Retirement Plans Newsletter

May 20, 2016

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Technical Compliance Consultant - Retirement and Stock Programs
Publix Super Markets, Inc.
in FL

Plan Administrator for Retirement Plans
Dana Consulting Group, Ltd.
in Telecommute

Compliance Advisor
Securian Financial Group
in MN

Director Client Services
Newport Group
in CA

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Webcasts and Conferences

Fundamentals Series 13: Taxation: Roth
June 6, 2016 WEBCAST
(FIS Relius Education)

Fundamentals Series 14: Fiduciary Requirements
June 13, 2016 WEBCAST
(FIS Relius Education)

Form 5500 Update: New Issues and Best Practices for the 2015 Filing Season
June 16, 2016 in NY
(Worldwide Employee Benefits Network [WEB] - New York Chapter)

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[Guidance Overview]

DOL Rules Target Fiduciary Conflict of Interests
"While the rules discourage abusive activities by avaricious salespeople, they also preclude some appropriate practices and may drive honest advisers out of the market.... [T]he reach of the rule is not limited to investment advisers, plan participants and IRA owners. The rule also may affect plan sponsors and other plan fiduciaries." (Snell & Wilmer)  


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[Guidance Overview]

IRS Issues Final Regs on Allocation of After-Tax Amounts from Roth Accounts
"If disbursements are made from a taxpayer's designated Roth account to the taxpayer and also to the taxpayer's Roth IRA or designated Roth account in a direct rollover, then pre-tax amounts will be allocated first to the direct rollover, rather than being allocated pro rata to each destination. A taxpayer will be able to direct the allocation of pre-tax and after-tax amounts that are included in disbursements from a designated Roth account that are directly rolled over to multiple destinations[.]" (Practical Law Company)  

Borrowing to Fund Pensions May Enhance Shareholder Value
"When borrowing to fund pension plan shortfalls, companies replace a variable and potentially volatile debt obligation -- the underfunded pension -- with a known, certain amount of debt with a fixed funding cost. Recent rounds of [PBGC] premium increases highlight another important benefit of funding the plan -- the elimination of variable PBGC premiums, which are scheduled to rise to 4.1% of unfunded liability in 2019. The combination of increasing annual PBGC premiums and the low rate environment make borrowing to fund a very attractive potential opportunity for plan sponsors." (Prudential)  

SEC Plans to Propose Fiduciary Rule Next April
"The SEC is projecting that it will propose in April a rule that requires both investment advisers and brokers to meet a fiduciary standard for advice to retail customers.... The SEC has struggled to propose a uniform fiduciary duty rule since it was given authority to promulgate such a measure by the Dodd-Frank financial reform law in 2010." (Pensions & Investments)  

IRS Clarifies Documentation of FATCA Exemption for Savings Plans
"Exempt plans generally furnish a Form W-8BEN-E to any payers from which they receive U.S.-source income to certify their exempt status. However, the 2014 version of Form W-8BEN-E did not provide for such certification for plans meeting the savings plan exemption. This has been rectified in the April 2016 revision to that form, which now allows filers to indicate exempt status for retirement savings accounts that are not considered financial accounts." (Willis Towers Watson)  


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Improving Retirement Plan Management: Considerations for Hospitals and Health Systems
"Mergers and acquisitions are occurring at an accelerated pace in the health care industry.... [D]ue diligence on retirement plans is often left until after the merger occurs, resulting in compliance issues, delays in consolidation of retirement programs, and unrealized efficiencies and economies of scale.... [O]pportunities for improving retirement plan management for health care industry plan sponsors [include:] Plan harmonization ... Fiduciary oversight ... Reducing DB pension risk ... Retirement readiness." (Willis Towers Watson, via Becker's)  

Central States Pension Fund Drops Efforts to Create Second Bailout Plan
"The decision ... to drop efforts of a second rescue-package submission means the fate of the cash-strapped $16.8 billion multiemployer plan sits with federal lawmakers. Absent a congressional bailout, ... [the plan] will run out of cash by the end of 2025, said Thomas Nyhan, the group's executive director. Mr. Nyhan said ... that there wasn't enough time to resubmit a plan without cutting retiree benefits deeper than is legally allowed." (The Wall Street Journal; subscription may be required)  

Chicago's Pension Fund Troubles Just Became $11.5 Billion Bigger
"Thanks to the defeat of the city's retirement-fund overhaul by the Illinois Supreme Court and new accounting rules, Chicago's so-called net pension liability to its Municipal Employees' Annuity and Benefit Fund soared to $18.6 billion by the end of 2015 from $7.1 billion a year earlier ... The fund serves some 70,000 workers and retirees." (Bloomberg)  

How (and Why) Men and Women Retire Differently
"Men may approach retirement as an extended vacation, while women are likely to focus more on the unknowns presented by this life change.... [W]omen want to be sure they'll be able to handle any financial contingency ... 43 percent of women report caring for a family member in retirement, significantly more than the 26 percent of men who report the same.... [W]omen are generally more conservative with investments, while men are typically more aggressive.... [W]omen investors earned an average of 12 percent more than men during 2014." (U.S. News & World Report)  

Benefits in General

Second Circuit Applies Stricter Rules for a Plan Administrator's Noncompliance with Benefit Claims Regulations
"The Second Circuit held that, under [ERISA]: [1] When denying a claim for benefits, a plan administrator's failure to comply with the [DOL] claims procedure regulations ... will result in the plan administrator's claim determination receiving no deference on review in federal court, unless the plan's claims procedures fully conform to regulatory requirements and the plan administrator can establish that any failure was inadvertent and harmless; ... and [2] A plan administrator's failure to comply with the DOL's claims procedure regulations could warrant the introduction of additional evidence outside the administrative record if the claim determination is challenged in litigation." [Halo v. Yale Health Plan, No. 14-4055 (2d Cir. Apr. 12, 2016)] (McDermott Will & Emery)  

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, 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 BenefitsLink.com, 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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