Retirement Plans Newsletter

April 4, 2016

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Employee Benefits Jobs

Account Manager, Employee Benefit Services
Healthcare Association of New York State
in NY

Administrative Department Manager
IUPAT Industry Pension Fund
in MD

ERISA Consultant
Goldleaf Partners
in MN

Implementation Consultant
Alliance Benefit Group of Houston, Inc. (ABG)
in TX

Senior Analyst
Cammack Health, LLC
in NY

Assistant General Counsel, Retirement Benefit
NRECA
in VA

National Account Manager
John Hancock
in MA

Retirement Plan Consultant
Intac Actuarial Services
in NJ, NY

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Webcasts and Conferences

Final Conflicted Advice Regulation: What’s New and What Does It Mean for Plan Administrators
April 14, 2016 WEBCAST
(ASPPA [American Society of Pension Professionals & Actuaries])

Employee FMLA Certifications: Practical Rules to Avoid Legal Mistakes
April 27, 2016 WEBCAST
(Onlinecompliancepanel)

DuPage Association of Health Underwriters 2016 EXPO
May 17, 2016 in IL
(DuPage Association of Health Underwriters)

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[Guidance Overview]

April 30, 2016 Is Deadline for Updating Many Retirement Plan Documents
"Many 401(k) and profit sharing plans are stated in pre-approved documents and, thus, must be restated by the end of April. For pre-approved volume-submitter plans in which the employer has modified the pre-approved language, the deadline to submit the plan to the IRS for a favorable determination letter (if desired) is also April 30, 2016." (Bond, Schoeneck & King)  


[Advert.]

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[Guidance Overview]

GASB 68 Implementation War Stories
"Although the statements have existed for nearly four years, many plan sponsors are just now adopting the new standards. This article will share some key [items learned] from actual implementations, with a focus on single-employer plans ... [and] will highlight planning-type items to be considered for a smooth implementation of the new standards." (Cowden Associates, Inc.)  

Fiduciary Regulation Clears OMB
"As the industry anticipates publication of the Labor Department's fiduciary regulation this week, the Office of Management and Budget (OMB) has finished its review, according to a posting on the OMB's website. The OMB has had the regulation under review since January 28." (National Association of Plan Advisors [NAPA])  

DOL Slated to Release Fiduciary Rule on April 6
"The [DOL's] final conflict-of-interest rule is scheduled to be released April 6. While [DOL] officials declined to comment, some critics are weighing in. House Speaker Paul Ryan, R-Wis., tweeted ... that the final rule 'is Obamacare for financial planning.' Mr. Ryan promised congressional action to hold up the rule, which he said will make it harder for some people to get financial advice." (Pensions & Investments)  

Fiduciary Rule Could Hit the Industry Like ACA on Health Care
"New rules expected as early as this week by the [DOL] could upend the way many financial advising firms do business ... 'The problem is, much of the industry is not ready for this,' said Robert Fragasso, chairman and CEO of Fragasso Financial Advisors ... who supports the change.... 'How do you turn around segments of the investment industry that live on high-commission products? This will hit the investment industry with the same force that Obamacare hit the health insurance industry,' Mr. Fragasso said." (InsuranceNewsNet.com)  


[Advert.]

2015 SPARK National Conference -- June 19-21, Washington DC

Sponsored by SPARK

The retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda is designed to meet the needs of 401(k) Plan Providers, Financial Advisors and Third Party Administrators.



Massachusetts Regulator Doubts Robos Can Be Fiduciaries
"The highly anticipated [DOL] fiduciary rule may not mean a fast track for robo advisors after all. In Massachusetts, digital advice firms seeking to register as RIAs will face extra scrutiny from state securities regulators, who expressed doubts about their ability to act as fiduciaries.... While it is the first state regulator to formally issue policy on digital advice, is not the first authority to scrutinize the workings of robos. The SEC has stated it is reviewing its rules regarding automated advice, and earlier this month FINRA released guidance for broker-dealers considering the use of such tools." (On Wall Street)  

Fitch Makes Predictions About Fiduciary Rule Effects
"[R]atings agency Fitch says that the rule could affect U.S. individual annuity sales.... While Fitch said the regulation's effect is viewed as credit neutral to U.S. life insurers, and it does not expect the potential reduction in revenue to negatively affect the industry's overall credit profile, longer term, ... Fitch says it expects the new regulations could: have a material negative impact on the sale of certain annuity products; drive changes in product offerings, distribution strategies and compensation structures; and lead to increased operational costs to comply with the new standard." (National Association of Plan Advisors [NAPA])  

Lead Attorney on 401(k) Lawsuits Discusses Plans' Biggest Mistakes
"The biggest mistakes that [Jerry] Schlichter sees advisors working on defined contribution plans make include not drilling down on the details of the plan. Like the employers they represent, advisors are held to the very high standard of a prudent expert which includes the duty to benchmark plan fees and investments.... Commenting on the Tibble v. Edison case where the Supreme Court ruled that plans have the duty to continually monitor funds notwithstanding the statute of limitations, Schlichter commented, 'It takes about a minute' to make sure funds are appropriate for the plan." (401kTV)  

457(b) Plan Fees and Revenue Sharing
"[It] is surprising that so many public agencies have little or no idea how much is being 'taken' from their plans as custodian/trustee, recordkeeping, third-party administration, fund management, and investment advisory fees. To compound the confusion, many 457(b) plans are provided through 'bundled' arrangements ... Such arrangements make it difficult to determine exactly how much the plan and its participants are paying for each of the services being provided." (Chang Ruthenberg & Long PC)  

How the Teamsters Pension Disappeared More Quickly Under Wall Street Than the Mob
"The debacle unfolding at the $16.1 billion Central States fund in Rosemont, Illinois, is a cautionary tale for all Americans dependent on their retirement savings. Unable to reverse a decades-long outflow of benefits payments over pension contributions, the professional money managers placed big bets on stocks and non-traditional investments between 2005 and 2008, with catastrophic consequences." (MarketWatch)  

PBGC Reports Multiemployer Program Likely to Be Insolvent in 10 Years Without Large Premium Increases
"The multiemployer insurance program's deficit stood at $42.4 billion as of September 30, 2014, with assets of only $1.8 billion compared to liabilities of $44.2 billion.... [PBGC] found a greater than 50% chance that it would run out of money by 2025 and a 91% chance that it would run out of money by 2032. This is the result even if failing plans reduce benefits to the fullest extent allowed by MPRA." (Cheiron)  

GAO on Retirement Security: Shorter Life Expectancy Reduces Projected Lifetime Benefits for Lower Earners
"An increase in average life expectancy for individuals in the United States is a positive development, but also requires more planning and saving to support longer retirements. At the same time, as life expectancy has not increased uniformly across all income groups, proposed actions to address the effects of longevity on programs and plan sponsors may impact lower-income and higher-income individuals differently.... GAO examined [1] the implications of increasing life expectancy for retirement planning, and [2] the effect of life expectancy on the retirement resources for different groups, especially those with low incomes." (U.S. Government Accountability Office [GAO])  

Private Equity Funds Liable for Portfolio Company's Withdrawal Liability
"While the District Court's holding governs in the District of Massachusetts only and is confined to ERISA and MPPAA (i.e., although the decision discusses U.S. federal income tax authorities, it is not controlling for U.S. federal income tax purposes and should not have a meaningful impact beyond the ERISA context), if sustained on appeal, this decision may be persuasive in other jurisdictions, and its logic would surely extend to cases involving underfunded defined benefit pension plans." [Sun Capital Partners III, LP, et al. v. New England Teamsters & Trucking Industry Pension Fund, No. 10-10921 (D. Mass. Mar. 28, 2016)] (Latham & Watkins)  

DC Record Keepers' Assets Dropped 2.5% to $5.42 Trillion
"Record-keeping assets for firms responding to the P&I survey dipped 2.5% from its record high of $5.56 trillion for the year ended Sept. 30, 2014. The number of participants among survey respondents, however, increased to 91.84 million, up 1.4% from 90.56 million.... Forty-five companies participated in the latest survey vs. 50 for the previous survey. This was due in no small part to continued consolidation within the industry." (Pensions & Investments)  

Fewer of Us Save, More Are Confident of Retirement. Are We Crazy?
"Many of the 'very confident' have, or have a spouse who has, a defined contribution plan, an IRA or a defined benefit plan from a current or previous employer. Twenty-six percent of workers with such savings plans were 'very confident' about being able to afford retirement, compared with 10 percent of those who don't have accounts. People without any of those options were more confident, too.... One possible reason is a decrease in the unemployment rate[.]" (Bloomberg)  

Benefits in General

Top Five Employee Benefits and Executive Compensation Issues to Watch This Spring
"[1] Director compensation ... [2] Information reporting under the [ACA] ... [3] The final fiduciary regulation under Section 3(21) of [ERISA] ... [4] The pay ratio rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) ... [5] Fiduciary issues to consider when selecting ERISA service providers." (Practical Law Company)  

Executive Compensation and Nonqualified Plans

Say-on-Pay, the Golden Parachute, and Other Executive Compensation Issues (PDF)
18 pages. "In the aftermath of the 2008 financial crisis, compensation programs and practices have become the subject of intense regulatory and shareholder scrutiny. In light of the non-binding shareholder say-on-pay vote required by Dodd-Frank, as well as the other executive compensation provisions of Dodd-Frank that the SEC is in the process of implementing, public companies are enhancing both their proxy disclosures and their shareholder engagement efforts.... This [article] will discuss the new challenges facing executive compensation decision makers, and the strategies employed in response." (Shearman & Sterling LLP)  

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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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