Retirement Plans Newsletter

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Webcasts and Conferences

11th Annual Ohio Employee Health & Wellness Conference
August 23, 2016 in OH
Manufacturers' Education Council

Employee Plans Compliance Unit (EPCU) 2016 Updates
August 25, 2016 WEBCAST
IRS [Internal Revenue Service]

11th Executive Forum on On-site and Near-Site Employee Health Clinics
September 12, 2016 in FL
World Congress

Employer Level SIMPLE Plans
September 13, 2016 WEBCAST

Handling IRA Trust Issues
September 15, 2016 WEBCAST

Pension Plan Termination: A Step-by-Step Process
September 15, 2016 WEBCAST
Findley Davies, Inc.

Healthcare Risk Adjusters: Medicare, Medicaid and the ACA
September 28, 2016 WEBCAST
Conference of Consulting Actuaries

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Protecting Plan Sponsors and Plan Participants Under the BICE Exemption
"[W]hy would a plan participant agree to such an agreement that allows a financial [adviser] to potentially engage in the same sort of abuse marketing and sales tactics that was the motivating factor behind the DOL's new fiduciary standard? Why would a plan sponsor not protect their plan participants ... [by] making the prohibition of soliciting such BICE agreements an express condition for any and contracts with third-party service providers? It is the second question that may form the basis for new allegations of a plan sponsor's breach of [its] ERISA fiduciary duties of loyalty and prudence."  The Prudent Investment Adviser Rules


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The Investment Policy Statement Tightrope
"A well-crafted investment policy statement can be one of your most effective governance tools.... [An] investment policy statement could hinder your ability to oversee your investment program and, at the extreme, land you in court.... Investment policy statements are important in providing meaningful guidance to fiduciaries, but this guidance could take the form of a more principle based approach -- leaving actual decisions to judgment -- rather than imposing directives."  Russell Investments

Is Using Active Investment Management a Fiduciary Breach?
"Despite a strongly held (and, at times, vigorously asserted) belief among investors -- as well as most of the financial services industry -- despite its disclaimer -- that past excess returns do imply a likelihood of a repeat in the future, our research and experience indicates the opposite: The most appropriate method of selecting active investment managers is defensive. That is, a risk minimization approach."  Fiduciary Plan Governance, LLC

U.S. Employers Slowly Embracing Lifetime Income Solutions
"The most prevalent lifetime income solutions are systematic withdrawals during retirement (73%), followed by income planning tools (64%) and education (60%).... [L]ess than one-fifth (19%) offer out-of-plan annuities at the time of retirement, although 21% are considering these options for 2017.... Less than one in 10 offer an in-plan deferred annuity investment option."  Willis Towers Watson

The Unusual Matter of 403(b) Ethics
"[T]here is a fundamental problem with attempting to regulate 403(b) arrangements as employer plans: they are functionally designed under the Tax Code as individual retirement plans, much as the manner in which IRAs are designed.... So it really isn't a surprise that particularly sensitive conundrums, unique to the nature of the 403(b) space, arise when attempting to apply professional ethics rules to often unresolvable 403(b) issues, with occasionally the result of exposing small, charitable organizations to all manner of liabilities."  Business of Benefits


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A Roth 401(k) Could Make a Difference in Retirement
"The Roth version of the 401(k), introduced 10 years ago, has yet to go viral. More than six in 10 plans offer a Roth option but fewer than 20 percent or so of employees with the option of saving in a Roth 401(k) use it. Those that do use the Roth tend to be younger workers."  Consumer Reports

Cook County Pension Liability Skyrockets from $6 to $15 Billion
"Cook County, Illinois -- which includes Chicago -- was just forced by its actuaries to restate its unfunded pension liability from $6 billion to $15.3 billion.... To put the importance of this stunning change of financial solvency in perspective, the entire annual payroll for all 22,000 Cook County employees is about $1.5 billion. That means that the pension plan's shortfall is ten times the annual payroll."  Breitbart


Private and Public Pensions and the State of Retirement Security
"Pension funds were not alone in being harmed by the Great Recession, nor are they alone in struggling through the slow economic recovery since the crisis. The thing about pensions, though, is that they have time to recover.... Investment returns may be low one year -- or for several years -- but pension funds will still be there when the markets improve and returns increase. The worrying trend in the private sector is how quick companies were to abandon defined benefit pensions."  National Public Pension Coalition


What Behavioral Science Solutions Overlook
"[W]hen it comes to implementing behavioral finance-focused alternatives, it's ironic while we readily acknowledge the importance of those considerations in thoughtful plan designs -- but almost never acknowledge their impact on those who make the complex financial decisions that affect the implementation of the designs that influence those participant decisions."  Nevin Adams, J.D., for National Association of Plan Advisors [NAPA]

Benefits in General

[Official Guidance]

Text of FASB Proposed ASU: Employee Benefit Plan Master Trust Reporting
25 pages; covers Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965). "This proposed Update relates primarily to the reporting by an employee benefit plan for its interest in a master trust. A master trust is a trust for which a regulated financial institution ... serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held.... The amendments in this proposed Update would clarify presentation requirements for a plan's interest in a master trust and require more detailed disclosures of the plan's interest in the master trust. The proposed amendments also would eliminate a redundancy relating to 401(h) account disclosures."  Financial Accounting Standards Board [FASB]

District Court Says Trustee, Legal Counsel Retaliated Against DOL Whistle-Blower
"In assessing whether [a trustee and legal counsel] had retaliated against [the trust fund's employee], the court noted that neither the U.S. Supreme Court nor the U.S. Court of Appeals for the Ninth Circuit had addressed which causation test should apply in an ERISA retaliation case -- the more lenient 'motivating factor' or the 'but for' test. The court applied the 'but for' test. In doing so, the court concluded that Robbins was placed on administrative leave because of her protected activity. [The trustee and legal counsel] 'set in motion' the trustees' decision to put Robbins on leave, the court said." [Perez v. Brain, No. 14-03911, (C.D. Cal. July 25, 2016)]  Bloomberg BNA

Executive Compensation and Nonqualified Plans

[Guidance Overview]

Section 409A: Top 10 Rules for Compliant Nonqualified Deferred Compensation
"[1] Broad impact on executive compensation arrangements.... [2] Elections of time and form of payment.... [3] Limited distribution events.... [4] Acceleration of NQDC is generally prohibited.... [5] Section 409A has unique definitions for common terms.... [6] Plans of the same type are treated as a single plan.... [7] Short-term deferrals.... [8] Separation pay.... [9] Six-month delay for publicly traded companies.... [10] Substitutions will be scrutinized."  Thompson Coburn

[Guidance Overview]

IRS Proposes Additional Guidance for Nonqualified Deferred Compensation Under 409A (PDF)
"This [article] focuses on four key areas that may have the broadest application to NDCP sponsors.... [1] Employee vs. independent contractor separation from service... [2] Payments following the death of a participant or beneficiary... [3] Accelerated payments to beneficiaries... [4] Plan terminations and accelerated payments."  Milliman

Federal Circuit Court of Appeals Addresses Tax Effect of Compensation Clawback
"The majority of future clawback cases are not likely to involve a determination of willful criminal conduct by the executive. However, the IRS could attempt to apply the broad reasoning of the Federal Circuit's decision to more routine compensation clawback cases, which would make a bad situation worse." [Nacchio v. U.S., Nos. 2015-5114, 2015-5115 (Fed. Cir. June 10, 2016)]  Winston & Strawn LLP

Press Releases

DOL Obtains Judgment, Order to Remove Fiduciary from $2.2M Employee Savings Plan and Trust in Ashland, Kentucky
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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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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