Compliance November 14, 2017

IRS Releases Covered Compensation Tables

The tables are to be used for determining contributions to DB plans and permitted disparity in DC plan contributions.
Reported by

The Internal Revenue Service has issued Revenue Ruling 2017-22 with the table of covered compensation for the 2018 plan year.

The revenue ruling provides tables of covered compensation under Section 401(l)(5)(E) of the Internal Revenue Code to be used for determining contributions to defined benefit (DB) plans and permitted disparity in defined contribution (DC) plan contributions.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

To determine 2018 plan year covered compensation, the taxable wage base is $128,700. Permitted disparity allows for larger contributions or benefits with respect to compensation in excess of the Social Security wage base.

In determining an employee’s covered compensation for a plan year, the taxable wage base for the plan year is the taxable wage base in effect as of the beginning of the period.

The Markets November 14, 2017

More Institutional Investors Seeking OCIOs

OCIOs are gaining momentum with health and hospital systems, defined contribution (DC) plans, public defined benefits (DB) plans, family offices, and sovereign wealth funds, as institutions face myriad investment-related, operational, and regulatory challenges, Cerulli Associates says.
Reported by

Cerulli Associates, a global research and consulting firm, expects that double-digit growth of worldwide outsourced chief investment officer (OCIO) assets managed on a partial or full discretionary basis will continue.

Cerulli predicts a 1Q 2022 base case assets under management (AUM) projection of $2.3 trillion, but says the market could be as large as $2.7 trillion.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Cerulli’s latest report, U.S. Outsourced CIO Function 2017: Identifying Emerging Opportunities Across Institutional Investors, says most of OCIOs’ new business is coming from investors that are using the OCIO model for the first time and previously used an investment consultant under an advice-only relationship (78%). However, providers expect increasing opportunities to come from replacement mandates.

Together, defined benefit (DB) plans and nonprofits continue to represent the majority of the AUM of OCIOs polled by Cerulli (81.1%), with the greatest growth opportunities over the next two years expected to come from nonprofit (84%) and corporate DB (71%) clients for total portfolio services.

OCIOs are gaining momentum with a broader range of investors—health and hospital systems, defined contribution (DC) plans, public DB plans, family offices, and sovereign wealth funds, as institutions face myriad investment-related, operational, and regulatory challenges, Cerulli says. More than one-third of OCIO providers view sleeve mandates from public DB (42%) and private DC (40%) plans as being very important to new business opportunities over the next two years. Nearly half of providers anticipate health/hospital systems to be very important to the growth of their business for both total portfolio (44%) and sleeve (46%) mandates.

Use of an OCIO remains highest among smaller institutions with $250 million or less in AUM. During the next two years, providers polled expect the ”sweet spot” for total portfolio corporate DB (62%), nonprofit (59%), and health/hospital (70%) mandates to be in the $250 million to $1 billion range.

Most (90%) asset managers polled by Cerulli have won a mandate through an OCIO provider and have had the most success working with OCIOs that are affiliated with an investment consultant (70%). Nearly two-thirds (63%) of asset managers surveyed anticipate the OCIO business will be very important to their overall institutional sales goals in three years, up from 37% that currently view it as very important.

Information about ordering Cerulli’s report can be found here.

«