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June 25, 2019 logo logo
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Retirement Plan Manager
Benefit Consultants Group
in Cherry Hill NJ

Sr. Pension Administrator
in San Luis Obispo CA / Encinitas CA / Roseville CA / Telecommute

Senior Plan Consultant
Cherry Bekaert LLP
in Virginia Beach VA / Rockville MD / Telecommute

Claims Processor / Call Center Liaison
in Los Angeles CA

Lead Regulatory Support Consultant
in NY

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Webcasts, Conferences

Regulation Best Interest
July 10, 2019 in DC
SIFMA [Securities Industry and Financial Markets Association]

IRA Fundamentals
August 22, 2019 WEBCAST

Hot Issues in Executive Compensation 2019
September 11, 2019 WEBCAST
Practising Law Institute

►See 134 Upcoming Webcasts and Conferences

►See 1555 Recorded Webcasts


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[Guidance Overview]

Editor's Pick SEC Adopts Regulation Best Interest and Related Rules

"Now that these Rules have been adopted, the industry is waiting to see (and in some cases actively trying to influence) what conforming guidance, if any, DOL will issue with respect to advice to individual retirement plan investors generally, [IRA] rollovers in particular.... The intent of the SEC was to create a 'fiduciary-like' standard for governing firm and representative conduct ... Of particular interest to the retirement services industry is the inclusion of rollover and account opening advice even in the absence of specific securities recommendations."
Groom Law Group


Make Retirement Simple for Your Participants

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

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Which Comes First: The Contribution or the K-1?

"[T]he TPA is correct -- they need the earned income from the K-1 to calculate the contribution. But the CPA is right, too -- they need the contribution figure to finalize the K-1. If it feels like this is going in circles, it is. Self-employed income calculations are circular in nature, with both the earned income and plan contributions dependent on each other. Coordination between your CPA and plan consultant is the key to making these calculations easy (relatively speaking)!"

Rep. Waters Seeks to Block SEC Regulation Best Interest

"House Financial Services Committee Chairwoman Maxine Waters [D-CA] ... offered an amendment to the Financial Services and General Government Appropriations Act of 2020, H.R. 3351, to prohibit the SEC from using funds to enforce Reg BI. The House Rules Committee voted late Monday evening to accept Waters' amendment ... [which] will now be taken up on the House floor as soon as Tuesday.... [The amendment] prohibits the SEC from 'implementing, administering, enforcing or publicizing the final rules and interpretations' of Reg BI, 'The Broker-Dealer Standard of Conduct.' "

Fiduciary Breach Lawsuit Issues: Active vs. Passive Investments

"Based on the outcomes of the litigation surrounding this issue, it seems clear that plan fiduciaries can include actively managed investment options in their plans. There is nothing in the ERISA regulations that requires a plan to include any index investment options, or to select passive funds instead of active options in any particular asset class. However, it will likely help lessen the chances of being sued on this issue if there are at least some index funds included in the investment lineup."
Cammack Retirement Group

Fiduciary Framework for Investment by Defined Contribution Plans in Alternative Assets (PDF)

19 pages. "This Legal Update reviews recent trends, considerations under [ERISA] and potential legal risks arising out of the investment of defined contribution plans in alternative asset classes.... A number of recent academic, consultant and industry group studies have focused on this trend and advocate for the need to better diversify defined contribution plan assets into private equity, hedge, real estate, infrastructure and other alternative asset classes that are commonly included in defined benefit plan portfolios."
Mayer Brown


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Baby Boomer Women Significantly Lag Baby Boomer Men in 401(k) Savings

"Baby boomer women have a median 401(k) savings balance of $59,000, less than half of the $138,000, median balance of baby boomer men, according to a recent T. Rowe Price survey focused on the financial behavior and attitudes related to gender. This savings gap carries over to millennial women, who have a median 401(k) balance that is $30,000 less than the median balance of millennial men."
T. Rowe Price

Can Annuities Become a Bigger Contributor to Retirement Security?

"This paper reviews explanations of the annuity puzzle and examines the nature of the market for annuity products in practice, highlighting, in particular, how some annuities (accumulation annuities) are often used to lower tax burdens rather than boosting lifetime income. This paper also reviews strategies for improving take-up of lifetime income products, including better access to annuities in workplace plans and better understanding of the role of lifetime income in a stable retirement."
The Brookings Institution

Automatic Enrollment in 401(k) Annuities: Boosting Retiree Lifetime Income

"Our proposal is to include deferred lifetime income annuities (DIAs) as a default in employer-provided 401(k) plans. We investigate the pros and cons of such a proposal using a life cycle economic model which takes into account the value of having true longevity protection in one's retirement account. Specifically, we report results from a calibrated lifecycle consumption and portfolio choice model embodying realistic institutional considerations relevant to the American workforce. We show that automatically enrolling retirees using only a small portion of their 401(k) assets can substantively enhance retirement security and improve welfare."
The Brookings Institution

How Has the Decline in Assumed Returns Affected Public Pension Plan Costs?

"Public pension plans have lowered their investment return assumptions, which generally raises costs by requiring larger contributions to fund promised benefits.... At the same time, plans have increased their assumed real (i.e., net of inflation) investment returns, which lowers costs.... [P]ublic plans are not fully indexed so their real costs actually increase as the inflation assumption falls. The net effect of these changes has been to increase costs, but the increase is much smaller than if the decline in the assumed return was due to a lower real return."
Center for Retirement Research at Boston College


American Benefits Council Comment Letter on Rulemaking for the CalSavers Retirement Savings Program

"[1] We strongly support the process prescribed for identifying Eligible Employers, which includes allowing, but not requiring, Exempt Employers to take any action to communicate their exempt status to CalSavers. [2] We read the proposed rules as confirming that the exemption for employers that maintain or contribute to a Tax-Qualified Retirement Plan is available to all such employers, including an employer whose Tax-Qualified Retirement Plan is not available to every employee of the employer at any given time."
American Benefits Council

Executive Compensation
and Nonqualified Plans

Companies Win Battles Over Compensation Clawback Shareholder Proposals

"Apparently, Alphabet does not currently have a clawback policy in place, and a number of union pension funds were leading the charge to make them adopt a plain vanilla policy. According to the Form 8-K filed, the proposal was voted down by more than 3 to 1.... The proposal filed at Mylan N.V. was more complicated in that it sought to require the company to adopt [a] specific compensation clawback policy ...[T]he company ultimately decided to solicit shareholder views through the proxy card as a 'contribution to the discussion' at the annual meeting."
Winston & Strawn LLP

Selected Discussions
on the BenefitsLink Message Boards

Cross-Testing a DB/DC Plan Combination with Different Normal Retirement Date Definitions

Is age 65 or 62 to be used when cross-testing a DB/DC plan? The DB Plan document defines NRD as "The later of age 65 or the fifth anniversary of Plan participation, or if earlier, the later of age 62 or the 10th anniversary of Plan participation." The DC plan document states NRA means the "Later of age 65 or 5th anniversary of the date the participant commenced participation in the plan."
BenefitsLink Message Boards

Alternate Payee Is a Participant

If an alternate payee is also a participant in the 401(k) plan that is subject to a QDRO (i.e., the divorcing couple work for the same employer and both participate in the same plan), must the plan create a separate account for the alternate payee, or may the plan transfer the QDRO award into the alternate payee's existing account under the plan?
BenefitsLink Message Boards

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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 2019, 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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