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[Official Guidance]

Text of IRS Notice 2017-22: Update for Weighted Average Interest Rates, Yield Curves and Segment Rates, March 2017 (PDF)
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) of the Internal Revenue Code.... [T]his notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)."
Internal Revenue Service [IRS]


Online Learning Course: ERISA

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Get the information you need to understand the requirements of ERISA, including penalties, vesting requirements, fiduciary responsibilities, plans covered by the PBGC, and the roles of the various enforcement agencies.

[Guidance Overview]

DOL Proposes to Delay Fiduciary Advice Rule, Requests Comments on Delay and on Costs, Benefits of the Rule
"In the Proposal, the DOL itself recognized the disruptions that could arise if there were 'two major changes in the regulatory environment rather than one.' Therefore, interested persons may wish to urge the DOL [1] to continue to delay the Rule's effective date until the review required by the Presidential Memorandum is completed; and [2] that any extensions of the delay be announced as soon as practical."
Katten Muchin Rosenman LLP

[Guidance Overview]

DOL Issues Field Assistance Bulletin with Fiduciary Rule Enforcement Relief (PDF)
"[FAB 2017-01] provides enforcement relief ... [1] where the DOL decides not to issue a delay of the Fiduciary Rule's Applicability Date; and [2] where the DOL delays the Applicability Date, but the delay is published after April 10, 2017.... [T]he enforcement relief provided in the FAB provides much needed certainty that no matter what the outcome of the Proposed Delay, firms will have adequate time to communicate with clients."
Groom Law Group

FASB Issues Accounting Standards Update
"[ASU 2017-07] amends ASC 715, Compensation -- Retirement Benefits, to require employers that present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating expenses (together with other employee compensation costs). The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in nonoperating expenses. Employers that do not present a measure of operating income are required to include the service cost component in the same line item as other employee compensation costs."
Willis Towers Watson

FASB Changes Presentation of Defined Benefit Costs
"[T]he new standard requires a reporting organization to separate the service cost component from the other components of net benefit cost for presentation purposes. The new standard also: [1] Provides explicit guidance on how to present the service cost component and other components of the net benefit cost in the income statement. [2] Allows only the service cost component of net benefit costs to be eligible for capitalization."
Journal of Accountancy


2017 SPARK National Conference -- June 1-2, National Harbor, MD

Sponsored by SPARK

The retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda is designed to meet the needs of 401(k) Plan Providers, Financial Advisors and Third Party Administrators.

What Is the Difference Between a Record Keeper and a Third Party Administrator?
"A Third Party Administrator (TPA) is an organization or an individual that processes transactions and/or claims; or certain administrative aspects of employee benefit plans for a separate entity.... [A] record keeper's main function is to track how much you have, where it is, and what type of money it is (salary deferral, tax-deferred, taxable, employer-matched, etc)."

ESOPs: A Powerful Tool for Closely Held Banks
"For shareholders in a closely held bank, an ESOP can be used as a succession planning or liquidity vehicle. For the bank's employees, it can provide enhanced benefits useful in attracting, motivating and retaining employees. For the sponsoring bank or bank holding company, an ESOP can facilitate tax-efficient capital enhancement.... An ESOP is not an isolated, stand-alone vehicle. To be successful, it must be integrated into the bank's overall strategic plan."
Holland & Knight

Is Your DC Plan's Investment Policy Statement Keeping You on Track? (PDF)
"[An] investment committee that tries to manage its DC plan without an IPS is apt to lose its way. On the other hand, if ... an IPS is unclear or confusing, it can also lead to bad outcomes.... [This article] explores the role the IPS plays in investment committee decision making, best practices in developing and maintaining an IPS, and ... how the IPS can be ideally positioned as a tool for plan management."
Callan Associates

Is It Time to End the 12b-1 Fee?
"[T]he reality is that financial advisors, custodians, broker-dealers, and product providers still need to get paid for what they do, which means eliminating the 12b-1 fee still won't necessarily bring down costs for the end client. Instead, it would likely just shift where and how financial advisors and their platforms get paid. Nonetheless, given the 12b-1 fee's implicit conflicts, and their declining relevance, arguably it's time to create a more appropriate pricing structure for the realities of today's investment marketplace!"
Nerd's Eye View

The Actuarial Approach: Much More Than Just a Measure of Where You Stand Financially
"The funded ratio proposed by [Russ Hill, Sam Pittman, and Bob French] divides assets by aspirational liabilities (the individual's spending goals) to help the individual determine where he or she stands in meeting retirement goals and how much the individual's assets would need to be to meet these goals.... [I]ndividuals can also use this basic actuarial equation to develop an actuarially calculated spending budget for the current year[.]"
Ken Steiner, FSA Retired

Older People's Willingness to Delay Social Security Claiming
"[H]alf of the respondents would delay claiming if no work requirement were in place under the status quo, and only slightly fewer, 46 percent, with a work requirement. [The authors] also asked respondents how large a lump sum they would need with or without a work requirement. In the former case, the average amount needed to induce delayed claiming was about $60,400, while when part-time work was required, the average was $66,700. This implies a low utility value of leisure foregone of only $6,300, or about 10 percent of older households' income."
Michigan Retirement Research Center [MRRC]

Survey Reveals Demand for Unbiased Human Investment Advice and Digital Tools as Americans Work to Get on Track
"[L]ess than two thirds (62 percent) of Americans feel confident they're saving enough to retire comfortably -- down from 64 percent a year ago and 72 percent in 2015 ... 39 percent of non-retired Americans believe they should contribute 15 percent or more of their income to retirement, yet only 13 percent are doing so (down two points from 2016) ... Among Americans who are investing, 83 percent see value in information aggregators, as well as retirement calculators (73 percent), technology to connect with advisors (71 percent), digital-human 'hybrid' solutions (69 percent) and robo-advisors (56 percent)."
Capital One


DOL Fiduciary Rule Already Is Delivering Benefits to Workers and Retirees: Delay Puts Those Benefits at Risk (PDF)
"Just as intended, the rule is eliminating the most harmful conflicts associated with commission-based advice without eliminating access to commission-based advice.... Despite dire predictions to the contrary, most firms are continuing to offer commission-based retirement investment advice.... Far from driving up investors' costs, the rule is already responsible for significant cost reductions."
Consumer Federation of America

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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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