Retirement Plans Newsletter

December 15, 2016

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[Official Guidance]

Text of PBGC Interest Rate Update for January 2017: Benefits Payable in Terminated Single-Employer Plans (PDF)
"This final rule amends the [PBGC] regulation on Benefits Payable in Terminated Single-Employer Plans to prescribe interest assumptions ... for valuation dates in January 2017.... PBGC will publish a separate final rule document dealing with interest assumptions under its regulation on Allocation of Assets in Single-Employer Plans for the first quarter of 2017.... The January 2017 interest assumptions under the benefit payments regulation will be 1.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for December 2016, these interest assumptions represent an increase in the immediate rate of 0.50 percent and are otherwise unchanged."
Pension Benefit Guaranty Corporation [PBGC]

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[Official Guidance]

Text of IRS Form 5300: Application for Determination for Employee Benefit Plan (PDF)
Rev. January 2017. "Review instructions and the Procedural Requirements Checklist before completing this application. Submit all required attachments."
Internal Revenue Service [IRS]

[Guidance Overview]

IRS News Release 16-171: Plan Now to Get Full Benefit of Saver's Credit; Tax Credit Helps Low- and Moderate-Income Workers Save for Retirement (PDF)
"The saver's credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver's credit is available in addition to any other tax savings that apply."
Internal Revenue Service [IRS]

A Look at Private-Sector Retirement Plan Income After ERISA, 2015 (PDF)
32 pages. "Retirement income generated by private-sector retirement plans has become more prevalent -- not less prevalent -- since the passage of ERISA in 1974, and this is true across all income groups.... The decline of private-sector defined benefit (DB) plans has changed the type of pension offered to workers, not the likelihood that workers are offered a pension.... The extent to which retirees relied on DB plans may be overstated by looking only at statistics on DB plan coverage, because coverage does not always result in retirement income." [Also see: Supplemental Tables (XLS)]
Investment Company Institute [ICI]

Two MPRA Suspension Applications Bite the Dust (PDF)
"The [Ironworkers Local 16 Pension Fund denial letter] explained that the Application used the 1983 Group Annuity Mortality Table (1983 GAM Table) which is significantly out of date.... [and] made no provision for mortality improvement for the period from 1983 to the proposed effective date of the suspension, or for the 30-year solvency projection period following the effective date of the suspension ... The [Teamsters Local 469 Pension Fund denial letter] explained that the Plan's own experience is that over 70% of participants receive a joint-and-survivor annuity. In its Application, the Plan assumes that 80% of all participants who have not commenced their benefits are married, and ... that 100% of the married participants will choose to waive their subsidized joint-and-survivor annuities and receive less valuable single-life annuities."
United Actuarial Services, Inc.

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America's Largest Pension Fund: A 7.5% Annual Return Is No Longer Realistic
"Top officers of [CalPERS] want to lower their investment targets, a move that would trigger more pain for cash-strapped cities across California and set an increasingly cautious tone for those who manage retirement assets around the country.... The last time the California system lowered its investment expectation was in 2012, when the rate was dropped to 7.5% from 7.75%."
The Wall Street Journal; subscription may be required

Trends in the Retirement Industry and Participant Experience Design Impacted by the New Fiduciary Rule (PDF)
"59% of respondents agreed that the industry was making progress in improving participant experiences prior to the announcement of the DOL Fiduciary Rule.... Nearly 60% of respondents believe the DOL Rule will have a positive or neutral impact on participant experience design.... Almost 70% of respondents believe that Retirement Plan participants are likely to be confused by changes implemented by the industry as a result of the DOL Rule.... half of firms who responded are ready for the first DOL deadline in April, 2017.... 49% of respondents believe the DOL Rule will not change their fiduciary status"
Broadridge

How the DOL Fiduciary Rule Might Affect Governmental Plan Sponsors (PowerPoint)
24 presentation slides. "State and local government DC plans are not bound by ERISA and the DOL rules. But, it can be expected that providers of investment services will likely treat participants in government plans similarly to those in the ERISA covered plans."
National Association of Government Defined Contribution Administrators [NAGDCA]

Fiduciary Focus: A Glimpse Into 403(b) Plan Trends
"Seventy percent of 403(b) plan sponsors are aware of the [DOL] fiduciary regulatory package, but that number drops to less than 50 percent among small plans ... 40 percent of all plan sponsors feel their plan service provider(s) act in a fiduciary capacity, while 50 percent say their plan advisor is not a fiduciary."
Principal Financial Group

Women and Retirement: Saving Less, Worrying More
"Women have $34,000 in household retirement savings overall (median), the same as in 2012; men now have $115,000, up from $50,000 in 2012 ... 72 percent of women are saving for retirement; 80 percent of men are. 75 percent of women offered a 401(k) or similar plan are participating in it; 79 percent of men are. Women who participate in a 401(k) or similar plan contribute 6 percent of pay (median); men contribute 10 percent (median)."
Next Avenue

Sure, Stocks Are Up. But the Great Recession Is Still Weighing on Retirement Confidence
"Most workers say they have not fully recovered from the Great Recession. Still, the 20% who say they have fully recovered is a sharp improvement over the 14% that felt that way two years ago ... The top three retirement fears among workers remains constant: outliving their money; cuts to Social Security benefits; and declining health, most notably the 35% that fear eventual onset of dementia."
TIME

[Opinion]

Will Dow 20,000 Save Pensions?
"[It's] in US corporations' best interests to over-report their pension deficits just like it's in the best interests of US public plans to under-report them. How so? Aren't pension deficits a noose around the neck of US corporations? Yes, they are, which is why they are trying to offload the risk onto employees and get rid of defined-benefit plans altogether for any new employees.... [T]hey are shifting everyone into defined-contribution plans which will only ensure more pension poverty down the road. That is the brutal truth on DC pensions, they aren't real pensions employees can count on."
Pension Pulse

Press Releases

NAPA Announces its 2016 List of Top Women Advisors
American Retirement Association

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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