Retirement Plans Newsletter

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Webcasts and Conferences

Winning With Wellness
June 10, 2016 WEBCAST

Accountable Care Organizations: What Have We Learned?
June 16, 2016 in GA
(Worldwide Employee Benefits Network [WEB] - Atlanta Chapter)

Rollovers Between Retirement Plans and IRAs
August 30, 2016 WEBCAST

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[Guidance Overview]

PBGC Revises Annual Financial and Actuarial Information Reporting for Single-Employer Plans
"Sponsors of single-employer plans that are underfunded, have minimum funding waivers, or have missed contributions (thus, making them potentially subject to section 4010 reporting) need to determine whether they will be eligible for any of the new relief from section 4010 reporting for plan years beginning after December 31, 2015." (Cheiron)  


Employee Benefits Glossary -- Your Time and Sanity Saver

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

The new Employee Benefits Glossary is your essential guide to the world of employee benefits. Inside you'll find more than 4,000 definitions to give you confidence in your understanding of even the most complicated employee benefit terms. Order Now!

[Guidance Overview]

Treasury Issues Final Benefit Suspension Guidance Under MPRA (PDF)
"The statute states that in the aggregate, benefit suspensions must not materially exceed the level that is necessary to avoid insolvency. The Proposed Regulation established a numerical test for determining if this requirement is satisfied.... The Final Regulation adds a second way to satisfy this test. Under the second approach, a suspension plan will 'not materially exceed the level that is necessary to avoid insolvency' if reducing the amount of each participant's suspension by 2% of the pre-suspension benefit would cause the plan to fail to be projected to be solvent." (Groom Law Group)  

[Guidance Overview]

The DOL Fiduciary Rule: Six Immediate Concerns for Plan Sponsors (PDF)
"[1] 'Updated' service agreements ... [2] Counterparty transactions.... [3] New hidden fees.... [4] Participant communications.... [5] Investment education.... [6] Distribution counseling." (Ivins, Phillips & Barker)  

To BICE or Not to BICE, That Is the Question.
"Under the new fiduciary rule, plan sponsors have an opportunity for significant power in vetting potential service providers and establishing the terms of any engagement. They also have an increased liability exposure in connection with same.... [O]ne can legitimately ask why a plan sponsor would not require that a potential service provider agree not to ask plan participants to enter into a BICE agreement, since a BICE agreement essentially asks a plan participant to allow the service provider to engage in the very sort of abusive conflict-of-interest conduct that drove the passage of the rule and BICE." (The Prudent Investment Adviser Rules)  

Collective Investment Trusts: Is Cheaper Always Better? (PDF)
"Availability of collective investment trusts (CITs) is increasing as plan sponsors look for low-cost vehicles, as well as more transparent cost structures, to offer participants. While typically lower in costs, CITs also have other characteristics -- such as different regulatory oversight and data availability -- that cause them to differ from mutual funds.... This paper provides an overview of and trends surrounding CITs, in particular within the target date industry, and outlines what plan sponsors should consider when looking at adding CITs to their plan lineup." (Portfolio Evaluations, Inc.)  


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.

Interesting Angles on the DOL's Fiduciary Rule, Part 8
"[T]he rule imposes a burden on plan sponsors to monitor [asset allocation] models and which [designated investment alternatives] are used for the models.... Most plan sponsors won't know about this duty. Even if they become aware of the responsibility, they probably won't know how to evaluate if the 'education' models are disguised vehicles for generating management fees for proprietary products or more revenues for advisers or their financial institutions." (  

How America Saves, 2016
"This comprehensive report analyzes the retirement savings behavior of about 4 million plan participants and serves as a valuable reference tool for retirement plan sponsors. The report offers useful insights into current issues affecting defined contribution plans, including employer contribution trends, automatic plan features, use of target-date funds, and use of advice services." (Vanguard)  

Participants Sue Over Church Plan Status for Hospital Pension Fund
"Holy Cross Hospital and Sinai Health Systems, Chicago, are being sued by participants of a terminated defined benefit plan who are challenging its church-plan status.... The lawsuit ... alleges that Holy Cross Hospital transferred plan sponsorship and liabilities to an order of nuns ... the day before completing a merger with Sinai Health System in 2012. At the time, the plan had $31 million in liabilities after Holy Cross stopped making contributions in 2007, according to the lawsuit." (Pensions & Investments)  

Verizon-CWA Pact Preserves Generous Lump Sum Pensions
"As part of the recent collective bargaining pact between Verizon and the Communications Workers of America, the company agreed to retain a lump-sum payment calculation that uses generous discount interest rate assumptions in exchange for the union's agreement to lock in 2016 mortality tables. Verizon made the deal knowing that long-awaited [IRS] mortality table updates are coming and will carry a hefty price tag ... When Verizon proposed scrapping the lump-sum option altogether during bargaining, the union responded by agreeing to an innovative freeze of the plan's mortality table assumptions for the life of the 38-month contract[.]" (Bloomberg BNA)  

Retirement Health Care Costs and Income Replacement Ratios (PDF)
10 pages. "[C]urrent [income replacement ratios], which do not include unexpected out-of-pocket medical expenses, accurate health care inflation rates, life expectancy projections, and Medicare means-testing surcharges, will likely fail to produce sufficient income for retirees to afford quality health care and maintain the standard of living they have planned for.... [W]hile the health care savings gap will be substantial, it can be managed through modest additional contributions to 401(k) plans, HSAs, Roths, annuities, or other products, such as life insurance." (HealthView)  


ARA Comment Letter to IRS: Recommended Priorities for Items in the 2016-2017 Priority Guidance Plan (PDF)
"ARA recommends that [a total of 15] Retirement Benefit items listed [in this letter] be included ... in the following order of priority ... [1] issue guidance permitting the use of forfeitures to fund Qualified Non-Elective Contributions (QNECs), Qualified Matching Contributions (QMACs), and Safe Harbor Contributions ... [2] provide official guidance on the recordkeeping requirements that plan sponsors must satisfy to properly document hardship distributions.... [3] issue sample language for amendments that are required for legislative changes and modify the interim amendment process to require only periodic adoption of interim amendments." (American Retirement Association [ARA])  


Employers, You Should Be Appalled by Industry Reaction to the New Fiduciary Rule!
"Remember that the major thrust of the DOL's new regulations are to require brokerage firms to provide investment recommendations to their retirement clients (You!) that are in your best interest (not theirs). Right now, no such requirement exists for brokerage firms. That the brokerage community does not accept this new fiduciary standard with open arms should trouble you, especially if your 401(k) plan investment advisor works for one of these firms." [Editor's note: this article was in yesterday's newsletter, but the title we created was confusing and might have misled readers. We apologize for the error.] (Lawton Retirement Plan Consultants)  

Executive Compensation and Nonqualified Plans

FASB Stock Compensation Accounting Amendments (ASU 2016-09): Summary of Early Adopters (PDF)
"Of the 44 early-adopters, 16 chose to account for forfeitures as they occur and 7 chose to continue estimating forfeitures under the current guidance. 21 companies did not explicitly disclose their policy election.... Of the 16 companies accounting for forfeitures as they occur, 11 disclosed the cumulative effect resulting from this change in accounting principle." (PricewaterhouseCoopers)  

Press Releases

ECFC Increases Industry Education to Advance Healthcare Consumerism
ECFC [Employers Council on Flexible Compensation]

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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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