Retirement Plans Newsletter

September 26, 2016

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Plan Administrator
Boutique actuarial consulting & TPA firm
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in IA

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in DC, FL, GA, MD, NC, VA

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Third Party Administrator
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Webcasts and Conferences

Employee Plans Determination Letter Program Changes In 2017
RECORDED
IRS [Internal Revenue Service]

Self-funded Health Plans: What Do We Have to Cover?
September 29, 2016 WEBCAST
Littler Mendelson

Breakfast Forum: Mergers and Acquisition Issues - What Affect Does it Have on Your Clients?
October 20, 2016 in CA
Western Pension & Benefits Council - Orange County Chapter

401(k) Beyond the Basics 11: Safe Harbor 401(k) Plan Design
October 31, 2016 WEBCAST
FIS Relius Education

Effect of Death on 401(k) Plans [2016]
November 1, 2016 WEBCAST
FIS Relius Education

457(b) Plans for 401(k) Practitioners; New Proposed Regs [2016]
November 15, 2016 WEBCAST
FIS Relius Education

Self-Funded Health Plans: What Employers Need to Know About Advantages and Risks
November 15, 2016 WEBCAST
HRWebAdvisor

The Dirty Dozen: Correcting Commonplace Errors [2016]
November 22, 2016 WEBCAST
FIS Relius Education

Required Minimum Distributions [2016]
November 30, 2016 WEBCAST
FIS Relius Education

Fundamentals of Cross-Tested Plans - A 3-Part Program [2016]
December 6, 2016 WEBCAST
FIS Relius Education

Ethics: Doing it Right [2016]
December 14, 2016 WEBCAST
FIS Relius Education

1099-R: An Ongoing Challenge Revisited [2016]
December 15, 2016 WEBCAST
FIS Relius Education

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[Official Guidance]

IRS Explanation, Worksheet (Alert Guidelines), and Deficiency Checksheet: Permitted Disparity (PDF)
10 pages; revised April 2016. This single PDF document contains three items: Publication 4964, Form 9637, and Form 9639. Excerpt: "The purpose of Form 9639, Worksheet Number 5B, is to identify major problems relating to permitted disparity requirements of section 401(l) of the Code. This worksheet is to be used in reviewing plans that are intended to satisfy a design-based safe harbor and that provide for a disparity in the rate of employer contributions (in the case of a defined contribution plan) or employer-provided benefits (in the case of a defined benefit plan) that favors highly compensated employees." [Cycle A Submission Period, 2/1/2016 through 1/31/2017]
Internal Revenue Service [IRS]

[Advert.]

SPARK Forum - November 6-8, 2016 -- The Breakers, Palm Beach, FL

Sponsored by SPARK

Join us at the retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda to meet the needs of 401(k) Plan Providers, Financial Advisors and Third Party Administrators.


[Official Guidance]

IRS Explanation, Worksheet (Alert Guidelines), and Deficiency Checksheet: Safe Harbor Nondiscrimination Requirements for DC Plans (PDF)
6 pages; revised April 2016. This single PDF document contains three items: Publication 6393, Form 5627, and Form 6045. Excerpt: "The purpose of Form 5627, Worksheet Number 5 and this explanation is to determine whether a defined contribution plan satisfies the nondiscrimination safe harbor requirements of section 1.401(a)(4)-2(b) of the Regulations and associated requirements such as the nondiscriminatory compensation requirements of section 414(s)." [Cycle A Submission Period, 2/1/2016 through 1/31/2017]
Internal Revenue Service [IRS]

[Official Guidance]

IRS Explanation, Worksheet (Alert Guidelines), and Deficiency Checksheet: Safe Harbor Nondiscrimination Requirements for DB Plans (PDF)
12 pages; revised April 2016. This single PDF document contains three items: Publication 4965, Form 9638, and Form 9640. Excerpt: "The purpose of Form 9638, Worksheet Number 5A, and this explanation is to determine whether a defined benefit plan satisfies the nondiscrimination safe harbor requirements of section 1.401(a)(4)-3(b)(3) of the Regulations and associated requirements such as the nondiscriminatory compensation requirements of section 414(s)." [Cycle A Submission Period, 2/1/2016 through 1/31/2017]
Internal Revenue Service [IRS]

[Guidance Overview]

Proposed Missing Participant Program Expansion (PDF)
"The proposed PBGC defined contribution plan program is optional for most defined contribution plans subject to ERISA.... [Such plans] would either transfer all missing participant accounts to the PBGC or notify the PBGC of where all the missing accounts were transferred ... Because defined contribution plans already have guidance for addressing missing participants in terminated plans (Field Assistance Bulletin 2014-01), the proposed program seeks to incorporate those requirements into the program, requiring the same search or determination outlined in existing guidance before the plan determines a participant is missing."
Ascensus

[Guidance Overview]

Charity is Exception to 'Contingent Right', Making Trust a 'Qualified Beneficiary'
"When a trust is named as the beneficiary of an IRA, it must a qualified 'see-through' trust (qualified trust) in order to allow for extended distributions based on the trust beneficiary's life expectancy. Despite best efforts, some trusts fail to meet the requirements to be a qualified trust; and even experts in the field sometimes make incorrect determinations as to the qualified status of a trust."
Appleby Retirement Dictionary

[Advert.]

Help the Pension Rights Center celebrate 40 years of work

Sponsored by Pension Rights Center

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.


The Costs to Small Businesses of Starting Up a Retirement Plan
"[T]here are a variety of factors to be considered ... but, [when] asked how much (on average) out-of-pocket would it cost a 10-person firm to set up a DC plan, such as a 401(k), the answers broke down as: 44.3%: $2,000-$3,000; 27.5%: $1,500-$2,000; 17.5%: $500-$1,000; 7.7%: more than $5,000; 3.0%: less than $500."
National Association of Plan Advisors [NAPA]

Proposed Senate Legislation Includes Many Changes to Retirement Savings
"The Senate Finance Committee last week considered legislation -- the Retirement Enhancement and Savings Act of 2016 -- that if enacted would make a number of changes to current IRA and employer-sponsored retirement plan provisions. During the bill mark-up of the committee, a number of additional provisions were added to the original text.... The retirement-related provisions [are listed in this article]."
Ascensus

Lawmakers' Year-End Sprint for Savings, Pension and Multiemployer Plan Changes (PDF)
"Although we remain in the dark as to whether there will be any last-minute 2016 year-end tax extenders or policy riders to a post-December 9 [continuing resolution] or an omnibus funding bill, we anticipate that there will be one or more. Specifically, we could see congressional efforts to include riders delaying the effective dates of the overtime and fiduciary rules, as well as more substantive provisions that change the landscape of retirement savings, pension and multiemployer plan rules."
Xerox HR

Impact of the Default Investment Decision on Participant Deferral Rates: Managed Accounts vs. Target Date Funds
14 pages. "Managed accounts participants save more compared to target-date fund investors.... Participant deferral rates are generally lower for plans with automatic enrollment (versus voluntary enrollment) unless the default deferral rate is at least 6%.... The potential benefits of increased savings likely outweigh the costs of managed accounts for many participants."
Morningstar

Judge Hears Oral Argument in Case Seeking DOL Fiduciary Rule Preliminary Injunction
"In concluding the hearing, Judge Crabtree emphasized his view that the issues and rights implicated in the case are 'substantial' and 'important,' suggesting that he may be inclined to grant the limited injunction requested by Market Synergy. As for timing, Judge Crabtree ordered the parties to file supplemental briefs due in one week, and further ordered the parties to meet and confer over the next two weeks in order to determine if any additional materials or briefing would be required in order for him to rule on both the preliminary injunction motion and the underlying lawsuit at the same time." [Market Synergy Group, Inc. v. DOL, No. 16-04083 (D. Kans., filed June 8, 2016, oral argument Sept. 21, 2016)]
Miller & Chevalier

Financial Advisors See Opportunity in DOL Investment Advice Rule
"Twenty-nine percent of financial advisors see the [DOL] investment advice rule as having a positive impact on their businesses -- a 17 percent increase since January. On the other hand, as result of the rule, 10 percent of advisors are planning to leave or retire from the field earlier than expected, and 18 percent are reconsidering their careers as advisors.... 54 percent of advisors have taken some action to prepare for the rule, compared to only 20 percent in January who indicated that they had taken some action."
Fidelity

It's All About Income: The American Retirement Experience
24 pages. "This report examines the lifestyles, financial condition, experiences and expectations of Americans who have lived in retirement for several years, and who had at least $50,000 in investable assets when they retired. Overall, these retirees are doing quite well, but their story carries a few cautionary tales for future generations, especially pre-retired Baby Boomers and GenXers."
Insured Retirement Institute [IRI]

A Latent Mechanism for Generating Wealth Inequality in 401(k) Retirement Plans
"This paper identifies and quantifies an otherwise unnoticed latent mechanism for generating inequality in 401(k) plans based solely on differences in how employees with different incomes (who have already elected to join a plan) self-select either riskier or less risky portfolios. Lower income employees, as a whole, allocate to less risky investments than higher income earners, which results in real differences in outcomes favoring the wealthier."
Adam Hayes, via SSRN

In a First, CalPERS May Cut Small Town's Pensions
"A CalPERS crackdown on employers that have not been paying into the pension fund could cut the pensions of all four retirees of a small Sierra County city, Loyalton, which stopped making its payments more than three years ago. It would be the first time that CalPERS used its power to cut pensions, in proportion to the payment not made by the employer, after a plan is terminated and closed to new members, a CalPERS spokesman said."
Calpensions

Benefits in General

New IRS e-Services Authentication Process Requires Re-Registration
"The IRS ... is strengthening the authentication process for identifying users and that the new, more stringent procedures will require existing users to re-register (Oct. 24 is the target date for the start of re-registration) ... Any current e-account holder is affected, which the IRS said includes: [1] Electronic return originators; [2] Return transmitters; [3] Large business taxpayers required to e-file; [4] Software developers; [5] Health care law insurance provider fee/branded prescription drug filers; [6] Health care law information return transmitters/issuers; [and] [7] Reporting agents[.]"
Journal of Accountancy

Executive Compensation and Nonqualified Plans

Dispelling Some Common Misconceptions About Determining the CEO Pay Ratio
"[T]his would be a good time to address some common questions ... and perhaps dispel some lingering myths: ... A comprehensive pay definition is the best route to find the median employee ... Sampling won't save much time and effort ... A more cost-effective sampling approach invites added scrutiny ... Sampling will yield more volatility in the pay ratio ... A lower pay ratio is always preferable."
Willis Towers Watson

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, 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 BenefitsLink.com, 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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