Retirement Plans Newsletter

July 24, 2017

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Associated Pension Consultants
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Associated Pension Consultants
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Fringe Benefits Design, Inc.
in MN

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Webcasts and Conferences

Guidelines For Taxing Gifts, Awards, & Other Fringe Benefits
July 26, 2017 WEBCAST
HRTrainingCenter.com

Developing an Effective Financial Wellness Program
August 3, 2017 WEBCAST
Clear Law Institute

Health Savings Account Training
August 10, 2017 WEBCAST
Wolters Kluwer

Mississippi Health Care Reform Forum
August 15, 2017 in MS
Bradley Arant Boult Cummings LLP

Voluntary Fiduciary Correction Program
August 16, 2017 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Prop 206 PST FAQs and NFAQs Plus Need-to-Know but Often Overlooked Employer Hot Points
September 21, 2017 in AZ
Worldwide Employee Benefits Network [WEB] - Phoenix Chapter

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Discussions

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PBGC's Early Warning Program: A Work in 'Progress'?
"The PBGC ... posted FAQs on its website in May assuring plan sponsors that [Early Warning Program] review would not be triggered absent a transaction. A mere change in a plan sponsor's credit quality, for example, would not be sufficient. The PBGC also confirmed that its screening criteria ($50 million or more underfunding, or 5,000 or more participants -- each on an aggregate controlled group basis) had not changed."
Morgan Lewis

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IRS Determination Letter: Recent Changes and New Guidance

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Major Behavioral Determinant of 401(k) Saving Success
"54 percent of participants with a written plan increased their 401k contributions in the past year, compared with only 33 percent of those without a written plan. Fully half of those with a written plan have rebalanced their 401k portfolio, while only 24 percent of those without a plan did."
401K Specialist

Do's and Don'ts for Beneficiary Designations
"Do: Start with how you feel.... Recognize the benefits accorded to spousal beneficiaries.... Make sure your beneficiary designations sync up with other parts of your estate plan.... Name contingent and/or partial beneficiaries.... Consider charities or other nonprofits.... Make beneficiary designation checkups part of your portfolio review.... Don't: Leave assets to minor children without understanding what that means.... Leave assets to loved ones with special needs without considering the ramifications.... Designate to someone who's not the end owner.... Stop with tax-advantaged assets.... Make inadvertent beneficiary designations."
Morningstar

Treasury Department Gives Thumbs Up to Second Pension Rescue
"The Furniture Workers fund's proposal is the first under the MPRA to have its plan partition request get conditional approval from the federal Pension Benefit Guaranty Corporation, which guarantees a minimum benefit to plan participants. If the partition is approved as part of a vote by plan members, the plan would be divided into two plans -- the original plan and a successor plan -- with the PBGC providing financial assistance to the successor plan."
Bloomberg BNA

Multiemployer Plans on the Rocks: Furniture Workers Pension Allowed to Cut Retiree Benefits
"[Most multiemployer plans (here, MEPs)] are greatly underfunded, not just the MPRA-applied plans.... [T]he percentage of the liability that's for active employees is very low for the MPRA plans compared to all the other MEPs. For all the other MEPs, almost 40% of the total liability was for active employees."
STUMP

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'Upon Further Review: Do We Already Have a Universal Fiduciary Standard?' Redux
"There are basically four ways that an adviser acquires fiduciary status: by contract or express agreement; by state common laws and/or regulatory rules; by control over a discretionary account; and by having de facto control over a non-discretionary account. Fiduciary status based upon contract is fairly obvious. However, financial advisors may not be as familiar with the other three methods of acquiring fiduciary status."
The Prudent Investment Fiduciary Rules

Further Delay in Full Applicability of the Fiduciary Rule Would Cost Retirement Savers in Every State
"The map ... shows how much retirement savers would lose in each state over the next 30 years as a result of a further one-year delay. Losses from an additional delay range from $10.4 million in Wyoming to $88.2 million in Iowa to $432.4 million in Texas and $804.9 million in California."
Economic Policy Institute

[Opinion]

Economic Policy Institute Comment Letter to DOL on Extending the Applicability Date of Portions of the Fiduciary Rule
"We estimate the cost to retirement savers of each additional year of delay to be $7.3 billion dollars over the next 30 years. Given the large, persistent losses suffered by retirement investors as a result of a further delay of these provisions, [EPI opposes] any delay of the full implementation and enforcement of the rule."
Economic Policy Institute

[Opinion]

ICI Comment Letter to DOL on Fiduciary Rule Effective Dates (PDF)
17 pages. "To provide needed certainty, reduce harm to investors, and limit unnecessary 'sunk' costs associated with implementing requirements that the Department ultimately eliminates or modifies, the Department should immediately ... issue an interim final rule delaying the January 1, 2018 applicability date to January 1, 2019 ... [and] announce its intent to finalize amendments to the rulemaking prior to the end of the one-year delay period. [ICI recommends] that the applicability date of any modified rule and exemptions become effective no sooner than one year after finalization -- approximately January 1, 2020."
Investment Company Institute [ICI]

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[Opinion]

What's an Appropriate Discount Rate for Personal Financial Planning?
"[W]hile historical asset class returns give us a sense of what we might expect in the future from various asset mixes, there are no guarantees that these historical returns will continue in the future, and higher expected investment returns generally do not come without additional risk.... [C]onsideration of this additional investment risk is an important part of the 'appropriate discount rate' determination that should not be ignored. Mr. Kitces' advice is potentially inconsistent with the basic financial economic principle that the value of a future stream of payments should be determined by finding a portfolio of assets that matches the benefit stream in amount, timing and probability of payment."
Ken Steiner, FSA Retired

[Opinion]

California Is Still Facing a Pension Crisis Even with Good Stock Market Returns
"Californians need to temper the glowing statements and shrug off the efforts to keep us from looking too closely at the wreckage. Of course, impressive stock-market returns are a good thing that reduce the amount of taxpayer-backed pension obligations. But one good year doesn't fix a problem that has been two decades in the making. For perspective, CalPERS' returns for the previous two fiscal years were 0.6 percent and 2.4 percent respectively."
PensionTsunami

Benefits in General

Supreme Court Indirectly Stiffens a Fiduciary Breach Time Limit and Helps ERISA Fiduciaries in the Process
"The Supreme Court appears to have barred equitable tolling under ERISA Section 413's six-year statute of repose for fiduciary breach claims, subject only to well-pled allegations and proof of fraud or concealment.... [T]he Court dismissed as untimely a securities case filed by CALPERS after the statute of repose expired. CALPERS argued that the lawsuit was timely because the same claim was timely asserted in another securities class action that CALPERS opted out of after filing its own case. The Court rejected the CALPERS argument that the timely filing of the class action equitably tolled statute of repose for its individual case." [CalPERS v. ANZ Securities, Inc., No. 16-373 (U.S. June 26, 2017)]
Seyfarth Shaw LLP

Discussions on
the BenefitsLink Message Boards

Two Employers: 403(b) Plan Limits
"If a person is employed by 2 separate entities offering 403(b) plans (she has no ownership/control in either, nor is an HCE) and has negotiated nonelective employer contributions with both, is the $54,000 annual additions limit separate for each plan or is it a combined limit?"
BenefitsLink Message Boards

Rescinding 5-Year Amortization
"I have a client who is rescinding their 5 year amortization base extension. After rescinding, can you re-elect the 5 year amortization extension? I can't find anything that says you can or you can't."
BenefitsLink Message Boards

PPA Restatement and Plan Termination After Dissolution of Plan Sponsor
"Let's say the plan was a one-person profit sharing plan. The sponsor was the sole participant's medical professional association. The participant died in 2014. The plan provides that the plan terminates upon dissolution of the plan sponsor. I believe the P.A. might have been dissolved in 2013. The plan never was formally terminated or paid out. Would the plan need a PPA restatement?"
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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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