Retirement Plans Newsletter

March 30, 2017

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Assistant Plan Administrator
Retirement Planning Services, Inc.
in CO

5500 & Trust Specialist
Kravitz, Inc.
in CA

Health Insurance / Employee Benefits Account Manager
Associated Builders and Contractors Insurance Trust
in DC

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Webcasts and Conferences

Fiduciary Fee Reasonableness: Breaking Down Litigation Teachings
RECORDED
Manning & Napier, Inc.

ERISA Company Stock Fund Litigation Is Anything Left After Dudenhoeffer?
April 20, 2017 in NY
Worldwide Employee Benefits Network [WEB] - New York Chapter

How to Understand and Manage Liability Exposure for 401(k) Committee Members
April 20, 2017 in IL
Drinker Biddle & Reath LLP

The SHIFT! Navigating the Changing Retirement Plan Landscape
April 20, 2017 in GA
Worldwide Employee Benefits Network [WEB] - Atlanta Chapter

Fundamental Framework of Employee Stock Ownership Plan: Key Features Uncovered
April 27, 2017 WEBCAST
Knowledge Group

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What to Collect When Processing a Hardship Distribution
"[This article provides] a list of specific documents that the employer must collect based on each type of hardship.... [1] Notifications that the employer/administrator must provide to the employee ... [2] General information for all hardship requests ... [3] Specific information on deemed hardships: [a] Medical care ... [b] Purchase of principal residence ... [c] Educational payments ... [d] Foreclosure/eviction from your principal residence ... [e] Funeral and burial expenses ... [f] Repairs for damage to principal residence."
Castle Rock Investment Company

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Pooled Employer Plans Set to Dominate Small 401(k) Market
"The Retirement Enhancement and Savings Act... would create [pooled employer plans (PEPs)], eliminating the 'one bad apple' rule. And separate bills introduced in both the House and Senate in March would also allow aggregated Form 5500 filings if the plans share the same trustee, fiduciary, plan administrator, plan year and investment menu.... Short of requiring employers to offer a retirement plan at work, which some states are mandating as part of soon-to-be-implemented programs, the market is ready for PEPs. Here are a few reasons why:"
InvestmentNews

Supreme Court Hears Church Plan Consolidated Cases
"At first, Justices Sotomayor and Kagan both seemed hostile to the Defendants' view of the construction of the church-plan exemption. But this view seemed to change during the Plaintiffs' presentation.... Justices Alito and Kennedy seemed to focus on church-plan sponsors' long-standing reliance on the IRS/PBGC interpretations of the exemption.... Justice Kennedy also seemed concerned that hundreds of plans had sought and obtained the blessing of the IRS and/or PBGC, and could still face liability 30 years later. Chief Justice Roberts appeared to align with this view, asking Plaintiffs' counsel why those agencies took a view opposite to Plaintiffs' interpretation." [Advocate Health v. Stapleton, Nos. 16-74, 16-86, 16-258 (consolidated cases argued Mar. 27, 2017)]
Jackson Lewis P.C.

Proposed Multiemployer Composite Plans: Background and Analysis (PDF)
19 pages. "The composite plan proposal is the third element of a proposal ... to reform multiemployer DB pension plans. The first two elements were adopted as the Multiemployer Pension Reform Act of 2014.... For employers, composite plans would offer several advantages over DB plans.... Retired participants in composite plans would receive monthly benefit payments. However, the benefit amounts could increase or decrease, depending on the investment experience of the plan." [Report R44722, Mar. 27, 2017]
Congressional Research Service [CRS]

OMB Approval Requested for DOL Fiduciary Rule Delay
"There are only [seven] business days, including today [March 30], until the current April 10 applicability date. This leaves the OMB with a tight schedule to review and approve the final version of the delay.... DOL Secretary-nominee Alex Acosta is now closer to being confirmed.... Acosta appears to take a dim view of the fiduciary rule and is eager to conduct a thorough re-examination of the rule."
Stradley Ronon

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Despite Uncertainty, DOL Fiduciary Rule Upends 401(k) Biz
"The conflict-of-interest regulation ... is having an outsized effect on plan advisers whose primary revenue generator is individual wealth management rather than defined contribution plans. These dabblers ... represent by far the largest group of plan advisers, and they are most likely to serve plans in a nonfiduciary capacity today. There are roughly 250,000 active, licensed financial advisers who either work on or get paid for a defined contribution plan ... Among them are an estimated 225,000 dabblers, those advisers who oversee fewer than five DC plans[.]"
InvestmentNews

How Retirement Plan Sponsors Can Manage Liability Risks
"Plan sponsors can strive to protect themselves ... and ensure a better future for their employees by actively nurturing retirement readiness ... by offering financial wellness resources in connection with company retirement plans.... [K]ey steps to consider: [1] Make plan enrollment automatic.... [2] Offer ongoing and retirement goals-based education and coaching programs.... [3] Provide analytic tools that track progress and quantify key metrics."
WealthManagement.com

Latest Pension Accounting Update May Be Huge -- or Not!
"Under the new standard, interest cost, amortizations and expected return on assets will be moved out of operating expenses. They will remain as other expenses on the income statement, but in a separate area outside of operations.... This change in recognition can result in a sudden increase or decrease in pension related operating expenses depending on each sponsor's situation. Frozen plans and those that are significantly underfunded will likely see reductions. While non-frozen, well-funded plans may actually see increases."
The Principal Blog

Roth IRA Recharacterization: Things You Need to Know at Tax Time
"A recharacterization of a 2016 Roth IRA conversion can be done up to October 16th, 2017 even if you have already filed your 2016 income tax return.... You can do either full or partial recharacterizations depending on your tax situation and the investment.... A recharacterization undoes the Roth IRA conversion and wipes out the income tax due on the conversion. The amount converted and later recharacterized is treated as though it never left the IRA."
Slott Report

The Skinny on State-Run Auto-IRAs
"To this day, such plans have never taken off, due partly to the fact that small employers still had to go through the process of selecting an IRA program provider and establishing a program with that provider. A state-run plan, which is essentially a payroll-deduction IRA on steroids, eliminates that step. State-run programs will presumably contain other advantages over payroll-deduction IRAs, such as reduced administrative costs and less work on the part of an employer to establish and maintain."
Cammack Retirement Group

[Opinion]

American Benefits Council Comment Letter to IRS on Proposed Regs to Update Mortality Tables
"Due to the impact on business planning, a minimum of 18 months is needed between finalization of the regulations and their effective date. The proposed future mortality projections are overly speculative and inconsistent with Social Security Administration projections.... [An] automatic approval process is needed.... [A]djustments are needed to the user fees to reflect the simplified process and the availability to smaller plans. Plans currently using substitute mortality tables should be grandfathered from the new substitute mortality table rules ... For substitute mortality tables, formulas should be provided rather than described."
American Benefits Council

[Opinion]

Pensions at the Supreme Court: Church Plans
"[T]here's a reason it was never brought up legally before now. It's because now, many of these pensions are bankrupt.... [W]hile the Justices make comments about the expense of all this, that really should be irrelevant re: the law.... There can be bad law and bad legal interpretation. But there's a problem if they undercut the IRS letters. Because tax policy is a huge part of the controlling bureaucracy of the federal government, and if the IRS letters do not hold, then that calls into question all sorts of regulatory actions."
STUMP

Benefits in General

[Guidance Overview]

New Claims Procedure Requirements for Disability Claims
"[If] a plan treats a participant as being disabled, based [solely] on being granted an award of a Social Security disability benefit, the plan's claims procedures would not have to reflect or apply the prior or new rules in the regulations that apply to disability claims.... If the plan retains any other requirement for treating a participant as being disabled, such as the plan administrator retaining any authority to challenge and deny such treatment despite the grant of a Social Security disability award, then the plan would have to handle a participant's claim for a disability benefit wholly or partly in accordance with the (prior and new) rules in the regulations relating to disability claims."
Cary Kane ERISA Lawyer Blog

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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