Retirement Plans Newsletter

June 5, 2017

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Employee Benefits Jobs

Senior Pension Administrator
Primark Benefits
in CA

Retirement Plan Service Specialist 4
Wells Fargo
in NC

401(k) Administrator
Carnow & Associates, Ltd.
in IL, IN, WI

Distribution & Loan Processor
Carnow & Associates, Ltd.
in IL, IN, WI

Junior Pension Administrator
Aldrich Retirement Solutions LP
in AK

Executive Benefits Client Associate
Wells Fargo
in NC

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Webcasts and Conferences

Employee Leaves of Absence: Understanding How Various Legal Authorities Work Together - Part 2: ADA Interactive Process
June 13, 2017 WEBCAST
HRWebAdvisor

ERISA Fiduciaries, Data Privacy and Cybersecurity Risks: HIPAA, HITECH, and ERISA Preemption of State Data Breach Laws
June 20, 2017 WEBCAST
Strafford

Employee Benefits Communications: The Who, The How And The Now!
June 22, 2017 in IL
Worldwide Employee Benefits Network [WEB] - Chicago West Chapter

Keeping Current: ERISA Exempt Plans
June 29, 2017 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

IRA Trusts, Rollovers and Distributions
September 11, 2017 WEBCAST
National Business Institute

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Text of Supreme Court Opinion: DB Plan of Church-Affiliated Organization is 'Church Plan' Regardless of Who Established It (PDF)
21 pages; unanimous opinion. "That use of the word 'include' is not literal, but tells readers that a different type of plan should receive the same treatment (i.e., an exemption) as the type described in the old definition. In other words, because Congress deemed the category of plans 'established and maintained by a church' to 'include' plans 'maintained by' principal-purpose organizations, those plans -- and all those plans -- are exempt from ERISA's requirements.... Both parties' accounts of Congress's purpose in enacting sub-paragraph (C)(i) tend to confirm this Court's reading that plans maintained by principal-purpose organizations are eligible for the church-plan exemption, whatever their origins." [Advocate Health Care Network v. Stapleton, No. 16-74 (U.S. June 3, 2017)]
Supreme Court of the United States

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DOL Fiduciary Rule to Take Effect -- At Least for Now
"A private fund manager will not be a fiduciary when it markets its fund to a plan committee that the fund manager reasonably believes holds or has under management and control total assets in excess of $50 million ... [T]he private fund manager [must] know or reasonably believe that: (a) the plan committee is capable of evaluating investment risks independently, both in general and with regard to the private fund's investment program and strategies; and (b) that the plan committee is a fiduciary with respect to the transaction and is exercising independent judgment in evaluating the transaction."
Schulte Roth & Zabel LLP

Audits and Other Form 5500 Developments (PDF)
"AICPA has proposed changes to audit standards that would significantly increase reporting obligations for employee benefit plans.... DOL, IRS and PBGC have proposed vastly expanded filing requirements to modernize and improve the Form 5500 ... effective for plan year 2019 filings. However, the new administration's efforts to push back regulatory burdens may significantly curtail that effort. IRS has once again allowed a pass on their compliance questions by omitting them from the 2017 draft forms."
Conduent

SEC Seeks Public Comment on DOL Fiduciary Rule's Impact
"SEC Chairman Jay Clayton said ... his agency wants input on how the fiduciary rule will impact retail investors and entities regulated by the [SEC].... He noted that the SEC has been reviewing a fiduciary standard for some time with input from various sources, including a 2006 RAND study of investor perspectives, a 2011 staff study and a 2013 solicitation for comments, but that there have been 'significant developments in the marketplace' since then."
Pensions & Investments

Brand's Reputation Can Outweigh Investment Performance in Asset Manager Selection
"Some asset managers are more likely than others to get a pass from institutional investors during periods of underperformance ... Brands establish trust through their organizational stability, an experienced investment team, a distinguished investment philosophy, and level of service and support."
Institutional Investor

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ESOPs Can Provide Liquidity to Facilitate Division of a Family-Owned Business Upon Divorce
"The benefit of a financed transaction is that the ESOP can pay for the stock with pre-tax dollars as opposed to the normal stock repurchase arrangement between spouses which would require one spouse to generally use after-tax dollars for the purpose of buying out the former spouse's interest in the stock. Essentially the U.S. government is subsidizing the initial cost of the buy-out through use of tax deductible payments."
Butterfield Schechter LLP

Annuities Offer Stability, Lump Sum Takers Say
"More than half -- 52 percent -- of lump sum recipients agreed that their budget would be more predictable if they'd chosen annuity payments from an employer pension or defined contribution plan ... Far fewer lump sum recipients -- 34 percent -- said it would be easier to pay for necessities if they had chosen monthly annuity payments instead of a lump sum ... The average lump sum amount ... for those who took a lump sum from the defined benefit plan was about $192,000. The average defined contribution plan balance at retirement was about $240,000."
InsuranceNewsNet.com

Retirement Savings Milestones: How Much Should You Have Now?
"Once you have an idea about how much income you'll need each year to pay for retirement, you can measure how your current savings compare -- which can help you decide whether you need to do more. The calculations are a little complex, so [the authors have] created a table showing the different 'multipliers' you can use to work out where your savings portfolio should be at a given age."
Charles Schwab

How to Maximize Social Security Retirement Benefits
"[1] Check your wage history on the Social Security statement ... [2] Know your full retirement age ... [3] The benefits and costs of working in retirement ... [4] Taxing Social Security benefits ... [5] Spousal benefits ... [6] Survivor benefits ... [7] Divorced spousal benefits."
Lawton Retirement Plan Consultants

[Opinion]

Presidential Pensions as Broken Windows
"Why should federal taxpayers pay a post-presidential pension to a former President who is willing and able to enrich himself after he leaves the White House? ... [T]he presidential pension presents the classic case of a 'broken window,' the relatively small incident which suggests deeper disarray. The same 'broken windows' effect occurs when former state legislators manipulate state pension laws, taking short-term but highly paid state executive positions to boost their retirement pensions."
Prof. Edward A. Zelinsky, OUPblog

Benefits in General

Does Your Plan Document Give Appropriate Discretion to the Plan Administrator?
"With the exception of the 5th Circuit, the Circuit Courts have unanimously interpreted Firestone such that when the plan document provides discretion to the plan administrator, the abuse of discretion standard of review applies to plan interpretations, factual determinations, and the application of the facts to the plan provisions. As illustrated by Ariana M. v. Humana Health Plan of Texas, Inc., the 5th Circuit Court of Appeals treats factual determinations differently.... The takeaway from Ariana is that ERISA plans should make it clear that the discretion afforded to the plan administrator applies to factual determinations, in addition to interpreting the plan provisions and applying the facts to the terms of the plan."
Graydon Head & Ritchey LLP

Bill Encourages Portable Benefits for Independent Workers
"The [DOL] would get new funds to encourage the development of portable benefits models for independent workers such as contractors, temporary workers, and self-employed workers ... The Portable Benefits for Independent Workers Pilot Program Act authorizes a total of $20 million for competitive grants to states, local governments, and nonprofits for pilot projects to design, implement, and evaluate new models or assess and improve existing benefit programs that allow workers to maintain benefits when changing jobs."
Mercer

Discussions on
the BenefitsLink Message Boards

Using an LLC to Hold an 'Alternative Asset' for Self-Directed Investment Accounts
"Client would like to set up an LLC for the sole purpose of investing in an alternative investment for the plan. He would allow participants to invest in the alternative investment through the LLC. What are the main issues?"
BenefitsLink Message Boards

Divorce in the United Kingdom but Plan Assets in the U.S.
"We are getting divorced in the UK (it has to happen in the UK because this is where we currently live). My pension plan in the US states that the QDRO must be signed by a judge in a US court. We plan to attached the agreed QDRO to the UK court documents that will be signed/stamped by a UK court. How do we then get the QDRO signed by a judge in a US court?"
BenefitsLink Message Boards

Normal Duration of Out-of-Market Cash Position During Blackout Period
"Does anyone have a sense for what a normal number of days would be not for the blackout itself, but to be out of the market in cash? I know plans typically go into blackout before the liquidation date to ensure everything has a chance to settle, and on the other end it often stays in blackout until everything is completely up and running which at times is after the repurchase. I'm looking for a typical amount of time to be sitting in cash."
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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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