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Financial Resources & News

Midyear Changes to Safe Harbor 401(k) Plans

Long-awaited relief regarding midyear amendments to safe harbor 401(k) plans arrived when the IRS released Notice 2016-16 on January 29, 2016. The new rules were immediately effective and apply to both 401(k) and 403(b) traditional safe harbor plans and qualified automatic contribution arrangement (QACA) safe harbor plans. Scope of the New Rule Rather than the very short list of permitted...

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Rushing to Levelize Fees May Increase Liability

Investments offered in a retirement plan often provide different amounts of revenue sharing which is used to offset the administrative costs associated with the plan. Often times, investors with entirely passive allocations may not contribute toward the administrative costs at all. Fee levelization is the use of recordkeeping systems to ensure administrative costs are being spread equitably...

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Markets in Review

The first quarter of 2016 was largely characterized by a volatile equity market driven by macroeconomic factors. The S&P 500 declined by more than 10% during the quarter before recovering to gain more than 1%. Concerns of a slowdown in China, global central bank moves into negative interest rates, and fears of a potential U.S. recession weighed on the equity markets. The bond market broadly...

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RECENT Developments

PATH Retirement Plan Provisions On December 18, 2015, President Obama signed into law the Protecting Americans from Tax Hikes (PATH) Act, which contains two retirement plan changes. Rollovers into a SIMPLE IRA. Rollovers may be made into a SIMPLE IRA from an employer-sponsored retirement plan after the individual has participated in the SIMPLE IRA plan for two years (Section 306). Once this...

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Bankruptcy and Retirement Plans

In 2005, Congress passed a major revision of the Bankruptcy Code, confirming the protected status of individual retirement accounts (IRAs) and defining the levels of debtor assets that may be sheltered by qualified retirement plans and IRAs. Bankruptcy Law Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), debtors seeking bankruptcy protection whose net monthly...

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The Fiduciary Role and Tibble v. Edison

Under the Employee Retirement Income Security Act (ERISA), a plan fiduciary has important responsibilities and is subject to specific standards of conduct because he or she is acting on behalf of retirement plan participants and their beneficiaries. One of the pivotal fiduciary responsibilities under ERISA is the duty to act prudently. Section 404(a)(1)(B) of ERISA provides that a fiduciary must...

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Post-Severance Compensation Revisited

For years, there was no guidance on the issue of whether post-severance payments made to employees could be used for qualified plan purposes (i.e., elective deferrals and matching and nonelective employer contributions). As a result, various interpretations existed. Although the final 2007 Section 415 regulations provided guidance on this issue, some uncertainty remains as to what, if any,...

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Markets in Review

For the first time since June of 2006, the U.S. Federal Reserve (the “Fed”) voted to raise the target range for the Federal Funds Rate from 0.00% - 0.25% to 0.25% - 0.50%. The decision on December 16th was unanimous by all Fed officials, and marked the end of a 7-year period of “zero-interest rate policy.” During the quarter, the U.S. Dollar continued to strengthen against a basket of other...

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Week Ending 12/25/15 Recap

DJIA▲423.62 NASDAQ▲125.41 S&P500▲55.44 10YR TREASURY YLD 2.24% The U.S. equity market rose on the heels of a rebound in energy and material related stocks. West Texas Intermediate (WTI) crude oil closed the week at $38.10, after the release of a report showing a decline in U.S. crude stockpiles. The U.S. economy grew 2.0% in the third quarter, a slight downward revision from 2.1%...

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RECENT Developments

Determination Letter Program Changes Based on its need to direct its limited resources more efficiently, the IRS stated in Announcement 2015-19 that effective January 1, 2017, the staggered five-year determination letter remedial amendment cycles for individually designed plans will be eliminated. There will be a cycle E PPA restatement and a cycle A of the third five-year restatement cycle,...

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Studies/Surveys

Most Workers May Not Be Able To Retire At 65 Nearly two-thirds of U.S. workers are not saving enough to ensure a comfortable retirement by age 65, according to a new report by Aon Hewitt. Based on an analysis of 77 employers representing 2.1 million workers, the report found 68 to be the median age when workers would be able to retire with enough resources to maintain their standard of living....

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Bill Seeks to Boost Women’s Retirement Security

A bill introduced by Senator Patty Murray (D-WA) seeks to improve retirement security for women, BenefitsPro recently reported. The Women’s Pension Protection Act of 2015 proposes to safeguard retirement savings, improve access to retirement savings plans for long-term, part-time workers -- most of whom are women -- and help increase women’s financial literacy. One provision would extend spousal...

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Supreme Court Ruling on Same-Sex Marriage

On June 26, 2015, the U.S. Supreme Court issued its decision in Obergefell v. Hodges,* ruling that the 14th Amendment requires all states (and the District of Columbia and U.S. territories) to recognize same-sex marriage. The ruling also requires states to recognize same-sex marriages lawfully performed in another state. Background Previously, in 2013, the Supreme Court had ruled in United...

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Markets in Review

The global markets were characterized by heightened volatility and uncertainty with all major equity markets ending the quarter in negative territory. China’s slowdown and currency devaluation placed pressure on global economies and markets. As a result of the correction in China, commodity prices and emerging markets currencies in areas highly dependent on China also experienced a decline. In...

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Retirement Distribution Advice

It is common practice for financial services firms to contact 401(k) participants who are nearing retirement to discuss rolling over their 401(k) nest egg into an individual retirement account (IRA). Several different regulatory agencies, including the Financial Industry Regulatory Authority (FINRA), the Government Accountability Office (GAO), the Department of Labor (DOL), and the Securities...

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