Retirement Plans Newsletter

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Account Manager for Retirement Plans
Benefit Administration, Inc.
in WI

Senior ERISA Compliance Attorney
Lockton Companies
in CA, CO, DC, IL, KS, MO, NY

Retirement Plan Consultant
BPAS,Inc. [Benefit Plans Administrative Services]
in PA

Distribution Specialist
PenSys, Inc.
in CA

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Webcasts and Conferences

2016 Pension Plan Risk Strategies Save Cost, Improve Funding, Reduce Risk
(University Conference Services)

Generics Anything But Generic! Understanding the Unknowns and Pricing of Generic Drugs
(University Conference Services)

HIPAA Privacy Audits Is HHS Coming for Your Health Plan?
May 6, 2016 WEBCAST
(Littler Mendelson)

Sal Tripodi - The Farewell Tour
June 1, 2016 in TX
(ASPPA Benefits Council [ABC] of Dallas/Fort Worth)

2016 Employee Benefits Symposium
June 9, 2016 in DC
(AFS 401[k] Retirement Services)

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[Official Guidance]

Text of Chief Counsel Advice 201617006: Eligibility of Certain Cash Balance Plans for the Section 411(b)(1)(H) Safe Harbor Rules Regarding Lump Sum-Based Benefit Formulas and Indexed Benefits (PDF)
"As of the effective date of the 2014 revisions to Section 1.411(b)(5)-1 (which generally apply for plan years beginning on or after January 1, 2017), cash balance plans with a single-sum distribution that is determined as the present value of the participant's accrued benefit using the actuarial assumptions specified in Section 417(e)(3) are not eligible for the safe harbor rule for plans with lump sum-based benefit formulas under Section 411(b)(5)(A) and Section 1.411(b)(5)-1(b)(1) (which applies to many cash balance plans using the safe harbor formula measure described in Section 1.411(b)(5)-1(b)(1)(i)(B)). However, these plans are generally eligible for the safe harbor rule for plans with indexed benefits under Section 411(b)(5)(E) and Section 1.411(b)(5)-1(b)(2)." (Internal Revenue Service [IRS])  


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[Guidance Overview]

The DOL's Finalized Fiduciary Rule: What You Need to Know
"The DOL's ultimate goal is to impose a universal 'Best Interest' fiduciary standard on all types of advisers to plan sponsors, participants and IRA owners.... Plan sponsors now must understand how their providers are affected by the new rules, lest their compensation be a prohibited transaction for which the plan sponsor could be jointly liable.... [Plan] sponsors should be prepared for the likelihood that vendors will present them with new or modified documentation, as the vendors seek to qualify under one of the now finalized regulatory regime's exceptions or exemptions or to clarify their fiduciary status. Sponsors should be aware that such changes could take the form of a negative consent requiring no affirmative action by the sponsor." (The Wagner Law Group)  

Text of Ninth Circuit Opinion: Burden of Proof Shifts to Plan Sponsor When Benefit Dispute Turns on Documents Held Under Its Control (PDF)
"[W]here a claimant has made a prima facie case that he is entitled to a pension benefit but lacks access to the key information about corporate structure or hours worked needed to substantiate his claim and the defendant controls such information, the burden shifts to the defendant to produce this information.... ERISA, our precedent, and common sense dictate that the corporate defendant should not lay that arduous task at the feet of former employees." [Estate of Barton v. ADT Security Serv. Pension Plan, No. 13-56379 (9th Cir. Apr. 21, 2016)] (U.S. Court of Appeals for the Ninth Circuit)  

Iron Workers Local 16 Pension Fund Application for Benefit Suspension
"The Iron Workers Local Union 16 Pension Fund application proposing benefit suspensions [the full text of which is available at the linked page] ... is currently being reviewed and the review is expected to take several months. IW Local 16's representative has advised [Treasury] that individualized participant notices were sent via first class mail at end of March 2016." (U.S. Department of the Treasury)  

Most U.S. Investors Happy With Their 401(k)
"Among six tools or resources that investors use to help them allocate their 401(k) investments, Internet research and personal financial advisers tie for the most commonly used -- with 58% of investors naming each. These are followed by online investment calculators, at 46%, and advice from family and friends, at 40%.... Although 78% of investors who are currently enrolled in a 401(k) say they have access to a financial call center through their plan, only 15% say they rely on it for allocation advice." (Gallup)  


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How the DOL Fiduciary Rule Will Impact Annuities
"[C]hanging incentives for annuity companies may not kill annuity products at all, and in fact may actually drive annuity products to get better in the future.... [W]hen an annuity company can't pay a hefty commission to incentivize agents to sell it, their [only] remaining choice is to actually design a good product, and then market and educate advisors on how to use it ... in a manner that meets their own fiduciary requirements.... [A]nnuity companies will also face new pressures to be more transparent and less 'gimmicky' with their product design, as anything less will drive away fiduciary advisors who will fear they can't do sufficient due diligence to manage their own liability exposure." (Michael Kitces in Nerd's Eye View)  

Revisiting the Employer's Fiduciary Duty to 'Get That Money to the Plan' (PDF)
"Because large employers often have layers of management oversight, the circumstances of a failure to contribute funds to a plan are commonly associated with financially distressed small and medium-sized employers in which the oversight of the firm's managers (or owners) is minimal. Vendors clamor for payment, the pressure on the employer grows, and a bad decision is made. The pressure to use payroll deductions for improper purposes can overcome the good sense of even the most level-headed managers." (Epstein Becker Green)  

Understanding Your Participant Demographics
"Once the plan has been designed, demographics, including gender, age, salary level, education level, and cultural background/ethnicity, continue to influence a host of other issues, including participant education and communication.... [D]emographics change over time. Plan sponsors cannot become complacent as workers age, the company's needs and goals change, and a new generation of workers enters the organization. The retirement savings plan must keep up with and reflect these changes in order to remain relevant to both the plan sponsor and its participants." (Deutsche Asset & Wealth Management)  

Sun Capital Decision May Affect Structuring of Private Investment Funds
"Although the Sun Capital decision was limited to multiemployer pension plan liability, and was likely motivated in part by policy considerations unique to multiemployer pension plans, the legal principles ... may extend to other pension liability (e.g., unfunded liability under a traditional defined benefit pension plan), as well as the application of the coverage and discrimination rules applicable to 401(k) and other defined contribution plans that are dependent upon 'controlled group' status." (Goodwin Procter)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

New FASB Rules on Equity Compensation Withholding
"The new standard permits equity classification for partial cash settlement of a share-based award for tax withholding up to the maximum statutory tax rate in the applicable jurisdictions. Although withholding typically is mandatory in most jurisdictions, the new standard appears to provide companies with greater flexibility, for financial accounting purposes, to address the preferences of the award recipients with regard to the amount to be withheld." (Morgan Lewis)  

New Proposed Rules for Incentive Compensation for 'Financial Institutions' Under Dodd-Frank Act Section 956
"[T]he most significant changes appear to be that: [1] Covered financial institutions must hold back (defer) a portion of covered employees' incentive compensation for four years, rather than the three-year period in the 2011 proposed rules. [2] The clawback period for covered institutions and covered employees is extended to seven years.... So far, only the National Credit Union Administration has voted to approve the new proposed rules, which must be approved by six separate agencies. The other five agencies, including the [SEC], have meetings to discuss the rules scheduled in the next week." (Winston & Strawn LLP)  

Federal Regulators Propose Tougher Rules Governing Wall Street Bonuses
"Top executives at the biggest Wall Street firms would have to wait four years to collect most of their bonus pay and could be forced to return the money in the event of wrongdoing, under proposed rules unveiled by federal regulators. The rules, which were released [in draft form] by the National Credit Union Administration ... say senior executives at firms worth more than $250 billion must wait to collect 60 percent of their bonus pay. Executives at firms valued at $50 billion to $250 billion would have to wait three years to receive half their bonuses. The rules cover banks, investment advisers and credit unions, as well as mortgage giants Fannie Mae and Freddie Mac." (National Public Radio)  

For Stock-Based Pay, HR Can Help with Next Year's Taxes
"Employees should be saving confirmation statements and any other substitute statements provided by their stock plan provider or employer.... Double-counting restricted stock income is one of the most common mistakes employees make today, simply because current Form 1099-Bs don't account for taxes potentially withheld already. Keeping track of additional documentation, such as previous confirmation statements, can help ensure employees don't pay taxes on amounts paid in the previous year." (Society for Human Resource Management [SHRM])  

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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