Retirement Plans Newsletter

August 9, 2017

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ERISA Attorney
Kraw Law Group, APC
in CA

Trading & Corrections Associate
Aspire Financial Services LLC
in FL

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Webcasts and Conferences

Pharmacy Benefits: How to Protect Your Plan from Pharmacy Fraud
August 24, 2017 in IL
Worldwide Employee Benefits Network [WEB] - Chicago West Chapter

Fiduciary Certification Workshop
September 19, 2017 in NC
Centre for Fiduciary Excellence [CEFEX]

Half-Day Benefits Symposium
October 19, 2017 in CA
PSCA [Plan Sponsor Council of America]

Collection Procedures Institute
November 15, 2017 in CA
International Foundation of Employee Benefit Plans [IFEBP]

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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]

DOL Issues FAQ Addressing Key Concerns Over Fiduciary Rule
"[T]he DOL has clarified that it does not consider service providers to have been informed of a change in fiduciary status on June 9, 2017, the date the fiduciary rules became applicable. In addition, the DOL recognizes the uncertainty caused by its past decisions to delay the fiduciary rules and considers the current circumstances to be beyond the control of service providers. Therefore, service providers who must update their disclosures for the fiduciary element of the service provider disclosure must simply do so as soon as it is practicable. In addition, the DOL FAQ reminds service providers that such amendments may be provided to plans electronically. A chart summarizing these disclosure rules is provided[.]"
Ascensus

[Advert.]

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[Guidance Overview]

Interesting Angles on the DOL's Fiduciary Rule, Part 57
"[If] an adviser (or his or her supervisory entity) was a fiduciary, functional or acknowledged, before June 9th, but did not give a 408(b)(2) notice of fiduciary status, that is not covered.... The] relief does not cover new relationships with retirement plans after June 9th.... [If] the adviser's prior 408(b)(2) disclosures, or agreement, stated that the adviser (and his or her supervisory entity) is not a fiduciary, then relief is not provided and a disclosure must be given."
FredReish.com

New DOL Guidance in Connection with the Fiduciary Rule
"If a service provider will continue to provide only nonfiduciary services to ERISA plans post-Fiduciary Rule, or has already effectively disclosed investment advice fiduciary status, no additional disclosure would be required under Section 408(b)(2) of ERISA. In the case of a service provider who does not 'reasonably and in good faith believe' that it will be providing services to an ERISA plan that would make it an investment advice fiduciary under the Fiduciary Rule, then the service provider would not be required to disclose its newfound fiduciary status under Section 408(b)(2) of ERISA."
Stradley Ronon

The Positive Impact of Automatic Features (PDF)
"Automatic enrollment and automatic escalation, when properly implemented, are highly likely to increase savings rates.... Employees appreciate automatic features.... Contrary to popular belief, higher automatic enrollment percentages do not significantly increase opt out rates.... Automatic features improve nondiscrimination testing results.... Greater retirement readiness provides immediate and long-term financial benefits for a company."
Qualified Plan Advisors

Pro-Rata Participant Fees and Fee Transparency: A Recordkeeper's Conundrum
"Pro-rata deductions are used to ensure that participants with a lower account balance do not get charged a greater percentage of their balance than another participant with a higher account balance. In terms of fee fairness, pro-rata fees will ensure that all participant fees are reasonable based on their account balance. In terms of fee clarity, a participant will never be able to verify or calculate their pro-rata fee, since they are only aware of their individual account balance and not the balances of other participants."
RPG Consultants

[Advert.]

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!


These Five Retirement Issues Brought Out the Lobbyists
"[D]espite the intense U.S. political debates occurring around retirement, lobbyists overall spent 15 percent less this quarter than last, the lobbying data indicate. The fiduciary rule, multiemployer reform, retirement issues relevant to tax reform, repeal of state retirement plans, and Pension Benefit Guaranty Corporation premiums were the top topics, in terms of number of lobbyists weighing in on them in the second quarter."
Bloomberg BNA

The Trusteed IRA vs. Using a Trust as IRA Beneficiary
"[A] trusteed IRA really doesn't provide any benefits that can't already be accomplished with a (separate) trust as beneficiary. And in fact, having a standalone trust drafted to be the beneficiary of a retirement account can provide even more flexibility, or more robust spendthrift and asset protection for future beneficiaries."
Nerd's Eye View

Budgeting to Meet Your Spending Goals in Retirement vs. Cobbling Together Sources of 'Lifetime Income'
"[T]he major actuarial organizations in the U.S. appear to be more focused on advocating the cobbling together of various lifetime income 'solutions' (including lifetime income insurance products and SWPs) than advocating the use of basic actuarial principles to help individuals achieve their spending goals.... [T]he actuarial calculations required to develop a reasonable spending budget, that reflects your specific situation and that is consistent with your goals, can be somewhat complicated.... By using the Actuarial Approach, [a sample couple] increased their initial spending budget by almost 53% and, on an expected basis, satisfied all of their spending goals."
Ken Steiner, FSA Retired

The Financial Impact of Student Debt on Working and Retired Americans (PDF)
47 pages. "This study includes an analysis of ... the significance of accumulated education debt for retirement security.... [An] increase in indebtedness during a person's working life can be expected to reduce the wealth he will have accumulated by the time he retires.... The report makes illustrative calculations to determine the impact on annual personal expenditure under a range of assumptions about the debt burden, interest rates, and salary growth."
Society of Actuaries

[Advert.]

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[Opinion]

Investors Will Win If SEC Swiftly Adopts -- and DOL Recognizes -- Best-Interest Standard for Brokers
"ICI advocates that the SEC take the lead by adopting a new, clearly defined best-interest standard of conduct for SEC-registered brokers that enhances the current 'suitability' standard and other obligations that apply to brokers under federal securities laws and FINRA rules.... The new SEC standard that ICI recommends ... enhances the suitability standard to provide an explicit duty of care and duty of loyalty[.]"
Investment Company Institute [ICI]

[Opinion]

EPI Comment Letter to DOL on the Fiduciary Rule and PT Exemptions
"[W]hether or not most retirement savers who currently rely on a broker's conflicted 'advice' will actually hire financial advisers instead -- a doubtful assertion -- 'advice' from brokers is not comparable to advice from disinterested experts. Similarly, even if the industry's prediction that the rule could cause investors to lose access to some investment products is borne out, it does not follow that investors will be harmed since these products are unlikely to be in savers' best interests."
Economic Policy Institute

[Opinion]

SPARK Comment Letter to DOL on Fiduciary Rule and PTEs (PDF)
14 pages. "[M]any plan sponsors, participants, and IRA owners have been cut off from beneficial products and services that were previously made available to them.... The overall reduced access to important products and services is a direct result of the steps our members have been forced to take in order to comply with the Department's overly broad and poorly tailored definition of fiduciary investment advice. Unless changes are made ... we are concerned that this reduced access to information, products, and services could become permanent."
The SPARK Institute

Benefits in General

DOL Announces Review of Regs on Disability Claims
"[T]hese rules also apply to ERISA-governed retirement plans that make disability determinations.... While nonqualified retirement plans are exempt from many ERISA requirements, the claims procedures requirement is not one of them.... These new disability claims procedure regulations do not apply to any plan (health and welfare plan or qualified/nonqualified retirement plan) that provides a benefit the availability of which is conditioned on a finding of disability made by a party other than the plan itself."
Porter Wright Morris & Arthur LLP

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Brace for 2018: The SEC's Pay Ratio Rule
"Develop a process for collection of information, and consider a reasonable, documented approach to the calculation that is defensible to the SEC, investors and employees.... Conduct a simulated exercise ('dry run') of the pay ratio calculation and disclosure using 2017 compensation data as a baseline.... In drafting disclosures, consider how to frame the methodology, including assumptions, adjustments and any exemptions relied upon.... Provide the compensation committee with a draft of the CEO pay ratio disclosure as early as possible."
Pillsbury Winthrop Shaw Pittman LLP

Discussions on
the BenefitsLink Message Boards

Participant Married at Date of Death? 'Wife' Says Yes, Kids Say No
"401(k) participant died in 2012, which (as you will see) is about all that's certain. He had named son and daughter as beneficiaries in 2007; the form states that he was not married. But the death certificate states he was married and shows the informant as having the relationship 'wife.' Son and daughter now want the $15,000 account balance. No probate estate has been opened, or is planned. Son says his parents divorced many years ago, that dad was not married when he died, and that mom had been trying to re-marry dad so she could get some of the money. The plan sponsor is trying to get some kind of proof of marriage from the 'surviving spouse,' or an amended death certificate (if the kids can get one) that says he wasn't married at the date of death. Decedent lived in California. We've learned the alleged remarriage might have taken place in another country (El Salvador). How should the TPA handle this situation?"
BenefitsLink Message Boards

Plan Document Gone, So Investment Firm Won't Pay Any Funds
"Client is a surviving spouse. We believe her to be the beneficiary of a large account held in a profit sharing plan. Her husband and his attorney are both deceased. Life insurance salesman who sold them on the nonstandardized plan created by life insurance company is senile. Only papers related to plan date back to 2000. Those include some 5500s. The insurance company can't produce the nonstandardized plan, let alone the adoption agreement. The small 3-person TPA is no longer in business, and no one can be found. The investment firm holding the account says, 'produce the plan document' before it will do anything. What to do?"
BenefitsLink Message Boards

Failure to Pay $5,000 Cash-Outs
"A plan sponsor's DB plan is under IRS audit. Like most plan documents, the plan has a small payment provision in which a single sum payment is made to the participant if the PV of the benefit is under $5,000 at the employment termination date. The plan sponsor failed to pay out several such participants, some as long as 5 years ago. The auditor is requiring interest to be paid, back to the time when payment should have been made. Has anyone heard of this coming up under an audit?"
BenefitsLink Message Boards

Press Releases

PEI Welcomes New Director to the Team
Portfolio Evaluation, Inc.

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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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