Retirement Plans Newsletter

March 15, 2017 logo logo
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ABCs of ESOPs for ESOP Participants
March 29, 2017 WEBCAST
Ohio Employee Ownership Center

What Now?
April 26, 2017 in TX
ASPPA Benefits Council [ABC] of Dallas/Fort Worth

Employer Forum on Pharmacy Benefits and Specialty Drugs
June 21, 2017 WEBCAST
Midwest Business Group on Health

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[Guidance Overview]

The 2017 Operational Compliance List
"For 2017, the Operational Compliance List includes ... [1] QNECs and QMACs in defined contribution plans ... [2] Extension of temporary nondiscrimination relief for closed defined benefit pension plans ... [3] Partial annuity distribution options for defined benefit pension plans ... [4] Cash balance/hybrid plans final regulations."
Findley Davies | BPS&M

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[Guidance Overview]

IRS Issues Substantiation Guidelines for Safe-Harbor Hardship Withdrawals
"Although the guidance does not have binding legal or regulatory effect, it nonetheless highlights what auditors of plans offering safe-harbor hardship distributions will be looking for ... and reinforces that plan administrators should be regularly reviewing their record retention practices. It also emphasizes the need for proper documentation and internal controls for such distributions, including, to the extent applicable, understanding between TPAs and employer plan sponsors regarding their respective roles in the review and documentation process, as well as the importance of substantiation before distributions are made."
McGuireWoods LLP

[Guidance Overview]

IRS Views on Self-Certification of Financial Hardship
"In cases where any participant has received more than two financial hardship distributions in a single plan year, the guidelines advise agents to request source documents supporting those distributions if a credible explanation for the multiple distributions cannot be provided.... [P]lan sponsors may wish to consider limitations on the number of financial hardship distributions that a participant may take or to apply a more stringent process for approving requests for financial hardship distributions where more than two requests are made in any plan year."
Benefits Bryan Cave

[Guidance Overview]

Interesting Angles on the DOL's Fiduciary Rule, Part 40
"With all the attention that has been devoted to fiduciary status and prohibited transactions, it is possible, perhaps even probable, that the old rule will be applied more vigorously. As a result, advisers need to understand its provisions and need to review their practices to determine whether they are currently acting as fiduciaries under the old rule."

Retirement Plan Best Practices: Plan Design (PDF)
13 pages. "How you structure your plan can have tremendous impacts on participant outcomes. We'll examine the factors that you should consider as a fiduciary when making decisions about plan design, look at how other plans handle different options, and identify some best practices. The goal of this paper is to help you make the decisions that will lead your participants to retirement readiness."
Arnerich Massena


Annual Funding Notice Deadline is April 30! Are you ready?

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Put It in Writing! Why Your Pension or 401(k) Plan Should Have Written Policies
"Plan fiduciaries sometimes think that they have total flexibility to deal with issues if they don't commit their processes to writing, but ... when fiduciaries act without policies that set out good fiduciary processes, they may be missing important issues, such as benchmarking fees regularly, or monitoring the limits on plan loans. Just putting a policy together forces you to focus on how you will do what needs to be done.... Here are some of the policies that are becoming more common and the reasons to consider them[.]"
Cohen & Buckmann, P.C.

Texas Judge Asks Plaintiffs to Explain Need for DOL Rule Injunction
"A Texas judge asked plaintiffs today to explain why an emergency injunction is needed given the [DOL's] willingness to defer enforcement.... Plaintiffs asked for the emergency injunction Friday to delay the April 10 'applicability date' of the DOL fiduciary rule. That same day, the DOL released a bulletin alerting the financial services industry that it will not pursue enforcement of the rule in the short term."

ERISA Stock Drop Challenge Targets Allergan
"The complaint suggests defendants 'permitted the plans to continue to offer Allergan Stock as an investment option to participants even after the defendants knew or should have known that Allergan Stock was artificially inflated during the class period,' which runs February 25, 2014, to November 2, 2016."

Company Stock in Defined Contribution Plans
"38.5% of those surveyed offer their own stock to plan participants. Stock offerings include available plan investment options or via an ESOP plan. From 2009 to 2014, stock offered in plans trended downward before seeing a temporary increase in 2015. Among the plans that do not offer company stock, 82% say they have never offered it as an investment option; 16% said they used to, but it has been since removed or frozen."
Pensions & Investments

Lump Sum De-Risking in 2017
"[This article discusses] how changes in interest rates, [PBGC] premiums and mortality tables may affect sponsor decisions to de-risk (or not de-risk) defined benefit plan liabilities in 2017. For purposes of this article, by de-risking we mean paying out a participant's benefit as a lump sum and thereby eliminating the related liability -- the 'low-hanging fruit' for pension de-risking efforts.... [F]or some sponsors there may be significant dollars at stake."
October Three Consulting

Public Pension Assets Quarterly Update, Q4 2016
"As of the fourth quarter of 2016 (December 31), public pension assets were a record $3.86 trillion, up approximately 1.3 percent, from $3.81 trillion as reported for Q3 2016....The Federal Reserve reported in March that the combined value of defined benefit plan assets held by state and local governments as of Q4 2016 increased by 5.5 percent, to $3.86 trillion, from $3.66 trillion as of Q4 2015."
National Association of State Retirement Administrators [NASRA]


SIFMA Comment Letter to EBSA on Proposed Delay of Fiduciary Rule
"Our members have spent hundreds of millions of dollars getting ready to comply with the Rule, and a group of our largest members alone estimate that they would need to spend an additional $300 million to be ready for the April 2017 compliance deadline. If the entire industry is in roughly the same position, more than a billion dollars must still be spent to be ready for the April applicability date. Further, members need to plan for the January 2018 compliance date. Without a corresponding extension of the transition period, members will continue to expend substantial resources."
Securities Industry and Financial Markets Association [SIFMA]

Benefits in General

[Guidance Overview]

FASB Changes the Presentation of Pension Cost (PDF)
"On March 10, 2017, the FASB issued final guidance on the presentation of net periodic pension and postretirement benefit cost (net benefit cost).... The amendment requires the bifurcation of net benefit cost. The service cost component will be presented with other employee compensation costs in operating income (or capitalized in assets). The other components will be reported separately outside of operations, and will not be eligible for capitalization."

[Guidance Overview]

ERISA Civil Penalties: Adjusted Amounts for 2017
"DOL's penalties as they relate to ERISA violations pursuant to the Federal Civil Penalties Inflation Adjustment Act Annual Adjustments for 2017, which became effective on January 13, 2017."
Butterfield Schechter LLP

Executive Compensation and Nonqualified Plans

Stock Compensation Would Be Affected by the Repeal and Replacement of Obamacare
"The AHCA seeks to eliminate most of the taxes introduced by the ACA, including the net investment income tax on capital gains, dividends, and interest (also known as the 3.8% surtax) and the additional Medicare tax (0.9%) on wages.... While it is paid with a taxpayer's annual tax return rather than by income withholding, the ACA's 3.8% surtax on investment income also can be triggered by stock compensation."

Press Releases

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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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