Retirement Plans Newsletter

July 7, 2017

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Retirement Plan Consultant
Intac Actuarial Services
in NJ, NY

Flexible Spending, HSA, HRA, COBRA Sales
Stanley Benefit Services, Inc.
in NC

Director - Plan Administration
CliftonLarsonAllen
in IL

Plan Administrator for Retirement Plans
Dana Consulting Group, Ltd.
Telecommute

Senior Regulatory Support Consultant
Transamerica
in NY

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Webcasts and Conferences

Latest Trends in Health Care Technology
July 20, 2017 in GA
Worldwide Employee Benefits Network [WEB] - Atlanta Chapter

How New Health Services are Reshaping Employee Benefits
July 25, 2017 WEBCAST
Fidelity Health Marketplace

Fiduciary Rule: What You Should Do Today to Remain Compliant
July 25, 2017 WEBCAST
Multnomah Group

Taking the Mystery Out of Retirement Planning
August 10, 2017 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

ERISA Basics Part II: Working with Employers on Reporting and Compliance Requirements
August 15, 2017 WEBCAST
American Bar Association Section of Real Property, Trust and Estate Law

Controlling Health Benefit Costs Through Self-insurance: Practical Guidance for Small & Mid-Size Employers
August 23, 2017 WEBCAST
Clear Law Institute

401K Plans: Beyond the Basics
September 8, 2017 WEBCAST
Lorman Education Services

ACA Reporting Requirements and Lessons Learned
September 15, 2017 WEBCAST
Lorman Education Services

Responsibilities of an Internal ESOP Fiduciary
September 26, 2017 WEBCAST
National Center for Employee Ownership [NCEO]

2017 Annual Conference
October 22, 2017 in MD
ASPPA [American Society of Pension Professionals & Actuaries]

Don't Do That With Your ESOP
November 7, 2017 WEBCAST
National Center for Employee Ownership [NCEO]

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Discussions

New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum


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[Guidance Overview]

Department of Labor's 2016 Fiduciary Rule: Background and Issues (PDF)
28 pages. "On April 8, 2016, the [DOL] issued a final regulation that redefined the term investment advice within pension and retirement plans.... The 2016 final rule is accompanied by new prohibited transaction exemptions (PTEs) and amendments to existing PTEs.... DOL delayed the applicability date by 60 days from April 10, 2017, to June 9, 2017, of [1] the expanded definition of investment advice and [2] the Impartial Conduct Standard of the Best Interest Contract (BIC) exemption.... [O]ther aspects of the exemption, such as requirements to make specific disclosures and warrant policies and procedures and to execute written contracts are to become applicable on January 1, 2018." [Report R44884; July 3, 2017]
Congressional Research Service [CRS]

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IRS Determination Letter: Recent Changes and New Guidance

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IRS Overhauls Opinion Letter Process for Pre-Approved Plans, Combines Prototype and Volume Submitter Programs
"The overhaul of the pre-approved plan program is not surprising given the IRS's significant reduction of the determination letter program for individually designed plans ... Comments are specifically requested regarding the possibility of allowing adopting employers to continue to maintain certain 'legacy' benefit formulas (such as frozen or continuing benefit formulas for certain participants due to a merger or acquisition) when adopting a pre-approved plan."
Thomson Reuters / EBIA

Second Circuit Opinion: District Court Correctly Reformed Plan to Conform to Plan Sponsor's 'Materially False, Misleading, and Incomplete Disclosures'
"Defendants focus, in particular, on participants who received seniority enhancements under the cash balance plan. Those participants, Defendants contend, experienced little to no wear-away, but in fact received more relief than other participants because they benefitted from a windfall created by the cumulative effect of the 'A benefit' and 'B benefit' ordered by the district court.... [We] review a district court's award of equitable relief 'only for an abuse of discretion or for a clear error of law,' Amara II ... and we detect none here. As we stated in Amara II, the equitable remedy of reformation is governed by contract principles, and a district court may 'properly reform[] [a pension] plan to reflect the representations that the defendants made to the plaintiffs.' " [Osberg v. Foot Locker, No. 15-3602 (2d Cir. July 6, 2017)]
U.S. Court of Appeals for the Second Circuit

Retirement Plans Are Leaking Money. Here's Why Employers Should Care
"If their retirement accounts are dwindling, older employees may not be able to retire when they want to. How problematic that is depends on the employer and its workforce management philosophy.... [If] an employer wants workers to stay until normal retirement age, pass along their knowledge and skills, and then leave so younger workers can move up, early withdrawals become more problematic."
Society for Human Resource Management [SHRM]

Interesting Angles on the DOL's Fiduciary Rule, Part 54
"The DOL needs to balance the burdens of compliance with protection of retirement investors. For example, the cost, complexity and possible litigation implicit in those requirements could cause financial institutions to limit the range of investments and/or to increase their charges to investors. On the other hand, how will IRA retirement investors obtain relief if there was a breach of the best interest standard of care? While plans and participants can file claims under ERISA, retirement investors in IRAs don't have a similar statutory right."
FredReish.com

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Things Have Changed Are You Up-To-Date?

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DOL's New Stance on Fiduciary Rule at Odds in Thrivent Case
"Thrivent is urging the court to rule in its favor in light of the agency's July 3 announcement that it will no longer defend the validity of the best-interest-contract exemption's condition restricting class-litigation waivers as it applies to arbitration agreements, according to a letter filed July 5 in the U.S. District Court for the District of Minnesota."
Bloomberg BNA

Two New Cases Highlight Scrutiny of University-Sponsored Retirement Plans (PDF)
"There have been 12 proposed class actions brought against major universities with regard to their employee benefit plans. These lawsuits allege numerous claims of fiduciary breach including plan sponsors retaining expensive and underperforming investment options, incurring duplicative fees from using more than one record-keeper and offering too many investment options. Federal district courts have issued two recent decisions on motions to dismiss, allowing many of the claims to proceed."
Schulte Roth & Zabel LLP

Connecticut Passes Conflict-of-Interest Rule for Non-ERISA 403(b)s
"According to the text of the bill, effective October 1, 2017, any person that enters into a contract or agreement with a non-ERISA 403(b) plan to provide services to the plan, and reasonably expects to receive $1,000 or more in compensation, direct or indirect, in connection with the provision of such services, shall disclose to a fiduciary of the retirement plan any conflict-of-interest the person has with the retirement plan."
PLANSPONSOR

ERISA Plans Require Strong Subadvisory Due Diligence
"Much of the growing use of multi-asset-class solutions occurs within corporate retirement plans and other types of institutions utilizing outsourced chief investment officer services.... The Cerulli analysis suggests ... that some asset managers struggle more than others with compliance in the institutional space -- and that firms succeeding in either retail asset management or institutional management do not always transition smoothly into working with other types of clients/assets."
PLANSPONSOR

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Circuit Courts Split on Structural Conflicts of Taft-Hartley Boards When Reviewing ERISA Benefits Determinations
"On the one hand, [LMRA] requires that one-half of the board of a Taft-Hartley plan consist of trustees who are appointed by the employers who fund the plan, and, as such, are arguably motivated to deny the claim for the sake of saving costs. But on the other hand, the other half of the board consists of union-designated trustees who are arguably motivated to grant the claim to help their members.... [T]he Ninth, Sixth, and Fourth Circuits [have ruled] that the boards of trustees of Taft-Hartley plans are not structurally conflicted and the Second Circuit [has ruled] that they are structurally conflicted. This article reviews the underpinnings for the conflict of interest analysis generally and the reasoning of the differing rulings applying this analysis to Taft-Hartley plans."
Proskauer Rose LLP

Union Pension Plan Participation Can Create Massive Unexpected Liabilities
"Employers have the right to request an annual written estimate of withdrawal liability from any multiemployer pension plan in which they participate. The plan may charge a reasonable fee for the request and may take up to 180 days to comply with the request. An employer who participates in a multiemployer pension plan should request such an estimate on an annual basis so it is aware of the amount of any potential withdrawal liability."
Frost Brown Todd LLC

New Jersey Approves Budget, Shifting State Lottery to Pension Fund
"The state's $2.51 billion contribution for fiscal 2018 to the New Jersey Pension Fund represents a 35% increase from the $1.86 billion for the 2017 fiscal year. By using lottery proceeds, the recently passed budget law means the contribution from general operating funds will be reduced to approximately $1.5 billion, assuming the lottery receipts meet projected totals."
Pensions & Investments

Here's How Much You Should Have Saved for Retirement at Every Age
"By the time you reach your 30s, you should try to have the equivalent of your annual salary saved for retirement.... By age 40 ... you should have around three times your annual salary saved.... By age 50, you should have about six times your annual salary saved.... By age 60, you should have about eight times your annual salary saved."
Motley Fool

Discussions on
the BenefitsLink Message Boards

Use of Foreign Real Estate as 'Qualifying Employer Real Property'
"Under the PT rules, an employer can make an in-kind contribution of real property to a DB plan if (among other things) the real property constitutes 'Qualifying Employer Real Property.' Is there any reason that foreign property couldn't constitute QERP?"
BenefitsLink Message Boards

Using Remedial Amendment Period for a 403(b) Document from 2001
"Rev. Proc. 2017-18 provides that the RAP begins on 1/1/2010 and ends on 3/31/2020, so a 403(b) plan sponsor can adopt a prototype or VS plan by 3/31/2020 retroactive to 1/1/2010 and fix any issues in an old plan document. The sponsor must adopt a written plan document 'intended to satisfy the section 403(b) requirements' before 1/1/2010. Announcement 2009-89 says the document must satisfy the requirements of 'the regulations' (which did not come out until 2007). My client's latest document was signed in 2001. Can the client qualify for the 3/31/2020 RAP if it restates the 2001 document retroactive to 1/1/2010?"
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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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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