Budget Bill Allows Churches to Merge Qualified and 403(b) Plans: Part 1
"First and foremost, a church plan is a plan a church establishes and maintains for its employees. The church can do this directly or through a separate organization, which has the principal function of administering or funding a retirement benefit program for church employees.... The term 'employee' in this context includes some persons who are not employees of the church itself.... A plan is not a church plan if it is established and maintained primarily to benefit employees of one or more unrelated trades or businesses under Code Section 513. The regulations provide a detailed 50% test for this rule, softened by a facts and circumstances alternative.... A more narrow definition of church appears in several 403(b) rules."
Working with a Financial Advisor Doubles Retirement Preparedness
"70 percent of those who work with a financial advisor are on track or ahead in saving for retirement, versus 33 percent of those not working with an advisor. Among people who have an advisor, more than a third had determined how much to save for retirement and half had contributed to an IRA; for people without an advisor, only 14 percent knew how much they'd need for retirement and 16 percent had contributed to an IRA[.]"
How America Supports Retirement: Challenging the Conventional Wisdom on Who Benefits (PDF)
228 pages. "Policy discussions of tax deferral often focus on the reduction in taxes enjoyed by workers and ignore the higher taxes these workers will pay during retirement.... Contrary to conventional wisdom, the marginal benefits of tax deferral (the benefits of deferring an additional $1 of compensation) are higher, on average, for the lower-earning workers analyzed in this study than they are for the higher earning workers.... By essentially allowing workers to 'income average' over a lifetime, tax deferral arguably makes the tax system more -- not less -- fair.... The most prominent reform proposals for retirement plans would make the tax code less fair."
(Investment Company Institute [ICI])
DOL Poised to Advance Final Fiduciary Rule
" 'The rumor mill is very active,' Fred Reish, a partner at Drinker Biddle & Reath [said]. 'The prevailing thinking is that the final package of the regulation and exemptions will go to OMB in the next three weeks and could go any day now. The tea leaves say that the fiduciary package will be ... published in the Federal Register somewhere between mid-March and mid-April.' "
What's Your Opinion about the Elimination of Most Determination Letters?
The Employee Plans subgroup of the IRS Advisory Committee on Tax Exempt and Government Entities has prepared a short, confidential online survey to solicit retirement practitioner/service provider feedback on the elimination of determination letters for individually designed plans, and to determine the choices plan sponsors are likely to make and how the IRS can minimize the impact of the change. Responses are needed by February 1. Respondents need not identify themselves, and all responses go directly to the ACT members, not to the IRS. Take the survey here.
Federal Court Dismisses 'Excessive Fee' Claims Against Plan's Service Provider
"The court held first that Principal's selection of sixty-three funds for the initial investment menu in the 2009 contract was not a fiduciary act.... The court also rejected McCaffree's assertion that Principal was a fiduciary because it offered the participants investment advice giving rise to a fiduciary duty under ERISA section 404(a). Again, the court found that McCaffree offered no facts to show Principal's actions as an investment manager were connected to or caused the excessive fees alleged in the complaint." [McCaffree Fin. Corp. v. Principal Life Ins. Co., No. 15-1007 (8th Cir. Jan. 8, 2016)]
Expanding the Case for Stable Value (PDF)
"[T]he percentage of defined contribution plans offering stable value funds has been below 50 percent for years ... Stable value proponents know what those participants are missing: the combination of steady returns and principal protections that only stable value funds offer, and the comfort and confidence that can come from including this volatility-dampening investment in their retirement portfolios. But what about plan sponsors who've elected not to include stable value funds on their investment menus? What are they missing? And why?"
Rule of Thumb Withdrawal Strategies Just Don't Cut It for Retirees
"[S]imply adding 4% of a retiree's accumulated savings to other retirement income payable during the year to determine a spending budget may either overstate or understate an actuarially sound spending budget. And this is only one of the problems associated with the 4% Rule or any rule of thumb that focuses on 'tapping your savings' rather than properly coordinating with other sources of retirement income to develop a reasonable spending budget."
(Ken Steiner, FSA Retired)
Have You Checked Your Retirement Plan Lately?
"Have you experienced any life changes? ... Reexamine your risk tolerance ... Is your asset allocation still on track? ... Regaining your balance ... Revisit your plan rules and features ... Could you add a little more each pay period? ... A little maintenance goes a long way."
(Asset Strategy Advisors)
Benefits in General; Executive Compensation
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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
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