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May 3, 2018 logo logo
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Qualified Retirement Plan Investment Advisor
Nadler Financial Group, Inc.
in IL

Actuary Retiree Medical - Pension Services
National Rural Electric Cooperative Association [NREC]
in VA

in OH

Retirement Plan Document Specialist
in CA, Telecommute

Retirement (IRA) Client Service Specialist
in ND

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[Guidance Overview]

SEC Proposes Rules and Interpretations to Protect Retail Investors

"The SEC's goal is to enhance investor protection by applying consistent principles to investment advisers and broker-dealers while acknowledging the inherent differences in the customer relationship for each. These principles include clear disclosure, exercising due care, and properly addressing conflicts of interest. Specific obligations will be tailored to the particular types of advice relationships that each firm offers."
DLA Piper


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The Inconvenient Fiduciary Implications of Plan Loan Defaults (PDF)

"Plan sponsors have historically treated loans as an administrative program, outside the boundaries of fiduciary standards and review.... The [DOL] takes the position, however, that a participant loan is a plan investment, and requires the same fiduciary oversight as any other investment in the plan. This article focuses attention on loan defaults, and challenges plan sponsors to reconsider ... handling of participant loans and their default. The retirement losses created by these circumstances have substantial fiduciary implications."
K&L Gates and Custodia Financial, via Bloomberg Tax Management Compensation Planning Journal

Ding Dong, the DOL Fiduciary Rule Is (98%) Dead

"The Fifth Circuit Court of Appeals rejected last-minute appeals by AARP and three states to intervene and re-argue the need to save the controversial [DOL] fiduciary rule.... The federal government ... opted not to appeal the ruling ... Denying the AARP and states' motions essentially kills the DOL rule for good. The court could decide to re-hear the case on its own, which seems unlikely.... [T]he government has until June 13 to ask the Supreme Court of the United States to take the case. That also seems highly unlikely."

New DOL Guidance May Dampen Adoption of ESG Investment Options

"So far, ESG funds haven't made much of a dent in DC plans covered by ERISA, according to the latest survey by PSCA of its members offering 401(k) or profit-sharing plans. Of 684 respondents covering the 2016 plan year, only 2.4% offered ESG funds."
Pensions & Investments

'Do Good' Investing by Retirement Plans to Be Part of New GAO Report

"The report will focus on the use of 'do good' parameters by retirement plans like traditional pensions and 401(k) plans in the U.S. and comparable plans abroad ... Requested by three Democratic congressmen -- Rep. Gerry Connolly (D-Va.), Rep. Jim Langevin (D-R.I.), and Sen. Brian Schatz (D-Hawaii) -- the report likely will be published in May ... Its release coincides with recent investment guidance by the [DOL] that clarified guidance issued under the Obama administration."
Bloomberg BNA


ERISA Litigation Update: New Trends and Significant Changes

Sponsored by Lorman and BenefitsLink

May 31 webinar includes tips for avoiding litigation. key issues in defending claims for benefits, and emerging areas of specialized ERISA claims. Discount for BenefitsLink readers.

Moving Fiduciaries from Minimally Required Compliance to Best Practices

"[P]lan sponsors and retirement plan committees should have a microscope, looking at what's in front of them in great detail and saying, 'I have to make a great decision.' They should also have a periscope, used to find what they don't know -- what are emerging issues, what are they able to get sued for that is not under the microscope today."

The Just Born Case: Responding to the Multiemployer Pension Crisis

"The Just Born case is much more than a delinquent contribution collection case. It deals with the interaction of the MPRA, the National Labor Relations Act, the Taft-Hartley Act and the PPA -- implications of which the court barely discussed. The case also illustrates tactics the Pension Fund and Just Born used to mitigate the looming insolvency crisis facing many badly underfunded multiemployer pension plans (MEPPs) and the employers participating in those MEPPs." [Bakery & Confectionary Union & Industry Int'l Pension Fund v. Just Born II, Inc., No. 17-1369 (4th Cir. Apr. 26, 2018)]

Data on Multiemployer Defined Benefit Pension Plans (PDF)

15 pages. "This report provides data on multiemployer DB plans categorized in several ways. First, the report categorizes the data based on plans' zone status in 2015. Next, it provides a year-by-year breakdown of the number of plans that are expected to become insolvent and the number of participants in those plans. Finally, the report provides information on the 25 largest multiemployer DB plans in 2015 (each plan has at least 75,000 participants)." [Report R45187, May 1, 2018]
Congressional Research Service [CRS]

DB Funding Strategies Under the New Tax Law

"For every $1,000,000 contributed that counts for the 2017 year rather than 2018 (or later), the plan sponsor will save $140,000 in federal tax.... For each $1,000,000 of underfunding that is erased, the 2018 PBGC premiums are generally reduced by $38,000. Collectively, contributing $1,000,000 now rather than waiting until after September 15, 2018 could save the plan sponsor $178,000. Over a five-year period, the PBGC premium savings amounts to roughly 20% of the unfunded liabilities that are eliminated -- for a total return on the 2018 contribution of over 30%."

Pension Finance Update, April 2018

"Higher interest rates boosted pension finances in April. Both model pension plans ... gained ground last month -- traditional Plan A gained more than 1% in April while the more conservative Plan B improved less than 1%. For the year, Plan A is now 4%-5% ahead, while Plan B is up almost 1%[.]"
October Three Consulting

The 4% Withdrawal Rate: Is It Still the Rule of Thumb?

"[If] $40,000 of retirement income is needed outside of pension and/or social security, an individual would need to save $1 million to be safe under the 4% rule. However, if that individual were to save $1.5 million, he/she will likely be safe, even if the 4% rule were to fail. So, don't just aim to meet savings goals -- smash them! ... If an individual is not tracking expenses and budgeting now, it is going to be far more difficult to do so in retirement. And tracking/budgeting now can also have the effect of lowering current expenses, which can result in more retirement savings -- and thus, more income in retirement!"
Cammack Retirement Group


A More Accurate Evaluation of Retirement Plan Participation

"In 2014, the latest year for which data are available, 56 percent of workers aged 26 to 64 participated in an employer-sponsored retirement plan, and another 7 percent did not participate but had a spouse who did.... For workers aged 45 to 64 with income of $30,000 or more, 77 percent participated or had a spouse who participated...., 81 percent of working households aged 55 to 64 have accrued benefits in a DB plan, assets in a DC plan or individual retirement account (IRA), or both."
Investment Company Institute [ICI]

Benefits in General

[Guidance Overview]

DOL's Final Rule on Disability Claim Procedures Take Effect

"The Disability Claims Regulations deem a claimant to have exhausted all administrative remedies if a plan fails to strictly adhere to all of the DOL claims regulations, so it is vital for the plan administrator or follow these requirements.... The special rules require [a plan] to provide oral language services ... that would answer questions in the applicable non-English language and provide assistance with filing claims and appeals in such language; provide, upon request, a notice written in such language; and include in the English versions of all notices, a written statement prominently displayed in any applicable non-English language clearly indicating how to access the language services provided by the plan."
Friday Eldredge & Clark LLP

Selected Discussions
on the BenefitsLink Message Boards

Plan Characteristic Code 2A

Quick question about the Plan Characteristic code 2A for DC Pension Features. If the plan has an integrated allocation, would you list 2A as a characteristic code on the 5500? The description seems to suggest that you would since the allocation method provides for an additional rate on comp above the TWB threshold.
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David Rhett Baker, J.D., Editor and Publisher
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2018, 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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