Retirement Plans Newsletter

February 9, 2017

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Webcasts and Conferences

Establishing Risk Management Protocols for Defined Benefit Plans and Defined Contribution Plans - Part 1 of 4
February 23, 2017 WEBCAST
PRMIA

What You Need to Know About Your Welfare Benefit Plan Documents
February 28, 2017 WEBCAST
ftwilliam.com

Retirement Plans: Steering the Fiduciary Ship
March 7, 2017 in MA
Morgan Lewis & Bockius LLP

Independent Accountant's Role in the Annual Form 5500 Process
April 6, 2017 WEBCAST
American Bar Association [ABA]

Washington Legislative Update
May 22, 2017 in DC
International Foundation of Employee Benefit Plans [IFEBP]

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[Guidance Overview]

IRS Proposes Use of Forfeitures to Fund QNECs, QMACs in 401(k) and 401(m) Plans (PDF)
"If the plan sponsor's existing plan document contains language requiring that QMACs and QNECS be 100% vested when contributed to the plan, a plan amendment will be needed to reflect the new rule.... [F]or some plans a mid-year amendment to permit the use of forfeitures to fund QNECS and QMACs may result in a cut-back of benefits under 411(d)(6)."
VOYA Financial

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Text of District Court Opinion Denying Summary Judgment for Plaintiffs Challenging DOL Fiduciary Rule (PDF)
81 pages. "The fiduciary rule does not exceed the DOL's authority ... DOL did not exceed its statutory authority to grant conditional exemptions ... BICE and PTE 84-24 do not create a private right of action ... Neither the new rules nor the rulemaking violate the APA ... BICE meets the prohibited transaction rules exemptive requirements ... Waiver applies and the rules do not violate the First Amendment ... The Exemptions' contractual provisions do not violate the FAA." [Chamber of Commerce of the U.S. v. DOL, No. 16-1476 (N.D. Tex. Feb. 8, 2017)]
U.S. District Court for the Northern District of Texas

Is This the End of the Fiduciary Rule -- and Will It Matter?
"The language in the [Presidential Memorandum for the Secretary of Labor] suggests that the rule will be history.... The [DOL] can't just issue a replacement rule.... Litigation may reach a standstill.... Financial organizations will have to decide whether they will adhere to a fiduciary standard.... Plan sponsors and plan committee members have it easier.... The real losers here are the IRA holders."
PenChecks

Interesting Angles on the DOL's Fiduciary Rule, Part 35
"If [the rule] is delayed, that leaves us with the questions of [1] what rules apply now, and [2] will the rules be withdrawn or modified (and, if modified, how)? The answer to the first question is easy ... the 'old' fiduciary rules are in effect until something is done. The second question is not easily answered. There is a split of opinion about whether the DOL will kill or modify the rules. At this point, we need to wait and see."
FredReish.com

Self-Dealing Suits: The Latest Trend in Fee Litigation (PDF)
"What can Plan Sponsors learn from these latest lawsuits? ... Review your investment offerings and processes to identify shortcomings. Consider the following: Are processes for investment selection and review prudent and recorded? Is the fund lineup properly diversified among asset classes and sizes? Are fees reasonable? Do the funds have strong long-term performance?"
Ekon Benefits

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Text of 2017 Enrolled Actuary Program Booklet: Basic (EA-1) Examination; Pension EA-2 (Segment L) Examination; and Pension EA-2 (Segment F) Examination (PDF)
35 pages. "The EA-1 examination ... covers the mathematics of compound interest and practical financial analysis and the mathematics of life contingencies and practical demographic analysis. The pension (EA-2) examination consists of two segments: The EA-2 (Segment L) law examination ... covers relevant pension laws ... as they affect pension actuarial practice.... The EA-2 (Segment F) examination ... covers the selection of actuarial assumptions and calculation of minimum required and maximum tax-deductible contributions under current pension law, along with the related actuarial mathematics." [Issued Jan. 2017, for May and November, 2017, exams; rev. Feb. 2, 2017]
Joint Board for the Enrollment of Actuaries [JBEA]; American Society of Pension Professionals & Actuaries [ASPPA]; Society of Actuaries

Employers' Perspectives on Delayed Retirement
18 pages. "This [article] examines the employer perspective on how to respond to the needs and desires of older workers to delay or prolong the transition from full-time employment to complete retirement. What factors influence the willingness of firms to retain older workers? Can firms develop transitional employment contracts so workers can shift to new areas, perhaps with less responsibility and lower compensation, while remaining with their career employers?"
Upjohn Institute

Study Shows Great Success with ESOP Acquisitions
"[A]ll 20 ESOP executives had completed a total of 442 acquisitions and only 12 were unsuccessful, which is a 97.5% success rate. In addition, every ESOP acquirer hired 90-95% of all of the target company employees ... The strongest effect was the relationship of a Shared Vision to Organizational Empowerment. This indicates that for a successful acquisition to occur, both the acquiring and target companies need to have a common shared vision for their future together[.]"
Blue Ridge ESOP Associates

[Opinion]

The Pension Monster that Devoured Education
"The retirement fund for teachers, CalSTRS, last week lowered the rate it expects to receive on investments. Gov. Brown's budget calls for $153 million more to offset the rate change.... CalPERS, which covers non-teacher [state] employees, also projects greater funding concerns because of promised pension and healthcare costs. According to [one] report, what school districts must contribute to CalPERS could double in just six years. On top of the troubles for local school districts, last month the University of California Regents agreed to a 2.5% tuition increase, in part, to cover pension costs."
Fox&Hounds

Benefits in General

Advisory Council on Employee Welfare and Pension Benefit Plans to Meet on March 22
[T]he 185th open meeting of the Advisory Council on Employee Welfare and Pension Benefit Plans (also known as the ERISA Advisory Council) will be held on March 22, 2017.... The purpose of the open meeting is to welcome the new members, introduce the Council Chair and Vice Chair, and set the topics to be addressed by the Council in 2017."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Best Practices for Workplace Financial Wellness Programs (PDF)
12 pages. "A highly effective financial wellness program can save an organization well into the millions of dollars for large companies -- and that's focusing on the easiest costs to measure: wage garnishments, absenteeism and utilization of FSAs and HSAs. With additional analysis, companies can also measure healthcare costs savings, reduction in costs associated with delayed retirement, employee engagement, productivity, retention, and morale."
Financial Finesse

Frequently Asked Questions about Workplace Financial Wellness Programs (PDF)
13 pages. "What percentage of employees are financially well? ... What is the difference between financial wellness and financial security? ... Where are employees falling short with respect to financial wellness? ... What is the difference between financial education, financial advice and financial wellness? ... What kind of companies need financial wellness and should roll it out as a key employee benefit? ... What are the biggest financial wellness needs across generations?"
Financial Finesse

Retiree Benefits: A Tale of Two Cities (States)
"Many states' combined costs -- pensions, other post-employment benefits (OPEBs) such as health insurance, and payments on all government bonds -- appear manageable. More worrisome are the eight states with the highest combined costs: Illinois, New Jersey, Connecticut, Hawaii, Kentucky, Massachusetts, Rhode Island, and Delaware. [States with high pension burdens also tend to have high costs for retiree health benefits].... [T]he picture overall [for cities] is a mix of a handful of deeply troubled jurisdictions and many where the costs appear manageable. The eight major cities with the highest total cost burdens range from the predictable -- Chicago and Detroit -- to surprises such as Wichita, Kansas, and Portland, Oregon."
Squared Away Blog, by the Center for Retirement Research at Boston College

Trump's 2-for-1 Regulatory Reduction Challenged in Court
"President Donald Trump's Executive Order requiring two regulations be repealed for every new one adopted and related OMB guidance have been challenged in a law suit ... by Public Citizen, the Natural Resources Defense Council and the Communications Workers of America.... The complaint alleges that the agencies cannot lawfully comply with the president's order because doing so would violate the statutes under which the agencies operate and the Administrative Procedure Act." [Public Citizen v. Trump, No. 17-253 (complaint filed Feb. 8, 2017)]
Dodd-Frank.com, a blog by Stinson Leonard Street

Executive Compensation and Nonqualified Plans

[Guidance Overview]

IRS Updates Golden Parachute Audit Guide
"The [2017 Audit Techniques Guide (ATG)] is the first update released since the release of the IRS's initial 2005 ATG ... The ATG includes: [1] an overview of the rules and the consequences of potential adjustments in the audit; [2] the documentation an IRS agent should review as background regarding a corporation's golden parachute payments; and [3] the nine steps involved in a parachute examination, including an examination flow chart. The 2017 ATG expands and updates the list of documents for IRS examiners to review in connection with a golden parachute examination."
Orrick

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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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