Retirement Plans Newsletter

July 22, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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Employee Benefits Jobs

Pension Plan Administrator
Growing Retirement Plan Administration Firm
in NY

Bilingual 401(k) / 403(b) Education Specialist
Next Retirement Solutions of Raymond James Financial Services
in CA

Institutional Retirement and Trust Transition Consultant Project Leader
Wells Fargo
in NC

Pension Administrator
AKT Retirement Plan Services
in AK, CA, OR

ERISA Consultant
Goldleaf Partners
in MN

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Webcasts and Conferences

Election 2016: What's at Stake for Group Health Plans?
August 11, 2016 in NC
(Hill, Chesson & Woody)

401(k) Beyond the Basics 03: Eligibility and Vesting Design Considerations
August 15, 2016 WEBCAST
(FIS Relius Education)

CCA Public Plans Community White Paper on Public Pension Funding Policies
August 18, 2016 WEBCAST
(Society of Actuaries)

Regional Conference
September 7, 2016 in CO
(State and Local Government Benefits Association [SALGBA])

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[Guidance Overview]

Considering In-Kind Contributions to Defined Benefit Plans
"[A recently-issued prohibited transaction exemption] offers a glimpse into current DOL thinking as to how to structure a contribution-leaseback transaction.... [T]he DOL imposed several conditions required in previous rulings, including the retention of an independent fiduciary to negotiate and approve the transaction and a requirement to secure an appraisal report from an independent qualified appraiser confirming the fair market value of the property." (Greensfelder)  


The Advisor's Guide to Qualified Plans

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[Guidance Overview]

Proposed Regs Affect Tax-Exempt Employers' Deferred Comp Plans
"The regulations explain and clarify [1] what types of arrangements will not be treated as deferred compensation for purposes of Section 457(f); [2] how to calculate the amount of compensation that is taxed under Section 457(f); [3] key definitions; and [4] special rules that apply to deferrals of current compensation and extensions of risk of forfeiture[.]" (Nixon Peabody LLP)  

Engaging the Millennial Generation in Defined Contribution Plans (PDF)
"Given the potential influence this sizable generation may have on retirement plans and their unique circumstances, plan sponsors should work with their record keepers to address behavioral issues within the population, as well as ways to better engage with this population." (Portfolio Evaluations, Inc.)  

Effects of the Pension Protection Act of 2006
"[T]he aftermath of the PPA on the defined contribution side has been nothing short of extraordinary. Sure it was all voluntary -- the use of carrots like safe harbors for automatic enrollment, rather than the sticks that accompanied the DB provisions. And yet, seemingly overnight, and without a government mandate or regulatory imperative, the decades-old concept of 'negative election' (now 'rebranded' as automatic enrollment) became part of every credible retirement plan advisor's toolkit." (American Society of Pension Professionals & Actuaries [ASPPA])  

Defined Contribution Plan Sponsors Embracing Non-Recordkeeper Target Date Funds
"[N]on-recordkeeper or off-platform target date funds (TDFs) continue to grow in popularity among plan sponsors. While ninety percent of survey respondents said they currently offer TDFs as an investment option in their plan, the use of recordkeeper TDFs and non-recordkeeper TDFs is essentially split evenly. Those plans with over $1 billion in assets ... are leading the way with 64 percent offering non-recordkeeper TDFs." (SEI)  


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Investors Are Getting Ripped Off on Index Fund Fees, Lawsuits Say
"In recent years, money has flooded into low-cost index funds and out of more expensive actively managed funds ... In the New York Life lawsuit, an index fund used in the two 401(k) plans was more profitable for the company than for plan participants, according to the complaint.... This isn't the first 401(k) lawsuit that has raised the issue of overpriced index funds. But it's the first time the whole case is about an index fund[.]" (Bloomberg)  

The Effect of Brexit on Tax-Qualified Plans
"In the case of DB plans, Brexit potentially has implications for funding levels, lump sum payments, [PBGC] premiums, and financial accounting results -- all of which are the responsibility of the plan sponsor (rather than participants).... [DC plan participants] will bear the risk of both declining bond prices and more volatile financial markets generally. Plan fiduciaries may want to consider alerting participants to the issues raised by Brexit, the possible impact on plan investments, the advisability of staying the course in turbulent markets, [and] diversification considerations[.]" (Morgan Lewis)  

Millennials Much More Optimistic Than Boomers About Stock Market
"Seventy-one percent of millennial investors predict a bull market in the next one to three years, compared to 50 percent of baby boomer investors. Forty-two percent of millennial investors say they are very knowledgeable about investments, compared to 17 percent of boomers." (Securian)  

Why Doesn't Your Company Want You to Put More in Your 401(k)?
"By getting more workers to increase contributions to their 401(k), you potentially raise the amount you'll need to pitch in as a matching contribution. If you match the first 3 percent that workers put in, for example, and you get another fifth of your workforce to meet that threshold, then auto-enrollment can look like an expensive decision. But auto-enrollment rarely costs as much as employers fear[.]" (  

The Downside of a 401(k) Loan
"You lose out on any earnings.... Your payments may be higher.... You may not be able to take another loan.... You may be subject to taxes and penalties if you leave your job.... You're double-taxed on the interest." (Financial Finesse)  


What's in an Investor's Best Interest? The Battle Continues
"So, what exactly is NAFA complaining about [in its challenge to the DOL fiduciary rule]? According to them, 'Congress intended ERISA fiduciary duties to apply only to those who participate in ongoing management of a plan or its assets.' ... NAFA completely disregarded that fiduciaries are those who render investment advice for a fee. Put it this way, an annuity can play a large role in someone's retirement, so how would selling annuities to people not be considered rendering investment advice?" (Castle Rock Investment Company)  


Is Using Active Investment Management a Fiduciary Breach?
"The question ... for investment fiduciaries who typically delegate investment management to third-parties like mutual funds and professional investment managers may not be, 'Is using active management a fiduciary breach?' but 'Is there a way to select the right ones?' The answer may be both simpler and more difficult than most of us, including investment advisors and others who make their livings purporting to do so, imagine." (Fiduciary Plan Governance, LLC)  

Benefits in General

Employee Benefit Participation Rates, March 2016
"The participation rate for employer-sponsored medical care benefits for civilian workers was 52 percent in March 2016 ... The participation rate was 49 percent for private industry workers and 73 percent for state and local government workers.... The participation rate for employer-sponsored retirement benefits, which include defined benefit and defined contribution plans, was 54 percent for civilian workers. The participation rate was 49 percent for private industry workers and 81 percent for state and local government workers." (U.S. Bureau of Labor Statistics [BLS])  

DOL Holds Modest Sway With Courts on Benefits Issues
"Of the 77 cases that led to clear decisions on the questions raised by the DOL, the department has scored 44 victories and suffered 33 losses. That's a win rate of about 57 percent -- only modestly better odds than a coin flip. Although the department has filed ERISA-related briefs in all the federal circuit courts and several district and state courts, its win-loss record doesn't vary significantly by court. In most courts, the department has won about as many cases as it's lost." (Bloomberg BNA)  


DOL's Proposed Form 5500 Changes Could Improve Plan Design
"Eric Ryles, Managing Director of Judy Diamond Associates [said,] 'Right now, information on the small group health market is essentially nonexistent. By requiring companies with fewer than 100 participants to file a 5500, the DOL has opened the door to increased competition resulting in better, cheaper plans for the covered employees.' Continues Ryles, 'Transparency of fees and coverage is always a good thing, and we will be ready to incorporate each and every proposed change as soon as they are incorporated into the form.' " (Judy Diamond Associates)  

Press Releases

Burnham Benefits Welcomes New Senior Account Manager
Burnham Benefits Insurance Services Inc.

Connect   LinkedIn logo   Twitter logo   Facebook logo, Inc.
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Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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