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Text of PBGC Request for Comments on Proposed Revisions to Form 715, Power of Attorney, for Participants Receiving Payment from PBGC

"PBGC is proposing to revise one form in this collection, the Power of Attorney Form (Form 715). The proposed revision would include: ... [1] granting a durable power of attorney (DPOA) in addition to a nondurable power of attorney (NDPOA), and allowing a principal to name up to three agents to act on her behalf with PBGC ... [2] heightened requirements for granting authority and for executing the document ... and [3] A 'Notice to the Principal,' to alert the principal about what powers she is granting to a designated agent, and an 'Agent's Acknowledgement' to inform the agent about her duties and liabilities with respect to handling the principal's affairs. PBGC believes these revisions provide greater flexibility and greater protections against fraud for customers using the Form 715." Pension Benefit Guaranty Corporation [PBGC]

Finish Your Certificate in June!

The Certificate in Retirement Plans provides an overview of defined benefit and defined contribution plans, Social Security, basic investment principles, qualified plans, and 401(k) plans, as well as their surrounding legal and regulatory environment.

IRS 'Umbrella' Closing Agreement Program Allow Providers of Pre-Approved Plan to Correct Multiple Missed Deadlines

"While plan sponsors may continue to make VCP submissions for correcting a failure to restate their plans by the deadline, the IRS invites financial institutions or other service providers to submit proposals for umbrella closing agreements to correct the same failure on a larger scale by addressing employers affected by the failure as a group." Internal Revenue Service [IRS]

DOL Issues Guidance on Use of ESG Factors for Plan Investments and for Plan Exercise of Shareholder Rights

"[ FAB 2018-01 ] clarifies that ... prior guidance should not be read to suggest that an investment's promotion of ESG factors or positive market trends means that the investment is automatically a prudent investment choice.... A plan should not routinely spend significant assets to initiate or actively sponsor proxy battles, initiate shareholder meetings or fund campaigns on shareholder resolutions."
Mayer Brown

Are ESG Investments Part of Your Plan?

"[D]ecisions regarding using an ESG fund as a QDIA (qualified default investment alternative) were distinguished as not analogous to merely offering participants an additional investment option. A plan sponsor would violate its fiduciary responsibility if it could not show that the fund as a default investment does not create a conflict of interest, and that the fund does not offer lower expected rate of return or higher risk than a non-ESG alternative." Graydon

FINRA Moves to Amend the Suitability Standard in Lockstep with the SEC's Efforts

"[The SEC 'Regulation Best Interest' (Reg BI)] is a paraphrase of [FINRA Rule 2111.05(c), Components of Suitability Obligation] ... The SEC standard condition (3) ... removes the present qualifier that this quantitative suitability is applicable only when a member or associated person 'has actual or de facto control over a customer account.' This is a significant alteration to the FINRA rule." Drinker Biddle

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Interesting Angles on the DOL's Fiduciary Rule, Part 90

"The SEC's proposed Regulation Best Interest (Reg BI) is remarkable in its similarities to the DOL's vacated Best Interest Contract Exemption (BICE). This article describes some of those similarities. Keep in mind as you read this that Reg BI applies to securities recommendations, while BICE would have covered any investment or insurance recommendation by a fiduciary advisor." FredReish.com

Stick the Landing on DB Termination Investments

"LDI is designed to align investments with market value liabilities at any given point in time. So as interest rates float from month to month, the market value liability and asset move together in a similar fashion, reducing the risk of new unfunded liabilities occurring. When a plan is approaching final distribution of assets upon termination, however, the lump sum portion of the plan's liability can lock in for up to one year (decoupling from market values)." The Principal Blog

President Trump Announces Intent to Nominate PBGC Director

"Gordon Hartogensis of Connecticut ... is an investor and technology sector leader with experience managing financial equities, bonds, private placements, and software development. He holds a B.S. in Computer Science from Stanford University and an M.S. in Technology Management from Columbia University." The White House

Is Excessive Fee Litigation Headed for Its Dudenhoeffer? (PDF)

"Over the last half-year ... six district courts in five federal circuits have provided 401(k) and 403(b) plan sponsors with some hope by turning the established trend upside-down ... The [ Dudenhoeffer ] opinion ... seemed to acknowledge the need to 'weed[] out meritless claims' among the many stock drop suits that had been filed since 2008 ... In the excessive fee context, every win by defendants ... provides 401(k) and 403(b) plan sponsors some hope that the plaintiffs will be held to similar scrutiny."
Groom Law Group

Reducing Risk in Your Pension Plan: Lump Sum Payments to Former Participants

"Is the plan's funded percentage (AFTAP) over 80%, or has the plan been completely frozen since before September 1, 2005? ... Highly Compensated former employees may possibly not be permitted to receive a lump sum distribution.... Lump sum distributions from the plan could trigger a 'settlement' recognition on your company's financial statement pursuant to pension accounting rules." Watkins Ross

ERISA's Duty to Inform: Distinguishing Between Existing and Possible Benefits

"[T]he plaintiff alleged that defendants misrepresented to her that her retirement benefit plan would not change or would only change to her advantage after the residency program that she participated in was terminated, and that she relied on that misrepresentation in suspending her search for a new job.... [The district court] ruled that while plan fiduciaries have an affirmative duty to ensure that participants inquiring about existing benefits receive relevant information, they do not have a duty to inform participants inquiring about future benefits of possible changes to the plan unless they are under serious consideration at the time of the inquiry." [ Kovarikova v. Wellspan Good Samaritan Hospital , No. 15-2218 (M.D. Pa. May 7, 2018)]
Proskauer Rose LLP

An Interview with Phyllis Borzi: What Would a 'Perfect' Fiduciary Rule Look Like?

"The SEC's statutory authority is limited to securities.... DOL regulation can reach tax-favored retirement investments, but not non-retirement investments. Certain investment products fall outside the jurisdiction of both agencies.... In a perfect world, ... the DOL and the SEC would work together to issue identical standards because together they could cover a large part of the marketplace. However, the major legal barrier to that is the regulatory approach to conflicts of interest that is the bedrock structure of each statute." Fiduciary News

New DOL Claims Procedures for Disability Benefits: Action Items to Stay in Compliance

"Review and identify all company-sponsored employee benefit plans to determine if the plan conditions benefits, including the payment or vesting thereof, on a determination of disability.... Amend claims procedures and update notices, Summary Plan Description and third-party service provider agreements ... Employees involved in making disability claims determinations should be trained on the new requirements imposed under the Final Regulations." Buchanan Ingersoll & Rooney PC

Employee Benefit Risk Management from a Board's Perspective (PDF)

"This article discusses tactics boards use to gain a thorough understanding of their organizations' risks, how fiduciary risk ranks among other hazards, [and] the effect risk culture has on how directors prioritize risks. [It] includes suggestions on how to strengthen the management of risks associated with employee benefit plans." Roland|Criss, via Journal of Compensation and Benefits

Many Plan Participants Lack Access and Skills to Fully Engage with Technology (PDF)

"Insurance carriers, 401(k) recordkeepers and plan sponsors continue to push the use of different technologies. And while there are certainly a number of participants who can properly access these options, the fact remains that, whether through lack of geographical access, lack of funds to purchase access or fear of technology, there are millions of Americans who cannot take part in the technological services offered (or required) in their benefit plans." Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS]

DOL and Treasury Update 2017-2018 Regulatory Agendas for Employee Benefits

"There is one new DOL initiative -- an exception for short-term limited duration insurance under the [ACA] -- and no new IRS initiatives.... DOL also discontinued six projects ... relating to the claims procedure regulation, state saving arrangements for non-governmental employees, brokerage windows in retirement plans, the section 408(b)(2) disclosure regulations, target date funds, and health care continuation coverage. DOL retained the Form 5500 modernization project but changed its status to a long-term initiative."
Eversheds Sutherland

Can QNECs and User Fee Be Paid from 403(b) Plan Assets?

Client is a 501(c)(3) organization eligible to maintain a 403(b) plan. The plan provided for salary reduction contributions, but they've never been implemented. A few operational errors have occurred. Can the user fee be paid from plan assets? Can a correction of QNECs equal to a default of 1.5% of compensation plus earnings be credited to the plan using plan assets? BenefitsLink Message Boards

Dueling Beneficiaries

401(k) plan has the language in it where divorce or legal separation does not revoke the beneficiary designation. Participant completed beneficiary designation naming his spouse (at the time) as the primary beneficiary, which I know is required unless waived. Participant got divorced a couple years back and plan never received a QDRO. Participant subsequently remarries and dies shortly thereafter. No one-year marriage requirement in the plan document. Participant never completed a new beneficiary form prior to his death naming his current spouse. Who gets the money? BenefitsLink Message Boards

Late Contributions of Deferrals

Deposits were late if measured by date of deposit, but the checks had been mailed a week previous. Do we calculate from the check's mailing date or from the date it was deposited into the account? BenefitsLink Message Boards

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Press Releases

NPPG Fiduciary Services Appoints Brian J. Horowitz as ERISA Counsel Northeast Professional Planning Group [NPPG)]

Chief Investment Officer Ted Eliopoulos to Leave CalPERS CalPERS [California Public Employees' Retirement System]

P-Solve to Rebrand as River and Mercantile Solutions P-Solve

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