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The Power of Defined Contribution Plan 'Wellness' (PDF)
"This paper explores the relationship between plan wellness and retirement readiness and provides a framework for sponsors and their advisors to evaluate their plan wellness with a focus on balancing participant outcomes and cost efficiency."
Prudential
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Active Management Ideas for DC Plan Sponsors
"[In] the context of net-of-fee returns, passive bond strategies may be the most expensive fixed income option.... [P]lan sponsors [should] review their TDFs to ensure they have adequate exposure to diversifying assets ... [P]lan sponsors [should] review their stable value manager and confirm their ability to provide value even during volatile market periods.... Multi-real asset solutions may offer a convenient way to seek diversification across inflation fighting assets, protect purchasing power and limit volatility relative to stand-alone options such as commodities."
PIMCO
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Perspective on Annuities for Accumulation in Defined Contribution Plans
12 pages. "The case for using annuities as savings vehicles in defined contribution plans in the accumulation phase rests on assumptions that they will provide income streams after retirement, yet few participants actually convert them into income streams.... Because it is challenging to predict whether or how much annuity income will be needed, it may be best to delay decisions about annuitizing wealth until closer to retirement."
Vanguard
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WestRock Challenge to Pension Change Dies in 11th Circuit
"Can an employer use [ERISA] to challenge changes made to an underfunded multiemployer pension fund's rehabilitation plan? The U.S. Court of Appeals for the Eleventh Circuit held May 16 that no viable ERISA claim could proceed.... According to the Eleventh Circuit, the disputed rehabilitation plan forced employers to make contributions to address the plan's funding deficiency when they left the plan. This payment was separate from, and in addition to, any withdrawal liability payments the employer was statutorily required to pay, the Eleventh Circuit concluded." [WestRock RKT Co. v. Pace Industry Union-Mgmt. Pension Fund, No. 16-16443 (11th Cir. May 16, 2017)
Bloomberg BNA
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Court Decisions on Investment Fees Provide Hope for Plan Sponsors
"[I]t is important for plan sponsors to understand that it is not their responsibility to include only the lowest cost investments in each asset category within their retirement plan. It is not required, and it should not be the case, that plan fees are the sole determining factor when selecting investments.... Each investment must be evaluated in the context of its overall performance, cost, and the value received through its role in the plan portfolio. Plan sponsors using cost as the only factor are potentially failing to fulfill their responsibility to finding investments that are reasonable and competitive."
Cammack Retirement Group
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[Advert.]
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Software Solutions to Calculate Safe Withdrawal Rates
"[No] financial planning software solution has ever been created to illustrate the safe withdrawal rate approach.... [In] part, it's because the original safe withdrawal rate research used very simple assumptions -- from a two-asset-class portfolio, to ignoring the impact of fees, and a fixed 30-year time horizon -- which just doesn't hold for a wide swath of retirees. To fill the void, though, two new software solutions have recently emerged for financial advisors, specifically to illustrate the safe withdrawal rate approach, and be able to model the impact of varying assumptions, from a wider range of asset classes, to the impact of investment expense ratios and advisory fees, and time horizons that may be longer or shorter than 30 years."
Nerd's Eye View
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Importance of DC Plans, IRAs and Home Equity in Family Total Wealth (PDF)
16 pages. "This study first looks at the percentage of families with a working family head that have low levels of assets, and then examines the percentage of these families that have [individual account retirement plans (employment-based DC plans and IRAs)].... The study concentrates on families with working family heads ages 25 to 64 to show how workers are accumulating assets at different ages up to retirement age.... The percentage of families with a working head ages 25-64 that have one of these types of plans range from 50.4 percent for families with a head ages 25-34 to 71.4 percent for those families with a head ages 55-64."
Employee Benefit Research Institute [EBRI]
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2016 State-By-State Information on PBGC Payments to Retirees
"[This] state-by-state map shows how much PBGC pays in benefits to our participants, listing the dollars and number of people paid in each state. Some of the interesting information you can glean from the 2016 data is that Ohio ranks as the state with the most benefits paid, $557,021,996 to 78,929 retirees; next, in Pennsylvania, 79,687 retirees were paid $464,996,076 in benefits; while 57,874 retirees in Florida received $414,878,111 in benefits."
Pension Benefit Guaranty Corporation [PBGC]
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Puerto Rico Bankruptcy Pits Investors Against Pensioners
"Puerto Rico's fiscal tug-of-war with pensioners, bondholders, other creditors and its own finances starts a new, uncharted chapter on May 17. That's when a specially appointed federal judge opens bankruptcy proceedings in a case that dwarfs previous public bankruptcies, with nearly $50 billion in unfunded pension liabilities, $74 billion in bondholder debt and dim financial prospects."
Pensions & Investments
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[Opinion]
The Incredible Shrinking DOL Fiduciary Rule
"For [DC] plans like 401ks, the DOL rule punctuated a movement already under way where more and more advisors were willing to act as fiduciaries.... The real impact ... is on IRAs over which the DOL has no enforcement jurisdiction -- the undermining of private rights of actions in the recent delay of the DOL rule may have disenfranchised lawyers ready to take up enforcement. But changes by many broker-dealers and RIAs eliminating potential conflicts of interest in IRAs and restricting activities of inexperienced advisors for DC plans will, in effect, bring about changes the DOL intended by the rule now under assault by the White House and possibly the new DOL secretary."
Fred Barstein, via 401kTV
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[Opinion]
Five Ways to Fix the Saver's Credit
"[1] Update the messaging and positioning.... [2] Implement an ongoing educational campaign to promote the Saver's Credit and how to claim it.... [3] Encourage employers to promote the Saver's Credit among their employees.... [4] Add the ability to claim the credit on Form 1040EZ ... [5] Facilitate the depositing of the amount that a tax filer receives from the Saver's Credit into a retirement account."
National Association of Plan Advisors [NAPA]
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[Opinion]
The Pension Storm Cometh?
"[T]he pension storm isn't coming, it's been here for years and will only get worse. Whenever people talk about pensions, they typically focus on assets, not liabilities. This is a fundamental mistake because pensions are all about managing assets and liabilities. In short, it's about the funded status, stupid, not bragging about how much money your pension plan makes in any given year. This is especially true in the US where you have mature, chronically underfunded pensions which are poorly governed. No matter what they do, they will never be able to invest their way back to fully-funded status."
Pension Pulse
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Benefits in General
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ERISA Advisory Council to Meet June 6-8
"[T]he 186th open meeting of the Advisory Council on Employee Welfare and Pension Benefit Plans (also known as the ERISA Advisory Council) will be held on June 6-8, 2017.... The Advisory Council will study the following topics: [1] Reducing the burden and increasing the effectiveness of mandated disclosures with respect to employment-based health benefit plans in the private sector, and [2] Mandated disclosure for retirement plans -- enhancing effectiveness for participants and sponsors."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
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Widening Gap in U.S. Life Expectancy Based on Geographic Location
"[R]ecent gains in longevity aren't being enjoyed equally in all corners of the United States. In fact, depending on where you live in this great country, life expectancy can vary more than 20 years -- a surprisingly wide gap that has widened significantly in recent decades. Researchers attribute this disturbing gap to a variety of social and economic influences, as well as differences in modifiable behavioral and lifestyle factors, such as obesity, inactivity, and tobacco use."
National Institutes of Health
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Testimony on the Costs of Federal Civilian Personnel: A Comparison With Private-Sector Employees (PDF)
"Average benefits were 52 percent higher for federal employees whose highest level of education was a bachelor's degree than for similar private-sector employees ... Average benefits were 93 percent higher for federal employees with no more than a high school education than for their private-sector counterparts. Among employees with a doctorate or professional degree, by contrast, average benefits were about the same in the two sectors. On average for workers at all levels of education, the cost of benefits was 47 percent higher for federal civilian employees than for private-sector employees with certain similar observable characteristics, CBO estimates."
Congressional Budget Office [CBO]
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Ransomware: The Smart Person's Guide
"Because of the ease of deploying ransomware, criminal organizations are increasingly relying on such attacks to generate profits.... While home users have traditionally been the targets, healthcare and the public sector have been targeted with increasing frequency. Enterprises are more likely to have deep pockets from which to extract a ransom.... How do I protect myself from a ransomware attack?"
TechRepublic
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Last Week's Notable ERISA Decisions, from a Plaintiff's Perspective
Contains summaries of the facts and results in 25 recent ERISA-related court decisions, which are considered to be notable by this plaintiffs' law firm. The case descriptions are sorted by subject matter and jurisdiction, and include links to the court opinions.
Roberts Bartolic
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Executive Compensation
and Nonqualified Plans
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Practical Considerations Relating to Share Withholding for Taxes
"[A new FASB rule] permits cash settlement of a share-based award for tax withholding up to the maximum statutory tax rate in the applicable jurisdiction without causing adverse accounting treatment of the equity award. The rule generally became effective for calendar year companies on January 1, 2017. Many companies are now considering implementing increased share withholding for taxes and must consider their existing equity plan provisions and securities law, IRS, and payroll issues."
Morgan Lewis
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Discussions on
the BenefitsLink Message Boards
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Safe Harbor Contribution After Date of Plan Termination?
"Employer is terminating its 401(k) plan effective on June 30 (next month), so there will be no employee contributions after that date. Can a safe harbor contribution for 2016 be made by September 15 of this year, even though it's after the termination date? Would this jeopardize the plan's termination?"
BenefitsLink Message Boards
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Excluding Seasonal Employees
"What if I have a group of employees who are being excluded solely because they work during the summer months exclusively without regard to how many hours a week they work. I know they can be excluded; the question is, does the document (and operations) need to make them eligible if they hit 1,000 hours in 12 months (i.e. if they meet max eligibility under section 410(a)?"
BenefitsLink Message Boards
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Retroactive Amendment to Allow an Already-Made In-Service Distribution
"In-service distributions are not allowed under the current provisions of the plan. The document can be amended to allow in-service at normal retirement age now, but this does not help the fact that a distribution occurred that was not permitted under the terms of the AA. Can we do a retro-active amendment to correct this operational failure? If so, does it need to be submitted under EPCRS?"
BenefitsLink Message Boards
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BenefitsLink.com, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
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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