Retirement Plans Newsletter

January 15, 2016

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Compliance Business Analyst
Enterprise Iron
in TX

Senior Benefits Analyst
Tempur Sealy International
in KY

Health Benefits Associate
The Segal Group
in NY

Senior Retirement Plan Administrator
Goldberg, Swedelson & Associates
in CA

Defined Contribution Retirement Plan Senior Administrator
First American Bank
in IL

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Webcasts and Conferences

Role of the Small Employer in the Affordable Care Act
January 20, 2016 WEBCAST
(Hill, Chesson & Woody)

Affordable Care Act 2016 - Extensions, Updates, Delays and Modifications
February 24, 2016 in VA
(Willcox Savage)

2016 City Event
March 15, 2016 in NE
(PSCA [Plan Sponsor Council of America])

2016 City Event
March 22, 2016 in AZ
(PSCA [Plan Sponsor Council of America])

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Discussions


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[Guidance Overview]

PBGC Issues Final Partition Rule
"The PBGC discussion makes it clear that the application must contain sufficient documentation information to support the Trustees' conclusion, and the PBGC will make its own determination whether all reasonable measures have been exhausted. The PBGC's determination will be made after consultation with the Participant and Plan Sponsor Advocate. This raises the questions of the level of documentation needed to support the Trustees' conclusions and the consequences of a negative determination by the PBGC." (Cheiron)  


[Advert.]

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Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

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Second Multiemployer Pension Plan Seeks to Reduce Core Benefits
"On January 8, 2016, the Iron Workers Local 17 Pension Fund -- which operates from Cleveland, Ohio -- became the second multiemployer pension plan to file an application with Treasury to reduce core benefits. In its application, the Iron Workers Fund trustees advised that the Fund's actuary had certified that the Fund was in 'critical and declining status' for the plan year beginning May 1, 2015. Moreover, without approval of the application, the Fund was projected to become insolvent by 2025." (Jackson Lewis P.C.)  

New Jersey Pivots on State-Run Retirement Plan Design
"The bill, renamed via the conditional veto, is now entitled the New Jersey Small Business Retirement Marketplace Act. It calls for the establishment of a retirement plan marketplace targeted at firms that employ fewer than 100 qualified employees ... at the time of enrollment, where a majority of which employees are employed in New Jersey.... The firms participating in the marketplace are required to offer a minimum of two product options, including a target-date or similar fund and a balanced fund. The marketplace will offer three options: a SIMPLE IRA, a payroll deduction IRA and a MyRA." (National Association of Plan Advisors [NAPA])  

EPCU Project: Final Return with Assets
"A review of Form 5500 series returns showed that there are returns marked as Final Return that also reflect plan assets at the end of the plan year. A Form 5500 series return should not be marked Final Return unless there are zero assets at the end of the plan year and zero participants at the end of the plan year." (Internal Revenue Service [IRS])  

A New Fee Challenge for Retirement Plan Sponsors: Levelization
"Plan sponsors, as a whole, are unaware that participants pay disparate fees, and service providers, particularly recordkeepers that receive revenue-sharing payments, are not going to address it ... It is incumbent on sponsors, then, to ask their plan advisers and recordkeepers about fee levelization. It is also a fiduciary responsibility that has largely escaped sponsors' attention[.]" (PLANSPONSOR)  

The 'Trickle-In' ESOP
"[Under] a 'trickle in' strategy ... the company will use its annual profits (cash) to redeem a small percentage of stock from an owner ... [typically] limited to 25% of eligible payroll (or less). The company will in turn contribute those shares, in kind, to the ESOP and allocate them as a current year retirement plan benefit to the employees based on their eligible pay for the year.... This approach ... may be a good alternative for companies that cannot afford the costs of the larger, complex transaction and/or maybe want to get their feet wet a bit on the ESOP concept ... [and/or] to accommodate the liquidity event for a small, minority shareholder, knowing that the intention is to have the ESOP be a larger shareholder at some point down the road." (Principal Financial Group)  

Borrowing Money to Reduce PBGC Premiums (PDF)
"In recent years, Congress raised PBGC premiums sharply for single-employer defined benefit pension plans. In 2016, the increased premiums will act as an effective tax of 3.0% per year on unfunded pension liabilities, with additional increases scheduled through 2019. This article discusses plan sponsors borrowing money to fully fund their pension plans, thereby eliminating these PBGC premiums." (Milliman)  

Is the PBGC Worth Propping Up?
"General president of the Laborers' International Union of North America [Terry O'Sullivan] thinks the half-million union members he represents at $35 billion LIUNA are headed for disaster. That's because, as insured members of the [PBGC], they're paying into a mandatory program with a whopping $52.3 billion deficit.... He wants a wholesale exit from the PBGC and asserts that his union can take care of participants who fall victim to employer bankruptcies without help from the troubled federal agency." (Institutional Investor)  

Boeing Reaches Deal with SPEEA to Freeze Pension Plan at End of 2018
"The Boeing Co. Employee Retirement Plan had already been closed to employees represented by the [Society of Professional Engineering Employees in Aerospace (SPEEA)] hired after March 1, 2013, following separate agreements with professional engineers and technical workers based in Puget Sound, Wash., and elsewhere. The contracts are currently set to expire Oct. 6, and the retirement portion of the deal covers both engineers and technical workers. The freeze will still allow salary growth for the final pension payout." (Pensions & Investments)  

1940 Act Funds: Commercial and Operational Issues for Non-U.S. and U.S. Alternative Investment Managers
8 pages. "A 1940 Act Fund is the only securities fund permitted to raise capital from U.S. retail investors, particularly defined contribution retirement plans ... Any investment manager seeking to launch a 1940 Act Fund must appreciate the particular 1940 Act restrictions and prohibitions that apply to launching and operating such a product, but perhaps more importantly must appreciate the broader effect that the 1940 Act will have on its business and operations. This briefing discusses, through a commercial and operational lens, the material issues managers likely will face when organizing and managing a 1940 Act Fund." (Allen & Overy, via Lexology)  

Are Your Employees Retirement-Ready? (PDF)
"Much of the discussion on the decumulation phase of retirement savings has focused on the lack of any lifetime annuities. But there is a whole range of options sponsors can employ to facilitate the generation of retirement income and bolster financial wellness.... [I]t is imperative that human resources professionals help employees -- particularly the retiring baby boomers -- to maximize what they have saved. This article presents five first step ideas[.]" (Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS])  

Helping Clients With the Transition to Retirement
"It's critical to have a process in place that allows you to walk a single client or couple through the complexities of the 'decision decade' and then continue to serve them as they age." (Morningstar Advisor)  

How Will Unfunded Pension Liabilities Affect Big Cities?
"When the unfunded liability is reallocated from the state to the 92 cities in cost-sharing plans, the liability burden almost doubles. While this is not a new liability, it is raising concerns for cities in these cost-sharing plans because the liability had previously been reported as an aggregate figure in the state government's financial statements." (Center for State & Local Government Excellence)  

State Street Agrees to $12 Million Settlement of SEC Charges for Pay-To-Play Scheme
"An SEC investigation found that [the head of] State Street's public funds group responsible for serving as custodians or sub-custodians to public retirement funds, entered into an agreement with Ohio's then-deputy treasurer to make illicit cash payments and political campaign contributions. In exchange, State Street received three lucrative sub-custodian contracts to safeguard certain funds' investment assets and effect the settlement of their securities transactions." (U.S. Securities and Exchange Commission [SEC])  

[Opinion]

American Retirement Association Comments to EBSA on Proposed Regs for Savings Arrangements Established by States for Non-Governmental Employees (PDF)
"The ARA generally agrees with and supports the Department's proposal and the underlying goal of expanding coverage. We are concerned, however, that the proposed rule creates different standards for payroll deduction IRA Programs administered by a state and those administered by private sector providers outside of a state program. Furthermore, we believe the lack of a private sector alternative operating alongside the various state programs would be contrary to the overall objective of increasing access to workplace retirement savings programs. This would be to the detriment of improving retirement security for American workers." (American Retirement Association [ARA])  

Benefits in General; Executive Compensation

[Guidance Overview]

Annual ISO and ESPP Information and Reporting Requirements
"Participant statements may be provided on Form 3921 (for ISOs) and Form 3922 (for ESPPs) or may be provided using a different format that complies with the substitute form requirements found in IRS Publication 1179.... [C]ompanies with a limited number of transactions will likely use Forms 3921 and/or 3922 (as opposed to substitute statements) since these forms will need to be prepared and submitted to the IRS in any event.... [C]ompanies that provide Form 3921 and/or 3922 to participants (again, as opposed to providing substitute statements) will deliver the form(s) to their participants, along with a cover letter explaining the statement in a manner similar to this statement for ISO transactions and this statement for ESPP transactions." (Orrick)  

[Guidance Overview]

Changes to Benefit Plan Financial Statements Under ASU 2015-12
"In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Updated (ASU 2015-12), titled Plan Accounting. This ASU is effective for defined benefit pension plans, defined contribution pension plans and health and welfare plans.... [A chart] generally accepted accounting principles (GAAP) before ASU 2015-12 and after the implementation of ASU 2015-12." (WithumSmith+Brown, PC)  

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of that content. You may not alter or remove any trademark, copyright or other notice from copies of the content.

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