Retirement Plans Newsletter

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Pension Associates Retirement Planning LLC
in CT

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Webcasts and Conferences

Hot Topics in Employee Benefits: What We're Seeing
June 8, 2016 WEBCAST
(Morgan Lewis & Bockius LLP)

Preventive Health Programs: 5 Ways You May Be at Compliance Risk
June 14, 2016 WEBCAST
(EHE International)

Employment and Benefits Law Update
June 16, 2016 in TN
(Bass, Berry & Sims)

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[Guidance Overview]

Might You Be Stumbling Into Being Subject to the DOL's Conflict of Interest Regulatory World?
"Many financial advisors, tax advisors, investment advisors and wealth planning advisors for individuals, brokerage firms, banks and financial institutions may accidentally wander into being subject to the regulation and need to comply with the more limited existing prohibited transaction exemptions and the new more intensive prohibited transaction exemptions to be able to continue providing advice and assisting customers with tasks they have historically done. The new rules are generally effective beginning on April 10, 2017, but will require substantial changes to be ready by that date." [Article includes 11 questions and answers to identify situations subject to the regulation.] (Winstead PC)  


2016 SPARK National Conference -- June 19-21, Washington DC

Sponsored by SPARK

The retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda is designed to meet the needs of 401(k) Plan Providers, Financial Advisors and Third Party Administrators.

[Guidance Overview]

Treasury Issues Final Suspension of Benefits Regs Under MPRA
"Critical and declining plans will usually be experiencing negative cash flows, which means that the near-term returns when assets are at their highest level are much more significant in determining the actual cash flows of the plan. Accordingly, it may be appropriate to consider using a select and ultimate set of interest assumptions when performing the cash flow projections.... It is not clear if the sensitivity analyses on the different investment returns and different contribution base trends are to be performed independently or in combination with each other. Logic would suggest that all combinations should be shown." (Cheiron)  

DOL Final Fiduciary Rule Faces Industry-Led Court Battle
"The U.S. Chamber of Commerce, along with the Securities Industry and Financial Markets Association [SIFMA], are preparing to file a lawsuit ... As many as three other trade groups will likely also join the lawsuit ... The groups are expected to target the primary means of enforcing the heightened retirement-advice standards: a provision that allows investors to file class-action lawsuits when they believe an adviser runs afoul of the new rules. Industry groups say that will open the $14 trillion market up to expensive litigation, and that the administration lacked congressional authority needed to include such a provision in the rule." (The Wall Street Journal; subscription may be required)  

401(k) Fiduciary Concern: Financial Literacy and the Savings/Investing Dichotomy
"There's a growing realization among 401k plan sponsors that the old ways of employee education have not produced the desired results. For plan fiduciaries, this means a movement away from emphasizing investing and investments and towards emphasizing saving and savings. Yet, there is no consensus on the savings/investing dichotomy. When asked 'either/or' questions, professionals remain divided on the best answer." (Fiduciary News)  

401(k) Plan Sponsors and Fiduciaries Face Alarming Number of Class Action Lawsuits
"Plan sponsors ... have been challenged for offering stable value funds and equally for not offering them.... [P]laintiffs have sued some plans for failing to offer stable value funds, because money market funds -- a fixed income investment alternative -- have produced historically low returns.... Plan fiduciaries that do not currently offer a stable value investment option should examine their fund lineups to ensure that the lineups provide an adequate fixed income investment at a reasonable cost to plan participants." (McDermott Will & Emery)  


Join us for our 5th Annual Customer Conference, August 17-19

Sponsored by Wolters Kluwer

Earn CE credits while learning about the latest news and industry trends and your software!

Ninth Circuit Gets the Varity Issue Right
"The Ninth Circuit explained that Varity did not explicitly prohibit a plaintiff from pursuing simultaneous claims under Section 1132(a)(1)(B) and Section 1132(a)(3). This approach also comports with the Federal Rules of Civil Procedure ... And to top it off, allowing plaintiffs to seek relief under both Section 1132(a)(1)(B) and Section 1132(a)(3) is consistent with ERISA's intended purpose of protecting participants' and beneficiaries' interests." [Moyle v. Liberty Mutual Retirement Benefit Plan, Nos. 13-56330, 13-56412 (9th Cir. May 20, 2016)] (Springer & Roberts LLP)  

Text of Enrolled Actuaries Pension Examination EA-2, Segment L, Spring 2016 (PDF)
93 pages. Complete text of exam dated May 10, 2016, with answers, published online by IRS. (American Society of Pension Professionals & Actuaries [ASPPA]; Joint Board for the Enrollment of Actuaries [JBEA]; Society of Actuaries)  

Text of Enrolled Actuaries Basic Examination EA-1, Spring 2016 (PDF)
70 pages. Complete text of exam dated May 10, 2016, with answers, published online by IRS. (American Society of Pension Professionals & Actuaries [ASPPA]; Joint Board for the Enrollment of Actuaries [JBEA]; Society of Actuaries)  

Hey American Abroad, Do You Really Want to Make that Pension Contribution?
"[1] Does the U.S. have a double tax treaty with my country of residence that covers pensions? ... [2] Will the local tax benefits of participation simply result in a bigger U.S. tax bill? ... [3] Will my pension plan be treated as a foreign grantor trust for U.S. tax purposes? ... [4] Do Malta pension schemes provide a superior alternative pension platform for Americans abroad? ... [5] Do my U.S. retirement accounts create a local tax reporting problem? ... [6] Are IRA and 401(k) contributions permitted while I am living abroad?" (The Wall Street Journal; subscription may be required)  

May 2016 Pension Finance Update
"Higher interest rates and higher stock prices improved pension finances modestly in May. Both model pension plans we track gained a bit of ground last month. Plan A improved 1% in May, but remains down more than 6% so far in 2016, while Plan B picked up less than 1% last month, but is still down 3% year to date[.]" (October Three Consulting)  

U.S. Group Pension Buy-Out Sales Top $1 Billion in First Quarter of 2016
"This represents the first time sales have topped $1 billion in the first quarter since 2008 and marks the fourth consecutive quarter in which sales have exceeded $1 billion.... First quarter buy-outs in 2016 increased 21 percent over first quarter 2015." (LIMRA)  

Getting Stretch IRA Treatment With an A/B Trust
"[E]ven where the see-through trust rules do allow for the stretch of an inherited IRA, the income tax treatment will often be less favorable than naming beneficiaries outright (due to the compressed trust tax brackets). As a result, anytime an A-B trust is being considered as the beneficiary of an IRA or other retirement account, it's crucial to weigh the non-tax (and potential estate tax) benefits against the likely income tax disadvantages!" (Michael Kitces in Nerd's Eye View)  

Former CEO of CalPERS Is Sentenced to Prison for His 'Spectacular Breach of Trust'
"A federal judge [on May 31] sentenced the former head of the nation's largest public pension fund to four and 1/2 years in prison in a case in which the pension fund CEO acknowledged accepting more than $200,000 in bribes and trying to steer investments to help an associate. Senior U.S. District Court Judge Charles Breyer called the case against Federico Buenrostro, the former chief executive of [CalPERS], 'seriously troubling' and said it reflected a 'spectacular breach of trust for the most venal of purposes, which is self-enrichment.' " (Los Angeles Times)  


401(k) Disclosure Rules Are Out of Date; It's Time for Common Sense Reform
"401k plans are obligated to disclose a lot of information to a participant prior to their enrollment date and each year thereafter. The most common disclosures are listed in [a table] ... Unfortunately, a lot of the information in these disclosures is redundant. Why? Because cross-referencing information is often not allowed. This redundancy results in lengthy disclosures that participants are less likely to read.... [It] de-emphasizes the importance of the SPD -- which 401k participants should be conditioned to use for plan information." (Employee Fiduciary)  


American Retirement Association Letter to IRS on Proposed Form 5500 Series Compliance Questions (PDF)
"The effective date for mandatory collection of information solicited by the new compliance questions should be delayed to coincide with the proposed Form 5500 revisions expected from the [DOL] ... The request for the EIN of the plan's trust at 1(b) should remain an optional question at least for the next 2 plan years so as to provide time for plan sponsors to determine whether a trust EIN has been deactivated by the IRS or apply for an EIN." (American Retirement Association [ARA])  


American Benefits Council Letter to IRS on Proposed Changes to Form 5500
"While we welcome the proposed changes for 2016 reporting, several questions contain technical ambiguities.... [C]larification will be needed before service providers that produce the Form 5500 for plan sponsors can implement the changes.... [A]ny changes of this nature will need significant systems development, making it very difficult to implement them properly without the appropriate lead time. That lead time will need to be provided after any proposal is finalized and the additional guidance is provided." (American Benefits Council)  

Benefits in General

[Guidance Overview]

June and July 2016 Filing and Notice Deadlines for Qualified Retirement and Health & Welfare Plans
"The filing and notice deadline table [in this article] provides key filing and notice deadlines common to calendar year plans for the next two months." (King & Spalding)  

Executive Compensation and Nonqualified Plans

Broad-Based Stock Grants and Employee Ownership Are Expanding
"[B]road-based grants of equity awards to all [employees] ... show that stock compensation and share ownership are not just for executives and directors but are also practical, commonsense ways in which companies can reward rank-and-file employees above and beyond salary and encourage a commitment to workplace excellence through a culture of employee ownership. From an economic perspective, corporate profit-sharing through stock options and restricted stock/RSUs has the potential to reduce income inequality by giving employees potentially substantial investment upside via the familiar, trustworthy channel of their own companies." (  

Press Releases

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David Rhett Baker, J.D., Editor and Publisher
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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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