Retirement Plans Newsletter

February 12, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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Employee Benefits Jobs

Senior 401(k) Administrator
Guidant Financial
in WA

Retirement Planning Consultant
in CA

Benefits Attorney
The Air Line Pilots Association, Int'l
in VA

Senior Recordkeeping Specialist
Hooker & Holcombe, Inc.

Investment Advisor
Magis Financial Partners
in PA

3(16) Administrator
Associated Pension Consultants, INc.

Retirement Plan and Health & Welfare Plan Administration
Direct Retirement Solutions
in NY

401(k)/Retirement Plan Administrator
Wells Thomas, LLC
in CT

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Webcasts and Conferences

Demystifying ESOP Benefit Distributions
February 17, 2016 WEBCAST
(Ohio Employee Ownership Center)

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[Official Guidance]

Text of IRS Notice 2016-18: February 2016 Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) of the Internal Revenue Code. In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)." (Internal Revenue Service [IRS])  


401(k) Answer Book, 2016 Edition

Sponsored by Wolters Kluwer

When participants, sponsors, or service providers ask you questions, this book has the answers. Covers 401(k) plan design, testing, reporting and disclosure, plan termination, investment topics and regulatory guidance. Use code BENEFIT20 for 20% discount.

[Guidance Overview]

Thoughts About Recent DOL Guidance on ESG Factors and ERISA
"In the updated guidance, the DOL uses a number of key words and phrases that are helpful to focus on as fiduciaries consider applying ESG criteria to investment selections or making economically targeted investments. Three of these key concepts are collateral benefits, tiebreakers, and primary analysis." (Calvert Investments)  

The Dreaded Census Questionnaire: Fidelity Bond Requirements (PDF)
"ERISA fidelity bond coverage is necessary protection for your employee benefit plan. Inadequate fidelity bond coverage, as listed on the annual Form 5500, could trigger a DOL audit. Your TPA is requesting this information ensure that your Plan's fidelity bond meets the bond amount requirements and that all plan officials requiring coverage are properly bonded." (Ekon Benefits)  

Breach of Fiduciary Duty Tops FINRA Disputes Again
"According to dispute resolution statistics, published by the Financial Industry Regulatory Authority ('FINRA'), breach of fiduciary duty continues to lead the list of 'controversy types in customer arbitrations.' Negligence, failure to supervise, misrepresentation, breach of contract, suitability and omission of facts follow.... That breach of fiduciary duty allegations feature so prominently in FINRA customer disputes is notable since ERISA litigation patterns reflect a similar focus on how decisions are made by stewards of other people's money." (Good Risk Governance Pays)  

Sen. Warren Accuses Annuity Providers of Double Talk on DOL Fiduciary Rule
"Sen. Elizabeth Warren [D-Mass.] urged [OMB] Director Shaun Donovan ... to 'quickly finalize' the [DOL's] rule to change the definition of fiduciary on retirement advice because large insurance companies and financial services firms have been exaggerating the negative impacts of the rule.... In her letter to Donovan and Labor Secretary Thomas Perez ... Warren states that while firms like Prudential Financial, Lincoln National, Jackson National and Transamerica have publicly chided DOL's rule to change the definition of fiduciary under [ERISA], they are telling their investors the rule 'will have no significant impact on their companies.' " (ThinkAdvisor)  

MassMutual Sued Over Stable Value Fund Fees
"A 401(k) plan participant has filed suit against Massachusetts Mutual Life Insurance Company, alleging the firm collects tens of millions of dollars annually in undisclosed compensation due to the way it values the crediting rate for stable value funds offered to 401(a) and 403(b) retirement plans.... The lawsuit says MassMutual has the sole and exclusive discretion to determine the crediting rate for a given crediting period. MassMutual sets the crediting rate well below its internal rate of return (IRR) on the invested capital it holds in the SVAs, creating a substantial profit for itself, according to the complaint." (PLANSPONSOR)  

Multiemployer Pension Plan Lowers Threshold That Triggers Partial Withdrawal Liability Payments
"Under the 70% Decline Rule, a partial withdrawal can occur when the employer's contribution base units decline by at least 70% and remain at or below that level over a three-year testing period. However, under the seldom utilized ERISA Section 4205(c), a multiemployer pension plan that covers mostly employees in the retail food industry may be amended to provide that a partial withdrawal is triggered by only a 35% decline in contribution base units instead of a 70% decline. This is the provision that the UFCW National Pension Fund has taken advantage of, and which may ensnare some of its unsuspecting participating employers." (Jackson Lewis P.C.)  

New York State Teamsters Mulls Filing for Benefit Reductions
"In a Feb. 5 letter to 34,639 participants, trustees said the plan's actuary determined that it is projected to go insolvent within the next 19 years, placing it in 'critical and declining' status for the plan year that began Jan. 1. That status allows it to apply to the Treasury Department for approval of a plan to suspend benefits." (Pensions & Investments)  

Benefits in General

Obama Administration Budget Proposals Would Again Impact Retirement and Health Benefits (PDF)
"[T]he 2017 package ... includes several new items of significance, including proposals to: [A]mend [ERISA] to permit unaffiliated employers to adopt a defined contribution multiple employer plan (MEP) that would be treated as a single plan for purposes of ERISA.... Account for geographic variation by increasing the threshold for the 'Cadillac Tax' ... Give the [PBGC] the authority to adjust premiums for multiemployer plans ... [P]rovide $6.5 million to allow three states to pilot and evaluate state-based 401(k)-type programs or automatic enrollment IRAs ... [P]rovide $100 million in new funding through the [DOL] to allow States and nonprofits to design, implement, and evaluate new approaches to expand retirement and other employer-provided benefit coverage ... [I]ncrease DOL's budget by 4.9% -- with a 64% increase for [EBSA] -- and the [IRS] budget by 12%." (Groom Law Group)  

Pension Commission Calls for New Jersey Public Worker Health Care Cuts
"The proposal calls for freezing the pension system and moving active public employees onto a cash balance retirement plan, but it hinges largely on reducing health care costs to free up cash.... The commission argues pension and health benefits need to be rethought to prevent them from swallowing 27 percent of the state's annual budget by 2022.... This year, it's 14.3 percent." (  

Executive Compensation and Nonqualified Plans

Executive Pay Remains in Shareholder Proponents' Sights
"Companies likely will see proposals focused on single-trigger change-in-control stock vesting, clawbacks, mandatory stockholding and severance pay in the coming year ... [T]he SEC's work on a Dodd-Frank Act requirement in which public companies would have to adopt mandatory 'clawback' policies ... may result in fewer clawback proposals.... [T]he number of compensation-related proposals have decreased since the advent of say-on-pay votes in 2011, giving way to environmental, social and corporate governance resolutions[.]" (Bloomberg BNA)  

BofA Shareholders to Vote on Deferring Executive Pay to Cover Legal Fines
"The [SEC] has cleared the way for Bank of America shareholders to vote on a proposed requirement that its top executives have a portion of their annual pay deferred to cover future legal fines.... While it remains unclear whether the proposal will pass, shareholders at Citigroup failed to approve a similar proposal last year." (Charlotte Observer)  

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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