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403(b) plans

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[Discussion] Plan Operational Errors Found, 5500 Now Overdue Because Auditor Won't Issue Clean Report
"A client has a 403(b) plan that is now a large plan requiring an audit. The auditor uncovered several operational errors and a lack of adequate procedures to make sure the plan is compliant.... The 5500 is now overdue because the auditor will not issue a report. So a new late filing error has occurred and the penalty amount will continue to increase.... Is an auditor able to issue a qualified opinion in these circumstances -- stating the types of errors that were found and indicating that the sponsor is working with counsel to make appropriate corrections?" (BenefitsLink Message Boards)
Update on University Section 403(b) Cases: Inconsistent Rulings
"A novel theory proceeding in both the Duke and Emory cases is the claim that the defendants were imprudent to hire multiple record keepers, where consolidating services with one record keeper could have resulted in lower fees for participants." (Jackson Lewis P.C.)
Breach of Fiduciary Duty Case Against University Retirement Plan Fiduciaries Survives Motion to Dismiss
"[T]he court ruled that, for most of the claims asserted, the plaintiffs had properly stated a claim that survives the defendants' motion to dismiss.... [However,] the court granted the defendant fiduciaries' motion to dismiss the claim that it was imprudent for the plan to offer 111 investment options. The court ... explained that having too many investment options does not hurt participants, but rather provides them with additional opportunities to choose investments they prefer." [Henderson v. Emory Univ., No. 16-2920 (N.D. Ga. May 10, 2017)] (Ballard Spahr LLP)
Emory Is First College to Lose in Retirement Plan Lawsuits
"The May 10 decision refusing to dismiss most claims against Emory is the first substantive ruling in the series of proposed class actions filed in August 2016 against the retirement plans of 12 prominent American universities ... Each school is accused of including too many investment options in its retirement plan -- Emory is said to have 111 -- and charging participants excessive fees for record keeping and administrative services, often because of the school's decision to use multiple record keepers." [Henderson v. Emory Univ., No. 16-2920 (N.D. Ga. May 10, 2017)] (Bloomberg BNA)
Form 990 Filing Deadline Approaching
"Tax-exempt organizations that do not file can lose their tax-exempt status, which will affect eligibility to offer 403(b) plans." (PLANSPONSOR)
Connecticut Senate to Consider Narrower 403(b) Disclosure Bill
"[T]he amended bill ... [requires] that 'any company that administers' a 403(b) plan offered by a political subdivision (and not administered by the state itself) must disclose in writing, upon enrollment, and annually thereafter: the fee ratio and return, net of fees, for each investment under the retirement plan; and the fees paid to any person who, for compensation, engages in the business of providing investment advice to participants in the retirement plan either directly or through publications or writings." (National Tax-Deferred Savings Association [NTSA])
The Tiered Investment Menu: A Behavior-Based Approach to Menu Design (PDF)
"Prior to [the DOL's 403(b)] regulations, multi-vendor arrangements with expansive fund menus were common.... [F]urther redesign of the investment menu ... is being done through investment menu segmentation into behavior-based levels or tiers. Many plan sponsors and financial educators are finding this new tiered menu approach easier to communicate and simpler for employees to understand how to select investment options that may be most suitable for them." (Fiduciary Investment Advisors)
Why the Fiduciary Rule Applies to IRAs but Not Non-ERISA 403(b)s
"IRAs are subject to the Tax Code; and Section 4975 of the Internal Revenue Code address prohibited transactions between IRAs an 'disqualified persons' including fiduciaries. The section then goes on to define to define a fiduciary to include any person designated as a fiduciary under ERISA. It is this basis that the DOL is using to affirm that its definition of what constitutes a fiduciary applies to Section 4975 of the Code as well." (PLANSPONSOR)
In K-12 403(b) Plans, Employees and Their Unions Can Be Their Own Worst Enemy
"Employee groups sometimes balk at reducing investment choice when school districts attempt to make changes, given the history of such retirement plans placing importance on an abundance of choice ... There may also be a degree of distrust between school boards and teachers that freezes progress ... Some unions distributing their own retirement products may also have financial incentives to keep their current plans intact[.]" (InvestmentNews)
[Guidance Overview] Rules for Design and Operation of Section 403(b) Plans
"While all employers are eligible to set up a defined benefit plan, and most tax-exempt nongovernmental employers are eligible to set up 401(k) plans, 403(b) plans are another option for certain tax-exempt and governmental organizations. These organizations may establish a 403(b) plan (sometimes called a tax-sheltered annuity plan or a TSA), which can fulfill most of the functions of a qualified plan, including allowing for pre-tax employee elective contributions, while offering various advantages to employers over a traditional qualified plan design." (Venable LLP)
[Discussion] Can We Exclude Adjunct Professors from Our 403(b) Plan?
"Most of those employees are under 1,000 hours per year. Some might have been a full time employee who went to adjunct status. They are paid by the number of courses/classes they teach." (BenefitsLink Message Boards)
[Opinion] Updated Website Aims to Simplify Teachers' Retirement Choices
"[CalSTRS] has finally upgraded the website where public-school employees can get educated about their 403(b) retirement plan options, making it easier to compare fees and performance and sign up for a plan. While the upgrade of could save teachers some serious bucks, it's still not perfect because there is no easy way to compare the thousands of options available in the public schools. What it does do is highlight the shamefully daunting task teachers face trying to save for retirement." (Kathleen Pender, in San Francisco Chronicle)
[Discussion] No HCEs in 403(b) Plan, But Does Universal Availability Still Apply?
"Yes. Section 403(b)(12) does not include an exception for a plan without HCEs. That makes no sense, as you point out, but it's still there." (BenefitsLink Message Boards)
College Professors Give Themselves a 'B' Grade in Financial Literacy
"[N]early one third (29 percent) of professors aren't sure of the investment mix of their retirement savings, suggesting they don't know if the investments they selected align to a specific financial goal and timeline.... When it comes to the financial wellness of non-faculty employees, 64 percent say they often worry about their financial situation, compared to 44 percent of professors." (Fidelity)
[Guidance Overview] IRS Issues Guidance to Correct Defective 403(b) Plans
"[A]mendments must be retroactive to January 1, 2010, so a correction could cover a lot of years. If a plan was administered based on a defective plan document, that failure would also need to be corrected retroactively using EPCRS. Employers will need to collect information from 2010 forward as to what amendments have been made to the 403(b) plan and when, as well as to whether operation was consistent with those plan terms." (Ice Miller LLP)
[Guidance Overview] IRS Publishes Audit Guidelines for Hardship Withdrawals from 401(k) and 403(b) Plans
"The IRS audit guidelines only relate to the documentation requirements that apply to safe harbor hardship withdrawals, but are likely to also be relevant to non-safe harbor hardship withdrawals." (Miller Johnson)
Managing Critical 403(b) Issues Through Proper Allocation of 3(16) and 3(21) Fiduciary Responsibility
"[T]he complex nature of handling 403(b) plans -- and, in particular, the unique manner in which the fiduciary rules apply to them -- make these plans uniquely suited to customized fiduciary services.... Allocated fiduciary services are especially critical in the growing movement toward 403(b) MEPs, both of the ERISA and non-ERISA types. It takes a special expertise to manage the 'legacy' contract issues in a coordinated and meaningful way [among] a significant number of employers between which employees can often transfer." (Business of Benefits)
[Guidance Overview] IRS Provides New Guidelines for Documenting Hardship Distributions
"The memorandum requests that field agents follow a 2-step approach in determining if a hardship distribution was made on account of a deemed immediate and heavy financial need ... [If] the notification provided to employees in Step 1 or the information reviewed in Step 2 is incomplete or inconsistent on its face, the agent may ask for source documents from the employer or third-party administrator." (EisnerAmper)
[Guidance Overview] IRS Views on Self-Certification of Financial Hardship
"In cases where any participant has received more than two financial hardship distributions in a single plan year, the guidelines advise agents to request source documents supporting those distributions if a credible explanation for the multiple distributions cannot be provided.... [P]lan sponsors may wish to consider limitations on the number of financial hardship distributions that a participant may take or to apply a more stringent process for approving requests for financial hardship distributions where more than two requests are made in any plan year." (Benefits Bryan Cave)
[Guidance Overview] IRS Issues Substantiation Guidelines for Safe-Harbor Hardship Withdrawals
"Although the guidance does not have binding legal or regulatory effect, it nonetheless highlights what auditors of plans offering safe-harbor hardship distributions will be looking for ... and reinforces that plan administrators should be regularly reviewing their record retention practices. It also emphasizes the need for proper documentation and internal controls for such distributions, including, to the extent applicable, understanding between TPAs and employer plan sponsors regarding their respective roles in the review and documentation process, as well as the importance of substantiation before distributions are made." (McGuireWoods LLP)
[Guidance Overview] 401(k) and 403(b) Plan Hardship Distribution Substantiation: What Will the IRS Be Looking For?
"In order to avoid potential unpleasantries on audit, plans that use an electronic or streamlined hardship distribution request process will need to take certain steps. First, the employer or TPA must provide the employee notice ... Second, the summary of information must include, at a minimum, the information specified in the [two recently issued IRS] memoranda ... Third, if a TPA administers hardship distributions, it should provide a report to the employer at least annually that describes the hardship distributions made during the year." (Jackson Lewis P.C.)
[Official Guidance] Text of IRS Memo: Substantiation Guidelines for Safe-Harbor Hardship Distributions from Section 403(b) Plans (PDF)
"This memorandum sets forth substantiation guidelines for EP Examinations employees examining whether a section 403(b) plan safe-harbor hardship distribution is 'deemed to be on account of an immediate and heavy financial need' pursuant to Section 1.401(k)-1(d)(3)(iii)(B) of the Income Tax Regulations.... [The Feb. 23, 2017] 401(k) Memorandum and Attachment are also applicable to hardship distributions from section 403(b) plans[.]" (Internal Revenue Service [IRS])
Connecticut Bill Would Require 403(b) Service Providers to Describe Services, Disclose Compensation
"Entitled 'An Act Requiring Service Providers Under Certain Retirement Plans to Disclose Conflicts of Interest,' the bill requires all service providers to 403(b) plans in Connecticut to describe their services and disclose all the direct and indirect compensation received for the services.... [T]he bill tasks the Connecticut Department of Treasury with adopting regulations regarding those disclosures with only one instruction: that such regulations be 'guided by' the [DOL's] 408(b)(2) regulation from 2012." (National Tax-Deferred Savings Association [NTSA])
[Guidance Overview] IRS Fact Sheet: How to Self-Correct Defective 403(b) Plan Provisions During the Remedial Amendment Period
"During the [remedial amendment period], sponsors of both 403(b) pre-approved plans and 403(b) individually designed plans are eligible to correct plan provisions that fail to meet IRC Section 403(b) requirements (including those under the 403(b) regulations and subsequent guidance) either by: Adopting a 403(b) pre-approved plan by March 31, 2020, that has a 2017 opinion or advisory letter; [or] Amending their individually designed plan by March 31, 2020." (Internal Revenue Service [IRS])
[Guidance Overview] 2017 Compliance Checklist for Qualified Plans Not Subject to ERISA (PDF)
20 pages. "The Compliance Checklist incorporates requirements for governmental and nonelecting church plans, non-ERISA 403(b) plans, 457 plans and nonqualified executive benefit plans, and provides information on the materials that you will need to file, filing due dates and agencies to which the filings should be made." (Prudential)
New Wave of Retirement Fee Litigation: The University 403(b) Lawsuits
"The participant-plaintiffs ... allege that the universities and other fiduciaries of the plans failed to use the plans' billion-dollar negotiating power and, instead, paid unreasonable and excessive fees for recordkeeping, administrative, and investment services. The plaintiffs also allege that the fiduciaries selected and retained investment options that consistently and historically underperformed their benchmarks and charged excessive investment management fees." (Trucker Huss)
[Guidance Overview] IRS Announces the Last Day of the Remedial Amendment Period for 403(b) Plans
"[T]he remedial amendment period is available only if an employer adopted a written plan document intended to satisfy the requirements of Code Section 403(b) on or before January 1, 2010 or, if later, the first day of the plan's effective date.... [If] the form of a Code Section 403(b) retirement plan does not satisfy the requirements of Code Section 403(b) during the remedial amendment period but is properly retroactively amended by March 31, 2020, the plan will be considered to have satisfied the requirements for the entire remedial amendment period[.]" (Proskauer's ERISA Practice Center)
[Guidance Overview] Remedial Amendment Period for 403(b) Plans Ends March 31, 2020
"Although the IRS has not yet issued any determination letters for pre-approved 403(b) plans, it is expected that it will do so soon ... The IRS has never offered a program for individually-designed 403(b) plans to obtain determination letters that plan documents are in compliance with the 403(b) Plan Rules, and has discontinued its regular determination letter program for individually-designed qualified plans, such as pension and 401(k) plans. Accordingly, it is unlikely that plan sponsors will be able to obtain IRS approval that individually-designed 403(b) plans are in compliance with the 403(b) Plan Rules." (Kilpatrick Townsend)
[Guidance Overview] Sponsors of Pre-Approved 403(b) Plans Need to Request Opinion or Advisory Letters by March 31, 2020
"[T]he last day of the remedial amendment period for Section 403(b) plans will be March 31, 2020.... While it is unclear when they might again be permitted to file, the cycle for qualified plans is a six-year cycle. If applied to Section 403(b) plans, this would mean that there will not be another opportunity to file until about 2025 or 2026." (Venable LLP)
403(b) Rules May Suggest Value as Universal Platform of the Future
"One of the most unusual differences ... between 403(b) plans and 401(k) plans is the striking fact that the 415 limit is an individual limit, not a plan level limit. The reason: 403(b) plans are still fundamentally designed around an individual. It is this sort of design which also should suggest it as a potential design of choice for the future: with the focus growing on individual portability of the retirement benefit, it's easy to forget that these individual contracts were portable between plans." (Business of Benefits)
[Guidance Overview] IRS Provides Long-Awaited Guidance on Initial 403(b) Plan Remedial Amendment Period (PDF)
"The IRS first announced that it would be issuing guidance on the remedial amendment period for 403(b) plans in Revenue Procedure 2013-22, where it set forth the procedures for requesting and issuing opinion and advisory letters for pre-approved 403(b) plans. No such opinions or advisory letters have been issued yet, but some applicants have been informed that the review of their plans has been completed, and informal comments from IRS suggest they should start to come out in a few months." (Groom Law Group)
Window for Fixing Current 403(b) Documents to Close in 2020 (PDF)
"IRS will allow 403(b) plan sponsors until March 31, 2020 to correct document defects and/or adopt a pre-approved plan restatement ... The remedial amendment period is available only if an employer adopted a written plan intended to satisfy the 403(b) requirements on or before January 1, 2010, or the plan's effective date, if later (the first day of the plan's remedial amendment period)." (Conduent)
[Guidance Overview] SEC Extends Rule 482 Relief to Non-ERISA Retirement Plans
"While Rule 482 under the Securities Act permits information about investment companies to be provided to investors without being accompanied or preceded by those companies' full prospectuses, DOL-required disclosures did not comply with all the conditions for reliance on Rule 482. Nevertheless, the SEC staff issued a no-action letter in late 2011 under which it agreed, for ERISA plans, to treat the DOL-required disclosures as if they satisfied the conditions of Rule 482. The SEC staff's February 18 letter extends that position to cover provision of the same disclosures required by the DOL rule to participants and beneficiaries in plans that are not subject to ERISA, thus permitting reliance on Rule 482 for such disclosures." (Carlton Fields)
[Guidance Overview] The Birth of the First-Ever IRS Pre-Approved 403(b) Plan Documents
"[E]mployers have maintained 403(b) plans beginning in 1959, well before 401(k) plans were even a glimmer in anyone's thoughts. Employers will, for the first time need to restate their plans to reflect a 'real' plan document ... The restatement period will be a three-year period ending on March 31, 2020. The IRS plans on issuing their approval letters (opinion letters for prototype plans and advisory letters for volume submitter plans) on the plans that have been submitted by March 31, 2017. Once the letters are issued, employers can start restating their plans." (National Tax-Deferred Savings Association [NTSA])
How to Make Your 401(k) or 403(b) Plan a Litigation Target
"[1] Adopt an Investment Policy Statement, then never consult it again.... [2] Don't benchmark your fees or do periodic RFPs.... [3] Load your investment menu with proprietary funds.... [4] Try to do everything in house.... [5] Enter into a revenue sharing arrangement, then fail to monitor payments.... [6] Use multiple recordkeepers and providers.... [7] Set it and forget it, because nobody is complaining.... [8] Don't hold regular committee meetings." (Cohen & Buckmann, P.C.)
[Guidance Overview] Correcting 'Best Guesses' on 403(b) Plan Terms by Using the First Remedial Amendment Period Under Rev. Proc. 2017-18
"Considering there have been generations of administrators and vendor staffs which have used a variety of different methods to operate 403(b) plans, [implementing the 2007 plan document requirement] was bound to be a difficult one. And it has been.... 403(b) written plan documents needed to be adopted by January 1, 2010 ... If you timely adopted a plan document (or adopted a new one since January 1, 2010), the terms of that document are unlikely to comply with what we think the rules are, given what we have found through the pre-approval process[.]" (Business of Benefits)
[Official Guidance] Text of IRS Rev. Proc. 2017-18: Last Day of Remedial Amendment Period for 403(b) Plans (PDF)
"This revenue procedure provides that the last day of the remedial amendment period for Section 403(b) plans, for purposes of section 21 of Rev. Proc. 2013-22 ... is March 31, 2020. The selection of the last day of the remedial amendment period for Section 403(b) plans was reserved in section 21 of Rev. Proc. 2013-22 (setting forth the procedures for issuing opinion and advisory letters for Section 403(b) pre-approved plans)." (Internal Revenue Service [IRS])
[Guidance Overview] IRS Summary and Audit Indicators: 403(b) Universal Availability Requirement
Updated Jan. 11, 2017. "A common error occurs when employees, working less than full-time, are automatically excluded from making elective deferrals under the 403(b) plan. A plan that wants to apply the statutory exclusion for part-time employment must determine eligibility for the 403(b) elective deferrals based on whether the employee is reasonably expected to normally work less than 20 hours per week and has actually never worked more than 1,000 hours in the applicable 12-month period." (Internal Revenue Service [IRS])
Results of PSCA 2016 Survey of Fiduciary Awareness of 403(b) Plan Sponsors
10 pages. "PSCA's [survey] reflects responses from 281 not-for-profit organizations that currently sponsor a 403(b) plan." 10 tables: [1] Respondent demographics by organization size and ERISA status; [2] Respondents by industry type; [3] Number of plan providers used, by plan size; [4] Approximate plan asset size of respondents fiduciary responsibilities; [5] Percentage of respondents who view themselves or their organization's Investment Committee as a plan fiduciary; [6] Entities other than the plan sponsor that act as plan fiduciaries; [7] Percentage of respondent aware of the recently released DOL Conflict of Interest Rule; [8] Changes made or considering in light of the new DOL Rule; [9] Entities relied on in making investment line-up decisions; [10] Percentage of organizations offering, or planning to offer, investment decision assistance to participants. (Plan Sponsor Council of America [PSCA])
Multiple Recordkeepers at Heart of Excessive Fee Suit
"The case contains many of the elements that have become wearingly familiar ... But it also is distinct because of the history of the two retirement plans ... including a 403(b) plan that has some important distinctions from a typical 401(k).... Plaintiffs argue the size of a defined contribution plan, both by number of participants with balances and total assets, should directly determine the pricing it can obtain for administrative services and investment management. 'By combining administratively, the plans have had the ability to operate in the market as a 20,000-participant plan with $1 billion in assets,' plaintiffs suggest." [Morin v. Essentia Health, No. 16-4397 (D. Minn. complaint filed Dec. 29, 2016)] (PLANSPONSOR)
[Official Guidance] Text of DOL Information Letter: Application of ERISA's Fiduciary Provisions to Default Investments with Lifetime Income Features That Contain Certain Liquidity and Transferability Restrictions
Unnumbered letter to TIAA-CREF, dated Dec. 22, 2016. "It is the view of the Department that a fiduciary of a participant-directed individual account plan could, consistent with the provisions of Title I of ERISA, prudently select an investment with lifetime income elements as a default investment under the plan if it complies with all the requirements of 29 CFR 2550.404c-5 except for reasonable liquidity and transferability conditions beyond those permitted in paragraph (c)(5)(i) of the regulation. When evaluating whether it is prudent to use this type of investment alternative as a default investment alternative, the fiduciary must engage in an objective, thorough and analytical process that considers all relevant facts and circumstances." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Fiduciary Focus: A Glimpse Into 403(b) Plan Trends
"Seventy percent of 403(b) plan sponsors are aware of the [DOL] fiduciary regulatory package, but that number drops to less than 50 percent among small plans ... 40 percent of all plan sponsors feel their plan service provider(s) act in a fiduciary capacity, while 50 percent say their plan advisor is not a fiduciary." (Principal Financial Group)
Year-End Action Items for 403(b) Plans
"[If] a new safe harbor employer matching contribution for 2017 was approved, the plan must be amended by December 31 for safe harbor protection to be effective for 2017.... Excess IRC Section 402(g) contributions.... Excess IRC Section 415(c) contributions.... Compensation in excess of IRC Section 401(a)(17) limit.... Special Catch-up Contributions.... Year-End Contribution Adjustments.... Required Minimum Distributions (RMDs).... Universal availability.... Automatic enrollment." (Groom Law Group, via PLANSPONSOR)
[Opinion] Comments of American Benefits Council on Draft of the Retirement Improvements and Savings Enhancements (RISE) Act
10 pages. "[A]n employer would be permitted to make matching contributions under a 401(k) plan, 403(b) plan, or SIMPLE IRA with respect to 'qualified student loan repayments,' which are broadly defined as repayments of any indebtedness incurred by the employee solely to pay qualified higher education expenses of the employee (emphasis added) (expenses of a dependent would not be covered).... We applaud the innovation ... [Another] proposal would eliminate the ability of many plan and IRA beneficiaries to receive benefits over a period longer than five years.... [This] will in many instances reduce retirement savings for beneficiaries." (American Benefits Council)
403(b) University Lawsuits May Impact 401(k) Self-Directed Brokerage Accounts
"There are so many moving pieces in these lawsuits related to the particular structure and operational differences between 401(k) plans and 403(b) plans, that it does remind [the author] of the expensive trap many service providers fell into after the 2007 IRS 403(b) reg changes. Those reg changes made 403(b) plans look ... a lot more like 401(k) plans. What those service providers (and the IRS as well) soon found out is that there are still fundamental structural and detailed differences between the two types of plans-and not recognizing those differences has been very costly. It appears that the plaintiff law firms may have made a similar miscalculation, underestimating the differences between the two types of plans." (Business of Benefits)
Spreading the Gospel of Better Retirement Plans
"Universities and hospitals have full-time human resources staff to select and monitor 403(b) plans. Public schoolteachers have 403(b)'s too, even if many of them are of questionable quality and unquestionable complexity. Employees and leaders of smaller nonprofits, however, are left to fend for themselves, and they muddle through in a variety of ways." (The New York Times; subscription may be required)
403(b) Retirement Plan Compliance in Light of Recent Fiduciary Litigation
"Fiduciaries of hospital or health system 403(b) retirement plans should take these steps now to ensure compliance and reduce litigation risk: Review governance structure.... Inventory the current state.... Conduct routine investment structure review and manager searches.... Conduct an RFP for recordkeeping services in the market.... Conduct a fee structure study.... Supervise ongoing due diligence and monitoring.... Additional protections modeling large 401(k) plans." (Willis Towers Watson)
From EBSA Secretary Phyllis Borzi: Your Conflicts of Interest Questions Answered
"Earlier this year, we announced new protections to ensure that Americans who are saving for retirement will have access to financial advice in their best interest.... One of the first and most important efforts on this front is the publication of FAQs based on the input we've received from the financial services industry and others. These questions are an important part of the regulatory process as they allow the department to clarify important parts of the rule, and head off misunderstandings that could lead to bad results for retirement savers, or financial services professionals.... Our initial focus has been, and remains, broad compliance with the rule." (U.S. Department of Labor [DOL] Blog)
[Official Guidance] Text of DOL FAQs on Conflict of Interest Exemptions (PDF)
24 pages. 34 Q&As, including: "Is compliance with the BIC Exemption required as a condition of executing a transaction, such as a rollover, at the direction of a client in the absence of an investment recommendation? ...Is the BIC Exemption available for advisers who act as discretionary fiduciaries to retirement plans and then provide investment advice to a participant to roll over assets to an IRA for which the adviser will provide advice? ... Is the BIC Exemption available for recommendations to roll over assets to an IRA to be managed on a going- forward basis by a discretionary investment manager? ... Is 'robo-advice' covered by the BIC Exemption or other exemption? ... Does the full BIC Exemption prohibit a financial institution or adviser from discounting prices paid by customers for services? ... Under the BIC Exemption, who are 'level fee fiduciaries' and what prohibited transaction relief is available to them? ... Can an adviser and financial institution rely on the level fee provisions of the BIC Exemption for investment advice to roll over from an existing plan to an IRA if the adviser does not have reliable information about the existing plan's expenses and features? ... Can a financial institution and adviser rely on the level fee provisions in the BIC Exemption to recommend a rollover from an employee benefit plan to an IRA if the adviser will become a discretionary manager with respect to the IRA assets after the rollover? ... Can insurance companies rely on independent insurance agents to sell fixed rate and fixed indexed annuities to retirement investors after the applicability date of the Rule? ... What is the role of insurance intermediaries, such as independent marketing organizations (IMOs), in the sale of annuity contracts to retirement investors after the applicability date of the Rule? Can they receive compensation such as commissions and override payments? ...Is there a way to get an exemption for advice to engage in principal transactions involving assets that are not specifically covered by the Principal Transactions Exemption? ... Does PTE 84- 24 cover rollovers into an annuity? ... The wording of PTE 84-24's reasonable compensation standard differs from the reasonable compensation standard used in the BIC Exemption. Does the Department intend to interpret them differently? ... How will the Department approach implementation of the new rule and exemptions during the period when financial institutions and advisers are coming into compliance?" (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Excessive Fee Litigation: Three Categories
"Over the past decade, more than 75 lawsuits have been commenced alleging claims of 'excessive fees' with regards to defined contribution retirement plans. While the suits initially focused on large, company-sponsored defined contribution plans, they have since expanded to sponsors of smaller plans and even non-profits. In most cases, these excessive fee lawsuits can be broken down into three categories." (Groom Law Group)
[Opinion] Think Your Retirement Plan Is Bad? Talk to a Teacher
"[M]any 403(b) accounts are riddled with complicated, expensive investment products that can cost their owners tens of thousands of dollars, if not more, over their careers. The 403(b) accounts that many workers contribute to are not subject to the more stringent federal rules and consumer protections that apply to 401(k) plans. In fact, of the $879 billion in total 403(b) assets, more than half is not subject to federal retirement plan rules[.]" (The New York Times; subscription may be required)
[Official Guidance] Text of IRS Announcement 2016-39: Retirement Plan Distribution Relief for Victims of Hurricane Matthew (PDF)
"[A] qualified employer plan will not be treated as failing to satisfy any requirement under the Code or regulations merely because the plan makes a loan, or a hardship distribution for a need arising from Hurricane Matthew, to an employee or former employee whose principal residence on October 4, 2016, (October 3, 2016, for Florida) was located in one of the counties identified for individual assistance by [FEMA] because of the devastation caused by Hurricane Matthew or whose place of employment was located in one of these counties on that applicable date or whose lineal ascendant or descendant, dependent, or spouse had a principal residence or place of employment in one of these counties on that date. These counties identified for individual assistance by FEMA are in Florida, Georgia, North Carolina and South Carolina and can be found on FEMA's website ...

"Plan administrators may rely upon representations from the employee or former employee as to the need for and amount of a hardship distribution, unless the plan administrator has actual knowledge to the contrary, and the distribution is treated as a hardship distribution for all purposes under the Code and regulations ...

"[A] 'qualified employer plan' means a plan or contract meeting the requirements of Section 401(a), 403(a) or 403(b), and ... a plan described in Section 457(b) maintained by an eligible employer described in Section 457(e)(1)(A), and any hardship arising from Hurricane Matthew is treated as an 'unforeseeable emergency' for purposes of distributions from such plans....

"To make a loan or hardship distribution pursuant to the relief provided in this announcement, a qualified employer plan that does not provide for them must be amended to provide for loans or hardship distributions no later than the end of the first plan year beginning after December 31, 2016. To qualify for the relief under this announcement, a hardship distribution must be made on account of a hardship resulting from Hurricane Matthew and be made on or after October 4, 2016, (October 3, 2016, for Florida) and no later than March 15, 2017." (Internal Revenue Service [IRS])

[Guidance Overview] IRS Information Release 2016-138: Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Matthew (PDF)
"Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.... Currently, parts of North Carolina, South Carolina, Georgia and Florida qualify for individual assistance." (Internal Revenue Service [IRS])
Legacy Investments in Higher Education: What is a Plan Sponsor's Responsibility to Participants?
"Even though institutions may not have authority to move the legacy assets to a newly offered line-up of more prudently evaluated investments, they do have responsibility to communicate the value of these options to the participants who hold these legacy assets.... Limitations implied or imposed by legacy providers with 'individual' contracts do not eliminate the need for prudent oversight or communication from plan sponsors regarding these investments, and their alternatives in a way that is in the best interest of participants." (Fiduciary Plan Governance, LLC)
Report of EPCU Completed Project: Ineligible Employer -- 403(b) Plans
"Responses showed that the majority of the plan sponsors were educational organizations still eligible to sponsor their IRC Section 403(b) plan. However, some employers incorrectly reported IRC Section 403(b) plan deferrals in box 12 showing that the accuracy of the box 12 codes is still a concern." (Internal Revenue Service [IRS])
University 403(b) Plan Fee Litigation Update, September 2016 (PDF)
"The allegations in these actions are similar to those made in the dozens of excessive fee cases involving 401(k) plans filed in the last decade.... The new cases will test the essential structure of such plans and determine whether fiduciary standards developing in the 401(k) matters should be applied in the 403(b) context." (Groom Law Group)
Not-for-Profit Hospitals and Health Care Providers Face Retirement Plan Class Actions
"[S]teps such plan sponsors may want to consider: [1] Adopting a robust governance structure ... [2] Adopting an investment policy statement ... [3] Setting up performance standards for the plan's service providers and regularly monitoring their performance.... [4] Conducting a confidential, comprehensive, and objective review ... of all current investment options available in the plans ... [5] Implementing a periodic competitive bidding process for record-keeping, administrative, investment consulting, plan participant education, and other commoditized plan services." (Greenberg Traurig)
[Guidance Overview] 403(b) Multiple Employer Plans: ERISA and Tax Considerations (PDF)
14 pages. "Code section 403(b) plans are generally subject to less statutory and regulatory guidance and oversight than most Code section 401(a) qualified plans.... The effect of this discrepancy is that there is more greyness as to the legal standards that would apply to a closed Code section 403(b) MEP.... [This memorandum] ... [1] Defin[es] the meaning of the term 'closed multiple employer plan'; [2] Review[s] how the multiple employer plan rules apply to Code section 401(a) qualified plans; [3] Provid[es] a brief overview of Code section 403(b) plans; and [4] Review[s] how certain multiple employer plan rules could be applied to a closed Code section 403(b) MEP." (Groom Law Group, for Transamerica)
[Opinion] Are Hospital Plans Sick And University Plans Dumb? (PDF)
"The lawsuits consistently focus on determining 'the floor' of minimum costs that they say a plan should incur. The plaintiffs typically do not discuss whether the plan costs are at the median, rather they seem to believe all plans are 'commodities' of the same basic services and results. The plaintiffs also assume all the same outcomes in terms of retirement readiness and believe any costs above the floor 'are wasted.' They seldom, if ever, mention differences in retirement readiness in their arguments." (Unified Trust Company, N.A.)
How to Prepare for an IRS Audit of Your 403(b) or 457(b) Plan (PDF)
13 pages. Includes: [1] How employers can prepare for an IRS Audit of their 403(b) and/ or 457(b) Plan, [2] potential areas of focus during an IRS examination, and [3] best practices for strengthening tax compliance. (National Association of Government Defined Contribution Administrators [NAGDCA])

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