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[Guidance Overview]
IRS Provides Guidance on Scope of New Determination Letter Program for Individually Designed Plans
"The IRS and Treasury intend to publish an annual Required Amendments List beginning with changes in qualification requirements that become effective on or after January 1, 2016. The Required Amendments List will establish the date that the remedial amendment period ... expires for changes in qualification requirements contained on the list.... To assist plan sponsors in achieving operational compliance, the IRS intends to issue an annual Operational Compliance List to identify changes in qualification requirements that are effective during a calendar year."
Trucker Huss
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Micro-Saving Apps Target Millennial Investors
"According to a recent Harris Poll study, more than 40% of millennials claim that they don't invest in the stock market because they don't feel they have enough money. Apps like Acorns, Stash and Digit are positioning themselves as small-change solutions to an otherwise growing problem. These free-to-download apps offer users innovative ways to kick-start their saving and investing journeys."
Corporate Insight
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How Work and Marriage Trends Affect Social Security's Family Benefits
"Social Security's spousal and survivor ('family') benefits were designed in the 1930s for a one-earner married couple.... Single mothers who were never married are not eligible for family benefits, nor are divorced women who were married less than 10 years. These women often find it harder to earn an adequate Social Security benefit on their own, as their work opportunities are constrained by child-rearing duties. Policy experts have suggested ways to help: Earnings sharing among married couples could raise benefits for women who later become divorced. Caregiving credits could help mothers regardless of their marital status."
Center for Retirement Research at Boston College
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Stable Value Fees Again Draw Excessive Fee Suit
"The suit ... alleges that in setting and resetting the crediting rates applicable to the stable value accounts offered by Voya, and setting the amount of and keeping the Income, and in thus determining its own compensation, Voya has breached its fiduciary duties to the plans and their participants." [Dezelan v. Voya Retirement Ins. & Annuity Co., No. 16-01251 (D. Conn., complaint filed July 26, 2016)]
National Association of Plan Advisors [NAPA]
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The Problem with Reverse Churning in Advisory Accounts
" '[R]everse churning', where an advisor charges an ongoing investment management fee ... is likely to be a growing regulatory concern in the coming years, as the DOL fiduciary rule spurs a massive shift towards various forms of fee-based brokerage and advisory accounts.... [T]he scrutiny on reverse churning raises troubling concerns when paired with the growing popularity of using index funds, ETFs, and passive investment approaches. How is an advisor supposed to justify an ongoing advisory fee when the right thing for the client to do might really be to do nothing?"
Michael Kitces in Nerd's Eye View
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[Advert.]
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Roth IRA Investors Activity, 2007-2014 (PDF)
88 pages. "In any given year, more than three in 10 Roth IRA investors contribute to their Roth IRAs. On average, in recent years, estimates suggest that about $18 billion of contributions flowed into Roth IRAs per year.... In 2010, more than 5 percent of Roth IRA investors made conversions, up from less than 2 percent in recent prior years. Between 2011 and 2014, Roth conversion activity declined again, to about 2.6 percent ... Four percent of Roth IRA investors took withdrawals in 2014."
Investment Company Institute [ICI]
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Traditional IRA Investors Activity, 2007-2014 (PDF)
76 pages. "In tax year 2014, 8.9 percent of traditional IRA investors contributed to their traditional IRAs, and nearly half of traditional IRA investors who did so contributed at the legal limit ... Withdrawal activity is rare among younger traditional IRA investors and overall, fewer than one in four traditional IRA investors took withdrawals in 2014.... In 2014, about seven in 10 new traditional IRAs received rollovers."
Investment Company Institute [ICI]
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Exceptions to the Pro Rata Rule for IRA Distributions
"Distributions that are not subject to the pro-rata rule include: [1] Qualified Charitable Distributions (QCDs) ... [2] Qualified HSA Funding Distributions (QHFDs) ... [3] Rollovers to Company Plans ... You can only fund each of these distribution with the taxable part of your IRA."
Slott Report
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Pension Finance Watch, July 2016
"Strong equity returns and falling interest rates pushed asset and liability values up essentially in tandem in July. The Willis Towers Watson Pension Index remained unchanged at 66.9; it remains down 8.4% for the year."
Willis Towers Watson
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Pension Plans Recover Slightly Following Brexit
"The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies increased by one percentage point during July 2016, reaching 77 percent funded status, as positive equity markets more than offset a further decrease in discount rates. As of July 31, 2016, the estimated aggregate deficit of $562 billion represents a decrease of $6 billion as compared to the end of June 2016."
Mercer
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Chicago Seeks Tax Hike to Avert Pension Fund Insolvency
"The city wants to raise the levies on water and sewer bills to shore up the Municipal Employees' Annuity and Benefit Fund of Chicago, the most underfunded of the four pensions ... Without changes, the pension that serves more than 70,000 workers and retirees is on track to run out of money within a decade.... The plan would boost Chicago's payments to the fund by no less than 30 percent over five years starting with the 2017 contribution. New employees will have to pay 3 percent more to their pensions, and employees hired after Jan. 1, 2011, have the option to retire earlier, but will have to contribute more to their retirement fund."
Bloomberg
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Public Pensions Face Worst Returns Since Great Recession
"The slim earnings for fiscal 2016, which ended June 30 for most plans, is well below the average earnings target of about 7.5 percent. It also marks the second year in a row that plans have missed the assumed rate of return: Most reported an investment gain between 2 percent and 4 percent in fiscal 2015."
InsuranceNewsNet.com
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Benefits in General
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[Guidance Overview]
Proposed Overhaul of Form 5500 Slated for 2019 Plan Years (PDF)
"Many new questions are designed to make fiduciaries evaluate plan compliance with tax and ERISA requirements, as well as to provide the Agencies with improved tools for enforcement.... Particularly in light of the recent IRS curtailment of determination letter requests ... the Agencies may see the Form 5500 as a way to support compliance reviews -- whether performed by the Plan Administrator or the Agencies via audit."
Xerox HR Services
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Significant Changes Proposed for Employee Benefit Plan Reporting
"The 2019 proposed changes ... include language requiring [retirement plan] sponsors to identify whether the plan failed to pay benefits when due ... The major change for health plan sponsors ... is the addition of Schedule J ... [which] would include the number of individuals offered and receiving COBRA continuation health coverage; whether the plan covers spouses, children and/or retirees; the number of participants and beneficiaries covered at the end of the plan year; and whether the plan requires participant contributions or is 100 percent employer paid."
Bloomberg BNA
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Press Releases
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BenefitsLink.com, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, Inc. All materials
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