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May 11, 2016 WEBCAST
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Washington Update: The DOL Fiduciary Rule Package (Is there Anything Else?)
May 19, 2016 in CA
(Western Pension & Benefits Council - Orange County Chapter)

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Connecticut Bill Creating Private-Sector Retirement Accounts Passes
"The Democratic lieutenant governor broke an 18-18 tie in the Senate Saturday, cementing final legislative approval of a measure first proposed several years ago. It now moves to the governor. The bill creates an agency that will establish a Roth individual retirement account program for workers whose employers have at least five employees paid at least $5,000 in the preceding year. The employers will be required to automatically enroll each worker, who can opt out." (ctpost)  


Frozen plans are different, and need to be managed differently.

Sponsored by Russell Investments

Thousands of pensions have frozen benefit accruals on the path to plan termination. Many more are considering such a step. The Frozen Plan Handbook is an illustrative guide for sponsors who have frozen -- or are considering freezing -- their pension plan.

Illinois Mandatory Small-Business Retirement Plan Faces Resistance
"As Illinois moves toward becoming a national model in retirement savings for small-business workers, the designers of the state's new Secure Choice IRA plan were warned ... that if they don't get the plan right, it could be doomed from the start.... [T]he state board planning the new program was warned repeatedly that the project could flop if small businesses are overwhelmed with bureaucratic paperwork and if low-income workers feel nervous about saving too much for retirement when paychecks already are stretched thin." (Chicago Tribune; subscription may be required)  

IRS Confirms California 'Waiting Time Penalties' Are Not Wages for Federal Income Tax Purposes
"A recent IRS information letter confirms that 'waiting time penalties' paid under California law are not wages for federal income tax withholding purposes. Section 203 of the California State Labor Code imposes penalties on employers that fail to pay final wages to terminated employees within a specified period of time.... [T]he guidance clarifies that these penalty payments are not includable as wages for benefit plan purposes under a plan (like a 401(k) or pension plan) that calculates benefits based on 'W-2 income.' " (Proskauer's ERISA Practice Center)  

Kroger, UPS Challenge Central States Reduction Plan
"Current and former plan participants of Kroger Co., Cincinnati, last week sued the $17.8 billion Teamsters Central States over the rescue plan.... The Teamsters union [had] negotiated a proposal to remove Kroger participants from Central States and create a new plan for Kroger employees, with the company agreeing to absorb the increased withdrawal liability, according to the federal court complaint. Because Central States trustees 'flatly refused to consider' after deliberating for just five days, the plaintiffs are asking the court to order reconsideration of the proposal, to appoint an independent fiduciary to judge the idea and to negotiate an arrangement with Kroger." (Pensions & Investments)  

PBGC Director: Budget Proposal Passage Would Rescue Agency
"The multiemployer insurance program can remain solvent for at least 20 years, however, if the administration's budget proposal is enacted, [PBGC Director W. Thomas Reeder] said. The proposal would give the agency's board of directors the authority to increase premiums from plan sponsors to the aggregate tune of $15 billion over 10 years[.]" (Bloomberg BNA)  


ASPPA's New Retirement Plan Fundamentals Course - Now Available

Sponsored by ASPPA

ASPPA's Retirement Plan Fundamentals course has been redesigned as online, interactive modules. Perfect for anyone new to the industry or who is preparing for an ASPPA credential. Ask your employer to make RPF part of your professional development.

Q&As on DOL Fiduciary Rule: Plan Sponsor Responsibilities
"[T]he new Fiduciary Rule is intended to make it easier for the plan sponsor to identify who is a 'real' fiduciary and who is not.... [To] a large extent plan sponsors are shielded from fiduciary liability as long as they follow a prudent process in selecting and monitoring the advisor's activities.... Sponsors should, at a minimum, review the materials available to employers on the DOL's website ... [and] designate an appropriate staff person to take a fiduciary training course or hire a fiduciary advisor to provide them with an objective overview of the plan sponsor's responsibilities." (fi360)  

Robo-Advisor Movement Is Dying as Growth Rates Crash
"[T]he combination of rising client acquisition costs and declining average revenue per client may be an outright death knell for the direct-to-consumer robo-advisor movement, as they approach the unsustainable crossover point where the lifetime value of a client, cumulatively, is less than the cost to acquire a single client ... [T]ech-augmented human advisors are rapidly growing past both their robo-advisor and traditional human advisor peers, and an outright 'arms race' of technology is emerging amongst financial advisor custodians and broker-dealers all seeking to be the future platform of choice." (Michael Kitces in Nerd's Eye View)  

Why Bankrupt San Bernardino Didn't Cut Pensions
"San Bernardino follows the path of previous bankruptcies in Vallejo and Stockton by limiting the main cuts in long-term debt to bonds and retiree health care, while raising taxes, slowly rebuilding reduced services, and leaving pensions untouched.... The San Bernardino disclosure gave the same basic reason as Stockton for not attempting to cut pensions in bankruptcy: Pensions are needed to be competitive in the job market, particularly for police." (Calpensions)  


The Thatcherism of State-Sponsored Private Sector Retirement Programs
"Margaret Thatcher would likely have been uncomfortable with a legally-imposed mandate requiring private sector employers to participate in a state-run pension plan. It is also likely that she would have preferred that the state not compete with commercial pension providers -- though she might have been mollified by the prospect that part or all of these state programs will be outsourced to private firms. However, Margaret Thatcher would probably have viewed state-sponsored private sector retirement plans as stimulating stock ownership by low income employees. This she would have strongly supported." (Prof. Edward Zelinsky, OUPblog)  


DOL Fiduciary Rule: What 'Best Interests' Means, and How It Affects Financial Services
"Ignoring the several exemptions the DOL promulgated, the Final Rule, at its core, is an example of the best form of government regulation. It applies ERISA's tough sole interests fiduciary standard of conduct, by requiring conflicts of interest to be avoided. ERISA's tough prohibited transaction rules are also applied, in the context of the statutory exemption from same that permits 'necessary' services for 'reasonable compensation.' In essence, the DOL's Final Rule is elegant in its simplicity and in its application. It is an example of government getting things right." (Ron Rhoades)  


U.S. Chamber of Commerce Comments to DOL on Proposed Retirement Plan Surveys
"EBSA should implement periodic surveys as a regular aspect of its responsibilities.... [The Chamber recommends] that the initial panel be extended to at least five years.... The information collected in the survey should be made available to the public.... EBSA should consider creating an advisory panel for the survey project." (U.S. Chamber of Commerce)  


Comment Letter to IRS on Proposed Regs Providing Nondiscrimination Relief for Closed Defined Benefit Plans
"[The authors] encourage further clarification on the amendments prescribed in the guidance, addressing M&A activity, eliminating the prohibition on pre-closing amendments and the five-year delay for the relief to apply, permitting DB and DC plans to be tested together for all testing purposes, and relief for plans with less than 50 active participants." (The ERISA Industry Committee [ERIC], American Benefits Council, and 9 other employers and employer organizations)  


American Retirement Association Comments to IRS on Proposed Nondiscrimination Relief for Closed Defined Benefit Pension Plans (PDF)
"ARA recommends that: [1] Relief under Section 401(a)(26) be provided for closed plans, similar to relief offered for Section 401(a)(4). [2] More detail be provided regarding the use of the average contribution percentage (ACP) to meet a portion of the minimum gateway allocation." (American Retirement Association [ARA])  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

New Incentive Compensation Rules: Implications for Private Equity Firms (PDF)
"[T]he Federal Deposit Insurance Corporation and several other agencies have released revised proposed rules to implement Section 956. The proposals released to date preview what are expected to be substantially similar proposed rules coming from the SEC in the near term. The SEC's version of the proposed rules should provide additional detail that would apply specifically to investment advisers -- including advisers to private equity funds and other private funds -- and to broker-dealers. The proposed rules differ significantly from the original rule proposals issued in 2011." (Debevoise & Plimpton LLP)  

Can You Amend Your Stock Plan to Allow Tax Withholding Up to the Maximum Statutory Rate?
"[B]oth the NYSE and NASDAQ require shareholder approval of a material amendment of a plan that provides for stock awards to directors or executives.... From the perspective of the NYSE and NASDAQ, if the Stock Plan allows the recycling of shares surrendered or withheld to pay tax withholding (that is, puts those shares back in the authorized share pool and allows those shares to be re-used for future awards), then an amendment of that Plan that allows for tax withholding at the maximum rate instead of the minimum rate would be material because it will increase the number of shares available for issuance under the Plan!" (Winston & Strawn LLP)  

Press Releases

DOL, Invesco Trust in Atlanta Reach Settlement to Compensate Investors for Undisclosed Losses
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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