[Guidance Overview]
Is the QSERP Dead? Proposed Rules Target Individual Benefit Formulas
"Under the proposed rules, to satisfy coverage using the average benefits test, the rate group must, in addition to passing the numeric tests, be based on a formula that applies not only to the HCE for whom the rate group is established, but also to a group that represents a reasonable business classification. According to the IRS, a benefit formula that applies solely to an HCE identified by name won't meet this requirement."
(Hanson Bridgett LLP)
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[Guidance Overview]
IRS Provides Relief for Mid-Year Amendments to Safe Harbor Plans (PDF)
"This notice does not require any additional notice or election opportunities for changes to information that is not required safe harbor notice content even if that information is provided in the plan's safe harbor notice. Also it does not modify the existing safe harbor notice content requirements.... The IRS is requesting comments on additional guidance that may be needed with respect to mid-year changes to safe harbor plans. Specific comments are requested with regard to mid-year changes for plans involved in mergers and acquisitions or plans that include an Eligible Automatic Contribution Arrangement (EACA)."
(VOYA Financial)
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401(k) Custodial Contracts Must Be Disclosed, Judge Says
"Considering an issue of first impression, Judge James Knoll Gardner of the U.S. District Court for the Eastern District of Pennsylvania held that a custodial agreement between a 401(k) plan and Nationwide Trust Co. qualified as a formal document under which the plan was established and operated. Although noting it was a 'close question,' Gardner said the custodial agreement was therefore subject to the statutory disclosure requirements of [ERISA]." [Askew v. R.L. Reppert, Inc., No. 11-cv-04003 (E.D. Penn. Feb. 5, 2016)]
(Bloomberg BNA)
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A Better Way to Evaluate Retirement Plans
"[The authors] created a methodology for estimating the effectiveness of a plan at the individual participant level, which in turn can be rolled up into ... a Retirement Plan Effectiveness Score.... [R]obust estimation techniques [are used] to determine the appropriate retirement plan 'target balance' based not only on age and plan tenure but also gender, compensation, and other variables. Comparing the participant's current balance to a customized target balance yields the relative funded status, and combining these individual participant metrics produces the Retirement Plan Effectiveness Score."
(David Blanchett, CFA and Thomas M. Idzorek, in Morningstar Advisor)
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Are Retirement Plan Sponsors Too Afraid of Longevity Annuities?
"11 companies were offering QLAC products to plan participants as of September of last year. MetLife was the first -- and so far only -- insurer to issue a group QLAC for DC plans ... As of last month three plan sponsors are 'in the process of implementing it ... and we have several others that are going through the negotiation process.' ... [W]hile some [plan sponsors] are confident their provider-selection process would stand a challenge under ERISA ... others say they need additional clarity from the DOL on the process of selecting a provider[.]"
(WealthManagement.com)
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Final Obama Budget Proposal Heavy on Retirement Account Changes (Again!)
"Having seen none of his 14 retirement account-related proposals from last year's budget enacted, the President has included them all again in this year's budget. In addition, this year's budget features one additional significant retirement account-related change.... [This article includes] a complete list of the 15 provisions in the President's budget that directly relate to retirement accounts. For each, you'll see whether they are new or carryovers from previous years, a description of each, as well as some commentary to provide insight and perspective."
(Slott Report)
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Summary of President's FY2017 Budget Proposal
"[T]he proposals provide some indication of what could be on the chopping block, should any legislation happen to be going through Congress that needs a 'revenue offset' to cover its cost. Key provisions that could be changed in the future include: [1] Elimination of back door Roth IRA contributions ... [2] Introduce Required Minimum Distribution obligations for Roth IRAs ... [3] Elimination of Stretch IRA rules for non-spouse beneficiaries ... [4] Limit new IRA contributions for large retirement accounts (over $3.4M) ... [5] Repeal of net unrealized appreciation rules for employer stock in an employer retirement plan."
(Michael Kitces in Nerd's Eye View)
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Iowa Proposes State-Sponsored Retirement Plan for Private Sector Employees
"About 42 percent of Iowa's private sector employees don't have access to an employer-sponsored retirement plan ... Retirement Savings Iowa would not require employer contributions. Through payroll deductions, it would put 3 percent of an employee's wages in the plan unless the employee chose to opt out. The plan would have tax advantages similar to an IRA[.]"
(Globe Gazette)
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[Opinion]
Why Your 401(k) Adviser May Be Underpaid
"They have to know all of the things that a standard financial advisor knows...in addition to everything retirement plan related.... They commit to improving themselves to better serve you.... They have a serious time commitment.... They will have a fiduciary liability."
(QP Steno Blog)
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Benefits in General; Executive Compensation
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Obama Proposes Cadillac Tax, PBGC Premium Changes
"Under the proposal, in any state where the average premium for 'gold' coverage on the state's individual health insurance marketplace exceeds the Cadillac-tax threshold, the tax trigger would be set at the level of that average gold premium.... [T]he administration says it wants to hold the line on premiums employers pay the [PBGC] and shift to the agency's Board -- comprised of the secretaries of Labor, Treasury and Commerce -- the authority to set premium levels. Congress last year sharply raised PBGC single-employer premiums, but the administration says more hikes are not necessary."
(Business Insurance; free registration required)
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Press Releases
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