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Associated Pension Consultants
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Charles Schwab
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SEC Proposed Standards of Conduct for Retail Advice
May 9, 2018 WEBCAST
Morgan Lewis & Bockius LLP

Compensation
August 28, 2018 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

Puerto Rico 401(k) Plans: Do You Know the Rules That Apply?
August 30, 2018 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

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Text of DOL Field Assistance Bulletin No. 2018-02: Temporary Enforcement Policy on Prohibited Transactions Rules Applicable to Investment Advice Fiduciaries

"[F]or the period from June 9, 2017, until after regulations or exemptions or other administrative guidance has been issued, the Department will not pursue prohibited transactions claims against investment advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards for transactions that would have been exempted in the BIC Exemption and Principal Transactions Exemption, or treat such fiduciaries as violating the applicable prohibited transaction rules. Of course, investment advice fiduciaries may also choose to rely upon other available exemptions to the extent applicable after the Fifth Circuit's decision, but the Department will not treat an adviser's failure to rely upon such other exemptions as resulting in a violation of the prohibited transaction rules if the adviser meets the terms of this enforcement policy." Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Now is a great time to join Worldwide Employee Benefits Network (WEB)

Worldwide Employee Benefits Network helps me connect with thought leaders in the Benefits Industry. Join WEB today at www.webnetwork.org .

The DOL Again Weighs in on Social Investing

"[T]he DOL has taken the position that consideration of ESG-type factors should be rare, later indicated that such factors can be used as tie-breakers, and most recently noted that such factors should be considered where there is a direct relationship to an investment's economic merits. [ FAB 2018-01 ] strikes a cautionary tone."
Winston & Strawn LLP

Aon Hewitt Investment Consulting, Lowe's 401(k) Plan Latest Target of ERISA Lawsuit

"According to the text of the complaint, defendants placed $1 billion of the Lowe's 401(k) plan's assets into the [Hewitt Growth Fund]. At least some of the money, plaintiffs allege, was inappropriately reallocated from eight existing funds in the plan, 'which were generally performing well,' when the Hewitt Growth Fund replaced these options on the investment menu. planadviser

Advisors, Sponsors Cutting 401(k) Fees

"83% of plan sponsors calculated fees within the last year, 41% reduced their fees as a result of their fee review, and 60% are somewhat or very likely to conduct a fee study in 2018. Although reining in fees should be a good thing, ... even modest fee trimming requires care. Plan sponsors who skimp on investment management, plan administration, fiduciary services, participant education or other plan-related services may put themselves and their employees at risk." Financial Advisor

Key Employee Benefit Plan Internal Controls to Have in Place

"[P]lan sponsors need to make sure hours reported are monitored and have a procedure in place for reviewing when participants become eligible for the plan.... For plans with automatic enrollment, sponsors should have procedures in place to make sure no one was missed.... Payroll departments should make sure payroll codes are created for the different uses of compensation.... Plan sponsors should also check vesting accuracy, even if calculated by the recordkeeper or third-party administrator (TPA)." PLANSPONSOR

Things to Consider About Passive Target Date Funds

"[1] The distinction between active and passive target-date series has become murkier.... [2] There's no such thing as a truly passive portfolio for target-date funds.... [3] Target-date managers appear to have less conviction in their passive series.... [4] Investors haven't consistently been better off by moving to the lower-cost offering." Morningstar Advisor

How Could a Flattening Yield Curve Impact LDI Portfolios?

"[F]or a typical DB plan, a bear flattening scenario where short rates rise faster than long rates will cause funded status to improve.... Combine this with the reality that most corporate DB plans are less than 100% hedged to interest rate volatility and we end up with an environment where liabilities fall faster than hedging assets.... [T]he bigger risk in a curve flattening environment is that long rates fall, driving up those more volatile long-dated liabilities." Russell Investments

Loan Programs for Underfunded Multiemployer Plans (PDF)

"[Recent proposals] would authorize either direct government loans, or government-guaranteed loans issued by third parties, to troubled multiemployer plans in an effort to help them return to financial stability.... This issue brief discusses the ways in which a loan program could benefit troubled plans and their participants, and also addresses the costs and risks associated with these proposals." American Academy of Actuaries

Central States Pension Fund Says It Will Be Insolvent by 2025

"[Executive Director Thomas Nyhan] said the fund held $15 billion at the end of March, but annually pays out $2 billion more than it takes in.... Central States is selling off much of its stock investments and other holdings that could generate higher returns and delay the insolvency but also carry the risk of losses that would push the fund into insolvency sooner. It is investing the proceeds from those sales in low-risk bonds and cash-like holdings." Kansas City Star

Restrictions on Financial Interests of Auditors: DOL and AICPA Rules

"It is the plan sponsor's responsibility to engage an independent accounting firm. When selecting an audit firm, plan sponsors must inquire about the firm's knowledge of, and compliance with, the DOL, AICPA and, if applicable, SEC independence requirements. Firms that are knowledgeable of all such requirements should have quality control procedures in place to ensure their firm's initial and ongoing compliance." EisnerAmper

2018 Report on State Retirement Systems: Funding Levels and Asset Allocation (PDF)

10 pages. "[T]he aggregate funded ratio was 70.2% at fiscal year-end 2017, which represents an increase of 2.8% from the end of FY 2016 and reverses two consecutive years of aggregate funded ratio declines. A primary driver of the improvement was the increase in global equity values for the twelve-month period ending June 30, 2017[.]" Wilshire Associates

Worst-Funded 'Nonendangered' Multiemployer Plans

"These were the four multiemployer plans with the largest unfunded liabilities based on 2015 data ... Central States ... admits to being in risk category D (Critical and Declining) while the next three report their status as N (Not Endangered or Critical). Is that really the case or are they playing games with actuarial assumptions?" Burypensions

Justice Denied as Courts Miss the Forest for the Trees in ERISA Actions

"In the most recent court decisions, the courts claimed that using Vanguard index funds for benchmarking would be like comparing 'apples-to-oranges' due to the difference in the fund families' business model. Nowhere in the decisions was there any mention as to the relative performance between the funds, the actual end-return benefit or value, if any, realized by the plan participants." The Prudent Investment Fiduciary Rules

Plan Sponsor Has Discretion to Set Plan's Termination Date Despite Sale of All Assets?

Company B is purchasing all of the assets of Company A. All employees of Company A will terminate effective July 15. Company A's 401(k) Plan is terminating. The owners of Company A would like to make a discretionary profit sharing contribution for this final plan year. Can Company A wait until 12/31 to formally adopt a resolution to terminate the plan (thus avoiding a reduction in the compensation limit, 415 limit, 1,000 hrs allocation service requirement for PS, etc.)? BenefitsLink Message Boards

Targeting the Ideal Client for Cross-Testing and New Comparability

What types of individuals or companies do you find to be "ideal" target clients who could benefit from a cross-tested or new comparability plan? I will be glad to share my thoughts. I look for smaller businesses that have a lot of income with demographics that are favorable for the testing and with owners who want to sock away some money, take advantage of the tax deduction, and mitigate the costs of benefits to their staff. BenefitsLink Message Boards

Which Has Better Bankruptcy/Creditor Protection: Qualified Plan or IRA?

A client has a profit sharing plan with only the owner and his wife as participants. They want to invest the assets in a real estate program of some sort and have decided to terminate the plan and roll its funds into an IRA for each of them. Each IRA will invest in the real estate. But would it be better to keep the money in the plan and let the plan invest in the real estate, if the plan carries more bankruptcy and creditor protection than the IRAs. Does the answer change when only a husband and wife are participants? Does the answer change if they amend and restate the profit sharing plan as a Solo 401(k) plan? BenefitsLink Message Boards

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