Retirement Plans Newsletter

October 10, 2016 logo logo LinkedIn logo Twitter logo Facebook logo
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Employee Benefits Jobs

Webcasts and Conferences

ACA Outreach for State and Local Governmental Employer Community
October 20, 2016 WEBCAST
IRS [Internal Revenue Service]

Retirement Plan Law Suits on the Rise
October 25, 2016 WEBCAST
HANYS Benefit Services

Lower the Fee, the More for Me? Figuring Out 401(k) Fees
October 27, 2016 in DC
Worldwide Employee Benefits Network [WEB] - Washington Metropolitan Chapter

Nonprofit Fiduciary Summit
November 2, 2016 in DC

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[Guidance Overview]

IRS Updates Plan Correction Program and Modifies Criteria for Monetary Penalties in Plan Audits (PDF)
"Generally, this updated EPCRS revenue procedure does not introduce new concepts, but [1] incorporates 'correction' guidance previously issued by the IRS in 2015 ... and [2] modifies EPCRS to take into account the major changes to the determination letter program for individually designed plans[.]"
Groom Law Group


Face Plan Failures Head On!

Sponsored by ASC

Learn how to prevent plan disqualification! Based on real-life scenarios, see how common & not-so-common plan failures can be fixed using EPCRS. Join Charles Lockwood, J.D., LL.M. Nov 1st for the webcast. Register today!

Future Higher Sanctions Implied in IRS's Update of Plan Correction Procedures?
"Normally, when a practitioner files for a client under VCP, there is a set user fee that is based on the type of problem the plan experienced and the number of participants. Under this new language, however, the IRS has reserved 'the right to impose a sanction that may be larger than the user fee' for any submission based on its belief that there was an action taken that was knowingly a failure and predominantly benefited highly compensated employees[.]"
Bloomberg BNA

Putting the Pension Back in 401(k) Plans: Optimal Versus Default Longevity Income Annuities
"[I]ntroducing a longevity income annuity [LIA] to the plan menu is attractive for most DC plan participants who optimally commit 8-15% of their plan balances at age 65 to a LIA that starts paying out at age 85. Optimal annuitization boosts welfare by 5-20% of average retirement plan accruals at age 66 (assuming average mortality rates), compared to not having access to the LIA.... [An] approach where a fixed fraction over a dollar threshold is invested in LIAs will be preferred by most to the status quo, while enhancing welfare for the majority of workers."
National Bureau of Economic Research [NBER]

Searching for the Right Fiduciary: The RFP Process
"Anyone who has reviewed bid documents from public and corporate plan sponsors will likely conclude that there is not much consistency, especially for due diligence and governance assignments.... Another way to go would have the plan sponsor hire someone to interview its in-house fiduciaries, identify and rank their major concerns and then use that information to create a structured Request for Information or Request for Proposal ('RFP') that would be distributed to potential review firms."
Pension Risk Matters

Why Robo-Advisors Meet the Lofty Fiduciary Standard When So Few Humans Can
"A prominent law firm is putting its reputation on the line by stating unequivocally that, yes, a robo-advisor can meet the legal standard of a fiduciary.... Industry watchdogs have staked out differing positions on the crucial point of whether a robot can put humans first. The [DOL] seems to see them as potential boons to retirement savers thanks to their low fees, while the SEC frets that the automated component inherent in the very name of the sector may lead to incorrect assumptions that generate subpar advice -- basically, that you get what you pay for."


Target Date Funds: What You Need to Know

Sponsored by Lorman and BenefitsLink

October 21 webinar, with Joan Neri of Drinker Biddle. Learn what distinguishes a custom target date fund from an off-the-shelf target date fund. Plan fiduciaries will learn about your fiduciary responsibilities in selecting target date funds and the prudent process that can be undertaken to fulfill these duties and minimize risk.

Merrill Lynch's Move to End Commission IRAs a 'Tectonic Shift' for Brokerage Industry
"The firm, which houses more than 14,000 advisers, will no longer offer new, advised commission-based individual retirement accounts beginning April 10, the implementation date for the rule. Rather, it will migrate clients to its advisory platform, self-directed brokerage or robo advisory service. And, it could push the other large brokerages to respond in a similar way."

A $122,000 Mistake: Choosing Salary Over Retirement Benefits
"Both of her salary offers were $50,000, but if you added in the retirement plan matches, one offer was $51,500, while the other offer was $55,000.... The 7 percentage point difference is worth about $122,000 over the next 15 years of her employment. Seeing as though Jen is only 30 years old, she could conceivably work at her new job for decades, which would drive the impact of her decisions into the hundreds of thousands of dollars range."

New York City Comptroller Unveils 3-Pronged Retirement Program for Private-Sector Employees
"Under the umbrella title of 'New York City Nest Egg,' [New York City Comptroller Scott M. Stringer] proposed creating: [1] The Empire City 401(k), which would enable employers to join a single, publicly sponsored 401(k) plan based on a new federal law allowing multiple employers that are unaffiliated to join a single plan. [2] The NYC 401(k) Marketplace, a voluntary exchange overseen by an independent board that would offer employers a choice of 'screened, competing 401(k) and other retirement plans from private and public providers' ... [3] The NYC Roth IRA, an automatic default designed for eligible private-sector employers that do not select a plan on their own or through the NYC 401(k) Marketplace."
Pensions & Investments

Disability and the Exception to 10% Early Distribution Penalty
"Many people, both advisors and IRA owners alike, think that if they are receiving any sort of disability payment that they will qualify for this penalty exception. Unfortunately, that is not true."
Slott Report

Press Releases

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