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[Guidance Overview]
Disregarded Entity Employees May Participate in Exempt Entity's Plans
"[GCM 201634021] clarified that employees of a single-member limited liability company (LLC) can participate in the section 403(b) and section 457(b) retirement plans of a single member that is a tax-exempt entity.... The IRS stated that a single-member LLC that has not elected to be taxed as an association is treated as a branch or division of the tax-exempt entity, not a subsidiary or affiliate. Therefore, the reference in the regulation to eligible employers does not apply to single-member LLCs that are disregarded."
RSM US
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[Guidance Overview]
IRS Reminder for One-Participant Plan Sponsors
"One of the most common reasons why a retirement plan becomes an orphan plan is because the plan sponsor no longer exists. For example, the individual employer/plan sponsor: retires passes away (and there's no successor appointed), or abandons the plan before properly terminating it. An orphan plan may fail to meet the Internal Revenue Code qualification requirements and lose its tax-favored status."
Internal Revenue Service [IRS]
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SunTrust Stock-Drop Complaint Moves Forward Post-Dudenhoeffer
"[T]his latest ruling seems to be a partial victory and partial defeat for SunTrust Bank, which won summary judgment and dismissal on certain claims while seeing other plaintiffs' claims certified as a class action, slated for a full trial.... [T]he district court has denied a plantiffs' motion to remove from consideration a key report that supports SunTrust decisionmaking related to its offering of employer stock." [In re SunTrust Banks, Inc. ERISA Litig., No. 08-3384 (N.D. Ga. Aug. 17, 2016)]
PLANSPONSOR
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Pilgrim's Pride Wins Round in Long-Running ERISA Stock Lawsuit
"The proposed class of 16,000 Pilgrim's Pride workers failed to meet the standards recently established by the U.S. Supreme Court for cases involving company stock losses in retirement plans governed by [ERISA], according to the magistrate's report. The workers didn't sufficiently demonstrate what plan fiduciaries should have done differently in the face of declining share price, the magistrate said." [In re Pilgrim's Pride Stock Inv. Plan ERISA Litig., No. 08-00472, (E.D. Tex., report and recommendation Aug. 19, 2016)]
Bloomberg BNA
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How the 401(k) Fiduciary Can Help Retirement Savers Make Better Decisions, Part 1
"The want/should dichotomy addresses head-on the conflict between the instantaneous gratification derived from buying something today and the delayed gratification inherent in saving more for retirement. Understanding what environments and situations drive people towards 'want' decisions will help 401k plan fiduciaries craft plan designs, education programs, and overall plan infrastructure in such a way as to help guide employees towards making a 'should' decision rather than a 'want' decision. In other words, they'll do the things they 'should' be doing to insure they retire in comfort rather than doing things they 'want' to do merely because it satisfies some near-term desire."
Fiduciary News
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[Advert.]
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What Plan Sponsors Need to Do Now in Response to 401(k) Money Market Fund Rules
"Given the October 14, 2016 implementation date of the new rules, your investment committee should have a safe haven investment fund strategy in place as soon as possible. Your investment advisor should help you: Get rid of any prime money market fund ... Review your safe haven options ... Communicate to participants."
Lawton Retirement Plan Consultants
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Perspectives on Retirement: Baby Boomers, Generation X, and Millennials (PDF)
94 pages. "Seventy percent of workers expect 'Social Security'; however, there is a wide disparity among generations with younger workers less likely to expect it compared to older workers. Company-funded pension plans (25 percent), home equity (14 percent), and inheritance (11 percent) are less often cited.... 38 percent of workers are expecting income from continued work during their retirement.... Only 51 percent of workers agree that they are building a large enough retirement nest egg ... Sixty-five percent believe that they could work until age 65 and not save enough to meet their needs."
Transamerica Center for Retirement Studies
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Millennials May Be Headed Toward Their Own Retirement Crisis
"64% of the millennials surveyed said they would never accumulate $1 million in savings over their lifetime (73% of the women felt this way). 54% of the millennial women said their finances were stretched too thin to save for retirement (just 43% of the men said so). 52% of respondents overall said stock market volatility makes them worry they will lose their retirement savings in the market.... [W]omen reported median personal income of $28,800 and the men earned $39,100.... Some millennials may not understand ... that accruing $1 million may be within the realm of possibility if they start saving regularly."
MarketWatch
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Employers Offer Flexible Retirement Options to Keep Older Workers
"About 30 percent of large employers -- those with over 1,000 employees -- offer workers some flexible retirement option, whether it is allowing older employees to work part time or in job sharing with colleagues ... Only about 6 percent of large employers have formal phased retirement policies ... 42 percent of employers are considering them this year."
CNBC
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Does Socioeconomic Status Lead People to Retire Too Soon?
"Using education for SES, the analysis calculates a retirement gap -- the difference between how long households plan to work and how long they need to work.... Even after controlling for demographic/financial characteristics and pre-retirement shocks, the bottom-quartile households still have much larger gaps. Thus, premature retirement by low-SES households is a big problem. However, relatively poor health and job prospects may make it harder for them to work longer."
Center for Retirement Research at Boston College
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Group Pension Buy-Out Sales Top $1 Billion for Fifth Straight Quarter
"Traditionally, buy-out sales have had a strong seasonality with most sales occurring in the fourth quarter. Activity in the first six months of 2016 is up 22 percent compared with the first half of 2015. Through the second quarter of this year, 131 plan sponsors have converted their defined benefit (DB) pension plans to group annuity contracts, surpassing the previous high-water mark of 107 contracts sold in the first six months of 2015."
LIMRA
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Connecticut Treasurer Calls for Re-Evaluation of Pension Returns
"Connecticut Treasurer Denise Nappier said the 0.35 percent return posted by the state's $29 billion retirement system in the year that ended in June underscores the need to adopt more realistic investment assumptions. The teachers' and state employees' funds, Connecticut's two biggest pensions, target an 8 percent annual return."
Bloomberg
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Executive Compensation and Nonqualified Plans
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Making Sense of the Debate on Non-GAAP Performance Measures for Executive Pay Plans
"The focus of this guidance is to help ensure that companies using non-GAAP metrics do so in a manner that isn't misleading or would be presented more prominently than the standard GAAP metrics. Underlying this guidance is the perception that non-GAAP metrics invariably trend toward presenting company performance in a more favorable light."
Willis Towers Watson
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Press Releases
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BenefitsLink.com, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, Inc. All materials
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