Retirement Plans Newsletter

August 4, 2017

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Webcasts and Conferences

Connecting Health to Wealth: The Role of Consumer Health Care in Preparing Millennials for the Future
RECORDED
ConnectYourCare

ERISA Plan Investment Committee Governance: Avoiding Breach of Fiduciary Duty Claims
September 12, 2017 WEBCAST
Strafford

ASPPA Cincinnati Regional Conference
November 13, 2017 in KY
ASPPA [American Society of Pension Professionals & Actuaries]

2018 Business Management Conference (2018BMC)
January 13, 2018 in AZ
NIPA [National Institute of Pension Administrators]

ADA & FMLA Compliance Update
April 19, 2018 in DC
National Employment Law Institute

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[Official Guidance]

Text of DOL Conflict of Interest FAQs: 408(b)(2) Disclosure Transition Period, Recommendations to Increase Contributions and Plan Participation (PDF)
"[Three] FAQs provide information on [1] a 'fiduciary status disclosure' issue under the [DOL's] ERISA section 408(b)(2) service provider disclosure regulation ... [2] whether recommendations to plan participants and IRA owners to contribute to or increase contributions to a plan or IRA constitute fiduciary investment advice under the Fiduciary Rule, and [3] whether recommendations to employers and other plan fiduciaries on plan design changes intended to increase plan participation and contribution rates constitute fiduciary investment advice under the Fiduciary Rule."
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Advert.]

Early Retirement Incentives: Navigating the Legal Issues

Sponsored by Lorman and BenefitsLink

August 10 webinar. Learn the pros and cons of implementing a voluntary Early Retirement Incentive Program in your workplace, and the practical steps to doing so without running afoul of the ADEA. CE Credits. BenefitsLink discount


[Official Guidance]

Text of PBGC Disaster Relief Announcement 17-07 in Response to Severe Storms and Flooding in Michigan
"This Disaster Relief Announcement provides relief relating to PBGC deadlines ... to Designated Persons [in] Bay, Gladwin, Isabella, and Midland Counties, and the Saginaw Chippewa Tribe within Isabella County."
Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

Treasury Modifies Procedures for Applications for Multiemployer Plan Benefit Suspensions
"The most significant change in the procedure concerns the actuarial assumptions. Prior procedures required the application to describe the actuarial assumptions used in making projections of the plan's financial status. The revised procedure contains a new Appendix B, 'Information on Actuarial Assumptions and Methods' [which] requires a detailed description of each of the actuarial assumptions used to project the plan's status, including supporting data, the plan's past experience regarding each assumption, and justification of the assumptions in light of the experience."
Cheiron

Treasury Approves New York State Teamsters Conference Pension and Retirement Fund Application to Reduce Benefits
"On August 3, 2017, the Board of Trustees of the New York State Teamsters Conference Pension and Retirement Fund was notified that its application to reduce pension benefits under [MPRA] was approved by Treasury.... [T]he proposed benefit reduction will now be subject to a vote of participants and beneficiaries of the Fund. Ballots will be mailed to participants on or around August 14, 2017.... Unless a majority of participants and beneficiaries vote to reject the proposed benefit reduction, the proposed benefit reduction will go into effect on October 1, 2017."
U.S. Department of the Treasury

Notes from Meeting of Actuaries 'Intersector Group' with IRS, May 3, 2017 (PDF)
10 pages. Topics include: [1] Finalizing mortality table regulations ... [2] Change in funding methods ... [3] Relief for closed DB plans' nondiscrimination testing ... [4] Open issues related to variable annuity and hybrid plan designs ... [5] Adjusted Funding Target Attainment Percentage (AFTAP) certifications ... [6] Hybrid plans with interest credit choice based on age ... [7] Cash balance plans with market-based interest crediting rates.
American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA]

[Advert.]

Online Learning Course: 401(k) Plan Structure

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.


Notes from Meeting of Actuaries 'Intersector Group' with PBGC, May 3, 2017 (PDF)
9 pages. Topics include: ... [1] How does the new administration affect the current priorities? ... [2] What is PBGC's plan with respect to mortality assumptions now that the IRS proposed regulations have been released? ... [3] Is PBGC moving forward with review of all other assumptions (e.g., ERISA Section 4044), and what can be expected on that front? ... [4] Are there any changes in the types of issues PBGC is seeing on audits of plan terminations or premium filings? ... PBGC provided a litany of errors it commonly discovers ... [5] Does PBGC expect to finalize the multiemployer plan merger regulation, and are any changes likely from the proposed regulation?
American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA]

2017 National Cash Balance Research Report (PDF)
16 pages. "The number of new Cash Balance plans increased 17% compared with just 3% growth in new 401(k) plans ... 92% of Cash Balance Plans are in place at firms with fewer than 100 employees.... Cash Balance plans now make up over 34% of all defined benefit plans, up from 2.9% in 2001."
Kravitz, an Ascensus Company

All About Retirement: An Employer Survey (PDF)
54 pages. "69 percent of employers believe that most employees at their company could work until age 65 and still not save enough to meet their retirement needs.... Most employers feel that employees plan to work in retirement.... Four out of five employers say they support employees working past 65.... Almost half (47 percent) say that many of their employees envision a phased transition that involves reducing hours (33 percent) and/or working in a different capacity (27 percent).... Only 39 percent of employers offer flexible schedules. Even fewer enable their employees to shift from full-time to part-time (31 percent) or take on positions that are less stressful or demanding (27 percent)."
Transamerica Center for Retirement Studies

The Board of Directors Responsibility in Addressing ESOP Repurchase Liability
"In order to plan for ESOP repurchase liability, the corporation must quantify the liability and implement a strategy to fund it. These functions are the responsibilities of the board of directors of the corporate sponsor of the ESOP. This article [summarizes] director duties in determining and funding ESOP repurchase liability."
Principal Financial Group

FASB Update to Accounting Pension Expense Creates Opportunities (PDF)
"The new changes will bring about much needed simplicity and dampen some of the volatility often associated with these types of plans.... Under the new accounting treatment ... the expected rate of return is no longer an operating expense and thus is de-emphasized. Hence, there is one school of thought that this change will result in more plans moving to a more conservative investment approach."
Findley Davies | BPS&M

How America Dug a $375 Billion Pension Hole
"The vast majority of S&P 500 companies don't have enough money set aside to meet all their obligations to current and future retirees. There's a total gap of at least $375 billion for the 200 largest plans. This is how they got here."
Bloomberg

Seventh Consecutive Quarter of Investment Gains for Institutional Plan Sponsors
"Equities continued to drive investment returns in the Northern Trust Universe, with the median international equity program up 6 percent and median total equity program up 4.3 percent in the second quarter. Private equity programs gained 3.3 percent at the median, while fixed income and real estate were up less than 2 percent in the quarter."
Northern Trust

[Opinion]

Pew Misleads States by Pushing Cash Balance Plans
"Pew trumpeted the adoption of the cash balance plan as a 'successful public pension reform.' In reality, though, moving to a cash balance plan has failed to fix the problems facing Kentucky's public pension systems. Rather than improving the 'fiscal health of the pension system by billions of dollars,' Kentucky's pension funding level has continued to fall.... [C]hanging the plan design didn't solve the true problem: mismanagement by the state."
National Public Pension Coalition

[Opinion]

The American Academy of Actuaries Stumbles on Social Security 'Sustainable Solvency'
"The condition of 'Sustainable Solvency' developed by the SSA actuaries is based on exact realization of assumptions made today about the next 75 years.... [T]here exists no mechanism in current Social Security law to maintain actuarial balance (or Sustainable Solvency) over time. Therefore, a condition of Sustainable Solvency achieved at the time of eventual System reform will not guarantee or 'ensure' sustainable solvency for any specific period of time, and the AAA's call for implementation of a solution 'to ensure sustainable solvency of Social Security' is, in our opinion, potentially misleading to the public, Congress and other intended users of the AAA's Issue Brief."
Ken Steiner, FSA Retired

Benefits in General

[Official Guidance]

Text of IRS Disaster Relief Announcement MI-2017-01, for Victims of Severe Storms and Flooding in Michigan
"Victims of the Severe Storms and Flooding that took place beginning on June 22, 2017 in parts of Michigan may qualify for tax relief from the [IRS].... Individuals who reside or have a business in Bay, Gladwin, Isabella, and Midland Counties, and the Saginaw Chippewa Tribe within Isabella County may qualify for tax relief."
Internal Revenue Service [IRS]

[Guidance Overview]

Administration Looks to Delay or Amend Disability Claims Regs
"The [DOL's] regulatory agenda was updated on July 20 to include a project to 'delay or amend' the final regulations on disability claims procedures. The abstract included for this agenda item indicates that the DOL is reviewing the final regulations for 'questions of law and policy' and schedules a notice of proposed rulemaking for September 2017.... Although the DOL's updated agenda clouds the future of these regulations, it is possible they will take effect as scheduled in the same or similar form."
Willis Towers Watson

Benefits Litigation Update, July 2017 (PDF)
Articles include: [1] The importance and difficulty of controlling venue in ERISA litigation; [2] What's with GICs? Is any plan investment reasonable? [3] Fourth Circuit finally finds in favor of 401(k) plans' fiduciaries; [4] The parameters of the church plan exemption under ERISA; [5] Is an SPD enough to enforce subrogation after a medical liability settlement? [6] Support for plan service providers and sponsors in setting plan costs.
Epstein Becker Green

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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