Retirement Plans Newsletter

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Employee Benefits Jobs

Retirement Plan Consultant
Associated Pension Consultants, Inc.
in NY

Defined Contribution - Client Service Associate
in TX

Plan Documents Specialist
Professional Capital Services
in PA

Senior Retirement Plan Administrator
Professional Capital Services
in PA

Defined Contribution Account Manager
Nova 401(k) Associates

Implementation Specialist
Nova 401(k) Associates

Director of Insurance Services
Associated Builders and Contractors Insurance Trust
in DC

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Webcasts and Conferences

Are You Drowning in Health and Welfare Compliance Issues? Help is on the Way!
April 14, 2016 in MA
(New England Employee Benefits Council)

Value-Based Pricing for Prescription Drugs: Opportunities and Challenges
April 15, 2016 in DC
(Alliance for Health Reform)

Benefit Communication Strategies – How to get your Employees’ Attention
April 20, 2016 in MO
(Worldwide Employee Benefits Network [WEB] - St. Louis Chapter)

Benefits Strategies for 2016 and Beyond: Case Studies of Top Performing Employer
April 20, 2016 WEBCAST
(University Conference Services)

Voluntary Fiduciary Correction Program Workshop
April 27, 2016 in WA
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

WorldatWork Total Rewards 2016 Conference
June 6, 2016 in CA

Gain/Loss Analysis: Uniting Current and Traditional Methods
June 8, 2016 WEBCAST
(Conference of Consulting Actuaries)

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[Guidance Overview]

DOL Issues Final Fiduciary Rule
"[The DOL] has adopted a 'phased' implementation approach for the Best Interest Contract Exemption and the Principal Transactions Exemption.... During this transition period, firms and advisers must adhere to the impartial conduct standards, provide a notice to retirement investors that, among other things, acknowledges their fiduciary status and describes their material conflicts of interest, and designate a person responsible for addressing material conflicts of interest and monitoring advisers' adherence to the impartial conduct standards. Full compliance with the exemptions will be required as of January 1, 2018." (Littler)  


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[Guidance Overview]

Game Changer, Revisited: The Final Conflict of Interest Rules (PDF)
15 pages. "[C]ertain key ramifications suggest themselves. [1] Forced conversion to fiduciary status ... [2] The 'ERISA-fication' of IRAs ... [3] A new paradigm for rollovers ... [4] Migration to fee-based service ... [5]New Compliance Infrastructure." (Pentegra Retirement Services)  

The Grisly Death of Determination Letters for Individually Designed Plans
"[T]he IRS must rewrite and harmonize the law surrounding favorable determination letters. The IRS must address the interaction between determination letter filings and the Employee Plans Compliance Resolution System (EPCRS), remedial amendment period regulations, and Internal Revenue Code section 7805 relief." (Ogletree Deakins)  

Fiduciary Risk in Data Privacy and Cybersecurity? You Bet!
"Retirement plans store extensive personal data on each participant and beneficiary.... The extensive trove of [personal identifiable information (PII)] presents an attractive, and often undersecured and easily exploitable, opportunity for criminals intent on stealing identities or on the outright theft of plan assets and benefit payments. Federal laws similar to HIPAA but applicable to retirement plans have not (yet) been enacted. However, this does not mean that retirement plan fiduciaries and administrators are off the hook." (Morgan Lewis)  

Recent Lawsuit Demonstrates Continuing Need for Plan Fiduciaries to Document Decision-Making Process
"The plaintiffs claim that Anthem selected 'high-priced share classes of mutual funds, instead of identical lower-cost share classes of those same mutual funds,' purportedly resulting in a loss of over $18 million to the participants.... While the plaintiffs seem to overstate the requirement to always use the lowest-cost share class available, the fiduciaries of other plans may be able to protect themselves in similar litigation by having a documented process which demonstrates that they considered the lowest-cost share class available and, when such lowest-cost share class was not selected, the reasoning that led them to the selection of a more expensive share class." (Bradley Arant Boult Cummings LLP)  


The 2016 Pension Answer Book

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Benefit Plans of Church-Affiliated Organizations May Have to Comply with ERISA
"[The Stapleton] Court's focus on the 'actually established' language of the church plan exemption requires a much closer look at the process by which a plan was established.... Prior to this decision by the Seventh Circuit and a similar December 2015 decision by the Third Circuit, the main concern of religious-affiliated organizations that were not actual 'steeple' churches was whether or not they were sufficiently 'associated with or controlled by' an actual church, i.e., whether they were church-governed enough to be entitled to the ERISA exemption." (Michael Best & Friedrich LLP)  

Practical Considerations for Brokerage Windows in 401(k) Plans (PDF)
"Brokerage accounts can be helpful to some participants. The main questions are whether the window is appropriate for the needs of the participants and whether the brokerage provider is a prudent choice." (Drinker Biddle)  

Advantages of Lump Sum Windows (PDF)
"Acceptance rates for lump sums tend to be between 20-40%, depending on the group that is offered lump sums. This can reduce plan liabilities significantly and, in a volatile economy, the lower the liability, the easier it is for the plan to maintain its funded status." (Milliman)  

Chicago Mayor Determined to Craft New Pension Deal After Court Ruling
"[T]he Illinois Supreme Court overturned [Chicago mayor Rahm] Emanuel's plan to raise employee contributions by 29 percent and end compounded cost-of-living adjustments.... But the ruling also stated, 'The pension protection clause was not intended to prohibit the Legislature from providing 'additional benefits' and requiring additional employee contributions or other consideration in exchange.' ... Emanuel said he hopes to seize on the 'opening' the Supreme Court created to forge an agreement with union leaders that can pass legal muster." (Chicago Sun-Times)  


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Puerto Rico's Impoverished Pensions Complicate Island's Debt Crisis
"Under the [2013] reform package, retirement ages rose. So did employee contributions. Current and future participants were transferred to less-generous defined-contribution accounts, similar to 401(k) retirement savings plans.... The central government was supposed to have made $367.6 million in [annual lump sum] payments since 2014; so far, it has forked over just $22.7 million.... Failed fixes like the 2013 reforms help explain why Puerto Rico's public-employee pensions today are nearly broke -- a financial debacle decades in the making[.]" (Reuters)  


The DOL Rule: A Milestone for the Profession
"[T]he new rule fundamentally (and with pretty zero exception) requires the broker or independent BD rep to act as a fiduciary. That brings a lot of people into the principles-based universe, which is alien territory for the brokerage firms. They'll all have to set up subsidiaries that function as fee-compensated RIAs in order to keep working with qualified plan money.... Most importantly, the DOL rule writers seem to have been very careful to make sure that Wall Street firms and sales agents cannot disclose away, disclaim away or have their customers contractually sign away fiduciary responsibility." (Bob Veres in Inside Information)  


Why Fixed Indexed Annuity Sellers Can Challenge the DOL on Fiduciary Rule
"The DOL stance on FIAs is similar to a 2008 [SEC] effort to regulate all indexed annuities as securities. After a long fight, Rule 151A was thrown out by a U.S. Court of Appeals, leaving indexed annuities under state regulation as an insurance product. The District of Columbia Circuit Court of Appeals ruled that the SEC failed to analyze the rule's impact on the indexed annuity market that the commission sought to regulate. One could argue the DOL is guilty of the same misstep[.]" (  


Pension Rights Center Applauds Release of Rule Protecting Investors from Conflicted Investment Advice
" 'By finalizing this long-overdue rule, DOL has taken a giant step forward toward protecting workers and retirees trying to save for their retirement,' said Karen Friedman, the Center's executive vice president and policy director.... 'Now consumers will know that when a financial adviser gives advice on what they should do with their hard-earned money, that advice will be in their best interest.' " (Pension Rights Center)  


Vanguard's Perspective on the DOL's Final Rule on Fiduciary Advice
"[Vanguard's head of ERISA & Fiduciary Services, John Schadl,] said the rule is more aligned with existing [FINRA] standards for what constitutes a recommendation, although the DOL could have done more to harmonize these standards.... However, Mr. Schadl cautioned that these positive developments don't mean that implementation of the new standards will be easy or resolve all concerns about the workability of the rule." (Vanguard)  

Press Releases

Court Severely Limits ESOP Attorney’s Ability to Represent Employee Benefit Plans and Fiduciaries
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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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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