Retirement Plans Newsletter

November 30, 2016 logo logo
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Employee Benefits Jobs

401(k) Consultant
Creative Retirement Systems
in OH, Telecommute

Client Service Associate
Wells Thomas, LLC
in CT

Actuary / Pension Consultant
Hallett Associates
in PA

Defined Benefit Pension Plan Administrator
Consulting Firm
in NJ

Account Executive/Consultant - Retirement Svcs
Lockton Insurance Brokers - Pacific Series
in CA

Exclusive Retirement Plan Consulting Opportunity
Associated Pension Consultants
in CA

Retirement Plan Administrator / Consultant
Boyce & Associates, Inc.
in AZ

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Webcasts and Conferences

Top Issues for Plan Sponsors and Fiduciaries to Watch in 2017
December 15, 2016 WEBCAST
Morgan Lewis & Bockius LLP

Advanced Testing: 410(b) Coverage Testing of Combo Plans, ESOPs, and 403(b) Plans
January 11, 2017 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

Just for ERPAs Workshop
January 31, 2017 in FL
FIS Relius Education

Advanced Pension Conference
February 1, 2017 in FL
FIS Relius Education

View All Webcasts and Conferences

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[Official Guidance]

2016 IRS Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (PDF)
"If you only owe the additional 10% tax on early distributions, you may be able to report this tax directly on Form 1040, line 59, or Form 1040NR, line 57, without filing Form 5329. See the instructions for Form 1040, line 59, or for Form 1040NR, line 57."
Internal Revenue Service [IRS]


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.

[Guidance Overview]

IRS Issues Proposed Regs on Minimum Present Value Requirements for DB Plans
"[T]he proposed regulations would: [1] Update the regulations for ... the new interest rates and mortality tables ... and the exception from the valuation rules for certain applicable defined benefit plans ... [2] Clarify that the interest rates that are published by the IRS Commissioner under the provisions modified by the PPA are to be used without further adjustment.... The proposed regulations also address whether a plan that provides a death benefit equal in value to the participant's accrued benefit may apply a preretirement mortality discount for the probability of death when determining the amount of a single-sum distribution."
Practical Law Company

What 2,767 Small Business 401(k) Plans Are Doing
"68% of plans use a safe harbor 401k plan design to avoid annual ADP/ACP and top heavy Only 8.71% of plans automatically enroll employees that fail to make an affirmative enrollment election. 96% of plans permit after-tax Roth 401k contributions. 37% of plans permit non-safe harbor employer matching contributions. 65% of plans permit employer profit sharing contributions. A new comparability profit sharing contribution is most commonly combined with a safe harbor 3% nonelective plan design. Pro rata and integrated profit sharing contributions are most commonly combined with the 3 match-based safe harbor 401k plan designs."
Employee Fiduciary

Retirement Plans Incur Data Breaches; ERISA Council Addresses Cyber Risks
"Apart from protecting online data, plan administrators are seriously concerned about the following: [1] Is cybersecurity a fiduciary responsibility under ERISA? If so, in some cases plan fiduciaries may have personal liability under ERISA for the consequences resulting from data breaches. [2] Are state cybersecurity laws and regulations pre-empted by ERISA? If not, in the event of a data breach, administrators of plans with participants residing in multiple states will have a daunting task in determining which laws and regulations apply."
McGuireWoods LLP

Whatever Happened to That Old 401(k)?
"When the [DOL] recently studied the public filings of 50 large pension plans in the six states that fall within its Philadelphia office's jurisdiction, it found more than 70,000 participants older than 65 ... who were entitled to 'well over $100 million in annual benefits' but weren't collecting them ... When the agency contacted over 5,000 of these people, it discovered 'a very large percent didn't know they even had a pension'[.]"
The Wall Street Journal; subscription may be required

PBGC Proposes Missing Participant Program for Terminated Defined Contribution Plans (PDF)
"[T]he PBGC has released a proposed rule that would expand the missing participant program to terminating defined contribution plans including: 401(k) plans, profit sharing plans, employee stock ownership plans, stock bonus plans, 403(b)(7) plans and abandoned plans.... This program can be a useful option for defined contribution plan sponsors after the elimination of the Social Security Administration's letter forwarding service on May 19, 2014."
VOYA Financial

Long-Term Pension Policy Considerations with an Aging Population (PDF)
"An aging population and low fertility rates are two major demographic challenges facing the world today and, more specifically, U.S. public sector pension plans. Both of these challenges create a rising fiscal burden whose effects reverberate through all public sector populations. Risk pooling for retirement and health care benefits begins to lose its effectiveness as populations tilt more toward the aged person whose life expectancy is increasing with each future generation."

Single Premium Pension Buy-Out Sales Nearly $6 Billion in the Third Quarter 2016
"Activity in the first nine months of 2016 is slightly higher (less than 1 percent) than the first nine months of 2015, totaling more than $8 billion. As of Sept. 30, 2016, 17,165 buy-out contracts were reported, up 0.7 percent. The Institute reports 225 plan sponsors have converted their defined benefit (DB) pension plans to group annuity contracts year to date. This is an all-time high and 17 percent higher compared with prior year."
LIMRA Secure Retirement Institute

Will Trump Policies Kill Most Traditional Pensions? Maybe
"If Trump administration economic policies end up boosting inflation and interest rates, as investors and some economists seem to believe, defined benefit pension plan funding ratios stand to be strengthened.... Interest rates and plan terminations may not accelerate, however, as much as investors think. Nevertheless, pension plans are likely to continue looking for ways to free themselves from plan risks."
Bloomberg BNA

Teachers to Sue Kentucky Governor Over Underfunding of Pensions
"Jefferson County teachers who are fed up with the state government's failure to properly fund their pensions plan to sue Gov. Matt Bevin and two other high-ranking officials over the financial quagmire.... They hope the lawsuit will lead to a ruling that requires the state to fulfill its fiscal obligations to the Kentucky Teachers' Retirement System, which has been inadequately funded for years ... Teachers are contributing over 12 percent of their paychecks to KTRS[.]"
The Courier-Journal

Fact Sheet: What Is a Qualified Domestic Relations Order and Why Should I Care?
"A retirement plan can be the largest asset in a marriage. Nonetheless, retirement plans are often forgotten or overlooked during divorce, in part because divorce is so complicated and in part because a divorce can occur years before retirement -- and who's thinking about retirement when it's 10 or 20 years down the road? If they don't have the right kind of court order, people going though divorce could neglect a significant portion of the marital assets and put themselves at risk of economic insecurity in retirement."
Pension Rights Center


ERIC Responds to GAO Survey on Retirement Savings
"The GAO's recent survey contains recommendations regarding retirement savings that are severely flawed.... [T]he recommendations fail to take into account that a retirement plan is just one piece of the compensation package for an employee and that eligibility, vesting, and company contribution rules are in place to provide an employer flexibility in its ability to recruit, retain, and reward employees.' "
The ERISA Industry Committee [ERIC]


The Presidential Election: Implications for the DOL Fiduciary Rule
"[The author's] feeling is that the fiduciary rule will be retained, but modified.... [T]he fiduciary rule wasn't the source of the greatest objections to the DOL's guidance. Instead, that was the Best Interest Contract Exemption (BICE).... [T]here is an argument that a rule that requires that retirement money be invested in the best interest of the investor is not, in and of itself, objectionable.... [B]ecause of the ongoing retirement of baby boomers, many of whom are unsophisticated investors, and the rollover of their money to IRAs, there may be a perceived need to protect retirees."

Benefits in General

Employers Alter Benefits to Attract, Retain Employees
"Nearly one-fifth of HR professionals altered their benefits program to aid in the retention of employees over the past 12 months. Of these organizations, about three-fifths altered their health care benefits; more than one-third altered their flexible working, retirement savings and planning, leave, and professional and career development benefits as well. About three-fifths of respondents indicated that benefits for professional and career development, flexible work, health care, and retirement savings and planning will increase in importance to retain employees in the next three to five years."
Society for Human Resource Management [SHRM]

A Trump Presidency: What Does It Mean for Employee Benefits?
"The most significant [changes] are likely to be: [1] Major changes in the [ACA] (although the timing and extent of such changes are unclear), combined with expansion of health savings accounts. [2] Postponement or elimination of the recently issued [DOL] fiduciary regulations. [3] Loosening of executive compensation rules. [4] Further cutbacks in IRS guidance and audit activity. [5] Increased hostility to consideration of noneconomic factors in selecting retirement plan investments. [6] Diminished enforcement of protections for LGBT employees. [7] Increased activity at the state level, including establishment of state-sponsored retirement plans for private employers."
Venable LLP

Press Releases

DOL Files Suit Alleging Michigan DHHS, Kalamazoo Psychiatric Hospital Violated Family and Medical Leave Act
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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