Retirement Plans Newsletter

June 1, 2017

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Webcasts and Conferences

IRI Government, Legal & Regulatory Conference
June 11, 2017 in DC
Insured Retirement Institute [IRI]

Defined Benefit Half Day Seminar
June 15, 2017 WEBCAST
ASPPA Benefits Council [ABC] of Cleveland

Annual CE Day
June 21, 2017 WEBCAST
ASPPA Benefits Council [ABC] of North Florida

Quarterly Group Health Plans Update
June 29, 2017 WEBCAST
Cowden Associates, Inc.

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[Official Guidance]

Text of Treasury Department Extension of Comment Period for Multiemployer Pension Plan Application to Reduce Benefits: United Furniture Workers Pension Fund A
"On April 19, 2017, the Department of the Treasury published a notice of availability and request for comments regarding an application to reduce benefits under the United Furniture Workers Pension Fund A (UFW Pension Fund) in accordance with [MPRA].... The comment period for the notice published April 19, 2017 (82 FR 18536), is extended. Comments must be received on or before June 20, 2017."
U.S. Department of the Treasury

[Advert.]

ftwilliam.com's Chicago Regional One-Day Conference

Sponsored by Wolters Kluwer

Join us on Tuesday, June 20th! Our conference will provide a mix of industry topics and ftwilliam.com product updates. Receive up to 7 CE credits, including 2 Ethics hours! Low cost registration -- only $99! Hurry seats are limited!


[Guidance Overview]

Thought Mortality Was Dead? Considerations for Pensions Given the IRS Delay in Implementing RP-2014
"[T]he IRS [decision] to delay implementation of the RP-2014 mortality tables until 2018 ... affected liability valuation for three purposes ... [1] minimum required contributions, [2] variable-rate [PBGC] premiums, and [3] lump-sum distributions to terminated vested participants.... [F]or the remainder of 2017, the liability valuation for these three purposes is temporarily lower (and funded status therefore temporarily higher) than it will be once the new tables are adopted.... [T]his brief discusses what has changed and provides general considerations for all sponsors to weigh in the near term."
Cambridge Associates

[Guidance Overview]

Interesting Angles on the DOL's Fiduciary Rule, Part 49
"When the new fiduciary rule applies on June 9, it will convert most non-fiduciary advisers into fiduciaries. While there is not a disclosure requirement for new fiduciary advisers to IRAs, there is for these newly minted fiduciary advisers to plans ... in the 408(b)(2) regulation which was effective in 2012.... [U]nder the new rules it's hard for an adviser to work with a plan without being a fiduciary. So, accepting that virtually all advisers to plans become fiduciaries on June 9, what does that mean for disclosure of fiduciary status?"
FredReish.com

[Guidance Overview]

Fiduciary Rule to Go Live June 9, 2017
"[FAB 2017-02 signals] that the January 1, 2018 full implementation date is less than a certainty and that the Trump administration is still actively considering whether and to what extent to change the Final Rule ... The FAB also notes that the DOL's initial emphasis regarding the Final Rule will be on compliance assistance and not enforcement activities, such as citing violations and imposing penalties."
Trucker Huss

[Guidance Overview]

DOL Confirms June 9 as Effective Date of Fiduciary Rule: What Employers Need to Know Now
"[T]here are a number of steps that plan sponsors can take to proactively prepare for the implementation of the Fiduciary Rule. [1] Ensure you have prudent processes and procedures.... [2] Evaluate whether employees are acting as fiduciaries.... [3] Review agreements with your recordkeeper.... [4] Review agreements with your investment advisor.... [5] Continue to monitor fiduciaries."
Dickinson Wright PLLC

[Advert.]

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.


Time to Bench Some 404a-5 Notice Benchmarks
"[If] the disparity is great, and it is obvious on the notice that over a number of measurement periods the return does not even approach the benchmark, one argument is that the fund should have been replaced.... Here is a possible three-pronged prophylactic correction: [1] a written request to the third party administrator that the benchmark in the 404a-5 notice be replaced with one that is closer to the benchmark that the plan's financial advisor is actually using for monitoring the fund; [2] a discussion of the issue reflected in the minutes of the benefits committee meeting; and [3] a footnote in the 404a-5 notice to participants that the benchmark used in the notice is different from the benchmark which the plan sponsor's independent investment advisor deems appropriate for monitoring the fund."
Boutwell Fay LLP

Form 11-K Requirements for 401(k) Plans Offering a Company Stock Fund
"[If] a company no longer allows investments into the 401(k) Plan stock fund as of December 31, 2016 (for example), it could eliminate the need to file a Form 11-K for 2016 by doing the following: [1] Before June 30, 2017, file a post-effective amendment to the applicable Form(s) S-8 ... for the Plan deregistering the offer and sale of any remaining securities under the S-8(s). [2] File a Form 15 terminating the registration of the securities for the Plan under the '34 Act. This step is arguably not necessary under the no-action letter precedent, but ... it is the best practice and expected by the Corp Fin staff."
Winston & Strawn LLP

Adopting a New Pre-Approved 403(b) Document? It's a Good Time for a Plan Compliance Review (PDF)
"[P]lan sponsors will need to take care that they choose a pre-approved document that can accommodate their plan design, and, once they select an appropriate document, that all of the plan's provisions are correctly restated on the new document.... [The authors] have compiled [a] high level list of provisions that bear scrutiny. This is not a complete list, but it highlights some common areas where the operation of the plan may not be consistent with the terms of the document or with applicable law[.]"
Boutwell Fay LLP

Tips for Improving Retirement Plan Sponsor Homepages
"As the front door of a plan sponsor portal, a homepage should communicate an assortment of critical plan information and illustrate the overall health of the plans that sponsors administer in a direct and intuitive manner. An effective homepage can also serve as a central point of navigation, providing immediate access to alerts and action items as well as quick links to frequently used resources."
Corporate Insight

Impact of Smart Design and Reenrollment
"How often should you implement investment reenrollments, moving participants who may hold an age-inappropriate allocation into an age-appropriate investment such as a target-date fund (TDF)? How frequently should you carry out participation sweeps to capture nonparticipants or to put undersaving participants into higher savings rates? ... Whatever the frequency, the benefits of reenrollments and sweeps are well documented."
Vanguard

The Future of Retirement (PDF)
32 pages. "52% of working people think low interest rates mean they will need to work for longer.... 82% of working age people believe retirees will have to spend more on healthcare costs in the future.... 9% of people think Millennials are in the best position for a comfortable retirement, compared to 38% who think Baby Boomers are. 26 is the average age Millennials started saving for retirement. 58 is the average age Millennials expect to retire."
HSBC

U.S. Single Employer Pension Plan Contribution Indices, 2009-2014 (PDF)
"Using smoothed assets as allowed and the smoothed bond rates required by current law to discount the liability, the 2014 total funding target liability of $1.9 trillion was 98% funded, with an unfunded liability of $30 billion.... Weighted by plan liabilities, more than 99% of the [single employer] system contributed at least the minimum amount required by law for both 2013 and 2014. Preliminary data for 2015 indicate results similar to 2014.... Using the lower, unsmoothed rates, more plans had an unfunded liability and fewer plans' contributions were sufficient to maintain their unfunded liability."
Society of Actuaries

Understanding the Risks and Strategies for Successfully De-Risking a Pension Plan (PDF)
46 pages. "There are many reasons to avoid playing the de-risking waiting game. Escalating PBGC fees are one highly visible motivator ... [T]he current low-rate environment can be a golden opportunity to borrow to fund.... Whether gains are achieved through voluntary contributions or other means, plan sponsors would be well-advised to try to protect funded status improvements with a liability-driven investing (LDI) strategy. Generally, improvements in funded status are useful milestones for taking some risk off the table. And particularly for those borrowing-to-fund, using some of the proceeds for liability-hedging would help better align the risk profile of the new assets with the debt[.]"
Clear Path Analysis

Benefits in General

2017 Workplace Benefits Report (PDF)
24 pages. "An employer-sponsored retirement plan ranks second only to healthcare as the most important employee benefit. [This] study shows an increasing desire for employers to offer broader financial education, guidance and advice that goes beyond retirement savings, underscoring the powerful role the employer can play in delivering a meaningful benefit to employees."
Bank of America Merrill Lynch

June and July 2017 Filing and Notice Deadlines for Qualified Retirement and Health and Welfare Plans
"The filing and notice deadline table below provides key filing and notice deadlines common to calendar year plans for the next two months. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is generally delayed until the next business day. Please note that the deadlines will generally be different if your plan year is not the calendar year."
King & Spalding

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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