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Special Briefing for Investment Advisors: Retirement Plan Fee Litigation
RECORDED
Nixon Peabody LLP

Recent Updates in Employee Benefits Law
September 28, 2016 in IL
Michael Best & Friedrich LLP

Trends in Provider Sponsored Health Plans
October 5, 2016 WEBCAST
Healthcare Web Summit

Employers' Summit on Health Care Costs and Solutions
January 11, 2017 in DC
National Business Group on Health

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Today's Discussions on the BenefitsLink Message Boards

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[Official Guidance]

2016 IRS Form 4972 and Instructions: Tax on Lump-Sum Distributions (PDF)
"Use Form 4972 to figure the tax on a qualified lump-sum distribution you received in 2016 using the 20% capital gain election, the 10-year tax option, or both. These are special formulas used to figure a separate tax on the distribution that may result in a smaller tax than if you reported the taxable amount of the distribution as ordinary income. You pay the tax only once, for the year you receive the distribution, not over the next 10 years. The separate tax is added to the regular tax figured on your other income."
Internal Revenue Service [IRS]

[Advert.]

Help the Pension Rights Center celebrate 40 years of work

Celebrate the Pension Rights Center's 40th anniversary by helping it continue its work to protect and promote the retirement security for American workers, retirees and their families.

[Guidance Overview]

Proposed Regulations Would Establish PBGC Missing Participant Program for Terminating 401(k) Plans
"A DOL safe harbor allows fiduciaries to make distributions to IRAs on behalf of individuals who fail to make distribution elections upon a plan termination. Once finalized, the PBGC's proposal would provide another option for terminating 401(k) plans; it would not, however, help continuing plans locate missing participants."
Thomson Reuters / EBIA

[Guidance Overview]

PBGC Finalizes Reduced Late Premium Filing Penalties (PDF)
"As proposed in April, PBGC has cut their penalties for late payment of annual premiums in half and slice d them even further for plan sponsors who have a history of timely payment. The rule applies to both single-employer and multiemployer plans."
Xerox HR Services

[Guidance Overview]

IRS Explanation, Worksheet (Alert Guidelines), and Deficiency Checksheet: Joint and Survivor Determination of Qualification (PDF)
16 pages; revised April 2016. This single PDF document contains three items: Publication 6391, Form 5625, and Form 6042. Excerpt: "The purpose of Worksheet Number 3 (Form 5625) and this explanation is to identify major problems regarding joint and survivor annuity requirements under Internal Revenue Code sections 401(a)(11) and 417.... The joint and survivor annuity requirements of sections 401(a)(11) and 417 apply to plans to which section 411 applies, except those mentioned in section 411(e) (such as governmental plans)."
Internal Revenue Service [IRS]

[Guidance Overview]

IRS Explanation, Worksheet (Alert Guidelines), and Deficiency Checksheet: Miscellaneous Provisions (PDF)
25 pages; revised April 2016. This single PDF document includes Publication 6392, Form 5626, and Form 6043. Excerpt: "A plan which generally is more generous than the statutory minimum requirement for qualification in any given area will not fail to qualify merely because it fails to adhere to specific language found in the statute if it can be otherwise demonstrated that the minimum statutory requirement is met." [Cycle A Submission Period, 2/1/2016 through 1/31/2017]
Internal Revenue Service [IRS]

[Advert.]

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

Keep up to date on the latest rules and regulations with the ERISA Outline Book, THE resource for information on qualified plans. Choose from two great formats; hardcopy or online, including access to a fully searchable and cross-referenced website.

[Guidance Overview]

Death Master File Certification Program Finalized
"Pension plan administrators often need DMF information to determine when to terminate benefits to a deceased participant or when to direct payments to a beneficiary. The final regulations [issued by the National Technical Information Service of the U.S. Department of Commerce] outline the procedures for becoming certified to access DMF information. The final rules take effect on November 28, 2016. People who were certified before then will remain certified for one year after their certification date. After that, they must obtain recertification."
Willis Towers Watson

Supreme Court Pauses Ninth Circuit's Decision in Church Plan Case
"Associate Justice Anthony Kennedy granted Dignity Health a temporary reprieve from complying with [ERISA] until the eight justices decide whether or not to take up their appeal. In July, the Ninth Circuit determined that Dignity Health didn't qualify for a religious exemption from ERISA and its employee pension system couldn't be considered a church plan. Dozens of lawsuits have been filed against faith-based organizations over the issue. The lawsuits target some of the nation's largest health systems." [Dignity Health v. Rollins, No. 16-258 (S.Ct. Sept. 21, 2016)]
Modern Healthcare; registration may be required

Kubler-Ross and IRS Announcement 2016-32
"In Announcement 2016-32, the IRS requested comments on how [individually designed] plans can maintain compliance going forward since determination letters are no longer available.... The IRS is asking if there are additional provisions that would also be appropriate to incorporate by reference.... The IRS would like to know if there are other provisions that could possibly be avoided and the likelihood that the plan sponsor will actually amend the plan when the provision becomes applicable.... [T]here are challenges to switching to a pre-approved prototype or volume submitter plan, and the IRS wants to know about them ... What might depress practitioners most is that [these] are the only ones the IRS came up with as possibilities."
Benefits Bryan Cave

House Subcommittee Holds Hearing on Multiemployer 'Composite Plan' Proposal
"[T]he draft proposal would authorize 'composite' multiemployer plans, an innovative retirement plan option for workers and employers. The proposal represents the next step in the committee's ongoing efforts to strengthen retirement security and improve the multiemployer pension system."
Health, Employment, Labor, and Pensions Subcomittee of the Committee on Education and the Workforce, U.S. House of Representatives

Lawmaker Warns Against Stealth Passage of Pension Revamp
"[Rep. Joseph Courtney (D-Conn.) said] that it's 'still theoretically possible for the proposal to be debated in the committee and amended during the post-election lame-duck session.' Yet, he said he sees many parallels between this bill and the way the MPRA bill was passed two years ago as part of an omnibus bill. During the hearing, Courtney said it's 'common sense' that there isn't time left to amend the bill and questioned the timing of the draft bill hearing. Later, he said he suspects this bill, which is supported by many of the same groups that supported the MPRA, is part of a similar strategy used to pass that law."
Bloomberg BNA

Discovering Target Date Fund Prudence (PDF)
"[The author provides] a detailed examination of target date fund glide paths in order to differentiate the good from the bad. [The] focus is on fiduciary responsibility and the characteristics of a glide path that make it Prudent.... A glide path does not have to produce high returns to be Prudent. In fact, high returns can be an indication of imprudent risk taking."
Target Date Solutions

Fiduciary Education Isn't a Best Practice, It's a Requirement
"[D]oes the adviser fully understand the risk associated with the recommendation and has the adviser fully educated the investor of all risks so s/he can make an informed decision? Furthermore, is the adviser educated on the role a recommendation might fill under an ERISA standard of care? In other words, the adviser not only needs to be educated about the products they recommend but also why the products recommended are prudent and meet the best interest standard of care."
Fiduciary Matters Blog

DOL Fiduciary Rule to Cost the Securities Industry $11 Billion by 2020
"Hardest hit will be independent broker-dealers, who stand to lose $4 billion in revenue, or 22%, of the industry's total ... IBDs are also expected to see a decline of $350 billion in client assets, or 11% of the industry's total."
InvestmentNews

Kansas Judge Appears 'Sympathetic' to Market Synergy DOL Case
"Market Synergy agreed that the DOL would have authority to regulate FIAs if the DOL had demonstrated that the state regulatory regime was 'woefully inadequate.'... The DOL inexplicably failed to examine state regulation of FIAs in the rulemaking before subjecting FIAs to the BIC exemption, which was arbitrary because of the 'complete absence of data in the record of what the states have done,' the plaintiff's attorney told the judge."
InsuranceNewsNet.com

[Opinion]

State-Run Retirement Plans Are Not a Complete Solution
"There will be no employer matches. The maximum contribution will be just $5,500 instead of at least $18,000 in an ERISA-qualified retirement plan. In California's plan, the contributions will be invested conservatively for the first few years in government bonds, which may well provide inadequate returns. Finally, these state plans may crowd out small businesses that might have offered a traditional plan, but will now conclude that the state-run plan is sufficient."
Aron Szapiro, in Morningstar

[Opinion]

Joint Statement of Unions and Other Organizations Opposing Consideration of 'Composite' Pension Legislation
"The composite legislation does not go nearly far enough to ensure the retirement security of our members and other participants in multiemployer pension plans. The draft provides inadequate funding for composite plans and weakens the funding base for existing (legacy) plans ... Protecting the benefits of workers in legacy plans would require deep cuts to active workers in composite plans in times of market instability.... [C]omposite plans are exempt from paying PBGC premiums ... When combined with plan failures, the PBGC will be saddled with significant new liabilities at the same time an already underfunded multiemployer insurance program is depleted of funds."
International Association of Machinists and Aerospace Workers, International Brotherhood of Boilermakers, International Brotherhood of Teamsters, United Steelworkers, National Retirees Legislative Network, and the Pension Rights Center

[Opinion]

Got Those 'Conflicting Social Security Deficit Estimate' Blues Again
"Common sense tells us that rather than waiting to have Congress make very significant changes to the Nation's retirement program every thirty years or so to put it back into actuarial balance, it would be preferable to have minor changes made on a more frequent basis.... [A]utomatic adjustments to the system's tax and/or benefit structure [would] maintain the system's actuarial balance.... This is what is done in almost all financial programs funded using basic actuarial principles."
Ken Steiner, FSA Retired

ERISA: How Do You Spell (Equitable) Relief?
"In an ERISA case, what does it take to assert a claim for equitable relief? If the complaint does not assert an alleged breach of fiduciary duty, the claim for equitable relief should be dismissed." [Owens v. Liberty Life Assurance Co. of Boston, No. 15-00071 (W.D. Ky. Sept. 12, 2016)]
Lane Powell PC

Hold on to Your (Top) Hat: ERISA Section 502(a)(3) May Be Used to Enforce the Terms of a 'Top-Hat' Benefits Plan
"The court acknowledged that ERISA exempted the administrator of a top-hat plan from certain fiduciary duties, and the higher standard of care typically imposed on an ERISA fiduciary. However, agreeing with the decisions in other cases, the court found those exemptions did not immunize the top-hat plan administrator from all equitable remedies. Rather, 'equitable remedies ... are available for a breach of the general good faith standard of contract law by the plan administrator' of a top-hat plan." [Buster v. Compensation Comm. of the Bd. of Directors of Mechanics Bank, No. 16-01146 (N.D. Cal. Aug. 26, 2016)]
Zuckerman Spaeder LLP

Preparing for the 2017 Proxy Season, Part 2
"[T]ips and reminders for 2017 proxy season[:] [1] Determine whether any special reporting rules or exceptions apply to the company.... [2] Address non-employee director compensation best practices.... [3] Determine whether the company needs to amend its LTIP/Stock or Cash Incentive Plans to satisfy the periodic shareholder approval requirements (generally, every five years) of Code Section 162(m) or to add shares to the authorized share pool.... [4] Review ISS/Glass Lewis report and [Shareholder Say on Pay (SSOP)] voting results from 2016; ... [5]  Depending on SSOP frequency (every one, two, or three years), include SSOP proposal in 2017 ... Disclose in the CD&A the extent to which the Compensation Committee considered the results of previous SSOP votes." [Article includes 9 more.]
Winston & Strawn LLP

DOL Sues Exton Electrical Equipment Installation Company to Restore $166K to Employees’ 401(k) Retirement Plan
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Ascensus Introduces Enhancements to Managed Accounts Service for Employees
Ascensus

Manning & Napier Launches Trusteed IRA to Ensure Retirement Savings Lives On
Manning & Napier, Inc.

Doug Prince Named to 2016 Financial Times 401 Top Retirement Plan Advisers
ProCourse Fiduciary Advisors, LLC

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