Retirement Plans Newsletter

May 1, 2017

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Webcasts and Conferences

Clawbacks: Lessons (to be) Learned
May 11, 2017 WEBCAST
Practising Law Institute

Half Day Seminar
May 23, 2017 in FL
ASPPA Benefits Council [ABC] of Central Florida

401(k) Plan Fiduciary and Legal Update: Understanding Your Fiduciary Duties and Managing the Risks
May 25, 2017 in IL
Worldwide Employee Benefits Network [WEB] - Chicago West Chapter

mHealth + Telehealth World 2017
July 24, 2017 in MA
World Congress

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Text of Fourth Circuit Opinion: No Breach of ERISA Fiduciary Duty in R.J. Reynolds Plan's Divestment of Nabisco Stock (PDF)
37 pages. "We see no indication that the district court impermissibly rested its analysis solely on risk. Even a cursory review of its opinion reveals that the court also considered value and expected returns, the diversity of the Plan's investments, the requirements of the Plan documents, and the timing of the divestment.... Tatum maintains that the district court must have improperly used the 'could have' standard because that is the only standard that permitted the court to hold for RJR. That argument is wishful thinking.... [T]he district court did not err in refusing to require a more compelling reason for divestment decisions than for investment decisions[.]" [Tatum v. RJR Pension Inv. Comm., No. 16-1293 (4th Cir. Apr. 28, 2017)]
U.S. Court of Appeals for the Fourth Circuit

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Federal Appeals Court Sides with Reynolds on Retirement Plan Dispute
"The ruling from the Fourth [Circuit] Court of Appeals is the latest in a legal case that has lasted 15 years.... Robert Elliot, a Winston-Salem attorney representing Tatum, said in July 2015 that 'the plaintiffs have proven damages in excess of $50 million, which would be increased due to the passage of time since trial.' In February 2016, U.S. District Judge Carlton Tilley ruled for the second time that the committee acted prudently in eliminating the Nabisco funds from its 401(k) plan. Tatum filed an appeal in March 2016 -- his third attempt with the appeals court." [Tatum v. RJR Pension Inv. Comm., No. 16-1293 (4th Cir. Apr. 28, 2017)]
Winston-Salem Journal

Impact of Mortality Change on U.S. Single-Employer Pension Plan Funding (PDF)
"In December 2016, the [IRS] issued proposed updated mortality tables starting in 2018 for minimum funding requirements for single employer defined benefit pension plans. This study estimates the impact of the proposed change on the single employer pension system as a whole.... On a funding basis, estimated aggregate 2018 Funding Target liabilities increase 2.9% from $2.278 trillion to $2.343 trillion, and the estimated cost of current year benefit accruals (normal cost) increases 1.6%, from $49.6 billion to $50.4 billion.... For PBGC premiums, estimated aggregate 2018 Premium Funding Target liabilities would increase 3.1%, from $2.679 trillion to $2.763 trillion."
Society of Actuaries

Why Pensions Matter: The History of Defined Benefit Pension Plans in the U.S. (PDF)
10 pages. "Pensions, in the broadest sense of the term, have existed since ancient Rome.... Governments began offering pensions because they are the most effective and cost-efficient way for working families to prepare for retirement.... This report will explore the history of defined benefit public pensions in the United States, why they were implemented in the first place, and why they continue to remain today."
National Public Pension Coalition

Pension Finance Update, April 2017
"Pension plans broke even in April and remain in positive territory through the first four months of 2017. Last month, rising stock markets neutralized the impact of higher pension liabilities (driven by lower interest rates) for both model plans ... Through April, Plan A is up almost 3% and Plan B is up almost 1% so far this year."
October Three Consulting

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How Lavish Benefit Promises Are Coming Back to Haunt Public Sector Workers
"Benefits are taking a big bite out of school budgets in a number of states that have made lavish pension and retiree health care promises to workers. Connecticut, with one of the worst-funded state pension systems, has seen the cost of supplying benefits to its school employees rocket by 123% over 10 years, so that benefits alone now consume 27% of its public education budgets, up from 18% a decade ago.... In many states, there's little hope that this pressure will end soon."
Investor's Business Daily

How to Use the One-and-Done Method for Retirement Savings
"The one-and-done method takes some effort up front. Just compiling your bills will take time, and then calling your lenders or utility companies to reduce your spending will take more time. But once you've trimmed these expenses, you can roll the amount you save into a retirement account month after month. Here are some expenses you might be able to reduce with this method[.]"
U.S. News & World Report

Retirement Lump Sums Being Depleted Quickly
"More than one out of five workers who accepted a lump sum from their employer-sponsored retirement plan have depleted it ... Of the individuals who opted for the lump sum, 62 percent had money left over from the withdrawal, 21 percent had depleted their lump sum and 17 percent didn't know or couldn't recall ... Those who reported depleting their lump sum said it took them an average of five and a half years to burn through the money."
InsuranceNewsNet.com

[Opinion]

It's Harder Than You Think to Spend Down Your 401(k) Account in Retirement
"[P]eople seem to have a psychological attachment to their pile; they have spent a lifetime building it up and may be reluctant to draw it down. Second, people are fearful about end-of-life health care needs and want to be sure they have enough money to cover their expenses. Finally, people seem to have a desire to leave a bequest ... So, without some guidance, chances are high that retirees will deprive themselves of necessities. One way to help may be to put more emphasis on the Required Minimum Distributions[.]"
Alicia Munnell, in MarketWatch

[Opinion]

Start Spreadin' the News: Time to Defuse NYC's Pension Bomb
"New York City's pension costs will soon displace social services as the second-biggest spending category in the city budget, consuming the equivalent of more than 80 cents out of every dollar raised by the city's personal income tax. But even with annual contributions approaching the once-unimaginable level of $10 billion a year -- more than the entire budgets of all but a handful of large cities -- the city remains vulnerable to a pension funding crisis within the next few years."
New York Daily News

Executive Compensation
and Nonqualified Plans

Trump's Tax Reform Principles Could Affect Stock Compensation
"The proposals merely cut off the current top tax brackets, which could mean that anyone currently in the brackets between 25% and the new top bracket would get stuck paying a higher rate both on ordinary income and on short- and long-term capital gains.... Aside from the most senior executives, individuals with stock compensation tend to be in that income range."
myStockOptions.com

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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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