July 2015 Archive

Washington Update – July 2015

July 30, 2015

In this Current Outlook we review legislation introduced that would ease the rules on electronic disclosure. We also briefly discuss the effect of the Supreme Court's decision in Obergefell (the same-sex marriage case) on retirement plans and its decision not to review the Fourth Circuit's decision in Tatum v. R. J. Reynolds Tobacco Company. Read More

Cash balance plans: 2015 update

July 29, 2015

Many sponsors maintain cash balance plans, either as (1) their main retirement benefits program, (2) a program for a specific group of employees, or (3) a legacy benefit for certain employees. In 2014, IRS finalized cash balance plan regulations, reflecting changes made by the Pension Protection Act of 2006 (PPA), and we now have a clear set of rules for the operation of these plans. In this article we review the evolution of the cash balance plan design and summarize where we are now. We then consider the relative merits of this design vs. a defined contribution plan. Read More

Supreme Court ruling on Tibble

July 27, 2015

Recently, the Supreme Court handed down its unanimous decision in Tibble v. Edison International, a defined contribution plan fee case. The Court vacated the Ninth Circuit's decision, which had been in favor of sponsor fiduciaries, and remanded the case back to the Ninth Circuit for further proceedings. The case involves the application of ERISA's statute of limitations and the duty of sponsor fiduciaries to monitor the prudence of their plan fund menu decisions on an ongoing basis. In this article we briefly review the decision. Read More

IRS bans lump sums to already retired pension participants

July 24, 2015

On July 9, 2015, IRS released Notice 2015-49, Use of Lump Sum Payments to Replace Lifetime Income Being Received By Retirees Under Defined Benefit Pension Plans. The Notice effectively prohibits, as of July 9, 2015, the payment of lump sums to retiree-annuity recipients in de-risking transactions. In this article we review the Notice. Read More

Lifetime income disclosure bill introduced in Senate

July 23, 2015

On May 13, 2015 Senators Isakson (R-GA) and Murphy (D-CT) introduced the Lifetime Income Disclosure Act, a bill that would require defined contribution plan sponsors to provide participants an annual estimate of the ‘lifetime income stream equivalent’ of their accrued benefit. In this article we briefly discuss the proposal; we then discuss (and compare with the Isakson-Murphy bill) DOL's project on the same issue. Read More

DOL proposed redefinition of ERISA fiduciary – Best Interest PTE

July 15, 2015

The Department of Labor's proposed regulation package re-defining who is an ERISA ‘fiduciary’ as a result of the provision of investment advice would re-label many relationships as ‘fiduciary’ that, under current rules, are not so labeled. With respect to ‘retail’ advice, including advice to plan participants, as part of the package, DOL also proposed a Best Interest Contract Prohibited Transaction Exemption (PTE). The PTE would allow advisers receiving ‘conflicted payments’ and related financial institutions to provide advice to participants, so long as certain requirements are met. In this article we discuss the PTE in detail. Read More

June 2015 Pension Finance Update

July 01, 2015

Higher interest rates produced positive results for pension sponsors in June, and for the first half of 2015 generally. Both model plans we track saw improvements in funded status last month and are solidly above water so far in 2015, with Plan A ahead more than 6%, and Plan B up 3% through June. Download

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