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Webcasts and Conferences

Health Reform: Beyond the Basics - Preventing and Resolving Data-Matching Issues in the Federally-Facilitated Marketplace
(Center on Budget and Policy Priorities)

fi360 Fiduciary Talk: Recent Trends in Socially Responsible Investing

Looking for New Ways to Control Costs for Your Medical, Prescription Drug, and Other Employee Benefit Plans?
February 24, 2016 in IL

2016 City Event
September 29, 2016 in TX
(PSCA [Plan Sponsor Council of America])

2016 City Event
October 20, 2016 in CA
(PSCA [Plan Sponsor Council of America])

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[Official Guidance]

Text of IRS Notice of Proposed Rulemaking and Public Hearing: Increase in Special Enrollment Examination User Fees for Enrolled Agents
"The current user fee is $11 to take each part of the EA-SEE. The contractor who administers the EA-SEE also charges individuals taking the EA-SEE an additional fee for its services. For the May 2015 to February 2016 testing period, the contractor's fee is $98 for each part of the EA-SEE.... Taking into account the full amount of [additional] costs, the user fee for the EA-SEE is proposed to be increased to $99 per part." (Internal Revenue Service [IRS])  


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.

[Guidance Overview]

IRS Reduces Voluntary Compliance Program Filing Fees for Most Plans
"Going forward, VCP application fees will be subject to annual revision. [Tables] compare the current VCP application fees for standard applications and the new fees that will take effect February 1, 2016[.]" (Littler)  

Supreme Court Will Not Hear Second Circuit Case Disallowing Years-of-Service Definition of Normal Retirement Age
"Issue: Whether [ERISA] requires that a plan's definition of 'normal retirement age' must be based on the typical age at which the employer expects the plan's participants would retire from working." [PricewaterhouseCoopers LLP v. Laurent, No. 14-1179 (2d Cir. July 23, 2015; cert. denied Jan. 25, 2016)] (SCOTUSblog)  

Text of Per Curiam Supreme Court Opinion Finding Harris v. Amgen Complaint Did Not Allege Sufficient Facts and Allegations to State Claim for Fiduciary Breach
[Opinion begins on page 9 of the linked document.] "The Court now holds that the Ninth Circuit failed to properly evaluate the complaint.... The Ninth Circuit ... failed to assess whether the complaint in its current form 'has plausibly alleged' that a prudent fiduciary in the same position 'could not have concluded' that the alternative action 'would do more harm than good.' ... The Ninth Circuit's proposition that removing the Amgen Common Stock Fund from the list of investment options was an alternative action that could plausibly have satisfied Fifth Third's standards may be true. If so, the facts and allegations supporting that proposition should appear in the stockholders' complaint. Having examined the complaint, the Court has not found sufficient facts and allegations to state a claim for breach of the duty of prudence." [Amgen Inc. v. Harris, No. 15-278 (U.S. Jan. 25, 2016; per curiam)] (Supreme Court of the United States)  

Ninth Circuit Handed New Reversal on Amgen Case
"As Ninth Circuit Judge Alex Kozinski predicted, the Supreme Court handed the federal appeals court a reversal Monday, reviving securities claims against drugmaker Amgen. Having already gone before the Ninth Circuit twice, the case at hand involves claims that Amgen violated [ERISA] by failing to yank the company stock option when its executives knew or should have known that the stock's price was inflated." [Amgen Inc. v. Harris, No. 15-278 (S. Ct. Jan. 25, 2016; per curiam)] (Courthouse News Service)  

ERISA Claim Knocked Off the Pedestal: Eighth Circuit Finds Provider of 401(k) Investment Platform Does Not Have Fiduciary Liability
"The Eighth Circuit rejected the argument that Principal's making available the 63 initial investment alternatives constituted an exercise of 'discretionary authority' with respect to the Plan that would cause Principal to become an ERISA fiduciary. The court stated that, because McCaffree was free to refuse to enter into the contract, Principal could not have exercised fiduciary authority and therefore could not have breached any fiduciary duty." [McCaffree Fin. Corp. v. Principal Life Ins. Co., No. 15-1007 (8th Cir. Jan. 8, 2016)] (Dechert LLP)  

ERISA Breach Case Hinges on SunEdison Company Stock
"According to the complaint, the defendants permitted the plan to continue offering SunEdison stock as an investment option to retirement plan participants, even after they knew or should have known that during the time frame (August 6, 2015 to the present) the stock had a number of troubling issues. It was artificially inflated; SunEdison -- which bills itself as the world's largest global renewable energy development company -- was in extremely poor financial condition; and SunEdison faced equally poor long-term prospects." (planadviser)  

Employee Plans Compliance Unit (EPCU) Project: Data Analysis Verification
"A review of Form 5500 series returns showed that there are return filings for plans missing the pension feature codes, business codes, and total participant counts. Missing or incorrect codes create errors in the classification and selection processes and lead to a gap in coverage of the designated plan segments. The EPCU will be mailing the contact letter and attachment to a select group of plan sponsors. A closing letter will be issued to the plan sponsor upon completion of our review." (Internal Revenue Service [IRS])  

Funding Method Guidance Among IRS Projects Near Finish Line
"The Internal Revenue Service is 'really close' to issuing guidance specifying new automatic approvals for changes in pension plan funding method, a move made necessary by the Pension Protection Act of 2006, an IRS official said.... On nondiscrimination, the IRS is crafting rules that would allow large employers to continue closed defined benefit plans and maintain retirement expectations for certain employees. Once closed, these plans will eventually fail the nondiscrimination test ... The IRS is also working on de-risking regulations that would 'severely restrict' the ability to offer one type of risk transfer, a lump-sum distribution offer to plan participants already getting benefit[.]" (Bloomberg BNA)  


PBGC Reportable Events: What You Need to Know About the New Rules

Sponsored by Lorman and BenefitsLink

March 17 webinar - Learn how to comply with the new reportable event rules and avoid PBGC problems, what actions the PBGC is likely to take after a reportable event filing, and how to negotiate with PBGC in the event of threatened action. BenefitsLink discount.

Managing Pension Costs: Some Solutions Are Time-Sensitive (PDF)
"Pension costs are on the rise due to increasing retiree lifespans and PBGC premiums. Changing interest rates and roller coaster asset returns contribute to persistent cash and financial statement cost volatility. Many employers are actively taking steps to mitigate risk. Solutions for stabilizing pension costs exist, but are not one-size-fits-all." (PricewaterhouseCoopers)  

The Inconvenient Truth of Defined Benefit Pension Portfolios
"One well-tested axiom holds that pension plans should systematically reduce surplus -- the variability of funded status -- as they reduce funding deficits. Indeed, when pension plans become better funded and reallocate more to duration-exposed fixed-income assets, they are following a course that serves as the foundation of liability-driven investing and the rationale supporting glide-path strategies. But ill-constructed interest rate-hedging portfolios that ignore the correlation with return-seeking assets are not only inefficient but can also actually increase surplus volatility as funded status improves." (Institutional Investor)  

Mixed Financial Results for Global Pension Plans in 2015
12 pages. "Fourth quarter returns were positive across all regions, while interest rates remained stable. Full-year returns were positive as well, but generally below expected levels. Even with the sub-par returns, increases in interest rates over the year were sufficient to enable pension index increases in most regions." (Willis Towers Watson)  

State Retirement Plans: Carrots Instead of Sticks -- Marketplaces, Prototypes and Closed MEPs
"The sort of state involvement we're talking about today has states dangling carrots out to employers who don't currently sponsor a qualified retirement plan. And the state ideas come in a few different flavors: [1] Marketplaces.... Think of these as ACA insurance exchanges for employers without an employer mandate. Prototypes. This one has a little more State involvement.... [2] Prototypes ... [3] Closed MEPs." (Dorsey ERISA)  

Passive Mutual Funds Don't Get a Free Pass in DC Fee Debate
"[P]lan sponsors [are encouraged] to always be on the lookout for lower-cost options for any strategy -- active or passive. Often, that option may mean [collective investment trusts] or even separately managed accounts, if they're cost-effective, based on plan assets. And best practices would also suggest that plan sponsors look into unbundling recordkeeping and asset-management contracting." (AllianceBernstein L.P.)  

How Can Broker-Dealer Firms Adapt to the New Fiduciary Regime?
"[1] Understand fiduciary status, the rationale for its imposition, and the duties that flow from such status.... [2] Embrace the need for change, a new vision, and a new mission... [3] Adopt and promote a fiduciary culture... [4] Adopt and implement strategies and tactics.... [5] Promotion and marketing to clients.... [6] Feedback, adjustments." (Ron Rhoades)  


Got Those 'Conflicting Social Security Deficit Estimate' Blues
"Whose assumptions are a better estimate of future system experience? The Trustees'? The CBO's? Alicia's Technical Panel's? I have no idea. And frankly, no one does (now that Yogi has passed).... Since we don't know what the future holds, we need to solve our best estimate of the size of the problem in the near future. But equally important, we also need to use sound actuarial principles to ensure that the system automatically maintains its actuarial balance in the future when actual experience deviates from assumed experience (because trust me on this one, it will)." (Ken Steiner, FSA Retired)  


The Government Does Not Do it Better
"What our industry needs to do instead is lobby at the federal level to enact bipartisan policies to increase the types of private retirement plan product options available in the marketplace, and let American business owners decide who can do it best.... [L]et's change federal law to open up private MEPs to any employer as long as there is a designated plan service provider the employer can count on to keep that plan running properly. And let's create a new deferral-only 401(k) plan safe harbor for start-up businesses. These new options will move the needle on coverage and allow private industry to compete and succeed against the state." (Brian Graff, for American Society of Pension Professionals & Actuaries [ASPPA])  


DCIIA Comment Letter to DOL on Proposed Regs for State Savings Programs (PDF)
"Focusing solely on those with current access to a workplace retirement savings plan would ... not reflect workers temporarily out of the system because they have taken hardship withdrawals, have rollover [IRAs] or ... have cashed out of an employer-sponsored plan following a recent job transition. In addition to coverage, ... leakage continues to be an issue for institutional defined contribution plans that will not be solved by initiatives focused solely on access[.]" (Defined Contribution Institutional Investment Association [DCIIA])  


The Fiduciary's Duty of Care for QRP Rollovers to IRAs
"The IRA rollover decision is a complex one, and it deserves the scrutiny of an expert adviser operating under the fiduciary standard of conduct. Instead of the representative of a mutual fund company, brokerage firm, or insurance company, automatically stating: 'Yes, rollover that IRA with us,' the reply should be: 'Let's examine your circumstances, so that we may advise you to undertake the actions that are most prudent for you.' " (Ron Rhoades)  

Benefits in General; Executive Compensation

[Official Guidance]

Text of IRS IR-2016-9: Tax Relief to Missouri Storm Victims; Tax Deadline Extended to May 16
"[A]ffected taxpayers in Barry, Barton, Camden, Cape Girardeau, Cole, Crawford, Franklin, Gasconade, Greene, Hickory, Jasper, Jefferson, Laclede, Lawrence, Lincoln, Maries, McDonald, Morgan, Newton, Osage, Phelps, Polk, Pulaski, Scott, St. Charles, St. Francois, St. Louis, Ste. Genevieve, Stone, Taney, Texas, Webster and Wright counties will receive this and other special tax relief. Other locations in Missouri and other states may be added in coming days, based on damage assessments by FEMA." (Internal Revenue Service [IRS])  

The Nonqualified Deferred Compensation Plans Dirty Dozen: An Administrative Guide to Avoiding 12 Traps
"[1] 409A plan recognition; [2] Plan document requirement; [3] 'Top-Hat' group determination; [4] 409A grandfathering; [5] Application of FICA taxation; [6] Timing of deferral elections; [7] 401(k) contingent benefit rule; [8] Timing of distributions; [9] Forms of distributions; [10] NDCP/defined benefit (DB) plan funding connection; [11] Plan termination rules; [12] Separate rules for tax-exempt organizations." (Milliman Retirement Town Hall)  


Expect Reported CEO Compensation to be Lower for 2015
"CEO compensation for 2015 generally will be down from 2014.... Pension discount rates have risen. Equity markets generally did not perform well.... Did the economic conditions in 2014 that resulted in extremely large reported CEO compensation meant that CEOs were overpaid in 2014 compared to other years. And, similarly, were those same CEOs underpaid in 2015 compared to 2014?" (Benefits and Compensation with John Lowell)  

Press Releases

A Young Person's Guide to Social Security, Third Edition
National Academy of Social Insurance

MHK Retirement Partners is Certified for Fiduciary Excellence
Centre for Fiduciary Excellence [CEFEX]

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016, 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, 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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