Retirement Plans Newsletter

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Webcasts and Conferences

HSA Opportunities & Retirement Hot Topics/ Washington Update
March 10, 2016 in WA
(ASPPA Benefits Council [ABC] of Great Northwest)

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[Guidance Overview]

IRS Accepts 55 and Older NRAs in Multiemployer Plans
"The [IRS has] released an internal memorandum [dated February 23, 2016] instructing its agents to accept normal retirement ages (NRAs) that are 55 or older in multiemployer plans, provided that the plan is maintained pursuant to at least one collective bargaining agreement. The memorandum is described as interim guidance and is directed to IRS agents reviewing determination letters and conducting audits." (Segal Consulting)  


Frozen plans are different, and need to be managed differently.

Sponsored by Russell Investments

Thousands of pensions have frozen benefit accruals on the path to plan termination. Many more are considering such a step. The Frozen Plan Handbook is an illustrative guide for sponsors who have frozen -- or are considering freezing -- their pension plan.

Supreme Court Reverses Ninth Circuit Again, Reaffirms Special Pleading Standard Applicable in ERISA Stock Drop Cases
"As the Supreme Court made very clear, following Dudenhoeffer, to allege a breach of the duty of prudence in an ERISA stock drop case a plaintiff must plausibly allege facts demonstrating 'an alternative action that the defendant could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstance would not have viewed as more likely to harm the fund than to help it.' ... Without such allegations of fact, ERISA stock drop cases are likely to be dismissed[.]" (Trucker Huss)  

Tatum Reconsidered: No Fiduciary Liability Under Fourth Circuit's Higher Objectively Prudent Standard
"While these fiduciaries may have avoided liability despite their failure to follow a prudent process to determine whether and when to eliminate the stock funds, the outcome should not obscure the broader lesson of this case: Fiduciaries can avoid the practical difficulty of proving what a hypothetical prudent fiduciary would have done by ensuring that decisions are well-reasoned, meetings and decisions are appropriately documented, and the individuals making those decisions are authorized under the plan's governance provisions." (Thomson Reuters / EBIA)  

DOL Investigating DB Plans for Failure to Pay Participants
"The DOL's investigation has already uncovered more than half a billion dollars in unpaid benefits owed by just six large pension plans, and its scope is expanding. [A DOL representative] noted that even some plans with 'really good written procedures' could run into compliance problems if they fail to follow these procedures and thereby fail to provide vested benefits to former employees, some of whom may have terminated employment years previously." (Trucker Huss)  

Workers and Employers Would Be Forced to Save 3% of Pay Under New Retirement Proposal
"A new proposal to solve the country's retirement savings crisis would force workers and their employers to contribute at least 3% of the employee's salary each year toward an account that would be converted into an annuity at the time of retirement. The proposal, hatched by economist Teresa Ghilarducci and Tony James, the president of private-equity behemoth Blackstone Group, is designed to replace current 401(k) plans, which have been ineffective in providing a secure retirement for millions of Americans." (InvestmentNews)  


Form 5500 Reporting Update

Sponsored by Lorman and BenefitsLink

March 17 - This webinar explains the new reportable event definitions under the PBGC regulations that went into effect January 1, 2016. BenefitsLink discount.

Pension Benefit Cuts Planned at TVA, Breaking a Federal Firewall
"[T]he board of the Tennessee Valley Authority Retirement System, the pension program for roughly 11,000 workers and 24,000 retirees at the venerable New Deal-era agency, approved a tentative plan to lower the system's funding shortfall by reducing benefits. The plan will be implemented later this year if the T.V.A.'s management and board go along with it.... [W]hat has elevated an increasingly common debate about pensions into a larger controversy about inequality is [a] decision to exempt from the cutbacks the benefits that he and other executives receive through a supplemental retirement plan." (The New York Times; subscription may be required)  

S&P 1500 Pension Funded Status Decreases in February 2016
"The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies decreased by one percent to 78 percent as of February 29, 2016, as a result of negative equity markets and a decrease in discount rates. As of February 29, 2016, the estimated aggregate deficit of $487 billion increased by $15 billion as compared to the end of January. Funded status is now down by $83 billion from the $404 billion deficit measured at the end of 2015[.]" (Mercer)  

Tax-Deferred Retirement Saving in Canada (PDF)
23 pages. "Canadian employers who sponsor retirement plans have mostly adopted arrangements that qualify for deferral of taxes. It is no longer clear that this is the best choice. Low interest rates and the emergence of Tax-Free Savings Accounts mean that there could be better alternatives for future generations of employees. This research report re-examines the effectiveness of tax deferral and other fundamental choices." (Society of Actuaries)  


The State of American Retirement: How 401(k)s Have Failed Most American Workers
"This chartbook assesses the impact of the shift from pensions to individual savings by examining disparities in retirement preparedness and outcomes by income, race, ethnicity, education, gender, and marital status. The first section of the chartbook looks at retirement-plan participation and retirement account savings of working-age families.... The second section looks at income sources for seniors." (Economic Policy Institute)  


These Charts Show the Different Ways 401(k) Plans Fall Short
"Instead of leveling the playing field in retirement, 401(k) plans have the effect of magnifying income inequality, says Monique Morrissey, an economist for EPI who focuses on retirement. And differences in income alone don't explain the difference, she said, citing that tax law and differences in risk tolerance also could be deepening the gap between what low income and high income workers are able to set aside for retirement." (The Washington Post; subscription may be required)  


How Good Is the Federal Thrift Savings Plan?
"It is important to keep in mind that in nearly all cases TSP has provided the smallest source of federal employee retirement income. It is a supplement of varying size to the secure Social Security and pension sources, not a standalone retirement plan. As a solution to the growing retirement crisis, opening TSP up to private sector employees without plans ... would be better than nothing. It would not though provide, even in combination with Social Security income, enough retirement income." (James W. Russell, in the Huffington Post)  

Benefits in General

Supreme Court Preemption Decision Could Reach Beyond Self-Insured Health Plans
"Gobeille's ruling that the Vermont statute was a 'direct regulation of a fundamental ERISA function' might equally be applied to a state-sponsored retirement program for private sector employees where benefits are provided through employer payroll deduction. The rather cursory analysis provided in the preamble to the proposed regulation to support the DOL's rationale for exempting such a program from ERISA, and the recognition that state voluntary payroll decision arrangements might still be pre-empted depending on the specific terms of the applicable state law, would seem to require some re-examination in light of the relatively direct analysis in Gobeille." (McGuireWoods LLP)  

How to Pay School Loans and Save for Retirement at the Same Time
"CEO Tony Aguilar helped start Student Loan Genius in 2013 ... He's been pushing for Congress to pass a bill that would allow employer matches to student loan payments to be pretax. But in the meantime, his company came up with a way to sync the existing 401(k) program with college loan bills. That way, young people don't lose the opportunity for a tax-deferred match if they've chosen to pay down debt rather than save for retirement." (Bloomberg)  

Executive Compensation and Nonqualified Plans

Hot Topics in Executive Compensation: 2016 Proxy Season and Beyond
58 presentation slides. Topics include: [1] Shareholder proposal trends in 2015; [2] Proxy advisor policies for 2016; [3] Addressing the "new" SEC rules: CEO pay ratio, compensation clawbacks, and pay for performance; [4] Focus on performance measures; [5] Post-vest holding restrictions on equity awards; [6] 409A issues; [7] Proxy statement drafting tools and tips; [8] Maximizing "say on pay" support; and [9] Avoiding compensation litigation pitfalls. (Winston & Strawn LLP, for American Benefits Council)  

Press Releases

Sign Up Today for the 2016 NAGDCA/ANC Retirement Knowledge Quiz Bowl!
National Association of Government Defined Contribution Administrators [NAGDCA]

PBGC to Restore RG Steel Pension Plans to Renco Group
PBGC [Pension Benefit Guaranty Corporation]

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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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