Retirement Plans Newsletter

June 3, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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Employee Benefit Plans - 2016 Plan Sponsor Update
(PricewaterhouseCoopers LLP)

Maximizing Your HR Technology Investment & Analytics for Improved Outcomes
June 8, 2016 in TX
(Worldwide Employee Benefits Network [WEB] - Houston Chapter)

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[Guidance Overview]

'Call to Action' May Create Fiduciary Liability Under ERISA
"This rule does not preclude an adviser from marketing himself, or an affiliate, as a potential fiduciary to be selected by a plan fiduciary or IRA owner since touting personal attributes does not implicate the rule. But advisers should proceed with caution in their marketing efforts. If an adviser recommends, for example, that the investor pull money out of a plan or invest in a particular fund, that advice is given in a fiduciary capacity and is evaluated separately from the adviser's self-promotion. Similarly, the adviser could not recommend that a plan participant roll money out of a plan into investments that generate a fee for the advisor, but leave the participant in a worse position than if he had left his money in the plan." (Winstead PC)  


June 8 webinar - Compensation Planning for Tax-Exempt Entities: Navigating IRC Section 457(f)

Sponsored by Trucker Huss

Tax-exempt employers must be aware of unique restrictions and benefits of Section 457(f) for programs that include supplemental executive retirement benefits, long-term incentive bonuses and severance benefits. Learn best practices and avoid pitfalls.

NAFA Seeks Preliminary Injunction Against DOL Fiduciary Rule (PDF)
"NAFA ... has filed a federal lawsuit in the D.C. District Court challenging the [DOL]'s new 'fiduciary rule.' The lawsuit seeks a preliminary injunction to stay the rule, which is currently scheduled to become operational in April 2017.... The lawsuit alleges the DOL rule is invalid on grounds that the agency exceeded its authority to regulate IRAs and that it improperly categorizes insurance agents as fiduciaries. The lawsuit further alleges that the rule creates a private right of action, which only Congress can do." (National Association for Fixed Annuities [NAFA])  

First State-Run Retirement Plan for Private Sector Employees Set to Launch
"Starting January 1, 2017, Washington will be the first state to offer a state-run retirement plan for private-sector workers.... [T]he Small Business Retirement Marketplace will be an Internet site through which individuals and employees of small companies can set up retirement plans. It will operate much like the Washington Health Exchange does now for individuals to buy health insurance." (PLANSPONSOR)  

Interesting Angles on the DOL's Fiduciary Rule, Part 7
"There are three parts to the best interest standard [1] The prudent person rule. [2] Individualization to the retirement investor's circumstances. [3] The duty of loyalty.... Interestingly, none of the parts uses the word 'best.' In other words, 'best interest' is just a label; the real requirements are prudence and loyalty." (  

Puerto Rico Pension Plan Risks Insolvency Next Year
"The commonwealth's Employees' Retirement System had only 0.27 percent of funds to cover $30.2 billion it has promised to current and future retirees ... The pension system will run out of funds in the fiscal year that begins July 1, 2017, unless it receives more cash." (Bloomberg)  


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.


Fiduciary Rule Advances Investors' Interests
"If they cannot document that they serve investors' interests, broker-dealers, 401(k) plan providers, and other retirement advisors face potential private legal actions, including possible class-action lawsuits. (The DOL lacks the statutory authority to bring enforcement actions against retirement advisors, but it can require that they enter into contracts guaranteeing retirement investors the right to sue their advisors and plan providers.) In the 401(k) space, where plan sponsors have long had fiduciary obligations, similar class-action lawsuits have likely pushed down fees to investors, by giving sponsors an incentive to ensure that they are offering the lowest-cost share class for which they are eligible." (Morningstar Advisor)  


Businesses Fight for Their Right to a Lousy Retirement Plan
"[W]hile America's biggest companies are often quite generous to employees, its smallest companies are notorious for lousy 401(k)s. Small plans typically charge fees five or six times as great as those of large plans.... So it's surprising to see lobbyists fighting changes to the current retirement system and using small businesses to back their case." (Bloomberg)  


Thoughts on Chamber of Commerce v. Thomas Perez and the DOL
"[T]he actual legal issues are much more subtle than the broad discussion of financial services regulation in the complaint might suggest: the case isn't, in the end, going to be about the propriety or scope of regulating the financial industry, but instead about the scope of the Department's authority and the procedural manner in which it acted." (Stephen Rosenberg, The Wagner Law Group)  


Should Congress Raise the Social Security Full Retirement Age to 70?
"If the full retirement age were raised, future retirees with high lifetime earnings can expect to receive some compensation when their monthly benefits are cut. Because they can expect to live longer than today's retirees, they will receive benefits for a longer span of years after 65. For low-wage workers, there is no compensation. Since they are not living longer, their lifetime benefits will fall by the same proportion as their monthly benefits." (The Brookings Institution)  

Executive Compensation and Nonqualified Plans

Do CEO Stock Options Mean Trouble?
"The theory ... is that CEO pay should be aligned with the interest of company shareholders. But there's an active debate over whether stock options -- a very common part of CEO compensation packages -- are the best way to do that.... Dylan B. Minor offers evidence that stock options not only encourage CEOs to pursue bold innovation, but also to take dangerous risks." (HRE Daily)  

Press Releases

DOL Obtains Judgment to Restore Nearly $20K to 401(k) Plan of Contractor Based in Jessup, Maryland
Employee Benefits Security Administration [EBSA], U.S. Department of Labor Website adds Location-Based Technology to Personalize, Enhance User Experience
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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