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[Guidance Overview]

Grabbing Victory Out of the Jaws of Defeat: Late Plan Restatements (PDF)
"The IRS has addressed two types of nonamender situations: those affecting individual plans and their sponsors and those that affect many clients of given service providers.... If you are a service provider that sponsors a preapproved plan document and you have at least 20 clients who are nonamenders, you may file to protect those plans on an omnibus basis.... The program does not require that the failure to adopt a timely restatement be the service provider's fault or the result of a systemic error by the service provider. Therefore, this program may be used by a service provider who has 20 or more plans that were not signed timely by their plan sponsors for whatever reason." (Ferenczy Benefits Law Center LLP)  


401(k) Answer Book, 2016 Edition

Sponsored by Wolters Kluwer

When participants, sponsors, or service providers ask you questions, this book has the answers. Covers 401(k) plan design, testing, reporting and disclosure, plan termination, investment topics and regulatory guidance. Use code BENEFIT20 for 20% discount.

[Guidance Overview]

PBGC Proposes Reduced Late Premium Filing Penalties (PDF)
"The proposed changes would also add a new 80% waiver of the higher penalty applicable when PBGC provides notice for plans with good compliance history.... Eligibility for the 80% waiver would require satisfaction of two conditions: [1] The plan must have a five-year record of premium compliance -- timely payment or penalties fully waived. [2] The premium shortfall would need to be corrected promptly -- within 30 days of PBGC's notification." (Xerox HR Services)  

Fiduciary Duty to Review Fees Goes Beyond Fee Benchmarking
"In today's environment, even if you and your participants are pleased with your current outsourcing vendor, completing a full-scope RFP every 3 to 5 years helps you conform to additional best practices for fulfilling your fiduciary duties and can offer significant defense against fiduciary fee challenges. A full RFP can also help you identify new or creative services being offered in the market, cost savings available or a fresh approach to administrative practices: a win for everyone." (Buck Consultants)  

The DOL Fiduciary Rule: How Advisors Can Comply and Thrive (Part 1)
"In essence, financial services product companies claimed that they can offer often illiquid and opaque, commission-based and sometimes even proprietary products to consumers, while also receiving revenue-sharing agreements, and still act simultaneously in a client's best interests as a fiduciary ... [W]hile the fiduciary rule didn't outright regulate what the financial industry can and cannot do, it did change the legal standard by which the industry's actions will be judged, and ensure that eventually the courts will have the opportunity to rule on these fiduciary conflicts. And in the long run, that will be a world of difference." (Michael Kitces, in Financial Planning)  

Fiduciary Enforcement: How Advisers Can Avoid Legal Trouble (Part 2)
"The DOL retains the right to evaluate an institution's policies and procedures, and has vowed that it will be 'closely monitoring' institutions as they roll out new policies and procedures in the coming year.... [T]he agency can potentially declare that the institution has failed to meet the best interest contract requirements -- which would render the firm ineligible for the necessary prohibited transaction exemption, causing all of its advisors and conflicted compensation to be in violation of the rules, a potentially catastrophic outcome that institutions will desperately wish to avoid." (Michael Kitces, in Financial Planning)  


The Ultimate Retirement Professional Conference Experience

Sponsored by ASPPA

Limited travel budget? Let ASPPA bring the conference to you. Register for one of four ASPPA Regional conferences - Chicago, Boston, Cincinnati, or Philadelphia! We'll get you up to speed without the travel.

House Passes Resolution to Block DOL Fiduciary Rule
"H.J. Res. 88, which passed the House by a vote of 234 to 183, will... [1] Protect access to affordable retirement advice for all Americans. [2] Ensure small business owners can continue to find the advice they need to help their employees plan for retirement. [3] Build upon a larger, bipartisan effort to strengthen protections and help all Americans retire with the financial security and peace of mind they deserve." [Editor's note: the President has stated he will veto the resolution if is presented to him (i.e., if it is approved by the Senate).] (Committee on Education and the Workforce, U.S. House of Representatives)  

First Quarter Retirement Savings Analysis: Account Balances Lower, Long-Term Savers See An Increase
"The average 401(k) balance dipped slightly at the end of Q1 and is down roughly five percent from the record high balance at the end of Q1 2015. The average IRA balance also decreased at the end of Q1, and is also down five percent from one year ago.... The average balance for people who have been in their 401(k) continuously for 10 years increased 2 percent year-over-year to $240,700. For long-term savers between the ages of 35-39 -- when, according to Fidelity, individuals should aim to have saved between two to three times their salary in retirement savings -- the average balance was $131,000 at the end of Q1." (Fidelity)  

There's Rare Good News on the Retirement Front
"A record 13.6 percent of 401(k) participants raised their savings rate during the first quarter this year. Overall, employee contributions, combined with employer matching funds and profit sharing, rose 12.7 percent to reach another record. Not only are savings rates up, but more people are saving in both a 401(k) and an Individual Retirement Account ... Fidelity's universe of double-barreled savers is up 7 percent from a year ago, to 1.3 million people, with an average contribution of $11,600, up $300." (Bloomberg)  

Treasury Issues Final MPRA Suspension Regulations
"The final regulations make changes and clarifications to many specific provisions of the proposed regulations. Examples include: [1] Addressing numerous actuarial assumption and projection issues; [2] Clarifying that the plan must pay for actuarial, legal, and communication expenses of the retiree representative; [3] Adopting a new procedure permitting trustees, with the Treasury's approval, to withdraw and resubmit a revised suspension application; [4] Adding new procedural requirements for the participant vote. The final regulations do not change the statutory requirement that those who do not vote are counted as voting in support of a suspension." (Segal Consulting)  

UPS Warns of $3.8 Billion Cost If U.S. Backs Pension Benefit Cut
"The cost would be triggered if the U.S. Treasury Department approves benefit cuts to protect the solvency of the Central States Pension Fund, UPS executives said Thursday. UPS pulled out of the fund in 2007 but agreed to make up any losses its remaining members experienced. The world's largest package-delivery company may have to record a charge of $3.2 billion to $3.8 billion if the government approves the benefit cuts, executives said in an earnings conference call. UPS plans to oppose such a move by the Treasury." (Bloomberg)  

Why Chobani Gave Employees a Financial Stake in Company's Future
"Employee stock ownership is not all that unusual, especially among technology firms. Food companies like Starbucks and Whole Foods offer stock grants.... Their popularity is increasing ... in part because they enjoy large tax benefits and because retiring baby boomers who own companies see it as a good way to transfer ownership. [Corey Rosen, of the National Center for Employee Ownership,] estimates nearly one-tenth of American workers are part of an ESOP." (National Public Radio)  

Flying Autopilot with Target Date Funds: Points to Consider
"How much of my target-date fund do I want in stocks now? ... How much stock will I want 10, 20, 30 years from now? ... How much are the fees? ... Do I need to invest in anything else? ... Does my target-date fund have to be set for the year I want to retire?" (The Washington Post; subscription may be required)  


This Plan Could End Your 401(k) as You Know It
"Hamilton 'Tony' James, President of private equity giant Blackstone Group, and liberal leaning economist Teresa Ghilarducci have recently proposed a new plan for retirement savings, and it completely abandons the current 401(k) layout that has affected the lives of millions of Americans across the country.... But why have a labor economist and the president of a private equity firm, two polar opposites, come together to create such a plan? Tony James' background in private equity is worrisome, even if he says all the right things. There is something brewing in the background, with numerous private equity firms buying up insurance companies -- an unusual practice for the buy and sell market of private equity." (Philadelphia Business Journal)  


American Academy of Actuaries Comments to IRS on Proposed Nondiscrimination Regs (PDF)
12 pages. "The proposed regulations will provide relief for some employers and will help to stem the trend toward fully freezing pension plans; however, many plan sponsors will not be able to use the closed plan rules for a variety of reasons. We respectfully submit that the regulations need to go further in order be effective. In addition, we believe that certain aspects of these regulations, if implemented as proposed, could have unintended consequences that will likely lead to more plan freezes and terminations, further eroding the retirement security of the workforce." (American Academy of Actuaries)  

Benefits in General

Employment Cost Index, March 2016
"Compensation costs for civilian workers increased 1.9 percent for the 12-month period ending in March 2016.... Benefit costs increased 1.7 percent for the 12-month period ending in March 2016. In March 2015, the increase was 2.7 percent.... Compensation costs for private industry workers increased 1.8 percent over the year, lower than the March 2015 increase of 2.8 percent.... The increase in the cost of benefits was 1.2 percent for the 12-month period ending in March 2016, significantly lower than March 2015 when the increase was 2.6 percent." (U.S. Bureau of Labor Statistics [BLS])  

Executive Compensation and Nonqualified Plans

[Official Guidance]

Text of IRS Chief Counsel Memorandum 201618010: Review of Chief Counsel Advice on Application of Section 162(m)(6) to Risk-Bearing Entities Providing Services to Medicaid Recipients (PDF)
"[T]he determination of whether section 162(m)(6) applies to a risk-bearing entity providing services to Medicaid recipients requires application of the definitions of health insurance issuer and health insurance coverage to those arrangements.... Although section 162(m)(6) is a provision that is not part of HIPAA but rather is a provision of the Internal Revenue Code over which the Treasury Department and the IRS have sole jurisdiction, the failure to coordinate the definition [with other agencies] raises significant litigation hazards with respect to enforcement of the application of the deduction limitation to these entities.... Accordingly, we advise that for purposes of section 162(m)(6) the type of organizations identified in the recently issued CCAs not be identified as health insurance issuers and that the arrangements not be treated as providing health insurance coverage until such time as that coordination has been completed, and that any such treatment depend on the result of such coordination." (Internal Revenue Service [IRS])  

[Guidance Overview]

More Definitions on Incentive-Based Compensation for Financial Institutions
"The new proposed rules give a separate definition for each of the following terms: [1] Long-term incentive plan; [2] Incentive-based compensation plan; [3] Incentive-based compensation program; [4] Incentive-based compensation arrangement; [5] Qualifying incentive-based compensation." (Winston & Strawn LLP)  

[Guidance Overview]

The Executive Compensation Provisions of Dodd-Frank: Where We Are Now
"It's been over five years since the signing of the Dodd-Frank Wall Street Reform and Consumer Act and we are still waiting for the [SEC] to finalize rules on several provisions related to executive compensation. [This article provides] a summary of the current landscape of Dodd-Frank as it relates to key executive compensation provisions." (Mintz Levin)  

Press Releases

PSCA Announces 2016 Board and Committee Chairs
PSCA [Plan Sponsor Council of America]

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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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