Retirement Plans Newsletter

July 21, 2017

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Webcasts and Conferences

Cybersecurity and Benefit Plans: What Service Providers and Employers Need to Know
September 28, 2017 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

Jazz Up Your Knowledge of Self-Directed IRAs
October 18, 2017 in LA
Retirement Industry Trust Association [RITA]

SPARK Forum
November 5, 2017 in FL
SPARK Institute

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[Official Guidance]

Text of Treasury Department Letter Approving United Furniture Workers 'Pension Fund A' Application to Reduce Benefits (PDF)
On July 20, 2017, the Board of Trustees of the United Furniture Workers Pension Fund A (Fund) was notified that its second application to reduce pension benefits under MPRA was approved by Treasury. As a result, the proposed benefit reductions will now be subject to a vote of participants and beneficiaries of the Fund. Ballots will be mailed to participants and beneficiaries on or around August 1, 2017.
U.S. Department of the Treasury

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Workplace Retirement Savings and State Plan Mandates: Employer and Employee Perspectives (2017)
"In theory, many workers support the notion of government-mandated retirement savings, but their confidence in the ability of governmental entities to administer such programs is lower than in any other listed entity. Many employers say that they would be very likely to discontinue their Defined Contribution plan in favor of a government solution, but just as many say that they would not be very likely to do so.... Workers value many aspects of DC plans that will likely not be part of state-mandated solutions."
LIMRA

Phased Retirement Programs, Although Uncommon, Provide Flexibility for Workers and Employers
"In this report, GAO examines [1] recent trends in the labor force participation of older workers, [2] the extent to which employers have adopted phased retirement programs and what type of employers offer them, and [3] what challenges and benefits, if any, exist in designing and operating phased retirement programs." [GAO-17-536, published and released July 20, 2017]
U.S. Government Accountability Office [GAO]

Can You Put Your Retirement Plan on Autopilot?
"Having quality service providers is a good idea but they cannot relieve you, your company or your other in-house fiduciaries from all responsibility for investment and administrative decisions. Second, some financial advisory firms charge extra to act as 'investment managers.' You may find that the 'extra protection' afforded by this arrangement is not really worth the additional expense. Finally, consider other alternatives to mitigate fiduciary liability. This may include steps like adopting a suitable investment policy statement or obtaining fiduciary insurance."
The Retirement Plan Blog

The Risk of 3(38) Fiduciary 'Flexibility'
"[A] good 3(38) investment manager should provide the plan sponsor, and the plan advisor, with the necessary deliverables to make monitoring of that fiduciary a matter of periodic although definitely not pro forma protocol.... While a prudent process does not necessarily ensure successful investment outcomes, the prudent process that your 3(38) employs can be critical to the ultimate success, or lack thereof, in the participants' ability to accumulate the necessary assets to retire."
401K Specialist

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Reforms, Regulations & Retirement Realities

Sponsored by ASPPA

This October the nation's retirement industry elite will converge at ASPPA Annual, in our nation's capital, with insights from industry insiders, regulators, pundits and the nation's leading voices. Join us!


Fiduciary Rule and Plan Sponsors: What Happens Now?
"[I]mplementation of the fiduciary rule may result in changes to certain service delivery models ... [S]ome [DC] plan vendors will continue providing only non-fiduciary investment education, while others plan on delivering investment advice to participants in a fiduciary capacity, which requires a fiduciary assessment. Plan fiduciaries should understand and assess these changes in accordance with their obligations under ERISA. [This article provides a list of] near-term actions that fiduciaries of employer retirement plans may need to take[.]"
Willis Towers Watson

Avoiding Fiduciary Traps: Tips for DC Plan Sponsors
"[1] The plan's recordkeeper calls the shots.... [2] A haphazard approach to plan fee review.... [3] The IPS gets stale.... [4] Investment committee members learn as they go.... [5] Fund lineup creep.... [6] View managed account providers as commodities.... [7] No audit of the DC plan's security protocols.... [8] Sloppy documentation around decision making."
Callan Associates

Impact of the DOL Fiduciary Rule on Broker-Dealers
"[It] seems likely that the DOL will propose changes to the fiduciary rule and exemptions. As a practical matter, this means the transition period will be extended, probably to the end of 2018 and possibly even longer.... Broker-dealers may decide to use either PTE 84-24 or BICE for the sale of annuities during the transition period, and each has its pros and cons."
Drinker Biddle

DOL Rule Could Be Pushed Out to 2020
"One possible scenario has the [DOL] delaying the phase two effective date of its fiduciary rule by one year, and giving financial services a year beyond that to comply."
InsuranceNewsNet.com

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Know Thyself: Socratic Thoughts on Defined Benefit Fee Policy Statements
"DB plans generally require a more complex collection of services than DC plans which can make price benchmarking difficult for fiduciaries.... The value of these services to plan participants and the fees they generate can vary widely based on the complexity of the plan and the level of sophistication of each service. Unless fiduciaries can demonstrate that they have considered the level of these fees relative to the quality of services being provided on behalf of participants, they remain at risk."
The Principal Blog

ESOP Class Actions: An Existential Threat to the ESOP Community
"The DOL lawsuits are aimed at a relatively few specific transactions where the DOL has determined that the ESOP trustee has overpaid for the shares. However, the class action suits have a broader focus, which is to find errors in the implementation or operation of the ESOP in order to obtain the highest possible dollar recovery. What makes this so significant is that the plaintiff's bar obtains access to the ESOP's books and records by claiming the loss in share value constitutes a breach in fiduciary duty. This loss, however, is a necessary part of every leveraged ESOP transaction."
Fox Rothschild LLP

State and Local Pension Plans Funding Sputters in FY 2016
"The ratio of assets to liabilities for the 170 plans in the Public Plans Database decreased from 73 percent in 2015 to 72 percent in 2016, as measured by the traditional GASB standard; and from 73 percent to 68 percent, as measured by the new standard ... Payments as a percentage of payroll have increased to 18.6 percent; Plans in the PPD have continued to adjust their annual investment return assumptions downward to an average of 7.6 percent in FY 2016[.]"
Center for State & Local Government Excellence

Estimates of the Financial Effects on Social Security of the 'Protecting and Preserving Social Security Act' (PDF)
22 pages. "Assuming enactment of the proposal, the projected trust fund reserve depletion year for theoretical combined OASDI and DI Trust Funds would be extended to 2059. Under current law, the projected trust fund reserve depletion year for the combined trust funds is 2034."
U.S. Social Security Administration [SSA]

Social Security Tips for Working Retirees
"If you claim your benefits and continue to work, there is an earnings restriction until you reach your full retirement age (FRA), 65-67, depending on the year you were born.... If your benefits have been reduced due to earning too much prior to reaching your FRA, you will get these benefits back at your FRA when your monthly Social Security check will be increased to account for benefits withheld earlier due to excess earnings.... Social Security benefits are subject to federal income taxes above certain levels of 'combined income.' ... When to claim Social Security benefits will be one of the most important decisions that you make regarding your retirement[.]"
Fidelity

Benefits in General

Employee Benefits in the United States: March 2017
"Retirement and medical care benefits were available to 70 percent of civilian workers in March 2017 ... Ninety-four percent of union workers had access to employer-sponsored retirement and medical care benefits. For nonunion workers, 66 percent had access to retirement benefits and 67 percent to medical care benefits.... For civilian workers, the shares employers paid of medical care premium costs were 80 percent for single coverage and 68 percent for family coverage.... Employers assumed 87 percent of the premium for single coverage for union workers and 79 percent for nonunion workers."
U.S. Bureau of Labor Statistics [BLS]

Executive Compensation
and Nonqualified Plans

SEC Under Trump Slashes Rulemaking Agenda
"The list released July 20 has 33 items in the proposed and final rule stages ... Missing from the docket are proposed Dodd-Frank Act rules on the orderly liquidation of large broker-dealers and disclosure of the relationship between executive compensation and a company's financial showing, also known as pay versus performance. They were among 62 items in the pre-rule, proposed rule, and final rule stages on the fall 2016 agenda[.]"
Bloomberg BNA

Discussions on
the BenefitsLink Message Boards

Remailing of Summary Plan Descriptions
"Quick question on SPD fulfillment to plan participants. When do they need to be provided to existing participants? I have seen the 'every 5 years' timeframe, as well as after a substantial plan modification. But what is 'substantial'? A PPA restatement?"
BenefitsLink Message Boards

Handling Uncashed Distribution Checks to Now-Deceased Participant
"A defined benefit plan retiree was receiving monthly payments on a life annuity. The checks issued since January 2016 remain uncashed. The plan sponsor has determined that the participant died in December 2016. It's not a problem to stop payment on the checks issued after December 2016, but what should be done about the uncashed checks from before the date of death?"
BenefitsLink Message Boards

Withholding from Federal Criminal Garnishments
"Are there any tax withholding requirements when it comes to Federal criminal garnishment distributions from a plan?"
BenefitsLink Message Boards

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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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