Retirement Plans Newsletter

January 5, 2017

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Health Care Reform
RECORDED
Thomson Reuters / EBIA

Employee Benefits and Medicare Coordination Issues
January 19, 2017 WEBCAST
Frenkel Benefits, LLC

Proposed Form 5500 Overhaul in the Trump Administration: An Insight into the Minds of the Regulators
February 1, 2017 WEBCAST
Practising Law Institute

National Health Policy Conference
March 8, 2017 in DC
America's Health Insurance Plans [AHIP]

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[Guidance Overview]

Puerto Rico Treasury Announces Qualified Retirement Plan Limits for 2017
"For plans qualified in Puerto Rico and for those plans dual qualified in the United States and Puerto Rico, only the limits on annual benefits, annual contributions, and plan compensation have changed for 2017."
Haynes and Boone, LLP

[Advert.]

The World of Retirement: PSCA's 70th Annual National Conference

Sponsored by Plan Sponsor Council of America [PSCA]

Through calm seas, rough waters, and uncharted territories, PSCA has been the flagship in the world of retirement benefits. Join us at PSCA's 70th Annual National Conference to learn the latest trends to help you navigate the changing landscape.


[Guidance Overview]

Breaking Down the Three Key Elements of the DOL Fiduciary Rule
"All three elements described in [ERISA] section 3(21)(A)(ii) -- [1] a fiduciary [2] that renders (non-discretionary) investment advice [3] for compensation -- must be present in order for the Rule to apply to an advisor communicating with a plan participant or an IRA owner.... [The Rule] broadens the definition of 'investment advice.' More precisely, 'retirement investment advice' that's rendered to [1] participants in ERISA plans such as 401(k) plans, profit-sharing plans, money purchase pension plans, and defined benefit plans, as well as [2] owners of IRAs and participants in non-ERISA plans. Note that the Rule does not pertain to investment advice rendered to those investing in taxable accounts and non-retirement accounts. That retail environment remains within the purview of the SEC."
Morningstar Advisor

Chart of Defined Contribution Plan Annual Deadlines (PDF)
"[A] chart provides an explanation of key plan events for Section 401(a) and 401(k) defined contribution plans and the deadline for each. The chart is intended as a tool to assist employers with monitoring the key annual plan requirements."
VOYA Financial

For Pension Funding, IRS Issues Proposed Mortality Tables for 2018
" 'The updated standard mortality tables may increase pension liabilities approximately 5 percent', said Scott Hittner, partner and chief actuary at plan advisory firm October Three Consulting ... However, 'the impact will vary from plan to plan and might be highest for retiree-heavy plans.' There should be no significant impact on cash balance hybrid plans, he noted."
Society for Human Resource Management [SHRM]

PBGC's Guidance on Early Warning Program Ruffles Feathers of Plan Sponsors (PDF)
"Pension plan sponsors may be surprised to know that a drop in credit rating or some other financial circumstances not involving a corporate transaction may trigger the attention of the [PBGC] under a program designed to uncover threats to plans.... Plan sponsor advocates and advisers, however, question whether the PBGC should be using the Early Warning Program to investigate a plan sponsor in the absence of the sponsor engaging in a specific transaction."
Bloomberg BNA Pension & Benefits Daily

[Advert.]

The ERISA Fiduciary Compliance Guide

Sponsored by The National Underwriter Company

Authored by ERISA and employment law experts at The Wagner Law Group, this Guide is the practical reference you can rely on. Use code BENLINK for 10% discount.


Why Retirement Calculators Disagree on How Much You Need to Retire
"If you plan to use a retirement calculator you should keep in mind that retirement calculators rely on assumptions about the future that may turn out to be wrong ... Retired software developer Darren Kirkpatrick tested several calculators in 2012 and found the forecasts less than convincing.... Some calculators err by relying on inflation rates that are too low for the long term and err again by assuming a rate of return on investments that may be too high. '[That] gives you a bit of insight into where you stand financially today, but it tells you virtually nothing about what will happen in the future,' he has stated."
Mind Over Market

Social Security Benefits: What Married Couples Approaching Retirement Need to Know (PDF)
"Social Security benefits represent a valuable source of guaranteed income individuals can count as part of a retirement strategy. For married couples, a critical part of any Social Security claiming strategy is integrating Social Security benefits to take best advantage of the rules surrounding the claiming of benefits."
Prudential

Another Question is Answered in the Who's the Employer Q&A Column
"I have a client who wants to avoid predecessor employer status under the 415 regulations. Client and spouse own 100% of Company #1. They form a new Company #2 and own less than 50%. The businesses will be in the same field (advertising) but the DB Plan of Company #1 will be terminated so Company #2 will not maintain the plan of Company #1. All the employees of Company #1 (5 total) will become employees of Company #2. Would this be just a technical change under the 'facts and circumstances' language?"
BenefitsLink

[Opinion]

The 401(k) Plan: An Accident of History
"The failures of the current system are clear, but that doesn't mean all proposed reforms are good ones. While it's refreshing to see the idea of employer or employee mandates floated in a mainstream news article and attention paid to reform efforts advanced by state and city governments, it's critical that mandatory and government-sponsored plans be lower-cost as well as lower-risk than current 401(k)s and IRAs."
Economic Policy Institute

Benefits in General

[Guidance Overview]

DOL Issues Final Regs on Handling Disability-Related Claims
"[T]he Final Rule states that administrators of disability plans: (i) must provide more detail in adverse benefit decision letters (for both initial claim letters and appeal denial letters); (ii) adopt certain additional criteria to ensure independence and impartiality in the decision-making process; (iii) treat most rescissions as adverse benefit determinations; (iv) allow claimants to go directly to court if the claims procedures of the plan does not strictly comply with the requirements of the Final Rule; and (v) make disability claims subject to the same 'culturally and linguistically appropriate' rules as group health plan claims."
Benesch Friedlander Coplan & Aronoff LLP

[Guidance Overview]

Disability Claims Procedure Rules Changed to Require Plan Updates
"ERISA plan sponsors will need to review claim procedure language to determine whether updates are required. Such language may be present in the plan document, summary plan descriptions, or as standalone documents.... Minor regulatory changes ... apply to disability claims filed during a transition period beginning after the January 18, 2017 effective date and extending through December 31, 2017.... The remaining changes implemented under the regulation apply beginning January 1, 2018."
Michael Best & Friedrich LLP

[Guidance Overview]

New Disability Claim Procedures Require Strict Compliance
"If a plan violates any of the rules for disability claims, the claim is deemed denied without the exercise of discretionary authority. This gives the claimant the right to file a lawsuit without further delay and will allow a court to decide the merits of the claim de novo, without any deference to the fiduciary who violated the rules.... A copy of any internal rules and guidelines the plan relied upon must now be affirmatively provided without request to the claimant (or otherwise a statement that such materials do not exist)."
Greensfelder

[Guidance Overview]

IRS Issues Guidance on Safe Harbor Provision for De Minimis Reporting Errors
"Notice 2017-9 contains the requirements for a payee statement or information return recipient to make an election to not have the safe harbor exemption apply. An election to not apply the safe harbor makes the payer subject to penalties, even if the error is de minimis. The safe harbor exemption applies to certain information returns filed with the IRS and payee statements furnished to taxpayers, including Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc., Form 5498, IRA Contribution Information, and Form W-2, Wage and Tax Statement."
Ascensus

Executive Compensation and Nonqualified Plans

Portland to Impose Surtax on High CEO Pay Ratios
"On December 7, Portland, Oregon approved a surtax on public companies reporting that they pay the CEO at least 100 times that of the median worker, becoming the first jurisdiction in the nation to impose a tax based on CEO pay ratios.... The incoming Trump administration or the new Congress may look to undo some or all of Dodd-Frank. If they were to eliminate the CEO pay ratio reporting requirement, Portland would not have the compensation data available to implement its surtax."
Conduent

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2017 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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