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[Guidance Overview]

How to Comply With DOL's Best Interest Standard of Care
"[M]any advisors don't understand how the best interest standard of care will impact their advice to IRAs ... [T]he best interest standard of care duties [can be divided] into two categories: macro and micro. The macro requirement is that the investment products be generally prudent for retirement investors. The micro requirement is that the recommended combination of investment products and services be prudent for the particular retirement investor." (Fred Reish, in ThinkAdvisor)  


Advisors Guide to Social Security Planning

Sponsored by Lorman and BenefitsLink

June 21 webinar. Learn the basics of Social Security and planning strategies to maximize Social Security benefits for your clients. BenefitsLink discount.

[Guidance Overview]

Exemptive Relief May Soften Impact of Fiduciary Advice Regs (PDF)
15 pages. "The Best Interest Contract Exemption and the Principal Transaction Exemption provide opportunities to parties that may find business and compensation practices restricted under the final regulations.... The terms of PTE 84-24 are more relaxed than those applicable under BICE. However, insurance agents, brokers and other parties receiving compensation under PTE 84-24 will need to comply with impartial conduct standards and disclosure requirements." (Wolters Kluwer)  

MassMutual Settles 401(k) Fee Lawsuit for $31M
"The lawsuit ... alleged that MassMutual and its top executives 'larded' the company's retirement plan with 'excessive fees' and 'unreasonably priced, proprietary investment options' in violation of their fiduciary duties under [ERISA].... In addition to a $30.9 million settlement payment, MassMutual also agreed to keep the plan's annual record-keeping fees no higher than $35 per participant for the next four years. The agreement includes a four-year ban on calculating record-keeping fees as a percentage of plan assets." (Bloomberg BNA)  

Notes from Meeting of Actuaries 'Intersector Group' with IRS/Treasury, March 2016 (PDF)
5 pages. Topics include: [1] Reasonable actuarial equivalence; [2] Issues related to uncashed checks at plan terminations (both DB and DC plans); [3] Additional guidance under Code Sections 430 and 436; [4] Automatic approvals for changes in funding method and discount rate election; [5] EPCRS wish list; [6] Mortality basis change and 'partial credibility' rules for use of adjusted mortality tables; [7] Vested terminated participants over normal retirement age, or beyond the required beginning date -- coordination with DOL enforcement initiative; [8] MPRA suspensions; [9] Additional hybrid plan guidance for final market-rate rules and the 'lump sum-based benefit formula' definition; [10] Post-Gray Book interaction with actuarial community and plan sponsors. (American Academy of Actuaries, Society of Actuaries, Conference of Consulting Actuaries, and ASPPA College of Pension Actuaries)  

Notes from Meeting of Actuaries 'Intersector Group' with PBGC, March 2016 (PDF)
5 pages. Topics include: [1] Experience under new Reportable Events rules; [2] 4010 final regulations; [3] Prospects for 4062 regulations; [4] Regulations on multiemployer partitions; [5] Review of PBGC actuarial assumptions and timing of changes; [6] Issues related to uncashed checks in plan terminations; and [7] 'Proof of payment' guidance/practice. (American Academy of Actuaries, Society of Actuaries, Conference of Consulting Actuaries, and ASPPA College of Pension Actuaries)  


401(k) Answer Book, 2016 Edition

Sponsored by Wolters Kluwer

When participants, sponsors, or service providers ask you questions, this book has the answers. Covers 401(k) plan design, testing, reporting and disclosure, plan termination, investment topics and regulatory guidance. Use code BENEFIT20 for 20% discount.

Fiduciary Rule's Impact on IRAs Should Be No Surprise (PDF)
"Both ERISA-governed plans and IRAs have been governed by the same fiduciary investment advice for decades. Considering the DOL has since been given rulemaking authority over Code section 4975, it should come as no surprise that IRAs are subject to the same recently issued final rule that also applies to ERISA governed employer retirement plans." (Ascensus)  

A Second Look at How Target Date Funds Change Their Allocations
"Setting aside questions about whether target date funds use the most optimal allocation strategies -- beyond the scope of this article -- the biggest downside to them is the lack of customization. Shareholders in these funds are locked into specific fund families. They are also locked into allocation ranges based on planned retirement ages. So-called robo-advisers offer an alternative." (American Association of Individual Investors)  

How to Raise the Retirement Age for People Who Want to Work
"One idea is to raise the normal retirement age to, say, 70, but make it easier for older people to go on disability.... A streamlined alternative would be to base the normal retirement age on a worker's occupation -- raising it higher for deskbound jobs.... A sliding scale would seem suitable for an aging workforce, since getting old is one long process of sliding downhill in terms of ability to work.... [T]he share of people working above the traditional retirement age, while higher than in recent decades, remains lower in percentage terms than it was in the 1940s and 1950s." (Bloomberg)  

Colleges Offer Retirement Buyouts to Professors
"The share of people older than 65 teaching full time at American colleges and universities nearly doubled between 2000 and 2010. College professors are now among the oldest Americans in the workforce.... A growing number of private and public universities are resorting to offering large sums of money to faculty and staff in exchange for early retirement[.]" (The Atlantic)  

Pension Reform Nets Savings for CalPERS Employers
"Cost savings for the [state of California] range from 1.2 percent of payroll for miscellaneous plans and up to 5.1 percent of payroll for safety plans, while plans in the schools pool saw an approximately 1.7 percent cost savings as of the June 30, 2015 actuarial valuations. Savings for local public agencies will vary depending on the benefit provisions they elected to provide to their employees and the demographics of their work forces." (CalPERS)  

Philadelphia Calls for Task Force to Address Private-Sector Retirement Security
"The task force will be composed of various stakeholders from the private and non-profit sectors, all levels of government ... Councilwoman Cherelle L. Parker, who introduced the resolution ... [said] 'While we would love for federal officials to craft a solution, it's clear that big cities like New York and Philadelphia must take action now.' " (Pensions & Investments)  


Commission Proposes Comprehensive Changes to Strengthen U.S. Retirement System
"By far the most controversial recommendations to strengthen our retirement system are the ones regarding Social Security.... The Commission notes that their proposed package of changes would not only solve the 75-year actuarial deficit, but it would also result in 'sustainable solvency' as that term is defined by the Social Security actuary.... [T]hese conclusions are valid only if the 2015 Trustees assumptions are exactly realized (or are more favorable) and not changed over the next 75 years." (Ken Steiner, FSA Retired)  


How the Puerto Rico Rescue Makes State Pensioners the Big Winner
"The political path of least resistance is to make the hedge funds and other investors who lent to the state of Illinois pay for the state's pension shortfall, and the apparent Puerto Rico solution being debated by Congress provides a viable path to make that happen.... [T]he pattern will be set, if not by law then by custom: State employees on a defined benefit pension will always come before investors who foolishly lent money to their state. And no one will care one whit if that money represents the retirement funds of other U.S. citizens, either." (The Hill)  

Benefits in General

IRS to Contact Taxpayers in Writing in Audit Cases -- No More Phone Calls
"The IRS announced on May 20, 2016 that as of that date, all initial contacts with taxpayers to commence an audit examination must be made by mail, instead of the telephone, using official IRS initial contact letters. Until recently, making initial contact by telephone to schedule an appointment to initiate a field examination had been a long-standing policy and practice. The IRS has implemented the change in practice in response to the continuing threat of phone scams, phishing, and identity theft." (Schneider Downs)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

Major Changes Proposed for Incentive Compensation at Financial Institutions -- Are Other Types of Employers Next?
"The proposed regulations would require deferral of a significant portion of incentive compensation after the end of the performance period before the award is 'vested' and would also require the vested amount to be subject to substantial forfeiture and clawback risks.... The concepts in the proposals are likely to be extended to publicly traded employers, tax exempt entities, federal contractors, and other employers either by mandate or as emerging best practices." (Vorys, Sater, Seymour and Pease LLP)  

Press Releases

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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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