Retirement Plans Newsletter

December 2, 2016

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Employee Benefits Jobs

Senior Pension Administrator
Scholz & Friends Enlightened Retirement Group, Inc.
in TX

401k Plan Administrator
Qualified Services, Inc
in CA

NF Tech Operations Manager
Nationwide
in OH

Defined Contribution Plan / 401k Plan Administrator
N.A. Falcone & Associates, Inc.
in PA

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[Guidance Overview]

IRS Proposes More Changes to Minimum Present Value Calculations (PDF)
"Proposed regulatory changes from IRS would update the rules for calculating the minimum value for certain defined benefit plan distributions -- primarily lump sums from plans that are not eligible for the cash balance (hybrid plan) exception. The changes incorporate PPA segment rates and the PPA mortality tables, establish a standard for reflecting pre-retirement mortality, and provide an example of how the rules apply in calculating Social Security level income options."
Xerox HR Services

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SEC Says Appeals Court Should Take on Pension Fund Lawsuit Against Exchanges
"In an amicus brief requested by the [Second Circuit], the [SEC] said the U.S. District Court has jurisdiction over the case filed by investors including the $5.3 billion Plumbers and Pipefitters National Pension Fund, Alexandria, Va.; $4 billion State-Boston Retirement System and the $1.1 billion U.S. Virgin Islands Government Employees' Retirement System, St. Thomas. The plaintiffs, also including the city of Providence R.I., claimed that the New York Stock Exchange, Nasdaq and Bats Global Markets offered services to high-frequency traders that allowed them to use data faster than ordinary investors." [In re Barclays Liquidity Cross and High Frequency Trade Litigation, No. 14-2589 (S.D.N.Y. Aug. 26, 2015; on appeal to 2d Cir.)]
Pensions & Investments

401(k) Plan Fee Litigation Update
"[T]wo notable cases may indicate an extension of fee based claims into the small/mid-size 401(k) plan market: Checksmart ($25M) and LeMettry's Collision ($9M). Whether an expansion of fee-based claims to the small/mid-size plan market can be characterized as a trend is still to be determined.... [T]he larger plans can leverage their size to negotiate better fee deals. On the other hand, the potential recovery from a smaller asset pool (and the corresponding attorney fee award) is considerably smaller so it is possible that these small plan cases may simply be outliers."
Miles & Stockbridge

The Potential Downside of Automatic Enrollment in 401(k) Plans
"While the practice of automatically enrolling employees into a company retirement plan does boost savings, it's also correlated in some cases with increased consumer debt, serving as a counterbalance to savings benefits."
InvestmentNews

Should Your Employer Go Full Robo on Your Retirement Savings?
"Why would a company choose a 401(k) upstart over the long-established pros? ... [L]ower fees; managed, personalized portfolios for all participants; no conflicts of interest in fund selection; and a modern, intuitive user interface."
Bloomberg

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Who Does the DOL's Conflict of Interest Rule Apply To?
"[A] 3(21) administrative fiduciary is irrelevant because it has nothing to do with investing.... We can also ignore ... a 3(21) discretionary decision-maker such as an ERISA section 3(38) investment manager -- because, in making such decisions, the benefits of the Rule are not available to fiduciaries that receive variable compensation in exchange for rendering discretionary investment advice ... [It's] only ... a 3(21) non-discretionary advice-giver which the Rule pertains to: [1] a fiduciary [2] that renders (non-discretionary) investment advice [3] for compensation. All three of these elements must be present in order for the Rule to apply to an advisor communicating with a plan participant or an IRA owner."
Morningstar Advisor

State and Local Government Pension Risks (PDF)
30 presentation slides. "Despite large contribution increases and benefit cuts (primarily for new workers), U.S. public pension underfunding remains near record, almost as severe as at end of recession.... As interest rates fell and investing environment became more difficult, public pension plans maintained earnings assumptions and increased investment risk.... Incentives & institutions encourage risk taking. Lowering earnings assumptions would require large contribution increases."
Rockefeller Institute of Government

Pension Finance Update, November 2016
"Well, that was a weird month. It started with the Cubs winning the World Series and ended as the best month for pension sponsors this year. In-between, we had a presidential election with a surprising outcome.... Both model pension plans ... enjoyed strong improvements in funded status during November -- Plan A improved by 5% and Plan B by more than 1% last month -- pushing both plans into positive territory for the year, up almost 1%."
October Three Consulting

Retirement as We Know It May Become Extinct (PDF)
"While most of today's retirees (83 percent) are not currently working or never have during their golden years, the majority (83 percent) of millennials plan to work in retirement.... More than half (56 percent) of respondents don't anticipate needing more than $1 million, and nearly one in five (19 percent) simply 'don't know' their number.... The majority (70 percent) of millennials describe their investment approach as 'hands on,' compared to 60 percent of all respondents."
Merrill Edge

A Comparison of Free Online Tools for Individuals Deciding When to Claim Social Security Benefits
"This note provides information on six publicly available online retirement planning tools that focus primarily or exclusively on the Social Security claiming decision. It explains their advantages and limitations, what types of information the tools require of the user (inputs), and what types of information the tools provide (outputs).... The six tools ... are available to the public, do not require the user to create an account with the organization, and are free to use."
U.S. Social Security Administration [SSA]

Another Question is Answered in the Who's the Employer Q&A Column
"A owns 100% of A, Inc., a dental practice which sponsors a 401(k) plan. B similarly owns 100% of B, Inc., another dental practice with its own plan. A and B want to buy 50/50 D, Inc., the practice of a deceased dentist in another city. The three practices would be totally separate, with no sharing of patients or employees (other than the dentists, A and B). Of course, there is the possibility of an occasional cross-referral or a patient who moves from one practice to another. Is this an ASG because D might be 'regularly associated with' the other two businesses?"
BenefitsLink

[Opinion]

5500 Overhaul Alert: Comment Deadline Is Monday December 5
"If you thought that Form 5500-SUP was bad, you ain't seen nothing yet! ... [1] Your client list will become available to anyone (due to mandatory paid preparer disclosure). [2] It will cost you and your clients real money! Unlike the Form 5500-SUP changes, those in the Proposal go so much wider and deeper that you will need to dedicate staff and resources to collect and organize all of this additional plan data. The time your staff will need to prepare 5500 series forms under the Proposal will substantially increase. [3] Cold callers will hound your clients and bombard them with 'ammunition' provided in the new, improved 5500 Forms."
Indiana Benefits, Inc.

Benefits in General

[Official Guidance]

IRS Disaster Relief Notice MN-2016-03 for Victims of Severe Storms, Flooding in Minnesota
"Victims of the severe storms [and] flooding, that took place beginning on September 21, 2016 in parts of Minnesota may qualify for tax relief from the [IRS].... Individuals who reside or have a business in the counties of Blue Earth, Freeborn, Hennepin, Le Sueur, Rice, Steele, and Waseca may qualify for tax relief.... certain deadlines falling on or after September 21, 2016, and before January 31, 2017 are granted additional time to file through January 31, 2017."
Internal Revenue Service [IRS]

[Opinion]

ARA Comments to EBSA on Proposed Revision of Annual Information Return/Reports (Form 5500 Series) (PDF)
"The ARA is concerned that the Proposal significantly underestimates the cost and burden to comply with the reporting requirements and that there is insufficient time to make the technology and procedural updates required for the proposed 2019 plan year effective date."
American Retirement Association [ARA]

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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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