Retirement Plans Newsletter

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[Official Guidance]

Text of PBGC Proposed Regs: Expanded Missing Participants Program to Cover Multiemployer Plans, Most DC Plans, and Certain Other DB Plans
108 pages. "The [PBGC] administers a program to hold retirement benefits for missing participants and beneficiaries in terminated retirement plans and to help those participants and beneficiaries find and receive the benefits being held for them. The program is currently limited to single-employer defined benefit pension plans covered by the pension insurance system under title IV of [ERISA]. PBGC proposes to make changes to its existing program and, as authorized by the Pension Protection Act of 2006, to establish similar programs for multiemployer plans covered by title IV, certain defined benefit plans that are not covered by title IV, and most defined contribution plans. PBGC seeks public comment on its proposal."
Pension Benefit Guaranty Corporation [PBGC]


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[Official Guidance]

Text of PBGC Draft Forms and Instructions for Proposed Expanded Missing Participants Program
"PBGC [has issued] a proposed rule that would expand its existing Missing Participants Program to cover terminated 401(k) and other defined contribution plans and certain defined benefit plans that are not currently covered by the Program.... These forms are for information purposes only. PBGC-insured single-employer plans in the process of doing a standard termination should use the current forms to report missing participants."

Pension Benefit Guaranty Corporation [PBGC]

[Official Guidance]

Text of PBGC FAQs on Proposed Expanded Missing Participants Program
"Why is PBGC proposing a missing participants regulation? ... Will terminating plans be required to use PBGC's Missing Participants Program? ... How will the program work for defined contribution plans that choose to use it? ... What are the benefits to plans and participants of PBGC's proposed defined contribution Missing Participants Program? ... Did PBGC coordinate with other federal agencies? ... What types of defined contribution plans could use the Missing Participants Program? ... Does PBGC propose any changes to the current program for single-employer PBGC-insured defined benefit plans? ... When will the proposed expanded Missing Participants Program be available? ... Under the proposal, will plans pay a fee to participate in the Missing Participants Program? Where can I find more information about this proposal?"
Pension Benefit Guaranty Corporation [PBGC]

[Official Guidance]

Text of IRS Ann. 2016-32: Request for Comments on Facilitating Compliance with Qualified Plan Document Requirements (PDF)
"This announcement requests comments on ways in which the Department of the Treasury and the [IRS] can improve compliance with plan qualification requirements by making it easier for plan sponsors to satisfy requirements for qualified plan documents, particularly in light of the changes to the determination letter program described in Rev. Proc. 2016-37 ... Treasury and the IRS request comments on the following: [1] Incorporation by reference ... [2] Circumstances under which plan provisions may not be required.... [3] Conversion to pre-approved plans.... [4] Additional ways to facilitate compliance.... Comments may be submitted in writing on or before December 15, 2016."
Internal Revenue Service [IRS]

[Official Guidance]

Text of IRS Notice 2016-57: Temporary Nondiscrimination Relief for Closed DB Plans Extended through 2017 (PDF)
"Many detailed and thoughtful comments have been submitted on the proposed regulations, including oral comments made at the public hearing held on May 19, 2016. The [IRS] and the Treasury Department are taking the recommendations received from the public into account in finalizing the regulations. It is anticipated that the final regulations will not be published in time for plan sponsors to make plan design decisions based on the final regulations before expiration of the relief provided under Notice 2014-5 (as extended by Notice 2015-28). Accordingly, the IRS and the Treasury Department have determined that it is appropriate to extend the relief provided under Notice 2014-5 for an additional year.
Internal Revenue Service [IRS]


Safe Harbor 401(k) Plans - Sept. 28 webinar

Sponsored by Lorman and BenefitsLink

This webinar will provide a comprehensive overview of safe harbor 401(k) plans, including various design options, notice and contribution requirements, automatic contribution arrangements, plus common mistakes and how to fix them.

[Official Guidance]

Notice of Multiemployer Pension Plan Application to Reduce Benefits Filed by United Furniture Workers Pension Fund A
"The Board of Trustees of the United Furniture Workers Pension Fund A (UFW Pension Fund), a multiemployer pension plan, has submitted an application to Treasury to reduce benefits under the plan in accordance with [MPRA]. The purpose of this notice is to announce that the application ... has been published on the website of the Department of the Treasury, and to request public comments on the application from interested parties, including participants and beneficiaries, employee organizations, and contributing employers of the UFW Pension Fund."
U.S Department of the Treasury

Verizon Victory Not Changed by Recent Supreme Court Case
"This move by the Fifth Circuit is one of a growing number of cases limiting the ability of pension plan participants to sue over plan mismanagement that doesn't directly threaten their ability to receive benefits. Because pension benefits are by nature defined, courts often find that participants haven't suffered an injury sufficient to confer standing unless the alleged mismanagement is so serious that their benefits are jeopardized." [Lee v. Verizon Communications, Inc., No. 14-10553 (5th Cir. Sept. 15, 2016)]
Bloomberg BNA

Lost Track of an Old 401(k)? PBGC Program May Help to Find Your Money
"Under the voluntary service, businesses closing down a 401(k) could transfer stranded accounts to the PBGC or send the agency information on the location of the stranded assets, to be added to a database. The agency estimates that about 24,000 defined-contribution plans are ended each year, mostly at small employers.... Currently, stranded 401(k) accounts are often transferred to private companies ... which set up IRAs, notify the account holders, and search for any who can't be found."

Got a Fiduciary Question? DOL to Issue FAQs Soon
"The [DOL] will be issuing FAQs for advisers and wealth management firms this fall at an unspecified date, and will continue to do so on an ongoing basis, says Timothy Hauser, one of the agency's deputy assistant secretaries.... Hauser declined to specify which questions the department would answer first in its FAQs, but he emphasized that the [DOL's] focus was on helping advisers comply with the rule."
Financial Planning

A Sour Surprise for Public Pensions: Two Sets of Books
"CalPERS ... keeps two sets of books: the officially stated numbers, and another set that reflects the 'market value' of the pensions that people have earned. The second number is not publicly disclosed. And it typically paints a much more troubling picture[.]"
The New York Times; subscription may be required

How a Pension Deal Went Wrong and Cost California Taxpayers Billions
"Proponents sold the measure in 1999 with the promise that it would impose no new costs on California taxpayers. The state employees' pension fund, they said, would grow fast enough to pay the bill in full. They were off -- by billions of dollars -- and taxpayers will bear the consequences for decades to come. This year, state employee pensions will cost taxpayers $5.4 billion ... That's more than the state will spend on environmental protection, fighting wildfires and the emergency response to the drought combined."
Los Angeles Times

Incentive Fees and Competition in Pension Funds: Evidence from a Regulatory Experiment
"[F]unds with performance-based fees exhibit significantly higher risk-adjusted returns than other funds, but are not necessarily riskier (that depends on the measure of risk used).... [The authors] find that competitive pressure leads to poor performance, and conclude that incentives and competition are not perfect substitutes in the retirement savings industry.... [T]he pervasive regulatory restrictions on the use of performance-based fees in pension fund management may be costly for savers in the long-run."
Assaf Hamdani, Eugene Kandel, Yevgeny Mugerman, Yishay Yafeh, via National Bureau of Economic Research [NBER]


Getting Retirement Policy Right
"We need a PPA 2.0 that reaches underserved workers -- small-business employees and contract, mobile, and part-time workers. Options such as open, multiple-employer plans can bridge the access gap, but we need to act now to move these promising ideas forward. Some states are trying to address retirement plan access in their own proposals, but this fragmented approach produces inconsistencies in quality and implementation. A federal solution is needed."
Ann Combs, Vanguard

Benefits in General

Employee Benefit Issues in Mergers and Acquisitions (PDF)
"This article looks primarily at M&As involving ... 401(k) plans ... [and] explores other types of 'qualified' plans, health care plans, and 'nonqualified' deferred compensation plans.... [It] is critical that the buyer and seller engage in due diligence to understand the plans that exist and discover any problems, review and negotiate the terms of the purchase agreement, and take appropriate pre- and post-close actions to avoid creating problems and to facilitate any future plan mergers."
The ERISA Law Group, via The Advocate

Executive Compensation and Nonqualified Plans

[Guidance Overview]

Consider Amending Plans for Proposed Section 409A Regulations
"Although the changes do not necessarily require amending existing deferred compensation arrangements, employers may want to consider amendments to avoid contractual disputes about the benefits, to the extent that an employer intends to take advantage of the more liberal rules.... The following changes in the proposed regulations may warrant specific language[:] ... Beneficiary's intervening events ... Payment of legal expenses ... Delayed payment upon death ... Expansion of the short-term deferral exception."
Morgan Lewis

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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