DOL Delays Fiduciary Rule

On Monday, November 27, 2017, the Department of Labor (DOL) announced that some key provisions of the fiduciary rule will be extended for 18 months.

The fiduciary rule, in its most basic context, requires brokers and advisors to act in the best interests of their clients who have retirement accounts, including IRAs and rollovers from qualified retirement plans, including 401(k) and 403(b) plans.  The DOL first proposed the regulations in October 2010 but withdrew them in 2011 after opposition from the financial services industry as well as some members of Congress.  The regulations were reintroduced in 2015 with the final rule becoming effective June 7, 2016.  Compliance with the rules surrounding broker conduct and disclosure was delayed until April 10, 2017.  A transition period for compliance with some of the provisions was put in place from April 10, 2017 until January 1, 2018.  This latest delay will extend implementation of the enforcement provisions of the rule until July 1, 2019.  During this now extended transition period, fiduciaries will be required to meet the Impartial Conduct Standards, which requires that they receive only reasonable compensation, make no misleading statements, and act in their clients’ best interest.  Clearly, the path of these regulations has been arduous and the recent delay only makes it more so.

Key Retirement and Employee Benefits Compliance Reminders for December

Due December 1st

• Deadline for participant notices, including safe harbor notice, QDIA notice, automatic contribution arrangement notice.

Due December 15th 

• Extended deadline for distributing Summary Annual Report to participants.

Due December 31st

• Corrective distributions for failed ADP/ACP test for 2016 (10% excise tax applies).
• QNEC contributions due for failed ADP/ACP test for 2016.
• RMDs due (except for first time qualifying participants).
• Last day to adopt discretionary plan amendments.
• Deadline to convert or remove safe harbor status for 2018 plan year.

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Strategic Benefit Services' Carol A. Idone Receives Prestigious SPARK Advisor Award

Vice President, Client Relationship Management and Consulting,

Honored for Leadership in "Plan Design & Administration Innovation"

Strategic Benefit Services (SBS) is pleased to announce that Carol A.Idone, CFP®, AIF®, Vice President, Client Relationship Management and Consulting, is the recipient of the 2017 SPARK Advisor Award: Plan Design & Administration Innovation. 

Sobering News Around 2018 Mortality Tables

Effective January 1, 2018, the IRS will implement new mortality tables to be used by Defined Benefit plan sponsors. A number of important things could occur when these new tables take effect, none of which are good news. These include:

• an increase in the plan liabilities; 
• an increase in the sponsor's minimum funding levels; and 
• an increase in the PBGC premiums. 

Key Retirement and Employee Benefits Compliance Reminders for November

Due November 15th 

• Contributing entities making two reinsurance fee payments for 2016 must remit the second contribution payment. 

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Q3 Retirement Market Recap - Stocks Advance for the Eighth Consecutive Quarter

U.S. stocks, as measured by the S&P 500 Index, extended their gains for the eighth consecutive quarter, with the Index up 4.5%. The Index is up 18.6% for the one-year period through September 30, 2017.

The market shrugged off devastating hurricanes and political turmoil in Washington. In fact, the hurricanes stimulated demand for replacement cars and trucks, providing a welcome sales boost to that industry.

Read the Q3 Retirement Market Recap to learn more about the 3rd quarter stocks and bonds performance, and also review tips on "Understanding Stable Value Funds".

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

IRS Releases 2018 Retirement Plan Contribution Limits

The Internal Revenue Service (IRS) has recently released the contribution limits on Qualified Retirement Plans for 2018.

Strategic Benefit Services created a chart that details these contribution limits.

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Key Retirement and Employee Benefits Compliance Reminders for October

Due October 14th 

• Creditable Coverage Disclosure notices due to all Part D eligible individuals who are covered under, or apply for, the plan’s prescription drug coverage.

Due October 15th

• Deadline for adopting a retroactive adjustment to correct 410(b) coverage or 401(a)(4) nondiscrimination failure for 2016.
• Deadline for the distribution of Creditable Coverage Notices to employees and dependents that are enrolled in a group health plan that are eligible for Medicare 

Due October 16th 

• Extended deadline for filing Form 5500.

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Standard Items Appearing In An Investment Policy Statement

A retirement plan’s overarching goals are to help participants accumulate wealth during their years of employment and to provide them with income during their retirement.

The challenge for fiduciaries is to successfully navigate the options available and build an optimal investment menu that is designed to guide participant choices and improve their retirement readiness. Since plan fiduciaries may be exposed to personal liability, it is prudent to have a process in place for the selection and monitoring of investment options.

Plan fiduciaries should have an established framework on which they can defend their investment decisions should they ever be challenged. The process should begin with the construction of the plan’s Investment Policy Statement (IPS). Although not required by the Employee Retirement Income Security Act (ERISA), drafting an IPS is a fiduciary best practice. The IPS serves as a policy guide that can offer an objective course of action to be followed when emotional or instinctive responses might otherwise motivate less prudent action.

Which investment style has dominated over the long haul, active or passive?

Active vs. passive performance trends have been cyclical, with each experiencing its own periods of dominance. It is widely believed that the Morningstar Large-blend category (stocks in the top 70% of the capitalization of the US equity market where neither growth nor value characteristics predominate) is the most efficient category, or one that would customarily favor passive investing. However, even this category shows the cyclical nature of active and passive performance. Currently, we are experiencing a period of time when the performance of passive large blend funds is trouncing those actively managed.

Which came first––active or passive investing?

Active vs. Passive investing styles is an age-old debate in the investing world. Investment managers on either side tend to be steadfast advocates of the merits of their approach. Active managers seek to exploit market inefficiencies by relying on analytical research, forecasts, and their own judgement and experience to decide which securities to buy, hold, and sell. Passive investing involves simply tracking an index to avoid the management fees and trading costs that can be a drag on performance by adhering to a buy-and-hold strategy.

Active vs. Passive Investing Styles: An Age Old Rivalry

Active vs. Passive investing styles is an age-old debate in the investing world. Investment managers on either side tend to be steadfast advocates of the merits of their approach. Active managers seek to exploit market inefficiencies by relying on analytical research, forecasts, and their own judgement and experience to decide which securities to buy, hold, and sell. Passive investing involves simply tracking an index to avoid the management fees and trading costs that can be a drag on performance by adhering to a buy-and-hold strategy.

In Active vs. Passive Investing Styles: An Age Old Rivalry, SBS traces the origins of the active and passive investing styles, dives into the historical performance and asset flow trends of each, and addresses how plan sponsors can make prudent decisions about employing each investing style.

Complete the form below to download your copy today. If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Key Retirement and Employee Benefits Compliance Reminders for September

Due September 15th

• Extended due date for filing corporate tax returns and deductibility of contributions.

Due September 30th 

• Medical Loss Ratio (MLR) rebates due for the 2014 reporting year and beyond.
• Summary Annual Report due to participants, assuming filing of Form 5500 was not extended.

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Q2 Retirement Market Recap - Stocks and Bonds Advance Again in the 2nd Quarter

As of June 30, 2017 U.S. equities advanced for the seventh consecutive quarter, with the S&P 500 Index gaining 3.09% in the second quarter and 9.34% year to date. With the economic expansion and the bull market for stocks both in their eighth year, it is understandable that many investors are nervous about a market correction. Equity prices are reflecting a very solid U.S. economy, operating at full potential and full employment. Most of the economic data followed by investors has been positive:

• surges in Leading Economic Indicators, and the Small Business Optimism Index;
• accelerating global Gross Domestic Product (GDP) growth forecast;
• rising housing starts;
• strong Purchasing Managers Indexes (manufacturing and service sectors), strong hiring, declining unemployment, record low weekly unemployment claims and high quit rate;
• low inflation;
• strong consumer data: growth in average hourly earnings/real disposable personal income, household balance sheets, savings rates, credit scores, and record low household financial
• obligations ratio; and
• strong retail sales.

Read the Q2 Retirement Market Recap to learn more about the 2nd quarter stocks and bonds performance, and also review tips on "Understanding Non-Governmental 457(b) and 457(f) Plans".

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

11 Questions Employers Should Ask About Stable Value Funds

Stable value investments have been a core investment option in defined contribution retirement plans since the 1970s and are an attractive alternative to money market investments due to steady returns and principal preservation guarantees. Stable value funds have proven their worth to investors during the protracted period of low interest rates present since the recent financial crisis. Consider the following comparison of 2007-2016 calendar year total return for the Vanguard Federal Money Market Fund (VMFXX)[i] to the SBS MetLife Stable Value Fund.

1. What is a stable value fund?

Key Retirement and Employee Benefits Compliance Reminders for July

Due July 29th

• Summary of Material Modification (SMM) for amendments adopted in 2016.

Due July 31st 

• Form 5500 due (without extension)
• Form 5558 due for automatic extension to October 16 for filing Form 5500.
• Form 5330 due to report and pay excise tax on prohibited transactions and nondeductible contributions made in 2016.
• Patient-Centered Outcomes Research Institute (PCORI) fees and Form 720 due. 

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Key Retirement and Employee Benefits Compliance Reminders for June

Due June 30th

• Corrective distributions for failed actual contribution percentage (ACP)/actual deferral percentage (ADP) test without 10% excise tax penalty for plans with EACA.

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Upcoming Webinar

Get Ready for Paid Family Leave

Effective January 1, 2018, New York State Paid Family Leave Program will provide New Yorkers job-protected, paid leave. Working families will no longer have to choose between caring for their loved ones and risking their economic security.

But how does this impact you as the employer?

This webinar will cover the new regulations for the Paid Family Leave law and how to prepare for it including:

• which employers are covered, and employees are eligible for benefits; 
• the differences between Paid Family Leave (PFL), Disability Benefits Law (DBL) and the Family Medical Leave Act (FMLA); and 
• what employers should do to get ready.

Thursday, May 18 at 11:00 a.m.

CLICK HERE to register

Q1 Market Recap - Yin and Yang

Last quarter we reported to you that investors turned decidedly bullish toward equities after the U.S. election. That trend continued in the first quarter of 2017, with the S&P 500 Index hitting an all-time high of 2395.96 on March 1, immediately following President Trump’s conciliatory speech to Congress. That represented a 12% advance in the Index from pre-election levels. The Index closed the quarter off the all-time high, at 2362.72, as investors re-evaluated the probability of President Trump and Congress’ ability to deliver on tax cuts and increased federal spending on infrastructure. The S&P 500 returned a very strong 6.07% in the first quarter—the sixth consecutive quarter of positive returns for the Index.

In Chinese philosophy, yin and yang describe how seemingly opposite or contrary forces may actually be complementary, interconnected, and how they may give rise to each other as they interrelate. The U.S. has entered a period where proposed policy or political risks, the "yin" have moved to the forefront in driving market volatility, the "yang."

Read the Q1 Retirement Market Recap to learn more about the "yin and yang" forces affecting the U.S. market performance, and also review tips on "Understanding Your Retirement Plan Fee Methodology".

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

"Avoiding Litigation and Fiduciary Pitfalls"

Fiduciaries of defined contribution retirement plans are under closer scrutiny than ever before.  Plan participants are filing lawsuits,  and a number of organizations, have recently appeared in the headlines as defendants in class action lawsuits relative to their retirement plans. Lawyers on behalf of retirement plan participants are now setting their sights on non-profit institutions. This is a wake-up call to all non-profit organizations to make sure their retirement plan fiduciary oversight is robust and compliant.

Join us on May 3rd at the 30th Annual FMA Conference where Retirement Advisory experts John Jezsu and Peter Margiotta will present "Avoiding Litigation and Fiduciary Pitfalls." The presentation includes an overview of ERISA and DOL requirements for plan fiduciaries, retirement plan litigation, the risk to the healthcare and not-for-profit industries, preventative measures to avoid litigation, and what the future may hold.

Upcoming Webinar:

Pension Plan Cost Reduction and De-Risking Strategies

Did you know that your PBGC* per-head cost will have increased 130% between 2012 and 2019?

And your PBGC variable rate will have increased by 390%!

This one-hour, free webinar is a must for healthcare finance executives who are interested in paying less to run pension plans. Join us on May 24 at 11 a.m. to learn more about:

• how to decrease costs and save money; 
• pension de-risking concerns and solutions; 
• pension risk transfer steps available to plan sponsors; and 
• why plan sponsors should consider acting now to take advantage of these strategies.

CLICK HERE to register

Wednesday, May 24 at 11:00 a.m.

PRESENTERS:

Peter Margiotta

Vice President, Business Development
HANYS Benefit Services

Michael E. Devlin 

Principal
BCG Pension Risk Consultants

Key Retirement and Employee Benefits Compliance Reminders for April

Due April 1st

• Required minimum distributions (RMD) for first time qualifying participants, including 5% owners.

Due April 17th 

• Deadline for corrective distributions for 402(g) excess contributions.

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Is It Time to Refresh Your Voluntary Benefits?

by Wesley Price

Voluntary benefits have been around for several decades. These are coverages and products made available to employees for elective purchase at the employee’s expense. Over the years, as the cost of health insurance has continued to increase, employers have shifted the portfolio of offerings from employer-paid to voluntary. As a result voluntary benefits has evolved from being limited to main core benefits like dental, vision, and life insurance to including accident insurance, disability and critical illness. Additionally, new benefits are emerging based on growing demand, such as pet insurance, fraud protection and legal services.

8 Questions Plan Sponsors Should Ask about 457(b) and 457(f) Plans

Background:

457(f) and 457(b) plans are non-qualified deferred compensation plans for eligible highly-compensated employees. A non-qualified plan is a type of tax-deferred, employer-sponsored retirement plan that is not subject to Employee Retirement Income Security Act (ERISA) guidelines. Non-governmental 457 plans are not required to file Form 5500 since they are not subject to ERISA, but they are required within 120 days of the plan’s existence to file a one-time notification (“top hat letter”) with the Department of Labor. These plans are exempt from the non-discrimination testing that is required for qualified plans.

In 1986, Section 457 was added to the Internal Revenue Code (IRC) to specifically address the unique needs of the not-for-profit sector. The rules address governmental plans sponsored by state or local governments and non-governmental plans sponsored by tax-exempt organizations under Section 501(c). This frequently-asked question (FAQ) document will specifically address questions regarding non-governmental 457(b) and 457(f) plans.

Key Retirement and Employee Benefits Compliance Reminders for March

Due March 1st

• Form M-1 must be filed by multiple employer welfare arrangements (MEWAs) and entities claiming an exception from MEWA status (automatic 60-day extension is available upon request).

Due March 2nd

• Section 6055 (Forms 1094-B and 1095-B) Individual statements must be furnished 
• Section 6056 (Forms 1094-C and 1095-C) Individual statements must be furnished 

Due March 15th 

• Corrective distributions for failed actual contribution percentage (ACP)/actual deferral percentage (ADP) test without 10% excise tax penalty (for plans without EACA).
• Corporate tax returns due and contribution deadline for deductibility (without extension). 
• Due date for automatic extension to September 15 for corporate tax returns.

Due March 31st

• Electronic filing of Form 1099-R for distributions made in 2016.

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

2017 Retirement and Employee Benefits Compliance Calendar

Strategic Benefit Services wants to help you stay compliant with our 2017 Retirement and Employee Benefits Compliance Calendar.

Compliance is just one of many services SBS provides. Visit our Retirement Plan Services and Employee Benefits service pages to learn more.

If you have any questions regarding compliance requirements or their application to your plan, contact us at (855) 882-9177 or at sbs@hanys.org.

Strategic Benefit Services Named a PLANADVISER Top 100 Retirement Plan Adviser for the 2nd Year in a Row

PLANADVISER Magazine has named Strategic Benefit Services (SBS) as one of its 2017 Top 100 Retirement Plan Advisers. We have been awarded in the categories for large teams with $4 billion or more in retirement plan assets under advisement, and large teams with 180 retirement plans or more under advisement. The PLANADVISER Top 100 Advisers is an annual list of the retirement plan advisers and adviser teams that stand out in terms of a series of increasingly stringent quantitative measures.

Remedial Amendment Period for §403(b) Plans

Sponsors of 403(b) plans, both those subject to the Employee Retirement Income Security Act (ERISA) and non-ERISA plans, were required (with few exceptions) to have in place a written plan document by December 31, 2009. Sponsors who did so will be able to restate their plans to adopt one of the prototype plans or volume submitter plans when they become available.

The Internal Revenue Service (IRS) issued Revenue Procedure 2013-22 in March 2013, which provided guidelines for issuing opinion and advisory letters for §403(b) prototype plans and volume submitter plans. The Revenue Procedure stated that a remedial amendment period would be available whereby eligible employers could retroactively correct defects in the form of written 403(b) plans.

Key Retirement and Employee Benefits Compliance Reminders for February

Due February 28th

• Paper filing of Form 1099-R to IRS for distributions made in 2016.
• Section 6055 Reporting - Forms 1094-B and 1095-B. IRS information returns filed no later than February 28, 2017, or March 31, 2017 if filed electronically.
• Section 6056 Reporting - Forms 1094-C and 1095-C. IRS information returns filed no later than February 28, 2017, or March 31, 2017 if filed electronically.

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Q4 Retirement Market Recap - Post-Election Rally

The 2016 U.S. general election was an unusually dramatic event for investors, most of whom were expecting the Democrats to hold the White House. Investors reacted favorably to the election results, with the S&P 500 closing at a new record high on November 22, and continuing to advance through the end of the quarter.

Read the Q4 Retirement Market Recap to learn more about the impact of the 2016 election. Also included is an update on litigation targeting non-profit retirement plans.

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Understanding Your Retirement Plan Fee Methodology

Understanding your retirement plan’s fees is not only a good practice; it’s a fiduciary requirement as prescribed by the U.S. Department of Labor (DOL) under the Employee Retirement Income Security Act (ERISA). The traditional enforcement mechanism has been DOL plan audits. More recently, high-profile litigation has driven plan sponsors to evaluate their plan fees. These fees can be grouped into several categories: record keeping, administrative, legal, plan advisory, investment, and education and communication. The principal reason fees have been thrust into the limelight is that plan participants often bear most, if not all of the cost of running the plan.

Key Retirement and Employee Benefits Compliance Reminders for January

Due January 17th

• Transistional Reinsurance Fees due for insurers and plan sponsors of self-insured health plans..

Due January 31st

• Determination letter submission deadline for individually designed plan documents. This applies to plan sponsors with EINs ending in 1 or 6.
• Form 1099-R to participants who received a distribution in 2016.
• W-2 reporting for employer groups with over 250 employees (ACA)

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

The Popularity of Wellness Programs

The Employee Benefits survey helped call to attention the increasingly complex circumstances under which employee benefit plans are constructed. The popularity of wellness programs certainly shows a direct correlation between the health and welfare of employees and cost of their care. Most respondents said their organization offers a wellness program (74%), with the most popular methods including:

• flu shots;
• smoking cessation; and
• a health risk assessment.

If wellness helps reduce the risk of heart attack, stroke, diabetes, hypertension, and other serious conditions, then the hope is that it will result in fewer medical claims.

Download our Employee Benefits Survey Report and the Employee Benefit Survey Webinar Presentation Recording to understand what these results mean to you as an employer, and what challenges and risks you may face when attempting to offer a competitive benefits package under the Affordable Care Act.

If you have any questions, or would like to begin talking to an employee benefits advisor about wellness programs, please get in touch by email or by calling (855) 882-9177.