Retirement Plans Newsletter

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December 1, 2016 WEBCAST
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December 5, 2016 WEBCAST
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[Official Guidance]

PBGC Announces Premium Rates for 2017
"The per-participant flat premium rate for plan years beginning in 2017 is $69 for single-employer plans (up from a 2016 rate of $64) and $28 for multiemployer plans (up from a 2016 rate of $27). The increase in the single-employer rate was provided in The Bipartisan Budget Act of 2015. The increase in the multiemployer rate is the result of indexing."
Pension Benefit Guaranty Corporation [PBGC]


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[Official Guidance]

Text of PBGC Disaster Relief Announcement 16-14, in Response to Hurricane Matthew in Florida
"This Disaster Relief Announcement provides relief relating to PBGC deadlines.... The relief generally extends from October 3, 2016 through March 15, 2017. The disaster area consists of Brevard, Duval, Flagler, Indian River, Nassau, St. Johns, St. Lucie and Volusia Counties."
Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

Text of IRS Field Directive TE\GE-07-1016-0026 for EP Determinations on Pension Equity Plans (PDF)
Dated Oct. 18, 2016. "This memorandum ... provides direction to [Employee Plans Rulings and Agreements] employees on the application of the accrued benefit rules under section 411(b)(1)(G) ... to pending requests for determination letters by [pension equity plans (PEPs)].... Pending the issuance of guidance that will provide for more specific ways of complying with section 411(b)(1)(G), this directive contains a number of acceptable provisions for inclusion in plan documents."
Internal Revenue Service [IRS]

[Guidance Overview]

Guidance for the Post-Determination Letter Era
"The elimination of the interim amendment requirement means that plan sponsors need only amend their plans once to reflect a change in the law ... Once a change in the law in listed on the Required Amendments List, a plan sponsor will generally still have two more years for the adoption of the amendments.... [T]his could mean there will be a significant time lag between changes in the law and when plans must be amended to comply with the law. Accordingly, the new Operational Compliance List will become the critical roadmap for ongoing regular compliance efforts by plan sponsors."
Kilpatrick Townsend

More Regulatory Clarity, Better Products and Heightened Interest May Increase Prevalence of Annuities in 401(k) Plans
"Although many products offer riders to help beneficiaries in the event of an untimely death of the policy holder, an annuity is still generally viewed as a 'take it or leave it' choice. Consequently, few participants take advantage of annuities even when they are available, offering plan sponsors little incentive to take on potentially greater liability by offering them. Regulators would clearly like to see this resistance turned around."
Investment News


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Mortality Improvement Scale MP-2016
"The Retirement Plans Experience Committee of the Society of Actuaries (RPEC) is pleased to present this annual update to the RPEC_2014 model and its corresponding mortality improvement scales. This new version of the model reflects three additional years (2012-2014) of historical U.S. population mortality data (2012-2014) and modification of two input values designed to improve the model's year-over-year financial stability. For clarity, the updated mortality improvement scale based on this 2016 version of the model is called Scale MP-2016."
Society of Actuaries

UPS Offering Some Employees Lump-Sum Payments
"The population consists of former employees, from non-union and some union plans, who are vested in their respective U.S. pension plans but who have yet to retire ... The population is restricted to former employees who terminated their UPS employment between July 2003 and June 2016."
Pensions & Investments

Retiree Experiences Can Help Shape and Improve the Retirement Outlook for Future Generations
"Traditional pensions are a key component of income for retirees.... Pension replacement will be a key retirement planning issue.... Retirees love guaranteed lifetime income.... Retirees value professional financial advice.... Long-term care misconceptions are wide-spread ... The majority of retirees are not maximizing Social Security.... Retirees are not relocating en masse.... Retirement is more than a number."
Insured Retirement Institute [IRI]

Benefits in General

[Guidance Overview]

ERISA Violations Cost More Now
"The new method will adjust penalties for inflation, though the amount of the increase is capped at 150 percent of the existing penalty amount. The baseline is the last increase other than for inflation. [A] chart shows the new civil penalty amounts assessable by EBSA after August 1, 2016 for post-November 2, 2015 ERISA violations."
Solutions Law Press

Fifth Circuit Rule on Availability of Equitable Relief May Be In Doubt
"In the past the Fifth Circuit was of the opinion that the assertion of a 502(a)(1)(B) claim (claim for benefits) foreclosed the use of Section 502(a)(3) (equitable relief).... Based on its interpretation of Amara, the district court held that a plaintiff can alternatively plead a Section 502(a)(1)(B) claim and a Section 502(a)(3) claim, 'at least where there is a possibility that equitable relief may be necessary to make the plaintiff whole.' " [Currier v. Entergy Corp. Employee Benefits Comm., No. 16-2793 (E.D. La. Oct. 14, 2016)]
Harmon on Health Plan Law

Xerox Asked to Disclose What It Pays ERISA Lawyers
"After being ordered to recalculate workers' benefits in January, Xerox objected to the workers' request for attorneys' fees based on hourly rates between $250 and $675, arguing that an hourly rate of more than $300 would be unreasonable. On Oct. 19, Judge David G. Larimer of the U.S. District Court for the Western District of New York ordered Xerox to disclose the billing rates charged by its own attorneys, which Larimer said would provide the 'best evidence' for determining whether the workers' requested fees were reasonable[.]" [Frommert v. Conkright, No. 00-6311 (W.D.N.Y. Oct. 19, 2016]
Bloomberg BNA

Executive Compensation and Nonqualified Plans

[Guidance Overview]

SEC Staff Provides Guidance on CEO Pay Ratio Disclosure Rule (PDF)
"Although the rule provides companies with considerable latitude regarding how to identify the median employee, compliance is burdensome, particularly for large or multinational companies. The new [Compliance & Disclosure Interpretations (C&DI)] resolve a number of important questions and provide some clarity to companies as they prepare for compliance with the rule. Nevertheless, the scope of the C&DIs is limited and a significant number of open questions remain."
Sidley Austin LLP

[Guidance Overview]

Ten Challenging Areas of NQDC Plan Administration (PDF)
"[1] Payments to former employees -- overuse of the 25% optional federal tax withholding rate ... [2] Lost year-end bonus deferral elections ... [3] NQDC plans and [FICA] tax issues ... [4] Last payroll period vs. First payroll period ... [5] 401(k) hardship withdrawal suspensions ... [6] Requested employee deferrals not timely deducted from the participant's wages can be accelerated distribution violations under 409A ... [7] Evergreen enrollment elections -- new and improved -- proceed with caution ... [8] The beneficiary's payout elections ... [9] Non-qualified employee indicative data and indicative data changes ... [10] The 6-month delay for the specified employee group."
Russell Morgan NQDCSolutions, LLC

IRS Restricts Salary Deferrals for NQDC Plans
"IRS had indicated that its new rules would not respect salary deferral elections, as no rational employee would subject to a risk of forfeiture an amount he could elect to receive currently. The proposed regulations also backtrack on this threat, which would have limited contributions made by employers to 457(f) plans."

Press Releases

Josh Cohen is EBRI's New Research Committee Chair
EBRI [Employee Benefit Research Institute]

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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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