Retirement Plans Newsletter

April 6, 2017

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Midwest US Regional Sales Director
Fringe Benefit Group
in IA, IL, KS, MO, NE, NV, OK, WI

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Actuarial Data Inc.
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Actuarial Data Inc.
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Webcasts and Conferences

Identifying Common-Law Employees: Implications for Employer Group Health Plans
April 20, 2017 WEBCAST
Thomson Reuters / EBIA

Pay Me Now or Pay Me Later: How Not to Run an Employee Benefit Plan
May 16, 2017 WEBCAST
American Bar Association [ABA]

Fundamentals of 401(k) and Other Qualified Plans
June 19, 2017 in IL
FIS Relius Education

Group Health Plans Quarterly Update - Q2 2017
June 21, 2017 WEBCAST
Thomson Reuters / EBIA

QDROs Boot Camp
July 12, 2017 WEBCAST
National Business Institute

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[Official Guidance]

Text of IRS Request for Comments on Revisions to Form 5300: Determination for Employee Benefit Plans
"[T]he IRS is soliciting comments concerning Form 5300, Application for Determination for Employee Benefit Plans.... Form 5300 is used to request a determination letter from the IRS for the qualification of a defined benefit or a defined contribution plan and the exempt status of any related trust ... There are revisions being made to the form at this time."
Internal Revenue Service [IRS]

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[Guidance Overview]

2017 Enrolled Actuaries Meeting 'Blue Book': Questions to the PBGC and Summary of Responses (PDF)
23 pages, dated Apr. 2017. "[This document] sets forth the questions posed to staff of the [PBGC] at discussions on March 2, 2017, with representatives of the Enrolled Actuaries Program Committee. Included also are summaries of the responses to those questions.... [The document contains 19 questions and answers, covering:] [1] Premiums ... [2] Standard Terminations ... [3] Reportable Events ... [4] ERISA 4010 Reporting."
Enrolled Actuaries Program Committee and Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

Informal MPRA Tips from Treasury, PBGC and DOL, Courtesy of the American Academy of Actuaries (PDF)
"The Multiemployer Subcommittee of the American Academy of Actuaries (Subcommittee) met with members of the Department of Treasury, the [PBGC], and the [DOL] at the end of February 2017 and discussed applications by multiemployer pension plans in critical and declining status to suspend benefits or partition liabilities, as permitted under [MPRA].... [T]he Discussion Notes are a useful resource to summarize how these agencies saw the first 12 applications and what tips were offered to actuaries and plan sponsors at the meeting."
United Actuarial Services, Inc.

[Guidance Overview]

DOL Announces 60-Day Delay to Fiduciary Rule and Exemptions and Makes Significant Changes to Transition Period Compliance
"[T]he DOL's approach incorporates a 60-day delay of the applicability date of the Fiduciary Rule and related exemptions and a significant reduction in compliance burdens during the new transition period ... This approach essentially eliminates the need for transition agreements, disclosures, and certain structural changes (such as the appointment of a BICE officer) that were formerly required to be in place on the applicability date."
The Wagner Law Group

[Guidance Overview]

DOL Fiduciary Rule Delayed, But Parts Might Be Here to Stay
"In addition to the general 60-day delay, the Department has delayed most of the requirements for the best interest contract and other new exemptions through January 1, 2018. In setting separate applicability dates, the Department distinguished between [1] the rule on fiduciary status (who is a fiduciary) and the 'Impartial Conduct' standard (acting in the client's best interest), and [2] the more onerous requirements of the various exemptions. The Department hinted that it might let the rule on fiduciary status and the Impartial Conduct standard go into effect as early as June 9."
Proskauer's ERISA Practice Center

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[Guidance Overview]

Fiduciary Rule Delayed -- But It's Not Entirely What Was Expected
"[T]he delay means the 'old' rules will apply to the sale of investments (including insurance and annuities) and investment-related services to IRAs and ERISA-governed plans for another 60 days. This also means that -- until June 9, 2017 -- many firms and advisers will not be classified as fiduciaries and will not need to comply with a prohibited transaction exemption to do business. The relief provided under PTE 84-24, although temporary, is also significant.... In effect, the DOL is confirming that the new definition of fiduciary advice and the 'Best Interest' standard of conduct (and other Impartial Conduct Standards) will apply on and after June 9, even as it completes its review of the Rule and decides how to proceed."
Drinker Biddle

'Poof, It's Gone!' DOL Quietly Strips Two Heavy Lifts from the Fiduciary Rule as It Makes Delay Official
"In a move that took even seasoned ERISA attorneys by surprise, the [DOL] extracted the teeth from the fiduciary rule until Jan. 1, 2018. In making official its 60-day delay until June 9, the DOL eliminated its two most stringent requirements -- namely the need to declare fiduciary status to clients and the associated need to disclose specific conflicts of interest."
RIABiz

Fiduciary vs. Investment Manager: What's the Difference?
"In an environment of increased fiduciary litigation, advisors and other service providers have ramped up their marketing efforts to provide risk management services to plan sponsors. Such efforts have resulted in plan sponsor confusion as to the type of services that are being offered, as well as the type of services that are preferable (e.g., is it better to engage a 3(21) fiduciary, or a 3(38) investment manager?). This [article] will attempt to get past all of the marketing hype so that plan sponsors can make productive decisions in this area."
Cammack Retirement Group

Use of Managed Accounts Rising in 401(k)s
"Though the space is dominated by target-date funds, a number of employers seemingly feel that managed accounts that pair algorithm-driven advice with human helpers are superior for workers who are nearer to retirement. Participants in managed accounts have been found to save .5% a year more than those in target-date funds, while earning, on average, .24% more, after fees, each year."
Barron's

[Advert.]

Form 5500 Reporting Update

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Apr. 26 webinar. Learn when you need to file a Form 5500 and what you need to file, and will focus on some recent changes that may impact your filings.


Rollover Roulette: Rollover, Direct Rollover, Direct Payment, Direct Transfer or Transfer (Part 2: Potential Horrible Consequences)
"The only way that a beneficiary may move inherited eligible retirement plan monies to an inherited IRA is through a 'direct trustee-to-trustee transfer.' ... A 'direct rollover' is available only to plan participants (and their surviving spouses) and requires that the monies be paid directly to the plan participant's new employer's eligible retirement plan or IRA. A 'direct rollover' is not subject to the 60-day rule.... An IRA owner can also run into trouble if he or she confuses a 'rollover' with a 'transfer' and, as a result, does more than one rollover between IRAs in a 12-month period."
Morgan Lewis

Proposed 'Social Security 2100 Act' Cuts Taxes, Strengthens Benefits, Ensures Social Security Through This Century
"Over 11 million Social Security recipients would see a tax cut ... [The bill provides] a modest increase for all beneficiaries starting in 2016, equivalent to 2% of the average benefit.... [and improves] the annual cost of living adjustment (COLA) formula ... The new minimum benefit will be set at 25% above the poverty line rather than below it.... [The bill would] phase in an increase in the contribution that, for the average worker, equals an additional 50 cents per week every year to keep the system solvent.... This legislation would apply the payroll tax to wages above $400,000."
Rep. John B. Larson (D-Conn.)

Estimated Effect on Social Security Solvency of Proposed Social Security 2100 Act (PDF)
24 pages. "Assuming enactment of [the Social Security 2100 Act], we estimate that the combined Social Security Trust Fund would be fully solvent (able to pay all scheduled benefits in full on a timely basis) throughout the 75-year projection period ... In addition, under this proposal the OASDI program would meet the further conditions for sustainable solvency, because projected combined trust fund reserves would be growing as a percentage of the annual cost of the program at the end of the long-range period."
Office of the Chief Actuary, U.S. Social Security Administration [SSA]

S&P 1500 Pension Funded Status Increased by One Percent in March
"As of March 31, 2017, the estimated aggregate deficit of $391 billion represents decrease of $9 billion as compared to the deficit measured at the end of February 2017. The aggregate deficit is down $17 billion from the $408 billion measured at the end of 2016[.]"
Mercer

[Opinion]

Pursuing Universal Retirement Security Through Automatic IRAs and Account Simplification
"The proposal developed by Mark Iwry ... offers most employees who are not covered by any form of employer-sponsored retirement plan the opportunity to save through the powerful mechanism of regular payroll deposits that continue automatically. The employer's administrative functions are minimal and ... should involve no out of pocket cost for the employer."
David John, for The Heritage Foundation

Benefits in General

Some Standing Issues Under ERISA (PDF)
"The U.S. Supreme Court has defined standing as 'whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues.' Subject matter jurisdiction in ERISA litigation involves both constitutional limits on federal courts and prudential limitations on its exercise. Even if a plaintiff has a cause of action arising under a given statute, 'federal courts ... have only the power that is authorized by Article III,' which enforces the Constitution's case or controversy requirement."
Barry L. Salkin, The Wagner Law Group, via Benefits Law Journal

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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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