Retirement Plans Newsletter

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Employee Benefits Jobs

401(k) Retirement Plan Administrator
Nicholas Pension Consultants
in CA

Sr Manager, Legislative and Regulatory Strategy
T. Rowe Price
in MD

Implementation Consultant
T. Rowe Price
in CO

Lead Manager, Retirement Plan Services
T. Rowe Price
in MD

Client Account Manager
T. Rowe Price
in MD

Senior Plan Compliance Consultant
T. Rowe Price
in CO

Specialist, Plan Implementation
in OH

Qualified Plan Administrator
The Plexus Groupe, LLC.
in IL

Senior Pension Administrator
Scholz & Friends Enlightened Retirement Group, Inc.
in TX

Qualified Retirement Plan Administrator
Compensation Planning Inc.
in RI

Retirement Services Analyst
in CT

Pension Plan Administrator
DeMars Pension Consulting Services, Inc.
in KS, MO

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[Guidance Overview]

PBGC Proposes to Change, Expand Its Missing Participant Program for Terminated Plans (PDF)
"Proposed regulations would open PBGC's existing missing participant program in 2018 to terminated defined contribution plans, PBGC-insured multiemployer plans, and certain small professional service defined benefit plans. PBGC also proposed changes to its existing program aimed at aligning search requirements with DOL guidance and simplifying the rules for determining transfer amounts. The guidance would give sponsors considering plan terminations in the coming years new options for dealing with missing participants -- but does not address the missing participant problem in the case of distributions from ongoing plans."
Xerox HR Services


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[Guidance Overview]

IRS Finalizes Partial Annuity Regulation
"[If] a plan provides an early retirement benefit, a retirement-type subsidy, an optional form of benefit, or an ancillary benefit that only applies to part of the participant's benefit, then the plan must identify which portion of the participant's benefit is being paid as a lump sum. And, where the plan has eliminated an optional form but (because of Tax Code anti-cutback rules) preserved that eliminated optional form for part of the participant's benefit, then the plan must use the explicit bifurcation method."
October Three Consulting

Notes from Meeting of Actuaries 'Intersector Group' with PBGC, September 2016 (PDF)
4 pages. Topics include: [1] MPRA exclusion of certain contribution increases required by funding improvement and rehabilitation plans from withdrawal liability -- timing and scope of regulations ... [2] MPRA partitions -- evolution of PBGC philosophy on non-impairment provision ... [3] Policy on refunding premiums when sponsor learns a participant died with no spouse/beneficiary entitled to plan benefits several years in the past ... [4] 4010 filings ... [5] Viability of PBGC multiemployer program ... [6] Discussion issues raised by PBGC representatives.
American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA]

Notes from Meeting of Actuaries 'Intersector Group' with IRS, September 2016 (PDF)
5 pages. Topics include: [1] Guidance timing and priorities ... [2] Instructions for 2015 Form 5500 Schedule H/I line 4L and Form 5500-SF line 10f ... [3] Updating outdated mortality tables ... [4] Current processing time for approvals of shortfall and other funding method requests ... [5] Valuation of variable-annuity plans for funding, 417(e), etc.... [6] Multiemployer Pension Reform Act (MPRA) suspensions ... [7] Church plan litigation ... [8] Treating early retirement factors as benefits, rights, and features for nondiscrimination testing ... [9] Intersector Group suggestion to offer a special one-time determination letter opportunity within the next two years, solely for hybrid plans forced to change their interest crediting rate to comply with the final rules
American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA]

ERISA Fiduciary Litigation Update: Court Reiterates Priority of Process Over Results for 401(k) Plan Sponsors
"The court makes clear repeatedly that there are few, if any, per se fiduciary breaches with respect to 401(k) investment management decisions.... [In] order to survive early dismissal, plaintiffs will need to do more than make summary allegations of breach; rather, they will need to allege specific facts that give rise to a 'reasonable inference' of wrongdoing. Moreover ... those facts must be oriented toward a failure of the decision-making process rather than to a hindsight analysis of results." [White v. Chevron, No. 16-0793 (N.D. Ca. Aug. 29, 2016)]
K&L Gates LLP


SALGBA Regional Conferences: vital information for public sector benefits professionals

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A Sigh of Relief from Plan Sponsors Over the New Fiduciary Standard
"Unlike earlier versions of the regulation, most activities and communications by plan sponsors will not be considered fiduciary in nature. You can continue to do what you normally do -- communicate with participants about where they might want to invest, discuss with your investment committee their responsibilities, and so on -- without becoming a plan fiduciary. Advice services such as managed accounts, Financial Engines, and others were already fiduciary in nature, so there's no change there."

Fiduciary Rule Prompts ETF Price Cuts at Blackrock
"Asset managers already have been reducing prices on ETFs to attract individual and institutional investors frustrated with the higher expenses and lackluster performance of some actively managed funds.... BlackRock's move is part of a race to the bottom on fees for ETFs and other retirement-savings products. In August, Schwab announced that it was introducing low-priced target date funds for retirement accounts with an expense ratio of 8 basis points and no minimum investments."
Financial Planning

Insurers Will Benefit From Pension Risk Transfer Demand
"[C]orporate pension shortfalls totaled $369 billion among companies in the S&P 500 in 2015 ... This corporate shortfall -- combined with an estimated $3.4 trillion shortfall in U.S. public pension plans and a rise in the use of pension risk transfer mechanisms in the U.K. and Canada -- should keep demand for pension risk transfer services brisk.... About 15 insurers control 90% of the group annuities market, given high barriers to entry, which put them in an good position going forward."

S&P 1500 Pension Funded Status Remains Low as Third Quarter Closes
"The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies remained low at 77 percent funded status during September 2016 ... As of September 30, 2016, the estimated aggregate deficit of $551 billion USD represents a decrease of $19 billion as compared to the end of August 2016. The aggregate deficit remains down by $147 billion USD from the $404 billion USD deficit measured at the end of 2015[.]"

2016 Public Pension Funding Study (PDF)
"As of June 30, 2016, the aggregate funded ratio is estimated to be 69.8% ... Plan sponsors continue to reduce interest rate assumptions in the expectation that returns over the coming decades will be lower. The difference between the average sponsor-reported assumption of 7.50% and our independently determined assumption of 6.99% is the highest we have seen, indicating that pressure to reduce interest rate assumptions is unlikely to abate."

Benefits in General

[Guidance Overview]

Form 5500 Updates and Increased ERISA Penalties
"The proposed changes would also add more detailed reporting of amounts paid for salaries, audit fees, recordkeeping fees, trustee and custodial fees, actuarial fees, legal fees, valuation fees, and trustee expenses, including travel and meetings.... The proposed changes ... would require all ERISA-covered plans that provide group health benefits to file Form 5500, regardless of size and even if the plan is fully insured or unfunded."
Frost Brown Todd LLC

Court Finds Employee Benefit Trust Fund's Trustee, Legal Counsel Liable for Retaliating Against ERISA Whistleblower
"[T]he employee complained to DOL about the trustee's interference with her efforts to collect delinquent contributions from contractors who were required to contribute to the fund. After learning of the employee's contact with DOL, the trustee, on the advice of the fund's legal counsel, suspended the employee from her employment with the trust and, less than six months later, fired the employee.... [T]he court concluded that the employee's suspension and termination were a direct result of her communication with the DOL." [Perez v. Brain, No. 14-03911, (C.D. Cal. July 25, 2016)]
The Wagner Law Group

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