[Guidance Overview]
Well, They've Done It: The IRS Jettisons the Favorable Determination Letter Program (PDF)
"[If] the IRS's stringent approach to plan documentation on audit remains while the availability of the FDL program disappears, the potential for disqualification increases exponentially.... Interested persons should make their views known to the IRS through written comments on or before October 1, 2015. All sponsors of individually designed plans should discuss with their legal counsel whether the plan may be converted to a preapproved plan on or before January 1, 2017.... Practitioners who favor their own individually designed plans may decide to choose between using an available preapproved document that represents the 'lesser of evils' or preparing and filing their own document for preapproval to preserve their favorite special provisions for their clients."
(Ferenczy Benefits Law Center LLP)
|
[Guidance Overview]
IRS Determination Letter Program for Qualified Retirement Plans to Be Significantly Curtailed
"Auditors, and investment managers and others who rely on a qualified plan's tax-qualified status, typically require representations from management that plans are 'in compliance,' in addition to requiring a copy of a favorable [determination letter (DL)]. Once such a DL is no longer available as to the current version of a plan, the plan sponsor may seek other ways of obtaining comfort that the form of its plan complies with the Code, such as requesting an opinion of counsel. In the mergers-and-acquisitions contest, sellers may need to use even greater caution in determining what representations and warranties they could make regarding the tax-qualified status of an individually-designed retirement plan. Similarly, purchasers may need to engage in greater due diligence as to the seller's qualified plans."
(McGuireWoods LLP)
|
[Guidance Overview]
IRS Eliminates 5-Year Determination Letter Remedial Amendment Cycles for Individually Designed Plans
"Sponsors will need to: [1] keep their eyes on future remedial amendment period guidance; [2] be diligent in properly amending their plans in a timely manner, both for required amendments and discretionary amendments, to preserve the tax-qualified status of their plans; and [3] take into account the IRS's stated intent to extend the remedial amendment period for individually designed plans to a date no earlier than December 31, 2017 and completely (and timely) review their documents for compliance to make sure plan amendments are adopted prior to the end of the period."
(Findley Davies)
|
[Guidance Overview]
IRS Bans Lump Sums to Already-Retired Pension Participants
"While the general thrust of the change in policy is clear, the Notice is relatively brief and leaves several questions un-answered. May lump sums be offered to retirees under age 70-1/2 (the 401(a)(9) 'required beginning date)? It looks like the answer to this question will be 'no.' May lump sums be offered to retirees in connection with a plan termination? It looks like the answer to this question will be 'yes.' But we will have to wait for the actual proposal of a regulation (at least) before we get definitive answers to these questions."
(October Three Consulting)
|
Text of Second Circuit Opinion: Cash Balance Plan Definition of 'Normal Retirement Age' at Five Years of Service Violates ERISA (PDF)
47 pages. "[T]he Plan defines 'normal retirement age' as '[t]he earlier of the date a Participant attains age 65 or completes five 'Years of Service' at PwC.... The repetition of the phrase, 'normal retirement age,' in Section 3(24)(A) [of ERISA] is no mere tautology. Rather, it suggests that 'the time' that a plan establishes as its normal retirement age must have some reasonable relationship to the age at which participants would normally retire.... If any age will do, why can't PwC set 35 as its normal retirement age? Or 25? Or 12? Setting a normal retirement age at any of these calendar ages is no more consistent with the statute than defining normal retirement age as five years of service. PwC cannot reasonably expect its employees to retire at 35 any more than the National Basketball Association can reasonably expect its players to retire at 65." [Laurent v.
PricewaterhouseCoopers LLP, No. 14-1179 (2d Cir. July 23, 2015)]
(U.S. Court of Appeals for the Second Circuit)
|
Lifetime Income Disclosure Bill Introduced in Senate
"The bill would require that a DC plan administrator provide participants, in at least 'one pension benefit statement during any one 12-month period,' a description of the 'lifetime income stream equivalent' of the participants' 'total accrued benefits.' 'Lifetime income stream equivalent' is defined as 'the amount of monthly payments the participant ... would receive if the total accrued benefits of such participant ... were used to provide (i) a qualified joint and survivor annuity and (ii) a single life annuity.' "
(October Three Consulting)
|
Workers Rely on 401(k) Providers for Retirement Advice
"Across all ages, ... 29% of retirement plan participants cited their plan provider as their primary retirement advice source.... 17% of the respondents indicate relying on no source for advice at all.... Among participants under 30, just 9% rely on a financial advisor and 6% rely on a financial planner. In contrast, 20% of the over-70 crowd relies on an advisor and 19% rely on a planner.... The study also finds that there is some dissatisfaction among plan participants and their providers -- especially among those on the cusp of retirement, in the 50-to-59 age range."
(ThinkAdvisor)
|
What's the Right Savings Rate? (PDF)
"There is no single number that can guarantee retirement adequacy... The volatility of health care expenses is a primary driver of retirement adequacy heartburn.... Low- to moderate-income participants face an uphill battle in saving for retirement.... Both the match rate and the default contribution rate send a signal to participants about how much to save, and have a material impact on participant behaviors. The match can be structured to encourage participants to save more, but without impacting the company's bottom line."
(Russell Investments)
|
Impact of the Multiemployer Pension Reform Act: 2015 Survey Results
"Six months after the passing of the Multiemployer Pension Reform Act of 2014 (MPRA), an International Foundation of Employee Benefit Plans survey finds multiemployer plans are closely monitoring and discussing the law, but few are taking any drastic measures." [Page includes infographic and 20-page report of survey results.]
(International Foundation of Employee Benefit Plans [IFEBP])
|
|
|
Public Pension Cuts Tangled in Patchwork of Legal Rulings
"For decades, public pensions have been portrayed as guaranteed by state laws and constitutions, but lately, that certainty has been turned on its head. As states and cities have taken steps to rein in the cost of their pension plans, they have unleashed a tide of worker litigation, with vexing and sometimes contradictory results."
(The New York Times; subscription may be required)
|
Statement by Sen. Orrin Hatch at Finance Hearing Considering PBGC Director Nomination
"[T]his is a sobering moment for the pension system. And beyond the hardship some retirees inevitably will experience, it highlights both the challenge of delivering on the promise of lifetime retirement income and the stakes for retirees if the system fails. So, Mr. Reeder, if confirmed, you will have your work cut out for you."
(Committee on Finance, U.S. Senate)
|
[Opinion]
SPARK Institute Comment Letter to DOL on Fiduciary Proposal (PDF)
"The Proposal would make it difficult for service providers to: [1] provide meaningful assistance for small businesses, [2] provide general investment guidance to individuals, and [3] provide rollover and distribution information and guidance to individuals. The Proposal would force service providers to scale back on several very important and meaningful parts of investment education that have positively engaged retirement savers. [Finally, the] Proposal affects, but does not seem to take into account, service providers' standard industry practices and does not fully reflect how the market operates."
(The SPARK Institute)
|
|
Benefits in General; Executive Compensation
|
[Guidance Overview]
SEC Proposes Rules for Compensation Clawback Policies
"The proposed rules are a good opportunity to think about whether existing policies sync with the proposed rules on the following key terms: Are the correct 'executive officers' included under the policy? Is 'incentive-based compensation' properly understood under the policy? What types of, and how much, incentive-based compensation must be clawed back? Are there any exceptions? What types of clawback terms should be included in employment agreements?"
(Porter Wright Morris & Arthur LLP)
|
Potential Erosion of the Distinction Between Benefits Denials and Breach of Fiduciary Duty Under ERISA in the Tenth Circuit
"The Tenth Circuit has historically disallowed a participant's or beneficiary's claim for breach of fiduciary duty pursuant to Section 502(a)(3) when ERISA provides for another adequate remedy, such as recovery of improperly denied benefits pursuant to Section 502(a)(1)(B).... In [one recent case], however, the district court allowed a plan participant to amend his complaint to include a breach of fiduciary duty based on the claim fiduciary's alleged failure to consider an expert report that was submitted just one day before its final decision denying benefits was issued ... the claim fiduciary argued it was futile given that the breach of fiduciary duty claim was based on a wrongful denial of benefits, and therefore subject to dismissal. The district court allowed the amendment, reasoning that the breach of fiduciary duty cause of action could be asserted as an alternative claim for
relief." [Faltermeier v. Aetna Life Ins. Co., No. 15-CV-2255-JAR-TJJ (D. Kan. May 28, 2015)]
(Wilson Elser)
|
Tips to Reduce Adverse Effects of DOL's New Independent Contractor Status
"Check your ERISA plan language to ensure a misclassification issue does not result in the application of benefits if the worker is later determined to be an employee.... Excluding 'independent contractors' in the plan means the misclassified employee is now subject to benefits."
(Holland & Knight)
|
Employee Benefits in the United States, March 2015 (PDF)
"Retirement benefits were available to 66 percent of private industry workers in the United States in March 2015 ... Employer-provided retirement benefits were available to 31 per cent of private industry workers in the lowest wage category (the 10th percentile). By contrast 88 percent of workers in the highest wage category (the 90th percentile) had access to retirement benefits.... The share of premiums workers were required to pay for their medical coverage varied by bargaining status. Private industry nonunion workers were responsible for 23 percent of the total single coverage medical premium, whereas the share of premiums for union workers was 13 percent."
(U.S. Bureau of Labor Statistics [BLS])
|
[Opinion]
Can We Stop Pretending That the Trustees Reports Are Good News?
"[W]hile it is true that the Retirement benefits portion of OASDI (the OAS part) took in more revenue than it paid in benefits last year and has a 'trust fund' of $2.7 trillion, that fund will be exhausted in 2035... [O]ver 75 years, the unfunded obligations for OASDI are $10.7 trillion.... This does not even count the rapidly growing Medicare program ... More can be done to reform many parts of the program while keeping benefits for those who truly need them, from the application process to benefit determination[.]"
(National Center for Policy Analysis [NCPA])
|
|
Press Releases
|
|
|
|
|
|
|
|
|
|
|
