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Legal Counsel - Health & Welfare Benefits Plans
Fidelity Investments
in NC, TX

IRA Expert
Ed Slott and Company, LLC

Defined Contribution / 401k Retirement Plan Administrator
Pension Consultants, Inc.
in CT

Senior Retirement Plan Analyst
Dart Container Corporation
in MI

Retirement Plan Consultant
Schenck, SC
in WI

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Webcasts, Conferences

Using IRAs in Estate Planning
American Law Institute Continuing Legal Education Group [ALI CLE]

2017 Defined Contribution Plan & Fee Survey Review
September 13, 2017 WEBCAST

ERISA 403(b) Plan Litigation: New Frontier in Retirement Fund Litigation
September 26, 2017 WEBCAST

403(b) Prototype Document Workshop
October 10, 2017 in CO
FIS Relius Education

Ascend 2017 Education Conference
November 13, 2017 in CA

►See 187 Upcoming

►See 1223 Recorded


New Topics on the BenefitsLink Message Boards

New Comments and Topics

All Topics, Grouped by Forum

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[Official Guidance]

Text of PBGC Disaster Relief Announcement 17-08 in Response to Severe Storms and Flooding in West Virginia
"This Disaster Relief Announcement provides relief relating to PBGC deadlines ... The relief generally extends from July 28, 2017 through November 30, 2017. The disaster area consists of Harrison, Marion, Marshall, and Wetzel Counties."
Pension Benefit Guaranty Corporation [PBGC]


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[Guidance Overview]

IRS Notice 2017-44 Provides Model Amendments to a DB Plan Document to Add Bifurcated Benefit Distribution Options
"Plan sponsors may: [1] Limit the extent to which a participant's accrued benefit may be bifurcated; [2] Specify the number of forms of distribution among which an accrued benefit may be bifurcated; [3] Limit the combination of forms of distribution available for bifurcation. Notice 2017-44 provides examples of acceptable ways a plan may limit bifurcation of a participant's accrued benefit."
Thomson Reuters Practical Law

10 Years Later: The Pendulum Swings Back in Tibble v. Edison International
"Edison urged the court to adopt the statutory post-judgment rate ... The court, however, refused to apply it, finding it 'unreasonable' since money saved from investing in the lower cost institutional shares would have carried over to the new investment ... Judge Wilson was equally dismissive of the plaintiffs' argument to follow the only other excessive fees case tried to judgment to date ... and use the S&P 500 index fund.... Of the remaining two options, the court found the Plan returns to be the only reasonable approximation of the lost investment opportunity." [Tibble v. Edison Int'l, No. 7-5359 (C.D. Cal. Aug. 16, 2017)]
Miller & Chevalier

Tibble Wins Round Two Against Edison International
"The defendants introduced an argument at the rehearing that since the higher cost retail funds included revenue sharing that was available to the Plan for payment of the Hewitt Associates recordkeeping fees, the participants were not harmed as the Company could have imposed these costs on the participants in accordance with the terms of the Plan at any time. The Court rejected this argument as speculative." [Tibble v. Edison Int'l, No. 7-5359 (C.D. Cal. Aug. 16, 2017)]
Stinson Leonard Street

Excessive Fee Suit Alleges Fiduciary 'Abdication'
"The most recent excessive fee suit involves both the 401(k) and 403(b) plans of Allina Health System, which have nearly $2.3 billion in assets and 47,500 participants, according to the complaint. The suit ... claims that the fiduciary-defendants 'did not try to reduce the Plans' expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the Plans to ensure it was prudent.' "
National Association of Plan Advisors [NAPA]


Reforms, Regulations & Retirement Realities

Sponsored by ASPPA

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Interesting Angles on the DOL's Fiduciary Rule, Part 59
"The purpose of this Alert is simple -- to describe which plans and arrangements are covered, and which are not. [This article includes] a summary, followed by a brief discussion for those who want more explanation."

The DOL Fiduciary Rule: Issues for Retirement Plan Sponsors (PDF)
"[1] Is your 401(k) recordkeeper making changes to the services currently provided ... in an effort to (a) avoid becoming a fiduciary or (b) comply with the fiduciary rule's requirements as a fiduciary? ... [2] Will the fiduciary rule have the effect of keeping more assets in your retirement plans? ... [3] For defined benefit plans, are you being asked to make representations to your investment managers about matters that pertain to your consultant, such as whether the consultant is related to the investment manager and whether the consultant is responsible for exercising independent judgment in evaluating whether the plan should hire the investment manager?"
K&L Gates LLP

A Common Sense 401(k) Plan for Small Businesses
"TSP-like 401(k) plans are a common sense retirement plan -- a safe harbor of sorts from the confusing array of services, fee structures and investments offered by 401(k) providers today. That said, these simple and effective plans are not for everybody. Sometimes, 401(k) investments and investment-related services with higher fees are a better fit for a small business and its employees. Not sure if you're one of these businesses? Compare these services against a TSP baseline to decide if they are worth the extra money."
Employee Fiduciary

Corporate DC Plans Report Flat Fees
"[Defined contribution] plans have a median record keeper, trust and custody fee of $59 per participant, a slight increase from $57 in 2016. The asset-weighted average expense ratio for DC plans is currently 0.41%, consistent with the ratio reported in NEPC's 2016 survey (0.42%). However, both the median fee and average expense ratio have dropped substantially since NEPC first conducted this study in 2006, when fees were $118 and the expense ratio was 0.57%."


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Retirement Plan Fees Level Out. How Does Your 401(k) Compare?
"The average expense ratio on investments in defined-contribution, or 401(k), plans dropped by a hair to 0.41 percent of assets this year ... That follows three straight years of somewhat deeper declines, spurred in large part by regulatory pressure and a rash of high-profile class action lawsuits alleging excessive fees and plan designs that weren't in savers' best interests. The all-in cost of plans, including fees tied to investment management, record-keeping, and trust and custody services, have also been dropping in recent years. In the latest survey, it flattened out at 0.43 percent, the same amount as in 2016."

Distributed Ledger Technology and Retirement Savings Infrastructure, Part 2
"DLT is being implemented (at least incrementally) by the financial services industry.... An obvious application of DLT is the transformation of 401(k) plan recordkeeping.... An obvious application of DLT is the transformation of 401(k) plan recordkeeping.... The benefits of implementation of DLT at the participant level -- e.g., the ability to move assets between funds or take loans, hardship withdrawals or other distributions -- should be evaluated against this cost."
October Three Consulting

Pension Fund for Hospital Nurses Placed in Receivership
"The [DB] plan for nurses at Our Lady of Fatima Hospital and the former St. Joseph's Hospital was placed in temporary receivership last week after fund actuaries said it faced insolvency just three years after the hospitals were sold to a California-based for-profit company. The plan is 'severely underfunded and requires additional capital of over $43 million to reach a 100-percent funding level,' St. Joseph Health Services of Rhode Island Inc. wrote in a petition asking the court to appoint a receiver and approve a 40-percent across the board reduction in benefits to pension recipients.... According to the receivership petition, the plan is expected to lose religious exemption and begin owing PBGC premium payments in 2018."
Providence Journal

An Update on Retirement Plan Choices for Public Employees and Employers (PDF)
38 pages. "When given the choice between a primary DB or DC plan, public employees overwhelmingly choose the DB pension plan. DC plans are less cost efficient than DB plans, due to lower investment returns, and the lack of longevity risk pooling. Some states have considered moving employees from a DB-only to a DC-only structure in an attempt to address an unfunded liability. Making this shift, however, does nothing to close any existing funding shortfalls, and can actually increase retirement costs. Traditionally, employers bear most of the risk in DB plans, and employees bear most of the risk in DC plans. The public sector has always had cost sharing in its DB pensions and employees have experienced increases in their portion of plan contribution in recent years."
National Institute on Retirement Security [NIRS] and Milliman

Why Paying 401(k) Loan Interest to Yourself Is a Bad Investment
"[P]aying yourself 5% loan interest doesn't actually generate a 5% return, because the borrower that receives the loan interest is also the one paying the loan interest. Which means paying 401(k) loan interest to yourself is really nothing more than a way to transfer money into your 401(k) plan. Except unlike a traditional 401(k) contribution, it's not even tax deductible! And as long as the loan is in place, the borrower loses the ability to actually invest and grow the money ... which means borrowing from a 401(k) plan to pay yourself interest really just results in losing out on any growth whatsoever!"
Nerd's Eye View

Are You Overestimating Your Future Retirement Spending Needs?
"[T]otal mean spending decreases with age.... [M]uch of the decrease in mean spending ... may be explained from spending reductions generally associated with retirement: Reduced FICA taxes; Reduced taxes; and Reduced work-related expenses, including savings for retirement.... [There are] several approaches you can consider (either before or after retirement) to possibly avoid over-estimating your spending needs in retirement ... These approaches are all designed to increase current spending budgets. You should be aware, however, that increasing current spending budgets may also decrease future spending budgets, all things being equal, so these approaches should be considered more as 'Budget Shaping' approaches."
Ken Steiner, FSA Retired


Switching to 401(k)-Type Plan for Kentucky Public Employees Would Cause More Harm (PDF)
18 pages. "[T]he plan for most [Kentucky] state employees ... is severely underfunded, possessing only 16 percent of the assets it needs to pay future benefits ... [A] shift to a DC plan will not save money because its cost for new workers and teachers would be similar to the already-inexpensive defined benefit plans. In fact, closing the DB plans will increase the cost of paying off those plans' unfunded liabilities."
Keystone Research Center, for Kentucky Center for Public Policy

Benefits in General

Seventh Circuit Enforces ERISA Forum Selection Clause
"[T]he Seventh Circuit found the Sixth Circuit's reasoning ... to be convincing. The court was not persuaded by Mathias' citation to 'an obscure decision of the Supreme Court' ... that is often relied upon by plaintiffs in forum selection clause cases. In 2016, the same issue was raised in a petition for writ of mandamus to the Eighth Circuit under facts similar to Mathias. The Eighth Circuit denied the petition without explanation.... The secretary of labor filed an amicus brief in support of the participants in each of the three appellate cases, but none of the circuit courts were persuaded." [In re Mathias, No. 16-3808 (7th Cir. Aug. 10, 2017)]

Executive Compensation
and Nonqualified Plans

How to Boost the Value of NQDC Plans
"Future liabilities with respect to each executive in a company's NDQC plan rise and fall with the changing notional value of plan investments that the executive chooses. One [way] of hedging that volatility is purchasing the same funds in the same amounts as the investments that executives make in their own NDQC accounts.... The other common hedging method is purchasing company-owned life insurance ... With a [total return swap (TRS)] ... a company enters into a contract whereby it pays a bank LIBOR plus an additional fee in exchange for the returns on a basket of mutual funds."

on the BenefitsLink Message Boards

DOL Auditor Wants to See 408(b)(2) Disclosures
"Does anyone have any experience/success with the DOL in narrowing the scope of a national office request for a global review of 408(b)(2) disclosures?"
BenefitsLink Message Boards

Handwritten Amendment to Plan Document?
"On November 30, 2016 plan sponsor decides they want to change the safe harbor match formula from plan year to pay period effective January 1, 2017. They call the vendor, vendor says no way it is too late as the safe harbor notice is due the next day. Plan sponsor decides to hand write on the document crossing out plan year and writing in pay period. Required signatures and dates are written in to the margin as well as the execution page making it clear their intent. Plan sponsor changes the safe harbor notice by typing the notice and just changing plan year to pay period. Plan sponsor delivers the safe harbor notice timely with pay period wording. Plan sponsor sends the hand-written amendment and signatures to the vendor. Vendor refuses to honor the hand-written changes. Are handwritten amendments acceptable?"
BenefitsLink Message Boards

Press Releases

Hancock Appoints Nick McParland National Sales Manager
John Hancock Retirement Plan Services

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2017, 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, 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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