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[Official Guidance]

Text of IRS Rev. Proc. 2017-41: Changes to Opinion Letter Program for Pre-Approved Retirement Plans (PDF)
"This revenue procedure sets forth [procedures] for issuing Opinion Letters regarding the qualification in form of Pre-approved Plans under Sections 401, 403(a), and 4975(e)(7) of the Internal Revenue Code [and combines] the master and prototype (M&P) and volume submitter (VS) programs into a new Opinion Letter program. [It also] modifies and supersedes, in part, Rev. Proc. 2015-36 ... and modifies Rev. Proc. 2017-4 ... and Rev. Proc. 2016-37[.] [It also] modifies the on-cycle submission period for the third six-year remedial amendment cycle for Providers of pre-approved defined contribution plans so that it begins on October 2, 2017 and ends on October 1, 2018. [It also] modifies the IRS's historic approach to Pre-approved Plans in order to expand the Provider market and encourage employers that currently maintain individually designed plans to convert to the pre-approved format."
Internal Revenue Service [IRS]


Online Learning Course: 401(k) Plan Structure - BenefitsLink Discount

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Review considerations for structuring a 401(k) plan. Topics include salary deferral limits and catch-up contributions, matching and profit-sharing contributions, nondiscrimination testing and safe harbors. Use code BL2017 for 15% discount - good through July 31.

[Official Guidance]

Text of IRS Notice 2017-37: Cumulative List of Changes in Plan Qualification Requirements for Pre-Approved Defined Contribution Plans for 2017 (PDF)
11 pages. "This notice contains the Cumulative List of Changes in Plan Qualification Requirements for Pre-Approved Defined Contribution Plans for 2017 (2017 Cumulative List).... Cumulative Lists identify changes in the qualification requirements of the Internal Revenue Code that are required to be taken into account in a pre-approved plan document submitted under the pre-approved plan program administered by the [IRS] and that will be considered by the IRS for purposes of issuing opinion letters. The 2017 Cumulative List is to be used to submit opinion letter applications for pre-approved defined contribution plans during the third six-year remedial amendment cycle, which began February 1, 2017, and ends January 31, 2023 ... Defined contribution plans may be submitted for approval during the on-cycle submission period, which begins October 1, 2017, and ends October 1, 2018."
Internal Revenue Service [IRS]

[Official Guidance]

Text of EBSA Request for Public Input on the Fiduciary Rule and Prohibited Transaction Exemptions (PDF)
13 pages. "[EBSA] is publishing this Request for Information in connection with its examination of the final rule defining who is a 'fiduciary' of an employee benefit plan ... This Request for Information specifically seeks public input that could form the basis of new exemptions or changes/revisions to the rule and PTEs, and input regarding the advisability of extending the January 1, 2018 applicability date of certain provisions in the Best Interest Contract Exemption, the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs, and Prohibited Transaction Exemption 84-24." [Editor's note: The comment period is 15 days regarding an extension of the January 1, 2018 applicability date and 30 days regarding other issues. Comment periods begin on the day the notice is published in the Federal Register.]
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Retirement Plan Problem: Delayed Departure
"[E]ven a brief retirement delay by an employee can prove costly. Someone who retires at 66 instead of 65, for example, costs his or her company an average of more than $34,000 ... If retirement is postponed to age 70, the cumulative incremental tab rises to $172,000. And if 100 people at a company fit that profile, it creates a hit of more than $17 million."

Baby Boomers Delaying Retirement: Generational Shifts at Work
"[F]or the first quarter of 2017, the 55 and older age group continued its climb, distancing itself even further from the other age brackets ... This age group experienced 4.8 percent job growth during the first quarter of 2017, more than any other age group ... There are key focal points for employers to be aware of relating to this older age group: [1] Many of the workers in the top end of this bracket still need to work. [2] There is greater demand for these workers and their skills. [3] The key opportunity for employers is to connect this group with millennials."


IRS Determination Letter: Recent Changes and New Guidance

Sponsored by Lorman and BenefitsLink

July 27 webinar. Learn how employers can ensure that their individually designed retirement plans, with various amendments and design changes, remain in compliance with the voluminous requirements for tax-qualified status. CE Credits. BenefitsLink discount

Should Looming Tax Reform Drive 401(k) Prefunding?
"The concept behind 401(k) prefunding is straight-forward: increase the contribution(s) in a high-tax-rate year and decrease them when tax rates are lower.... The increased contributions would be allocated to employee accounts just like regular 401(k) contributions.... The 401(k) contributions for Year 1 can be deducted for Year 1 if they are made before the corporate tax deadline in Year 2.This deadline could be as late as mid-September for a calendar-year tax entity."

The Surprising Benefits of a 3(38) Fiduciary
"3(38) investment managers are a distinct breed of fiduciaries legally required to act in their clients' best interests when it comes to choosing funds and managing assets. They select, monitor, and benchmark retirement plan investments on a discretionary basis.... Smaller companies are happy to reclaim time; larger companies are often glad to unload some of the risks that aren't core to their businesses. But any size company is pleased when its investments achieve better outcomes."
CAPTRUST Financial Advisors

All Skewed Up? The Active Versus Passive Investing Debate
"The core of the argument for passive equity investing is the skewness of returns and hence further skewness in outcomes that arise when one looks at the resultant stock prices. While a normal distribution of returns is a reasonable approximation of outcomes and generates prices that are log-normally distributed and positively skewed, it understates what we observe in practice."

A First Look at Alternative Investments and Public Pensions
17 pages. "Public pension plans have boosted their holdings in alternative assets, defined as private equity, hedge funds, real estate, and commodities. This shift reflects a search for higher returns, a hedge for other investment risks, and diversification.... [A] 10-percent increase in the average allocation to alternatives was associated with a reduction of 30-45 basis points, primarily due to hedge funds.... Hedge funds reduced volatility, but real estate and commodities increased it."
Center for State & Local Government Excellence

Geographic Patterns in Social Security Disability Receipt
"In 2015, 1.8 percent of all 18- to 65-year-olds across the country received DI benefits because of mental disorders. That recipiency rate was markedly higher in Maine, New Hampshire, Rhode Island, and Vermont. The evidence suggests that access to and treatment from the health care system (which tend to be better in New England states) may help people identify their illnesses and contact the DI program and other services."
Urban Institute

Quarterly Survey of Public Pensions for 2017: First Quarter
"This report provides national summary data on the revenues, expenditures and composition of assets of the largest defined benefit public employee pension systems for state and local governments. This report produces three tables: [Table 1 and Table 3] include data on cash and security holdings and Table 2 provides data on earnings on investments, contributions and payments."
U.S. Census Bureau

Chicago Mayor Bypasses State, Introduces Plan to Raise City Contributions for Two Pension Plans
"The ordinance calls for Chicago's pension contributions to be increased over the next five years, reaching actuarial required levels in budget year 2022, payable in 2023.... The city contribution changes ... formed part of a municipal and laborers' pension reform bill that was passed by the Illinois Legislature in April and is awaiting Gov. Bruce Rauner's signature.... While the city can increase its contributions without a state law change, it does not have the authority to adjust employee contributions or benefits."
Pensions & Investments

CalPERS Announces New Disability Retirement Mandates and Local Agency Audits
"CalPERS announced that it is auditing the industrial disability retirement (IDR) process for 60 contracting agencies.... [B]ecause many local agencies do not have a formal policy that sets forth the procedures for determining disability and industrial disability retirement, agencies should strongly consider adopting such a policy in light of the due process concerns related to the separation process and CalPERS' direction that such a policy is necessary."
Liebert Cassidy Whitmore


OregonSaves will Force Large Employers to Redirect Costs
"[ERIC] is disappointed that Oregon lawmakers ignored the Joint Resolution of Disapproval rescinding federal rulemaking that allowed states to create mandatory retirement plans and next week will launch a pilot of OregonSaves, a program that will eventually reach beyond what the federal law allows by imposing a compliance burden on employers who voluntarily provide a retirement plan to their employees."
The ERISA Industry Committee [ERIC]

Benefits in General

Claim for Benefits Did Not Preclude Additional ERISA Fiduciary Breach Claim
"Plan administrators should heed this reminder that the timeframes in the claims procedure regulations are maximums, and the available extensions are not automatic entitlements. And from a litigation perspective, the court's conclusion that pursuing a claim for benefits does not necessarily preclude a simultaneous fiduciary breach claim is instructive." [Hancock v Aetna Life Ins. Co., No. 16-1697 (W.D. Wash. May 3, 2017)]
Thomson Reuters / EBIA

Retiree Health Costs Demand Financial Wellness
"The value of HSAs has become increasingly apparent as employers come to align them more closely with 401(k) plans, through efforts such as unified education, integrated dashboards, and similar investment menus. The result is that employees are starting to use HSAs for what they were initially designed: for long-term savings."

Separation Agreement Drafting Error Corrected by Michigan Appeals Court
"The agreement provided that the employee, who was then earning approximately $125 thousand per year, was to receive $80,805.97 per week for 34 weeks!.... The trial court found that a unilateral mistake had clearly occurred, supported by both the testimony of the company's director of human resources (who stated that she mistakenly inserted the total amount to be received over the 34-week payment period, or $80,805.97, as the weekly payment amount) and the reference to certain separation pay guidelines in the agreement ... [T]he Court did not ascribe much credence to the employee's affidavit, in which he stated his belief that severance pay in excess of $80 thousand per week was 'fair based on my 28 years of service.' " [El-Hayek v. Trico Products Corp., No. 331283 (Mich. App. June 27, 2017; unpub.)]
Jackson Lewis P.C.

Discussions on
the BenefitsLink Message Boards

Retired Participant Wants Distribution of Less Than Full Account Balance
"A participant retired in May of this year. She is on Social Security. She sent in a distribution request form and asked for a partial distribution, but the plan document specifically says 'lump sum' only. She is wanting to take a minimum out each month so that she does not mess up her SS. What to do? Her balance is approximately $1,800."
BenefitsLink Message Boards

IRS Contact Person to Discuss EPCRS Program?
"We have a question regarding the IRS policy on accepting certain kinds of corrections (not ones discussed in its common plan defects), and would like to speak to someone at the IRS about it. However, the IRS doesn't appear to publicize any information about which staff members are involved with the EPCRS program. Has anyone had any experience in finding an actual human to speak to?"
BenefitsLink Message Boards

Plan Document: How Many Pages is Yours?
"If a plan's sponsor were to read all of its plan document, how many pages would that be? In the prototype or volume-submitter set you regularly use, counting the adoption agreement, base document, and all appendixes and supplements that state provisions of the plan, how many pages (in total) is it?"
BenefitsLink Message Boards

Press Releases

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David Rhett Baker, J.D., Editor and Publisher
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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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