Retirement Plans Newsletter

January 9, 2015

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Employee Benefits Jobs

Retirement Plan Analyst
Trinity Pension Group, LLC
in NC

Actuarial Analyst
USI Consulting Group
in CT

Regional Vice President, Sales
Transamerica Retirement Solutions
in FL, GA

Actuarial Services Consultant
CBIZ Insurance Services, Inc.
in MD, PA

Senior Retirement Plan Analyst
Trinity Pension Group, LLC
in NC

Employee Benefits Attorney
Wiggin and Dana LLP
in CT, NY

Part-time Retirement Planning Consultant
Transamerica Retirement Solutions
in FL

Retirement Planning Consultant
Transamerica Retirement Solutions
in VA

Actuarial Analyst
The Benefit Practice
in CT, FL

Defined Benefit Plan Consultant
The Pension Studio
in ANY STATE, FL

Retirement Plan Services Administrator
Dixon Hughes Goodman, LLP
in VA

Technical Director
Employee Benefit Resources, Inc.
in ANY STATE, MT

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Webcasts and Conferences

Avoiding Common Pitfalls in the Plan Restatement Process
January 20, 2015 in CA
(Western Pension & Benefits Council - Orange County Chapter)

Multiemployer Pension Reform Act of 2014
January 20, 2015 WEBCAST
(International Foundation of Employee Benefit Plans [IFEBP])

Practicing Before the IRS – Circular 230 A to Z
January 24, 2015 WEBCAST
(IRS [Internal Revenue Service])

Health Benefits Laws Compliance Assistance Seminar
February 10, 2015 in TX
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

Extreme Cross-Testing of Defined Contribution Plans
February 12, 2015 WEBCAST
(ASPPA [American Society of Pension Professionals & Actuaries])

View All Webcasts and Conferences



[Official Guidance]

Text of PBGC Submission of Information Collection for OMB Review and Comment Request: Payment of Premiums
"PBGC is revising the 2015 filing procedures and instructions to require after-the-fact reporting of certain risk transfers through lump sum windows and annuity purchases... PBGC is also changing certain premium declaration certification procedures, offering the option for a plan to provide a telephone number specifically for inclusion in PBGC's Search Plan List on PBGC's web site, updating the premium rates (including to reflect the Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. 113-235), and making conforming, clarifying, and editorial changes.... PBGC intends to request that OMB approve the revised collection of information for three years." (Pension Benefit Guaranty Corporation [PBGC])  


[Advert.]

Attend, Learn, & Enjoy the Sun this January -- LA Advanced Pension

Sponsored by ASPPA

This must-attend event combines the best of ACOPA's Advanced Actuarial Conference and the LA Regional Conference, and will include hands-on learning about current regulatory, legislative, actuarial, and consulting topics from session leaders. CE's available.



[Official Guidance]

Text of Instructions for 2014 IRS Form 8606 (PDF)
"Use Form 8606 to report: Nondeductible contributions you made to traditional IRAs; Distributions from traditional, SEP, or SIMPLE IRAs, if you have ever made nondeductible contributions to traditional IRAs; Conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs; and Distributions from Roth IRAs." (Internal Revenue Service [IRS])  

[Guidance Overview]

IRS to Issue New Rules for Determining Status of Governmental Entities and Benefit Plans (PDF)
"[T]he IRS has put a high priority on moving this issue forward -- and we likely can expect something soon.... There are two basic issues that are involved in determining if a plan is a governmental plan that the IRS attempted to confront in the [2011 advance notice of proposed rulemaking (ANPR)]: (i) what is a governmental agency, and (ii) what is a governmental retirement plan.... Whether a particular entity is an agency or instrumentality of a state or political subdivision is determined by the facts and circumstances. The ANPR lists both 'main factors' and 'other factors' to consider.... It is clear from the ANPR that an entity need not meet every one of the factors to be a governmental entity. The ANPR is remarkably silent on how to work with them, however." (Hanson Bridgett LLP)  

[Guidance Overview]

Are You Selling or Downsizing a U.S. Business? Congress Reins in the PBGC
"Due to differences in the way liability was calculated, plans that were well or even fully-funded on an ongoing basis could have unfunded termination liability and 4062(e) liability under the PBGC's rules. Now plan underfunding will be measured under the ongoing rules used to determine whether variable rate premiums are due, and plans that are at least 90% funded under those rules are exempt. Instead of disproportionate funding of termination liability, a plan sponsor that has a Section 4062(e) event may elect to make additional contributions over those required by the minimum funding rules to fund unfunded vested benefits over seven years." (Osler, Hoskin & Harcourt LLP)  

[Guidance Overview]

Recent Pension Law Changes and PBGC Enforcement Decisions Impact Certain Corporate Transactions
"For transactions that involved a reduction in the number of participants in retirement plans that closed on or after December 16, 2014, employers should carefully review whether there is a reporting obligation and when each type of report is or may be due for the transaction since the new reporting requirement is not limited to reductions in DB Plan participants, but now includes reduction in all retirement plan participants.... Employers contracting with multiemployer plans now also have expanded access to the multiemployer plan documents, rehabilitation plans, funding improvement plans and funding notices ... effective for plan years beginning after December 31, 2014.... Only one copy is required to be provided in any 12 month period, so employers may want to carefully consider the timing of their request to obtain the most recent data available." (Winstead PC)  

[Guidance Overview]

Illinois Employers Must Soon Offer Retirement Savings Program
"[The Illinois Secure Choice Savings Program] is not up and running at this time. It is slated to become operative within two years. First, seven members must be appointed to the Illinois Secure Choice Savings Board (Board) which will administer the program. None of the program's requirements will take effect until after the Board opens the program for enrollment. Once the program becomes operative, any employer that fails, without reasonable cause, to enroll an employee in the program shall be subject to potential monetary penalties." (Fisher & Phillips LLP)  

What Does Spano v. Boeing Foretell About the Future of Excessive Fee Litigation -- and the Future Ruling in Tibble?
"[In] Spano, you see a much more focused theory, which is not based simply on the premise that the fiduciaries had broadly erred by retaining and never dispensing with high cost funds, and did not essentially allege simply that certain types of investment or operational decisions are essentially wrong per se. Instead, what you see is a narrow focus on specific decisions and activities by which the fiduciary duty was breached, forcing the defendants -- and in turn the Court -- to address not whether the type of conduct in general violates fiduciary norms, but instead whether the particular fiduciaries acted imprudently under the specific circumstances that confronted them; that is a much harder claim to get tossed out by means of motion practice, and the Spano decision reflects that." [Spano v. Boeing, No. 3:06-CV-743-NJR-DGW (S.D. Ill. Dec. 30, 2014)] (Stephen Rosenberg of The Wagner Law Group)  

Seventh Circuit Again Considers Partial Terminations of Retirement Plans
"[T]he Seventh Circuit [recently] revisited the topic of partial termination in a class action that had been litigated for almost 19 years and involved five appeals.... [T]he court reaffirmed its prior holding in a 2000 Matz decision that a significant corporate event need not occur solely within a single plan year, and that corporate events that occur over a multi-year period can be combined for purposes of measuring the percentage by which plan participation was reduced, if those events are related.... As guidance as to partial terminations is limited, the employer should take Matz into account in making this determination even when the situs of the plan is outside the Seventh Circuit." [Matz v. Household Int'l Tax Reduction Investment Plan, Nos. 14-1683 and 14-2507 (7th Cir. Dec. 24, 2014)] (McGuireWoods LLP)  

Fiduciary Requirements for Selecting a Lifetime Income Provider (PDF)
"[A] plan's fiduciaries must engage in a 'prudent process' to select the [guaranteed withdrawal benefit] and to choose the insurance company provider. While a plan's decision-makers (the fiduciaries, perhaps a plan committee) may not be familiar with evaluating insurance companies, they can take comfort in knowing that the fiduciary responsibility is not to select the 'best' insurance company, but instead is to engage in a prudent process ... and that the steps in that process are defined: [1] Determine and gather the information that is relevant to making an informed decision. [2] Evaluate that relevant information. [3] Make a reasoned decision based on that information." (Drinker Biddle)  

In-Plan Roth Rollovers and After-Tax Contributions: Maximizing Deferrals with Limited Future Tax Liability
"Plan sponsors seeking to provide employees with the ability to make after-tax contributions to a 401(k) plan may be interested in adding, along with the common Roth contribution feature, non-Roth after-tax contribution and 'in-plan Roth rollover' features to their 401(k) plans. These additional features would allow plan participants to save up to $53,000 (for 2015 and as reduced by matching and other employer contributions) annually with limited future tax liability." (Proskauer's ERISA Practice Center)  

As ERISA Turns 40, Clouds on the Horizon (PDF)
"This article reviews proposals that [1] focus on deficit reduction and tax reform, or [2] make larger systemic changes that will change the role of tax-advantaged retirement plans.... [including:] [1] I.R.C. contribution limit ... [2] Administration proposal to limit the value of tax deductions ... [3] Tax reform proposals ... [4] Consequences of cutting tax incentives ... [5] myRA initiative ... [6] Pension system reform at the federal level ... [7] Proposed expansion of Federal Thrift Savings Plan ... [8] State-sponsored system reform ... [9] Proposals from academia ... [10] SPARK Institute's USERP proposal ... [11] SAFE Retirement Act ... [12] Proposed systemic changes." (The Wagner Law Group, via Bloomberg BNA Tax Management Compensation Planning Journal)  

S&P 1500 Pension Funded Status Declines 9% in 2014
"Deficits revert to year-end 2012 levels, wiping out 2013 gains. New mortality tables are projected to increase liabilities by at least 4% for end-of-year accounting disclosures. Deficits more than doubled from $237 billion at 2013 year-end to $504 billion at 2014 year end, which will drive significant adjustments to balance sheets and 2015 P&L expense. Interest rates decreased by 88 basis points from 2013 year-end, reaching lowest levels in 2014, offsetting the positive impact of the 11.4% gain in the S&P 500 index in 2014." (Mercer)  

Benefits in General; Executive Compensation

EBSA 2014 Report May Indicate Investigators Are Looking at Different Types of Plans and Finding Different Types of Violations
" 'I still talk to DOL investigators on a pretty regular basis, and they tell me they're really focused on health and welfare plans right now -- I don't think there's any doubt that is what's behind the drop for 2014 collections,' [said David Donaldson, a former senior investigator with the EBSA (2009 to 2011)]. 'During my last quarterly training session while I was still an investigator for the DOL, they were already instructing that for every 401(k) or retirement plan we had in our case file, we were to go ahead and open up a case for the health and welfare plan if one happened to exist. We can see now that the focus on health and welfare is intensifying.' " (planadviser)  

Ninth Circuit Lowers the Bar for Plaintiffs Seeking ERISA Plan Benefits in Court (PDF)
"Of particular interest are the Ninth Circuit's holdings that: [1] A contractual statute of limitations must be specifically stated in a particular location within the plan's summary plan description in order to be enforced; [2] A plan document must affirmatively and unambiguously state that a participant has to exhaust administrative remedies before filing a lawsuit in order for that requirement to be enforced; and [3] Claims administrators (and, potentially, other plan fiduciaries) may be proper defendants in claims for benefits brought under ERISA Section 502(a)(1)(B)." [Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc., No. 12-17604 (9th Cir. Nov. 5, 2014)] (Trucker Huss)  

ISS Releases FAQs on New Equity Plan Scorecard for 2015 (Part 2)
"The following egregious features will result in an 'against' recommendation from ISS, regardless of other [Equity Plan Scorecard] factors: [1] A change in control definition that could result in vesting of awards by any trigger other than a full double trigger; [2] If the plan would permit repricing or cash buyout of underwater options or SARs without shareholder approval ... [3] If the plan is a vehicle for problematic pay practices or a pay-for-performance disconnect; or [4] If any other plan features or company practices are deemed detrimental to shareholder interests. Such features may include, on a case-by-case basis, tax gross-ups related to plan awards or provisions for reload options." (Winston & Strawn LLP)  

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