Retirement Plans Newsletter

March 1, 2016

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Defined Contribution Plan Administrator
Profit Planners LLC
in IL

Sr. Retirement Plan ERISA Consultant
Benefit Consultants Group
in NJ

Advisor Services Consultant
Benefit Consultant Group
in NJ

Retirement Consultant
Buck Consultants a Xerox Company
in NY

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Webcasts and Conferences

Fundamentals of Qualified Plans Web Series: 04- Coverage Test
March 3, 2016 WEBCAST
(FIS Relius Education)

MEPs, IRAs, and More: DOL Guidance on State Plans
March 8, 2016 WEBCAST
(FIS Relius Education)

Impact of EEOC Regulations on Wellness Programs
March 10, 2016 WEBCAST
(International Foundation of Employee Benefit Plans [IFEBP])

Fundamentals 05: Elective Deferrals
March 10, 2016 WEBCAST
(FIS Relius Education)

Everything You Wanted to Know About Pensions – But Were Afraid to Ask!
March 15, 2016 WEBCAST
(International Foundation of Employee Benefit Plans [IFEBP])

Church Plans: The Retirement Benefits Are Better Than Ever
March 15, 2016 WEBCAST
(FIS Relius Education)

Getting It Right - Know Your Fiduciary Responsibilities: Retirement and Health Plan Sponsors – Day 1
March 15, 2016 WEBCAST
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

Getting It Right - Know Your Fiduciary Responsibilities: Retirement and Health Plan Sponsors – Day 2
March 17, 2016 WEBCAST
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

Getting It Right - Know Your Fiduciary Responsibilities: Retirement and Health Plan Sponsors – Day 3
March 22, 2016 WEBCAST
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

ACA & Benefits Compliance Update
March 24, 2016 WEBCAST
(Frenkel Benefits, LLC)

ACA Potluck (IRS Notice 2015-87): IRS Provides Full Serving of New ACA Guidance
March 24, 2016 WEBCAST
(ABD Insurance & Financial Services)

Legislative Update: Health & Welfare Benefit Plans
March 30, 2016 WEBCAST
(TRI-AD)

Nonqualified Plans
April 19, 2016 in MN
(ASPPA Benefits Council [ABC] of Greater Twin Cities)

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Discussions


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[Guidance Overview]

Text of IRS Reference Lists of Changes in Qualification Requirements for Retirement Plans
"Reference lists are tools to help you ensure that your plan document incorporates all relevant mandatory and optional changes in plan qualification requirements.... Each reference list contains items that are new to the cumulative list for that year. For example, the 2014 Reference List includes those items that first appeared on the 2014 Cumulative List of Changes in Plan Qualification Requirements." (Internal Revenue Service [IRS])  


[Advert.]

Join the chorus of the LEADING voice of the Plan Sponsor!

Sponsored by Plan Sponsor Council of America [PSCA]

Join your peers to strengthen, refine, and amplify your voice at PSCA's 69th Annual National Conference. Hear the latest from Washington and learn the newest trends in DC plans to be a stronger and sharper advocate for your participants and your plan.



Proposed Fiduciary Rule Cited in Win for ESOP Adviser
"According to the judge, Strategic Equity's role in providing a fairness opinion and stock valuation to the ESOP didn't cause it to become a fiduciary under [ERISA]. That's because the firm didn't control whether the ESOP ultimately agreed to sell stock back to the plan sponsor ... [T]he judge [also] said that fairness opinions issued to ESOPs in connection with redemption agreements don't qualify as 'investment advice' under ERISA. In support of this conclusion, the judge cited the DOL's recent statement that the proposed fiduciary rule doesn't change the department's longstanding position that valuations of employer securities in connection with ESOPs 'are not considered investment advice.' " [Carter v. San Pasqual Fiduciary Trust Co., No. 8:15-cv-01507 (C.D. Cal. Feb. 22, 2016)] (Bloomberg BNA)  

IRS Guidance Creates 'Super Saver' Opportunity for 401(k) and 403(b) Retirement Plans (PDF)
"IRS Notice 2014-54 significantly boosted the savings potential of after-tax contributions when paired with a Roth IRA conversion.... This article will explain how IRS Notice 2014-54 creates an opportunity to convert after-tax contributions in a Roth IRA, some of the benefits of the conversion, and some advice for employers that want to make this 'super saver' technique possible for their participants." (Fiduciary Investment Advisors and Nixon Peabody)  

A Set-It-and-Forget-It Retirement? Not Exactly (PDF)
"[O]nly one quarter (26 percent) [of participants surveyed] are using the funds as intended. Two out of three (64 percent) target -date fund investors hold only a portion of their investments (less than 90 percent) in the funds, potentially harming their investment returns compared to those fully invested in target -date funds. Despite moving away from being fully invested in their target-date fund, 81 percent of participants said that they understood that target-date funds are diversified by design and that they knew how they worked. By investing outside of their target-date fund, participants were seeking something beyond what their target-date fund could offer." (Financial Engines)  

Reshaping Participant Outcomes Through Reenrollment
16 pages. "Reenrollment into low-cost target-date funds is a highly effective strategy to improve portfolio diversification and reduce fund fees paid by participants. Most participants remain invested in the default fund after the reenrollment event. A small group of participants opt out and make their own portfolio choices but use the default fund as an additional investment option." (Vanguard)  


[Advert.]

The Conference is "Virtual", but the Insights are Real.

Sponsored by ASPPA

Catch up on the latest industry trends and topics — while gaining up to 7.5 hours of CE? Hear from and interact with five of the industry's top thought leaders: Ilene H. Ferenczy, Brian Graff, Craig Hoffman, Adam Pozek and Sal Tripodi.



Should Plan Sponsors Worry About the Roth Promise?
"[P]articipants should hedge their bets by contributing something into their Roth 401(k) accounts. Anything, to at least get their Roth five year clock started. Once the five year period is met (with as little as a $1 of Roth 401(k) contributions) any future contributions are immediately eligible for tax-free treatment. There is not a separate five year clock for every Roth 401(k) contribution made.... [O]ne of the biggest reasons the federal government will keep their Roth promise is because unwinding it and taxing balances does not produce enough tax revenue." (Lawton Retirement Plan Consultants)  

Lifetime Income: An International Worry (PDF)
10 pages. "[T]he Actuaries Institute in Australia, the Institute and Faculty of Actuaries in the United Kingdom, and the American Academy of Actuaries in the US ... pretty much span the globe, and they share a mutual concern that citizens in their respective countries do not possess the tools and financial training needed to make their defined contribution retirement savings (e.g., 401(k) account balances) last a lifetime. Interestingly, these three geographically diverse nations have arrived at this collective concern from very different perspectives." (Bryan, Pendleton, Swats & McAllister, LLC)  

Change in Average 401(k) Account Balances, January 1, 2014 through March 1, 2016 (PDF)
The report shows the change in average 401(k) account balances through March 1, 2016, grouped by age and tenure, counting only those participants who had an account balance at the end of 2013. (Employee Benefit Research Institute [EBRI])  

February 2016 Pension Finance Update
"Following a difficult January, pension woes continued in February, marked by weak stock markets and falling interest rates. Both model pension plans we track lost ground again last month: Plan A fell 2% in February and is now down more than 8% this year, while Plan B dropped 1% last month and 4% total in the first two months of the year[.]" (October Three Consulting)  

Retirement Plan Options for Small Business Owners
"From the point of view of the business owner, 'easy-to-use' is often the most attractive option.... Another important factor is how owners view the business itself as an asset within their retirement portfolio.... When looking at the types of plans recommended by professionals and used by many small business owners, the choices themselves can be reduced to less than a handful.... Within these options, however, exist several variations, giving business owners and excellent range of options that can be customized for their specific needs." (Fiduciary News)  

Shortchanged in Retirement: Continuing Challenges to Women's Financial Future
"For women age 65 and older, the data indicate that their typical income is 25 percent lower than men. As men and women age, men's income advantage widens to 44 percent by age 80 and older. Consequently, women were 80 percent more likely than men to be impoverished at age 65 and older, while women age 75 to 79 were three times more likely to fall below the poverty level as compared to their male counterparts.... [In] 2010, men received $17,856 in median retirement income from a pension, whereas women received $12,000 -- or 33 percent less." (National Institute on Retirement Security [NIRS])  

MetLife Exits Brokerage Business as DOL Rule Looms
"A second major insurance company has decided to exit the brokerage business this year as MetLife Inc. announced Monday it is selling its U.S. adviser unit to Massachusetts Mutual Life Insurance Co.... Metlife is shedding the unit as brokerage firms face higher compliance costs tied to the Labor Department's proposed fiduciary rule requiring advisers to act in the best interest of their clients when providing investment services for retirement accounts." (InvestmentNews)  

[Opinion]

Senate Committee Report Indicates Ends Seem to Justify Means for Partisan DOL
"One of the key concerns of lawmakers and the retirement industry was whether the DOL had effectively communicated with the [SEC] as the conflicted advice regulations were being drafted.... The DOL not only refused to provide copies of what might have been its key communications with the SEC, but evidence obtained by the Committee from the SEC paints a picture of the DOL attempting to influence SEC not to fully cooperate with the DOL; not to provide these requested communication records. SEC staff had also pointed out numerous flaws in the regulations. The upshot is that the DOL's claim to have actively and substantively worked hand-in-hand with the SEC in creating these regulations turns out to be a fiction." (Todd Berghuis, for Ascensus)  

Benefits in General

March and April 2016 Filing and Notice Deadlines for Qualified Retirement and Health & Welfare Plans
"The filing and notice deadline table [in this article] provides key filing and notice deadlines common to calendar year plans for the next two months. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is generally delayed until the next business day. Please note that the deadlines will generally be different if your plan year is not the calendar year." (King & Spalding, LLP, via Lexology)  

Executive Compensation and Nonqualified Plans

Severance, ERISA, and Rum Punch
"If your severance benefit is more than two years' pay or if payments extend over more than two years, the plan likely is beyond the ERISA severance pay exception. If the plan involves more than one check which is easily calculated, don't look back. Get help. You likely have an administrative scheme and, accordingly, ERISA provisions -- including plan document, reporting and disclosure requirements -- could be sneaking up on you." (Jackson Lewis)  

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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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