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[Official Guidance]
Text of IRS Draft Instructions for 2016 Form 5500-EZ: Annual Return of One-Participant Retirement Plan (PDF)
"What's new: The IRS has decided not to require plan sponsors to enter the preparer's information at the bottom of the second page of Form 5500-EZ for the 2016 plan year and plan sponsors should skip these questions when completing the form. The IRS has decided not to require plan sponsors to complete questions on lines 4a through 4d, 13a, 13b, 14, and 15 for the 2016 plan year and plan sponsors should skip these questions when completing the form."
Internal Revenue Service [IRS]
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[Advert.]
ERISApedia.com - Compliance & Business Development ReSources
Join us at ASPPA Annual for an Author Champagne Toast Sunday Evening! Visit with our Nationally Respected Authors: Ilene H. Ferenczy, JD,CPC,APA; Chuck G. Humphrey, JD; Tim McCutcheon, JD, CPA, MBA; Bob Toth, JD, Fellow ACEB; and Conni Toth, BS, FINRA.
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[Guidance Overview]
Brokerage Account Windows in Your 401(k) Plan: Company Stock Issues
"If the 401(k) brokerage account does not prohibit investments in employer stock, there may be an offering of employer stock requiring a registration statement.... If an employer suggests that participants may invest in employer stock through their brokerage account window, this will trigger a requirement to file a Form S-8.... [It] is necessary to file the registration statement and maintain a sufficient number of registered shares for all purchases of company stock made through the brokerage account."
Wilkins Finston Friedman Law Group LLP
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[Guidance Overview]
Without Fanfare, IRS Issues New Revenue Procedure on EPCRS
"Among the more notable changes, Rev. Proc. 2016-51 ... [1] clarifies that any correction method set out in the revenue procedure can be used to correct a failure, so long as the plan and the plan sponsor are eligible for the correction used; ... [2] eliminates the 50% refund of the user fee that was previously provided in the case of an anonymous submission that fails to reach resolution; ...[3] clarifies that compliance statements and closing agreements ... do not constitute determinations that a plan is qualified in document or operation, but only that the plan has been timely adopted or that the specific operational failure has been corrected[.]"
Morgan Lewis
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[Guidance Overview]
IRS's Correction Program Retooled and Revamped
"Overall, the changes in the revised EPCRS program are welcome, particularly in light of the sunset of the ongoing individually-designed determination letter program at the end of the current cycle. That said, the basic EPCRS rule remains the same -- timely and efficient identification and correction of failures will yield the best result for the plan sponsor and potentially provide the best protection to participating employees."
Michael Best & Friedrich LLP
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[Guidance Overview]
New IRS Procedure for Waiving the 60-Day Rollover Deadline
"The IRS increased the fee for certain private letter rulings (PLR) requests to $10,000 per application, effective February 1, 2016. This include PLR requests to waive the 60-day deadline for completing rollovers, which is a significant increase as the fees for such PLRs used to range from only $500-$3,000.... Fortunately, the IRS has issued new guidelines that now allow eligible individuals to avoid having to pay the $10,000 fee by using a new self-certification option."
Appleby Retirement Dictionary
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[Advert.]
SPARK Forum - November 6-8, 2016 -- The Breakers, Palm Beach, FL
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.
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How Should Defined Contribution Retirement Plans Be Organized?
62 pages. "[T]he current rules require that investment adviser act in the best interest of the beneficiaries, yet they allow the advisers to receive income from third parties. In addition, the rules do not outlaw opaque, proprietary products, which would lead to uninformed and costly investment decisions. In fact, the current rules are likely to lead to continued conflicted investment advice, confusion, and wide-spread litigation to sort out these internal conflicts. [The authors] offer three policy recommendations to remedy these problems."
Sureyya Burcu Avci, M. P. Narayanan, and H. Nejat Seyhun, via SSRN
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Operators of Phone Centers and Websites May Be Able to Use Limited Fiduciary Protection (PDF)
"Current use of the [Best Interest Contract (BICE)] is far beyond the scope needed for non-fiduciary phone centers or Websites. Such use would be costly and impractical. The alternative is the Limited Fiduciary, which maintains the current services and uses the full protection of the 408(g) exemption for limited services. The insurance coverage is unaffected or costs potentially lowered as are the business risks. The chance of an accidental breach is also greatly reduced. The Limited Fiduciary for existing services can be quickly implemented at a very low cost and minimum interruption or re-training."
DALBAR
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Interesting Angles on the DOL's Fiduciary Rule, Part 22
"Based on the wording of the new fiduciary rule, if a bank employee recommends that an IRA invest in a certificate of deposit, and is compensated directly or indirectly for that recommendation, it is a fiduciary act for compensation. (The bonus, or bonus credit, is the compensation.) Since the bank employee is being paid compensation that is not stated and level, the payment is a prohibited transaction."
FredReish.com
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Retirement Confidence Survey Highlights Global Differences in Participants' Financial Wellbeing
"[Retirement] confidence remained relatively stable in 2016, and is higher than what was reported in 2013. Respondents in the US report the highest confidence with more than half of respondents reporting that they feel they are on track to meet their retirement goals.... US respondents report greater financial wellness scores with 46 percent showing high financial wellness compared to 33 percent of respondents in the UK and 13 percent of respondents in Ireland."
State Street Corporation
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Here's How 40% of 401(k) Plan Members Build Larger-Than-Average Account Balances
"Average balances can look puny because they include accounts that can't help but be small. They can include accounts owned by young workers who are just starting out. They can also include accounts owned by retirees who have been withdrawing money for many years.... [N]early 40% of all 401(k) plan members are consistent participants.... Their accounts had an average balance of $170,290 as of year end 2014, the latest year for which complete data are available."
Nasdaq
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The Fed Offers A Generous Retirement Plan, But Funds It Responsibly
"For 2015, the Fed used a discount rate of 4.05%. Based on this discount rate, the Fed's retirement plan had $13.27 billion in liabilities. Combined with the plan's $12.5 billion in assets, this produces a funded ratio of 94 percent. That figure would look good even compared to state and local pensions' typical stated funded ratio of about 75%. But the state and local figures are calculated using a 7 to 8% discount rate. Were the Fed to use that approach, its pension liabilities would shrink to $7.96 billion and its funded ratio rise to 157 percent."
Forbes
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Employee Contributions to Public Pension Plans (PDF)
"[N]early all employees of state and local government are required to share in the cost of their retirement benefit.... [By] providing a consistent and predictable stream of revenue ... contributions from employees fill a vital role in financing pension benefits. In the wake of the 2008-09 market decline, employee contribution rates in many states have increased. This issue brief examines employee contribution plan designs, policies and recent trends."
National Association of State Retirement Administrators [NASRA]
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Benefits in General
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The Enforceability of ERISA Forum Selection Clauses: Two Recent 'Against-The-Trend' Cases and an Uncertain Future (PDF)
"The majority of courts to address this issue have ruled in favor of enforcing forum selection clauses. However, going against the trend, two federal district courts recently determined that forum selection clauses are automatically invalid and unenforceable within the ERISA context ... [At] the beginning of this year, the U.S. Supreme Court declined to review a [third] case in which the Sixth Circuit Court of Appeals had ruled in favor of enforcing a plan's forum selection clause.... The [DOL] without any success thus far, has consistently filed amicus briefs in support of the view that forum selection clauses in ERISA plans are invalid and unenforceable."
Trucker Huss
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Fifth Circuit Provides Guidance on When ERISA Governs Severance Plans
"The Gomez court held that '[i]t is thus the existence or nonexistence of an 'ongoing administrative program' ... that is the key determinant of whether severance plans are governed by ERISA' rather than the form of the payments. 'Even for plans that result in only a lump-sum payment, that administrative scheme can be found in a number of other features that require discretion the eligibility determination; calculations of the payment amount (such as deductions and detailed formulas); the provision of additional services beyond the severance payment (such as insurance); and the establishment of procedures for handling claims and appeals.' " [Gomez v. Ericsson, Inc., No. 15-41479 (5th Cir. July 8, 2016)]
Begos Brown & Green LLP
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Executive Compensation and Nonqualified Plans
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Settlement of Director Pay Lawsuit Provides Best Practices Framework
"Under the terms of the settlement, Citrix has agreed to implement and maintain the following corporate governance reforms for at least five years. [1] Limits on annual equity compensation grants for non-employee Directors.... [2] Shareholder approval of plan amendments.... [3] Enhanced disclosures on Director compensation practices.... [4] Designated Compensation Committee responsibilities."
Meridian Compensation Partners, LLC
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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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