Retirement Plans Newsletter

March 7, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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Webcasts and Conferences

Navigating the Pitfalls of PBM Contract Negotiation
April 12, 2016 WEBCAST
(ABA Joint Committee on Employee Benefits [JCEB])

Audit Trilogy Part II: Preparing For and Surviving a Health and Welfare Audit
April 19, 2016 WEBCAST
(ABA Joint Committee on Employee Benefits [JCEB])

NAGDCA 2016 Annual Conference
September 18, 2016 in CO
(National Association of Government Defined Contribution Administrators [NAGDCA])

View All Webcasts and Conferences


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[Guidance Overview]

Money Market Reform Will Impact Some Qualified Plans
[It] would be prudent for recordkeepers and plan sponsors to consider the following issues: [1] Is it beneficial to have a government money market mutual fund, because government funds are exempt from these changes? [2] What are the potential impacts of redemption gates and liquidity fees on participants? [3] Are we comfortable offering a prime fund since redemptions could potentially be charged a fee, or temporarily halted? [4] Would it be preferable to offer a retail prime fund with a stable NAV, or an institutional fund with a floating NAV? [5] What plan governance actions and/or participant communications are warranted based on the option selected for the plan?" (FIS Relius)  


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Pension Plan Sues IRS Over Inability to Use Voluntary Correction Program
"A novel lawsuit accusing the [IRS] of mismanaging its Voluntary Correction Program [VCP] is moving forward after a federal judge denied the Service's motion to dismiss. The lawsuit -- which accuses the IRS of refusing to consider a retirement plan's attempt to maintain tax-qualified status -- appears to be the first lawsuit challenging the IRS's administration of its [VCP] in this way." (Bloomberg BNA)  

Money Market Funds Come Under Fire in Spate of 401(k) Suits
"Since December, at least three lawsuits have been filed alleging that respective 401(k) plan fiduciaries breached their duty under [ERISA] by retaining money market funds as an investment option rather than stable value funds. Plaintiffs claim stable value funds, another type of capital-preservation investment option, were the prudent choice given their higher returns." (InvestmentNews)  

A Comprehensive Plan to Confront the Retirement Savings Crisis (PDF)
32 pages. "[This] solution provides universal retirement savings coverage for all workers ... It provides every worker an individually owned, effectively invested retirement savings account with a guaranteed rate of return. It redirects government retirement savings support toward the bottom 90% of the income distribution ... replacing a regressive system of subsidies with a simple tax credit. It provides a federal solution to a massive problem -- and it guarantees lifelong annuitized income for all retirees, using existing government infrastructure." (Teresa Ghilarducci and Hamilton 'Tony' James, Schwartz Center for Economic Policy Analysis, The New School)  

Financial Statement Audits of Retirement Plans Q&A (PDF)
13 pages. "Though some sponsors see audits simply as a necessary expense, a good auditor can be a useful resource in ensuring that plan operations are compliant with the plan document, making the plan more likely to pass an IRS audit. The following Q&A offers a useful road map to determine: [1] Whether an audit is required; [2] Whether it can be limited in scope, and what that means for the plan; [3] How to select an auditor with the proper expertise." (Belfint Lyons & Shuman, CPAs)  


Roth IRA Answer Book, Seventh Edition

Sponsored by Wolters Kluwer

In-depth coverage of the administration and operation of Roth IRAs. Use code BENEFIT20 for 20% discount.

Corporate Pensions Seek Protection Against PBGC Hikes
"To avoid paying increasingly costly PBGC premiums -- up this year to a $64 fixed rate and $30 variable rate -- plan sponsors are turning to higher contributions, lump sum payouts, and pension-risk transfers. Of the 66% who planned on changing their plans, 32% said they were considering making higher contributions. Another 32% cited the possibility of lump sum payouts." (Chief Investment Officer [CIO])  

For Only the Second Time in PBGC History, Employer to Take Back Plans from PBGC
"Renco will take the pension funds back as of June 1, 2016, pay all future benefits and pay $35 million in shutdown benefits not guaranteed by PBGC but covered by the plans. Renco will also reimburse the PBGC $15 million for benefits that agency has paid since taking over the two pension funds in November 2012, when they were underfunded by $82 million and $7.4 million. The agreement marks only the second time in the PBGC's history that terminated pension funds were restored to an employer. In 1993, PBGC restored three LTV Steel pension funds after legal challenges that reached the Supreme Court, under different circumstances." (Pensions & Investments)  

TVA Retirement Board Approves Counterproposal on Plan Changes
"The original staff proposal froze the plan and moved all participants to the 401(k) plan. The retirement system board counterproposal fully moves only participants with less than 10 years of service to the existing 401(k) plan. TVA would contribute 6% of an employee's salary and then match 100% of employee contributions up to 6% of salary." (Pensions & Investments)  

Are Nondeductible IRAs Suitable for the Long Haul?
"While investors can still employ the backdoor Roth IRA maneuver ... high-income investors have reason to wonder whether it will be worth investing in a traditional nondeductible IRA if the wrapper can no longer be used as a conduit to a Roth IRA. That's also a relevant question for investors for whom a backdoor Roth IRA isn't desirable due to the pro rata rule. Do the modest tax benefits of a traditional nondeductible IRA outweigh the drawbacks -- notably, required minimum distributions and ordinary income taxes on appreciation? The short answer? It depends." (Morningstar)  

Mass Confusion Over New Social Security Rules
"Filing and suspending under current rules by the April 29 deadline allows a worker to trigger benefits for a spouse or dependent child while their own benefit continues to grow by 8% per year up to age 70. A person also has the right to request a lump sum payout of suspended benefits any time up to age 70 instead of collecting the delayed retirement bonus. Requests to file and suspend submitted on or after April 30, 2016, will be subject to a new set of rules." (InvestmentNews)  


Are U.S. Public Pensions Doomed?
"The critical point to remember in that when rates are at historic lows, every drop in global long bond yields represents a huge increase in future liabilities for pensions. Why? Because the duration of liabilities is a lot bigger than the duration of assets which means that every drop in bond yields disproportionately impacts pension deficits." (Pension Pulse)  

Benefits in General

Recent Employer Stock and Other Fiduciary Litigation (PDF)
43-page outline of March 4 presentation to the 2016 Plan Administrator Skills Workshop, Southwest Benefits Association. Includes detailed discussion of many recent employer stock cases, along with significant fiduciary litigation about retirement and health benefit plans. (Utz & Lattan, LLC)  

Supreme Court Reaffirms ERISA Preemption Doctrine
"The concurrences and dissent suggest that the Court is not finished wrestling with the ERISA preemption doctrine. Justices Ginsburg and Sotomayor seem inclined to take a narrow view of ERISA preemption, and Justice Breyer a potentially narrower view of preemption than the majority, while Justice Thomas would question even the constitutionality of ERISA's preemption provision. Justice Breyer's approach in Gobeille might not support ERISA preemption if there is not a ready regulatory workaround (for example, a DOL regulatory exception)." [Gobeille v. Liberty Mutual Ins. Co., No. 14-181 (U.S. Mar. 1, 2016)] (Morgan Lewis)  

Press Releases

Christine Marcks Named 2015 EBRI Lillywhite Award Winner
EBRI [Employee Benefit Research Institute]

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