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[Official Guidance]

Text of IRS Form 14568: Model VCP Compliance Statement (PDF)
Revised Aug. 2016. Also released:

  • Form 14568-A Model VCP Compliance Statement Schedule 1: Interim Nonamender Failures
  • Form 14568-B Model VCP Compliance Statement Schedule 2: Other Nonamender Failures and Failure to Adopt a 403(b) Plan Timely
  • Form 14568-C Model VCP Compliance Statement Schedule 3: SEPs and SARSEPs
  • Form 14568-D Model VCP Compliance Statement Schedule 4: SIMPLE IRAs
  • Form 14568-E Model VCP Compliance Statement Schedule 5: Plan Loan Failures (Qualified Plans and 403(b) Plans)
  • Form 14568-F Model VCP Compliance Statement Schedule 6: Employer Eligibility Failure (401(k) and 403(b) Plans only)
  • Form 14568-G Model VCP Compliance Statement Schedule 7: Failure to Distribute Elective Deferrals in Excess of the 402(g) Limit
  • Form 14568-H Model VCP Compliance Statement Schedule 8: Failure to Pay Required Minimum Distributions Timely
  • Form 14568-I Model VCP Compliance Statement Schedule 9: Limited Safe Harbor Correction by Plan Amendment
Internal Revenue Service [IRS]

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[Official Guidance]

Text of IRS Notice 2016-47: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates, August 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 sec. 431(c)(6)(E)(ii)(I)."
Internal Revenue Service [IRS]

[Guidance Overview]

IRS Provides Guidance on Future Determination Letter Program
"The staggered five-year remedial amendment cycle ends as of January 1, 2017. The IRS will publish a Required Amendments List of all amendments that must be adopted to retain the plan's qualified status. The tax agency plans to provide an Operational Compliance List to identify changes in qualification requirements that are effective during a year."
Willis Towers Watson

[Guidance Overview]

The Final DOL Fiduciary Rule: What It Means to Plan Sponsors
"General discussions about whether to roll over from an employer-sponsored plan to an IRA should not be considered a recommendation subject to a fiduciary standard if those discussions are limited to the pros and cons of each of a participant's options ... without suggesting a specific course of action. However, conversations about distribution planning and rollovers that go beyond a mere discussion of pros and cons of each option potentially would make those discussions subject to the new fiduciary rule."

MIT, NYU and Yale Are Sued Over 403(b) Plan Fees
"The universities ... each have retirement plans holding more than $3 billion in assets and are being individually sued by a number of their employees in cases seeking class-action status. The lawyer representing the three groups of plaintiffs, Jerome J. Schlichter ... has filed more than 20 lawsuits on behalf of workers in 401(k) retirement plans and has been widely credited with lowering plan fees across corporate America. With [these] suits ... the focus has turned to a lesser-known corner of the retirement savings market, 403(b) plans[.]"
The New York Times; subscription may be required


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Allianz Can't Duck ERISA Challenge to Mutual Fund Fees
"In largely denying Allianz's motion to dismiss the case, the judge dealt a blow to the financial companies being hit by an ongoing flurry of lawsuits challenging the in-house mutual funds in the 401(k) plans for their employees.... Allianz tried to have these claims dismissed by arguing that the plan participants lacked standing to challenge the fees of funds in which they weren't personally invested. Judge Josephine L. Staton ... disagreed, explaining ... that the participants' alleged injury related to the defendants' 'management and fund selection process as a whole rather than the unique factual nature of individual funds.' " [Urakhchin v. Allianz Asset Mgmt. of America, No. 15-1614 (C.D. Cal. Aug. 5, 2016)]
Bloomberg BNA

Employees May Profit from Less Choice in 401(k) Plans
"Individual 401(k) participants who select their own investments usually do not get as good returns, in the long run, as plan participants who let RIAs make investment decisions for them. Some 401(k) participants are too aggressive and spend far too much time managing their retirement accounts ... But most are simply too conservative in their investment choices."
Society for Human Resource Management [SHRM]

A 401(k) Fiduciary Must Know Where Gamification Fails in Encouraging Retirement Savings
"The trend towards gamification across all industries coincides with the rise of internet-based delivery systems. This is just as true for the retirement industry as it is with any other industry. The research highlighted in this article indicates what works for other industries might not work in the same way for retirement saving. Worse, it may actually produce undesired results."
Fiduciary News

Using Eligibility Provisions to Make Participants Out of Employees (PDF)
"The eligibility rules of a 401(k) plan have significant implications for plan sponsors. These rules can affect benefit costs, talent recruitment and retention, administrative complexity and plan compliance.... [P]lan sponsors [can] take a strategic approach to defining eligibility provisions in their 401(k) plans, with consideration given to various plan objectives and statutory requirements."
Milliman, via Plan Consultant magazine

Reducing Retirement Savings Leakage (PDF)
"[This] article summarizes discussion on new ways to reduce retirement plan 'leakage,' presented at the Employee Benefit Research Institute's 78th policy forum in Washington, DC, on May 12, 2016."
Employee Benefit Research Institute [EBRI]

Church Plans Raising Cain Among the Circuits
"The issue comes down to who must establish the plan and whether ERISA authorizes that ability to a nonprofit that is not a church.... Several district court cases have ruled in favor of the health-care companies, allowing them to treat their pension plans as ERISA-exempt church plans ... on the basis that the organizations were administering the plan ... for the employees of a church or a convention or association of churches.... [At] least three district courts ruled in favor of participants ... On appeal, these district courts were affirmed by their respective circuit courts, which elevates the potential impact these cases may have going forward."
Bloomberg BNA

Portable Benefits Stir Interest on Capitol Hill
"The portable model would allow employers to pay into a benefits pool on a flexible, pro rata basis and give workers the ability to take those benefits with them when they change jobs. Also, part-time employees, who simultaneously work for more than one employer, could accrue benefits from each of them."
Bloomberg BNA

Social Security Changes Likely Soon
"The S.O.S. Act charts a course of least resistance in the changes it proposes to keep Social Security solvent. If these changes don't result in a meaningful improvement in Social Security's funding outlook, the following more painful changes may be in the offing: Means testing.... Increases to the payroll tax.... Longevity indexing.... Incentives to keep working."
Lawton Retirement Plan Consultants


NCCMP Comment Letter to PBGC on Proposed Merger Transfer Rules (PDF)
"[T]he Proposed Rule adopts an interpretation of the interaction of the merger rule with the suspension rule ... that is inconsistent with the acknowledged legislative intent.... This interpretation will work against the legislative intent of MPRA by making financially distressed plans less likely to be merged as [a plan] likely to take in a financially distressed plan would be compelled to restore suspended benefits to the detriment of its own financial position.... [T]ightening the safe harbor provision will make mergers more difficult and therefore are contrary to the legislative purpose of MPRA."
National Coordinating Committee for Multiemployer Plans [NCCMP]


ICI Urges California Governor to Carefully Examine Legal and Economic Risks of 'Secure Choice' Retirement Program
"[T]he Institute warned in a [68-page letter] to the governor that the ultimate cost of implementing the California Secure Choice Program depends on many factors, including the opt-out and contribution rates of enrolled workers; legal and compliance costs relating to various federal laws; administrative costs in setting up and maintaining the program; and potentially significant costs that may arise later if market returns generated by the program's investments are insufficient to cover promised benefits to participating workers.... Although legislation authorizing the program limits the state's liability, future state policymakers are likely to feel an obligation to cover any shortfalls or excessive expenses that the program incurs."
Investment Company Institute [ICI]

Benefits in General

Transparency, Decision Support Are Next Wave in Benefits Self-Service
"As benefits self-service platforms become more sophisticated regarding decision-making support, employers should focus on finding and working with vendors that can take them in this new direction.... For example, will the actual system require modifications and workarounds to get it running alongside your overall HR systems? With so many new players entering the self-service technology market, employers should be looking for a partner that is financially sound and capable of meeting their needs for the next three to five years."
Society for Human Resource Management [SHRM]

Executive Compensation and Nonqualified Plans

[Guidance Overview]

IRS Proposed Regs Update 409A Rules for Nonqualified Plans
"The IRS has made payment schedules more flexible, allows offers of stock rights to prospective employees and relaxes some administrative requirements. Accelerating a payment after a plan termination is permitted only if the employer terminates and liquidates all plans in the same category. The IRS is proposing to strengthen the proposed anti-abuse rule for income inclusion."
Willis Towers Watson

409A Audit Could Be Coming to Your Company
"[A]necdotal evidence ... suggests that in other than very large companies, the primary target plans have been in order: [1] Nonqualified defined benefit pension plans that do not have the same formula as a broad-based DB plan in which the covered executives also participate; [2] Other nonqualified DB plans that simply make up for IRS limits (415 and 401(a)(17)); [3] Deferred compensation plans that look different from the company's 401(k) plans; and [4] 401(k) mirror plans. In other words, the target seems to be executive retirement plans."
Benefits and Compensation with John Lowell

ISS Releases 2017 Policy Survey
"Through its annual policy survey, Institutional Shareholder Services (ISS) seeks feedback from institutional investors, public companies, corporate directors and the consulting and legal communities on emerging trends in corporate governance and executive compensation and other matters as part of its policy formulation process. The policy survey often provides an advance read on where ISS is heading on a particular issue."
Meridian Compensation Partners, LLC

CEO Compensation Decreased in 2015
"[Total direct] compensation for CEOs in the S&P 500 ... declined from a median of $10.6 million in 2014 to $10.3 million in 2015. This decrease -- the first in at least five years -- is primarily attributable to lower short-term incentives ... The past five years witnessed an inverse usage of long-term incentive vehicles as the prevalence of stock options among S&P 500 companies shrank to 57% in 2015 from 72% in 2011. Over the same period, performance share usage increased from 76% to 87% and time-vesting shares remained steady at 59%."

Press Releases

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