Retirement Plans Newsletter

January 19, 2017 logo logo
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Senior Conversion Analyst
BlueStar Retirement Services, Inc.
in FL

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Webcasts and Conferences

Basics of 401(k) Plans - Session 1
January 19, 2017 WEBCAST

Technology Solutions for IRA Fiduciary Rule Compliance
January 24, 2017 WEBCAST
Fiduciary Benchmarks, Inc.

Recruiting, Managing and Retaining Millennials to Your Employee-Owned Organization
January 25, 2017 WEBCAST
Ohio Employee Ownership Center

Enhancing Financial Wellbeing through Voluntary Benefits
January 26, 2017 WEBCAST

Basics of 401(k) Plans - Session 2
February 2, 2017 WEBCAST

DC Benchmarking for Fee Reasonableness Determination
February 2, 2017 WEBCAST
Fiduciary Benchmarks, Inc.

DC Plan Design and Other DC Trends
February 14, 2017 in GA
ISCEBS - Georgia Chapter

Basics of 401(k) Plans - Session 3
February 16, 2017 WEBCAST

Service Provider's Due Diligence & Required Enforcement Actions
March 16, 2017 WEBCAST

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[Official Guidance]

Online Resources for Oregon's State-Sponsored Retirement Program for Private Employees
"HB 2960 calls for the establishment of a state-sponsored retirement savings plan that provides employees with automatic enrollment, payroll deduction, and automatic annual contribution escalation, all on a flexible, opt-out basis. The plan is governed by an appointed board and will be run by a private-sector provider, with a minimum employer role." [This page is the web portal for Board-related materials, including Board meeting agendas, provider presentations, terms of the program, and the proposed requirements for employers, which are scheduled for public hearing on Feb. 15.]
Oregon State Treasury


70-1/2 Year Olds NOT in Pay Status?

Sponsored by Pension Benefit Information, Inc.

Don't risk plan disqualification. Both the DOL and IRS are focused on RMD. Proactively address your deferred vested population with PBI's compliance based solutions. Give yourself peace-of-mind through a PBI auditable trail.

[Guidance Overview]

IRS OKs Use of Forfeitures as QNEC/QMAC/Safe Harbor Contributions (PDF)
"The proposed regulations [issued on January 18, 2017] would be effective for taxable years beginning on or after publication in final form. However, IRS states that taxpayers may rely on the proposed regulations for earlier periods. If the final regulations are more restrictive than the proposed changes, the final rule will be applied prospectively.... Plan sponsors and their recordkeepers may wish to ensure that current document language supports current operations or, if forfeitures are not currently utilized, revise plans accordingly taking into account this 'new' flexibility."

[Guidance Overview]

DOL Issues Additional FAQs Related to New Fiduciary Rule (PDF)
"[T]he January FAQs primarily focus on the circumstances in which fiduciary status would or would not attach under the Final Rule.... The 35 technical FAQs, after an overview of the fiduciary 'investment advice' definition [FAQ 1], primarily address the operation of the new definition in a variety of specific factual settings, as summarized [in a chart in this article]."
Sutherland Asbill & Brennan LLP

[Guidance Overview]

New Guidance Restores 1994 ERISA Proxy Voting Interpretation
"IB 2016-1 states that if a fiduciary concludes that there is a reasonable expectation that shareholder engagement on ESG issues is likely to enhance shareholder value, after taking the costs involved into account, a fiduciary can, consistent with under ERISA, take into account ESG impacts in proxy voting and shareholder engagement.... The DOL also sought to lower the threshold for shareholder engagement activities, by changing the standard from the plan fiduciary having a reasonable expectation that such activities 'will enhance the economic value of the plan's investment' to 'is likely to enhance the value of the plan's investment,' restoring the original language of IB 94-2."
Morgan Lewis

How to Make Your 401(k) or 403(b) Plan a Litigation Target
"[1] Adopt an Investment Policy Statement, then never consult it again.... [2] Don't benchmark your fees or do periodic RFPs.... [3] Load your investment menu with proprietary funds.... [4] Try to do everything in house.... [5] Enter into a revenue sharing arrangement, then fail to monitor payments.... [6] Use multiple recordkeepers and providers.... [7] Set it and forget it, because nobody is complaining.... [8] Don't hold regular committee meetings."
Cohen & Buckmann, P.C.


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.

Franklin Resources Can't Get 401(k) Fee Lawsuit Dismissed
"Franklin Resources Inc. lost its bid for quick dismissal of a lawsuit claiming that it stuffed its workers' 401(k) plan with in-house mutual funds that carried excessive fees and performed worse than competitors' funds... The lawsuit also challenges Franklin's decision to include a money market fund in the 401(k) plan instead of a stable value fund that would have provided 'inflation-beating returns.' " [Cryer v. Franklin Templeton Resources, Inc., No. 16-4265 (N.D. Cal. Jan. 17, 2017)]
Bloomberg BNA

Understanding Your Retirement Plan Fee Methodology
"There are two basic retirement plan fee structures: per capita hard dollar fees and fees charged as a percentage of assets. Determining whether to charge per participant hard dollar fees or fees as a percentage of assets is a philosophical decision, with each scenario possessing distinct positive and negative attributes."
Strategic Benefit Services

When Plan Sponsors Select Service Providers, Trust Trumps Fees
"Know your value proposition and communicate it clearly in your marketing, mission statement, and in meetings with clients.... Offer group meetings for the Plan Sponsors' employees.... Don't shy away from discussing your compensation.... Discuss any needs you have of your client to properly advise them ... Get a list of their priorities ... and offer a broad plan in which you can emphasize these priorities."
TriStar Pension Consulting

Simplicity Is Sophistication When Contemplating Retirement Income (PDF)
"The core purpose of a DC plan should be to serve as an income source during retirement, according to 85% of plan sponsors who responded to MetLife's 2016 Lifetime Income Poll. In fact, one industry professional has suggested that, 'If the vehicle doesn't have a lifetime income option, it doesn't look like a retirement plan.' ... [This paper examines] the various retirement income products available in the marketplace and, importantly, how plan sponsors can decide which solution or combination of solutions is best suited for their DC plan participants."

Fixed Annuity Sellers May Get Fiduciary Rule Relief
"Much of the exemption looks similar to the finalized fiduciary rule's best-interest-contract exemption ... The DOL said it devised the proposal in response to requests from nearly two dozen insurance intermediaries that contract with independent insurance agents to sell fixed annuities. They sought relief from the rule similar to the BICE. The BICE allows certain investment advice fiduciaries to receive various forms of compensation that, in the absence of an exemption, wouldn't be permitted under the fiduciary rule."
Bloomberg BNA

Why a De-Risking Strategy Is More Important Now
"For some plan sponsors, the prospect of engaging in a pension risk transfer, via the purchase of non-participating annuity contracts for current retirees, or offering a lump-sum window for deferred vested participants, may seem cost-prohibitive. The cost of transferring risk is lower than what many sponsors perceive, as the transaction will generate a long-term savings on expenses that the sponsor would otherwise incur[.]"
Cowden Associates, Inc.

2017 Retirement Policy Recommendations (PDF)
14 pages. Discusses 12 recommendations in three broad categories: [1] Correcting the retirement policy mistakes of the past eight years (definition of a fiduciary, state-based retirement plans, and Form 5500); [2] Promoting private sector innovation (Multiemployer Pension Reform Act, open MEPs, nondiscrimination testing for frozen plans, PBGC premiums, notice requirements, electronic delivery, and the required minimum distribution rules); [3] Recommendations for the long-term (tax reform, multiemployer pension reform, and Social Security)."
U.S. Chamber of Commerce

Use of Data and Cost-Benefit Analysis in DOL Decisions Is Top Accomplishment, Borzi Says
"Phyllis C. Borzi got the job she 'always wanted' when she took over leadership of [EBSA] in 2009 ... A belief in the value of data helped in the nurturing of what she sees as one her biggest achievements, the conflict-of-interest rule. 'One of the things I am most proud of in the conflict-of-interest rule is the economic analysis.' ... In addition to fighting for more research resources, Ms. Borzi and her EBSA team ... set out to leverage those resources in enforcement to see 'where we could get the biggest bang for our buck. We spent a lot more time looking at service providers rather than individual plans because a service provider can affect hundreds, if not thousands of plans and possibly millions of participants.' "
Pensions & Investments


Environmentalism Provides Moral Cover for New Taxes to Fund Pensions
"There are two intertwined themes that define unionized government in California. First, funding government retiree pensions will soak up every new source of tax revenue they will ever collect. Second, cloaking new taxes and fees -- and new agencies -- in the virtuous raiment of environmentalism will deflect criticism and demonize critics."


The Dallas Pension Fiasco Is Just the Beginning
"It's tempting to see the generous pension structure and bad investment decisions in Dallas as making it a special case. Detroit was seen by many as a special case when it went into bankruptcy in 2013 as it had seen its population fall by 25% in a decade.... Growing debt and pension obligations are signs of what is to come for many local and state governments who have been living beyond their means for decades."

Benefits in General

Supreme Court Declines to Hear Challenge to Validity of Forum Selection Clauses in ERISA Plans
"The U.S. Supreme Court on Jan. 17 ended a yearlong legal challenge to the enforceability of a forum selection clause in an ERISA-governed benefit plan, when the court denied the plaintiff's petition for writ of certiorari. The petitioner unsuccessfully opposed transfer, moved for retransfer and twice sought review of the Eighth Circuit before filing her petition for writ of certiorari with the Supreme Court."

Press Releases

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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2017, 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 those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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