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November 4, 2016 logo logo
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[Guidance Overview]

What's the Impact of 2017 IRS Retirement Plan Limits?
"High-paid participants will now have more of their compensation 'counted' towards qualified plan benefits and less towards non-qualified plans. This could also help plans' nondiscrimination testing if the ratio of benefits to compensation decreases.... Plans may see marginally worse nondiscrimination testing results (including ADP results) if more employees with large deferrals or benefits become HCEs. It could make a big difference for plans that were previously close to failing the tests."
Van Iwaarden Associates


Phased Retirement Programs: Exploring the Issues

Sponsored by Lorman and BenefitsLink

Dec. 5 webinar. Learn practical and legal advice for implementing a phased retirement program. Identify the situations in which phased retirement may be beneficial, structure arrangements in such a way as to avoid the practical and legal pitfalls.

Text of Treasury Department Denial of Application for Suspension of Benefits by Ironworkers Local 16 Pension Fund (PDF)
"[A]fter reviewing the Application and consulting with PBGC and DOL, Treasury has determined that the suspensions described in the Application fail to satisfy the requirement set forth in Kline-Miller 'that the proposed benefit suspensions, in the aggregate, be reasonably estimated to achieve, but not materially exceed, the level that is necessary to avoid insolvency', because the mortality and the hours of service assumptions used for this purpose are not reasonable."
U.S. Department of the Treasury

The Reason for the DOL Rule: IRAs
"The primary reason for issuance of the Rule doesn't involve qualified retirement plans. Although litigation over the last decade has shown that hidden -- and therefore high -- costs exist even in multibillion-dollar 401(k) plans sponsored by giant corporations ... the $4.7 trillion held in 401(k) plans is relatively better regulated and incurs relatively lower costs than the $7.4 trillion held in IRAs.... The real reason for issuance of the Rule is to mitigate what the DOL regards as the bad effects resulting from the practices of some advisors providing conflicted investment advice and products to unsuspecting IRA owners."

Bill Could Add 'PEP' to 401(k) Multiple Employer Plans
"While the proposed [Retirement Enhancement and Savings Act (RESA)] addresses a variety of defined contribution plan issues, one of the key provisions would allow unrelated employers to enter into so-called pooled employer plans (PEPs), replacing today's far more limited shared 401(k) multiple employer plans (MEPs)."
Society for Human Resource Management [SHRM]

Society of Actuaries Updates Mortality Table
"The age-adjusted mortality improvement rates in the United States for those between the ages of 50 and 95 decreased for periods ending in 2009 and 2014. Based on the declining improvement in mortality, the rates in scale MP-2016 are lower than those in MP-2015."
Findley Davies

DB Plans Are Not Totally Disappearing
"The total number of retirement plans increased in 2014 to approximately 685,000 plans -- a 0.6% increase over 2013. The number of defined contribution (DC) plans grew by 0.5%, while the number of DB plans increased by 1.6%.... DB plan assets increased 4.2% to nearly $3.0 trillion, while DC plan assets increased by 6.3% to $5.3 trillion. However, ... in 2014, 21.4% of DB plans report being fully frozen. Also, 14.9% of total DB plan assets were frozen in 2014."

S&P 1500 Pension Funded Status Remains at 77% for Fourth Month in a Row
"The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies remained at 77 percent funded status at the end of October 2016, as an increase in discount rates was offset by negative equity markets. As of October 31, 2016, the estimated aggregate deficit of $530 billion represents a decrease of $21 billion as compared to the end of September 2016. The aggregate deficit is up $126 billion from the $404 billion deficit measured at the end of 2015[.]"


Speech by Karen Friedman at the American Academy of Actuaries' Annual Meeting and Public Policy Forum
"[T]here are two big problems that need to be solved. The first is ensuring that the PBGC is able to continue to pay benefits for the insolvent plans that it is already committed to supporting. The second is to solve the problem of so-called 'critical and declining' plans -- but not by allowing these plans to make the harsh benefit cuts authorized by MPRA. The MPRA cutback provisions must be repealed! And, of course, saving severely underfunded plans will make it a lot easier to ensure that the PBGC will have the capacity to meet its obligations to insolvent plans."
Pension Rights Center

Benefits in General

[Official Guidance]

Text of IRS Disaster Notice VA-2016-08: Tax Relief for Victims of Hurricane Matthew in Commonwealth of Virginia
"Victims of Hurricane Matthew that took place beginning on October 7, 2016 in parts of Virginia may qualify for tax relief from the [IRS].... Individuals who reside or have a business in Chesapeake, Newport News, Norfolk and Virginia Beach cities may qualify for tax relief.... [C]ertain deadlines falling on or after October 7, 2016 and on or before March 15, 2017 have been postponed to March 15, 2017."
Internal Revenue Service [IRS]

DOL Releases Form 5500 for 2016 Plan Year
"No changes have been made to the main body of Form 5500; minor changes have been made to some Schedules.... It seems likely that the DOL is keeping changes to a minimum in anticipation of the significant modifications it has proposed to take effect beginning with 2019 plan year filings[.]"
Thomson Reuters / EBIA

Three Signs You've Outgrown Your Benefits Technology
"[1] You get asked the same simple benefit questions repeatedly.... Employees want easy ways to access the benefits information they need at the time they need it.... [2] Your workforce is more diverse than ever before, and regulatory issues are making benefit strategies more complicated.... Being on the leading edge of technology that can support creative benefit strategies should be the focus of your software provider.... [3] You communicate with your employees through broad HR announcements primarily via email or paper communication.... Targeted messaging to subsets of your workforce is the modern way to engage employees."

Executive Compensation and Nonqualified Plans

Action Items to Prepare for 2017 Proxy Season
"[1] The SEC is on high alert for non-GAAP financial disclosures, including in the executive compensation area, [2] Pay additional attention to your director compensation programs and disclosure this year, in light of litigation and a renewed media and investor focus, [3] This would be a very good time to review your compensation risk assessment process and disclosure, in light of recent events, and [4] Do not forget the Say on Pay Frequency Resolution this year."
Winston & Strawn LLP

2016 End of Year Plan Sponsor "To Do" List, Part 1: Executive Compensation
"Last chance to correct certain Section 409A document failures discovered in 2016 ... Nonqualified deferred compensation deferral elections should be made on or before December 31, 2016 ... Consider shareholder reapproval of section 162(m) performance compensation plans approved in 2012 ... Review whether your equity-based compensation plan has sufficient shares remaining for 2017 grants ... Consider adding separate annual limits on director equity awards ... Code section 6039 information statements due by January 31, 2017 ... Review grant procedures for upcoming equity-based grants ... Review confidentiality language in existing agreements ... Consider revising stock-based incentive programs in response to FASB's new approach to share-based withholding."
Snell & Wilmer

Press Releases

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David Rhett Baker, J.D., Editor and Publisher
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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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