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National Pension Fund
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Update on Lawsuits Challenging the DOL's Fiduciary Rule
"[T]here are five pending lawsuits challenging the [DOL's] new fiduciary rule.... [In the first case,] briefing is now complete on the [motion by the National Association for Fixed Annuities] for a preliminary injunction and for summary judgment, as well as the DOL's cross-motion for summary judgment.... [T]he three lawsuits filed in the U.S. District Court for the Northern District of Texas were consolidated ... A hearing on the motion for preliminary injunction [by Market Synergy] is scheduled for September 21, 2016."
Proskauer's ERISA Practice Center


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University Retirement Plan Lawsuits Could Be Just the Beginning
"There's an interesting dimension to the arguments -- effectively, Schlichter and plaintiffs are pushing back against too much retirement planning choice.... [One] lawsuit claims MIT had 340 investment options before July of 2015, including over 300 mutual funds across 40 families. But MIT cut hundreds of mutual funds last year, settling on a new lineup that the lawsuit says includes 37 investment options. Earlier changes could have saved employees money, the suit argues."
Inside Higher Ed

Is Using Active Investment Management a Fiduciary Breach? Part 5
"It seems that although over longer periods a small number of active managers have outperformed their benchmarks, there are not clear markers for identifying them. It also seems there may not be a clear way of evaluating whether an underperforming manager is unskilled (and, therefore, not fit to manage your money) or skilled but going through an 'out of favor' period."
Fiduciary Plan Governance, LLC

DC Plan Sponsors Obsessed With Manager Performance
"While consultants insist that to properly measure a plan's effectiveness, key factors to be examined are participation levels or how much participants are actually contributing to their accounts, these factors seem to come second to plan sponsors' main concern: the performance of their investment options."
Money Management Intelligence

Many DC Plan Sponsors Hesitate to Offer Lifetime Income Products
"Nearly three-quarters (71 percent) of respondents said the primary reason to adopt a lifetime income solution is to help participants convert defined contribution plan balances into lifetime income ... Many plan sponsors tend to opt for safer choices to help participants deal with the risk that they will outlive their money, such as systematic withdrawals during retirement, income planning tools and education, the survey said. Just 19 percent offer out-of-plan annuities at the time of retirement[.]"
Bloomberg BNA


Things Have Changed – Are You Up-To-Date?

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401(k) Shopping Checklist: Comparing 401(k) Providers
"Find out if the provider offers low fees, help for employees, and a tech-friendly platform to minimize manual work for you.... Determine whether the provider can scale as you grow, effectively engage employees to join and save, and will take on the lion's share of compliance testing work."

Seven Reasons Retirement Income Formulas May Not Work for You
"[1] At what age do you want to retire? ... [2] Where do you plan to live after you retire? ... [3] Do you plan to downsize? ... [4] What are your travel plans? ... [5] What hobbies and activities do you plan to engage in during retirement? ... [6] Do you anticipate any financial windfalls? ... [7] Do you anticipate any financial hardships?"
U.S. News & World Report


The $6 Trillion Pension Cover-Up?
"Pension deficits are path dependent, which in effect means the starting point matters a lot as do investment and other decisions along the way. If a pension plan is already underfunded below the 80% threshold (i.e., assets cover 80% of liabilities) many consider to be manageable, then taking more investment risk at a time when assets are fairly valued or over-valued can lead to a real disaster, a point of no return where the only thing left is to ask taxpayers to bail them out or introduce cuts to benefits and increases to contributions."
Pension Pulse


Will 401(k) and 403(b) Litigation Turn Retirement Plans Into Widgets?
"Today we find ourselves at dangerous crossroads. Is the retirement world perfect? No. But the vast majority of the members of the retirement ecosystem -- from plan sponsors to service providers of all stripes -- try to do their best. Fees across the industry continue to drop. It is a good thing -- but performance, not just fees, is a relevant factor in evaluating investments. Similarly, recordkeeping and other services are not just about cost, but also service levels, what services are provided, and the level of services. There is no one-size-fits-all, but many of the actions brought by the plaintiffs' bar would seemingly paint retirement plans as one-size-fits-all widgets. This outcome could easily stifle innovation and efforts to build better solutions for participants' retirement years."
David Levine, Esq., for National Association of Plan Advisors [NAPA]

Benefits in General

[Guidance Overview]

GASB 73: Implementation and Overview (PDF)
"New accounting rules for public postretirement benefit plans in the United States are set to take effect soon. Successful implementation of the new rules will require an understanding of a variety of technical concepts regarding the various newly required calculations."

Text of Treasury Department 2016-2017 Priority Guidance Plan (PDF)
30 pages, dated Aug. 15, 2016. The 2016-2017 Priority Guidance Plan contains 281 projects, including 35 retirement plan projects and 20 projects relating to executive compensation, health care and other benefits, and employment taxes.
U.S. Department of the Treasury

ERISA Advisory Council Highlights Importance of Cybersecurity Oversight
"[T]he Council is considering ... [1] General types of cybersecurity risks that benefit plans are exposed to and how the overall threat environment is evolving; [2] Steps, processes, and controls that benefit plans and third party providers are taking to address these risks; [3] Differences in the scale of cybersecurity risk between small and large plan sponsors, with the objective of tailoring guidance and education accordingly; [4] Resources that will help plan sponsors identify and establish a scalable cyber risk management strategy, including the vendor selection and monitoring process; and, [5] Sample tip sheets, checklists, and other educational tools that can be used to provide plan sponsors, vendors, and plan participants with guidance on navigating cybersecurity risks related to their benefit plans."
Greenberg Traurig

How Income Affects Your Medicare Premiums (PDF)
"The amount of premium you pay is based on your income tax return from two years ago. So the premium you will pay for 2017 will be based on your 2015 income tax return, 2018 premiums will be based on your 2016 income tax return, and so on. Taxpayers with a modified adjusted gross income (MAGI) over certain income brackets pay a higher Medicare premium than others....In April 2015, legislation was passed to reduce the income brackets for Levels 3-5 starting in 2018, with inflation adjustments in subsequent years. This means that more taxpayers will be subject to the higher IRMAA Medicare premiums beginning in 2018.
Meld Financial, Inc.

Executive Compensation and Nonqualified Plans

SEC Whistleblower Actions Suggest Immediate Changes to Severance and Release Agreements
"For decades, employers have required terminating employees to advise them of any facts of which the employee is aware that constitute or might constitute a violation of any ethical, legal, or contractual standards or obligations of the company.... [W]here some employers seem to have gone too far [is] by asking that the former employee not take part in or benefit from any litigation of governmental actions involving such matters."
Winston & Strawn LLP

SEC Enforcement Actions May Require Changes to Severance Agreements
"Standard severance clauses covering [1] confidential information and [2] prohibitions against receiving additional monetary awards have been deemed unlawful by the SEC, resulting in settlements and fines exceeding $600,000, plus other sanctions.... 'No further recovery' clauses may need to be removed or redrafted to permit recovery of whistleblower bounties under Dodd-Frank. Confidentiality clauses ... may need carve-outs that permit disclosure to the SEC or other government agencies, without requiring prior notification to the company."

SEC Enforcement Action Finds Confidentiality and Waiver Provisions in Severance Agreement Violate Dodd-Frank Whistleblower Protections
"As part of the settlement, BlueLinx will pay a $265,000 penalty and must inform all parties to the severance agreements that it does not prohibit former employees from: [1] providing information to, or communicating with, SEC staff without notice to BlueLinx; or [2] accepting a whistleblower award from the SEC pursuant to Section 21F.... [C]ompanies under the jurisdiction of the SEC should proceed with caution when entering into any employment related contract that contains restrictions on the use of confidential information, and should categorically avoid including waivers of whistleblower bounties."
Schiff Hardin

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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