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[Official Guidance]

Text of IRS PLR 201722014: Severance and Special Retirement Benefit Offered by State in Connection with Hospital Closure Creates Cash or Deferred Arrangement (PDF)
"Statute provides that employees of the State's public hospitals whose positions are being abolished or who are directly affected by a reduction-in-force or workforce restructuring plan ... could... elect one of the following: ... [1] a one-time lump-sum cash payment ... or ... [2] a subsidized early retirement benefit under the Plan ... [If] Statute becomes effective, the election granted to the State employees under Statute with respect to the benefit they receive upon separation from service would constitute a cash or deferred election[.]"
Internal Revenue Service [IRS]


Online Learning Course: 401(k) Plan Structure

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

This course looks at the many aspects to consider when structuring a 401(k) plan. Topics include salary deferral limits and catch-up contributions, matching and profit-sharing contributions, nondiscrimination testing and safe harbors.

[Guidance Overview]

New FAQs Add Some Clarity to Fiduciary Rule Transition Period Compliance
"FAB 2017-02 delays the effective date of the PTE 84-24 amendment to January 1, 2018. Until then, those who market fixed-indexed and variable annuities may offer them to retirement savers, relying on the existing PTE provisions and the impartial conduct standards previously described. Q2 also makes clear that the extended applicability date applies to typical payments made in connection with the sale of such annuities to retirement savers[.]"

[Guidance Overview]

The 'Final' Countdown: DOL Fiduciary Rule Still Applies June 9, 2017
"[P]lan sponsors [should] take the following steps sooner rather than later. [1] Review all existing advisory relationships ... [2] Review existing educational materials ... [3] Review practices related to rollovers into and out of the plan ... [4] Confirm that in-house employees who provide advice to participants are not being separately compensated for such advice ... [5] Confirm that existing plan investment managers can continue to rely on any needed prohibited transaction exemptions. [6] Analyze contractual arrangements with advisers to confirm fiduciary status and compliance with rules and related exemptions.... [7] Confirm that the fee structure and amounts of compensation received by advisers are not prohibited transactions."
Porter Wright Morris & Arthur LLP

Chevron Again Defeats Lawsuit Over Its $19 Billion 401(k)
"The participants didn't allege in their amended complaint facts sufficient to raise a plausible inference that Chevron took any action for the purpose of benefiting itself or Vanguard Group Inc. at the expense of the plan participants or that it acted under conflict of interest, Judge Phyllis J. Hamilton said in dismissing the amended lawsuit.... In addition, the participants' allegations of unreasonable record-keeping fees charged until March 2012 were based on 'little more than guesses' and were either 'invalid or relatively incomprehensible,' Hamilton said." [White v. Chevron Corp., No. 16-793 (N.D. Cal. May 31, 2017)]
Bloomberg BNA

Supreme Court Addresses Division of Military Retirement Benefits
"[T]he United States Supreme Court unanimously ... held ... that a military veteran cannot be required to indemnify (or reimburse) a former spouse who receives a reduced amount of the veteran's retirement pay resulting from the veteran's election to waive a portion of their military retirement pay in order to receive nontaxable disability benefits from the federal government in lieu of military retirement pay." [Howell v. Howell, No. 15-1031 (U.S. May 15, 2017)]
Butterfield Schechter LLP


The Advisor's Guide to the DOL Fiduciary Rule

Sponsored by The National Underwriter Company

Authored by ERISA experts at The Wagner Law Group, this Guide delivers a powerful combination of expert explanations and legal analysis along with vital Q&As that provide reliable, direct answers to vital questions before they arise. BENLINK for 10% discount.

Bon Secours Agrees to $98 Million Settlement in Church Pension Funding Suit
"The deal, announced in court papers filed May 31, requires the hospital to contribute $98 million to its pension plans over a seven-year period. This payment represents the 'total amount' of plan underfunding at the time of the settlement, according to the filing. The hospital also agreed to pay $300,000 to 530 employees who would have received additional benefits had the hospital used a pension-vesting schedule that complied with [ERISA]."
Bloomberg BNA

Pension Finance Update, May 2017
"Pension plans managed to tread water last month, with assets and liabilities growing about 1% each during May for both model plans ... Through the first five months of 2017, Plan A is ahead 2%-3%, while Plan B is up almost 1%."
October Three Consulting

Texas Governor Signs Houston Pension Reform Bill; Firefighters Fund Sues City
"A pension reform bill for Houston's three pension funds was signed into law by Texas Gov. Greg Abbott on [May 31], a day after the Houston Firefighters' Relief and Retirement Fund filed a lawsuit challenging the constitutionally of the bill's provisions. The pension reform package, proposed by the city of Houston and passed the Texas Legislature on May 24, includes benefit reductions for participants in the $3.9 billion Houston Police Officers' Pension System, $3.8 billion firefighters' fund and $2.3 billion Houston Municipal Employees Pension System that would help reduce the plans' $8.2 billion in total unfunded liabilities."
Pensions & Investments

Lawmaker Wants to Mandate Retirement Plans, Employer Contributions
"A new legislative proposal wouldn't just require employers to offer a retirement plan -- it would mandate employer contributions too. The proposal ... would direct employers with 10 or more employees to open individualized retirement accounts for every employee, if they do not already offer a retirement plan. These federally established 'Secure, Accessible, Valuable, Efficient Universal Pension' accounts (labeled 'SAVE UP' accounts) would have government oversight, private management and a limited number of low-fee index fund options."
National Association of Plan Advisors [NAPA]

Social Security Actuary Estimates Effect of Proposed Reduction of Payroll Tax Rate (PDF)
"The proposal would reduce the employee portion of the payroll tax rate from 6.2 to 4.2 percent on annual earnings below the applicable threshold; the employer portion would remain at 6.2 per cent. The tax rate for self-employed workers would be reduced from 12.4 to 10.4 percent on annual earnings below the applicable threshold.... [T]hat enactment of this proposal would increase the long-range OASDI actuarial deficit by about 0.77 percent of taxable payroll, from 2.66 percent of payroll under current law to 3.43 percent of payroll under the proposal."
Office of the Chief Actuary, U.S. Social Security Administration [SSA]

The Pension-Style Retirement Product You Should Know About
"Back in 2014, the Treasury Department started an initiative focused on 'putting the pension back' into 401(k) retirement savings.... Through loosened restrictions and some tax-law changes, the Treasury made it easier to convert funds from retirement savings into ... longevity income annuities, or LIAs, that provide guaranteed lifetime income. Income for life LIAs are deferred annuities and, while they've been around for a while, they've only recently become a part of mainstream retirement planning. The Treasury initiative could even cause them to become an integral part of 401(k) target funds."

401(k) Distribution Rules: Frequently Asked Questions
"When am I eligible for a 401(k) distribution? ... What's a hardship distribution? ... When can I rollover a 401(k) distribution? ... Can I leave my money in my 401(k) plan after I terminate employment? ... When must I start taking Required Minimum Distributions from my 401(k) account? ... How are 401(k) distributions taxed? ... How are distributions of Roth 401(k) deferrals taxed?"
Employee Fiduciary

Benefits in General

[Official Guidance]

Text of IRS IR-2017-102: For Letter Rulings and Similar Requests, Electronic Payment of User Fees Starts June 15
"In the past, ruling requesters could only make required user fee payments by check or money order. During a two-month transition period, June 15 to Aug. 15, requesters can choose to make user fee payments either through or by check or money order. After Aug. 15, 2017, will become the only permissible payment method."
Internal Revenue Service [IRS]

Discussions on
the BenefitsLink Message Boards

Does High Minimum Investment Threshold Raise a 'Benefits, Rights and Features' Issue?
"A plan has an investment option that includes a high required minimum amount, which is offered to all participants. Only one participant, who is a Highly Compensated Employee, takes advantage of it. Does the plan fail the 410(b) component of the BRF test?"
BenefitsLink Message Boards

Can Sponsor Reimburse Plan for Investment Expenses?
"I have a plan sponsor that wishes to [1] reimburse the plan for investment advisory fees that are automatically deducted from participants' accounts, and [2] reimburse the plan for investment sales commissions. Can this be done? Would they be deductible?"
BenefitsLink Message Boards

Section 436 Restricted Lump Sum Issue
"DB plan has an AFTAP of 70% and is comprised of: [1] a traditional benefit that does not have a lump sum option, and [2] an account balance type benefit that has a lump sum. Assume a participant has a traditional benefit of $200,000 per year plus an account balance of $15,000. Participant elects an annuity from the traditional and a lump sum from the $15,000. Can the $15,000 be paid or is it restricted to $7,500 under Section 436?"
BenefitsLink Message Boards

FAS87 ASC715 Discount Rates and Moody's Rates
Includes an unofficial monthly report as of May 31, 2017 of Moody's Daily Long-term Corporate Bond Yield Averages and Moody's Daily Treasury Yield Averages, used as benchmarks by some corporate pension plans.
David Rigby via BenefitsLink Message Boards

Fractional Accrual Rule for Fresh Start with Add-On
"Can a benefit formula with a fresh start date with an add-on benefit satisfy the fractional accrual rule? If so, a cite would be appreciated."
BenefitsLink Message Boards

Press Releases

SHRM Names Johnny C. Taylor President and CEO
SHRM [Society for Human Resource Management]

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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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