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[Official Guidance]

Text of OPM Proposed Regs: Federal Employees' Retirement System; Government Costs
"OPM proposes to ... [1] clarify the process by which the Secretary of the Treasury and the U.S. Postmaster General may file a request for the Board of Actuaries of the Civil Service Retirement System to reconsider an amount determined to be payable to the CSRDF with respect to a supplemental liability.... [2] amend its definition of 'actuary' ... [3] establish separate normal cost percentages for FERS, FERS-RAE and FERS-FRAE employees within each employee category ... [4] include members of the Capitol Police as 'Congressional Employees' for purposes of deriving separate normal cost percentages for this employee group.... [5] include U.S. Postal Service employees as a separate category for which OPM will derive normal cost percentages.... [6] establish the procedures and requirements for a request for reconsideration of a supplemental liability determination filed by the Secretary of the Treasury or the Postmaster General.... [7] refine its definitions of present value factor and actuarial present value ... to ensure that these definitions are uniform and appropriate."
U.S. Office of Personnel Management [OPM]


Techniques to Enhance Your 401(k) Plans

Sponsored by Lorman and BenefitsLink

Jan. 31 webinar. Fiduciary process and techniques of automatic enrollment, auto escalation, re-enrollment, Qualified Default Investment Alternatives, hiring and monitoring of service providers, benchmarking, investment due diligence, regulatory issues.

[Official Guidance]

Text of Temporary PTEs for Asset Managers Affiliated with Deutsche Bank, Citigroup, JPMorgan Chase, Barclays or UBS
158 pages. Makes effective the Temporary Exemptions that were proposed November 16, 2016. "This document contains exemptions ... [for] Deutsche Investment Management Americas Inc. (DIMA) and Certain Current and Future Asset Management Affiliates of Deutsche Bank AG ... [PTE 2016-13; application D-11856]; Citigroup, Inc.... [PTE 2016-14; application D-11859]; JPMorgan Chase & Co.... [PTE 2016-15; application D-11861]; Barclays Capital Inc.... [PTE 2016-16; application D-11862]; and UBS Assets Management (Americas) Inc.; UBS Realty Investors LLC; UBS Hedge Fund Solutions LLC; UBS O'Connor LLC; and Certain Future Affiliates in UBS's Asset Management and Wealth Management Americas Divisions ... [PTE 2016-17; application D-11863]."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Guidance Overview]

DOL Finalizes Guidance for Local Government-Coordinated Private Sector Plans
"The final regulations contain two clarifications regarding the responsibility of state and local governments to ensure security of withheld wages. First, they must ensure that amounts withheld from wages by employers are 'promptly' forwarded to employee accounts. While not specifying the exact meaning of 'promptly,' the DOL has established a contribution safe harbor.... Second, states and local governments must provide an enforcement mechanism to ensure compliance with the requirement that withheld wages be deposited promptly."

Your Next Retirement Plan Could Be Run by City Hall
"A new rule would clear regulatory barriers that might otherwise stop large municipalities such as New York from setting up plans for all workers -- not just those who work for local government.... Out of almost 90,000 local governments in the U.S., the [DOL] estimates that only about 88 would be eligible. First, jurisdictions would need authority under state law to set up the program. They also couldn't overlap with an existing statewide retirement plan, ... Finally, they'd need to have a population greater than the least-populous state. (That's Wyoming, population 586,000.)"

Rising Interest Rates and Equity Markets Create Opportunities and Risks for Defined Benefit Plans
"DB plan sponsors [should] consider the following actions in 2017 ... Creating a comprehensive journey plan ... Growth portfolio opportunities and challenges ... Re-risking ... Ensure your bonds are fit for purpose ... Funding flexibility and borrowing to fund ... Consider cashouts ... Insurer risk transfer ... Effective management of alts ... Data are key ... Delegation -- coordinated de-risking."


Online Learning Course: 401(k) Plan Structure

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

This course looks at the many aspects to consider when structuring a 401(k) plan. Topics include salary deferral limits and catch-up contributions, matching and profit-sharing contributions, nondiscrimination testing and safe harbors.

En Banc 9th Circuit 'Restores Power' to Edison Employees' Suit Against 401(k) Plan Fiduciaries
"The latest decision, from the en banc court, vacates the district court's decisions and remands on an open record for trial on the claim that the fiduciaries breached their continuing duty to monitor the appropriateness of the investments. The beneficiaries did not waive their duty-to-monitor argument." [Tibble v. Edison, No. 10-56406 (9th Cir. Dec. 16, 2016)]
Wolters Kluwer Law & Business

401(k) Plan Sponsor Fiduciary Litigation Update: Sequoia Fund Litigation
"Here, what the District Court appears to be saying is that when a plan fiduciary selects a fund that is intended have a higher risk/return profile, including through less diversification, the plan fiduciary should not have an obligation to monitor whether that fund is, in fact, diversified. In other words, as the court stated, 'in the context within which the Plan operated during the relevant time period', plan fiduciaries had no duty to monitor the concentration of any particular investment in the Sequoia Fund." [In Re Disney ERISA Litigation, No. 16-2251 (C.D. Cal. Nov. 14, 2016)]
K&L Gates LLP

ERISA Stock-Drop Litigation and the Dudenhoeffer 'More Harm Than Good' Pleading Standard
"It is not clear what specific facts a plaintiff could allege that would support the claim that a prudent fiduciary in the same circumstances could not have concluded that the proposed alternative actions would do more harm than good with respect to the plan's participants. One question is whether there can ever be disclosure of negative news with respect to a company's stock, or negative actions taken with respect to employer stock fund, that will not contribute to the lowering of the stock price and thereby, in the eyes of a prudent fiduciary, do more harm than good to current participants in the fund."
Baker Botts LLP

ESG Investing in 2017: Three Things to Know
"[1] An increasing number of scoring, indexes and rating systems are emerging to support a growing [environmental, social and corporate governance (ESG)] values and belief system.... [2] ESG related investments offer competitive returns ... [3] Investors born in the 1980s and 1990s are among the most active investors in ESG trends at 93 percent. That compares with 68 percent of Gen Xers and 51 percent of baby boomers who say that social or environmental impact is important when making investment decisions[.]"

Interesting Angles on the DOL's Fiduciary Rule, Part 31
"Some forms of additional compensation are obvious. For example, that includes commissions, 12b-1 fees, revenue sharing, trailing commissions, and so on. Others, though, are more subtle and, therefore, easier to overlook. Those could include trips, gifts, awards, reimbursements, marketing support, conference registrations, and so on.... While advisers to retirement plans have, by and large, been aware of these rules, ... advisers who focus primarily on wealth management, including advice to IRAs, are not familiar with the rules."

State of the Insured Retirement Industry: 2016 Review and 2017 Outlook
28 pages. "The largest wave of Baby Boomers, those born between 1952 and 1959, will begin to retire in 2017. There are roughly 33 million Baby Boomers in this group.... Only one in four Boomers expects to receive a pension in retirement, leaving 57 million who may need to use their retirement savings to produce steady, predictable retirement income.... Demographics, increasing longevity, decline of traditional pensions, and consumer appreciation for products providing guaranteed retirement income each month will support demand for lifetime income strategies."
Insured Retirement Institute [IRI]

CalPERS Poised to Lower Discount Rate Again, Increase Employer Contributions
"CalPERS' Finance and Administration Committee ... estimates that with a reduction in the rate of return to 7.25%, most employers could expect up to a 2% increase in the normal cost for miscellaneous plans, and up to 3% for safety plans. Should the rate of return be reduced to 7%, employers could expect an increase in the normal cost of up to 3% for miscellaneous, and up to 5% for safety plans."
Liebert Cassidy Whitmore


Treasury Department Approves Devastating Pension Cuts for Cleveland Iron Workers' Retirees
" 'These cuts will devastate retirees who count on their pensions to make ends meet in retirement. We're extremely disappointed that the Treasury Department approved these cuts, and we're not sure why they did it,' said Karen Ferguson, the Center's Director. 'We're puzzled as to why the agency did not provide specific reasons for approving the application.' "
Pension Rights Center


U.S. Pension Funds Should Look North for Inspiration
"Despite being among the largest private equity investors, U.S. pension funds such as [CalPERS] and [CalSTRS] have been slow to transition from a hands-off approach to one that involves actively participating in select deals, a feature known in the industry as direct investing. The benefits of direct investing are lower (or sometimes no) fees and the potential to enhance returns, and that makes it an attractive proposition. But so far, U.S. pension funds have been pretty content as passive investors for the most part, writing checks in exchange for indirect ownership of a roster of companies but without outsize exposure to any."

Benefits in General

[Official Guidance]

Text of IRS Disaster Relief Announcement ATL-2016-11, for Victims of Wildfires in Tennessee
"Victims of the wildfires, that took place beginning on November 28, 2016 in parts of Tennessee, may qualify for tax relief from the [IRS].... [A]ffected taxpayers in Sevier County will receive tax relief. Individuals who reside or have a business in Sevier County may qualify for tax relief.... [C]ertain deadlines falling on or after November 28, 2016, and before March 31, 2017 are granted additional time to file through March 31, 2017."
Internal Revenue Service [IRS]

The Legacy of Phyllis Borzi, DOL's Champion for Employee Benefits
"Phyllis Borzi has one month to go in office as assistant secretary for [EBSA], but stacks of files are still heaped on her desk and on the floor.... Borzi [said] that she came into office in 2009 with three goals, or 'pillars': transparency, accountability and minimizing conflicts of interest.... Count among the wins the plan fee disclosure regulations under Section 408(b)(2) of [ERISA], the hard-fought fiduciary rule and an abundance of guidance under the [ACA]. Among rules that didn't get to the finish line was one that would have helped plan sponsors, especially small plan sponsors, provide lifetime plan participation illustrations."
Bloomberg BNA

Executive Compensation and Nonqualified Plans

Ho, Ho ... How? A Guide to Making Year-End Donations of Company Stock to Charities
"For a charitable donation of company stock acquired from equity compensation, the tax treatment is the same as it is for donations of any stock to a qualified charity.... With a charitable gift of appreciated shares held long-term, the donation you make and the deduction you get are greater than they would be if you were to instead sell the shares and donate the cash proceeds. This is because when you donate shares, you avoid paying the capital gains tax."

Press Releases

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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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