[Official Guidance]
Text of SEC Proposed Rule: Removal of Certain References to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Fund Rule (PDF)
"The [SEC] is re-proposing certain amendments, initially proposed in March 2011, related to the removal of credit rating references in rule 2a-7, the principal rule that governs money market funds, and Form N-MFP, the form that money market funds use to report information to the Commission each month about their portfolio holdings ... The re-proposed amendments would implement provisions of the [Dodd-Frank Act].... In addition, we are proposing to amend rule 2a-7's issuer diversification provisions to eliminate an exclusion from these provisions that is currently available for securities subject to a guarantee issued by a non-controlled person."
(U.S. Securities and Exchange Commission [SEC])
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[Official Guidance]
Text of IRS Proposed Regs: Method of Accounting for Gains and Losses on Shares in Certain Money Market Funds; Broker Returns with Respect to Sales of Shares in Money Market Funds (PDF)
"[These proposed regs] provide a simplified method of accounting for gains and losses on shares in money market funds (MMFs) that distribute, redeem, and repurchase their shares at prices that reflect market-based valuation of the MMFs' portfolios and more precise rounding than has been required previously (floating net asset value MMFs, or floating-NAV MMFs) ... [and] provide guidance regarding information reporting requirements for shares in MMFs. The proposed regulations respond to [SEC] rules that change how certain MMF shares are priced. The proposed regulations affect floating-NAV MMFs and their shareholders. This document also contains requests for comments and provides notice of a public hearing on these proposed regulations."
(Internal Revenue Service [IRS])
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[Guidance Overview]
SEC Adopts Money Market Fund Reform Rules to Address Run Risks in Money Market Funds
"The new rules require a floating net asset value (NAV) for institutional prime money market funds, which allows the daily share prices of these funds to fluctuate along with changes in the market-based value of fund assets and provide non-government money market fund boards new tools -- liquidity fees and redemption gates -- to address runs.... The final rules provide a two-year transition period to enable both funds and investors time to fully adjust their systems, operations and investing practices."
(U.S. Securities and Exchange Commission [SEC])
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[Guidance Overview]
SEC Adopts Amendments to Money Market Fund Rules
"[T]he SEC voted 3-2 (with Commissioners Kara Stein and Michael Piwowar dissenting) to adopt amendments to SEC rules that significantly affect the structure and operations of money market funds and are designed to lessen money market funds' susceptibility to heavy redemptions, improve the ability of money market funds to manage and mitigate potential contagion from high levels of redemptions, and increase for investors the transparency of risks associated with money market funds. At the same time, the SEC sought to preserve the benefits of money market funds."
(Drinker Biddle)
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[Guidance Overview]
SEC Rules Preserve Integrity of Money Funds for Individuals
"Shifting to a floating net asset value (NAV), as the rule requires for institutional funds, will likely change the way institutional investors use money market funds. However, the compliance date for the floating NAV and fees and gates is two years after the date of publication of the release in the Federal Register, giving investors in those funds time to adapt to the new regime."
(Vanguard)
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[Guidance Overview]
QLACs Offer New Retirement Planning Options, Advisors Must Do Their Due Diligence
"[P]art of the suitability obligation of an advisor to a retail client would be comparing the cost of a deeply deferred annuity to a traditional fixed annuity or alternative investments used under RMD rules. One observer estimated the return of premium benefit would add 5 to 10 percent to the QLAC premium.... Investment fiduciaries also should carefully consider whether it is preferable to purchase a QLAC through an eligible defined contribution plan or IRA, if both options are available. A spokeswoman for the Pension Rights Center ... stated that IRA mortality tables are gender-neutral, which would treat women unfairly since they generally live longer than men."
(fi360)
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[Guidance Overview]
IRS Provides Guidance on Expanded In-Plan Roth Rollover Feature (PDF)
"A primary concern for plan sponsors should be any source/fund limits imposed by the plan's recordkeeping system. Since rollovers of non-distributable amount require the preservation of protected benefits and payment restrictions, all contribution sources available for these rollovers will have to be duplicated, at a minimum. To track the five-year recapture period, it may be necessary to create new sources annually.... Plan sponsors should also consider how a proliferation of source/fund combinations could complicate reporting on participant statements."
(Prudential)
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Senate Committee Advances ERISA Amendments Impacting PBGC
"[T]he bill would make technical amendments to Subsection (e) of Section 4062 of ERISA by inserting language to further define what constitutes a 'substantial cessation of operations.' The bill would also clarify when ... the [PBGC] should step in to assist stressed pension funds. Committee members say the steps are necessary to prevent unnecessary intervention by the PBGC while also ensuring protections for participants will be available when they're truly needed."
(PLANSPONSOR)
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New Actuarial Mortality Tables May Be 'Nail in the Coffin' for DB Plans
"The measured value of liabilities for most defined benefit plans will increase between 3% and 8% with the adoption of new mortality tables ... For women ages 25 to 85, the liability increase ranges from 5.5% to 10.5%. For males in that age group, the increase ranges from 2.5% to 17.4%."
(Pensions & Investments)
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Actuaries Raise Questions About Proposed RP-2014 Mortality Tables
"The new tables significantly increase life expectancy assumptions and, if adopted by regulators and DB plan actuaries, will significantly increase DB plan liability valuations for purposes of disclosure, funding and de-risking.... [T]he Society of Actuaries is advocating the use of mortality tables that recognize significantly increased life expectancy. The Academy of Actuaries is raising questions about that and, by implication, questioning whether the proposed tables might not overstate life expectancy."
(October Three Consulting)
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Three Things to Check on a Beneficiary Form -- Besides the Beneficiaries
"[1] Does the beneficiary form work on a per stripes or per capita basis? ... [2] Are there any restrictions on whom you can name as a beneficiary? ... Some beneficiary forms ... may not allow a trust to be named as a beneficiary. Others may limit the number of primary or contingent beneficiaries you can name.... [3] Does the beneficiary form allow the stretch? ... [A] retirement account may require that any beneficiary -- designated or not -- empty an inherited account within 5 years."
(The Slott Report)
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Preparing for -- and Surviving -- a 401(k) Plan Audit (PDF)
35 presentation slides. Topics include: [1] Identify Your Plan Fiduciaries; [2] Fiduciary Standards of Conduct; [3] Establish Internal Controls; [4] Audit Flags: Where do they begin? How do they decide? What catches their attention? [5] Self-Audit: Plan Document Review and Plan Operations Review; [6] IRS Examination Steps; and [7] Being Successful in an Audit.
(Millennium Trust Company)
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Stupid Investment Tricks: Interesting, Risky, or Downright Dumb Retirement Plan Investments (PDF)
"Most retirement plans today follow a rational investment process and keep it simple ... But for every rule, there is an exception, and what follows is a sampling of the exceptions -- interesting, risky, or downright stupid investments that illustrate useful lessons in retirement plans.... Morals of these stories for plan sponsors: [1] Stick to a 'safe' profile.... [2] If you offer a self-directed brokerage option, do it the smart way.... [3] Before investing in anything that sounds cool instead of boring, get expert advice."
(Pete Swisher, in Journal of Pension Benefits)
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Supreme Court Shuts Down 'Moensch'-Kin Land -- Whither Employer Stock Drop Litigation?
"With thinly veiled, almost Kingsfield-like, sarcasm, Justice Breyer tossed the 'Moensch Presumption' into the dustbin of judicial history based on a review of the text of ERISA as it has existed since enactment in 1974. Unanimously telling the lower courts that followed Moensch that they had been improvidently granting motions to dismiss for up to 20 years, while they marched up a yellow brick road to 'presumptive prudence,' because they didn't read the statute with sufficient care, is about as shrill as the Court gets in admonishing them about mushy thinking." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)]
(ERISA Fiduciary Administrators LLC)
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Living on a Prayer? Recent Challenges to the Church Plan Exemption from ERISA Coverage (PDF)
"Within the last year, at least five lawsuits have been filed challenging the application of the exemption to pension plans sponsored by nonprofit hospital systems affiliated with the Roman Catholic Church. This article addresses the issues raised by those five lawsuits, recent decisions in those cases, and the potential impact of these lawsuits on the controversial church plan exemption."
(Alston & Bird, LLP via Benefits Law Journal)
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CalPERS Pulls Back from Hedge Funds
"Public pensions from California to Ohio are backing away from hedge funds because of concerns about high fees and lackluster returns. Those having second thoughts include officials at the largest public pension fund in the U.S., [CalPERS]. Its hedge-fund investment is expected to drop this year by 40%, to $3 billion, amid a review of that part of the portfolio[.]"
(The Wall Street Journal; subscription may be required)
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The 3-2 Verdict: SEC Approves Money Market Fund Reform
"In a 3-2 vote [on July 23, the SEC] passed a rule that will force institutional prime money market funds to move from a stable $1 per share net asset value (NAV) to a floating NAV. Additionally, the new rule also allows fund boards to impose two safeguards to stave off runs: liquidity fees of up to 2 percent on redemptions, and temporary suspensions of redemptions, or 'gates.' ... The new rules do not apply to retail and government funds, as they have shown to be less susceptible to redemption runs during times of stress than their prime counterparts."
(Association for Financial Professionals [AFP])
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Benefits in General; Executive Compensation
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Employee Benefits: Yesterday, Today and Tomorrow
"This Issue Brief summarizes the presentations and discussions at EBRI's 73rd policy forum held in Washington, DC, on Dec. 12, 2013.... [T]he symposium offered expert perspectives on not only the workplace and work force of the past, but the challenges of today's multi-generational workplace, and the difficulties and opportunities that lie ahead. Following a review of the benefits landscape by EBRI's research team, panels discussed: [1] 1978 to 2013: The Changing Role of Employers in Employee Benefits; [2] Employee Benefits from 2013 to 2048: The Road to Tomorrow; [3] 2013 to 2048: Work Force Trends and Preferences, Today and Tomorrow."
(Employee Benefit Research Institute [EBRI])
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Fifth Circuit Holds Deferred Comp Plan Was Governed by ERISA
"The court explained that the [plan] was not a 'bonus program' but rather was a self-described 'deferred compensation plan,' and, thus, the DOL regulation was inapplicable. The court did not address the undisputed fact that the [plan] was the exclusive vehicle through which RBC paid financial advisors annual performance bonuses.... [This] decision has important implications for employers -- particularly in the financial services industry -- that use deferred compensation arrangements with an understanding that the particular arrangement does not constitute an ERISA-governed pension plan. The decision also indicates that the DOL's 'bonus program' regulation does not apply to plans that provide bonuses alongside other forms of deferred compensation." [Tolbert v. RBC Capital Markets Corporation, No. 13-20213 (5th Cir. July 14, 2014)]
(Morgan Lewis)
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Press Releases
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