Retirement Plans Newsletter

July 10, 2017

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Employee Benefits Jobs

Retirement Services Administrator
Old Point National Bank
in VA

Regional Director, Non-Qualified
Newport Group
in FL, GA, IL, MN, NC

Retirement Plan Account Analyst
Boulay
in MN

Heath and Group Benefits Analyst
JM Family Enterprises
in FL

Compliance Coordinator / Senior Plan Administrator
Scholz & Friends Enlightened Retirement Group, Inc.
in TX

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[Guidance Overview]

Chipping Away: Does the DOL's Fiduciary Rule Continue to Be on the Chopping Block?
"It increasingly seems unlikely that the full BIC Exemption and other certain suspended aspects of the Rule will become effective when 2018 arrives, and, indeed, there are multiple paths to a substantial rollback of the Rule in whole or in part. On the other hand, to many it did not appear that the June 9 applicability date would actually come into effect; and yet it did."
Dechert

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Fate of Fixed Index Annuities Rests With DOL Rule Retooling
"DOL regulators signaled [on July 6] that they are keen [to] explore the advantages and drawbacks of expanding the types of annuities covered under PTE 84-24 as part of a broader review of the fiduciary rule's exemptions. 'Would it facilitate advice to expand the scope of PTE 84-24 to cover all types of annuities after the end of the transition period on January 1, 2018?' regulators asked. The answer from the annuity community is an unequivocal yes."
InsuranceNewsNet.com

Trial Lawyers Want to Defend Fiduciary Rule in Court
"The American Association of Justice [AAJ], a nonprofit group representing plaintiffs' lawyers, ... chastised the Labor Department for taking the 'extraordinary step' of asking the court to 'vacate the government's own rule.' According to the AAJ, 'the government's lawyers at the Department of Justice are asking this Court to vacate a rule that the [DOL] (a) promulgated after thorough notice-and-comment rulemaking, (b) successfully defended in court, and (c) is currently required to implement.' "
Bloomberg BNA

Americans Trust in Their 401(k) Plans
"Ninety percent of DC-owning households agree that their DC plan account helps them think about the long term, not just their current needs ... 91 percent agree that payroll deduction makes it easier to save; and 44 percent agree that they probably wouldn't save for retirement if they didn't have their DC plan at work. These results highlight the important role that employers play in promoting retirement saving."
Investment Company Institute [ICI]

What's Underpinning UPS's Shift from Pension Plans to the 401(k) Savings Plan?
"In January 2023, UPS will move the approximately 78,000 non-union employee pension plan participants to its UPS 401(k) savings plan. The move is expected to reduce future contributions to the pension plan after 2023. While reducing future contributions is positive, part of the underlying impetus for this is likely associated with the changing shipping environment."
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Non-ERISA 403(b) Plans Must Walk Fine Line to Avoid Losing ERISA Exemption
"Sometimes discretion inadvertently or unknowingly finds itself in the plan such as an employer determining eligibility, processing hardship distributions and loans, and determining whether a domestic relations order is a Qualified Domestic Relations Order. That also includes hiring a Third Party Administrator like our firm. That means, of course, the 403(b) plan could be subject to ERISA's Title I requirements with all the time and expense to make the DOL's required corrections[.]"
The Retirement Plan Blog

Working Past 70: Americans Can't Seem to Retire
"[B]aby boomers are increasingly ignoring the traditional retirement age of 65. Last quarter, 32 percent of Americans 65 to 69 were employed. Even past age 70, a growing number of seniors are declining to, or unable to, retire. Last quarter, 19 percent of 70- to 74-year-olds were working, up from 11 percent in 1994."
Bloomberg

Fat Tails In Monte Carlo Analysis vs Safe Withdrawal Rates
"[This article] analyzes Monte Carlo projection scenarios relative to actual historical scenarios, to compare which does a better job of evaluating sequence of return risk and the potential for an 'unexpected' bear market ... and finds that in reality, Monte Carlo projections of a long-term retirement plan using typical return and standard deviation assumptions are actually far more extreme than real-world historical market scenarios have ever been!"
Nerd's Eye View

Evansville Woman Sentenced in Federal Court for Bankruptcy and Wire Fraud Scheme Involving Husband's 401(k)
"[Patricia Bippus-Allen] was convicted of wire fraud stemming from her transferring money from her husband's 401(k) account into her own personal bank accounts without his consent, knowledge, or authorization. Bippus-Allen made multiple calls to the 401(k) service center purporting to be her husband while also faxing supporting documentation to the service center for a 401(k) hardship withdrawal. In sum, Bippus-Allen made multiple unauthorized withdrawals from her husband's 401(k) account for a total of over $24,000. Bippus-Allen also took out over $16,000 in loans on her husband's 401(k) account without his consent, knowledge, or authorization."
Office of the Solicitor, U.S. Department of Labor

[Opinion]

Public Plans Data Takeaway: Bad Actuarial Assumptions
"Actuarial assumptions for public plans are selected with one goal in mind -- to generate the lowest contribution amounts possible. As those assumptions are not realized the funded levels drop despite the fact that these funding methods are supposed to develop contributions that consist of an annual cost to pay for benefits accruing during the year plus an amortization amount to pay off any past shortfall."
Burypensions

Benefits in General

Plan Sponsors Using Limited-Scope Audits Should Watch for Proposed Changes
"The proposed SAS requires the plan sponsor to acknowledge its responsibility when it comes to the audit. The auditor would be required to get it in writing.... This change will most likely increase plan sponsor costs, especially when plan sponsors opine on certified financial statements prepared by financial institutions. Plan sponsors may need to engage the appropriate subject-matter expert to comment on asset valuation and financial statement presentation."
HRDailyAdvisor

Executive Compensation
and Nonqualified Plans

CEO Pay Packages See Largest Increase Since 2013
"Over the study period, a growing number of companies started granting performance-based long-term incentives (LTI) to their chief executives, reaching 81.5 percent of Equilar 500 companies in 2016. Meanwhile, the prevalence of CEOs receiving time-based stock options fell to a five-year low of 50 percent in 2016."
Society for Human Resource Management [SHRM]

Discussions on
the BenefitsLink Message Boards

Paying Death Benefit When No Beneficiary Designation on File
"Participant dies at age 37 with no designated 401(k) plan beneficiary for his $6,000 account. Plan document states that, absent a designation, the death benefit of a participant is payable to the participant's spouse or, if there is no spouse, to the participant's children in equal shares or, if there are no children, to the participant's "estate." This participant had no spouse and no children. His parents have predeceased him. We've been told that the death benefit should should be paid to the participant's first cousins (of which there are 14), but many of these individuals have no knowledge of the situation. Of those that do, they say they have no intention of opening a probate estate for the division of the $6,000. What should the plan do?"
BenefitsLink Message Boards

Looking for Recommendations for Form 8955-SSA Filing Software
"I need suggestions on Form 8955-SSA filing software. All I need is something for the 8955 electronic filing. The IRS site provides a list of vendors but the vendor websites do not provide much information."
BenefitsLink Message Boards

Requesting Relief from ERISA Section 411 Debarment
"Does anyone have experience in seeking relief for an ERISA Section 411 debarment -- i.e., relief permitting a convicted felon to serve as a consultant to an employee benefit plan prior to the 13-year restriction period? We have a client who just discovered that it has a long-term employee with a felony conviction covered under Section 411. The employee is a clerical worker. The client is an insurance agency/TPA type group which provides services to group benefit plans."
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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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