Retirement Plans Newsletter

March 18, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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Webcasts and Conferences

ACA-Driven Litigation: Cases to Watch and What’s Next
March 30, 2016 WEBCAST
(Bloomberg BNA)

Wellness Conference: Emerging Trends in Wellness
April 6, 2016 in MA
(Wellness Workdays)

Half-Day Retirement Plan Symposium
April 14, 2016 in FL
(PSCA [Plan Sponsor Council of America])

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Text of Seventh Circuit Opinion: Hospital DB Plan Cannot Qualify as Church Plan (PDF)
30 pages. "Advocate's position -- that a plan qualifies as a church plan merely by being maintained by a church-affiliated organization -- has a fatal flaw. If a plan could qualify solely on the basis of being maintained by a church-affiliated organization, the 'established by a church' requirement of subsection (33)(A) would become meaningless." [Stapleton v. Advocate Health Care Network, No. 15-1368 (7th Cir. Mar. 17, 2016)] (U.S. Court of Appeals for the Seventh Circuit)  


2016 Retirement Plans Facts

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

This must-have book answers more than 650 questions concerning defined benefit, defined contribution, money purchase, cash balance and profit-sharing retirement plans. Practical guidance to help you understand this changing arena. Order Now.

Church Plan Challengers Score Second Appellate Victory
"Although the district courts have issued mixed rulings in these lawsuits, the hospitals have struck out with both of the appellate courts to have considered these questions, with the Seventh Circuit following the Third Circuit's 2015 decision against Saint Peter's Healthcare System.... The next appellate decision in this line of cases is likely to come from the Ninth Circuit, which heard arguments in a similar case in February[.]" [Stapleton v. Advocate Health Care Network, No. 15-1368 (7th Cir. Mar. 17, 2016)] (Bloomberg BNA)  

ERISA Advisory Council Receives Borzi Update, Sets 2016 Agenda
"In addition to the fiduciary rule, Borzi discussed the department's effort to update Form 5500 to modernize and standardize it in order to improve the granularity of the data collected.... The Council then hashed out their plans for the year, ultimately settling on two goals: [1] addressing cybersecurity issues in retirement plans, including drafting model communications for plan sponsors, vendors and participants; and [2] creating tools for the DOL to better facilitate plan-to-plan transfers." (American Society of Pension Professionals & Actuaries [ASPPA])  

Assessing Fee Fairness: Characteristics of an Effective Plan Fee Structure (PDF)
14 pages. "Any efficient administrative fee structure must satisfy three standards: Adequacy ... Transparency ... Administrative ease ... [F]airness.... Using administrative data from a large plan, [the authors] demonstrate that an administrative fee structure charging a flat pro rata can satisfy all four standards." (TIAA Institute)  

Is a Mandatory Retirement Plan in Your Future?
"Requiring employers to provide health insurance to workers is one of the most controversial features of the [ACA], but a mandatory retirement savings program might just have a shot at success in Washington ... The idea is getting a push from a politically unlikely duo: labor economist Teresa Ghilarducci and Tony James, president of Blackstone Group LP, the global asset management firm. What they have in common is a mutual belief that the 401(k) system is not up to the job of building a secure retirement for average Americans." (NBC News)  


ASPPA's New Retirement Plan Fundamentals Course - Now Available

Sponsored by ASPPA

ASPPA's Retirement Plan Fundamentals course has been redesigned as online, interactive modules. Perfect for anyone new to the industry or who is preparing for an ASPPA credential. Ask your employer to make RPF part of your professional development.

Active Versus Passive: Thoughts on How You Can Get Your Investment Portfolio On Base (PDF)
"Driven by the impact of fees upon results, poor relative returns and the difficulty in finding and retaining managers that can consistently outperform the many types of markets, more investors have been defaulting to the cheaper and seemingly easier solution of just owning a market basket of securities. [This article] examines the hits and strikeouts of the ongoing debate ... [T]o the question of 'is it possible to achieve excess return relative to a passive market benchmark in a highly competitive environment?' -- the answer is unequivocally 'yes' ... [P]oll the members of the World Champion Kansas City Royals for their baseball-equivalent response. Is that feat easy? For that, ask the members of the other 29 teams." (Segal Rogerscasey)  

Should You Hedge Currency Risk in a Pension Plan?
"Plan sponsors should be asking the following questions as they develop a risk budgeting process: What is our plan's currency exposure? ... How much of that exposure should we hedge? ... How should a currency-hedging program be implemented? ... How much liquidity is necessary to maintain a hedge? ... Should a pension plan sponsor actively or passively manage currency hedges? ... How should behavioral challenges be addressed?" (Treasury & Risk)  

Public Pensions in Flux: Can the Federal Government's Experiences Inform State Responses?
"Many state and local governments currently face difficulties financing future pension obligations for their workers. The federal government, however, faced similar circumstances in the 1980s and successfully implemented a substantial reform.... [The authors] present key aspects of the situation facing state governments currently and draw comparisons between them and the federal situation in the 1980s.... [S]tates experiencing distress today about the cost and funding of its pension plans could benefit from following an approach similar to the federal government's resolution of its pension problems in the 1980s." (The Brookings Institution)  


Beyond Wall Street's Myth: The Little Guy Will Be A-OK Under New Fiduciary Definition (PDF)
"The employer and employees have a one in a million shot to successfully sue the advisor if XYZ tanks and ABC soars. But the employees have a much greater shot to successfully sue the employer that thought it did its homework and relied upon the advisor who gets off scot-free. The DOL proposal makes certain advisors in certain conditions 'fiduciaries' under ERISA. It also extends that fiduciary definition to advisors, brokers, etc. of IRAs.... The DOL is targeting the advisor who provides advice and gets paid for it, requiring a common sense degree of honesty currently not required. If you are an employer, employee, or IRA owner, ... you should be thrilled if the regulation becomes law." (The ERISA Law Group)  


The Case for Hybrid Corporate Pensions
"There is a middle ground between [DB and DC]. It is called a collective defined contribution [CDC] plan. The Netherlands and Denmark have CDCs, and while they aren't perfect, they offer some useful solutions to the challenge of retirement security. A CDC functions like a [DB] plan except that the employer is no longer on the hook for future liabilities. The employer would make the same contribution as in a [DB] plan. The plan, however, would be managed by professionals whose goal is to provide a pension benefit equal to what a classic pension would offer." (  

Benefits in General

[Official Guidance]

Text of IRS Notice 2016-26: Public Comment Invited on Recommendations for 2016-2017 Priority Guidance Plan (PDF)
"The Department of Treasury and [IRS] invite public comment on recommendations for items that should be included on the 2016- 2017 Priority Guidance Plan.... The 2016- 2017 Priority Guidance Plan will identify guidance projects that the Treasury Department and the [IRS] intend to work on as priorities during the period from July 1, 2016, through June 30, 2017.... Please submit recommendations by May 16, 2016, for possible inclusion on the original 2016- 2017 Priority Guidance Plan. Taxpayers may, however, submit recommendations for guidance at any time during the year." (Internal Revenue Service [IRS])  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

IRS Proposal Targets Accrual of Enhanced Executive Benefits Under Qualified Plans
"If the new rules take effect as proposed, they will sound the death knell for QSERPs -- both new QSERPS and future accruals under existing QSERPs.... Instead, the proposal will likely drive benefits currently provided under QSERPs to SERPs and other types of NQDCs, even though these plans pose some insolvency risk to executives and are subject to onerous time and form of payment restrictions." (Morgan Lewis)  

Press Releases

PBGC, Sears Reach Agreement on Financial Protection for Pension Plan
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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