Retirement Plans Newsletter

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Employee Benefits Jobs

Retirement Account Administrator
in MI, NH

Regional Sales Consultant
The Retirement Advantage
in TX, Telecommute

Relationship Manager
John Hancock
in CA

Regional Sales Consultant
The Retirement Advantage
in IL, Telecommute

ERISA Compliance Services Director
Ameritas Life Insurance Corp.
in OH

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Webcasts and Conferences

Opportunity is Knocking: How Benefits Lay the Groundwork for a Thriving Workplace
July 12, 2016 WEBCAST

Changing National & Chicago Health Care Markets
July 20, 2016 WEBCAST
(Midwest Business Group on Health)

HRA/HSA Compliance and Administration Issues
July 28, 2016 WEBCAST
(Frenkel Benefits, LLC)

Creating a Domestic Partner Benefits Policy
August 30, 2016 WEBCAST
(Lorman Education Services)

Code Section 409A: Structuring Compliant Plans and Avoiding Pitfalls
August 31, 2016 WEBCAST
(Lorman Education Services)

Using New Payment Approaches to Obtain Quality Health Care
September 15, 2016 WEBCAST
(Midwest Business Group on Health)

Health & Welfare Benefit Plans National Institute
October 6, 2016 in DC
(ABA Joint Committee on Employee Benefits [JCEB])

Utilization Management Master Class for Health Plans
October 24, 2016 in IL
(Healthcare Education Associates)

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[Guidance Overview]

IRS Fact Sheet: New Determination Letter Program Under Rev. Proc. 2016-37
"An [individually designed plan's (IDP's) IRC Section 401(b) remedial amendment period for required amendments will be tied to a Required Amendment List (RA List) unless legislation or other guidance states otherwise. Interim amendments will no longer be required for IDPs. The RA List is the annual list of all the amendments for which an IDP must be amended to retain its qualified plan status. IRS will publish the RA List after October 1 of each year... IRS anticipates making exceptions based on program capacity to work additional applications, and the need for rulings in certain areas. We'll measure need in a variety of ways including annual input from the EP community." (Internal Revenue Service [IRS])  


The Advisor's Guide to Qualified Plans

Sponsored by The National Underwriter Company

The Advisor's Guide to Qualified Plans enables you to handle all aspects of qualified plans and provide the perfect solution for each client on a case-by-case basis, without a one-size fits all cookie cutter approach. Print and eBook editions available.

What Fee is Reasonable for a Plan Audit?
"By leaving cost out of the evaluation until the very end you will be able to make a sound determination whether, given all that you are seeing in the way of resources, services, experience and quality, any of the fee proposals are out-of-line. If any are, your next step should not be eliminating but questioning further." (Fiduciary Plan Governance, LLC)  

What Can DB Sponsors Do About Upcoming Mortality Changes?
"Once the IRS updates their prescriptive tables ... sponsors can expect funded ratios ('FTAP' and 'AFTAP' in IRS nomenclature) to drop, which will trigger higher contributions requirements (due to a larger funding shortfall to fill), and could push some sponsors into 'benefit restriction' or 'at-risk' territory below 80%.... [L]ump sum payments will increase (as most lump sums are just the present value of annuities), making lump sum offers less attractive to sponsors." (Russell Investments)  

Pension Risk Increases Slightly in 2016
"Among companies in the WTW Pension 100, the median [pension risk index] score ticked up from 1.7% in 2015 to 1.9% in 2016. If current market conditions persist, sponsors' financial positions will deteriorate further by year-end 2016. Plans using an LDI strategy will likely fare much better, as strong long bond returns should mitigate the negative impact of falling interest rates." (Willis Towers Watson)  

401(k) Investment Options: Less is More
"A new study ... [examined] how employees reacted when one large U.S. employer reduced the number of investment options. The results were lower fees and less turnover, saving employees an average of $9,400 over a 20-year period. Further, their new portfolios were less risky. The employer, a non-profit organization, cut the number of investment options roughly in half, from the 90 different funds initially in the plan." (SquaredAway Blog, by the Center for Retirement Research at Boston College)  


Now is a great time to join Worldwide Employee Benefits Network (WEB)

Sponsored by WEB - Worldwide Employee Benefits Network

WEB members represent more than 25 professions and 30 areas of expertise within the pension and benefits industry-including administrators, consultants, attorneys, accountants, investment managers, communications experts and benefits managers. Join today.

Target Date Fund Innovations -- A Series of Short Videos
Video segments include: [1] Trends, due diligence, and customization; [2] Market volatility; [3] What role does fixed income play in a multiasset portfolio? [4] Healthy scrutiny and the DC lineup; [5] The TDF sub-asset allocation decision; [6] Shocking the glide path; and [7] What should sponsors think about? (Vanguard)  

Tips for Drafting Best Interest Contracts Under DOL Rule (PDF)
"In the BIC contract or in a separate single written disclosure provided with the contract, the [financial institution (FI)] must clearly and prominently make certain disclosures. The content of the disclosures will be subject to customization to the FI's particular circumstances. As they apply to IRAs, a few of the disclosures are redundant to other contract terms. So long as the required information is provided clearly and prominently, a single disclosure of particular information is sufficient." (Sutherland Asbill & Brennan LLP)  

Ten DOL Fiduciary Rule Questions Answered
"[1] Who is a fiduciary under the final rule? ... [2] What is best interest? ... [3] What is a conflict of interest? ... [4] Weren't advisers fiduciaries before now? ... [5] What sort of recommendations are considered 'advice'? ... [6] What is investment or retirement 'education'? ... [7] What are 'general communications'? ... [8] What is a Best Interest Contract Exemption? ... [9] When does the final rule go into effect? ... [10] Is the rule a done deal?" (International Foundation of Employee Benefit Plans [IFEBP])  

DOL Urges Expansive View of Pension Plan Standing
"The question of constitutional standing has derailed a number of recent lawsuits involving defined benefit pension plans. Judges have reasoned that because benefits are by nature defined, it's difficult for participants to show that they've been injured by mismanagement, unless that mismanagement is so severe that it threatens their ability to receive benefits.... The department used its brief to attack this reasoning, arguing that a pension plan participant's right to 'proper fiduciary conduct' is sufficient to establish both constitutional and representational standing to sue the plan's fiduciaries." (Bloomberg BNA)  

Excessive Fee Lawsuit Against Small 401(k) Plan Dismissed -- by Plaintiffs
"Less than a month after filing, plaintiffs in the case of Damberg v. LaMettry's Collision, Inc.... filed for a voluntary dismissal of their lawsuit.... The case -- which some held out as a harbinger of this type litigation moving down market -- stood out in an environment where for a decade the vast majority of the so-called 'excessive fee' revenue-sharing lawsuits have been filed against multi-billion dollar 401(k) plans." (National Association of Plan Advisors [NAPA])  

Aegon and Transamerica Settle Participant Excessive Fee Suit
"The original complaint suggested that the defendants burdened the plan with layers of superfluous fees; that the plan pays fees higher than its peers; and that the fees go mostly to Aegon, which serves as recordkeeper and investment manager for the plan through its Transamerica affiliates.... [T]he settlement will bring about structural changes in the way the company runs its retirement savings plan -- and how it calculates fees. Payments will also be made to compensate class members." (PLANSPONSOR)  

The 'Feel Free' Retirement Spending Strategy (PDF)
"To determine a safe percentage of savings to spend, just divide your age by 20 (for couples, use the younger spouse's age). For someone who is 70 years old, it's safe to spend 3.5 percent (70/20 = 3.5) of their savings. That is the amount one can spend over and above the amount of Social Security, pension, employment or other annuity-type income.... Anyone who wants to spend more than the feel-free spending level (divide-age-by-20 rule), may want to consider buying an annuity to provide some of their income." (R. Evan Inglis, FSA, via Society of Actuaries)  

GAO to Investigate Central States' Investments
"The investigation was requested June 21 by 10 senators and 41 congressmen, who asked GAO officials to consider several issues, including how the pension fund's fiduciaries and relevant parties ensured conflict-free investment advice with reasonable fees. The letter also asked about the investment strategy and returns from 1997 to 2015, including comparisons to similar funds for each asset class." (Pensions & Investments)  


Conflicted Interpretations Arising from DOL Final Fiduciary Rule
"Was it the DOL's intent to provide incentives for you to apply your AUM fees to a client's cash accounts, so you could comply with the new regs? Do you think the DOL believes you should give up your investment judgment and simply recommend whatever happens to be on the Morningstar list of least expensive options? Don't you think the BICE exemptions were purely and simply an accommodation to product manufacturers who were selling investments that would otherwise be hard to justify as a fiduciary recommendation?" (Bob Veres in Inside Information)  


Loss of Determination Letter Program Detrimental to Large Employers and Their Employees
"Today's decision hurts everyone -- plan sponsors, employees, and their families -- and will have massive rippling effects throughout the benefits world.... 83% of respondents stated that their external auditor requested and used the IRS determination letter as proof of compliance with federal laws and regulations ... 76% of respondents confirmed there will be a significant increase in legal and audit costs ... 25% of respondents stated that audit and legal costs are paid by plan participants[.]" (The ERISA Industry Committee [ERIC])  

Benefits in General

[Official Guidance]

Text of DOL Final Regs: Federal Civil Penalties Inflation Adjustment Act Catch-Up Adjustments
105 pages; includes provisions for all DOL agencies, including EBSA. "This section ... addresses the civil monetary penalties administered by EBSA to enforce title I of [ERISA]. Paragraph 2(a) explains how the Department determined the date each civil monetary penalty was last adjusted by law or regulation (other than the Prior Inflation Adjustment Act, as amended), and Paragraph 2(b) describes the calculation of the catch-up adjustment for each ERISA civil monetary penalty through the use of a table. Paragraph 2(c) addresses the restructuring of 29 CFR Part 2575 and other technical changes to the Department's regulations needed to reflect the amendments made to the Prior Inflation Adjustment Act by the Inflation Adjustment Act." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

What Does the Supreme Court's Spokeo Decision Mean in the ERISA Litigation Context?
"Spokeo holds that 'concrete' harm, which can arise from the violation of tangible or an 'intangible' right created by Congress, along with particularization, is all that is required by the standing analysis. However, Justice Alito also described some clear limitations on the definition of the term 'concrete.' ... Justice Alito's definition of the word concrete may offer some possible defenses to ERISA claims that are pled as no more than bare procedural violations or 'general grievances.' " [Spokeo v. Robins, No. 13-1339 (S. Ct. May 16, 2016)] (Jackson Lewis P.C.)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

Key Takeaways from the Newly Issued Proposed Section 409A Regs
"Exempt stock rights (stock options and stock appreciation rights) can be awarded to service providers who are expected to commence work for the service recipient within 12 months, if they actually do commence work within that period.... Liberal timing rules apply to payments triggered by the service provider's death.... 'Clawbacks' on exempt stock rights are permitted.... A payment can qualify as a 'short-term deferral' even if the payment is made after March 15 of the year following vesting, where the payment is prohibited by federal securities law restrictions." (Wilkins Finston Friedman Law Group LLP)  

[Guidance Overview]

Proposed Section 409A Regs Make Several Notable Changes
"Though the IRS emphasized that the proposed regulations make narrow, discrete clarifications and changes to the final and 2008 proposed regulations, ... changes to four areas ... are likely to have a greater impact on the design and operation of deferred compensation plans. [1] You can still 'fix' noncompliant arrangements the year before vesting.... [2] Changes to stock option/SAR Rules.... [3] Employee-Independent Contractor.... [4] Payment events triggered by beneficiaries." (Miller & Chevalier)  

[Guidance Overview]

Proposed Rules for Incentive-Based Compensation at Financial Institutions
"The theory behind the proposed rules is to deny compensation for short-term actions that produce longer-term bad consequences ... and to reward 'balanced' risk and rewards assessments by bankers.... [T]he proposed rule also rewards things that were perceived as not being rewarded in the industry prior to 2008, such as enhanced compliance and risk management practices. By bringing such mandatory compensation practices down to mid-size community banks with only $1 billion in assets, the Federal regulators (including the Federal Reserve) intend to achieve a sweeping impact on virtually the entire banking industry, not just Wall Street." (Quarles & Brady LLP)  

[Guidance Overview]

Section 409A Proposed Regs: IRS Changes Affect Nonqualified Deferred Comp and Stock Plans
"[T]hese proposals formalize previously informal guidance that the IRS has been providing, offer new flexibility in some areas, and set forth a few new requirements. The IRS is allowing reliance on this guidance now and will not assert any position that runs counter to it. The proposed regulations present a lengthy list of items." (  

Press Releases

Keating Partners is Certified for Fiduciary Excellence
Centre for Fiduciary Excellence [CEFEX]

Advent Design Corporation is Certified for Fiduciary Excellence
Centre for Fiduciary Excellence [CEFEX]

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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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