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[Guidance Overview]
DOL Fiduciary Rule Goes Into Effect
"With respect to existing Benefit Plan Investors, fund managers may consider sending out a notice or supplement ... to obtain the appropriate representations for reliance on a carve-out.... [F]or self-directed ERISA Plans and IRAs whose owners are not represented by a sophisticated independent fiduciary, any recommendations to such investors will not fall into one of the carve-out categories. Thus, fund managers may want to suspend taking investments (or additional investments) from such investors until further guidance is issued."
Haynes and Boone, LLP
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Interesting Angles on the DOL's Fiduciary Rule, Part 51
"The first step of a best interest, or prudent process, is to determine the information that is 'relevant' to making a decision that is 'informed.' In other words, what would a person who is knowledgeable about such matters, and who is unbiased and loyal to the IRA owner, want to review in order to develop a recommendation? Unfortunately, there aren't any specific guidelines in the fiduciary regulation or BICE."
FredReish.com
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Court Dismisses Chevron Fee Complaint a Second Time
"Chevron has many facts in common with other 401(k) plan fee cases -- plaintiffs generally challenge as imprudent the use of certain funds in the plan's fund menu and the revenue sharing-based fees paid to the plan's recordkeeper. The new decision is interesting for its discussion of plaintiffs' duty of loyalty claim and its dismissal of plaintiffs' claims based on the availability of 'identical lower-cost share classes.' " [White v. Chevron Corp., No. 16-793 (N.D. Cal. May 31, 2017)]
October Three Consulting
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Merrill Lynch Settles Suit with Small 401(k) Class
"The deal features a 'corrective remediation payment' totaling at least $8.8 million ('equal to the deficient remediation payments and interest sought by Plaintiffs from the outset') and a 'disgorgement payment' of $16.2 million. Class counsel will request attorney's fees equal to 35% of the settlement payment, or $8.75 million.... Most of the mutual funds available on Merrill Lynch's retail platform offered waivers on up-front sales charges for retirement plans; however, the firm failed to apply those waivers."
National Association of Plan Advisors [NAPA]
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Northrop Grumman Settles 401(k) Fee Class Action for $16.8M
"The deal ... resolves claims by a class of more than 100,000 people who participated in Northrop's retirement plans between 2000 and 2009. The lawsuit accused Northrop of forcing 401(k) plan participants to pay excessive administrative fees -- some of which went directly to Northrop. This is the latest multimillion-dollar settlement over 401(k) plan fees to be negotiated by St. Louis-based Schlichter Bogard & Denton."
Bloomberg BNA
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[Advert.]
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How to Evaluate Your 401(k) Investment Advisor
"You should not continue to work with a 401k investment advisor who will not sign on to your plan as a fiduciary.... Production of reports, investment option performance evaluation, fund searches, Investment Policy Statement (IPS) maintenance and fiduciary compliance consulting are all core investment advisory services. In addition, your 401k investment advisor should be a key player in coordinating your employee education sessions; managing your recordkeeper, trustee, custodian and other providers; benchmarking your plan; helping with plan design issues; and implementing your financial wellness education solution."
Lawton Retirement Plan Consultants
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Chocolate-Covered Target Date Funds?
"[T]here are many in the financial industry who strongly believe that mixed investing is a bad idea; that mixing a TDF with another investment option is a misuse of TDFs ... [S]ome mixed investors are strategically coupling their TDF with another option that is either slightly more aggressive or slightly more conservative than their TDF.... [As] long as the expense ratios are in line, and the investors are willing and able to manage the rebalancing of their portfolios going forward, their decision to mix may not be wrong for them."
Vanguard
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Closing the Retirement Income Gender Gap: The Opportunity Is Now (PDF)
12 pages. "Plan sponsors increasingly have the ability to leverage data to determine when participants are facing important milestones in their lives. The ability to use data to fuel proactive engagement regarding key savings and planning opportunities can also help make closing the gap an achievable reality. This paper will explore some key challenges faced by women and the ways in which plan sponsors can help."
Prudential
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PBGC Reverses Expansion of Early Warning Factors
"Plan sponsors and others had criticized the new additions to the list as too vague. There were also concerns that these factors could result in more forcefully sought financial concessions from plan sponsors that could ill afford them. The PBGC initially claimed that it had always used similar criteria in its screening process."
Willis Towers Watson
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Executive Compensation
and Nonqualified Plans
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FASB Issues Helpful Guidance on Accounting for Equity-Based Compensation
"The ASU should reduce the instances that an entity is required to apply modification accounting to a share-based payment award.... The ASU streamlines the application of modification accounting by stating that when making a change to the terms or conditions of a share-based payment award, a company should apply modification accounting to the award, unless each of [three] conditions is met[.]"
Winston & Strawn LLP
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Discussions on
the BenefitsLink Message Boards
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How Many EINs for a Multiemployer Plan? And Who Files?
"Is there a need to have separate EINs for the fund office of a multiemployer plan and for the plan itself? In the case of a corporation, for example, you would have separate EINs for the corporation and for its plan. I'm wondering whether the same thing is needed for a multiemployer plan -- for example, so that a tax levy that should apply to assets of the fund office (e.g., for failure to deposit withholding taxes on their employees' wages) would not be applied to plan assets. Also, who files for the EIN? The instructions talk about having the 'responsible party' do so. But a multiemployer fund has co-chairs (one union, one management). Can either of them do it?"
BenefitsLink Message Boards
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Amend Plan to Exclude Certain Employees Who Already Participate
"We have an existing 401(k) safe harbor plan with one year of service, age 21, and quarterly entry dates. Employer would like to amend the plan to exclude certain employees (i.e., those who work in a particular division of the employer). Some of the employees in that division currently participate in the plan, however. The plan would easily pass coverage after the amendment. But would the currently participating employees need to be allowed to continue to participate?"
BenefitsLink Message Boards
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Taxable Distribution of Life Insurance; Rollover to Save the Day?
"Participant held life insurance in a retirement plan. Agent said the insurance should be transferred to the participant. The participant is over 59-1/2 so at least it was a permitted distributable event. But he was not aware that the transfer would be a taxable distribution. We're still within 60 days of the transfer. If the participant has sufficient outside assets, can he contribute an amount to an IRA equal to the cash value less the basis and treat it as a rollover?"
BenefitsLink Message Boards
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Press Releases
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BenefitsLink.com, Inc.
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Winter Park, Florida 32789
(407) 644-4146
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.
Links to web sites other than BenefitsLink.com and EmployeeBenefitsJobs.com are offered as a service to our readers; we were not involved in their production and are not responsible for their content.
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