Retirement Plans Newsletter

February 1, 2017

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Farmer & Betts
in CO, OR, WA

401(k) Compliance Consultant
DWC ERISA Consultants, LLC
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NF Tech Operations Manager
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Webcasts and Conferences

Defined Contribution Plan Sponsor Roundtable
February 8, 2017 in MA
Morgan Lewis & Bockius LLP

Individual Benefits: Employee Engagement Infrastructure Driving Education, Benefit Relevance, Re-enrollment Rates, and Employee Satisfaction
February 16, 2017 in AZ
Worldwide Employee Benefits Network [WEB] - Phoenix Chapter

Keeping Up with Changes to Employee Benefits Rules (Part 1)
February 23, 2017 WEBCAST
Frenkel Benefits, LLC

Hot Topics in Executive Compensation
February 23, 2017 in OH
Worldwide Employee Benefits Network [WEB] - Cleveland Chapter

2017 Total Rewards Conference & Exhibition
May 7, 2017 in DC
WorldatWork

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[Official Guidance]

Text of PBGC Disaster Relief Announcement 17-01 for Severe Storms in Georgia
"[PBGC] is waiving certain penalties and extending certain deadlines in response to Severe Storms, Tornadoes and Straight-line Winds that began on January 2, 2017, in Georgia.... The disaster area consists of Dougherty County."
Pension Benefit Guaranty Corporation [PBGC]

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[Official Guidance]

Text of PBGC Disaster Relief Announcement 17-02 for Severe Storms in Mississippi
"[PBGC] is waiving certain penalties and extending certain deadlines in response to Severe Storms, Tornadoes, Straight-line Winds, and Flooding that began on January 20, 2017, in Mississippi.... The disaster area consists of Forrest, Lamar, Lauderdale, and Perry Counties."
Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

Proposed IRS Regs Permit Use of Forfeitures for QNECs and QMACs
"Under the new proposed regulations, contributions will qualify as QNECs or QMACs as long as they meet the nonforfeitability and distribution requirements at the time such amounts are allocated to participants' accounts. These proposed rules ... will provide 401(k) plan sponsors, especially plan sponsors of safe harbor 401(k) plans or those who rely on QNECs to correct failed nondiscrimination tests, more flexibility in determining how to use and allocate plan forfeiture accounts[.]"
Seyfarth Shaw LLP

[Guidance Overview]

Safe Harbors and Exclusions in the DOL Fiduciary Rule
"Some communications are not deemed by the Rule to be a 'recommendation,' so they're not 'investment advice.' These communications include [1] marketing or making available a platform, [2] general communications and [3] investment education. [This article considers each.]"
W. Scott Simon, in Morningstar Advisor

How 'Not' to Transition to a New Recordkeeper
"Usually, the plan sponsor is so happy to have 'completed' its RFP process that it treats the selection of a record-keeper as the end of the plan migration process -- rather than its beginning.... As the 'arbitrarily-determined' cutover date approaches, the plan sponsor and the plan's retirement committee or fiduciaries are forced to either concede or compromise on ... [the] exact basis upon which and the exact amount the record-keeper is being paid.... [and the] terms and conditions of the administrative services agreement (ASA)."
Chang Ruthenberg & Long PC

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Survivor Sues Employer for Failure to Offer Joint-and-Survivor Annuity to Domestic Partner
"The spouse of a deceased television station employee can proceed with breach-of-fiduciary-duty claims against his husband's former employer based on the employer's failure to inform the employee that he could elect a joint-and-survivor annuity under the company's pension plan ... [The couple] were not married when [the employee] retired ... but California law entitles registered domestic partners to the same legal rights, benefits and protections as married couples." [Reed v. KRON/IBEW Local 45 Pension Plan, No. 16-4471 (N.D. Cal. Dec. 5, 2016)]
Society for Human Resource Management [SHRM]

A New Twist on Fee-Based Cases Against Plan Sponsors
"The complaint alleged the plan sponsor breached its duties as a fiduciary by not taking its plans to market in a consolidated manner in such a way as to leverage the combined assets and participant numbers of both plans to negotiate the lowest possible fee for participants in both plans via the utilization of a single record keeper.... The claims in this suit represent the fact that lawsuits against plan sponsors and fiduciaries are becoming increasingly subjective and less objective." [Morin v. Essentia Health, No. 16-4397 (D. Minn. complaint filed Dec. 29, 2016)]
Pension Consultants, Inc.

Church Plan Cases: Federal Agencies Finally Speak
"The [amicus curiae brief of the U.S. Solicitor General with contributions by counsel at PBGC, DOL, IRS and Treasury] presents four arguments urging the High Court to read ERISA's church plan exemption to apply to employee benefits plans of religiously affiliated employers notwithstanding that the plans initially may not have been established by a church.... [1] 'Natural reading' ... [2] Context, history, and purpose ... [3] Consistent and long term application ... [4] No sound reason for radical re-interpretation."
Jackson Lewis P.C.

Understanding Independent Qualified Plan Auditor Opinions on Financial Statements
"A disclaimer of opinion is given when there is a scope limitation on the audit procedures that precludes the auditor from performing the audit in accordance with Generally Accepted Auditing Standards (GAAS).... When an auditor performs a limited-scope audit, he or she does not perform audit procedures on testing investments and investment transactions. The [DOL] has allowed this type of audit to occur when a limited-scope certification is provided by a regulated financial institution such as a bank, trust company, or insurance company."
Belfint Lyons & Shuman, CPAs

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Behavioral Biases and the Hierarchy of Retirement Needs
"[P]erhaps the biggest caveat to the hierarchy of retirement needs is that if retirees must satisfy a desire for current income, and future income, and have liquid current assets available, they may actually feel compelled to save more for retirement than they actually need (even if there is no desire to leave a legacy behind).... [If] the need for future income cannot be achieved until the need for current assets has been mentally satisfied first, retirees may continue to feel constrained by not having enough -- even if they do -- and/or to choose retirement income solutions that are mechanically inferior but psychologically more satisfying to our hierarchy of retirement needs!"
Michael Kitces in Nerd's Eye View

Iron Workers Local 17 Pension Fund Participants Vote to Cut Benefits
"The Trustees are currently scrambling to implement the reductions with the participants' February 1 pension checks. Based on the Fund's application, these cuts generally involve reducing accrued benefits and eliminating early retirement subsidies and extra benefit credits indefinitely. The Trustees believe that these reductions are critical to improving the Fund's solvency over the long term. And now, it appears that the Treasury Department and participants agree."
Morgan Lewis

Appropriateness of Risk-Taking by Public Pension Plans (PDF)
36 pages. "Policymakers can take two important steps that might temper future risk-taking. First, they should explore ways to change and counter the incentives and institutions that encourage U.S. public pension funds to take risk. Second, public pension funds should ensure that they analyze and communicate the risk they are taking, in ways that can be understood not just by their boards, but by the governments that contribute to their funds, and by the public that ultimately bears the risks they take."
Rockefeller Institute of Government

Another Question is Answered in the Railroad Retirement Benefits Q&A Column
"Should I start my Railroad Retirement annuity at age 62 (with monthly payments for life at 70% of the monthly payments I would receive if I wait to start at age 66), or should I wait until age 66?"
Robert Kaufman on BenefitsLink

[Opinion]

California Crumbling?
"[W]hen CalSTRS or CalPERS lower their long-term expected return assumptions, contribution rates necessarily go up.... [That] means teachers and other public-sector workers and the state government need to pay more into the pension system to sustain the pension system over the long run. More money for pensions means less money for other services and that's where things get hairy."
Pension Pulse

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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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