Compliance Specialist
Great-West Financial / Empower Retirement
in KS

Compliance Specialist/Client Implementation
Means & Associates
in CA

Retirement Plan Administrator
PBC Advisors, LLC
in IL

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All Day Summer Seminar with Sarah Simoneaux
June 28, 2016 in MN
(ASPPA Benefits Council [ABC] of Greater Twin Cities)

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[Official Guidance]

Text of IRS Notice 2016-39: Recovery of Investment in the Contract from Payments Received from a Qualified Defined Benefit Plan by an Employee During Phased Retirement (PDF)
15 pages. "[P]ayments received by an employee from a qualified retirement plan during phased retirement are not received as an annuity for purposes of Section 72 if all the following conditions apply:

1. The employee begins to receive a portion of his or her retirement benefits when he or she enters phased retirement and begins part-time employment, and will not begin receiving his or her entire plan benefits until he or she ceases employment and commences full retirement at an indeterminate future time ...
2. The plan's obligations to the employee are based in part on the employee's continued part-time employment ... and
3. Under the plan terms, the employee does not have an election as to the form of the phased retirement benefit to be paid during phased retirement, but elects a distribution option at full retirement that applies to the employee's entire retirement benefit, including the portion that commenced as phased retirement benefits....

"To the extent the phased retirement payments received from a qualified defined benefit plan during the period of part-time employment are amounts not received as an annuity, the rules of Section 72(e)(8) apply." (Internal Revenue Service [IRS])  

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[Official Guidance]

Text of IRS June 2016 Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) of the Internal Revenue Code. In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)." (Internal Revenue Service [IRS])  

[Guidance Overview]

The DOL's 2016 Final Fiduciary and Conflict of Interest Regs: The Principal Transactions Exemption
"Riskless principal transactions are the functional equivalent of agency transactions. As such, they are also covered under the Best Interest Contract exemption. This means that riskless principal transactions can proceed under either exemption, thereby resulting in 'some overlap between the Best Interest Contract exemption and the principal transaction exemption.' The Best Interest Contract exemption, however, provides broader relief for all recommended purchases." (Mintz Levin)  

From the Teacher's Advocate: The Annuity Chart They Don't Want You To See
"This [article provides] a document from The Annuity Source, Inc. [which] lists all the latest annuities they are selling and the commission rates.... [It's] available on the open net...so, here it is (18 pages of annuity products and their commission schedules)." (The Teacher's Advocate)  

What's More Important than 401(k) Fund Performance?
"[F]or the first time, the desire to reduce fees and expenses outranks underperformance as the most common reason for dropping an investment manager from the plan lineup ... [S]maller plans [are] more likely to request lower fees and larger plans [are] looking for lower-cost, more personalized investment options.... Mutual funds remain the most common investment vehicle offered, yet in search of performance and a more favorable fee structure, interest is rising in products such as managed accounts, ETFs and collective investment trusts (CITs)." (401K Specialist)  

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Changes in Reverse Mortgages Give Advisers New Tools in Retirement Planning
"There is great value for clients in opening a reverse mortgage line of credit at the earliest possible age, particularly in a low-interest-rate environment like today. Once established, the available line of credit continues to grow each year, even if the underlying value of the house does not appreciate. In addition to serving as a hedge against portfolio depletion, a standby reverse mortgage line of credit can serve as long-term-care insurance or a deferred annuity, using the home as collateral instead of paying insurance premiums." (InvestmentNews)  

ERISA Fiduciaries: What the Numbers Really Mean (PDF)
"Most plan sponsors don't know the difference between an ERISA 3(16), ERISA 3(21), and ERISA 3(38) fiduciary; it becomes a number soup of its own. So this article is going to break down what a fiduciary is and what these fiduciary numbers actually mean." (Ary Rosenbaum, Esq.)  

Funded Status Improves in May Due to Rising Corporate Bond Discount Rates and Investment Gains (PDF)
"The funded status of the 100 largest corporate defined benefit pension plans improved by $10 billion during May ... The deficit fell to $401 billion at the end of May, due to an increase in the benchmark corporate bond interest rates used to value pension liabilities and investment gains. As of May 31, the funded ratio increased to 77.5%, up from 77% at the end of April." (Milliman)  

Understanding the Growth in Government Contributions to New York State's Public Pension Plans
"This study examines potential explanations for the recent rise in government contributions to the retirement plan for general state and local government employees.... [I]ncreases were driven primarily by plan investment losses and the plan's practice of adjusting government contributions to offset unexpectedly high or low investment returns. Plan benefits to current retirees are more generous than in other states, but recent cutbacks will sharply curtail future retirement benefits for new hires." (Urban Institute)  

Maryland Pays More Than $320 Million in Fees to Manage Pension Funds. What Does the State Get in Return?
"The state's pension portfolio is on track to fall below the program's modest goal of a 0.51 percent return on investments for fiscal 2016, which ends June 30. As of April 30, the plan had earned a mere 0.12 percent. If the fund continues to underperform through June, it could bolster an argument ... that several other states have recently adopted: Public pension systems should bid farewell to high-cost financial wizards and shift more money into passively managed index funds such as those that mimic the Standard & Poor's 500-stock index." (The Washington Post; subscription may be required)  

Officials Investigate Breach of Chicago City Employee Retirement Accounts
"Workers with Nationwide Retirement Solutions noticed 'suspicious activity' with some 457 deferred compensation accounts for municipal employees ... on June 1 ... These accounts are administered by Nationwide on behalf of the city ... City officials said 91 accounts were breached, of which 58 accounts had money withdrawn and the remaining 33 accounts did not." (Chicago Tribune; subscription may be required)  

[Opinion]

American Academy of Actuaries Letter to IRS: Timing for Release of 2017 Applicable Mortality Tables Under Sections 430(h)(3) and 417(e) (PDF)
"We understand that the IRS and Treasury continue to evaluate options for updating the mandated tables ... Given the significance of these changes to the statutory mortality tables and the resulting public policy implications, we believe it is imperative to allow sufficient time for review by the actuarial and plan sponsor community, and for evaluation of submitted comments and testimony by IRS and Treasury prior to issuing final regulations." (American Academy of Actuaries)  

[Official Guidance]

Text of Rev. Proc. 2016-36: Recovery of Investment in the Contract from Payments Received from a Non-Qualified Plan by an Employee During Phased Retirement (PDF)
"This revenue procedure provides guidance regarding the application of Sections 1.72-2(b)(2) and 1.72-4(b)(1) ... to amounts ... that are received from a non-qualified contract.... The [IRS] will not apply Notice 2016-39 to amounts received from a non-qualified contract. Accordingly, in applying Sections 1.72-2(b)(2) and 1.72-4(b)(1) to a non-qualified contract, the possibility of further contributions to the contract or a subsequent election under the contract to receive the benefit payable under the contract in a different manner generally will not affect the determination of whether payments are amounts received as an annuity." (Internal Revenue Service [IRS])  

PBGC Selects Firms for Smaller Asset Manager Pilot Program
PBGC [Pension Benefit Guaranty Corporation]

The Segal Group Announces New President and CEO
The Segal Group

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