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Webcasts and Conferences

Today's Plan Changes Create Tomorrow's Fiduciary Problems

Statewide Pension Fund Seminar Fall 2016
September 22, 2016 in NY
Bond, Schoeneck & King, PLLC

Davis Bacon Prevailing Wage Retirement Plans
November 3, 2016 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

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[Guidance Overview]

The 457(f) Proposed Regs: The Goodies Have Some Gotchas
"While ... extending a substantial risk of forfeiture (i.e., vesting) through the use of a rolling risk of forfeiture or a covenant not to compete will delay income inclusion and payment for section 457(f) purposes, it will not do so under section 409A.... [If] the 457(f) plan is subject to section 409A, it is not possible for the plan sponsor to change the time of payment under the plan without complying with the section 409A subsequent deferral rules, and any accelerations of payment are impermissible."
Wilkins Finston Friedman Law Group LLP


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[Guidance Overview]

IRS Proposed Rules for Deferred Compensation Plans Present an Opportunity to Review Design
"[S]ponsors may want to ... [1] Consider implementing Roth contribution programs in Section 457(b) plans; [2] Review leave pay programs to ensure they are not subject to deferred compensation rules; and [3] Take advantage of new designs allowed for Section 457(f) plans, including non-compete agreements, 'rolling risks of forfeiture' and increased compensation levels for recurring part-year compensation."
Segal Consulting

[Guidance Overview]

New DOL Fiduciary Rules: Part 1, Fiduciary Definition
"The onus of compliance is on individuals/entities that will be considered investment advice fiduciaries under the new rules. Plan sponsors should have an understanding of the requirements to ensure their providers will address all fiduciary matters so there are no prohibited transactions between the plan/IRA and a fiduciary that does not comply. Sponsors should require service providers give them a detail of their analysis of fiduciary status as it relates to the services being provided."

Fidelity, HP, United Airlines Sued Over 401(k) Float Practice
"The lawsuit ... targets Fidelity's float practice and alleges that the firm earned interest on overnight investment of $1.13 billion in contributions to the HP plan and $255 million to the United Airlines plan. Plan sponsors HP and United Airlines allegedly breached their fiduciary duties under [ERISA] by failing to adequately investigate the procedures used by Fidelity in connection with their plans' trading activity and distribution of benefits, the complaint said." [Burgess v. HP, Inc., N.D. Cal., No.16-04784 (N.D. Cal., complaint filed Aug. 18, 2016)]
Bloomberg BNA

Morgan Stanley Hit with $150 Million 401(k) Lawsuit Alleging Self-Dealing and Excessive Fees
"The plaintiff is seeking $150 million on behalf of a proposed class for losses incurred due to the alleged breaches of fiduciary duty under ... The $8 billion Morgan Stanley 401(k) plan had six Morgan Stanley mutual funds as of the end of 2014, which were 'tainted either by poor relative performance, high relative fees, or both,' according to the complaint[.]" [Patterson v. Morgan Stanley, 16-6568 [S.D.N.Y. complaint filed Aug. 19, 2016)]


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Edward Jones Becomes the Latest 401(k) Litigation Target
"Edward D. Jones & Co. is the latest financial services firm accused of breaching its ERISA fiduciary duties by using its employees' 401(k) plan assets for its own benefit. In a twist on the series of proprietary fund-focused suits, this one alleges something of a quid pro quo where Edward Jones is alleged to have included fund options on its menu that benefits the firm's mutual fund partners." [McDonald v. Edward D. Jones & Co., L.P., No. 16-1346, (E.D. Mo., complaint filed 8/19/16)]
National Association of Plan Advisors [NAPA]

What Mr. Schlichter Understands ... and Plan Sponsors and Investment Fiduciaries Need to Understand as Well
"[T]he prudent fiduciary will normally choose a period of five or more years so that at least one down period is included to get a better idea of how the fund performed in both up and down markets.... [T]oo many investment fiduciaries look at a fund's nominal returns and the fund's standard deviation and believe that they have met their fiduciary duties.... What too many fiduciaries fail to consider is that a fund's nominal return may not reflect the fact that a fund achieved a respectable return while assuming far less risk than a fund with slightly higher nominal returns."
The Prudent Investment Adviser Rules

Mr. Schlichter Goes to College: Universities Are the Newest Target for Excessive Fee Lawsuits
"[P]laintiffs' lawyers have found their next pot of gold. Based on recent history we can expect these cases to settle, resulting in tens of millions of dollars in attorney's fees.... Until a case is actually decided in court, it will be hard to determine where to draw the line between excessive and reasonable fees. Employers need to realize there are plaintiffs lawyers looking for new retirement plans to sue, and there is no plan size or industry that is safe.."
Pension Consultants, Inc.

Ups and Downs of Passive vs. Active
"Overall DC assets slipped 1.1% to $5.48 trillion as of year-end 2015; internally managed assets declined 0.9% to $4.79 trillion.... Among equity categories ... active domestic equity assets fell 3.3% to $1.34 trillion, and assets in active international equity dropped 2.2% to $393 billion. Meanwhile, assets in passive domestic equity rose 3.9% to $1.1 trillion, while passive international equity assets jumped 28.2% to $206.9 billion."
Pensions & Investments


2016 Retirement Plans Facts - answers at your fingertips

Sponsored by The National Underwriter Company

With more than 600 retirement plans questions asked and answered, 2016 Retirement Plans Facts provides proven and practical guidance in this changing arena.

Pensions Play with Puts for Protection
"Pension funds in Hawaii and South Carolina are plying an arcane options strategy called cash-secured put writing. In a typical trade, the investor sells a contract, known as a put, to someone who owns stocks and is willing to pay up for protection in case they decline. If, within a certain time, the shares fall below a given price, the investor buys the stocks at that price, or covers their lost value. The upside for the pension funds, which are writing options on the S&P 500 index, is that they earn regular income.... But if protection is cheap and the market takes a big fall, the pension fund can end up with losses."
The Wall Street Journal; subscription may be required

Advisors Cry Foul Over State Mandated Auto-IRAs
"In some states, the government is positioned to play the role of financial advisor within state administered auto-IRA programs and it's not just trade associations that are concerned. Financial advisors question what a state run automatic-IRA retirement plan might turn into in the long run."

California Appellate Court Pension Decision Weakens 'California Rule'
"Last week, an appeals court issued a ruling in a Marin County case that is a 'game changer' if upheld by the state Supreme Court ... Justice James Richman of the First District Court of Appeal wrote that 'while a public employee does have a 'vested right' to a pension, that right is only to a 'reasonable' pension -- not an immutable entitlement to the most optimal formula of calculating the pension. 'And the Legislature may, prior to the employee's retirement, alter the formula, thereby reducing the anticipated pension. So long as the Legislature's modifications do not deprive the employee of a 'reasonable' pension, there is no constitutional violation.' " [Marin Assoc. of Public Employees v. Marin County Employees' Ret. Assoc., No. A139610 (Cal. Ct. App. 1st Dist. Aug. 17, 2016; certified for pub.)]

Planning for Constant Real-Dollar Spending in Retirement -- Is It Setting the Bar Too High? Part 2
"[A]verage spending appears to decrease consistently during retirement, until individuals become quite old, at which time their expenses (mostly health-related) increase.... The larger the portion of the spending budget that is represented by non-essential expenses (using different rates of assumed increases for essential non-health (ENH) expenses, essential health (EH) expenses and non-essential (NE) expenses), the greater the annual decrease expected in future real-dollar total spending budgets."
Ken Steiner, FSA Retired

The Effects of the Early Retirement Age on Retirement Decisions
"Using a Regression Kink Design, we estimate that, within a birth cohort, a 1.0 year increase in the ERA leads to a 0.4 year increase in the average job exiting age and a 0.5 year increase in the average pension claiming age. When the ERA increases, many older workers remain in their jobs longer."
Day Manoli and Andrea Weber, via SSRN


Academy of Actuaries Comments to EBSA on DC Plan Lifetime Income Options (PDF)
"[N]ew DC plan safe harbors that focus on the ability to deliver lifetime income to retirees from DC plans should ... be considered. Safe harbors could include guidance on insurer and product selection, withdrawal program structures, allowable education approaches, and facilitated use of annuities purchased through a rollover IRA when a participant terminates from a DC plan."
Lifetime Income Risk Joint Task Force, American Academy of Actuaries

Executive Compensation and Nonqualified Plans

Stock Compensation: 2016 Assumption and Disclosure Study (PDF)
36 pages. "This study presents [an] analysis of the 2015 calendar year-end assumptions and disclosures separately for large, non-high tech US public companies and for high tech US public companies."

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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