Retirement Plans Newsletter

July 27, 2016

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Sr Counsel - Empower Retirement
Great-West Financial
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University of California Office of the President
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Webcasts and Conferences

ERISA 2016: The Evolving World
August 1, 2016 WEBCAST
Practising Law Institute

401(k) Beyond the Basics 04: HCEs and Compensation
August 22, 2016 WEBCAST
FIS Relius Education

DOL Fiduciary Rule: What Now? What Next?
August 24, 2016 WEBCAST
Wagner Law Group P.C.

IRA Excess Contributions & Recharacterizations
September 27, 2016 WEBCAST
Ascensus

2017 National Conference
May 7, 2017 in CA
State and Local Government Benefits Association [SALGBA]

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[Guidance Overview]

What Is the Maximum Equity Exposure Allowed in TDFs as QDIAs? (PDF)
"[T]here must be a mix of equity and fixed income exposure. Therefore, an investment fund or product with zero fixed income (or, alternatively, zero equity) would not qualify as a QDIA.... [T]he QDIA regulations do not establish minimum fixed income or equity exposures ... [T]he DOL continues to believe that such a determination is best left to the discretion of the individuals or entities tasked with assessing the appropriateness of a particular QDIA for a plan."  Retirement Learning Center, LLC


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[Guidance Overview]

Interesting Angles on the DOL's Fiduciary Rule, Part 13
"It is not clear under current rules whether 'suggesting' investment policies is a fiduciary act. In that vein, it's also not clear if providing a sample investment policy statement (IPS) is a fiduciary act. However, that is about to change.... [If] you don't want to be a fiduciary for that purpose, the safest bet is to avoid suggestions of investment policies or providing a sample IPS."  FredReish.com

Improving Retirement Security Through Innovation
"For workers in multiple employment relationships, the ability to take benefits from job to job can provide greater retirement security. The new program will award two to four grants of between $25,000 and $75,000 to help nonprofit organizations develop a portable retirement benefits program for their members, clients and constituents. Such activities must involve assessing the challenges and barriers unique to low-wage workers with little to no retirement savings, researching opportunities to expand or build new portable retirement vehicles, or identifying associated legal constraints that would need to be addressed before implementing these types of programs."  U.S. Department of Labor [DOL] Blog

Text of Ninth Circuit Opinion: ERISA Church Plan Exemption Requires that Plan Be Established by Church (PDF)
26 pages. "We conclude that the more natural reading of subparagraph (C)(i) is that the phrase preceded by the word 'includes' serves only to broaden the definition of organizations that may maintain a church plan. The phrase does not eliminate the requirement that a church plan must be established by a church. The other circuit courts that have considered the question agree with this reading." [Rollins v. Dignity Health, No. 15-15351 (9th Cir. July 26, 2016)]  U.S. Court of Appeals for the Ninth Circuit

Faith-Based Health Systems Ask Supreme Court to Hear 'Church Plan' Cases
"Two faith-based health systems want the U.S. Supreme Court to weigh in on whether their pension plans should be exempt from certain federal protections for workers -- an issue that has spurred dozens of lawsuits across the country in recent months. Advocate Health Care in Illinois and St. Peter's Healthcare System in New Jersey argue that because of their religious affiliations, their employee pension plans should not be subject to [ERISA]."  Pensions & Investments


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401(k) Enrollment: Is a Meeting or E-Delivery Best For Your Small Business?
"A growing number of small businesses are delivering 401k investment education to employees online or by e-mail (i.e., e-delivery). Why the change? Today's technology and investment products make 401k investing decisions easier than ever for employees. Most, if not all, 401k providers offer online tools to keep retirement savings on track while new 401k investment products can make 401k investing decisions simple for even the most inexperienced investor. An e-delivery approach is often less costly too."  Employee Fiduciary

401(k) Plans Still in the Crosshairs: New Cases Challenge Plan Fees
"[L]itigation continues unabated with new theories and new targets. Are the targets just Wal-Mart and Fidelity-sized? Not any more.... There is more reason than ever for them to adopt fiduciary best practices with regard to plan fees.... Hire a co-fiduciary investment adviser or a fiduciary investment manager if you don't already have one.... Don't set it and forget it.... Benchmark fees and do RFPs on a regular basis to evaluate your fees.... Evaluate share classes and revenue sharing arrangements to get the best deal for your participants."  Cohen & Buckmann, P.C.

A Plan Sponsor Finds Surprises in Adviser Benchmarking
"Happy with its adviser, Dot Foods only completed the RFP process for due diligence, but what it discovered led it to hire a new adviser."  PLANSPONSOR

Are Rollover IRAs on the Way Out?
"Keeping more assets in the plan does have its advantages. However, [there are] several important issues related to the stay-over strategy. These include increased costs and fiduciary responsibilities to the plan sponsor for keeping former employees in the plan, as well as additional administrative time and costs.... [P]lan sponsors will need to maintain close contact with retirees still in the plan, keeping on top of address changes, monitoring death notices, and communicating with retirees (or their successors) when making changes to plan provisions or investments. Plan sponsors will also need to establish a process for communicating information conveyed at investment meetings to retirees who are unable to attend."  PenChecks

Why the Last Defense of Public Pensions Is Eroding
"Twenty-year annualized returns for public pensions in the U.S. are poised to decline to 7.47%... That would be the lowest-ever annual mark recorded by Wilshire, which began tracking the statistic 16 years ago. In 2001, near the height of the dot-com boom, pensions' 20-year median return was 12.3% ... The dip is intensifying a national debate over whether states and cities can continue to afford pension obligations, as the soaring costs are squeezing budgets across the U.S."  The Wall Street Journal; subscription may be required

When Developing Your Retirement Spending Budget, Carefully Consider How to Deploy All Retirement Assets
"[E]ven though it may be common sense to deploy all your assets to meet your retirement spending objectives, you generally won't find much discussion of how to accomplish this with ... approaches such as the 4% Rule or other safe withdrawal rate approaches. What you do hear with those approaches is something like, 'trust us, based on complicated Monte Carlo modeling, if you invest your accumulated savings at least 50% in equities, you will have a 95% chance of not running out of money.' On the other hand, with the Actuarial Approach, you develop a reasonable spending budget based on your best estimates of future experience and your financial situation."  Ken Steiner, FSA Retired

Benefits in General

[Guidance Overview]

Department of Commerce Issues Final Rule on Access to Death Master File
"The application package for access to the Limited Access DMF must now include documentation from an 'Accredited Conformity Assessment Body' determining that the applicant meets security and safeguarding requirements described in the final rule.... The final rule also imposes a penalty of $1,000 for each disclosure or use of Limited Access DMF to those not meeting the certification requirements or for non-legitimate purposes, as outlined in the rule."  Drinker Biddle

Forum Selection Provisions in ERISA Plans (PDF)
15 pages. "This article discusses in detail how courts are divided on the issue of the enforceability of forum selection clauses in ERISA plans."  The Wagner Law Group, via Benefits Law Journal

ERISA Advisory Council to Meet August 23-25, 2016
"The purpose of the open meeting is for Advisory Council members to hear testimony from invited witnesses and to receive an update from [EBSA]. The EBSA update is scheduled for the morning of August 25, subject to change. The Advisory Council will study the following topics: [1] Participant Plan Transfers and Account Consolidation for the Advancement of Lifetime Plan Participation, on August 23 and [2] Cybersecurity Considerations for Benefit Plans, on August 24."  Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Press Releases

DOL Announces Availability of Grants to Develop Portable Retirement Savings Plans for Low-wage Workers
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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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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