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[Official Guidance]
IRS Explanation, Worksheet (Alert Guidelines), and Deficiency Checksheet: Employee Leasing (PDF)
7 pages; revised April 2016. This single PDF document contains three items: Publication 7003, Form 8398, and Form 8386. Excerpt: "The worksheet and explanation ... are based on the statute itself and on various questions and answers in Notice 84-11 ... and Rev. Proc. 2002-21 ... as amplified by Rev. Proc. 2003-86 ... Until applicable regulations are published, the guidance provided by these questions and answers and procedures may be relied upon to comply with the provisions of section 414(n)." [Cycle A Submission Period, 2/1/2016 through 1/31/2017]
Internal Revenue Service [IRS]
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[Official Guidance]
IRS Explanation, Worksheet (Alert Guidelines), and Deficiency Checksheet: Affiliated Service Groups (PDF)
6 pages; revised April 2016. This single PDF document includes Publication 7005, Form 8388, and Form 8400. Excerpt: "The general rule of section 414(m) is that employees of employers that are members of an affiliated service group are considered to be employed by a single employer for purposes of certain provisions of section 401(a), and sections 408(k), 408(p), 410, 411, 415 and 416." [Cycle A Submission Period, 2/1/2016 through 1/31/2017]
Internal Revenue Service [IRS]
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[Guidance Overview]
IRS Simplifies Rules for Allowing Participants to Take Partial Lump-Sum Distributions
"The new regulation permits a plan to bifurcate a participant's benefit and have the present value requirements of Section 417(e) apply only to the portion of the benefit that is payable in an accelerated form. The determination of the remaining percentage payable as an annuity depends on how the plan determines the accelerated form."
Cheiron
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BP Beats ERISA Challenge to Stock Drop in Fifth Circuit
"This much-anticipated decision by the [Fifth Circuit] is the latest court ruling to emphasize the high bar facing workers who challenge drops in publicly traded stock price under [ERISA].... Without mentioning the DOL and SEC briefs, the Fifth Circuit said that workers challenging employer stock losses now bear 'the significant burden of proposing an alternative course of action so clearly beneficial that a prudent fiduciary could not conclude that it would be more likely to harm the fund than to help it.' " [Whitley v. BP, No. 15-20282 (5th Cir. Sept. 26, 2016)]
Bloomberg BNA
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Criminal Liability for Failure to Contribute to Multiemployer Benefit Fund?
"[This case] represents a troubling expansion of liability from civil to criminal. Further, imposition of criminal liability for something (double-breasted operations) described as 'neither uncommon nor inherently unlawful' is similarly disturbing. Finally, also worrying is [that] the determination of the sufficiency of the sophisticated elements of a lawful double-breasted operation will be up to a jury in a criminal proceeding." [U.S. v. Thompson, No. 16-10014 (D. Mass. Sept. 13, 2016)]
Jackson Lewis P.C.
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2016 Recordkeeper Services Guide
"Most providers that work with advisers are fairly flexible in terms of types of adviser partners.... [W]hile several providers work with designated adviser firms, none indicated that they will work only with designated firms, and just four out of the 45 said they work only with unaffiliated advisers. More than seven in 10 providers said they will work with nonaffiliated advisers or designated firms, as well as with their own affiliates.... All but two recordkeepers can support registered-investment-adviser (RIA)/hard-dollar fees; 83% (up from 77%) offer them ongoing trailing commissions; and 33 (72%) make [ERISA] accounts available."
planadviser
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401(k) Advisors Must Educate Plan Sponsors on Two Numbers
"In an effort to deal with their enhanced responsibilities in as painless a way as possible, some plan advisors are considering outsourcing certain responsibilities to service providers who can act as 3(21) and 3(38) fiduciaries. In order to choose the best solution for their plans, advisors must educate sponsors first so they understand the difference between being a fiduciary under 3(21) or 3(38)."
401K Specialist
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DOL Rule Will Lead to Simplification of Many Retirement Products
"Financial advisors can expect some insurers to simplify many income and retirement products in the wake of the [DOL's] fiduciary rule ... [T]he rule will push distributors to use more efficient technology and recordkeeping.... Even if courts rule in favor of plaintiffs suing to block parts of the rule from taking effect, financial advisors can expect insurers and marketing organizations to press forward with execution."
InsuranceNewsNet.com
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SEC Fiduciary Rule Not Coming 'Any Time Soon'
"The SEC's fiduciary rule may be on the back burner for a while longer.... Chairwoman Mary Jo White emphasized that the process is extraordinarily complex and the SEC is missing two of its five commissioners.... White said she expected an eventual SEC rule ... to have some differences [from the DOL rule]. But she did not specify what those variations would be. The SEC would coordinate its rule-making with the Labor Department, White said."
Financial Planning
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Workers at Peeps Factory Go on Strike: The Coming Peepocalypse?
"At issue is a contractual disagreement between Just Born Inc. -- the Bethlehem, Pennsylvania-makers of Peeps, Mike and Ike, and Hot Tamales -- and union employees of Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Local 6. Workers are protesting the company's proposal for future hires to enroll in a 401(k) plan rather than the pension program offered to current employees."
The Onion
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Furniture Workers' Pension Fund Applies for Benefits Suspension
"The pension is in 'critical and declining' status, and is projected to become insolvent by 2021 ... With $180 million in actuarial liabilities projected for July, the fund would be 30 percent funded at that time ... The board seeks for the pension benefits to be suspended May 1, 2017. A suspension would drop monthly benefits from $238 on average to $219, yielding an overall reduction of $12 million."
The Tennessean
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Standards and Metrics for Public Retirement Systems (PDF)
20 presentation slides. "What does heightened risk suggest for policy and what might it portend for behavior? For policy, ... it means we need more disclosure of risk to those who bear risk, to those who act on risk-bearers' behalf ... If deciders decide long-term risks are too high, could lead to: [1] Lower assumed returns; [2] Allocation away from riskier assets... [3] Substantially higher contribution requests; [4] Certain and substantial crowding out now (services, taxes), rather than risk of greater (or lesser) crowding out later."
The Pew Charitable Trusts and the Urban Institute
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Puerto Rico Pension Fund Joins Lawsuit Against UBS Over Muni Bonds
"UBS served as a major banker for the U.S. territory, which has been defaulting on a growing share of its debt and has been placed under federal financial oversight. The bank was able to legally serve as an adviser, underwriter and bond-fund manager even though such multiple roles are barred on the mainland because of the conflicts of interest."
Bloomberg
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Benefits in General
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6 in 10 Millennials Would Sacrifice Pay for Retirement Benefits
"[T]he number of millennials willing to pay a higher amount for a guaranteed retirement benefit has increased from 42% in 2009 to 59% this year. Two-thirds of boomers (66%) would also be willing to sacrifice pay for more secure retirement benefits, versus half in 2009. However, only a third of millennials (32%) and boomers (34%) said they are willing to pay a higher amount for lower or more predictable health costs, a decline from 43% and 45%, respectively, in 2009."
Willis Towers Watson
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Executive Compensation and Nonqualified Plans
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Mercer Spot Survey Finds CEO Pay Ratios to Be Lower Than Expected
"A recent Mercer spot survey of over 100 companies in 12 industries found that the CEO-to-median-employee pay ratio is less than 200:1 at the majority of respondents that have estimated a ratio. These estimates, calculated in preparation for the SEC's pay ratio disclosure rule, are significantly lower than the AFL-CIO's 335:1 average ratio for 2015 frequently cited by the media."
Mercer
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Wells Fargo Claws Back Millions from CEO After Scandal
"Wells Fargo & Co. Chairman and Chief Executive John Stumpf will forfeit $41 million for the bank's burgeoning sales scandal, marking one of the biggest rebukes to the head of a major U.S. financial institution. The bank's board moved to rescind pay for Mr. Stumpf and former community-banking head Carrie Tolstedt ahead of a hearing of the House Financial Services Committee ... The awards being forfeited by Mr. Stumpf represent about a quarter of the total compensation he has accrued over his nearly 35 years at the bank[.]"
The Wall Street Journal; subscription may be required
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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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