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[Official Guidance]

Text of 2017 Instructions for IRS Form 1098-Q: Qualifying Longevity Annuity Contract Information (PDF)
"File Form 1098-Q ... if you issue any contract that is intended to be a qualifying longevity annuity contract (QLAC).... A QLAC is an annuity contract that is purchased from an insurance company for an employee under any plan, annuity, or account described in section 401(a), 403(a), 403(b), or 408 (other than a Roth IRA) or eligible governmental plan under section 457(b), and that ... satisfies each of [certain specified] requirements."
Internal Revenue Service [IRS]


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Automatic Retirement Plan Features Give Millennials an Early Start
"Plans with automatic enrollment features see an average participation rate of 78% -- 9% higher than participation in plans without automatic enrollment. Plans that combine automatic enrollment and automatic increase have an average participation rate of 81%."

Is Big Law Ready to Retire? Largest 401(k) Plans in the Industry
"To put the 401(k) plans of the law firms in perspective, compare those plans with those sponsored by big name companies. While these plans in corporate America are extremely large, the average account balances are quite small when compared with those in the legal industry."
Bloomberg BNA

When Is an Organization a 'Church' That Sponsors a Retirement Plan?
"[N]othing ever defines just what qualifies as a 'church.' In the 403(b) world, we often refer to them as 'steeple churches,' but that seems just to beg the question as well.... The IRS has made a game try at defining it, informally ... in its Publication 1828.... Note that the [IRS] uses all the facts and circumstances ... in making a determination."
Business of Benefits

Second Circuit Addresses ERISA Plan Participation in Securities Lawsuit Settlements
"The Court was asked to determine whether AIG's ERISA plans -- three 401(k) plans and one defined benefit plan -- were properly excluded from the class of shareholders participating in the settlement because they were deemed 'affiliates' of AIG. The Second Circuit concluded that the Plans were not affiliates and thus could participate in the settlement. But it left for another day the issue of whether the Plans could submit their claims on a plan-wide level or on a participant-by-participant basis." [In re Am. Int'l Grp., Inc. Sec. Litig., No. 14-4067 (2d Cir. Sept. 20, 2016)]
Proskauer Rose LLP


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Retired Wells Fargo Adviser Claims Firm Violated Fiduciary Duty with 401(k) Plan
"The plaintiff, John Meiners of St. Louis, is suing Wells and the fiduciaries for the defined-contribution retirement plan ... Meiners worked for Wells since 1984, most recently as a senior vice president ... The Wells Fargo retirement plan has 350,000 participants and $35 billion in assets, making it one of the largest retirement plans in the country, according to the lawsuit."
On Wall Street

What's Next for the DOL's Fiduciary Rule?
"The final rule has already had a major impact on the financial services industry. Broadly, the industry has sorted itself into two camps: those financial institutions that will no longer offer commission-based products to their retail retirement clients; and those who will rely on the DOL's so-called 'best interest contract' or 'BIC' exemption to continue to accept third-party payments and pay brokers and private wealth managers on a commissioned basis.... Outlined [in this article] are options available to the President and Congress should they align with the rule's many detractors and elect to repeal, revise or delay the rule's applicability."
Shearman & Sterling LLP

Emergency Request to Halt Fiduciary Rule Filed in Appeals Court
"After losing two rounds with a district judge, NAFA on Nov. 29 filed an emergency motion asking the U.S. Court of Appeals for the D.C. Circuit to halt the rule while NAFA's appeal proceeds. NAFA claims that without a delay, the annuity industry will be forced to take 'irreversible, costly, and industry-altering actions' that would render the D.C. Circuit's ultimate decision 'meaningless.'"
Bloomberg BNA

Beyond Labels: Issues in Target-Date Fund Evaluation and Selection
"[T]here are more dimensions to risk in the glide path than equity alone.... [T]oday's highest-rated manager is unlikely to be tomorrow's highest-rated manager.... Why would a plan sponsor need to customize an approach that already exists in some form, likely at a more reasonable price? ... [I]ndex-based investing faces certain limitations in the TDF context."
American Century Investments

Pension Funding Deficits 'Nearly a Third of U.K. GDP'
"Britain's mammoth funding gap for gold-plated company pensions stands at nearly a third of the country's economic output despite a 50 billion GBP boost in November.... This marks the third month in a row that the funding gap has improved after hitting a record high 710 billion GBP in August. But the pensions black hole is still 110 billion GBP higher than it was at the start of the year and is equivalent to almost a third of the UK's entire gross domestic product (GDP)."


Company Stock in Your 401(k): Yes, It's Still a Bad Idea
"Even if a company's shares don't go down the tubes in Enron-like fashion, employees who invest heavily in company stock are commingling their financial capital with their human capital, and making their financial plans unnecessarily risky along the way."

Executive Compensation and Nonqualified Plans

Caution on Transferable Equity Award Provisions
"ISS indicates that it will recommend against equity plan proposals if the details of an ongoing [Transferable Stock Option (TSO)] program are not provided to shareholders.... If a company's equity plan provides for the transferability of equity awards to third parties, and the [TSO disclosures] are not made (which ISS will then evaluate on a case-by-case basis), then the company can expect a negative ISS vote recommendation on their equity plan proposal even if they have run the ISS Equity Plan Scorecard model and believe the plan will pass muster."

ISS Issues Proxy Policy Updates for 2017
"ISS generally recommends a vote against the plan proposal if the combination of the [equity plan scorecard (EPSC)] factors indicates that the plan is not, overall, in shareholders' interests, or if certain egregious factors apply. For 2017, ISS made minor changes to various factor weightings, but only two recognizable changes to the EPSC."
Winston & Strawn LLP

2016 Director Compensation Report (PDF)
"[T]otal compensation increased by 1.3% at the median of the total sample versus last year's study, which reflects an apparent stabilization of director pay among large- and mid-cap companies in particular.... The mid-cap median of $200,000 reflects only a 1.1% increase from last year, while the small-cap median of roughly $145,000 reflects a larger increase of 6.0%. Technology continues to be the highest-paying sector ... and Financial Services the lowest, consistent with recent years."
Fw Cook

2016 Year-End Key Executive Compensation Reminders and Considerations
"Although 2017 may bring significant changes to the executive compensation landscape, [this article provides] a brief summary of the key executive compensation-related reminders and considerations that remain important for public companies to consider as we approach next year's proxy season."
Latham & Watkins

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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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