Retirement Plans Newsletter

February 24, 2017

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Cybersecurity Risks and Liabilities for Employers, Retirement Plan Sponsors and Fiduciaries (PDF)
"While there is no regulatory scheme protecting the personal data provided to retirement plans, such as ... under HIPAA privacy and security for health plans, ... that does not mean there is no obligation to keep the personal information secure. There is a protection requirement under ERISA, if a Plan Sponsor utilizes electronic methods of distribution of plan information."
Winstead PC, in Pension & Benefits Daily

[Advert.]

P&I DC East Conference | Miami | March 19-20

Sponsored by Pensions & Investments

Join leading executives who manage 401(k), 403(b), 457 and TSP plans at DC East. You'll learn how other plan sponsors analyze, develop, implement and measure programs for their participants, so you can improve your own plan.


Interesting Angles on the DOL's Fiduciary Rule, Part 37
"In 2015, the Office of Compliance Inspections and Examinations (OCIE) of the SEC issued a National Exam Program Risk Alert describing its 'Retirement-Targeted Industry Reviews and Examinations Initiative' (ReTIRE).... [T]here are agencies, in addition to the [DOL], that are focused on advisers' practices for retirement investing and related activities (for example, the recommendation of rollovers)."
FredReish.com

Top U.S. Tax Firms Carry Wealthy 401(k) Plans on Their Books
"Retirement savings in 401(k) plans among the nation's 10 top-grossing accounting firms range from $439 million to $5.47 billion ... The top three firms by revenue -- Deloitte, PwC and E&Y -- have established more than one retirement plan for their employees. Both Deloitte and E&Y have 401(k) plans specifically for partners and other highly compensated employees.... The average account in Deloitte's plan for partners is $781,416 -- this is more than 10 times the average account of those participants in the other plan, which is $73,723."
Bloomberg BNA

Importance of Accuracy in ESOP Data Collection
"Reviewing and understanding your plan's definition of compensation is the key to making sure that all the right elements of compensation ... are recorded properly in your census data file.... It is important to review your plan document and understand which method is used for determining Hours of Service (hours worked or elapsed time).... Each year it is important to provide your recordkeeper with any company changes as those changes could impact the allocation and compliance testing process for the plan year."
Principal Financial Group

American Academy of Actuaries Response to PBGC Request for Information on Alternative Two-Pool Withdrawal Liability Methods (PDF)
10 pages. "The primary risk to participants is that the two-pool arrangement will result in the plan being less well-funded over time than it would have been if some other course of action had been followed within a typical arrangement.... The risks to new pool employers are primarily the result of possible uncertainty regarding certain aspects of the two-pool arrangements, particularly as it relates to the extent to which the pools receive separate treatment and in regard to the extent to which a two-pool arrangement can include favorable provisions that apply in the event of a future mass withdrawal."
Multiemployer Pension Plans Subcommittee, American Academy of Actuaries

[Advert.]

P&I DC East Conference | Miami | March 19-20

Sponsored by Pensions & Investments

Join leading executives who manage 401(k), 403(b), 457 and TSP plans at DC East. You'll learn how other plan sponsors analyze, develop, implement and measure programs for their participants, so you can improve your own plan.


Detroit Mayor Proposes Trust Fund to Cover Future Pension Payments
"Under the plan, fund deposits and interest earnings would total $377 million by the end of fiscal 2023 ... Detroit, which exited the biggest-ever municipal bankruptcy in December 2014, has already set aside $70 million for the higher pension payments. The court-approved bankruptcy exit plan had projected city pension payments to spike to $111 million beginning in fiscal 2024 after years of minimal or no payments by the city. But a subsequent actuarial analysis pegged the payment spike at $200 million or more."
U.S. News & World Report

OIG Report: $1 Billion Paid by Social Security to Individual Representative Payees Who Do Not Have a Social Security Number (PDF)
20 pages. "SSA is required to obtain the SSNs of representative payee applicants. SSA uses the representative payee's SSN to [1] verify the payee's identifying information; [2] determine whether the payee applicant is receiving Old-Age, Survivors and Disability Insurance or Supplemental Security Income; [3] determine whether the applicant is a convicted felon; and [4] determine whether the applicant previously served as a representative payee and has a history of poor payee performance or misuse.... [OIG estimates] that 22,426 beneficiaries had an individual representative payee who did not have an SSN, and SSA had not followed its policy to retain the paper application.... From April 2006 to September 2016, SSA paid these representative payees about $1 billion."
Office of the Inspector General [OIG], Social Security Administration [SSA]

Monte Carlo Analysis vs. the Actuarial Approach
"Many financial advisors utilize Monte Carlo analysis (MCA) to help their clients develop financial plans in retirement.... [T]here are several potential problems with MCAs and some of these problems can be mitigated if financial advisors: stress that 'Clients should understand planning is not a one-time occurrence', 'Emphasize the importance of ongoing planning', and 'Present information in more than one way.' "
Ken Steiner, FSA Retired

[Opinion]

American Benefits Council Comment Letter to IRS on Minimum Present Value Requirements for DB Plan Distributions
"The possibility of requiring lump sums to be based on a subsidized early retirement benefit would be in effect a major government-required benefit increase, which is inconsistent with current law. The proposed treatment of social security level income options and post-normal retirement age benefits would similarly impose major new obligations on employers, without a basis in the law. The treatment of employee-derived benefits is ... inconsistent with prior guidance and would impose material costs to plans."
American Benefits Council

[Opinion]

The Retirement System Diaries, Chapter 1: The So-Called Retirement Crisis (PDF)
"There is a real retirement crisis in the United States, but there is also a fake one. This article attempts to bring some levity and perspective as to which pieces of the sky are, in fact, falling.... [By] 'crisis' we don't mean anything obvious like war, famine, or national penury. Instead, 'retirement crisis' has come to mean simply that people aren't saving as much as they should and won't be able to retire with enough money to maintain their late-career standard of living. Admittedly, no one ever says it that way, but that's what they mean. This is not a crisis."
Pete Swisher, Pentegra Retirement Services, via Journal of Pension Benefits

[Opinion]

Retirement is an Artificial Finish Line
"Women and men are discovering that retirement is not a natural life transition. It's an idea that's been inflicted upon us by corporations and society. We've been indoctrinated into thinking that when you turn 65, it's time to punch out and live a life of leisure. This may have worked for the previous generation, but that mindset is no longer sustainable. Pensions and institutional stewardship have gone the way of the dinosaur, and today more than ever we have to assume control over our own retirement planning."
Paladin Research & Registry

[Opinion]

An Ironic Twist to 401(k) Fee Lawsuit Settlements: 'Physician, Heal Thyself'
"[It] appears these companies who manage corporate retirement plans for their clients can't even properly oversee their own 401k plans for their own employees from a fiduciary standpoint.... [M]any companies think these vendors have their best interests in mind. If you are a plan sponsor or a plan fiduciary, you've got to ask yourself 'if these service providers can't manage the fees in their own plans how confident can I be they are helping me manage the fees in my plan?' "
Greenspring

Benefits in General

Supreme Court Will Not Review Enforceability of Forum Selection Clauses in ERISA-Governed Benefit Plans
"While the only two U.S. appellate courts to rule on the issue of forum selection clause enforceability as it relates to ERISA benefit plans (i.e., the 6th and 8th Circuits) have upheld their validity, ... several U.S. district courts within other circuits have found these clauses unenforceable ... [W]hile forum selection clauses within ERISA-governed benefit plans may continue to be enforced in the 6th and 8th Circuits, other circuits are still free to adopt the opinion that such clauses are invalid and thus unenforceable."
Butterfield Schechter LLP

Press Releases

PBGC Customer Contact Center Additional Saturday Operating Hours
PBGC [Pension Benefit Guaranty Corporation]

TIAA Joins the Retirement Advisor Council
Retirement Advisor Council

ECFC Announces New Board Members
ECFC [Employers Council on Flexible Compensation]

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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

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