Retirement Plans Newsletter

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Employee Benefits Jobs

Webcasts and Conferences

Sex Discrimination Rules in ACA
April 12, 2016 WEBCAST
(International Foundation of Employee Benefit Plans [IFEBP])

Talent Management Harnessing Choice, Personalization and Technology
April 28, 2016 WEBCAST
(International Foundation of Employee Benefit Plans [IFEBP])

401(k) Plan Workshop - Appleton
May 19, 2016 in WI
(FIS Relius Education)

Getting It Right - Know Your Fiduciary Responsibilities
May 19, 2016 in NH
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

Form 5500 Workshop - Appleton
May 20, 2016 in WI
(FIS Relius Education)

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[Guidance Overview]

IRS Introduces Method for Plan Document Providers to Request Correction of Clients' Failure to Timely Adopt Pre-Approved Plans
"Previously, the only way an employer could correct not signing a pre-approved defined contribution (DC) retirement plan by the deadline was to complete a submission under the Voluntary Correction Program (VCP) ... A new option ... allows the financial institution or service provider that offers the plan document to request a closing agreement on behalf of all adopters who missed the deadline." (Internal Revenue Service [IRS])  


It's Not too Late to Join the Series or a Single Class!

Sponsored by ASC

The Fundamentals Series continues April 7th with Participant Loans; QDROs; Death Benefits; Plan Termination; & more. Beginners receive a solid foundation & experienced professionals a comprehensive refresher. Register today!

[Guidance Overview]

IRS Cautionary Note on Discriminatory Plan Designs Using Short Service
"[The IRS has] recently found discriminatory plan designs in ... plans that: provide significant benefits to the HCEs and a specified group of NHCEs, who work very few hours or receive very little compensation, and exclude other NHCEs from plan participation.... The actual number of NHCEs included in the plan ... isn't a set group, but instead is defined as the minimum number required to satisfy the requirements of IRC Sections 401(a)(4) and 410(b).... Although these designs may allow the plan to satisfy the vesting or numeric general tests for nondiscrimination and the associated regulations, they don't satisfy Treas. Reg. Section 1.401(a)(4)-1(c)(2), which requires that the provisions of Sections 1.401(a)(4)-1 through 1.401(a)(4)-13 be reasonably interpreted to prevent discrimination in favor of HCEs." (Internal Revenue Service [IRS])  

Beware the Retroactive QDRO
"Some courts accept the legal fiction that the order relates back to the original date; others do not. The district court decided that it would accept the order as having been entered in 1993 so that at the time it was entered there was a benefit to be split. As of that date, if the order had been implemented it would not have provided for increased benefits. Therefore, the plan was required to pay a survivor benefit to Ardella, the alternate payee, even though the participant had elected -- and been paid -- a life annuity that was larger in amount than the benefit that would have been paid to him if he had elected a survivor annuity for Ardella's benefit. Employers will need to monitor the cases in the jurisdictions in which they operate to determine whether courts will allow retroactive QDROs." [Patterson v. Chrysler Group, No. 15-10563 (E.D. Mich. Feb. 17, 2016)] (Stinson Leonard Street)  

Uncashed 401(k) Checks: An Issue that's Gaining Attention
"At a minimum, plan documents should describe or refer to plan procedures which describe: [1] the steps that will be taken to locate lost or non-responsive participants, [2] the time frames for banks or the plan administrator to report uncashed checks to the plan ... and, [3] how the funds from uncashed check will be handled if the participant cannot be located. Separately, the plan should have rules and procedures addressing the time frames and circumstances in which assets may be forfeited if accounts remain unclaimed and the procedures for reinstatement if later claimed." (401K Specialist)  

A Brave New World for 401(k) Plans Sponsors Without Conflict-of-Interest Fees
"With the DOL poised to release its Conflict-of-Interest (a.k.a. 'Fiduciary') Rule and the SEC committed to targeting 12b-1 fees, it appears 12b-1/revenue sharing fees may soon be consigned to the dustbin of history.... If the DOL stays true to its word and retirement savers are saved from conflict-of-interest fees, what will this brave new world look like? ... In reality, the world may not change as much as one might think. Already, many advisers have spurned these conflict-of-interest fees." (Fiduciary News)  


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.

Senator Jeff Merkley Champions a Cheaper 401(k) Alternative
"U.S. Senator Jeff Merkley of Oregon is championing a new savings vehicle to boost retirement security for the American workforce.... Proposed in late January, Merkley's American Savings Account Act would create a universal retirement plan for the private sector. The American Savings Account (ASA) mirrors some of the best features of the Thrift Savings Plan (TSP), considered one of the best-designed and lowest-cost defined contribution plans, which was created for federal employees, including members of Congress." (Institutional Investor)  

Variable Annuities, Lifetime Income Guarantees, and Investment Downside Protection (PDF)
"[This] paper evaluates lifecycle consumption and portfolio allocation patterns given Guaranteed Minimum Withdrawal Benefit (GMWB) variable annuities, a rapidly-growing financial innovation in the recent past.... For the range of households [the authors] examine, welfare gains of up to 4% result from access to the variable annuity/GMWB (compared to no access)." (TIAA Institute)  

403(b) Accounts Can Have Troubling Conditions
"In many cases, high expenses, poor performance and often nonexistent service combine for a trifecta so troubling that many eligible employees should consider not investing in 403(b) accounts at all. One challenge, especially for teachers, is that the administration of 403(b) plans is different from district to district so there is no one-size-fits-all recommendation.... In some cases, management fees for the underlying investment funds are multiple times what equivalent investments outside of these accounts charge." (Tacoma News Tribune)  

You Contributed to Both an IRA and a Roth IRA -- Now What?
"If you made contributions to both your IRA and your Roth IRA and exceeded the limit, then you have made an excess contribution.... You probably want to keep your full Roth IRA contribution because that will most likely benefit you more long term. But, sorry, you can't. The IRS regulations say that contributions are allocated first to the IRA and then to the Roth IRA. If there is an excess contribution, it is in the Roth IRA and must be removed from the Roth IRA." (Slott Report)  

On First Day of Providence Pension Trial, Retirees Say Benefit Changes Have Caused Uncertainty
"The long-awaited trial pitting a group of retirees who opted out of Providence's 2013 pension settlement against the city finally started Monday, with several former firefighters explaining how they've been affected by the loss of their cost-of-living adjustments (COLAs).... Known colloquially as the 'opt-out case,' the lawsuit was filed in November 2013 by more than 60 former public employees who refused to support a settlement between the city, its municipal unions and retirees that froze 3% COLAs for 10 years, eliminated 5% and 6% COLAs forever and shifted how pensions are calculated. The deal also shifted retirees over the age of 65 to Medicare." (  


The 'F' Word ... Fiduciary Standard of Care
"If one is simply buying a 'product', suitability and its inherent simplicity, has advantages for a large financial institution. When selling products, and mass distribution is the plan, the number of internal intermediaries couldn't possibly be held to a higher standard. So why is the fiduciary standard being fought so hard against by the established financial services industry? Simply, it puts more burden on the entire firm." (Paladin Research & Registry)  

Benefits in General

Claim Denial Letters: Sometimes-Forgotten Arguments to Enforce Contractual Limitations Provisions
"A recent court trend ... requires denial letters to inform the claimant of the Plan's contractual limitations provision.... Other courts have rejected arguments that ERISA regulations impose an affirmative duty to include the length of the limitation period for filing suit in claim denial letters.... The evolving 'best practice': add information regarding the contractual limitations period in the denial letter. And ... here is some good news: sometimes you can use the contractual limitations defense even if the contractual limitations period was not disclosed in the denial letter." (Lane Powell PC)  

Executive Compensation and Nonqualified Plans

Executive Severance and Change-in-Control Practices (PDF)
23 pages. "[T]he past few years have seen notable severance practice reform. The multiple of pay (base salary and/or bonus) that is commonly provided has decreased, and some lucrative benefits, such as 'single trigger' protection ... and excise tax gross-ups, have all but disappeared. This study examines severance and [change in control] practices for chief Executive Officers and chief Financial Officers at 200 large- and mid-cap public companies across multiple industries. The report focuses on the full 200-company sample and breaks out practices by company size or industry where variation in practice was evident." (Frederic W. Cook & Co., Inc.)  

Press Releases

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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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