March 2017 Archive

DOL issues FAB on fiduciary rule enforcement

March 23, 2017

As we have discussed in previous articles, on February 3, 2017, President Trump signed a memorandum instructing the Department of Labor to reconsider its new Conflict of Interest regulation (aka “fiduciary rule), and related prohibited transaction exemptions (PTEs). On March 1, 2017, DOL released a proposal to delay the “applicability date” of the regulation by 60 days, from April 10, 2017 to June 9, 2017. Following on those actions, on March 10, 2017, DOL issued a Field Assistance Bulletin (FAB 2017-01) addressing concerns about how the new Conflict of Interest rule (and related prohibited transaction exemptions (PTEs)) will be enforced while DOL considering the applicability date delay. Read More

Repeal of Affordable Care Act: effect on retirement savings

March 13, 2017

One of the more controversial elements of the proposal to “repeal and replace” the Affordable Care Act (ACA), introduced by House Republicans March 6, 2017, is the repeal of the ACA 3.8% Medicare Net Investment Income (NII) tax. In this article we briefly discuss how that change, if enacted, would, for certain high-earners, reduce the relative value of saving in a 401(k) plan vs. saving outside the plan. Read More

Litigation with respect to in-house funds

March 16, 2017

There have been a number of recent lawsuits brought against financial services companies alleging prohibited ERISA “self-dealing” with respect to the use of proprietary funds and services for plans they maintain for their own employees. In this article we review the issues presented by these cases for plan fiduciaries – both fiduciaries of financial services company in-house plans and “regular” plan fiduciaries. Read More

Lump sum de-risking in 2017

March 13, 2017

In this article we discuss how changes in interest rates, Pension Benefit Guaranty Corporation premiums and mortality tables may affect sponsor decisions to de-risk (or not de-risk) defined benefit plan liabilities in 2017. For purposes of this article, by de-risking we mean paying out a participant’s benefit as a lump sum and thereby eliminating the related liability – the ‘low-hanging fruit’ for pension de-risking efforts. Read More

DOL publishes proposed delay in Conflict of Interest rule applicability date

March 09, 2017

On March 1, 2017, the Department of Labor released a proposal to delay the “applicability date” of its Conflict of Interest (aka “fiduciary”) regulation by 60 days, from April 10, 2017 to June 9, 2017. Interested persons have 15 days to comment on the proposed extension. In this article, we briefly discuss DOL’s proposed extension. We note that President Trump’s nominee for Secretary of Labor, Alexander Acosta, has not yet been confirmed. Nor, critically, has a new head of DOL’s Employee Benefit Security Administration (EBSA). Read More

February 2017 Pension Finance Update

March 07, 2017

Pension sponsors enjoyed a second month of modest improvement in finances during February on the strength of strong stock markets. Both model pension plans we track gained ground again last month: Plan A improved 1% in February and is now up 2% this year, while Plan B added a fraction and is now up almost 1% total through the first two months of the year: Read More

Fundamentals of PBGC Premiums

March 02, 2017

The Pension Benefit Guaranty Corporation (PBGC) was created as part of the Employee Retirement Income Security Act of 1974 (ERISA) to insure benefits for participants in qualified defined benefit plans in the event employers who sponsor these plans are unable to fulfill their commitments. In this article we cover the background of how these premiums work. Read More

How a large professional service firm saved big on PBGC premiums

March 02, 2017

Company was unaware their actions/inactions had caused them to pay more than $800,000 in PBGC premiums than they needed to pay over the last 6 years. The overpayment wasn’t their fault for they had no clue they could make simple changes and greatly reduce premiums. They were relying on their actuary to tell them what they owed. Unfortunately, this cost them a lot. Read More

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