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[Official Guidance]

Text of IRS Notice 2017-31: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for May 2017 (PDF)
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)."
Internal Revenue Service [IRS]


Online Learning Course: ERISA

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[Official Guidance]

Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, June 2017
"The June 2017 interest assumptions under the benefit payments regulation will be 1.00 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for May 2017, these interest assumptions are unchanged."
Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

Mid-Year Changes to Your Safe Harbor Plan
"Examples of permissible mid-year changes, given they meet the notice requirement, include: [1] Changes to the plan's default investment fund. [2] Changes to the plan's rules for dispute arbitration. [3] Increase in future safe harbor non-elective contributions from 3% to 4% for all employees. [4] Mid-year changes as required by law."
Butterfield Schechter LLP

[Guidance Overview]

PBGC Walks Back Early Warning Program Expansion (PDF)
"[On] May 10, 2017, PBGC updated the guidance on its website regarding the Early Warning Program. PBGC removed credit deterioration and a downward trend in a company's financial metrics as risk identification factors ... However, PBGC made clear that, in analyzing a transaction under the Early Warning Program, PBGC generally considers a company's credit quality in its analysis.... PBGC clarified that the December guidance was not meant to expand the Early Warning Program and that PBGC has not 'changed the monitoring criteria or the processes involved' in the program."
Groom Law Group

Emory Is First College to Lose in Retirement Plan Lawsuits
"The May 10 decision refusing to dismiss most claims against Emory is the first substantive ruling in the series of proposed class actions filed in August 2016 against the retirement plans of 12 prominent American universities ... Each school is accused of including too many investment options in its retirement plan -- Emory is said to have 111 -- and charging participants excessive fees for record keeping and administrative services, often because of the school's decision to use multiple record keepers." [Henderson v. Emory Univ., No. 16-2920 (N.D. Ga. May 10, 2017)]
Bloomberg BNA


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Enforceability of Arbitration Agreements with Class Action Waivers Becoming Hot Topic in ERISA Litigation
"Recent Supreme Court decisions permitting class action waivers in arbitration agreements opened the door to the question of whether such an agreement would be enforceable under [ERISA].... The wave of class action litigation over 401(k) and 403(b) fees has created a forum for addressing this question, and courts are beginning to provide an answer."

Fourth Circuit Agrees: Fiduciaries' Faulty Process for Eliminating Stock Funds Did Not Cause Plan's Losses
"This case demonstrates that the 'would have' standard for showing that a plan fiduciary's breach did not cause a loss is difficult, but not impossible, to satisfy.... Process is also crucial when adopting plan amendments, a point highlighted by the dissent, which ... faults the trial court for its handling of the fiduciaries' failure to properly adopt an amendment to eliminate the stock funds. The court majority overlooks that obstacle ... but there seems little doubt that proper adoption of the amendment requiring divestment would have helped the fiduciaries' case." [Tatum v. RJR Pension Inv. Comm., No. 16-1293 (4th Cir. Apr. 28, 2017)]
Thomson Reuters / EBIA

Fedex May Have Violated USERRA 12-Month Look-Back Pension Contribution Calculation Rule
"Because a FedEx employee's hours varied from week to week and he often worked overtime, USERRA required FedEx to use a 12-month look-back rule to determine the proper pension contribution for his periods of military service. Finding a triable question on whether FedEx's calculation was inconsistent with USERRA's terms -- it estimated the hours he would have worked during his leave, rather than the hours he actually worked in the prior 12 months -- the [Sixth] Circuit reversed summary judgment on his pension benefits claim." [Savage v. Federal Express Corp. dba FedEx Express, No. 16-5244 (6th Cir. May 10, 2017)]
Wolters Kluwer

Words Matter: A Lesson in Pension Plan Interpretation
"A recent federal appeals court decision involving famed brewer Anheuser-Busch's pension plan and the trigger for extra benefits is a perfect example of how a few words can make all the difference in the world.... Simply put, the appeals court said the plain language of the Anheuser-Busch pension plan was clear: plan participants were entitled to enriched pension benefits when their employment with the controlled group ended within three years after a change of control.... [That the] employees held onto their jobs after the deals, was irrelevant. What mattered was that the employees no longer worked for their former controlled group." [Knowlton v. Anheuser-Busch Companies Pension Plan, Nos. 15-3538, 15-3851 (8th Cir. Feb. 22, 2017)]


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Three Questions for Assessing a Target Date Fund's Fixed Income Allocation (PDF)
"[W]hen selecting the best TDF for their participants, plan sponsors may want to focus on the contribution of the fixed income component -- to ensure that it is structured and managed to deliver the strong risk-adjusted returns participants will need for a secure retirement. Is it appropriately diversified? Does the manager have sufficient flexibility to effectively allocate within and across fixed income sectors? And does the approach represent a reasonable compromise between cost and participants' retirement outcomes?"
J.P. Morgan Asset Management

Managed Accounts: Today's Service May Not Be Tomorrow's Solution
"[W]hile managed accounts had been moving in the right direction, more progress [is] needed ... for managed accounts to make the leap from opt-in services (their most prominent role in DC structures today) to qualified default investment alternatives (QDIAs), a space now dominated by target date funds.... [This paper] examine[s] the managed account value proposition, concerns with the current model, disruptive forces in the industry and the potential for managed accounts to become attractive QDIAs."
Willis Towers Watson

An Overview of Current Retirement Policy Legislation
"[T]his article [reviews] several bipartisan retirement policy initiatives being considered by Congress.... [1] [T]hree bills introduced in 2017, in the 115th Congress, addressing the issues of lifetime income disclosure, leakage and plans with closed groups.... [2] [P]roposals from the 114th Congress that may come up again in the 115th Congress -- legislation addressing the issue of 'lost' benefits and Senator Hatch's (R-UT) Retirement Enhancement and Savings Act of 2016."
October Three Consulting

Looming Tax Reform Spurs Hefty Corporate Pension Contributions
"Facing increased PBGC variable premiums and potential corporate tax reform, U.S. corporations are accelerating their pension contribution schedules. At least four companies have announced significant debt issuances in recent months, the proceeds of which are being used, at least in part, to make hefty pension contributions in 2017, surpassing the original expected contributions that had been announced in 10-K filings[.]"
Pensions & Investments

NJ Gov. Christie Introduces Plan to Use Lottery Revenue for Pensions
"The state says the plan would immediately reduce unfunded obligations by $13.5 billion for the state's separate pension funds for teachers, public employees, and police and firefighters ... [and] raise the funded ratio of the retirement system from 45 percent to 59 percent. It would provide $37 billion over 30 years."
U.S. News & World Report

Choosing the Savings Strategy That's Right for You (PDF)
"Depending on a person's current health, family history, and lifestyle, he or she may be more or less inclined to maximize savings for medical expenses. Depending on a person's charitable giving strategy or the size of her or his family, she or he may be more or less likely to buy life insurance. Income and age make a difference, as well. That said, there is a general savings hierarchy that some experts suggest as a way to start thinking about a strategy."

Benefits in General

[Guidance Overview]

Action Required Before Year-End: Disability Plans Claims and Appeals Procedures
"The newly issued final regulations took effect on January 18, 2017 and will apply to all disability benefits claims filed on or after January 1, 2018.... [Employers should] work with their disability plan insurance carriers, third party administrators, and attorneys to ensure that all underlying disability plans and associated documentation (including any ERISA wrap plans, Code section 125 cafeteria plans, and claims denial forms) are reviewed and updated to ensure legal compliance with the requirements for claims filings beginning January 1, 2018. The final regulations are lengthy, comprehensive, and require detailed review and analysis."
Fraser Trebilcock

Recent Developments in U.S. Law Affecting Pension and OPEB Claims in Restructurings
27 pages. "From theory to practice, planning to enforcement, the answers to 42 of the most frequently asked questions can help you prepare, cope or respond to a restructuring.... Understanding the treatment of pension and OPEB obligations in bankruptcy continues to be important in today's business environment and the law relating to the treatment of these obligations continues to evolve."
Latham & Watkins

Executive Compensation
and Nonqualified Plans

SEC Charges CEO With Failing to Disclose Perks to Shareholders
"[T]he SEC's investigation found that without disclosing information to investors as required, MDC Partners paid for [the CEO's] personal use of private airplanes as well as charitable donations in his name, yacht and sports car expenses, cosmetic surgery, and a wide range of other perks ... [totaling] an additional $11.285 million in perks beyond his disclosed benefits and $500,000 annual allowances. He has since resigned and returned $11.285 million to the company."
U.S. Securities and Exchange Commission [SEC]

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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