ASPPA

Employee Benefits Compliance Attorney
Gallagher Benefit Services, Inc.
in TX

Employee Benefits Associate Attorney
Smith, Gambrell & Russell, LLP
in FL

Sponsor Strategist
JPMorgan Chase
in CA, CO, IL, KS, NY, TX

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Focused Topics Web Series - Nondiscrimination Testing with Related Employers, Topic 2 of 12
March 31, 2014 WEBCAST
(SunGard Relius)

The Future of Wellness
April 2, 2014 in TN
(Crichton Group)

Legislative Updates
April 22, 2014 in TX
(ASPPA Benefits Council of Dallas/Fort Worth)

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EBSA Proposes Amendment Requiring a Content Guide for Fee Disclosure to Plan Fiduciaries (PDF)
"Page and/or section numbers or identifiers must be used to narrow down specific locations within the document(s). The proposed amendment notes that identifying a document section number is not meant as a safe harbor, and is acceptable only if it is sufficiently specific to enable plan fiduciaries to quickly and easily find the relevant information. If a guide is provided electronically, a hyper link to a specific document or contract is not sufficient to meet the proposed amendment standard, unless page and/or section numbers are also provided. Hyperlinks directly to the required information will satisfy the proposed amendment standard." (Ascensus)

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DOL Proposal Would Require Fee Disclosure Guide
"These rules are only proposed and they have no current effect. Moreover, the proposal suggests that the new requirements would not go into effect until 12 months after the DOL issues final regulations.... There is a 90-day comment period, but, in addition, the DOL will be conducting focus groups to determine how and to what extent plan fiduciaries are using the information from fee disclosures. The DOL says they may reopen comments on these proposed regulations after the focus groups are done and analyzed." (SunGard Relius)

The Benefits and Pitfalls of Refinancing 401(k) Plan Loans
"If the amount and term of the new loan are not carefully calculated and administered, refinancing a participant's loan can trigger unintended tax consequences -- a deemed distribution.... If the repayment period of the replacement loan ends on or before the maximum permissible term of the existing loan -- no later than 5 years from the existing loan's origination date -- only the replacement loan is treated as outstanding to determine if the replacement loan exceeds the maximum dollar limit.... Where the term of the replacement loan ends beyond the maximum permissible term of the existing loan -- the replacement loan's payment ending date is more than 5 years from the existing loan's origination date -- both loans are treated as outstanding on the date of the replacement loan." (Warner Norcross & Judd LLP)

Plan Sponsor Sued Over $6 Million Paid to Broker
"The plaintiffs allege that the broker ... received excessive fees for the allegedly minimal services provided to the plans.... The $6 million alleged paid in 2012 to the broker ... amounts to about 40 basis points on $1.42 billion. If it ends up being that this was a case of the runaway train that can happen when providers are paid with uncapped revenue sharing, ... this complaint should be a wake up call to plan sponsors everywhere with similar setups." (FRA PlanTools, LLC)

Fifth Circuit: Investment Advisor Is Not an ERISA Fiduciary and Thus Is Not Liable for Alleged Misrepresentations About Proposed Investment
"[The Court found that the investment advisor] is not a fiduciary ... because he did not exercise discretionary authority or control over the oil and gas investment, as he did not cause the Plan's trustees to relinquish their independent discretion in investing the Plan's funds and to instead follow the course that he prescribed ... [and] because he did not receive a fee from the Plan in connection with the oil and gas company investment; he received a fee only from a third party." [ Tiblier v. Dlabal , No. 13-50344, (5th Cir. Feb. 28, 2014)] (Cary Kane ERISA Lawyer Blog)

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Rollovers to IRAs from Employer-Sponsored Retirement Plans: Emerging Legal and Regulatory Standards (PDF)
"A number of recent developments suggest that federal regulators and policy makers may be engaged in a reassessment of the IRA rollover phenomenon....[S]everal announcements seem to signal a regulatory interest in either imposing new duties on financial intermediaries when interacting with distribution-eligible plan participants or in reinterpreting existing duties and standards of care in new ways as a means of influencing and reconfiguring the rollover discussion." (Groom Law Group via BNA Pension and Benefits Daily)

Supreme Court Brief of Dudenhoeffer Plaintiffs Focuses on ERISA's Duty of Loyalty
"The Respondent's brief criticizes the statutory arguments of Fifth Third, with a focus on the plain text of Section 404. For example, the brief criticizes the bank's prudence argument -- that the 'like character and with like aims' aspect of Section 404(a)(1)(B) cited by the bank ignores Section 404(a)(2), which only exempts diversification from the duty of prudence when the plan holds employer stock. But it is the duty of loyalty, Section 404(a)(1)(A), that is the star of this brief -- it highlights not only what the plaintiffs say is missing from Fifth Third's brief, but why a presumption of prudence is unwarranted." (James E. Arnold & Associates, LPA)

Brokerage Windows: DOL May Be Preparing More Regulatory Guidance (PDF)
"It appears likely that the [DOL] will address whether it is permissible for plan fiduciaries to offer only a brokerage window to plan participants and beneficiaries. The department might also address whether offering more than a 'manageable number' of investment alternatives, perhaps through a brokerage window, is inconsistent with a fiduciary's duties. If it decides to address this issue, it will be revisiting a concern that it had previously raised in connection with the well-known 7th Circuit decision in Hecker v. Deere & Company [.]" (Groom Law Group via PLANSPONSOR)

Educating vs. Advising: Tough Questions for DOL Fiduciary Proposal
"[EBSA's Phyllis] Borzi ... insists that the revamped fiduciary rules ... will be substantively different from the original framework, offering greater detail about how advisors could operate under the rules and a rigorous analysis of the economic impact they would entail.... [T]he authors of the forthcoming rule proposal have taken pains to clarify the distinction between when an advisor is offering education or advice ... [A]n investment advisor who conducts a retirement seminar to provide an overview of fairly generic topics such as the importance of saving or the incentives for moving away from risky, volatile investments throughout retirement, would likely be considered to be providing an educational service, and would be exempted from the fiduciary duty." (On Wall Street)

Americans Spend Less Time Planning Their IRA Investment Than Choosing a Restaurant
"More Americans spent less time in the last year planning for an IRA investment for their retirement years than choosing a restaurant, flat screen TV or tablet ... [F]ewer than one in five (17 percent) of those surveyed currently contribute to an IRA, a decline from 22 percent in 2012.... [T]he number of Americans who would consider an IRA as part of their retirement strategy has fallen sharply since 2013. Fewer than half (47 percent) of those not contributing say they would consider an IRA, down from 57 percent in 2013." (TIAA-CREF)

Testimony of American Academy of Actuaries to Senate Subcommittee Hearing, 'The State of U.S. Retirement Security: Can the Middle Class Afford to Retire? ' (PDF)
"Financial preparation for retirement and the subsequent managing of finances in retirement involve many steps: setting aside sufficient funds; prudently managing investments before retirement; thoughtfully selecting a retirement date; establishing and following a retirement budget; managing investments in retirement, including home ownership; and securing retirement income for a lifetime, however long that might be. Policymakers and financial experts have generally given attention to these issues, but the last one -- assuring a lifetime income -- needs additional examination[.]" (American Academy of Actuaries)

SSA OIG Audit Report: Spouses Eligible for Higher Retirement Benefits
"In a 2008 audit, we found that spouses did not always receive the higher retirement benefits due them. We estimated that 13,580 spouses were eligible for $123.7 million in higher retirement benefits after they attained age 70. In this audit, we sought to determine whether SSA had adequate controls to identify and notify spousal beneficiaries who may have been eligible for higher retirement benefits based on their own earnings." (Office of the Inspector General, Social Security Administration)

Pension Debt Strains Chicago's Finances, Threatens Retiree Security
"Based on current funding practices and assuming steady market returns of 7.5 and 8 percent per year, one or more of the city's pension plans are projected to be teetering on the verge of insolvency within the next eight years ... At the same time, Chicago's annual pension contributions are scheduled to grow by up to 250 percent from $467 million in 2014 to $1.2 billion in 2015 as a result of recent statutory requirements to ramp up pension payments and improve the funding status of the city's pensions." (Laura and John Arnold Foundation)

Getting Real: How Much Do Retirees Spend?
"[O]ver time, retiree spending drops substantially. Households headed by people over the age of 75 spend just 72 percent of what households headed by people between the ages of 65 and 74 do, and they spend just 63 percent of what households headed by people 55-64 do ... [F]ewer than 2 percent of retirees make it to 70 before they start drawing on Social Security ... Most retirees don't spend blithely at a pre-conceived rate until their larders are empty and the money's all gone. They constrain their spending more gradually to match their resources." (Linda Stern for Reuters)

The Effects of the Increase in PBGC Premiums
"The PBGC's entire project to headline its 'deficit' and use it as a pretext for an increase in single-employer plan premiums is arguably fraudulent. That Congress bought into it as a way to 'solve' its deficit problem is deeply disappointing. Here's what I think happens next. The new variable-rate premium will amount to an annual 3% -- and rising -- tax on underfunding. Defined benefit (DB) sponsors with any access to credit will borrow in order to fund up their plans and avoid it." (PLANSPONSOR.com)

Text of Comments by Congressional Hispanic Caucus to DOL on Proposed Fiduciary Rule (PDF)
"Recent studies have shown that low and middle-income Hispanics and other minorities have retirement plan savings that are almost 40% lower than other low and middle-income individuals. In fact, only 38% of Latino employees age 25-64 have access to an employer-sponsored retirement plan. These challenges facing Hispanics and other minorities are of great concern to us. In our view, a viable way to address these challenges is through improved education and advice regarding how to save for retirement and the importance of saving." (Congressional Hispanic Caucus, via Financial Services Institute)

Testimony of Pension Rights Center to Connecticut General Assembly Committee Advocating Proposed State-Sponsored Retirement Plan for Low-Income Private Sector Workers
"As Connecticut studies the feasibility of creating a new system for private sector workers we would urge you to weigh that new system against our principles.... Universal Coverage.... Secure Retirement.... Adequate Income.... Shared Responsibility... Required Contributions.... Pooled Assets... Lifetime Payouts." (Pension Rights Center)

Does SEC Chair Mary Jo White Possess Courage? Do We?
"With SEC Chair Mary Jo White informing the financial services industry that a decision on whether, and how, to move forward with the fiduciary standard is due by the end of this year, the outlook for the fiduciary standard remains cloudy, at best.... [I]n all likelihood there are two commissioners in favor with moving forward ... to impose, by rule, fiduciary standards on brokers providing investment advice, and two commissioners are opposed (and favor enhancing disclosures, only).... While some fiduciary advocates believe that the SEC Chair is opposed to fiduciary standards, there is no concrete evidence of such a stance. There are many possible outcomes by the end of this year." (Ron Rhoades)

Second Circuit: All Relevant Factors Must Be Considered in Awarding Attorney's Fees; Absence of Bad Faith Alone Is Not Sufficient
"[I]f a court chooses to consider factors other than a plaintiff's 'success on the merits' in assessing a request for attorneys' fees, Chambless still provides the relevant framework in this Circuit, and courts must deploy that useful framework in a manner consistent with our case law. A court cannot selectively consider some factors while ignoring others.... [The District Court] originally denied attorneys' fees on the sole basis that Liberty had not acted in bad faith. But we have explained that 'a party need not prove that the offending party acted in bad faith' in order to be entitled to attorneys' fees.... The District Court did not consider culpability, which we have found in circumstances analogous to those at issue here.... The District Court also did not address the 'relative merits' ... By inadequately addressing these two important factors and, instead, treating the absence of bad faith as the most salient factor, the District Court committed an error of law[.]" [Donachie v. Liberty Life Assurance Company of Boston, No. 12-2996-lv (2d Cir. Mar. 11, 2014)] (U.S. Court of Appeals for the Second Circuit)

Fidelity Bonds and Fiduciary Liability Insurance: Do You Need Both?
"A fidelity bond is fixed at the beginning of each year for each plan official covered by the bond, and guards the applicable plan against losses due to fraud or dishonesty -- for example, theft -- by any covered plan official. Fiduciary insurance, on the other hand, is designed to insure the plan against losses caused by breaches of fiduciary responsibilities and, simultaneously, protect the covered fiduciary or fiduciaries from any personal liability resulting from such breaches." (Benefits Bryan Cave)

Defendants See Success with Statute of Limitations Defenses After Heimeshoff Decision
"Defendants have recently received three favorable decisions involving contractual and statutory limitations defenses. In each case, a federal court held that claims for benefits under ERISA plans were time-barred.... In combination, the three cases, together with the authorities on which they rely, provide some increased hope to plan administrators and sponsors that, with proper administration, they can limit the risks of defending claims based on dated events." (Proskauer's ERISA Practice Center)

The Other CEO Pay Ratio and Its Influence on Succession Planning
"In the wake of the [SEC's] proposed rules requiring disclosure of the ratio of CEO pay to that of the median employee, some observers have expressed interest in a different ratio: the one between the CEO's pay and that of the second highest-paid employee.... The theory is that a good succession plan means paying the likely successor more closely to the CEO to discourage the heir apparent from leaving for greener pastures. However, a recent study on the pay differences between the two highest-paid executives calls this logic into question." (Towers Watson)

Shareholder Engagement: A Key Component of Improved Say-on-Pay Outcomes in 2014
"The fourth season of mandatory say on pay ... is under way and ... the vast majority of companies continue to receive good marks from shareholders regarding their pay programs. Based on the first 131 Russell 3000 companies to hold their 2014 meetings, average support for say-on-pay resolutions is 94% so far this year, up from 90% in 2013. While 2% of companies failed their say-on-pay votes last year, only one Russell 3000 company has failed this year as of March 10[.]" (Towers Watson)

US Secretary of Labor Thomas E. Perez Announces New Appointments, Leadership for 2014 ERISA Advisory Council Employee Benefits Security Administration (EBSA), U.S. Department of Labor

DALBAR Gives Securian Retirement's Quarterly Statements for Employees Its Highest Designation Securian Retirement Services

Fidelity Enhances Mobile Experience With Workplace NetBenefits App for iPad Fidelity Investments

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