Retirement Plans Newsletter

June 27, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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[Guidance Overview]

Proposed IRS Regs Address Deferred Compensation and Severance Arrangements of Tax Exempt Organizations
"Among a number of other topics addressed in the proposed regulations, the IRS has set forth the requirements that must be satisfied in order to prevent severance pay and vacation or sick pay, offered by a tax-exempt organization, from being treated as deferred compensation that is taxable upon vesting." (Blank Rome LLP)  


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Record Retention Requirements for ERISA Plans (PDF)
"[ERISA] provides for the retention of plan-level records for a period of six years and retention of participant-level records for an indefinite period of time. These records may be retained using electronic media when certain requirements are met. Proper data retention will assist the plan sponsor with meeting the fiduciary duties of ERISA including the 'prudent man' rule." (VOYA Financial)  

A Pension Fund's Path to Leadership in Governance
"Governance leaders share six characteristics in their long-term strategies: They understand the value of investing in governance upgrades.... They eliminate deficits quickly.... They invest in board-level talent.... They increase exposure to alternatives and ESG.... They manage risks more effectively.... They invest in talent to create the most value." (Institutional Investor)  

A Little More Knowledge on Reducing 401(k) Plan Sponsor Liability
"Most plan sponsors blindly rely entirely on service providers who are either stockbrokers, broker-dealers, insurance agents or insurance companies.... In order for plan sponsors to justifiably rely on the advice of third parties, such third parties must be independent and unbiased.... [T]ruly objective and independent investment advisors can both educate plan sponsors and provide [them] with the valuable advice that they need in attempting to be 404(c) compliant[.]" (The Prudent Investment Adviser Rules)  

Jackson National's New Variable Annuity Hints at Future of Annuities Post-DOL Fiduciary Rule
"Aside from producer compensation being fee-based, the annuity has low contract charges (30 basis points for mortality, expense and administration costs), a range of optional living and death benefit riders, and a relatively short surrender-charge period (three years)." (InvestmentNews)  


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Using DC Plan Auto-Enroll to Improve Public Sector Participant Outcomes (PDF)
11 pages. "Due to their history of being viewed as supplemental, defined contribution plans in the public sector have lagged behind their ERISA counterparts in both innovation and participation.... [S]upplemental plans in the public sector have remained in the 30-50% participation range for decades.... [It] is time for public sector defined contribution plans to improve their plan design in an effort help public sector employees achieve retirement readiness." (National Association of Government Defined Contribution Administrators [NAGDCA])  

Boomers, It's Time to Spend -- and Pay Taxes on -- Your 401(k)
"At age 70-1/2, the bill comes due on all those tax-deferred savings accounts we've been building, and this week the oldest baby boomers will begin to reach that finish line -- with many millions more to follow. Those waves of retirees will be required to start pulling money from their IRAs and 401(k)s.... [T]hese annual withdrawals can push you into a higher tax bracket, so financial planners put a lot of energy into building strategies to minimize the tax bite. To be most effective, you need to plan far in advance of the magic age." (Bloomberg)  


ERIC Responds to House GOP's Tax Reform Policy Paper
"ERIC firmly believes the current limits on contributions to retirement plans should not be subject to further reductions, nor should changes be made to the taxation of the benefit; to do otherwise would almost certainly jeopardize the retirement security of millions of American workers and their families. Changes to the tax treatment of retirement plans that would reduce contributions or discourage the establishment and maintenance of plans could negatively impact the role of these pivotal players in the capital markets as well as the capital markets themselves." (The ERISA Industry Committee [ERIC])  

Benefits in General

[Guidance Overview]

GASB 74/75: Depletion Date Projections by Public Pension Plans (PDF)
"Required implementation is imminent, with GASB 74 effective for plan fiscal years beginning after June 15, 2016, and GASB 75 effective for employer fiscal years beginning after June 15, 2017.... This article ... focuses on the determination of a plan's depletion date, which is the projected point in the future (if any) when plan assets are no longer sufficient to satisfy benefit obligations. It also looks at the impact on liability calculations that will result from a conclusion that a depletion date exists. Unlike pension plans, many other postemployment benefits (OPEB) plans are not pre-funded through a dedicated trust. These plans, and pension plans that fall under GASB 73, will not have to prepare depletion date analyses. However, GASB 75 (or GASB 73 for pension plans that are not pre-funded) will impact the selection of the discount rate." (Milliman)  

Press Releases

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