Retirement Plans Newsletter

May 15, 2017

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Newport Group
in CA

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USI Consulting Group
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Norfolk Southern Corporation
in VA

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Webcasts and Conferences

Fi360 Fiduciary Talk: Health Savings Accounts in the Fiduciary Process
May 15, 2017 WEBCAST
fi360

Actuary as an Expert Witness
May 24, 2017 WEBCAST
ASPPA College of Pension Actuaries [ACOPA]

Family Medical Leave Statutes for Small and Medium Business
June 1, 2017 WEBCAST
ComplianceOnline

Diagnoses and Prescriptions: Top Ten Things Employers Need to Know About Arizona Paid Sick Time Before July 1, 2017
June 6, 2017 WEBCAST
Littler Mendelson

30th Annual Cincinnati Employee Benefits Conference
June 8, 2017 in OH
Cincinnati Bar Association

Rules and Timing of Death Distributions
June 21, 2017 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

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Discussions

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New Comments and Topics

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Lawyer's Role in Challenged ESOP Transaction May Have Caused Him to be an ERISA Fiduciary
"Evolve Bank & Trust was hired as an independent transaction trustee when the Plan purchased stock from Vinoskey at an allegedly significantly inflated price.... [It] appears that [attorney Michael New] was not acting in his capacity as an attorney or as counsel for Evolve or Sentry, but rather only as an employee employed as a fiduciary. Therefore, it is likely that New's status as attorney was not the critical factor; had a non-attorney filled New's role for Evolve and taken the same action, the court likely would have still found him to be a fiduciary." [Hugler v. Vinoskey, No. 16-0062 (W.D. Va. May 2, 2017]
Robinson & Cole LLP

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Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

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TIAA to Pay $5 Million in 401(k) Excessive-Fee Lawsuit
"As part of the settlement [with the class of employees and former employees who have participated in the TIAA retirement plan or the TIAA 401(k) plan], TIAA also agreed to make design changes in the plans, including adding non-proprietary and cheaper investment options. The plans should save more than $2 million a year in fees with the adjustments[.]" [Richards-Donald v. Teachers Ins. & Annuity Ass'n of Am. (TIAA), No. 15-8040 (S.D.N.Y., settlement agreement filed May 10, 2017)]
Pensions & Investments

Breach of Fiduciary Duty Case Against University Retirement Plan Fiduciaries Survives Motion to Dismiss
"[T]he court ruled that, for most of the claims asserted, the plaintiffs had properly stated a claim that survives the defendants' motion to dismiss.... [However,] the court granted the defendant fiduciaries' motion to dismiss the claim that it was imprudent for the plan to offer 111 investment options. The court ... explained that having too many investment options does not hurt participants, but rather provides them with additional opportunities to choose investments they prefer." [Henderson v. Emory Univ., No. 16-2920 (N.D. Ga. May 10, 2017)]
Ballard Spahr LLP

Duke Is Second School to Lose Round in Retirement Plan Lawsuits
"The judge May 11 refused to dismiss allegations that Duke's retirement plan charged excessive record-keeping and investment fees and favored the investment products offered by the school's record keepers over lower-cost alternatives. Other claims were subject to dismissal for being filed too late or for being insufficiently supported by facts, the judge ruled." [Clark v. Duke Univ., No. 16-1044 (M.D.N.C. May 11, 2017]
Bloomberg BNA

Canadian Court Rejects Multiemployer Plan's ERISA Controlled-Group Liability Claims (PDF)
"The court held that ERISA cannot be applied to hold Canadian entities liable for multiemployer withdrawal liability simply because those entities are owned by a common parent.... The decision marks one of the few instances to date that a court has analyzed ERISA's reach across the U.S. border, and may make it more difficult for multiemployer plans and the PBGC to seek payment from foreign entities of liabilities associated with underfunded multiemployer and single employer plans." [Walter Energy Canada Holdings, Inc. (Re), 2017 BCSC 709, May 1, 2017]
Groom Law Group

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Sponsored by Western Pension & Benefits Conference

Come get your CE credits in a professional, relaxed & upbeat setting. You'll learn a lot & have a great time too! From the tech raffle prizes and the mindful self-care session, to the free wine during Ethics, you don't want to miss it. Register Now!


Most Plan Participants Who Roll Over DC Assets into IRA Seek Advice
"8 in 10 [DC] plan participants who roll their assets into an [IRA] speak to someone before performing the transaction.... DC plan participants roll over more than $400 billion annually.... The top reasons plan participants gave for rolling over their DC assets into an IRA are: [1] To gain more control over their assets; [2] Access better investment options to achieve better returns; and [3] To consolidate their portfolio."
LIMRA Secured Retirement Institute

All Eyes on Acosta as DOL Rule Clock Winds Down
"The main thrust of the rule -- that anyone working with retirement dollars adhere to a fiduciary standard -- is scheduled to take effect June 9. Industry representatives are furiously lobbying the DOL for another delay. Opponents are pinning their hopes for an 11th hour reprieve from new Labor Secretary Alexander Acosta ... While he hasn't spoken publicly on the fiduciary rule, Acosta wants to freeze the rule permanently, according to an email a Senate aide sent to rule opponents[.]"
InsuranceNewsNet.com

Will DOL Continue to Make ESOPs a Compliance Priority?
"A recently filed case ... suggests that the DOL may continue to make a priority out of investigating potential abuses in ESOP transactions.... [E]mployers who are considering the adoption of the ESOP should be mindful of putting together an experienced team to guide them through the fiduciary issues. In particular, it is critical for the trustee of an ESOP to hire an independent appraiser that has not performed a preliminary ESOP feasibility study for the company, and the trustee and other fiduciaries of the ESOP should be engaged with the due diligence process."
Porter Wright Morris & Arthur LLP

Defined Benefit Plan Considerations for M&As
"Transactions occur regularly and come in a multitude of structures and players.... Properly and quickly assessing the deal landscape under a current lens, as well as a forward-looking post-deal lens, can be crucial for the deal to be successful for all involved.... [A chart describes] a few elements to consider from the buyer's perspective and some examples of the impact they can have on the deal[.]"
Milliman Retirement Town Hall

[Advert.]

EPCRS: Correct Plan Errors and Minimize Penalties

Sponsored by Lorman and BenefitsLink

May 31 webinar will discuss common retirement plan errors and pre-approved methods of correction, as well as tips and practices that can help avoid future problems. Presented by Blake C. MacKay, of Alston & Bird LLP. BenefitsLink discount


Hidden Debt, Hidden Deficits: 2017 Edition (PDF)
32 pages. "The unfunded obligations of the pension systems sponsored by state and local governments in the United States continue to grow. [This] second annual report on the off-balance-sheet pension promises of state and local governments [studies] in detail 649 pension systems around the United States, including all of the main pension systems of the states, the largest U.S. cities, and the largest U.S. counties. [It reports] on both their own measurements of their costs and obligations, and how these differ from market valuations that are consistent with the principles of financial economics."
Hoover Institution

Retirement Plan Riddles and Stumpers
"The tax law says you need a year-end valuation of all your IRAs. Do you include annuity contracts in that valuation or not? ... When is the same distribution both required and not required? ... You are married. You want to withdraw some money from your workplace retirement plan. Do you need your spouse's consent to do that?"
Morningstar Advisor

Average Retirement Balance Hits Record on 401(k) 'Autopilot'
"The average balance in a 401(k) defined-contribution account at Fidelity Investments hit a record $95,500 in the first quarter, up more than 9 percent from a year earlier ... 27 percent of workers in a Fidelity plan increased their contributions, as a percentage of their salaries, over the past 12 months.... In the first quarter, 68 percent of the rise in savings rates of workers under age 30 was due to automated increases[.]"
Newsmax

Your Retirement Plan: Set It, But Don't Forget It
"When it comes to planning for retirement, there are three commonly automated arrangements that warrant a one-off, stop-and-think review from time to time: beneficiary designations, plan participation and investment allocation."
Certified Financial Planner [CFP] Board of Standards, Inc.

[Opinion]

New Jersey's Big Pension Gamble
"[T]his latest attempt to shore up its chronically underfunded state pensions by using lottery proceeds is a desperate move which will only kick the can further down the road. It will help at the margin, especially for the state teachers' pension fund, but it's doing nothing to address serious structural flaws that continue to hamper the state's pensions."
Pension Pulse

Benefits in General

Retirement Planning: Coping with Higher Health Care Costs (PDF)
"Longer lives -- not disease -- are driving current and projected increases in health care costs that well exceed general inflation, placing the budgets of many retirees, now and in the future, under tremendous pressure.... [D]emographics as well as generational, gender, and geographic differences all play a role in the equation.... [F]inancial advisors will need to rethink their advice on how to accrue retirement income. Growth investment strategies can help retirees, while leaving properly funded legacies."
Prudential, Via Journal of Financial Service Professionals

Employees of Small Businesses Want Improvements to Benefits
"Although small businesses are fostering happy workplaces, 72% of respondents indicate that an improvement in their benefits offerings would make them even happier. The report also generated 22% of respondents that say their benefits offerings is one thing they like least about working for a small business."
HRDailyAdvisor

Discussions on
the BenefitsLink Message Boards

Partial Plan Termination?
"Mr. B will form new corporation B. Some of the employees of corporation A will come over to work for him -- or of course they can quit. He'll just establish a new plan.... I don't think there's any solid argument that these terminations from corporation A are 'voluntary' so it seems to me that if they weren't already 100% vested, they would need to be. Any other opinions?"
BenefitsLink Message Boards

When Does a DB Plan Participant Accrue a Full Year for Section 415 Purposes?
"The owner of a business sponsoring a defined benefit plan is the only participant. 2017 will be his tenth year of participation (at least 1,000 hours). We want to terminate the plan as soon as he reaches his full section 415 limit during 2017 so that he can roll over a lump sum and avoid the need to start a 2018 plan year. Can 2017 be counted as a full 'year 10' before Dec. 31, 2017?
BenefitsLink Message Boards

Can Owner-Trustee Cause Plan to Purchase Stock from His Brother?
"John Doe and his spouse own 100% of Corporation A. No employees. The corporation sponsors Plan A. John and his spouse own 40% of Corporation B. There is no other attributed ownership in corporation B, which sponsors Plan B. There is no CG/ASG. John's brother owns most of the other (60%) stock in Corporation B. Can Plan A purchase some of the Corporation B stock currently owned by John's brother, without causing a prohibited transaction?"
BenefitsLink Message Boards

Press Releases

Olivia Mitchell Named 2016 EBRI Lillywhite Award Winner
EBRI [Employee Benefit Research Institute]

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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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