Will the Fiduciary Rule Have Its Day in Court?
" 'I think there will be litigation,' said Fred Reish, a partner at Drinker Biddle & Reath ... adding that the obvious challenge is whether DOL followed the proper procedures in promulgating its rule.... A second possibility would challenge the DOL's authority to change arbitration rules.... The DOL rule would ban class-action waivers of participation in arbitration agreements. Industry opponents say the DOL lacks the authority to enforce this aspect."
(InsuranceNewsNet.com)
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Six Questions to Ask at Your Next Investment Committee Meeting
"[1] Do we really need to have all these funds on the menu? ... [2] Are there less expensive share classes available for the funds on our investment menu? ... [3] How much are our participants paying for this plan? ... [4] What services are we buying with those fees? ... [5] Do we all need to be on this committee? ... [6] Who's taking notes?"
(American Society of Pension Professionals & Actuaries [ASPPA])
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Why Johnny Cannot Retire (PDF)
"The deeper questions seek the reasons employers are terminating and freezing defined benefit pension plans despite the fact they are easily the least-cost means to fund retirement income for each dollar of benefits delivered. Following are some explanations: Other compensation costs ... Failure to view benefit costs as part of compensation ... Regulatory mishmash ... Artificially low fixed income interest rates ... Unfunded liabilities ... Availability of IRA type programs ... Johnny does not read."
(H.C. Foster & Company)
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Discount Rates Head Higher in 2015
"The approximate 25-basis-point jump in 2015 will provide a tail wind to corporations' defined benefit plans, whose investment returns will be challenged by a flat return environment in 2015. As Boeing noted in its 2014 annual report, a 25-basis-point increase in interest rates would reduce its projected benefit obligation by $2.449 billion, or 3.124%."
(Pensions & Investments)
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New Jersey Workers Without Retirement Plans May Get IRA Option
"The state Senate Budget and Appropriations Committee approved a bill earlier this month that would create an automatic enrollment payroll deduction [IRA].... The proposal would require companies with more than 25 employees to offer a 'Secure Choice' retirement plan if the companies do not already offer them. Employers with fewer than 25 workers have the ability to opt in, as well."
(Press of Atlantic City)
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More Advisers Will Discuss Social Security Strategies with Clients Next Year
"Next year a quarter of financial advisers said they will increase the amount of time they dedicate to discussing Social Security with clients, compared with how much time they spent on the subject this year ... A year ago, only 8% of advisers planned to bump up client time dedicated to Social Security discussions ... About 20% of advisers said next year they will spend more time talking with clients about cash-flow planning and 19% said income-tax planning would become a larger focus of discussions[.]"
(InvestmentNews)
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[Opinion]
Pension Obligations vs. Religious Exemptions: Does This Make Sense?
"Contrary to the [Medina v. Catholic Health Initiatives] court's concern that ERISA fiduciary duties may conflict with church doctrine on issues such as social investing, ERISA's rules are neutral and based solely on the intent that employers be held to their promises by imposing fiduciary obligations comparable to Judeo-Christian religious precepts. Favoring religiously affiliated plans over other nonprofit health-care plans thus raises a legitimate question under the establishment clause even if such plans are found to fit within the statutory 'church plan' definition."
(DeBofsky & Associates, P.C.)
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[Opinion]
The 'Retirement Crisis' That Isn't
"In fact, the historical shift from traditional pensions to 401(k) plans has not reduced retirement saving ... It's true that with 401(k)s, workers themselves bear the risks related to how their retirement funds are invested. But retirement saving is more widespread: More Americans have retirement plans today than did during the 'golden age.' And unlike with traditional pensions, which pay a decent benefit only to long-term employees, members of America's mobile workforce can carry their 401(k) plans with them as they change jobs."
(Andrew G. Biggs in The Washington Post; subscription may be required)
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[Opinion]
Chief Retirement Officer: A Seat at the Table
"The notion that a C-suite executive (or a government equivalent position) should be installed to oversee all things related to benefit plans merits consideration, especially if a plan's fiduciaries are short on time and/or expertise or have a conflict of interest.... The challenge ... is to find someone who possesses knowledge and experience in a variety of areas such as law, Human Resource strategy, investment management and governance.... Should a CRO properly report to the Board of Directors (or in the case of a government fund, report to the Mayor or Governor)?"
(Pension Risk Matters)
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[Opinion]
Are State-Run Retirement Plans a Good Deal for Private Sector Workers?
"The DOL's new rule is designed to clear a path for state-run retirement plans by exempting them from many ERISA requirements, provided the plans incorporate specific features.... Why should American workers be concerned about this approach? [1] Safe harbor or mirage? ... [2] For employers: all cost, little benefit.... [3] Low cost option or money pit? ... [4] Unanswered questions, real concerns."
(InvestmentNews)
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Benefits in General; Executive Compensation
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[Official Guidance]
Text of IRS Announcement 2016-02: Federal Tax Treatment of Identity Protection Services (PDF)
"The Treasury Department and the IRS have determined that Announcement 2015-22 should be extended to include identity protection services provided to employees or other individuals before a data breach occurs. Accordingly, the IRS will not assert that an individual must include in gross income the value of identity protection services provided by the individual's employer or by another organization to which the individual provided personal information ... Additionally, the IRS will not assert that an employer providing identity protection services to its employees must include the value of the identity protection services in the employees' gross income and wages. The IRS also will not assert that these amounts must be reported on
an information return (such as Form W-2 or Form 1099-MISC) filed with respect to such individuals. Any further guidance on the taxability of these benefits will be applied prospectively. This announcement does not apply to cash received in lieu of identity protection services."
(Internal Revenue Service [IRS])
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Court Rejects Argument That Participant 'Bargaining Power' Is Required for 'Top Hat' Status
"A former employee of a Pennsylvania non-profit cannot rely on [ERISA] for benefit protections as the plan in which he participated is a 'top hat' plan ... [The opinion] said even if the court were to accept that the [1990 DOL] letter adds bargaining power to the list of elements in determining top hat plan status, the letter itself ... [indicates] the DOL recognized that top hat plan participants have other means besides direct negotiation to affect or influence the plan design." [Sikora v. UPMC, No. 12-1860 (W.D. Penn. Dec. 22, 2015)]
(PLANSPONSOR)
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