Retirement Plans Newsletter

November 23, 2015

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Retirement Planning Consultant R150005IP
Transamerica
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Retirement Plan Manager
Prime Pensions, Inc.
in NJ

Director of Participant Operations and Policy
Federal Retirement Thrift Investment Board
in DC

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Webcasts and Conferences

ERISA Cyber Security – The Next Frontier
RECORDED
(Wagner Law Group P.C.)

Social Security Changes You Need to Know Now
December 10, 2015 WEBCAST
(International Foundation of Employee Benefit Plans [IFEBP])

Fiduciary Year in Review
December 10, 2015 WEBCAST
(fi360)

2015 Regulatory Wrap-Up and a Look Forward to 2016
December 17, 2015 WEBCAST
(Frenkel Benefits, LLC)

Final Preparation for Filing the 1094/1095
January 7, 2016 WEBCAST
(International Foundation of Employee Benefit Plans [IFEBP])

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[Guidance Overview]

IRS Employee Plans News No. 2015-13, November 23, 2015
Topics: [1] Notice of public hearing Dec. 18 on proposed regulations for the administration of a multiemployer plan participant vote on an approved suspension of benefits under the MPRA; [2] Taxpayers born before July 1, 1945 must receive payments from your IRAs and workplace retirement plans by Dec. 31; [3] Free webcast Dec. 8 about the latest activities in Employee Plans Examinations; [4] Form 2848 Instructions. (Internal Revenue Service [IRS])  


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A Guide for Employers: Setting Up a Retirement Plan Committee (PDF)
"Why set up a retirement plan committee? ... Who should be on the committee? ... Setting up bylaws and responsibilities ... The Investment Review ... Fee Disclosure ... Conflict of Interest Policy ... Document everything." (The Rosenbaum Law Firm, P.C.)  

Annuity Payouts from DC Plans: The Debate Continues
"Committees often worry about the process for selecting and monitoring insurers. Do we have the expertise to do it ourselves, or should we hire a consultant? What's the nature of our liability? These questions dissuade many committees from moving ahead, especially since expected demand from participants is typically low.... For now, most employers' answer to the question 'annuity -- or not?' is simple: 'not in the plan, but in an IRA rollover.' And plan sponsors continue to work on other ways to make their plans more hospitable to retirees to create an attractive retirement destination for participants." (Vanguard)  

All Quiet on the Pension Front at the $20 Billion Club
"Compared to the past few years ... 2015 has been fairly quiet.... Overall, funded status has probably not moved a great deal for most plans.... It is too soon to gauge the impact of recent news of further increases to PBGC premiums.... Federal Express is becoming the fifth of the twenty members of the club to adopt mark-to-market pension cost accounting.... Contributions have in many cases fallen off a little from the level of recent years, as more corporations are taking advantage of the current flexibility in funding rules." (Russell Investments)  

Uncertainty Denial: How Well Can Anyone Predict Long-Term Investment Returns?
"[T]here isn't a single spending rate, savings rate, asset allocation and floor allocation that are optimal across the broad range of possible returns suggested by such a mean and standard deviation.... A small change in a plan's market return assumption can make a large difference in what we calculate as optimal spending rates and asset allocations. The error in our estimate of future market returns gets magnified.... There are ways to manage this financial risk but even if we do the best job possible there will still be much uncertainty." (The Retirement Cafe)  

Florida Republicans Look at Closing Public DB System to New Members
"Florida Republicans once again are taking aim at the Florida Retirement System, arguing taxpayers can save billions of dollars by closing the huge public employee pension program to new members and offering them a 401k-style investment plan. The proposal, which is expected to be offered by House members in the coming legislative session, would preserve line-of-duty death benefits for law enforcement officers and firefighters, a move designed to appease lawmakers from both sides of the political aisle who have opposed the idea in the past." (Naples Daily News)  

[Opinion]

How the SEC Got DB Plans All Wrong
"What the rules ask be disclosed as compensation with respect to a defined benefit plan (qualified or nonqualified) is the increase, if any, in the actuarial present value of accrued benefits from one measurement date to the next. That seems simple and reasonable enough on its face, but that is exactly where, how, and why the SEC went wrong.... [T]he SEC methodology puts an inappropriate burden on companies sponsoring DB plans. For some, this may signal a reason for them to exit that space ... for all the wrong reasons." (Benefits and Compensation with John Lowell)  

Benefits in General; Executive Compensation

[Guidance Overview]

IRS Issues Guidance on Applicability of Section 162(m) to CFO Compensation
"[A recent IRS Chief Council advice memorandum] leaves open several questions, including [1] whether a smaller reporting company need only be eligible to rely on the scaled-back disclosure rules or whether it must actually rely on them, in order for Section 162(m) to apply to compensation paid to the company's principal financial officer; [2] whether compensation paid to the principal financial officers of emerging growth companies, which are also eligible to rely on the same scaled-back disclosure rules, will also be subject to Section 162(m); and [3] how the IRS will treat deductions already claimed for compensation paid in excess of the $1 million limitation to CFOs of smaller reporting companies or emerging growth companies since 2008." (Wilmer Hale)  

ISS and Glass Lewis Issue 2016 Policy Updates
"Glass Lewis now indicates that if it identifies egregious compensation practices, it may not only recommend against the Say-on-Pay vote but also recommend against the compensation committee based on the practices or actions of the committee during the year.... ISS will generally recommend against the Say-on-Pay proposal where there is an external management structure in place and there is insufficient detail in the company's disclosures for ISS to perform a comprehensive pay-for-performance analysis." (EdwardHauder.com)  

SEC Official Unveils Ambitious Executive Compensation Proxy Disclosure Review Project
"Keith Higgins, Director of the SEC's Division of Corporation Finance, announced ... that the Commission is expanding its comprehensive review of corporate disclosures to include an examination of the descriptions of executive compensation in the proxy and the accompanying tables.... The Project was started by the SEC two years ago and initially focused on a review of business and financial reporting of annual and quarterly reports. However, Mr. Higgins stated that the next priority would be executive compensation and governance information." (HR Policy Association)  

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