Retirement Plans Newsletter

April 14, 2017

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Employee Benefits Attorney
Graydon
in OH

Senior Plan Consultant
Retirement Planning Services, Inc.
in CO, Telecommute

ASC Defined Benefit Software Support Specialist
Actuarial Systems Corporation
in CA, FL, Telecommute

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Webcasts and Conferences

Stop Loss 101
April 25, 2017 WEBCAST
ISCEBS - North California Chapter

Employee Benefits Briefing
May 11, 2017 in NY
Nixon Peabody LLP

Revising the Affordable Care Act without Replacing It: The Trump Administration Regulates and Litigates the ACA
May 17, 2017 WEBCAST
Practising Law Institute

Automatic Retirement Enrollment: The New Norm for Benefits?
June 20, 2017 WEBCAST
Lorman Education Services

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[Official Guidance]

Trump Signs H.J.Res. 67, Nullifying DOL Safe-Harbor Rule for City-Run Retirement Plans for Private Employees
"On Thursday, April 13, 2017, the President signed into law H.J.Res. 67, which nullifies the [DOL's] rule on Savings Arrangements Established by Qualified State Political Subdivisions for Non-Governmental Employees."
The White House

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


[Official Guidance]

Text of PBGC Approval of Special Withdrawal Liability Rules: Service Employees International Union Local 1 Cleveland Pension Plan
"[A]n employer that completely or partially withdraws from a defined benefit multiemployer pension plan becomes liable for a proportional share of the plan's unfunded vested benefits.... Congress nevertheless allowed for the possibility that, in certain industries, the fact that particular employers go out of business (or cease operations in a specific geographic region) might not result in permanent damage to the pension plan's contribution base.... Each request for approval of a plan amendment establishing special withdrawal liability rules must provide PBGC with detailed financial and actuarial data about the plan.... PBGC [has] received a request [from] ... a multiemployer pension plan covering the commercial building cleaning and security industries in the greater Cleveland, Ohio area."
Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

(Mild) Relief for Safe-Harbor Hardship Administration
"The [memorandum to IRS EP employees] provides for some flexibility to employers and TPAs by allowing them to rely on summaries of information from participants. Employers and TPAs that currently require source documents to substantiate hardship distributions do not need to make any changes to their procedures. While they may want to consider whether collecting summaries might streamline their practices, their current practices assure that documentation is available upon an audit without having to rely on participants' recordkeeping abilities to satisfy any substantiation requests by the IRS."
Trucker Huss

DOL Backs Off Longtime 401(k) Policy Priority
"During the past five years, the DOL has filed friend-of-the-court briefs in every federal appeals court case asking whether a 401(k) plan service provider can be liable as a fiduciary under [ERISA]. The DOL this week declined to do the same in a case against Transamerica Life Insurance Co. that's pending in the U.S. Court of Appeals for the Ninth Circuit. While this move could signal a shift in DOL enforcement priorities in the Trump administration, it also could be read as a natural byproduct of a federal agency lacking top leadership following a presidential transition[.]"
Bloomberg BNA

DB Pensions and the Emergence of the Big Bang Strategy (PDF)
"The private defined benefit pension market of approximately $3 trillion dwarfs the total bulk buyouts executed to date. Over the next 5-10 years, [the authors] expect to see ... substantial outflows to insurance and household balance sheets in the form of annuities written by insurers and participants taking their DB benefit as a cash option.... [A] number of factors align in 2017 to accelerate pension changes and upend the relative inertia of recent years."
Mercer

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Another Question is Answered in the Who's the Employer Q&A Column
"An employer wants to move out of the 401(k) plan operated by their current PEO and establish a 401(k) plan with more flexibility in design. The plan with the PEO (which is co-sponsored by the employer) is not a safe harbor plan. Would the new plan be a 'successor' plan? Could it be a safe harbor plan?"
S. Derrin Watson, on BenefitsLink

[Opinion]

June 9, 2017 Dawning: Strict Fiduciary Obligations to Arise?
"At least for IRA accounts, salespeople will become fiduciaries.... Broker-dealer firms will diverge in their approaches to the rule.... Advisers will increasingly shift from one firm to another. Many of the older advisers, who want to try to remain as salespeople and who don't want to become true fiduciaries, will migrate to firms that will utilize BICE and the other PTEs.... Then, new advisers in firms that request the advisers to use BICE and the other PTEs, rather than level compensation, will eventually wise up and depart for a purer fiduciary pasture."
Ron A. Rhoades, JD, CFP

[Opinion]

Continuing Saga of So-Called 'Safe Withdrawal Plan' -- Good News, Bad News
"[T]he good news in this research is that: it is a mistake to view portfolio withdrawals in isolation from other sources of income (as is the common practice), and risks retirees face in retirement can be mitigated by investing in guaranteed lifetime income sources and using dynamic rather than static spending strategies. The bad news ... is that Dr. Blanchett is even talking about utilizing safe withdrawal strategies with the implication that there are still financial planners out there who continue to use such strategies for their clients."
Ken Steiner, FSA Retired

[Opinion]

ERIC Comment Letter to Treasury and OMB on Proposed Mortality Tables (PDF)
"[ERIC requests] that [OMB] review the procedure that was used to determine the proposed rule was not deemed 'significant', and, therefore, not subject ... to additional review by the respective agencies, including a thorough economic analysis.... Assets in all retirement plans in the United States represent trillions of dollars. Based on that figure, most regulatory actions that impact retirement plans would most likely surpass the $100 million threshold to be considered 'significant'[.]"
The ERISA Industry Committee [ERIC]

Benefits in General

Proposed Form 5500 Package for 2017: Links to Forms, Schedules and Instructions as Submitted for OMB Approval
"The forms and instructions have been updated to reflect the new form year (2017). As noted in the 'Changes to Note' section on the first page of the instructions, revisions include the removal of IRS-only questions, updates to the Authorized Service Provider Signatures to reflect the ability for service providers to sign electronic filings on the plan sponsor and DFE lines, where applicable, in addition to signing on behalf of plan administrators on the plan administrator line, updates to the administrative penalty amounts, clarifications regarding plan name changes, updates to mortality codes in Schedule MB, and a clarification regarding PBGC insurance coverage." [Editor's note: be sure the "All" checkbox is clicked on the target page, in order to see a table with clickable names of the forms, schedules and instructions.]
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Communicating with Video
"Are you using video to educate your workforce about their benefits? ... [As] technology evolves, the cost of professionally produced videos is decreasing, making them an affordable communication solution for employers.... More employers have realized that investing in video can save time and money, and keep managers at their desks instead of traveling to deliver the same presentation multiple times."
Willis Towers Watson

Executive Compensation
and Nonqualified Plans

Total CEO Pay in U.S. Companies Rose 6% in 2016
"[T]otal pay for CEOs increased 6% in 2016, up from the 4% median increase in 2015. Total pay as reported in the Summary Compensation Table in company proxy statements includes base salary; actual annual and long-term cash bonuses; the grant-date value of long-term incentives (LTIs) including stock options, restricted stock and long-term performance shares; the value of perquisites; earnings from deferred compensation; and the change in value of executive pensions."
Willis Towers Watson

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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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