Retirement Plans Newsletter

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Senior Pension Analyst
United Retirement Plan Consultants
in CA

Retirement Plan Services Business Development Officer
Heartland Financial, USA
in AZ, CO

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Webcasts and Conferences

Multiple Employer Plans: How MEPs Work for Private Employers
March 1, 2016 WEBCAST
(FIS Relius Education)

Settling Down Lessons Learned from Recent Class-Action ERISA Settlements
March 17, 2016 in CA
(Western Pension & Benefits Council - Orange County Chapter)

How to Make the Most of Your Firm's Qualified High Deductible Health Plan
April 8, 2016 WEBCAST
(Lorman Education Services)

10th Executive Forum on On-site and Near-Site Employee Health Clinics
April 10, 2016 in DC
(World Congress)

Interaction of Health Care Reform with Other Laws in 2016 and 2017
April 19, 2016 WEBCAST
(Lorman Education Services)

2016 Annual Employee Benefits Summit - Navigating the Total Health Revolution
June 10, 2016 in MA
(New England Employee Benefits Council)

NAPA Connect
June 26, 2016 in MA
(National Association of Plan Advisors [NAPA])

View All Webcasts and Conferences


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[Guidance Overview]

Proposed Amendments to Section 401(a)(4) Regs Offer Relief for Closed Plans, Discourage QSERPs, and Ease Combined Testing Rules
"While the proposed amendments would primarily provide relief for benefits under or related to certain 'closed' defined benefit plans, the proposal includes changes that would affect defined contribution plans (including 401(k) plans) that use cross-testing or combined testing for their profit-sharing contributions (whether or not the employer has a closed plan) and tighten the amounts testing rules to discourage qualified supplemental executive retirement plans (QSERPs)." (Thomson Reuters / EBIA)  


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[Guidance Overview]

Hybrid Plans Should Be Reviewed for Compliance With Final Rules
"The IRS ... delayed by one year (to the 2017 plan year) the effective date of the various provisions in the 2014 final regulations that plan sponsors have been concerned about, including: [1] The requirement to use one of the IRS-approved interest crediting rates under the market rate of return rules; [2] The need to eliminate whipsaw in order to remain a 'lump sum based formula'; [3] The requirement that conversions from accounts to annuities be based on reasonable actuarial equivalence either at normal retirement date or at the annuity starting date in order to be a 'lump sum based formula'; [4] Addressing limitations on early retirement subsidies that may be disregarded under the age discrimination safe harbor rules." (Willis Towers Watson)  

[Guidance Overview]

New U.S. Model Tax Treaty Makes Pension-Related Changes (PDF)
"[T]he 2016 Model ... [adds] a protocol where contracting countries will expressly define what qualifies as a 'pension fund'. This is a departure from the 2006 Model where 'pension funds' included entities that are generally exempt from income taxation in a country and that operated principally either to administer or provide pension or retirement benefits or to earn income for entities that administer or provide pension or retirement benefits.... [T]he 2016 Model clarifies the tax treatment of income earned by a person from a pension fund in a different country in the event of a tax-deferred transfer to another plan." (Groom Law Group)  

Plausible Sheep vs. Meritless Goats: Supreme Court Reinforces Duty of Care and Prudence for Retirement Plans with Employer Stock Funds
"Although in theory fiduciaries of plans holding employer stock are held to the 'same duty of prudence that applies to ERISA fiduciaries in general,' in practice, under Fifth Third and Amgen, they are subject to a different pleading standard.... Plan sponsors ... may want to give attention to the following considerations: [1] Review the composition of the committee charged with oversight of the retirement plan ... [2] Provide regularly scheduled and documented fiduciary training programs for committee members.... [3] Confirm that committee meetings are held on at least a quarterly basis.... [4] Request that the [plan sponsor's] treasury department or the retirement plan's investment advisor provide the committee with performance information regarding the employer stock fund ... [5] Focus on having a strong committee meeting process[.]" (DLA Piper)  

DOL Fiduciary Rule Will Transform the Annuity Industry
"The department's pending fiduciary rule, if finalized in its proposed form, would have profound effects on variable annuities sold in retail retirement accounts, from sales to product development and adviser compensation. Namely, brokers selling VAs would likely operate more in a fee- rather than commission-based capacity, and insurers would pivot to develop product suites catering to this new demand. Further, there could be commission compression, more use of trailing rather than upfront commissions, a shift toward lower-fee share classes and increased adoption of fixed-indexed annuities." (InvestmentNews)  


Roth IRA Answer Book, Seventh Edition

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Pensions with Purpose: Five Ways Pension Funds Are Taking Action to Own Better Outcomes for Retirement
"[T]he survey found that pension funds will look to 'own' five strategic retirement aspects: [1] Own the Outcome: Board training and education will be the focus of 2016 ... [2] Own the Future: Funds are transforming to meet future obligations, with a focus on ESG and alternatives ... [3] Own the Efficiency: Under pressure to cost cut, pension funds turn to asset pooling ... [4] Own the Risk: Pension plans face stark choices around risk ... [5] Own the Talent: The insourcing continues, but external advisors are still vital to success." (State Street Corporation)  

More Plans Than Ever Solve Liabilities Problem by Dumping Them
"While the past year did not see megadeals of the same scope as the General Motors Co. and Verizon Communications Inc. group annuity purchases in 2012, activity remained strong.... [P]ension buyout transactions exceeded $8 billion in the first three quarters of 2015, the most recent data available." (Pensions & Investments)  

Trends in Employer Costs for Defined Benefit Plans
"In March 2015, costs for defined benefit plans for private industry employers were approximately 61 cents per employee hour worked, on average. However, when data are averaged only by the employers that offer these plans, the costs are much higher. [This article explores] how costs fluctuate by industry, occupation, establishment size, and region, and review trends in costs for employees with access to these plans from 2008 to 2015." (U.S. Bureau of Labor Statistics [BLS])  

Innovation Could Be Outcome of Multiemployer Plan Debate
"One possible silver lining is the NCCMP's proposal to Congress to allow new types of multiemployer plans that have both defined benefit and defined contribution features. Inspired by 'shared-risk' models in other countries, these composite plans would allow existing plans to have two parts: a 'legacy' DB plan that would have to be fully funded with no future accruals and a new composite benefit for future accruals, with pooled management." (Pensions & Investments)  

Window Still Open on Social Security Rules Changes: Steps You Can Take to Maximize Your Benefits (PDF)
"[F]ile and suspend will remain available for those who reach full retirement age 66 prior to the law taking effect May 1, 2016. For those who were born on or before January 1, 1954, a group that was in effect grandfathered under the law, restricted application will remain available for an additional four years in its current form. Even with the pending changes, there are still strategies available to maximize Social Security benefits for these two populations[.]" (Bronfman E.L. Rothschild)  

Fewer Retirees Are Living Alone
"The proportion of people age 65 and older living alone increased dramatically from 6 percent in 1900 to 29 percent in 1990 ... However, over the past 25 years the share of older adults living alone declined by 3 percentage points to 26 percent in 2014. It is primarily older women who live alone.... They comprise 69 percent of the 12.1 million older Americans living alone, but this is down from 79 percent in 1990." (U.S. News & World Report)  

Withdrawal Liability to Bricklayers Pension Fund Upheld in Court
"A Washington District Court judge approved a settlement agreement between the International Union of Bricklayers and Allied Craftworkers, Washington, and a Nashville employer calling for $1.13 million in retroactive pension contributions." (Pensions & Investments)  


Why I Hate the 15-Year 403(b) Catch-Up Election
"It's complicated ... IRS examiners LOVE the 15-year catch-up ... It is a useless election for the vast majority of people ... plan sponsors should avoid it like the plague." (Cammack Retirement Group)  


Why Can't 3.6 Million Teachers Get a Group Discount on Their 403(b) Plans?
"Instead of collectivizing the investment needs of millions of teachers, spindly individual contracts with plan vendors are the rule.... This system has a dramatic effect upon the final balances of the individual teacher accounts, jeopardizing their retirement. According to a white paper by Aon Hewitt, teachers in 403(b) plans pay an astonishing ten billion dollars a year in unnecessary expenses! The biggest contributor to this conflagration is the individual annuity and fund expenses." (A Teachable Moment)  

Executive Compensation and Nonqualified Plans


What If the Compensation for All S&P 500 CEOs Were Confiscated and Redistributed to Rank-and-File Workers?
"The AFL-CIO reports that CEOs of companies in the S&P 500 received $13.5 million in average total compensation in 2014, and those 500 CEOs as a group would have therefore generated $6.75 billion in compensation. If that total amount of almost $7 billion was confiscated and redistributed equally to the 97,734 million workers that the AFL-CIO uses for its 'average worker pay' calculation, each of those rank-and-file hourly workers would have received $69.07 in extra annual pre-tax income in 2014, or about 3.5 cents per hour for a 40-hour workweek and about 4.2 cents per hour for a 33.7-hour workweek[.]" (American Enterprise Institute)  

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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