Retirement Plans Newsletter

July 19, 2016

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Benefits Manager
Kraft Group LLC
in MA

Retirement Plan Conversion Consultant
T. Rowe Price
in CO, MD

Compliance Specialist
Guidant Financial
in WA

Retirement Plan Services Specialist
Meeder Investment Management
in OH

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Boulay PLLP
in MN

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Webcasts and Conferences

Employee Plans - Examinations Update – Fall 2015
RECORDED
(IRS [Internal Revenue Service])

Highlights of the 2015 Cumulative List of Changes for Retirement Plans
RECORDED
(IRS [Internal Revenue Service])

DOL's Conflicts of Interest Rule: the Impact on Plan Sponsors
July 26, 2016 WEBCAST
(Multnomah Group)

Break Out of Commodity Thinking - For Good!
July 27, 2016 WEBCAST
(TPA Resources, LLC)

Affordable Care Act Risk Adjustment, Reinsurance and Cost-sharing Reduction Reconciliation Payment and Charge Collection Process
July 27, 2016 WEBCAST
(Centers for Medicare & Medicaid Services [CMS])

All About the ACA: Manage Compliance so it Doesn't Manage You
August 16, 2016 in WI
(The Alliance)

Mental Health Parity and Addiction Equity Act: Does Your Plan Comply?
August 18, 2016 WEBCAST
(International Foundation of Employee Benefit Plans [IFEBP])

VISION: IRI Annual Meeting 2016
September 25, 2016 in CO
(Insured Retirement Institute [IRI])

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[Official Guidance]

Text of IRS Notice 2016-46: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates for July 2016 (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])  


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Target Faces Second Stock-Drop Class Action
"The new lawsuit filed July 15 alleges that misleading statements about Target's expansion into Canada caused the company's stock to trade at artificially inflated prices. Meanwhile, plan fiduciaries invested millions of dollars in plan assets in the artificially inflated company stock, causing participants to lose their investment when its value subsequently declined, the complaint said." (Bloomberg BNA)  

Consolidation Results in Fewer 401(k) Recordkeepers, Better Prices for Employers
"As a result of plan sponsor demands, fees paid for record-keeping services have been squeezed, hitting record lows each year. The median record-keeping fee was $64 per plan participant in 2015 down from $70 in 2014, according to data from investment consulting firm NEPC. When NEPC started tracking fees 10 years ago, it was $118.... About 10 years ago, record-keepers needed to service 1 million participants to stay alive. Today, providers need 2.5 million to 3 million participants[.]" (Workforce magazine)  

Drop in Rates Swells Pension Burdens in U.S.
"The U.K's surprise vote to leave the European Union took a bite out of corporate pension plans in the U.S., as investors fled stocks for the safety of bonds last month, pushing interest rates lower.... [T]he declining rates triggered an increase in pension obligations for companies with defined-benefit plans ... Now, those companies are pursuing a variety of tactics as they struggle to close the resulting gap in pension funding and to avoid steep increases in premium payments to the nation's pension insurer." (The Wall Street Journal; subscription may be required)  

State and Local Government Contributions to Statewide Pension Plans: Fiscal Year 2014 (PDF)
"[T]he experience for FY 14 reflects an improved effort among state and local governments to make the full actuarially determined pension contribution, as well as a decline in the rate of growth of pension costs. This brief describes how contributions are determined; the recent public employer contribution experience; and trends in employer contributions over time." (National Association of State Retirement Administrators [NASRA])  


[Advert.]

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Sponsored by ASPPA

ASPPA's Retirement Plan Fundamentals course has been redesigned as online, interactive modules. Perfect for anyone new to the industry or who is preparing for an ASPPA credential. Ask your employer to make RPF part of your professional development.



CalPERS Earned Less Than 1% in Most Recent Fiscal Year
"CalPERS reported a 0.61 percent gain in investments in its latest fiscal year, the second straight year of subpar results for the big California pension fund.... [T]he meager gains are sure to heighten concerns about the $302 billion fund's long-term sustainability and its impact on taxpayers. The latest results come on top of a gain of just 2.4 percent in the previous fiscal year. Both results are well below CalPERS' official annual target of 7.5 percent." (The Sacramento Bee)  

[Opinion]

American Workers Need Pensions That Should Look Like This
"The plan design ... is often known as a Market Return Cash Balance Plan (MRCB). While an MRCB carries with it all of the required characteristics of defined benefit plan and it looks a lot like a 401(k) or other defined contribution plan, it brings with it additional benefits. It satisfies all of the bullets [the author has outlined]. Budgeting gets easy and predictable. There is no 'leakage' due to sudden expenses when a participant's car decides to break down or an unexpected flood ravages their house." (Benefits and Compensation with John Lowell)  

[Opinion]

Michael Kitces: DOL Fiduciary Rule a 'Pivotal Moment'
"[If] the SEC properly enforced the rules on the books for the '40 Act and had limited brokers from holding out as financial advisors ... we may have gotten there a lot sooner. But the SEC systematically failed to enforce for the past two decades, and now the DOL has by necessity forced the issue. Ultimately, I expect we'll see the DOL Fiduciary Rule clear the decks of the most sales-oriented 'financial advisors' -- who were really just financial services product salespeople -- while having only limited impact on real advice-centric financial advisors. In the long run, this is a huge plus for establishing a recognized professional status for advisors[.]" (Fiduciary News)  

[Opinion]

We Need a Bipartisan Solution for Sustaining Social Security
"The [Bipartisan Policy Center's] package of reforms to Social Security is balanced, containing a roughly even mix of revenue increases and benefit savings (such as increasing the retirement age to reflect increasing longevity and using a more accurate measure of inflation for cost-of-living adjustments). In addition to greatly improving work incentives, [these] policies would ensure the program's sustainability for 75 years and beyond, according to modeling by the chief actuary of the Social Security Administration." (U.S. News & World Report)  

Benefits in General

[Guidance Overview]

Proposed Changes to the Form 5500 (PDF)
"The Proposed Revisions make clear that, due to resource an d other constraints, the Agencies are increasingly relying on the Form 5500 as a key component of their enforcement efforts.... The Agencies are seeking more information related to investments.... The Agencies are attempting to harmonize the fee disclosure requirements (Schedule C) with the disclosure regime under ERISA section 408(b)(2) that applies to ERISA pension plans.... The Agencies want more information about health and welfare plans." (Groom Law Group)  

[Guidance Overview]

DOL Increases Penalties for ERISA Violations (PDF)
"The catch-up inflation adjustments will apply to penalties DOL assesses after August 1, 2016, if the associated violation occurred after November 2, 2015. (Violations that occurred on or before November 2, 2015, and assessments made on or before August 1, 2016, will be subject to the old penalty amounts in effect prior to the inflation catch-up adjustment.)" [Includes a 2-page chart listing penalties with old and new amounts.] (Xerox HR Services)  

Stock Options In Startup Companies Could Become More Popular Than Ever Under Proposed Tax Code Change
"[R]ecently proposed bipartisan legislation could provide a new optional tax treatment (pun intended) and make stock options more appealing than ever at startups and other pre-IPO companies.... [T]he Empowering Employees Through Stock Ownership Act seeks to give employees in privately held companies extra time to pay taxes on the income they recognize at exercise.... Instead of paying taxes at exercise with nonqualified options (or at RSU vesting when settled in stock), this legislation would allow tax deferral for up to seven years." (myStockOptions.com)  

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, 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 BenefitsLink.com, 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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