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[Official Guidance]
IRS Provides Tax Relief to Mississippi Storm Victims
"[A]ffected taxpayers in Benton, Coahoma, Marshall, Quitman and Tippah counties will receive this and other special tax relief. Other locations in Mississippi and other states may be added in coming days, based on damage assessments by FEMA. The tax relief postpones various tax filing and payment deadlines that occurred starting on Dec. 23, 2015. As a result, affected individuals and businesses will have until May 16, 2016, to file their returns and pay any taxes due."
(Internal Revenue Service [IRS])
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[Guidance Overview]
Late Deposits: A Timely Topic
"DOL deadline for timely deposits ... 7-business day safe harbor for small plans ... 'Earliest Reasonable Date' for segregation ... Correction for delinquent deposits ... Prohibited transaction and excise taxes ... DOL VFCP ... Self-correction ... Preventive measures ... DOL's heightened interest."
(Trucker Huss)
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Deadlines Are Fast Approaching for Cycle E Plans Under the Current Determination Letter Program
"The filing deadline for Cycle E Plans is January 31, 2016.... As announced last year, the 5-year remedial amendment cycle system for individually designed plans is set to be eliminated effective January 1, 2017. If you sponsor a Cycle E Plan, don't miss what may be your last opportunity to obtain a favorable determination letter under the current program."
(Graydon Head & Ritchey LLP)
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Target Date Income Funds: A Viable Alternative to Annuities in Retirement Plans
"[M]any annuities have the risk profile of a single stock.... In addition to the (hidden) costs and risks of many annuities, some investors have shied away from them due to their complexities ... It seems to be psychologically difficult, when push comes to shove, for investors to part with some (or all) of their money and hand it over to another party -- in this case, an insurance company.... A viable alternative to annuities to help plan participants generate sufficient inflation-protected income are target date retirement income funds (TDiF).... [A] TDiF's goal is to generate inflation-protected retirement income. In contrast, the goal of a traditional target-date fund remains focused on the right asset allocation in order to generate wealth[.]"
(W. Scott Simon, in Morningstar Advisor)
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Religious Hospital Ineligible for Church Plan Exemption, Third Circuit Rules
"Only a church -- and not a religious hospital -- can establish a church plan that is exempt from the notice and funding requirements of [ERISA], the U.S. Court of Appeals for the Third Circuit has ruled. The Dec. 29 ruling is the first by a federal appeals court to consider the scope of ERISA's church plan exemption ... Affirming the lower court ruling, the Third Circuit rejected virtually every argument presented by Saint Peter's that the plan was a church plan." [Kaplan v. St. Peter's Healthcare System, No. 15-1172 (3d Cir. Dec. 29, 2015)]
(Bloomberg BNA)
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Will More Corporations Need to File PBGC Form 4010 for Their DB Plans in 2016?
"[T]he PBGC proposes, beginning with 2016 fiscal year, eliminating the underfunding exemption if the combined pension plan participant count is 500 or more. For example, a plan with 500 or more participants that is less than 80% funded would now need to submit a 4010 filing under the proposed rules even if the amount of underfunding is $15 million or less."
(Milliman Retirement Town Hall)
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Optimal Pension Funding Strategy and Pension Insurance Reform
"The model calculates optimal pension funding decisions and compares them to the actual decisions companies make.... [T]he ability to save money in a tax sheltered account motivates companies to make higher than required contributions, [and] the limits on deductible contributions discourage contributions above the maximum. [The author] finds limited evidence suggesting that companies are deterred from making additional contributions because it would reduce the value of their PBGC insurance.... [He] finds no evidence that companies contribute additional money to reduce their variable rate premium."
(The Brookings Institution)
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J.P. Morgan Pays $4 Million to Settle SEC Charges That It Misled Clients About Advisor Compensation
"The [SEC] announced that J.P. Morgan's brokerage business [JPMS] agreed to pay $4 million to settle charges that it falsely stated on its private banking website and in marketing materials that advisors are compensated 'based on our clients' performance; no one is paid on commission.' ... 'Broker-dealers like JPMS have self-interest in representing that their monetary interests are aligned with their customers. JPMS misled customers by falsely claiming that the compensation of its registered representatives was tied to the success of the client's portfolio,' said Eric I. Bustillo, Director of the SEC's Miami Regional Office."
(U.S. Securities and Exchange Commission [SEC])
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Study Sets Structure for State-Run Retirement Program in Connecticut
"The [Connecticut Retirement Security Board (CRSB)] recommends that the program 'be made available to all employees, including part-time employees, at the Connecticut location of a business or non-profit organization that offers enrollment in the program, provided that the employee has worked at that entity for at least 120 days and provided that the employee is not eligible to participate in the employer's pension, 401(k), or similar retirement plan.' The CRSB endorsed both traditional and Roth IRAs ... but recommended that traditional IRAs be the default savings vehicle."
(American Society of Pension Professionals & Actuaries [ASPPA])
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America's Savings Rate Improves, But More Than Half of Americans at Risk of Not Covering Essential Expenses in Retirement
"[P]eople are saving more and investing more appropriately for their age, improving the overall state of retirement readiness of households in America. As a result of this positive behavior, the number of people who are likely to afford at least their essential expenses in retirement jumped seven percentage points since 2013, from 38 to 45 percent. However, this means more than half (55 percent) are estimated to be at risk of being unprepared to completely cover essential living expenses in retirement, which includes housing, health care and food."
(Fidelity)
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Workers Are Saving More for Retirement, Led by Millennials
"Millennials between the ages of 25 and 34 are saving a median of 7.5 percent of their pay for retirement, including whatever match they get from their jobs ... That's up from 5.8 percent two years ago, when the last survey was conducted, and it is the largest jump among all age groups.... Workers aged 35 to 50 are now socking away 8.2 percent of their income, up from 7.7 percent two years ago. The oldest workers, aged 51 to 69, are saving 9.7 percent, up from 8.1 percent."
(The Washington Post; subscription may be required)
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Benefits in General; Executive Compensation
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[Guidance Overview]
DOL and Treasury Update 2015-2016 Regulatory Agendas for Employee Benefits
"The DOL's agenda and related materials include 15 pending projects related to employee benefits ... The IRS Business Plan includes 32 pending items addressing retirement benefits and 16 pending items addressing executive compensation, health care and other benefits.... There are 2 new DOL initiatives." [A chart lists the agenda items from both agencies, along with their current status.]
(Sutherland Asbill & Brennan LLP)
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[Guidance Overview]
IRS Provides Guidance on Application of Federal Tax Law to Employee Benefit Plans in Light of Obergefell Decision (PDF)
"Solely for federal tax law purposes, Obergefell does not require additional amendments to be made to qualified retirement plans or to health and welfare plans. However, [Notice 2015-86] provides helpful guidance in the event that an employer wishes to make discretionary changes to its plan and/or to allow employees to make mid-year cafeteria plan election changes in light of Obergefell -- and it reminds employers that there may be changes in the operation (as opposed to the form) of their health and welfare plans as a result of Obergefell."
(Groom Law Group)
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The Intersection of Sections 457(f) and 409A: Is Guidance Really Imminent? (PDF)
"At this point, it is not yet clear what the nature of any transition relief under the proposed regulations will be. While informally the Service has indicated there will be some such relief, it is not anticipated that it will either provide a general grandfather for existing arrangements or cover some of the more aggressive designs under Code section 457 that have been known to be used in the past."
(Groom Law Group)
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David Rhett Baker, J.D., Editor and Publisher
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, Inc. All materials
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