Retirement Plans Newsletter

March 10, 2017

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Senior ERISA Document Specialist
Pentegra Retirement Services
in NC, NY, OH

Administrative Consultant for Qualified Retirement Plans
PenSys, Inc.
in CA, NC

Retirement Sales Consultant
Alerus Financial
in AZ, CA, CO, FL, GA, NC, OK, SC, TN, TX

Benefits Analyst
Universal Health Services, Inc.
in PA

RFP Writer
John Hancock Retirement Plan Services
in MA

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Webcasts and Conferences

31st Annual Ohio Employee Ownership Conference
April 27, 2017 in OH
Ohio Employee Ownership Center

Certificate Program for Non-Professional ESOP Fiduciaries
September 11, 2017 in OH
Ohio Employee Ownership Center

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[Official Guidance]

Text of FASB Accounting Standards Update 2017-07 (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (PDF)
58 pages. "The Board is issuing this Update primarily to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost... Topic 715, Compensation -- Retirement Benefits, does not prescribe where the amount of net benefit cost should be presented in an employer's income statement and does not require entities to disclose by line item the amount of net benefit cost that is included in the income statement or capitalized in assets.... To improve the reporting of net benefit cost in the financial statements, the Board added a standard-setting project to provide additional guidance on the presentation of net benefit cost in the income statement and on the components eligible for capitalization in assets."
Financial Accounting Standards Board [FASB]

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[Guidance Overview]

401(k) and 403(b) Plan Hardship Distribution Substantiation: What Will the IRS Be Looking For?
"In order to avoid potential unpleasantries on audit, plans that use an electronic or streamlined hardship distribution request process will need to take certain steps. First, the employer or TPA must provide the employee notice ... Second, the summary of information must include, at a minimum, the information specified in the [two recently issued IRS] memoranda ... Third, if a TPA administers hardship distributions, it should provide a report to the employer at least annually that describes the hardship distributions made during the year."
Jackson Lewis P.C.

Eighth Circuit Opinion in Tussey v. ABB: District Court Misconstrued Earlier Ruling, Must Reconsider Participant Claims (PDF)
"In an earlier appeal, we directed the district court to 'reevaluate' how the participants might have been injured if the ABB fiduciaries breached their fiduciary duties under [ERISA] when they changed the investment options for the plans.... Because the district court apparently mistook that direction for a definitive ruling on how to measure plan losses, and as a result entered judgment in favor of the ABB fiduciaries despite finding they did breach their duties, we vacate the judgment on that claim and remand for further consideration regarding whether the participants can prove losses to the plans. Because we thus reopen one of the participants' substantive claims, we also vacate and remand the district court's award of attorney fees." [Tussey v. ABB, No. 15-2792 (8th Cir. Mar. 9, 2017)]
U.S. Court of Appeals for the Eighth Circuit

Another ERISA Church Plan Class Action Settles
"The parties' settlement provides for a settlement amount of approximately $9 million, which would consist of $4 million paid by Defendants into an escrow account ... as well as approximately $5 million in Plan assets held in trust that have not yet been distributed.... Defendants anticipate that approximately $8.4 million will be available for distribution to Plan participants. After final distribution of the settlement amount the Plan will be fully liquidated and formally terminated." [Butler v. Holy Cross Hospital, No. 16-5907 (N.D. Ill. settlement agreement filed Mar. 1, 2017)]
National Law Review

Comments Flood DOL on Fiduciary Rule Delay
"As of the close of business [on March 8], the DOL posted 285 comments on a request to delay the rule's April 10 applicability date by 60 days.... Comments are split fairly evenly between both sides of the fiduciary fence. Financial services firms, trade organizations and individual letter writers repeat many of the arguments made by both sides. Comments are being accepted [by the DOL] until March 17." [Editor's note: the count stands at 345 as of noon on March 10.]
InsuranceNewsNet.com

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Dispelling an Urban Legend: Participant Loans Do Not Result in Double Taxation
"If a plan participant needs a loan and takes a loan from the plan, or from a bank, or from a relative, the loan repayment is always made with after-tax dollars. Please note that loan proceeds are generally not taxable. If the loan repayments to a retirement plan were made with pre-tax dollars, the participant would effectively get TWO tax deductions or tax deferrals for only one distribution that will be taxable."
Belfint Lyons & Shuman, CPAs

No Political Divide on Retirement Security
"76% of Americans are concerned about their ability to achieve a secure retirement ... More than three-fourths of Americans (77%) say the disappearance of pensions has made it harder to achieve the American Dream, and 71% of respondents say pensions do more to help workers achieve a secure retirement as compared to 401(k) plans. Nearly two-thirds (65%) say pensions are safer than 401(k) plans."
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Why Your Small Business Should Consider Implementing a Retirement Plan
"According to the Freelancers Union, a non-profit organization providing advocacy and health insurance to its members, there are an estimated 54 million independent workers. While millennials get credited for being the driving force of entrepreneurship, about half of new businesses are started by Baby Boomers. Regardless of their generation, 60 percent of independent contractors and small business owners report not saving enough for their retirement."
Butterfield Schechter LLP

Treasury Official Leaves Post Overseeing Multiemployer Pension Rescues
"Kenneth R. Feinberg stepped down as the Treasury Department's special master overseeing the implementation of a controversial law permitting pension cuts. Feinberg resigned from his role the week of Feb. 27 because his work was 'largely complete and there was no reason' to 'remain, having helped establish the precedents for reviewing private multiemployer pension plans pursuant to [MPRA]'[.]"
Bloomberg BNA

[Opinion]

American Academy of Actuaries Requests Guidance from IRS for Valuation of Variable Annuity Plans (PDF)
"[The Academy of Actuaries is requesting] guidance from the [IRS] and Treasury to resolve uncertainties that exist under the current regulations as to how [variable annuity] plans should be valued for minimum funding and Internal Revenue Code Section 417(e) purposes. In particular, [they] request guidance confirming that actuaries can determine obligations for these plans for such purposes at the theoretically correct value, recognizing that future benefit adjustments and the corresponding changes in the underlying asset value offset one another. There have also been questions raised recently about how these plans satisfy various aspects of IRC Section 411[.]"
American Academy of Actuaries

[Opinion]

ACOPA Letter to IRS on Proposed Update to Minimum Present Value Requirements for Defined Benefit Plan Distributions (PDF)
"Many plans, especially small plans, do not use a pre-retirement mortality assumption to determine present values.... An update to the Section 417(e) regulations should make it clear that a plan that provides for no pre-retirement mortality in determining minimum present values is considered to be using Section 417(e) applicable mortality rates for those determinations.... The proposal should be revised to make bifurcation available to [Social Security Level Income (SSLI)] options with rules similar to those available for partial lump sum payments under Section 1.417(e)-1(d)(7)."
ASPPA College of Pension Actuaries [ACOPA]

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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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