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Webcasts and Conferences

DOL Fiduciary Rule Finds New Life in Rule Extension
April 20, 2017 WEBCAST

Will You Be Ready When the Auditor Knocks? Preparing for HIPAA and DOL Audits
April 27, 2017 in OH
Worldwide Employee Benefits Network [WEB] - Cleveland Chapter

Certificate Series Denver
July 24, 2017 in CO
International Foundation of Employee Benefit Plans [IFEBP]

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How to Save a Bundle on PBGC Premiums
"Company 1 records the contributions as being for the 2017 plan year, while Company 2 records them as being for the 2016 plan year (which is often permissible for contributions made within eight and a half months after the end of the plan year). This simple difference in attribution has reduced Company 2's 2017 variable rate PBGC premiums by $6.8 million.... Suppose that instead of making its $100 million third-quarter contribution on Oct. 15, it accelerates the payment to Sept. 15. Then, it generally can be counted in plan assets as of Jan. 1, 2017, saving an additional $3.4 million in PBGC premiums."
October Three, via CFO


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

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Are IRAs the Future of Lifetime Income and Even Retirement Security?
"There is really quite bit of arrogance in the retirement plan marketplace, especially when it comes to dealing with IRAs. Most of us tend to actively ignore them ... The high degree of technical skill needed to maintain plans seems to engender this attitude. But it also has fostered a great deal of resistance to innovation.... IRAs, for whatever reason, are stealthily changing the retirement future. When you look closely at their structures, they can be designed to be incredibly flexible[.]"
Business of Benefits

New Sixth Circuit Decision Blesses Aggressive Tax Planning with Roth IRA
"In view of the Sixth Circuit's decision, it would appear that other tax-advantaged companies also could be owned through Roth IRAs.... Another tax-advantaged vehicle that might be an attractive candidate for ownership by a Roth IRA is a foreign corporation that is not subject to significant tax in its home country or in the United States.... [A] taxpayer still must establish a legitimate business purpose for forming the tax advantaged vehicle." [Summa Holdings, Inc. v. Comm'r, No. 16-1712 (6th Cir. Feb. 16, 2017)]
Foley & Lardner LLP

Substance Over Form May No Longer Prevail in the Sixth Circuit (PDF)
"[T]he Sixth Circuit outright rejected the substance-over-form doctrine, and held that because Roth IRAs are able to hold DISC stock, and that by Congressional design, DISCs are all form and no substance, neither it nor the IRS has the authority to undo this transaction just because the end goal was intended to be, and resulted in, a reduction in taxes.... Outside of the Sixth Circuit, companies should tread very lightly in this area. Everyone should anticipate Congressional action or possibly IRS appeal to the Supreme Court[.]" [Summa Holdings, Inc. v. Comm'r, No. 16-1712 (6th Cir. Feb. 16, 2017)]
Groom Law Group

Trump to Sign Resolution Nixing City-Run Auto-IRAs for Small Businesses
"Cities and counties will soon be barred from requiring small businesses without 401(k)-type retirement plans to enroll workers into a government-run [IRA]. Meanwhile, a measure to block a requirement for similar small businesses to participate in auto-enroll IRAs run by the state still awaits a Senate vote."
Society for Human Resource Management [SHRM]


Things Have Changed Are You Up-To-Date?

Sponsored by ASPPA

Keep up to date on the latest rules and regulations with the ERISA Outline Book, THE resource for information on qualified plans. Choose from two great formats; hardcopy or online, including access to a fully searchable and cross-referenced website.

Boomers Abandoning Target Date Funds at or Near Retirement
"[O]ne possible explanation for Boomers taking their money out of TDFs is they are putting their assets into a payment strategy... [G]uidance issued by the DOL and [IRS] in 2014 formally permits DC plan investment options such as target-date funds to include income annuities as part of their fixed-income holdings ... Yet, there has still been relatively little product development in this area."

Worker Retirement Confidence Waning (PDF)
"Conducted in January, the survey polled 1,671 workers and retirees to judge their confidence in their ability to retire comfortably. Even with the stock market soaring to record highs and the economy showing signs of strength, the percentage of workers saying they are 'Very or Somewhat Confident' in their retirement prospects fell to only 60% from last year's 64%."
Ekon Benefits

State and Local Government Spending on Public Employee Retirement Systems (PDF)
"On a nationwide basis, contributions made by state and local governments to pension trust funds account for 4.5 percent of direct general spending.... This update provides figures for public pension contributions as a percentage of state and local government direct general spending for FY 2014, and projects a rate of spending on pensions on an aggregate basis for FY 2015."
National Association of State Retirement Administrators [NASRA]

Appeals Court Unanimously Vindicates San Diego's 2012 Pension Revisions
"California's Fourth District Court of Appeal unanimously overturned a 2015 state labor board ruling that said the cutbacks were illegal ... The initiative, Proposition B on the June 2012 ballot, replaced guaranteed pensions with 401(k)-style retirement plans for all newly-hired city employees except police officers."
The San Diego Union-Tribune


United Airlines and the Fiduciary Paradox: Providing a Margin of Excellence
"When regulators become heavy-handed with complex or numerous rules, the result is a desensitization of our Moral Aspiration. More rules actually diminish our desire to want to act in the best interests of others, and often the result is mediocrity, or worse, as in the case of United Airlines.... If our objective is to provide those we serve a margin of excellence, we need to convince regulators that more rules will not translate into better outcomes. In turn, we need to accept responsibility to educate and inform fiduciaries of the leadership and stewardship behaviors that will amplify and improve their governance procedures."
Don Trone, via


Watching the Money Run Out: Applying a Simulation to a Chicago Pension Fund
"The reason the pension assets run out is because the starting assets are insufficient, and the contributions are really insufficient. This is why [the author's model considers] at what the increase in contributions would have to be to cover the outgoing cash flows. In this case, the increase is over 300%. So if you think the current contributions are too high, how are 4x the contributions going to be affordable? If you think pre-funding the pensions is expensive, wait until you have to do pay-as-you-go. It's really expensive."


New Approach to Social Security's Full Retirement Age Would Eliminate 83% of Cash Shortfall
"[The Save Our Social Security Act of 2016 (S.O.S. Act)] may be best remembered as providing a unique solution to Social Security's full retirement age that would eliminate a whopping 83% of the program's budgetary shortfall ... The S.O.S. Act would continue raising the FRA by two months per year between 2022 and 2034 until it hits age 69 in 2034. At this point, the FRA would be indexed to longevity ... At the same time, the maximum age for delayed retirement credits would increase in step with the full retirement age, keeping a three-year gap in place."
Motley Fool

Benefits in General

Data Security: Nine Questions to Ask Your Current or Prospective Benefits Technology Provider
"[1] What is your company's security philosophy? ... [2] Do you have a security audit or attestation report on your company itself (not just a leased data center)? ... [3] Has the system been properly hardened? ... [4] Is all data stored in your database encrypted at rest? ... [5] Is all data in motion inside the network encrypted in transit? ... [6] Does your network provide warm failover as opposed to antiquated tape backups? ... [7] Is multi-factor authentication required for remote users to the internal network? ... [8] Do you have a team of security employees and a different team of compliance employees that concentrate only on those activities? ... [9] How often are your security and compliance systems audited, and by whom?"

When Close Is Not Close Enough: A Shift Towards Strict Compliance for ERISA Claim Procedures
"A string of cases in the Second Circuit Court of Appeals is putting ERISA claims administrators on notice that falling short of strict compliance with the [DOL's] claims and appeal regulations may cost administrators a deferential standard of review.... Under the DOL's final regulations governing disability benefit claims, if a plan fails to strictly comply with the new disability claims regulations, a claimant may file a civil suit under ERISA Section 502(a) immediately without exhausting the plan's administrative remedies and the plan administrator's benefit determination will be subject to de novo review.... [T]he recent cases offer some lessons about the types of violations that may cause a plan administrator to lose its deferential standard of review."
Trucker Huss

Ninth Circuit Says Violation of DOL Claim Regulations Can Result in a Loss of Deferential Standard of Review
"The appeals court stated that, while Reliance's failure to comply with ERISA's procedural requirements could not on its own justify an award of benefits under the LTD policy, it might alter the standard of review... The Ninth Circuit thus directed the district court on remand to determine whether the procedural violation caused Smith substantive harm such that de novo review of Reliance's decision would be appropriate. Absent a finding of substantive harm, the district court should apply an abuse of discretion standard, while according the procedural violation appropriate weight." [Haber v. Reliance Standard Life Ins. Co., No. 14-9566 (C.D. Cal. Aug. 4, 2016)]
Robinson & Cole LLP

Discussions on
the BenefitsLink Message Boards

OK to Amend Plan to Fully Vest Active Employees But Not Former Employees?
"Can an employer amend its 401(k) plan to fully vest matching contribution account balances for all active employees, while maintaining the existing tiered vesting schedule for terminated participant accounts?"
BenefitsLink Message Boards

Why Not Make a Safe Harbor Contribution for Highly Compensated Employees?
"My client maintains a safe harbor 401K/PSP with new comp allocations. After three years of operation, the client -- who is an HCE -- wants to know why neither he nor any of his family members got a safe harbor contribution (3% of compensation). Besides the language in the plan document, as well as the fact that the general test stands a greater chance of being blown, what are some other good reasons?"
BenefitsLink Message Boards

Press Releases

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David Rhett Baker, J.D., Editor and Publisher
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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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