Retirement Plans Newsletter

October 27, 2016

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Employee Benefits Jobs

DC Valuations Specialist / Analyst
PenSys, Inc.
in CA

Retirement Administrative Manager
Bechtel Global Corporation
in CA

401(k) Administrator
Hunter Benefits Consulting Group, Inc.
in CO, IL, WA

Employee Benefits Attorney
Wiggin and Dana LLP
in CT

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Webcasts and Conferences

Face Plan Failures Head On!
November 1, 2016 WEBCAST
ASC

2016 Continuing Education for Trustees of Missouri Public Retirement Plans
November 10, 2016 in MO
Husch Blackwell

ERISA Current Developments
November 10, 2016 WEBCAST
ASC

Limiting Retirement Plan Liability in Light of Recent Litigation
November 16, 2016 WEBCAST
Husch Blackwell

Employee Benefits Briefing
December 7, 2016 in IL
Nixon Peabody LLP

The Opioid Epidemic and Your Benefit Plan
December 8, 2016 WEBCAST
International Foundation of Employee Benefit Plans [IFEBP]

IRA Reporting
December 13, 2016 WEBCAST
Ascensus

Keeping Current 2016: The Year in Review
December 13, 2016 WEBCAST
FIS Relius Education

Health & Benefits Leadership Conference
April 19, 2017 in NV
Human Resource Executive Magazine

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[Official Guidance]

Text of IRS Notice 2016-62: 2017 Limitations Adjusted as Provided in Section 415(d), Etc. (PDF)
"Effective January 1, 201 7, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $210,000 to $215,000.... The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2017 from $53,000 to $54,000.... The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $18,000.... The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $265,000 to $270,000 ... The limitation used in the definition of 'highly compensated employee' under Section 414(q)(1)(B) remains unchanged at $120,000 ... [T]he deduction for taxpayers making contributions to a traditional IRA is phased out for single individuals and heads of household who are active participants in a qualified plan ... and have adjusted gross incomes ... between $62,000 and $72,000, increased from between $61,000 and $71,000."
Internal Revenue Service [IRS]

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[Guidance Overview]

Self-Certification for Waiver of 60-Day Rollover Requirement (PDF)
"This new guidance encourages taxpayers to roll over their qualified plan or IRA distributions to preserve their retirement savings. For plan administrators and IRA trustees, it provides specific guidance that will allow them to make a determination as to whether a rollover contribution should be accepted after the 60-day deadline has been missed. This helps to avoid the acceptance of an invalid rollover."
VOYA Financial

Employee Stock Ownership Plan Participant Cannot Pursue Fiduciary Breach and Bad Faith Claim Against Insurer of Plan Fiduciaries (PDF)
"Applying Mississippi law, a federal district court has held that a participant in an employee stock ownership plan cannot pursue his claims against the insurer of the plan fiduciaries because those claims were previously released in a settlement agreement between the plan fiduciaries and the insurer.... In so deciding, the court explained that the dispute was whether the agreement actually released the plan fiduciaries' claims, whether the agreement constitutes an unenforceable anticipatory release, and whether the agreement is unconscionable." [Sealey v. Beazley Ins. Co., Inc., No. 15-768 (S.D. Miss. Aug. 16, 2016)]
Wiley Rein LLP

Hospitals Have More at Stake in Church Plan Litigation Than Huge Pension Liabilities
"Two of the three hospitals seeking Supreme Court review -- Advocate Health and Dignity Health -- have issued bonds. While it may be too early to speculate how the Supreme Court would rule if it takes up the cases, a ruling against these hospitals could affect their credit ratings and the bondholders."
Bloomberg BNA

The Next 10 Years Will Be Ugly for Your 401(k)
"It doesn't seem like much to ask for -- a 5 percent return. But the odds of making even that on traditional investments in the next 10 years are slim, according to a new report ... The company looked at the default settings of 11 retirement calculators, robo-advisers, and surveys of institutional investors. Their average annualized long-term expected return? 6.2 percent. After 1.6 percent was shaved off to allow for a decade of inflation, the number dropped to 4.6 percent, which was rounded up."
Bloomberg

How a Simple Two-Fund Portfolio Can Boost Your Retirement Returns
"U.S. equity investors typically concentrate their money in large-cap blend funds and so-called total-market funds, all of which tend to move in close step with the S&P 500. But there's lots more money to be made, in the long run, for investors willing to venture into value stocks and small-cap stocks."
MarketWatch

Mutual Fund Sales by Intermediaries: Fall-Out from DOL Fiduciary Rule and FINRA Enforcement (PDF)
"As the mutual fund industry continues to evaluate the plans and proposals that may be advanced by intermediaries in light of these developments, it is important to be mindful of potential business, legal and regulatory implications, each of which presents distinct challenges. This [article] summarizes recent enforcement and regulatory developments thought to be primarily responsible for this re-examination, as well as responses that are reportedly being proposed or considered by intermediaries with respect to mutual fund sales charges and share class structures."
Dechert LLP

[Opinion]

Variable Benefit Plans: The Future of Retirement?
"[V]ariable pensions suffer from the same deficiencies as DC plans, namely, they only invest in public markets and are subject to the vagaries of the stock market. Only difference is if the plan has a bad year, benefits are automatically adjusted down, which is no skin off the employer's back. There is zero risk-sharing going on here (employees assume all the risk in bad years)."
Pension Pulse

[Opinion]

How the Internet Destroyed Active Mutual Funds
"With recent advisor surveys suggesting that as many as 1-in-5 financial advisors could leave the industry in the wake of the DOL fiduciary rule, the potential arises that there will soon be a wave of advisory firms looking to sell. For those who are thinking about selling, this suggests there may be a race to get out the door first, before the glut of sellers causes advisory firm valuations to crash. And woe to the advisor who was 'coincidentally' planning to sell and retire in the coming years."
Michael Kitces in Nerd's Eye View

Executive Compensation and Nonqualified Plans

[Guidance Overview]

SEC Releases Helpful Guidance for Application of New Pay Ratio Rule (PDF)
"The new [Compliance and Disclosure Interpretations (CDIs)] contain additional guidance with regard to [1] the treatment of furloughed employees [2] when compensation can be computed using a method different than that used to compute the compensation reported in the Summary Compensation Table (SCT), [3] permissible time periods over which compensation can be measured, and [4] treatment of independent contractors and leased employees."
FW Cook

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, 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 BenefitsLink.com, 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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