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May 3, 2017 logo logo
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Employee Fiduciary, LLC
in AL, FL

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Beyond the BIC What It Means to Be a Fiduciary [Videocast]
April 12, 2017 WEBCAST
Eversheds Sutherland

Service Agreements
May 25, 2017 WEBCAST
FIS Relius Education

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[Official Guidance]

Text of IRS Memo for EP Rulings and Agreements Staff: Changes in Tax Exempt Quality Management System (TEGMS) and Mandatory Review Standards (PDF)
"Effective May 1, 2017, ... the following applications are subject to mandatory review: [1] Cases with interested party comments.... [2] Terminations with reversions of more than $5,000,000; and two percent of all other terminations. [3] Technical advice requests.... [4] Proposed adverse determination cases.... [5] Variable annuity plans. [6] Cases designated by a Determinations Manager, Determinations Area Manager or the Manager, EP Ruling & Agreements QA." [TE/GE-07-0417-0018, Apr. 28, 2017]
Internal Revenue Service [IRS]

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[Guidance Overview]

IRS Guidance on Cash Balance Benefit Formulas: Avoiding Employer Discretion
"IRS confirmed that a cash balance formula based on only a portion of a participant's annual compensation can nevertheless meet the 'definitely determinable' requirement so long as the formula is not subject to employer discretion under the plan terms. The EP staff is directed to apply this analysis when (i) reviewing a cash balance plan's determination letter request, or (ii) auditing a cash balance plan."
Drinker Biddle

Starwood Hotels Can't Escape ERISA Lawsuit Over 401(k) Fees
"The participants have sufficiently alleged that Starwood used a flawed process for selecting record-keeping and administrative services for its employees' retirement plan ... The hotel chain, however, successfully argued that the participants were time-barred from pursuing their claim that the hotel breached its duties by failing to exclude from the plan a BlackRock Inc. mutual fund that carried [allegedly] excessive fees." [Creamer v. Starwood Hotels & Resorts Worldwide, Inc., No. 16-9321 (C.D. Cal. May 1, 2017)]
Bloomberg BNA

Global DC Plan Investment Trends: Targeting the Right Glidepath
"Retirement readiness in the US is low at a time when the over-65 population cohort is expanding. Target date funds have rapidly become the most popular investment option in defined contribution plans, serving as the default option in many. Now DC plan sponsors are evolving -- shelving TDFs from record-keepers in favour of more flexible options, while adding financial wellness counselling to boost the productivity of participants."
Investment & Pensions Europe

Research Finds Investors Seeking Consistent ESG Disclosure
"68 percent of institutional investor respondents say non-financial performance frequently or occasionally played a pivotal role in their decision-making last year, compared to 52 percent the year before. Ninety-two percent of respondents agree or strongly agree that ESG issues have real quantifiable impacts on a company's performance."
Corporate Secretary


A simple, illustrative guide for pension plan sponsors.

Sponsored by Russell Investments

This practical overview for corporate plan fiduciaries is not only a great reference work -- it's a high level guide that makes an excellent training tool for new board and investment committee members.

State Fiscal Savings Fact Sheets
"When individuals save for retirement they are less likely to rely on public assistance programs later in life. These fact sheets show the fiscal savings to state governments that could result from lower-income retirees having saved through Work and Save programs during their working years."

Putting Demographics in Perspective
"[W]hile altering the glide path of TDFs to accommodate a plan's demographic characteristics can have a significant impact on expected returns, ... it can also reduce investor satisfaction with a portfolio's risk and return characteristics in the context of achieving their retirement savings goals."

Senate Slated to Vote on Rolling Back State-Run Auto-IRA Safe Harbor
"Senate Republicans feel they have the votes to undo the [DOL's] rules crafting a safe harbor that exempted states' auto-IRA programs from ERISA. The vote on H.J.Res. 66, a Congressional Review Act (CRA) resolution cancelling the Obama administration's regulation on state government-run retirement plans, is expected to occur today [May 3]. It would be the 14th CRA resolution of disapproval sent to the president's desk this year."
National Association of Plan Advisors [NAPA]

Retirement Benefits and Executive Compensation Under the New Administration (PDF)
"At best, a reduction in individual tax rates could result in increased contributions to health savings accounts and 401(k) retirement savings plans.... The new fiduciary rule was one of the Trump Administration's first targets.... Because of its popularity with institutional investors, 'Say on Pay' may be phased out over time, but for now it is still firmly in place."
Bryan, Pendleton, Swats and McAllister, LLC


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Trump's First 100 Days: A Retirement Policy Perspective (PDF)
"The sentiment in DC is that the proposed individual/corporate rate cuts and deductions will require new revenue to offset the loss. That requirement will likely lead Trump, the GOP, and the Freedom Caucus to the employee benefits exclusions in some way.... [T]he GOP tax plan would reduce the federal government's revenue intake by lowering corporate and individual tax rates.... The exclusion of employer contributions for medical insurance premiums and medical care results in $2.7 trillion in lost revenue from 2016 to 2025, and the combination of defined contribution/defined benefit plans is $1.5 trillion[.]"

Actuarial Inputs and the Valuation of Public Pension Liabilities and Contribution Requirements: A Simulation Approach
"Discount rates, salary growth rates, cost methods, and mortality tables all influence funding ratios and contribution requirements. Without considering these effects, comparisons of funding ratios across pension systems will produce biased results. The discount rate assumption is the most influential actuarial input on funding ratios and contribution requirements.... The effects of actuarial inputs greatly depend on plan characteristics such as demographic profiles and asset levels[.]"
Center for Retirement Research at Boston College

75% of State and Local Government Workers Were in DB Plans in 2016
"In March 2016, 75 percent of state and local government workers participated in defined benefit pension plans. Of these workers, 57 percent participated in frozen defined benefit plans, or plans that are not open to new employees. For 98 percent of workers who participated in defined benefit pension plans, employee benefits are based on a percentage of their earnings during a specified number of years, usually at the end of their careers. The other 2 percent of workers participated in cash balance plans, where employees are credited with a specified contribution and a rate of interest on the contribution; the benefits are provided as a lump sum and may be converted to an annuity."
U.S. Bureau of Labor Statistics [BLS]


DOL Fiduciary Rule: Good for Business But Opposed by the U.S. Chamber of Commerce
"You don't need to dig too deep into the rule to understand it's not just a pro-investor reform -- it's also pro-business. How so? By making it easier for 401(k) plan sponsors to meet their fiduciary responsibilities and lower their plan expenses.... [T]he COC is representing the interests of the financial services industry by opposing the Fiduciary Rule ... they should be supporting the rule to better represent their much bigger constituency of 401(k) plan sponsors."
Employee Fiduciary

Benefits in General

Fifth Circuit Maintains Default Deferential Standard of Review in Denial of Benefit Claims, But Suggests It May Soon Be Overruled
"Commenting that '[t]he pillars supporting Pierre may have thus eroded', the Fifth Circuit's concurrence suggests that the tides may be changing, and that Firestone's requirement for discretionary language may soon apply equally to questions of plan interpretation and fact in the Fifth Circuit." [Ariana M. v. Humana Health Plan of Texas Inc., No. 16-20174 (5th Cir. Apr. 21, 2017)]
Robinson & Cole LLP

Addressing the Risks of Related Employer Status for Benefit Plan Purposes (PDF)
"In determining related employer status, there is no 'conservative' approach.... If a group health plan covers the employees of two or more employers who are not in the same controlled group (but who might be in the same affiliated service group), the plan becomes a MEWA. MEWAs are subject to additional reporting requirements and may also be subject to state insurance laws in some situations. And, if a pension plan covers two or more unrelated employers, it requires special language in the plan document applicable to 'multiple employer plans' as well."
Boutwell Fay LLP

Disability: The Underappreciated Risk
"Employers can help their employees by educating them ... and by offering and encouraging participation in group long-term disability insurance. Wellness programs that detect health risks before they become chronic conditions can reduce the risk of disability. And, thanks to regulations issued in 2014, it now may be easier for employers that sponsors DC plans to protect their workers from the short- and long-term financial ruin that often accompanies a disability."
Bryan, Pendleton, Swats and McAllister, LLC

Senate Confirms Jay Clayton as SEC Chairman
"Jay Clayton was approved Tuesday by the Senate to serve as chairman of the Securities and Exchange Commission. Mr. Clayton was approved by a 61-37 vote, with several Democrats supporting him. Commissioner Michael Piwowar has been serving as acting chairman since Mary Jo White departed in January."
Pensions & Investments

Executive Compensation
and Nonqualified Plans

IRS Ruling Underscores Need for NQDC Plans to Diligently Adhere to Special FICA Rules
"In the Chief Counsel Memorandum released earlier this year, the IRS indicated that it will not enter into closing agreements with employers that fail to subject NQDC to FICA taxes as required under the special timing rule in Section 3121(v)(2) of the tax code and the taxable years in which FICA taxation should have occurred are statutorily closed.... The application of the special timing rule in Section 3121(v)(2) is exceedingly complex, and ... it is not uncommon for employers to make mistakes."
Willis Towers Watson

Anatomy of Incentive Compensation (PDF)
"The purpose of any incentive plan is to motivate employees to behave in certain ways. The key to success is to carefully identify the employees to target, the desired behavior, the best way to motivate that behavior and any constraints based on the company's situation." [The article provides a checklist of items for consideration in designing a plan and a chart of various forms of incentive compensation.]
Husch Blackwell

Follow-Up on Incentive Plans and ERISA
"Whether an arrangement gives rise to the 'systematic' deferral of payment to termination or beyond depends on the facts and circumstances of the arrangement. Some of the relevant circumstances for the determination are: [1] Whether [the] arrangement's design results in a high percentage of bonus payouts being made at or near recipients' retirement age; [2] Whether the employer communicates the plan to employees as an arrangement intended to provide retirement or deferred income; [3] Whether the arrangement allows for payments of unvested amounts upon employment termination; [4] The length of the payout period; and [5] Whether the bonus payments, by operation of the plan, are made to another type of retirement account such as an IRA. Federal court decisions have produced different results based on the facts of the particular case."
Winston & Strawn LLP

Press Releases

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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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