Retirement Plans Newsletter

February 23, 2016

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Retirement Services Deputy Director
ACCG
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Senior Retirement Consultant
Hooker & Holcombe
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Fringe Benefit Group
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Business Development
Atlantic Pension Services Inc
in DE, NJ, PA

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Webcasts and Conferences

Independent Fiduciary's Role: Mitigating Risk and Creating Opportunities
March 24, 2016 WEBCAST
(Worldwide Employee Benefits Network [WEB])

401(k) Investment Lineup
April 5, 2016 in CA
(Pensions & Investments)

401(k) Investment Lineup
April 7, 2016 in TX
(Pensions & Investments)

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Outsourcing by DC Plan Sponsors: A Compendium of White Papers on Fiduciary Solutions (PDF)
24 pages. Topics include: [1] Why DC fiduciary outsourcing? [2] What to outsource? [3] Selecting a DC plan outsourcer; [4] The outsourcing contract; [5] Fiduciary outsourcing: What liability does the sponsor retain? [6] The many faces of fiduciary outsourcing; [7] Outsourcing: Prudent selection and monitoring of your outsourcing provider; [8] The future of DC outsourcing. (Russell Investments)  


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Will Increased 401(k) Fee Scrutiny Eclipse DOL's New Fiduciary Rule?
"With the advent of new fee disclosure rules and the fallout from class action lawsuits, 401k plan sponsors appear to have become more serious about the potential liability of breaching their fiduciary duty. Was there a 'straw that broke the camel's back' that caused plan sponsors to take their fiduciary duty more seriously? Could increase in attention reduce the impact of the DOL's new Fiduciary Rule?" (Fiduciary News)  

Will the DOL's Proposed Fiduciary Rule Change Affect You as a Plan Sponsor?
"In order to understand how the DOL's proposed redefinition of the term 'fiduciary' under ERISA will affect you as a plan sponsor, you must first understand the relationship you have with your current plan service providers.... If you find that your current service providers are not fiduciaries, the question becomes, will the new proposed fiduciary rule cause them to now be a fiduciary?" (Pension Consultants, Inc.)  

IRS Asks Form 5500, 5500-SF Filers to Not Answer the New Compliance Questions
"The IRS has released at its website a notice indicating that filers of Form 5500, Annual Return/Report of Employee Benefit Plan, and Form 5500-SF, Annual Return/Report of Small Employee Benefit Plan, should not complete the optional compliance questions on the 2015 plan year version of these forms and their associated schedules.... This new IRS announcement does not, however, address or similarly direct filers of the 2015 Form 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan, to not complete the optional compliance questions on this form. Unlike the other Forms 5500, Form 5500-EZ is filed with the IRS." (Ascensus)  

Default Distributions from DC Plans: A Role for Managed-Payout Target Date Portfolios
"Default features in defined-contribution plans are designed to improve the retirement security of plan participants. To date, these have focused on the challenge of saving, ignoring the more complex challenge of dissaving in the post-retirement period. Automatic default provisions that apply to the drawdown of participant account balances after retirement could be beneficial. Their objective would be the reframing of the Zeitgeist of defined-contribution plans from that of savings plans closer to that of income continuation plans with pension-like features. This could be accommodated though a managed payout feature built into the plan's default investment strategy." (The Journal of Retirement; subscription may be required)  


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New midyear Safe Harbor amendments, cross-tested plan proposed regs

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Late 401(k) Deposits? 'An Ynche in a Misse Is as Good as an Ell.'
"There is no such thing as a 'miss' with 401(k) contributions. A late 401(k) deposit is a late 401(k) deposit regardless of the amount. It's considered a prohibited transaction. That is, an extension of credit between the plan and a 'party-in-interest', the employer as plan sponsor. When are deposits considered late? ... What voluntary correction programs are available?" (The Retirement Plan Blog)  

Retirement Plan Options for 1099 Employees
"[S]even in 10 entrepreneurs aren't saving regularly, if at all, for retirement.... Start by creating a budget.... Roth IRA.... MyRA.... Simple IRA.... Solo 401(k).... SEP IRA." (U.S. News & World Report)  

As Public Pension Funds Seek to Reduce Liabilities, Putting New Hires in 401(k) Plans May Weaken Retirement Security
"Many U.S. public pension funds are struggling to balance long-term needs against tight state budgets and dwindling performance from traditional investments like stocks and bonds. In some states that means putting new employees into defined contribution plans in an effort to limit pension obligations. But doing so can leave retirees short of income ... Rebalancing portfolios toward specific tactical themes instead of simply trying to hit target allocations might help to solve the problem." (Institutional Investor)  

Maximize Your Social Security Benefits
"[S]pousal strategies to maximize benefits start with knowing each spouse's [primary insurance amount (PIA)]. The other important facts, however, are realistic estimates of longevity as well as a review and estimate of overall income and resources available during retirement. As a result of unknown or unaccounted-for factors, it could be that the best-laid plans to maximize Social Security benefits turn out to be wrong.... Choosing how to take Social Security benefits ought to be accompanied by careful thinking about your health and other retirement resources[.]" (Bond, Schoeneck & King)  

Letter from CEFEX to SEC About Third-Party Compliance Reviews for RIAs (PDF)
"An SEC third-party examination program can focus on straightforward, evidence-based fact-finding like asset verification and consistency between advisory practices and Form ADV and website disclosures or other marketing materials. The program would assess conformity to specific practices that the Commission deems to be most conducive to examination by a third-party. It could also help uncover potential problems that may require more in-depth review by SEC examiners, thereby enabling the SEC build a more complete risk-profile of advisory firms examined so it can direct greater resources to higher-risk firms." (Cambridge Financial Services, LLP via CEFEX)  

[Opinion]

American Retirement Association Letter to IRS Requesting Meeting on Revised 5500 Compliance Questions/Instructions (PDF)
"The most recent announcement in which the IRS advised that the questions should not be completed, even on an optional basis, is the latest twist in this saga that has been on going since the draft questions were first released in December of 2014.... Once again, plan sponsors, practitioners and software providers do not know what data should be collected and maintained for a plan year that is underway.... The ARA continues to believe a meeting at which we (and other stakeholders) could explain our concerns would be extremely beneficial to improving the data received and reducing the burdens of collection." (American Retirement Association [ARA])  

[Opinion]

What Would Alexander Hamilton Say About Excessive Fees in 401(k) Plans?
"You know those vast empires of wealth that have been built across the retirement industry by taking large fees out of 401(k) plans? That empire's fallen. Making a lot of money out of servicing 401(k) assets is now going to have to come from doing a better job, not from charging more for the same job. There's just too much risk in it for plan fiduciaries if they allow people to keep making a lot of money simply by charging a lot of fees to place or hold retirement assets, without providing additional benefit that warrants additional fees." (Stephen Rosenberg, The Wagner Law Group)  

[Opinion]

America's Retirement Security Challenge: An Opportunity to Lead
"The best path to positive change would be to focus on what is already working well in today's workplace savings plans -- and extend that coverage to all. It will be possible to work with Congress to find ways to extend workplace savings coverage. The goal should be securing access to on-the-job savings for every American who pays Social Security tax." (U.S. Chamber of Commerce)  

Benefits in General

Montanile v. Board of Trustees: A New Model for Recovery
"Following the decision in Montanile, plans that are potentially owed money from participants must take a step back and reevaluate the way they investigate potential recovery claims, the language in their plans and the language in any reimbursement agreement.... A plan should immediately seek bank records and other information to determine how the money received from a third party was spent.... Nothing appears to prevent a plan from designating a participant as a fiduciary to the extent that the person receives money owed back to the plan and its insurers." (Wilson Elser)  

What Happens When a 'Procedural Irregularity' Occurs in an Appeal Denial?
"You know that procedural irregularities in an appeal denial of a claim for ERISA-governed benefits can change the standard of review from arbitrary and capricious to de novo review. But not all the time. The claimant should also 'provide meaningful new evidence or raise significant new issues on administrative appeal.' " [Messick v. McKesson Corp., No. 15-4019 (10th Cir. Feb. 17, 2016)] (Lane Powell PC)  

Five Tips to Litigation-Proof Your ERISA Administrative Process
"Examine your process for dealing with participant/beneficiary requests ... Review your procedure for dealing with assignments ... Review statute of limitations issues ... Think through fiduciary responsibility ... Conduct periodic reviews of your administrative process." (Miller & Chevalier, via Corporate Counsel; free registration required)  

Executive Compensation and Nonqualified Plans

Court Rules Employment Agreement Severance Provisions Can Constitute ERISA Plan
"The District Court ultimately agreed with the employer and found that the severance provisions in the executive's individual employment agreement established an ERISA plan. The court's analysis focused on five main points: Intended benefits ... Class of beneficiaries ... Source of financing ... Procedures for receiving benefits ... Ongoing administrative scheme." [Zgrablich v. Cardone Industries, Inc., No. 15-4665 (E.D. Penn. Feb. 3, 2016) (Winston & Strawn LLP)  

Press Releases

Burnham Benefits Welcomes New Vice President
Burnham Benefits Insurance Services Inc.

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, 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 BenefitsLink.com, 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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