Retirement Plans Newsletter

January 28, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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Employee Benefits Jobs

Account Manager
National Retirement Services, Inc.
in NC

ERISA Attorney
Kraw Law Group, a Professional Corporation
in CA

Retirement Administration and Benefits Technology Manager
BAE Systems
in VA

Benefits Department Manager
IUPAT Industry Pension Fund
in MD

Director of Retirement Plan Services
Sikich LLP
in WI

Senior Benefits Consultant (Non-Qualified Plans)
in TX

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Webcasts and Conferences

Securities Law for ERISA Professionals
February 18, 2016 WEBCAST
(American Law Institute Continuing Legal Education Group [ALI CLE])

Plan Benchmarking. Why is it Important to Evaluate your Plan?
February 25, 2016 WEBCAST

Employee Benefits Law Academy Spring 2016: Section 125 / Cafeteria Plans in the Age of the Affordable Care Act
March 8, 2016 in NY
(Bond, Schoeneck & King, PLLC)

Employee Benefits Law Academy Spring 2016: HIPAA Privacy Requirements for Your Group Health Plan
April 12, 2016 in NY
(Bond, Schoeneck & King, PLLC)

Employee Benefits Law Academy Spring 2016: Understanding Your Retirement Plan: Challenges and Choices
May 10, 2016 in NY
(Bond, Schoeneck & King, PLLC)

View All Webcasts and Conferences


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[Official Guidance]

Text of IRS Notice of Proposed Rulemaking and Public Hearing: Nondiscrimination Relief for Closed Defined Benefit Pension Plans and Additional Changes to the Retirement Plan Nondiscrimination Requirements
52 pages. "These changes are meant to apply to situations in which the proportion of the grandfathered group of employees who are highly compensated employees compared to the employer's total workforce has increased due to ordinary demographic changes ... The proposed regulations modify a number of provisions in the existing regulations under section 401(a)(4) to address situations and plan designs, including closed plans and formulas, that were not contemplated in the development of the regulations and the 2001 amendments. While many of the changes in the proposed regulations provide nondiscrimination relief for certain closed plans and formulas, the proposed regulations also include other changes that are not limited to closed plans and formulas." (Internal Revenue Service [IRS])  


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[Official Guidance]

Text of JBEA FAQs on Continuing Education, Enrollment and Standards of Performance (PDF)
6 pages; dated Jan. 2016. Topics include: [1] Questions related to qualifying programs for continuing education credit; [2] Questions related to certificates of completion of a qualifying program; [3] Questions related to continuing professional education credits; [4] Questions related to initial enrollment; and [5] Questions related to standards of performance. (Joint Board for the Enrollment of Actuaries [JBEA])  

[Guidance Overview]

IRS Guide to Retirement Plan Reporting and Disclosure Requirements (PDF)
16 pages, dated Jan. 27, 2016. "This Reporting and Disclosure Guide for Employee Benefit Plans was prepared by the IRS as a quick reference tool for certain basic reporting and disclosure requirements for retirement plans under the Internal Revenue Code and provisions of [ERISA] administered by the IRS. The Guide is not intended to be an exhaustive list of possible civil penalties and other consequences for reporting and disclosure violations. The [DOL and the PBGC] reviewed the parts of the Guide that concerns provisions the agencies jointly administer. This Guide should be used in conjunction with the DOL Retirement Plan Reporting and Disclosure Guide ... and DOL's [Troubleshooter's Guide to Filing the ERISA Annual Report (Form 5500 and Form 5500-SF)]." (Internal Revenue Service [IRS])  

[Guidance Overview]

FASB Issues Proposed Changes to Presentation of Net Periodic Pension/Postretirement Benefit Cost and Disclosures About Defined Benefit Plans
"The proposed changes will improve operating income for companies that present such a measure if their service cost is less than net periodic benefit cost. It also may eliminate the benefit of presenting a non-GAAP measure of operating income that excludes certain benefit costs.... Capitalization of only the service cost component may be problematic for utilities, defense contractors and others who seek recovery of certain benefit costs." (Willis Towers Watson)  

FASB Proposes Changes to Several Aspects of Pension Accounting (PDF)
"While not changing any of the recognition and measurement provisions of current retirement benefits accounting, the FASB is proposing changes to the presentation of the net benefit cost in an effort to improve the transparency and usefulness of financial information.... The objective of the benefit disclosures would be more clearly articulated under the proposed ASU. The changes also clarify that materiality should be considered when assessing the disclosure requirements and emphasize that entities can use appropriate discretion." (PricewaterhouseCoopers)  

DOL Focuses in on Plan Auditors -- and Their Clients
"DOL is making it clear that it is targeting certain types of audit firms and the plans they audit. Note that DOL's point is that the plan administrator (read 'plan sponsor' because that's almost always who it is) is the one who is responsible to ensure that the plan auditor is competent and that the audit, report and filings are accurate. In other words, if you are a plan sponsor you are the one on the hook if they aren't." (Fiduciary Plan Governance, LLC)  

Understanding 'Generation DC' -- Millennials and Generation X
"[The authors] decided to test generational assumptions ... by polling only people considered Millennials ... and Generation X ... [This] 'Generation DC' ... represents a watershed population: employees who rarely had access to a defined benefit plan and instead are responsible for their own retirement savings through a defined contribution plan.... [This paper outlines] initial highlights from our research, along with related actions plan sponsors can take." (State Street Global Advisors)  

Why Workers Retire When They Do: A Survey of U.S. Retirees
"Among more recent retirees, employer retirement programs have played a less central role in their decision to retire. Workplace environment and eligibility for Social Security and Medicare now play larger roles in workers' retirement decisions. One in five retirees cited disengagement with their job as a key reason for deciding to retire." (Willis Towers Watson)  

The New Flexible Retirement (PDF)
28 pages. "Today's workers are already anticipating the need for change with plans to extend their working lives. Many are re-envisioning retirement to be a gradual transition from work to non-work, which may involve shifting from full-time to part-time work, taking on a new role that is less demanding or more satisfying, or even pursuing an encore career. How- ever, few employers have employment practices in place to support them and, in some cases, new laws are needed to facilitate their new vision." (Transamerica Center for Retirement Studies)  

On the Governance of ERISA Investment Committees
"Expect more surveillance of ERISA investment committee decisions. A $25+ trillion retirement money pot and regulatory developments are two reasons.... It is a good idea to regularly review the Investment Policy Statement for each plan ... Consider crafting a companion Risk Management Policy Statement or beef up the risk sections in the Investment Policy Statement(s).... Document the process that dictates how new investment committee members are selected, whether they are trained (and by whom) and how they are reviewed, by whom and how often." (Pension Risk Matters)  

Six Investment Themes for DC Plan Sponsors
"Richard Fulford, executive vice president and head of U.S. Retirement at PIMCO, suggests plan sponsors evaluate active approaches, including custom target-date strategies, core strategies augmented by income, real assets, hedged international equities and alternative capital preservation options. 'Of the six ideas proposed, only the first, going custom, requires a meaningful revamp of the plan, or more accurately, the target date option,' Fulford [said]." (PLANSPONSOR)  

Supreme Court Rejects ERISA Stock-Drop Complaint for Failing Dudenhoeffer Pleading Standards
"The Supreme Court's prompt and emphatic reversal of Harris II shows that the proper focus of such 'stock drop' claims is on the fiduciary's discretionary judgment. As Judge Kozinski had observed in his dissent in Harris II: there is no liability if any 'prudent fiduciary could have concluded that [the proposed alternative action] would do more harm than good'." [Amgen Inc. v. Harris, No. 15-278 (U.S. Jan. 25, 2016; per curiam)] (McGuireWoods LLP)  

Best Interest Investment Recommendations (PDF)
"Almost as important as complying with the best interest contract is the need to prove that compliance. The diagnosis that leads to each recommendation is a permanent record of what facts were known at the time of the recommendation and prevents claims of misconduct when future losses occur.... It is ... necessary to define how best interest is determined and then later proven. Practices to comply with best interest contract requirements can then be put in place." (DALBAR)  

Get a Tax-Smart Plan for In-Retirement Withdrawals
"The sequence in which you tap your accounts will help you determine how to position each pool of money. The money that you'll draw upon first -- to fund living expenses in the first years of retirement -- should be invested in highly liquid securities like certificates of deposit, money markets, and short-term bonds.... [W]hile taxable assets usually go in the 'sell early' bin, that's not true if you have highly appreciated assets and plan to leave money to your heirs." (Morningstar)  

Press Releases

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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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