Retirement Plans Newsletter

February 8, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
Get Health & Welfare News | Advertise | Previous Issues | Search

Employee Benefits Jobs

Qualified Plan Sales and Marketing
Retirement LLC
in OK

Retirement Plan Administrator
Law Offices of R. David Danziger, P.C.
in PA

Recordkeeper Manager
Envoy Financial
in CO

Actuarial Analyst
USI Consulting Group
in CT

Consultant/Client Services Representative
Associated Pension Consultants
in CA

Pension Administrator / Consultant
Boyce & Associates, Inc.
in AZ

Manager, 401(k) Compliance Testing
Newport Group
in IL

Post Your Job

View All Jobs

RSS feed for jobs RSS Feed: All Jobs

Webcasts and Conferences

Telehealth Index: 2016 Employer Benchmark Survey
February 10, 2016 WEBCAST
(American Well)

New Bermuda Triangle: Navigating the Treacherous Waters of FMLA, Disability and Other Overlapping Leaves of Absence
February 11, 2016 in WV
(Littler Mendelson)

Correcting Failed Coverage & Nondiscrimination Tests
February 18, 2016 WEBCAST

EEOC Wellness Regulations
February 25, 2016 WEBCAST
(Frenkel Benefits, LLC)

Affordable Care Act Employer Mandate in 2016: What’s Next for Employers?
February 25, 2016 WEBCAST
(Bloomberg BNA)

IRA Basics
April 7, 2016 WEBCAST

View All Webcasts and Conferences


Subscribe Now to This Newsletter (free)

We also publish the BenefitsLink Health & Welfare Plans Newsletter (free): Subscribe Now

[Guidance Overview]

IRS Nondiscrimination Proposal Limits QSERPs, Adds Cross-Testing Option and New Closed Plan Relief (PDF)
"The package does not include any relief for closed defined benefit plans from the minimum participation rule that requires coverage of no fewer than 50 employees (or 40% of employees, if less). A new cross-testing option for combinations of defined benefit and defined contribution plans would allow the combined plan to be tested on a benefits basis as long as testing can be satisfied using a 6% interest rate (rather than the 7-1/2 to 8-1/2% rate allowed under the current rules)." (Xerox HR Consulting)  


Form 5500 Reporting Update

Sponsored by Lorman and BenefitsLink

February 24 webinar - Navigating the maze of changes with Form 5500 can leave you lost and helpless without all the important must know information. BenefitsLink discount.

[Guidance Overview]

Disapproving the Approval Process: IRS Provides Additional Guidance on the Curtailment of the Determination Letter Program
"[S]ponsors of Cycle A plans who are eligible to obtain an updated determination letter may wish to consider submitting an application for a letter on or before January 31, 2017.... It remains to be seen how much the combination of initial IRS approval, available IRS model language and IRS approval of plan terminations, together with a presumably expanded voluntary-compliance-system, will provide employers with sufficient practical comfort regarding plan establishment and administration." (Dechert LLP)  

[Guidance Overview]

More Church Plan Changes in Budget Bill
"[This] update [describes] portions of the Church Plan Clarification Act, including: [1] Rules addressing limitations for grandfathered 403(b) defined benefit plans, [2] Rules preempting state laws relating to automatic enrollment in church plans, and [3] Rules permitting church plans to invest in group trusts." (FIS Relius)  

Auto Escalation Beats Savings Inertia, So Why the Hesitancy?
"[W]hile 62 percent of employers with large plans (over $200 million in assets) automatically enroll new employees into their plan, far fewer (48 percent) have adopted automatic escalation... The top three reasons that employers gave for not offering automatic escalation were: [1] Too paternalistic toward employees ... [2] Employees would complain ... [3] Too costly from a company matching perspective[.]" (Society for Human Resource Management [SHRM])  

How Employers Can Better Prepare for Benefit Plan Audits
"A full Employee Plan Team Audit (EPTA) examination can involve between 75 and 150 requests for information, and consume between 200 and 300 staff days. These full exams, when conducted, found between $2 billion and $3 billion in corrections and adjustments... To stay on top of these regulatory changes and avoid the expansion of a focused exam into a full exam, employers should perform regular self-audits and other corrective initiatives before the IRS becomes involved." (Wayne Kamenitz, in Employee Benefit News)  


The Ultimate Retirement Professional Conference Experience

Sponsored by ASPPA

Limited travel budget? Let ASPPA bring the conference to you. Register for one of four ASPPA Regional conferences - Chicago, Boston, Cincinnati, or Philadelphia! We'll get you up to speed without the travel.

My Cash Balance Plan Had a Return in 2015 Less Than the Interest Crediting Rate. Now What?
"The funding requirements of a Cash Balance Plan allow for funding of an unfunded liability over 7 years. If your Cash Balance Plan had an asset balance of $100,000 and the interest crediting rate was 6%, what happens if the Plan had no return in 2015? This means that the Plan had a $6,000 loss which can be funded over the next 7 years ... If the cash is available for this contribution, making the contribution can provide tax benefits and reduce the unfunded liability of the Plan to allow for flexibility in contributions in future years." (Markley Actuarial)  

Senate Makes Moves to Block Fiduciary Rule
"Wrapping up a week of legislation designed to block, slow or thwart the [DOL's] fiduciary rule, the U.S. Senate finally got into the act with two pieces of legislation. Sen. Johnny Isakson (R-Ga) ... introduced the Affordable Retirement Advice Protection Act that would require a vote by Congress before any final rule by the administration goes into effect. On the same day, Sen. Roy Blount (R-Mo.) introduced ... legislation that its sponsors said would 'prevent the [DOL] from moving forward on an unnecessary and burdensome new regulation that will make it harder for ... all Americans, to save for retirement.' " (National Association of Plan Advisors [NAPA])  

California Secure Choice Program: Market Analysis, Feasibility Study, and Program Design Consultant Services (PDF)
518 pages; dated Jan. 31, 2016. "About 6.8 million workers are potentially eligible for the California Secure Choice Retirement Savings Program. Likely participation rates (70-90%) are sufficiently high to enable the Program to achieve broad coverage well above the minimum threshold for financial sustainability.... Given its inherent portability, the Program should have a lower incidence of rollovers and cash-outs than employer-sponsored 401(k) plans, which often force workers with low balances to close their accounts. At the same time, pre-retirement withdrawals are likely to be higher for the Program given eligible workers' income profile." (Prepared by Overture Financial LLC, for the California Secure Choice Retirement Savings Investment Board)  

SEC Proposal Could Alter Use of Mutual Funds in DC Plans
"A reduction in mutual funds' illiquid holdings resulting from the Securities and Exchange Commission's proposal, if ultimately approved, could lead to lower overall returns for those funds. That, in turn, could lead some defined contribution plans to drop mutual funds as investment options and replace them with separate accounts or commingled funds. Also, the proposal could lead to a decline in the overall value of illiquid securities, affecting defined benefit plan investments." (Pensions & Investments)  

CFP Board Begins the Process of Updating Its Fiduciary Standards of Professional Conduct
"At this point, the CFP Board has not (at least publicly) set any specific agenda for what is expected to be changed in the process of updating the Standards of Professional Conduct, though it will almost certainly encompass recent controversial areas, like the CFP Board's 'fee-only' compensation definitions. And in fact, it's possible nothing substantive will be altered. Nonetheless ... there are several parts of the Standards of Professional Conduct that seem ripe for changes and improvement." (Michael Kitces in Nerd's Eye View)  

How Well Do ESOP Acquisitions of Non-ESOP Companies Work?
"Most successful ESOP companies implement various types of progressive organizational strategies ... that may help overcome a principal challenge to mergers and acquisitions, namely difficulties with cultural integration. They also almost always make the target employees part of the ESOP.... This study focused on how other companies were acquired by an existing ESOP and how these target companies become employee-owned, with two key questions in mind: How does an ESOP company accomplish a successful acquisition? What, if any, organizational behavior patterns are associated with this process?" (Suzanne Cromlish, via National Center for Employee Ownership [NCEO])  

New Mortality Tables: Effective Date of 2017 or Later Provides Opportunities to Plan and Make Key Decisions (PDF)
"Although the RP-2014 mortality table has been met with acceptance, the improvements of the MP table are the topic of considerable debate. The Society study did not provide a 'combined' (male and female) mortality table, so the IRS will have to develop this table through the regulations. Furthermore, the IRS must determine whether to apply the mortality in a true multidimensional approach (that is, the mortality for a 60-year-old varies by year of birth), or whether to continue the current approach of utilizing a base mortality table (RP- 2014) with annual improvements from another table (MP) to go beyond 2014." (Markley Actuarial via Plan Consultant)  

CalSTRS Gets New Power to Set State, School Rates for Pension Funding
"Two years ago, after nearly a decade of CalSTRS pleading, the Legislature and Gov. Brown enacted a record rate increase. School district rates will more than double by the end of the decade, while teachers and the state have smaller increases.... In what could be a major change, the legislation lifted a cap that limited the basic CalSTRS state rate to 3.5 percent of pay. Now the CalSTRS board has the new power, beginning next year, to raise the state rate up to 0.50 percent of pay each year." (Calpensions)  


DOL Proposals for State-Based MEPs and Auto-IRAs: It's a Start
"One improvement to the DOL approach is simple and straightforward: In the multiple employer plan space, the department should encourage competition among providers rather than providing the state with a monopoly on the provision of certain MEPs.... Policymakers should also work to improve the state-based auto-IRA programs. Again, one questions whether the states should be granted an effective monopoly over provision of these programs.... Congress should also enact legislation to unify the contribution limits for various retirement accounts." (Scott Cooley, in Morningstar Advisor)  


NYC Proposes Its Own Private-Sector Retirement Plan, Making a Bad Idea Even Worse
"Apart from the clear track record that having municipality oversight of private sector employee retirement funds opens the door for corruption and abuse, the entire structure of such a program flies directly in the face of the very reasons why [ERISA] was signed into law over 40 years ago.... New York City might be the poster child for municipal pension plan mismanagement, Illinois and the City of Chicago notwithstanding. Is this the 'extensive infrastructure, know-how, and cost benefits' that the City has gained that should now be leveraged for private sector employees?" (The Platinum 401(k), via LinkedIn)  

Benefits in General; Executive Compensation

[Guidance Overview]

409A Rules Cast a Very Wide Net in Defining What Constitutes a Nonqualified Deferred Comp Plan
"Because 409A applies to all 'service providers' ... and 'service recipients' ... its regulatory reach is not limited to just arrangements between 'employers' and 'employees'.... Arrangements covering rank-and-file employees, directors, partners, independent contractors, consultants, and even other organizations potentially bear the risk of being subject to 409A.... 409A applies to any arrangement that provides for a 'deferral' of compensation. Such deferral arrangements may be elective or non-elective. It could be a paragraph in an employment agreement for just one individual or a 50-page document for a group. Even if it is informal (e.g., communicated through an internal memo) or even oral (i.e., the classic 'handshake agreement'), 409A could come into play if a deferral is recognized." (Milliman Retirement Town Hall)  

[Guidance Overview]

IRS Private Letter Ruling Addresses Elections to Contribute Unused Vacation to Retiree HRA or 401(k) Plan
"Prior IRS rulings have looked favorably on the automatic and mandatory contribution of unused vacation into another plan -- and a recent ruling allowed employees to choose which of two retiree medical plans would get the contribution ... However, the choice between an HRA and a 401(k) plan is a new twist.... The nondiscrimination rules could be an obstacle in other situations and for other plans (including HRAs), depending on the design." (Thomson Reuters / EBIA)  

Press Releases

Bronfman E.L. Rothschild is Certified for Fiduciary Excellence
Centre for Fiduciary Excellence [CEFEX]

Connect   LinkedIn logo   Twitter logo   Facebook logo, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President <>
David Rhett Baker, J.D., Editor and Publisher <>
Holly Horton, Business Manager <>

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.

Links to web sites other than and are offered as a service to our readers; we were not involved in their production and are not responsible for their content.

Privacy Policy