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Defined Contribution Retirement Plans: Who Has Them and What Do They Cost?
"[This article] takes a look at five types of employer-sponsored defined contribution retirement plans in private industry. The article shows the overall employee participation rates, employee participation rates by type of plan, and overall employer costs and worker participation costs for all types of plans.... Plans are categorized by type on the basis of Internal Revenue Code requirements and variations in contribution methods."
U.S. Bureau of Labor Statistics [BLS]


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How to Order a Triple Stack Match for Your 401(k) Plan
"Safe harbor plans guarantee that the Highly Compensated Employees (HCEs) will be able to contribute the maximum deferral amount of $18,000, but not necessarily the maximum annual addition under Code Section 415. In those cases, the triple stack match formula may be the solution, as follows: Stack One: 100% of the first 3% of deferrals, plus 50% on the next 2% of deferrals.... Stack Two: A discretionary match of 66-2/3% of deferrals up to 6% deferred.... Stack Three: A fixed match of X% of deferrals up to 6% deferred.... With this triple stack match formula, the plan qualifies as safe harbor and is also exempt from top-heavy rules,"
Belfint Lyons & Shuman, CPAs

Explanations of Vesting, Eligibility Rules Leave Some Plan Participants in the Dark
"In an online survey of participants in four 401(k) plans, employee responses were most accurate regarding the frequency of employer contributions and participants' initial eligibility to join the plan, but less accurate on knowledge of the plan's eligibility and vesting policies, according to [a recent GAO report.]"
Bloomberg BNA

Addressing the Risk of Long-Term Disability on Retirement Income (PDF)
"The historic shift from defined-benefit (DB) pension plans to defined-contribution (DC) plans has created a hidden threat to the retirement security of millions of American workers, in the form of long-term disability. Many workers and employers alike are unaware of the danger disability can pose to participants of DC plans such as 401(k)s; fortunately, recent regulatory changes have made it possible for long-term disability (LTD) insurance to cover retirement plan contributions."
Groom Law Group

Helping Participants Get the Most out of TDFs
"[O]nly 10% of participants surveyed allocate all their recurring contributions into a single TDF. More participants (11%) are actually only investing 1% to 10% of their contributions into one or more TDFs, while another 10% invest 41% to 50% of their recurring contributions into TDFs. When asked why they use TDFs in this (suboptimal) way, the top reason was to add to diversification (45%), suggesting that plan sponsors may need to re-evaluate how they educate participants about the benefits and features of TDFs."


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More Ways to be Tagged with Withdrawal Liability
"The Seventh Circuit found that it was common knowledge that many multiemployer pension funds are underfunded and therefore have withdrawal liability. Because the son had been active in the father's business, the son would know about the collective bargaining agreement and the obligation to contribute to the pension fund.... Consequently, the court of appeals refused to uphold a decision of the district court that the son necessarily had no knowledge of the withdrawal liability. According to the Seventh Circuit, knowledge of that liability is important to holding a successor responsible for the liability." [Board of Trustees of the Automobile Mechanics' Local No. 701 Union and Industry Pension Fund v. Full Circle Group, Inc., No. 15-2497 (7th Cir. June 24, 2016)]
Stinson Leonard Street

How Public Pension Plan Demographic Characteristics Affect Funding and Contribution Risk (PDF)
"Approximately two-thirds of public pension funds' $3.7 trillion of assets are in investments other than cash and fixed income, and have volatile investment returns. Investment gains and losses become larger relative to payroll and government contributions... can become more variable, and plan funded ratios can become more volatile.... Growing plans with increasing numbers of workers are less susceptible to investment risk than are shrinking plans. Very mature plans with high assets relative to payroll and high cash outflows face greater funding risk, all else equal."
Rockefeller Institute of Government

EU Workplace Pensions Now Required to Incorporate ESG Issues
"The new pensions directive stipulates that: ESG criteria [are] to be considered in investment decisions and their practical implementation should be disclosed in regular reports.... The integration of ESG considerations will not be considered as conflicting with fund managers' fiduciary duties."
Latham & Watkins

OECD Advocates Use of Annuity Distributions for DC Plans
"The organization made the recommendation in its latest Pensions Outlook 2016 ... which focused in part on the increasing importance of defined contribution plans in OECD countries. The OECD also recommended that DC plans and design are simplified amid the growing importance of individual retirement arrangements."
Pensions & Investments

Trumped: The Future of the Conflicted Advice Rule
"Financial institutions and advisors will be challenged over the next six months to develop strategies that keep them in compliance until the dust settles. There are a few things to keep in mind as the industry enters this very challenging period. [1] The conflict of advice rule is the law until it is ended.... [2] Watch for signals from the incoming administration and Congress about what they intend to do.... [3] Communicate carefully with clients.... [4] Think down the road."
Fiduciary Plan Governance, LLC

Executive Compensation and Nonqualified Plans

Sixth Circuit Win for State Street Bank in $200 Million Chrysler 'Top Hat Plan' Class Action
"In a second appeal, the Sixth Circuit Court of Appeals has ruled (again) that plaintiffs have no viable ERISA claims because the plan and trust operated as described in plan documents ... In short, all of the claims have been defeated on pleading and procedural grounds without a trial on what happened during the Chrysler collapse." [Loffredo v. Daimler A.G., No. 15-1443 (6th Cir. Nov. 8, 2016)]
McDermott Will & Emery

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