Retirement Plans Newsletter

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Understanding Error Reports for ACA Information Returns
IRS [Internal Revenue Service]

Form 5500 21st Century Modernization & Improvement Initiative
August 24, 2016 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Go All the Way with HSA: Everything HDHP/HSA You Need to Know
September 15, 2016 WEBCAST
ABD Insurance & Financial Services

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'Tipping Off' Potential ERISA Fiduciary Violations, Part 2
"It has been suggested that RIAs often base their choice of a fund's share class on whether the class offers a financial incentives such as 12b-1 fees or revenue sharing to the RIA. From the ERISA standpoint, the issue would be twofold. First, whether the plan sponsor simply blindly accepted their service provider's recommendations without performing the independent and thorough investigation required by ERISA. Second, whether the plan sponsor chose the investment options for the plan based on the fact that the fund offered a revenue sharing plan to help plans cover all or a percentage of a plan's administrative costs."
The Prudent Investment Adviser Rules


The Advisor's Guide to Qualified Plans

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Primerica Estimates Annual Cost of Compliance with DOL Fiduciary Rule
"Primerica Inc. executives estimate the firm will incur ongoing costs between $4 million and $5 million per year to comply with the [DOL] fiduciary rule, joining a handful of other financial services companies who've publicly said they anticipate spends in the tens of millions of dollars. The insurer is also eyeing a 'one-time cash outlay' of around $8 million between now and the end of 2017."

Emory University 403(b) Plans Latest to Face Fiduciary Breach Suit
"The lawsuit ... alleges Emory University and Emory Healthcare, a university-affiliated health system, breached their fiduciary duties by causing participants in their 403(b) plans to pay excessive record-keeping, administrative and investment management fees, and by retaining high-cost and poor-performing investment options.... [T]he plans' lineups contained the same 111 investment options, with TIAA-CREF, Vanguard Group and Fidelity as record keepers."
Pensions & Investments

Why 401(k) Plans Are a Source of Financial Stress
"Saving enough money for a comfortable retirement is a significant source of stress for 40 percent of employees, according to a recent survey ... More people are stressed about their retirement finances than their job security (24 percent), credit card debt (21 percent) or meeting daily expenses (20 percent)[.]"
U.S. News & World Report

Pension Risk Transfer Trends
"Longevity risk swaps have been by far the most common practice, with $85.4 billion of pension assets being insured.... Buyouts, where the plan transfers the liability to an annuity company ... [accounted for] $63 billion in liabilities risk being transferred away from the sponsor. Plans use the buy-in option, where the plan sponsor purchases an annuity to cover disbursements, for $21.7 billion in assets."
Pensions & Investments


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Pension Indicator, July 2016
"LDI is winning gold so far this calendar year. LDI Light portfolios, with approximately 60% fixed income, are up approximately 9-10%. Full LDI portfolios, with approximately 80% to long duration, are up approximately 12-14%. More traditional, balanced portfolios seeking growth are up approximately 6-7%."
Findley Davies

Dissident Actuaries Want to Show Big Pension Debt
"Two actuarial associations did not publish a controversial paper by their joint task force, reflecting a split in the profession over whether public pension debt should be measured with risk-free bonds or the earnings forecast for stock-laden investment funds.... Although not as well publicized as criticism from outside the profession, a group of actuaries has been urging the adoption of a risk-free discount rate for about a decade, said Paul Angelo of Segal Company ... For the first time, Angelo said, the actuaries urging a risk-free discount rate went beyond simply reporting debt and seemed to be advocating its use to set the annual payments to the pension fund made by government employers."

Teamsters, Bricklayers Funds Eye Multiemployer Benefit Cuts
"New York State Teamsters Conference Pension and Retirement Fund, Syracuse, is expected to file an application on Aug. 25 to reduce benefits under the Multiemployer Pension Reform Act of 2014 ... Benefit reductions would go into effect on July 1, 2017. As of Jan 1, 2014, the most recent 5500 filing, the plan was 46.5% funded, with $1.46 billion in assets and $3.14 billion in liabilities."
Pensions & Investments

Chicago Teacher Pension Fund Overpaid 234 Retirees, Wants Its Money Back
"[T]he pension fund's administrators miscalculated benefits for the 234 retirees and mistakenly gave them lump-sum payments ranging from $566 to $217,185 as back pay between 2012 and 2014, when the error was discovered ... [R]etirees were contacted last year and told they had to return the money either by paying the amount back in full or in monthly increments through reduced pension payouts until the money was repaid."
Chicago Sun-Times


Is the Pension Titanic Sinking?
"[W]hile low returns are taking a toll on all pensions, especially US public pensions, the most pernicious factor driving pension deficits is record low or negative bond yields.... The liabilities most pensions have in their books go out 75+ years, while the investment life of most of the assets they invest in is much shorter ... This means that a drop in rates will disproportionately impact pension deficits."
Pension Pulse

Executive Compensation and Nonqualified Plans

[Guidance Overview]

409A and 457 Updates (PDF)
20 pages. "[T]he proposed regulations revise and clarify certain specific provisions in existing rules ... Generally helpful, the new guidelines formalize some of the informal guidance provided over the years by IRS personnel regarding these topics. In revising a number of points, the regulations may in some cases increase flexibility for organizations or corporations as employers. Specifically addressed is ... the calculation of amounts includible as income under Section 409A(a), as well as clarification of the interaction of Section 457 with Section 409A."
Fulcrum Partners, LLC

[Guidance Overview]

New Regulations for Nonqualified Plans (PDF)
"[The IRS] has issued long-awaited proposed regulations for nonqualified deferred compensation (NQDC) plans under Section 409A.... The IRS proposed regulations outline 19 specific policy objectives which, for the most part, just formalize the informal stance developed over the last decade."

Press Releases

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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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