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[Official Guidance]

Text of PLR 201628006: Required Minimum Distribution Rules Apply to Designated Beneficiary Despite State Court's Post-Mortem Reformation (PDF)
"After Decedent's death, the trustees of the trusts petitioned the Court for a declaratory judgment that would modify the beneficiary designation for IRA X to carry out the original estate plan. Based on its finding of Decedent's intent, the Court ordered that the beneficiaries of IRA X are Trust C as a 50% beneficiary and Trusts D an d E as 25% beneficiaries, consistent with Decedent's prior beneficiary designation. The order was retroactively effective as if such designation were made on the date Decedent signed the beneficiary designation form for IRA X.... [A]lthough the Court order changed the beneficiary of IRA X under State law, the order cannot create a 'designated beneficiary' for purposes of section 401(a)(9)." (Internal Revenue Service [IRS])  


2016 Retirement Plans Facts - answers at your fingertips

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With more than 600 retirement plans questions asked and answered, 2016 Retirement Plans Facts provides proven and practical guidance in this changing arena.

[Official Guidance]

Text of DOL Technical Corrections to Best Interest Contract Exemption
48 pages. "The corrections in this document fix typographical errors, make minor clarifications to provisions that might otherwise be confusing, and confirm insurers' broad eligibility to rely on [the Best Interest Contract Exemption (BICE)], consistent with the exemption's clearly intended scope and the analysis and data relied upon in the Department's final regulatory impact analysis (RIA)." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of DOL Technical Corrections to Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs
32 pages. "This document makes technical corrections to the [Principal Transactions class exemption] ... In addition, the document adds an identifier, Prohibited Transaction Exemption 2016-02, to the heading of the Principal Transactions Exemption. For convenience, the text of the corrected exemption is reprinted in its entirety at the conclusion of this document." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Guidance Overview]

A Whole New World for Qualified Plans: Rev. Proc. 2016-37
"Effective January 1, 2017, sponsors of individually designed qualified plans may submit determination letter applications only for initial plan qualification, qualification on plan termination and certain other circumstances to be determined annually by the IRS. The IRS intends to publish annually a 'Required Amendments List' of disqualifying provisions that arise as a result in a change in qualification requirements.... To assist plan sponsors with operational plan compliance, the IRS intends to issue an Operational Compliance List annually to identify changes in qualification requirements that are effective during a calendar year." (Drinker Biddle)  

[Guidance Overview]

Does My Company's Retirement Plan Need an Audit? (PDF)
"[Y]ou have to determine annually whether you are a 'large' plan or 'small' plan for filing purposes. The good news is that you can determine 'large' plan status on the first day of your plan year, and you don't have to wait until after the plan year-end when your 5500 is being prepared.... [A] plan may continue to file as a small plan filer (and thereby avoid the requirement for an audit) as long as there are between 80 and 120 participants at the beginning of the plan year. This is especially important for plans in which the participant count may tend to hover around the 100 participant threshold." (Kushner & Company)  


Inheriting an IRA or Employer-Sponsored Retirement Plan

Sponsored by Lorman and BenefitsLink

July 12 webinar. Get information you need to advise clients on inherited IRA and qualified plan distributions. Covers required minimum distribution rules and how an IRA payable to a trust may still qualify as a designated beneficiary.

Edison Executives Beat ERISA Challenge to Stock Drop
"The lawsuit -- filed on behalf of a proposed class of more than 20,000 Edison workers -- accused the company's chief executive officer and vice president of violating federal benefits law by keeping artificially inflated Edison stock in the 401(k) plan. A federal judge dismissed the lawsuit July 6, finding that the workers failed to sufficiently identify what the executives should have done differently in this specific circumstance." [Wilson v. Edison Int'l, Inc., No. 15-09139 (C.D. Cal. July 6, 2016)] (Bloomberg BNA)  

First on the Docket: Market Synergy v. DOL Fiduciary Rule
"A Topeka, Kan. court will hear arguments Aug. 24 on insurance agency Market Synergy Group's lawsuit to stop the [DOL] fiduciary rule.... [It] will be the first appeal to be heard. A lawsuit filed in District of Columbia District Court by the National Association for Fixed Annuities has an Aug. 25 hearing date. Three lawsuits filed by several plaintiffs in U.S. District Court Northern District of Texas were consolidated by the court. That action does not have a scheduled hearing date." (  

Insurance-Based Broker-Dealers Plan to Use BICE Under DOL Fiduciary Rule
"[I]nsurers such as Massachusetts Mutual Life Insurance Co., Lincoln National Corp., Primerica Inc. and Ameriprise Financial Inc. have noted or strongly hinted at intent to use a part of the rule called the best interest contract exemption (BICE), which exposes firms to extra compliance requirements and litigation risk." (InvestmentNews)  

2016 Report on the Use of Cash Balance Plans (PDF)
17 pages. "Continuing almost a decade of double-digit annual growth, the Cash Balance plan market was up 19% in 2014, the most recent year for which complete DOL data is available. In contrast, the number of new 401(k) plans rose only 2% ... . Between 2008 and 2014, there was a 189% increase in new plans nationwide.... Total Cash Balance plan assets reached $1T for the first time in 2014 ... Plan sponsors added $25B in contributions in 2014.... Cash Balance plans make up 29% of all defined benefit plans, compared with 2.9% in 2001[.]" (Kravitz)  

Auditing Distributed 403(b) Contracts
"A 403(b) plan termination ... is not complete until all of the assets in the plan are distributed ... 403(b) plans, of course, have a unique problem with this rule. How do you distribute assets where the employer has no authority to distribute the assets in that 403(b) contract, either by virtue of the contract reserving to the individual participant the right to direct a distribution or where there is no surrender value in a contract (such as in an 'annualized' contract)?" (Business of Benefits)  

Funded Status of U.S. Corporate Pensions Falls to 78.1 Percent
"The slide represents the lowest month-end funded status yet for U.S. corporate DB plans in 2016. Asset growth of 1.5 percent was not enough for plan sponsors to outpace rising liabilities -- which increased by 4.0 percent in June ... [T]he S&P 500 pension deficit is now estimated to have increased by $61 billion in June, to $495 billion." (BNY Mellon)  

Funded Status Plummets in June -- Was Brexit to Blame? (PDF)
"Discount rates fell 23 basis points in June, the U.K. filed for divorce from the EU, pension trusts' fixed income investments reaped a gain but funded status eroded by $45.6 billion. The funded status deficit for the Milliman 100 plans settled at $447 billion at the end of June, having risen by $140 billion so far in 2016." (Milliman)  

Managing Risk Is a Strategic Objective, Part 8
"Risks tend to be the bad outcomes that most or all retirees face. Not everyone has children or wants to retire in Florida, but no one wants to go bankrupt, see their purchasing power eroded by inflation, or go broke late in life as the result of long-term care expenses.... [T]hey all belong in the Mission Statement, even though we may create the lists separately because that's the way we think. 'I want to retire in Florida' and 'I don't want to be wiped out by inflation' are both strategic objectives." (The Retirement Cafe)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

The Impact of Recently Proposed Regs on Ineligible Nonqualified Plans Under Sec. 457(f)
"Conspicuously absent from the proposal is any transitional relief.... Code Section 409A might as a practical matter impose some constraints on the ability of sponsors to amend many existing plans.... [T]he proposed regulations signal clearly that the old sheriff has a new, more restrictive agenda. For sponsors of ineligible plans, and particularly for the members of the various executive and compensation committees that negotiate the payment of benefits under ineligible arrangements, things are about to change for the worse." (Mintz Levin)  

[Guidance Overview]

New Proposed Regs Increase Flexibility and Complexity of Deferred Compensation for Employees of Tax-Exempt Entities
"The proposed regulations loosen the handcuffs in many key areas including the following: [1] Pay not considered deferral of compensation.... [2] Payment upon termination for good reason.... [3] Covenant not to compete as a substantial risk of forfeiture.... [4] Rolling risk of forfeiture allowed, but costly and complicated." (Michael Best & Friedrich LLP)  

Sen. Elizabeth Warren Leads Coalition to Cut Back on Executive Compensation Tax Deductions
"[T]he coalition has pledged its support to 'The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act' (H.R. 2103 and S. 1127).... [which] would amend the Internal Revenue Code by: [1] Eliminating the existing Section 162(m) exceptions for commission payments and qualified performance-based compensation; [2] Including all current and former employees (not limited to the chief executive officer and the three other highest compensated officers) within the scope of Section 162(m); and [3] Expanding the scope of Section 162(m) to include public companies subject to periodic reporting under Section 15(d) of the Exchange Act. The practical effect would be to expand the application of Section 162(m) to voluntary filers." (Tax Talks: The Proskauer Tax Blog)  

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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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