Retirement Plans Newsletter

February 9, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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Webcasts and Conferences

What's in Your Sandwich: The Impact of the Sandwich Generation and Retirement Readiness
March 30, 2016 WEBCAST
(ASPPA [American Society of Pension Professionals & Actuaries])

Form 5500 Update
April 26, 2016 WEBCAST
(ASPPA [American Society of Pension Professionals & Actuaries])

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[Official Guidance]

Text of Treasury Department Notice: Reopening of Comment Period on Central States Pension Fund Application to Reduce Benefits
"On October 23, 2015, the Department published a notice of availability and request for comments regarding an application to Treasury to reduce benefits under the Central States, Southeast and Southwest Areas Pension Plan in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). The purpose of this notice is to reopen the comment period and provide more time for interested parties to provide comments. Comments must be received on or before March 1, 2016." (U.S. Department of the Treasury)  


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[Guidance Overview]

Developments on Normal Retirement Age Regs for Governmental Plans
"With this Notice of Proposed Rulemaking, the IRS has attempted ... to establish certain safe harbors by which the normal retirement age under a governmental plan would satisfy the requirements of Code Section 401(a).... [It] will be particularly helpful [for governmental plan sponsors to] comment on the following issues/concerns: [1] If your plan uses a different criteria for normal retirement age, you should consider asking for it to be added as a safe harbor. [2] What should a plan with no in-service distributions do to meet the pre-ERISA vesting rules?" (Ice Miller LLP)  

Allocating Expenses Among Participant Accounts in DC Plans
"There are numerous options available to allocate plan expenses among participants, each having its own positive and negative attributes. [This article explores] the three most popular models and the associated benefits and drawbacks." (Cammack Retirement Group)  

The Future of DC Outsourcing (PDF)
"DC outsourcing ... allows sponsors to exploit scale and buying power to provide their employees with sophisticated retirement solutions without having to build the necessary expertise and functionality in-house. [This article provides] an overview of ... DC outsourcing -- covering everything from the fundamentals (why, what and how to outsource) to contracting to issues of residual fiduciary liability -- with links to ... more detailed discussions." (Russell Investments)  

Recently Filed Cases Show Continuing Evolution of Participant Fiduciary Claims
"These cases include allegations that 401(k) plan fiduciary committees and their members breached their responsibilities by: [1] Constructing a custom target date strategy that included hedge funds that suffered significant losses; [2] Not using the least expensive mutual fund share classes available to the plan -- or using mutual funds when less expensive commingled trusts or separate accounts of essentially the same investment strategies were available; [3] Allowing the plan to pay excessive recordkeeping and administrative fees in a multiple employer plan arrangement; [4] Using a money market fund rather than a stable value fund as the plan's cash-equivalent alternative." (CAPTRUST Financial Advisors)  


2015 SPARK National Conference -- June 19-21, Washington DC

Sponsored by SPARK

The retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda is designed to meet the needs of 401(k) Plan Providers, Financial Advisors and Third Party Administrators.

Intel Class Action Opens New Frontier in 401(k) Litigation (PDF)
"The reasonableness of the Intel plans' investment fees is one of the many fiduciary issues raised in the new Intel case, but the core issue is whether the plan's investment options should include exposures to alternative asset classes....[T]he Intel plans offered customized model portfolios that included a target date strategy, as well as a balanced strategy. These model portfolios provided exposures to various asset classes, including alternative investments, that is, hedge funds and private equity. The participant complaint alleges that the alternative investment allocations were too high and that they were determined imprudently by the plan fiduciaries." (The Wagner Law Group)  

The Days of Mapping Disengaged Participants Strictly Into Highly Defensive Investment Options Are Clearly Over
"It was not all that long ago that investors automatically enrolled into retirement plans were almost exclusively placed in stable value funds, or perhaps money market funds -- investment approaches deemed to be safe and prudent for any of the small number of people actually defaulted into retirement plans ... Today, nearly a decade after passage of major reforms in the Pension Protection Act (PPA), the steady stream of highly customizable products and services targeted at automatically enrolled defined contribution plan participants tells a different story." (PLANSPONSOR)  

Top Three 2016 Retirement Plan Committee Priorities
"[1] Survey employee sentiment and research behaviors.... [2] Review investment menu simplicity and focus.... [3] Money Market reforms and consideration of alternatives.... As retirement plan committee members, your responsibility is to be prudent and document your process; not to hold the crystal ball which accurately predicts the future." (BenefitsNav)  

DOL Rule Heralds New Era in Distribution
"The [DOL] rule designed to corral conflict of interests among financial advisors will likely lead to new ways of distributing insurance products into qualified retirement plans, say insurance carrier executives.... Instead of advisors heading the for the proverbial career exit in the wake of sagging sales, carriers and distribution partners seem to be poised to find innovative ways to sell more financial products through qualified retirement plans." (  

DOL Sues IAM National Pension Fund and Nine Trustees, Alleges Various Fiduciary Breaches (PDF)
"The allegations are just that -- allegations -- until proven by the preponderance of the evidence in a court of law. However, the allegations provide examples of the types of behaviors and facts that the DOL considers to cross the lines of fiduciary duty and/or violate the rules on prohibited transactions under ERISA.... The allegations highlight areas for self-examination by pension plan trustees to ensure their plan and fellow trustees avoid the behaviors contained in the lawsuit." (United Actuarial Services, Inc.)  

Defined Benefit Funds Stick with Commodities
"Despite a difficult return environment, pension funds continue to allocate to commodities. Total commodity assets of defined benefit plans in the P&I 1,000 were $22.5 billion, a 16.2% decrease from the prior year.... At Sept. 30, 2015, there were 55 pension funds that invested in commodities, up from 17 in 2006." (Pensions & Investments)  

2016 Opens with Dismal Performance of the Financial Markets Lowering Funded Status (PDF)
"The funded status of the 100 largest corporate defined benefit pension plans dropped by $31 billion during January ... The funded status deficit widened to $326 billion from $295 billion at the end of December 2015, due to large investment losses incurred during January.... A small drop in the benchmark corporate bond interest rates used to value pension liabilities also contributed to the increase in the funded status deficit. As of January 31, the funded ratio dropped to 80.9%, down from 82.7% at the end of December." (Milliman)  


Statement of Pension Rights Center at Treasury Department Public Session on Central States Pension Fund Benefit Reduction Application
"Here's how the Central States application flunks every condition set by MPRA: First, the application fails to demonstrate that the Central States Pension Fund took all reasonable steps to avoid insolvency ... Second, the plan did not equitably distribute the benefit cuts.... Third, even with the steep and unjust proposed cuts, the ability of the Central States Pension Fund to survive for the long term is extremely uncertain -- a key factor that the law says must be considered before the Treasury Department can approve any application to cut retiree pension benefits.... Mr. Feinberg, please reject the application.... There are better solutions." (Pension Rights Center)  

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