Retirement Plans Newsletter

December 14, 2015

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Georgia Municipal Association
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Webcasts and Conferences

HIPAA Compliance Audits: New Protocols and Requirements
December 15, 2015 WEBCAST
(MentorHealth)

Implications of Longevity Risk
February 3, 2016 WEBCAST
(Society of Actuaries)

Form 5500 Reporting Update
February 24, 2016 WEBCAST
(Lorman Education Services)

2016 Mid-Sized Retirement & Healthcare Plan Management Conference: Lifting the Fog: Clarity for Your Employee Benefit Plans
March 20, 2016 in CA
(University Conference Services)

HIPAA Compliance Program BootCamp
April 21, 2016 in FL
(Clearwater Compliance)

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[Official Guidance]

Text of PBGC Interest Rate Update for January 2016
"PBGC normally updates the assumptions under the benefit payments regulation for January at the same time as PBGC updates assumptions for the first quarter of the year ... in a single rulemaking document. Because of delays in obtaining data used in setting assumptions ... for the first quarter of 2016, PBGC is publishing two separate rulemaking documents to update the benefit payments regulation for January 2016 and the allocation regulation for the first quarter of 2016.... The January 2016 interest assumptions under the benefit payments regulation will be 1.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for December 2015, these interest assumptions are unchanged." (Pension Benefit Guaranty Corporation [PBGC])  


[Advert.]

Advisors: Attend NAPA's 2016 401(k) Summit, April 17-19 in Nashville

Sponsored by NAPA

Register for NAPA's 2016 401(k) Summit – the event Plan Advisors won't want to miss! Enjoy networking with other financial advisors and TPAs while earning up to 14 hours of NAPA/ASPPA CE credits from innovative sessions on the topics that matter most to YOU.



[Official Guidance]

Text of GASB Statement No. 78: Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans (PDF)
30 pages. "This Statement amends the scope and applicability of Statement 68 to exclude pensions provided to employees of state or local governmental employers through a cost-sharing multiple-employer defined benefit pension plan that [1] is not a state or local governmental pension plan, [2] is used to provide defined benefit pensions both to employees of state or local governmental employers and to employees of employers that are not state or local governmental employers, and [3] has no predominant state or local governmental employer (either individually or collectively with other state or local governmental employers that provide pensions through the pension plan)." (Governmental Accounting Standards Board [GASB])  

[Guidance Overview]

GASB Issues New Pension Guidance Designed to Assist Certain Governments
"In lieu of the existing requirements under Statement 68, the new guidance establishes separate requirements for employers that participate in [certain private or federally sponsored multiple-employer defined benefit pension plans (such as Taft-Hartley plans and plans with similar characteristics)]. Statement 78 establishes the criteria for identifying the applicable pension plans and addresses measurement and recognition of pension liabilities, expense, and expenditures; note disclosures of descriptive information about the plan, benefit terms, and contribution terms; and required supplementary information presenting required contribution amounts for the past 10 fiscal years." (Governmental Accounting Standards Board [GASB])  

SEC Expected to Take Big Step in BP Company Stock Lawsuit
"By year-end, the SEC is expected to file a friend-of-the-court brief in a class-action suit by participants in a 401(k) plan administered by oil giant BP PLC. They allege breach of fiduciary duty in managing the BP Stock Fund option in the plan after BP's stock price fell following the April 2010 explosion of the Deepwater Horizon oil platform in the Gulf of Mexico that killed 11 workers.... ERISA attorneys say the SEC's comments could transcend the facts of this case ... by providing greater detail on how plan fiduciaries can address the use of material non-public information in managing company stock funds without violating securities laws." (Pensions & Investments)  

Sixth Circuit Affirms That Plan Fiduciary Did Not Breach Its Fiduciary Duty in Connection with Employer Stock Fund
"As the dissent points out, much like the discredited presumption of prudence, the court's approach effectively immunizes publicly traded employer stock from imprudence claims absent 'special circumstances.' ... The court also does little to reconcile its conclusion that special circumstances are needed to support a claim of imprudence against an ESOP fiduciary with Dudenhoeffer's clear message that, except for diversification, ESOP fiduciaries are subject to the same fiduciary standard as other fiduciaries." [Pfeil v. State Street Bank and Trust Co., No. 14-1491 (6th Cir. Nov. 10, 2015)] (Thomson Reuters / EBIA)  

More Questions Answered about Benchmarking Fees
"Are you seeing a differentiation between 3(38) services? ... If the plan sponsor is picking up ALL the admin costs, and there is no revenue sharing, and the plan carries only passive investments -- what 408 requirements exist?" (fi360)  

DOL Fiduciary Rule: 'Disruptive But Manageable'
"The mere fact that a day was given over to preparing 155 advisers for the coming fiduciary rule by a prominent financial services company -- rather than rallying against it -- seemed like a sign that the retirement industry has passed the protest stage and entered the realm of acceptance of a rule much fought over since its April 14 announcement." (Institutional Investor)  

What Types of Costs Would a State-Sponsored Retirement Savings Plan Impose on Employers? (PDF)
"This report discusses the costs of [to employers of a state-sponsored retirement savings plan] using Illinois's Secure Choice Savings Program as a case study... Although the program is designed to minimize the expense to employers, it could incur costs in four ways: [1] The initial cost of enrolling employees or having them opt out of the program; [2] The cost of setting up the payroll deduction to collect the employees' contributions; [3] The cost of making the deposit into the IRA; [4] The annual cost of the open-enrollment period for employees." (AARP)  

Making State-Run Retirement Plans Work for Private Employers: Including Lifetime Income Options (PDF)
"[W]hile 401(k) plans are enormously popular, they have not yet been proven successful if we measure success by their ability to provide retirement income that lasts as long as the individual lives. Therefore, designers of state-sponsored retirement savings programs that target the three critical issues of access, adequacy, and lifetime income security should address how their program could ensure that individuals do not outlive their savings. These programs could incorporate lifetime income options into those savings programs." (AARP)  

State-Run Retirement Plan May Have No Firm Guarantee
"A big question faces a new state board, Secure Choice, as it prepares to recommend an 'automatic IRA' to the Legislature for the more than 6 million California private-sector workers not offered a retirement plan on the job. If a worker is automatically enrolled in a new state-run retirement savings plan, and does not opt out, what happens if the plan's investments lose money in one or more years? Last week, the Secure Choice board narrowed its choice to two plans. One is a 'dynamic asset allocation' ... The other plan is a 'variable-rate savings bond' that has a 'soft guarantee' to reduce but not prevent losses." (Calpensions)  

Industry Groups React to DOL Proposal for State-Run Retirement Plans
"Although no comments are posted yet, some industry groups have been weighing in on the proposal in various ways. For example, a leader at the American Retirement Association contends the proposal gives the government-run alternatives an unfair advantage over other programs.... Meanwhile, an American Council of Life Insurers (ACLI) executive has said that 'risks remain if the new guidance on establishing plans encourages more states to go down this path.' ... Other retirement industry interests have issued assessments of the state-run concept in general, both pro and con, but this was before DOL issued its proposal." (InsuranceNewsNet.com)  

Cash Balance Plans Overview
"Advantages of a Cash Balance Plan: Higher Deductions ... Flexibility in design ... Flexibility in contribution ... Investment gains ... Pooled investments ... Reduction in other taxes ... Creditor protection ... Disadvantages of a Cash Balance Plan: Special rules ... Duplications ... PBGC premiums ... Unfunded Liabilities." (Retirement Management Services)  

Financial Woes of Teamsters' Pension Fund Hurt Employers, Too
"The 225,000 people facing possible cuts in their retirement benefits, some of them on the order of 50% or more, are by far the most numerous and visible victims of the Central States Pension Fund troubles. But the fund's deep financial woes also have left hundreds of companies with large potential liabilities essentially because they have survived where others failed. In some cases, a company's rapidly growing obligations to the fund can make that company difficult to sell, and even threaten the firm's underlying assets[.]" (Milwaukee Journal Sentinel)  

Spotlight on Guam's Retirement Program for Public Employees
"Guamanian lawmakers are considering a proposal to move government employees to 'a hybrid plan that guarantees retirees an annuity payment, supplemented by the cash from their retirement investments.' At one time, Guam offered its public employees a defined benefit pension, but it abandoned this system in favor of a defined contribution, 401(k)-style plan in 1995. Guam's public workers do not participate in Social Security and the combination of no Social Security benefits and a 401(k)-style retirement plan has led to most Guamanian public employees only having $40,000 in total savings at retirement." (National Public Pension Coalition)  

Benefits in General; Executive Compensation

[Guidance Overview]

IRS Issues Guidance on Application of Obergefell Decision to Benefit Plans
"The IRS indicates in [Notice 2015-86] that in light of Windsor and the guidance issued thereafter, it does not anticipate any significant impact from Obergefell on the application of federal tax law to employee benefit plans. However, in a series of questions and answers in [this] Notice, the IRS does address certain issues relating to the amendment or administration of plans in response to Obergefell." (McGuireWoods LLP)  

[Guidance Overview]

IRS Notice on Obergefell Includes Permitted Cafeteria Plan Election Change and Guidance on Qualified Retirement Plans
"Notice 2015-86 confirms that Obergefell does not require changes to the terms of qualified retirement plans, and health and welfare plans. However, for calendar-year cafeteria plans that do not allow election changes due to significant improvements in coverage, but now wish to do so by the applicable deadlines, this guidance is arriving fairly late in the year and doesn't allow much time for plan amendments and election changes." (Practical Law Company)  

Press Releases

New Consumer Decision Support Features now Available at HealthCare.gov
Centers for Medicare & Medicaid Services [CMS]

Murphy & Sylvest is Certified for Fiduciary Excellence
Centre for Fiduciary Excellence [CEFEX]

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