Retirement Plans Newsletter

August 16, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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Retirement Plan Account Manager
Pentegra Retirement Services
in NC, OH, Telecommute

Retirement Plans Executive Vice President
Community National Bank
in KS

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Webcasts and Conferences

How to Form an Effective Retirement Plan Committee
August 24, 2016 WEBCAST
Pension Consultants, Inc.

The Affordable Care Act and Mental Health Parity and Addiction Equity Act
September 14, 2016 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

New Parental Leave Laws in Washington D.C.
October 11, 2016 WEBCAST
Lorman Education Services

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Reference Point 2016: T. Rowe Price Defined Contribution Plan Data (PDF)
40 pages. "The use of auto-enrollment has increased every year since the Pension Protection Act was enacted, and 51% of plan sponsors have adopted the feature -- a 31% increase since 2011. While auto-enrollment has lifted participation rates (88% versus only 48% for non-auto-enrolled plans), stagnant deferral rates have kept average contributions well below the suggested 15% level ... The average loan balance increased for the seventh straight year to $9,075, and the percent of participants taking loans during that time has remained stagnant at 24%. Roughly 47% of plan sponsors still allow two or more outstanding loans to be taken."
T. Rowe Price


Employee Benefits Glossary -- Your Time and Sanity Saver

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

The new Employee Benefits Glossary is your essential guide to the world of employee benefits. Inside you'll find more than 4,000 definitions to give you confidence in your understanding of even the most complicated employee benefit terms. Order Now!

2016 LIMRA Consumer Survey Update: For-Profit Sector Employees
"Few plan participants in the private for-profit sector have access to a defined benefit pension plan, but instead will rely heavily on a defined contribution plan to provide retirement income. Overall, 84 percent of workers in this market participate in their DC plan, with 79 percent having access to an employer match. 54 percent are confident that their savings will last through retirement."

2016 LIMRA Consumer Survey Update: Not-for-Profit Sector Employees
"Almost 35 percent of not-for-profit [NFP] employees have access to a defined benefit pension, compared to 16 percent of for-profit workers. Almost 40 percent of [NFP] employees report not being knowledgeable about investments or financial products. [58 percent are confident that their savings will last through retirement.]"

Millennials Are Freaking Over Retirement -- and Not Doing Much About It
"When left to their own devices, just 30 percent of young workers get around to signing themselves up for their 401(k) plans. More than half of workers in their 30s, 40s, 50s, and early 60s voluntarily take this step.... Among 20-something workers, 84 percent go along with being auto-enrolled in a 40(k) plan."

Inside the Cash Balance Plan Black Box
"Here a few considerations in deciding whether to adopt a Cash Balance plan. First and foremost, an employer should consider a Cash Balance plan if it is profitable and has predictable revenue. It is a retirement plan with recurring contributions. Second, the owners or partners are generally 40 year old and earn at least $100,000 per year. Third, they want to accelerate their retirement savings by contributing more than the annual maximum of $53,000 ($59,000 if age 50 or older) to a 401(k) and profit sharing plan."
The Retirement Plan Blog


SPARK Forum - November 6-8, 2016 -- The Breakers, Palm Beach, FL

Sponsored by SPARK

Join us at the retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda to meet the needs of 401(k) Plan Providers, Financial Advisors and Third Party Administrators.

Fee Litigation Hits Higher Education
"While lawsuits alleging excessive investment fees have become increasingly common over the past few years, this is the first wave of suits targeting institutions of higher education and 403(b) plans.... 403(b) plans offered by educational institutions have a much different legal history from that of 401(k) plans offered in the for-profit sector. As recently as 2009, before the [IRS] issued final regulations under Code Section 403(b), many employers considered 403(b) plans to be more in the nature of a payroll practice than an employer-sponsored retirement plan for which the employer had fiduciary responsibility."
Ice Miller LLP

DOL's Fiduciary Rule Poses New Litigation Threat to IRA Advice
"[P]laintiffs' lawyers and the courts have acknowledged that seemingly small differentials between share classes can have a meaningful impact on prospective-retirees' savings. The lesson to fiduciaries is that no fiduciary decision is insignificant and decisions should be reevaluated regularly as the clients' needs change.... Applying general best practices isn't enough -- advisors must have a holistic approach and take a look at their client's unique circumstances to determine any particular or customized needs."
Manning & Napier

Even Popular Changes to DOL Fiduciary Rule Are Proving to Be Problematic
"A handful of changes the financial advice industry praised when the final DOL fiduciary rule on retirement advice came out in April are turning out to be less advantageous than expected. For one, the rule that allows advisers to use product revenue within the best-interest contract exemption has become difficult when it comes to ensuring there's no conflict of interest for the adviser."

Qualified Charitable Distributions Can Ease the Tax Pain of RMDs
"Non-itemizers will get a tax benefit of reduced AGI from a donation that they otherwise wouldn't deduct. Itemizers will forgo the charitable deduction but may benefit from a lower AGI; QCDs might reduce the bite of the itemized deduction phase-out for high-income clients[.]"
On Wall Street

Public Pension Cuts Upheld by Sixth Circuit -- Again
"The court found that the Kentucky legislature didn't contractually bind itself to provide COLAs at specified levels, which defeated the pensioners' arguments under the Contract Clause. The Sixth Circuit said it was following the majority position on this question, noting that only in 'very limited circumstances' have courts found that state pensioners had a contractual right to specific COLA levels." [Puckett v. Lexington-Fayette Urban Cty. Gov't, No. 15-6097 (6th Cir. Aug. 15, 2016)]
Bloomberg BNA

Crowdfunding Emerging as 'Power to the People' Pension Tool
"When the Rhode Island Retired Teachers Association in 2015 wanted to investigate the investments made by the state's employee pension fund, it urged its approximately 700 members to go online to pledge funds to hire an independent investigator. The effort raised $20,000, enough to hire former [SEC] attorney ... Edward 'Ted' Siedle to begin digging into the plan's real estate investments."
Bloomberg BNA


Why a Coal Miner Pension Bailout Could Lead to a $600 Billion Union-Pension Bailout
"The UMWA pension plan ... has promised $5.6 billion more in pension benefits than it will be able to pay.... [It] represents only one of more than 1,300 multiemployer (union) pension plans across the U.S. Almost all of these plans have made promises they cannot keep.... If Congress forces taxpayers to bail out private union plans, why not also private non-union plans that have $760 billion in unfunded liabilities, and public plans that have as much as $4 trillion to $5 trillion in unfunded liabilities?"
The Heritage Foundation

Benefits in General

[Official Guidance]

Text of IRS Disaster Relief Notice 2016-20: Tax Relief for Victims of Severe Storms, Flooding in Louisiana
"[C]ertain deadlines falling on or after August 11, 2016, and before January 17, 2017, are granted additional time to file through January 17, 2017.... This includes individual returns on extension to October 17 ... [and] the 2015 corporate and partnership returns on extension through September 15 ... Individuals who reside or have a business in the parishes of East Baton Rouge, Livingston, St. Helena, and Tangipahoa may qualify for tax relief.... This relief also includes the filing of Form 5500 series returns[.]"
Internal Revenue Service [IRS]

Retirees Need $130,000 Just to Cover Health Care
"The average single 65-year-old woman can expect to need $135,000 to spend on health care in retirement, while a man will spend $125,000 ... (The difference is because the woman is expected to live longer -- an additional 22 years, vs. 20 years more for the man.) ... For a while, it looked as if health care costs were holding steady, but Fidelity this year says couples need to set aside a record $260,000 for Medicare premiums and all other out-of-pocket medical costs -- up 6 percent from last year and 18 percent from 2014."

Press Releases

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