University Conference Services [UCS]

Client Services Manager - TPA
TPA Firm
in GA

Retirement Planning Consultant
Transamerica
in DC, Telecommute

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Affordable Care Act: Information Reporting Requirements for Providers of Minimum Essential Coverage
RECORDED
(IRS [Internal Revenue Service])

Affordable Care Act: Employer Shared Responsibility
RECORDED
(IRS [Internal Revenue Service])

DOL Update and Motivating Millennials
May 18, 2016 WEBCAST
(RSM US LLP)

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[Official Guidance]

Text of PBGC Disaster Relief Announcement 16-07, in Response to Severe Storms and Flooding in Texas
"This Disaster Relief Announcement provides relief relating to PBGC deadlines ... [to] any person ... that is located in the disaster area for which the [IRS] has provided relief in HOU-2016-04, April 26, 2016 ... or [that] cannot reasonably obtain information or other assistance needed to meet the deadline from a service provider, bank, or other person whose operations are directly affected by the Severe Storms and Flooding that began on April 17, 2016, in Texas.... The relief generally extends from April 17, 2016 through September 1, 2016. The disaster area consists of Fayette, Grimes, Harris and Parker Counties." (Pension Benefit Guaranty Corporation [PBGC])  

[Advert.]

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[Guidance Overview]

IRS Concludes That Plans May Use Latest Permissible Entry Date to Identify Otherwise Excludable Employees
"[IRS Chief Counsel memorandum 201605013]clarifies how plans (including 401(k) plans) may define the group of 'otherwise excludable' employees for certain nondiscrimination testing purposes.... [T]he otherwise excludable group may include individuals who have attained age 21 and completed one year of service, but who have not yet completed the additional waiting period permitted under the participation rules.... Alternatively, plans could disregard the additional waiting period or they could use only the plan's actual waiting period, if that is less than the maximum permitted under Code Section 410(a)." (Thomson Reuters / EBIA)  

[Guidance Overview]

DOL New Fiduciary Regulation: Action Items for the Next Year
"Understand that this rule is directed at investment advice, and is not confined to defined contribution plans -- HSAs with investment components are subject to this rule ... Review any agreements or correspondence from service providers... and note where changes may be forthcoming from the providers, including potentially higher fees ... Review any communications to plan participants regarding rollovers and distributions to ensure that no particular recommendations are inadvertently being made ... Review who the employees are (and how they are compensated) who regularly communicate with plan participants and beneficiaries, and educate them about the new rule's requirements." (Findley Davies)  

[Guidance Overview]

New PTEs Impact Broker and Advisor Relationships with Retirement Plans and IRAs, and Also Impact Plan Sponsors and Fiduciaries
"While the PTEs apply to the broker dealers, banks, and others qualifying as 'financial institutions', [their] compliance will likely result in plan sponsors and plan fiduciaries needing to provide additional information and documentation to participants seeking to process a rollover and will require those vendors to establish procedures to respond to inquiries from participants and representatives of employees proving compliance with the PTEs. So understanding the PTEs' requirements is important for plan sponsors and fiduciaries because the retirement plan vendors' PTE compliance will impact employers when making plan distributions.... Plan fiduciaries and employers may want to anticipate additional questions from participants and employee organizations representing them about the plan's costs and expenses if the plan is operating under one of the PTEs providing for the availability of the additional information on PTE compliance." (Winstead PC)  

[Guidance Overview]

The DOL's Final 'Fiduciary' Rule -- Countdown to Implementation Begins in Earnest
"In general, the structure of the Final Rule gives fund sponsors more basis for contending that their sales activities should not be treated as a 'recommendation' ... The Preamble indicated that the DOL did not intend to depart from a 'plain and natural reading' of the term 'investment advice' in the statutory text of ERISA.... The DOL also stated (in the Preamble only) that a communication must involve a 'call to action' in order to rise to the level of a recommendation.... By removing the 'asset list' in the BIC Exemption, the scope of the exemption expands significantly, and comes closer to becoming the 'principles-based' approach intended by the DOL." (Jones Day)  

[Advert.]

5th Annual ftwilliam.com Customer Conference - August 17-19

We are thrilled to have industry experts Brian Furgala and Sarah Simoneaux as featured speakers this year in downtown Chicago! Sign up today.

[Guidance Overview]

The DOL's New Fiduciary Rules for Retirement Investment Advice
"In applying the new fiduciary definition, a critical threshold question is whether a communication is a 'recommendation.' Borrowing from FINRA's definition, the final regulation defines 'recommendation' as 'a communication that, based on its content, context and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action.' The DOL also borrowed from select SEC and FINRA interpretations about recommendations regarding the degree of individually tailored communications, lists of securities, aggregating communications, and disregarding whether the source is a person or a computer." (Faegre Baker Daniels LLP)  

IRS Issues VCP Submission Kit for Failure to Adopt Pre-Approved Plans
"The latest submission kit is intended to assist employers who sponsor pre-approved defined contribution plans (such as master and prototype 401(k) plans), but who failed to adopt a new plan document reflecting changes required by the Pension Protection Act (PPA) by April 30, 2016." (Compliance Dashboard)  

A Guide to Pension Plan Hibernation (PDF)
"[T]his guide ... will define and describe hibernation ... [and] explain what it means for benefits policy, funding policy, investment policy, cost management and risk management. In short, [it] will re-phrase the question and ask, 'What are my choices for managing the risks and cost of my pension plan?' And this broader formulation of the question will lead many plan sponsors to a different conclusion -- and potentially also to substantial cost savings." (Russell Investments)  

401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2014 (PDF)
"More 401(k) plan participants held equities at year-end 2014 than before the financial market crisis (year-end 2007), and most had the majority of their accounts invested in equities.... More than 70 percent of 401(k) plans included target-date funds in their investment lineup at year-end 2014.... A majority of new or recent hires invested their 401(k) assets in balanced funds, including target-date funds.... 401(k) participants ' investments in company stock continued at historically low levels.... 401(k) participants were less slightly likely to have loans outstanding at year -end 2014 than at year- end 2013." (Employee Benefit Research Institute [EBRI] and Investment Company Institute [ICI])  

How Americans Blow $1.7 Trillion in Retirement Savings
"[A recent study] found there was a strong relationship between respondents' biases [i.e., valuing their present well-being more highly than future well-being, and failing to appreciate the exponential nature of long-term investment compounding,] and their retirement account balances. The more biased they were, the less they'd saved in a 401(k) or other account. The connection held up even after researchers controlled for income, education, intelligence, and financial literacy. If somehow you could eliminate these two biases, retirement savings would immediately jump 12 percent." (Bloomberg)  

Schwab Shuns Load Funds in DOL's Wake
"A representative from Schwab confirmed that as of May 2 'we will no longer purchase Class A Load mutual funds -- although they can still transfer in, sell and elect dividend reinvestment for those shares.' Company spokeswoman Alison Wertheim said the 'move away from load funds has been a secular trend over the last decade or more and Schwab has never been a significant player in this space.' Despite the timing of the decision, she said that 'Our decision wasn't triggered by DOL; it's a housekeeping move for a low-volume business.' " (InvestmentNews)  

Are Target Date Funds Missing the Mark?
"While highly popular, target-date funds are coming under some increased scrutiny of late, as market watchers say the set-it-and-forget-it portfolio management philosophy may be off target.... The criticism of target-date funds comes at a time when such funds are pervasive, and are performing reasonably well. As a benchmark, target-date funds have returned 11.7 percent over the past three years and 9.3 percent over the past five years." (InsuranceNewsNet.com)  

Meeting of the Advisory Group to the Internal Revenue Service Tax Exempt and Government Entities Division
"The Advisory Committee on Tax Exempt and Government Entities (ACT) will hold a public meeting on Wednesday, June 8, 2016.... Issues to be discussed [include] Employee Plans: Analysis and Recommendations Regarding Changes to the Determination Letter Program." (Internal Revenue Service [IRS])  

Senate Democrats Urge Scrutiny of Central States Rescue Plan (PDF)
"The entire Democratic Party Senate caucus has urged the Treasury Department to closely scrutinize the Central States pension fund's rescue proposal.... The senators wrote that the fund's retirees 'contributed to their pensions over the course of many years -- making the sacrifices of giving up better pay or improved benefits, or even staying in a physically exhausting job that took them away from their families -- so they could earn a pension that they believed could never be taken away.' " (BNA Pension & Benefits Reporter, via Pension Rights Center)  

PBGC Aims for Reduced Late Premium Penalties
"The [PBGC] is proposing to cut its penalties for late premium payments amid increasing criticism that the cost of its mandatory insurance coverage stands among the chief causes driving private employers out of the defined benefit pension market. 'We think penalties should be no more than necessary to encourage timely payments,' explains PBGC Director Tom Reeder. 'I'm committed to doing everything I can to help companies keep their pension plans.' " (PLANSPONSOR)  

The IRS Attack on Illiquid IRAs
" 'The IRS has long believed that there is substantial noncompliance with minimum distribution requirements,' says Natalie Choate, an attorney with the Boston law firm Nutter McClennen & Fish.... Choate points to two windows: Form 5498, filed annually with information on how much an IRA account is valued and whether a distribution is required, and Form 1099-R, which reports the amount of any distribution. Starting with the 2015 versions of these forms, due in the first half of 2016, IRA custodians must reveal the presence of hard-to-value assets, and the asset type.... The new information from the forms can show the agency which large IRAs with illiquid assets are in the RMD stage." (Financial Planning)  

Please Call Off the Search for a Safe Withdrawal Rate
"Because of all the unknowns involved, determining a spending budget can sometimes be more art than science. If you a greater than average risk taker, you can always spend more of the present value of your assets now rather than later (with the risk that you may have to spend less later). However, don't be misled into thinking that just because retirement experts refer to an approach as a 'safe withdrawal rate' approach that it is necessarily safe or without risk." (Ken Steiner, FSA Retired)  

[Opinion]

Why Do Public Pension Boards Matter?
"Public pension boards look slightly different in each state, but they are typically made up of individuals with years of experience in investment, public finance, and public management. The median number of board members is nine, but it can be as few as five and as many as nineteen. As fiduciaries of the fund, they are responsible for looking out for the best interests of the workers and retirees that will rely upon the pension for their retirement security. Unfortunately, political meddling can sometimes interfere with the professional expertise of the pension board." (National Public Pension Coalition)  

Halo v. Yale, the Second Circuit, Hamilton and Sideways Challenges to the Scope of Discretionary Review
"[A] series of cases [has come] out of major courts that are aggressively pushing back against the unbridled assertion of broad discretion by plan administrators operating under a grant of discretion.... For the most part, these are not direct restrictions on the exercise of discretion itself, but instead consist of challenges to the applicability at all of discretion, such as in the form of decisions holding plan administrators to strict compliance with technical requirements of claims handling upon pain of losing the benefits granted them by discretionary review." (Stephen Rosenberg, The Wagner Law Group)  

What the $100m Uber Settlement Means to All Employers
"Quite simply, this deal is a game-changer. It provides a blueprint for a possible path towards peaceful coexistence with workers without the specter of a class action lawsuit hanging over your heads at all times.... [T]his deal further presages the possible emergence of a new third classification of worker that reflects the reality of working in the gig economy in the 21st century.... Government regulators and elected legislators will take notice of this proposed solution and could see it as a model for developing laws covering gig economy working relationships." (Fisher & Phillips LLP)  

What Constitutes 'Reasonable Efforts' to Inform Plan Participants of a Plan Amendment That Includes a Forum Selection Clause?
"AXA used 'reasonable efforts' to notify Malagoli of the amendment that included a forum selection clause because: (a) they presented the Court with an Excel spreadsheet listing all Participants used to mail notices, and Malagoli's address was on this list; (b) Malagoli concedes his address in this list was accurate; (c) AXA merged the list of 29,125 Participants with the letter announcing the amendment, and assembled them in printed envelopes; (d) a bulk mailing certificate confirms that 29,125 letters were mailed first class on December 27, 2011." [Malagoli v. AXA Equitable Life Insurance Company, No. 14-CV-7180 (S.D.N.Y. Mar. 24, 2016] (Lane Powell PC)  

[Guidance Overview]

Bank Regulators Issue New Proposed Rule on Incentive Compensation
"Every covered institution would be subject to the following requirements: [1] Incentive arrangements cannot encourage inappropriate risk by providing excessive compensation or encourage inappropriate risk that could lead to a material financial loss. [2] Incentives must include both financial and non-financial measures of performance (including risk-based measures), and the non-financial measures must be able to override the financial results.... [3] Incentive arrangements must include effective controls and governance, including oversight by the Board of Directors. [4] Covered financial institutions must create annual records documenting the structure of incentives and compliance with these regulations." (Meridian Compensation Partners, LLC)  

Dennis B. Story to Join Benefitfocus as Chief Financial Officer
Benefitfocus

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