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Compliance December 27, 2016
The Best of PLANSPONSOR Magazine Columnist Stephen Saxon
Groom Law Group attorney Saxon writes opinion and advice on the legislative and regulatory changes affecting plan sponsors today.
Reported by Judy Faust Hartnett
Art by J.CardielloCollected below are some of Stephen Saxon and his colleagues’ invaluable takes on topics from 2016 that are important for all plan sponsors. Saxon is a partner with Groom Law Group, headquartered in Washington, DC.
On November 9, Americans across the country woke up to the realization that Donald Trump had been elected president of the United States. This surprising turn of events may lead to the reversal or modification of many of President Obama’s policies in the area of retirement.
The fog created by Fifth Third may be clearing. Courts are beginning to eliminate the vagueness that the plaintiffs’ bar has tried to exploit and are, instead, signaling that stock drop claims are not easy claims to bring.
On July 11, 2016, the Department of Labor (DOL), the Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (PBGC) proposed revisions to the forms and regulations governing the Form 5500 annual reporting process for employee benefit plans. These proposed revisions, if implemented, would be the most significant overhaul of Form 5500 since the agencies’ last update with the 2009 plan year.
In light of the ongoing fee litigation, a plan fiduciary needs to augment those prudent decisions with documentation showing its prudent process. In other words, it is not longer sufficient to simply make prudent decisions of you can’t show how you made them.
Plan fiduciaries have been increasingly concerned that offering actively managed funds might unnecessarily raise scrutiny from the U.S. Department of Labor (DOL) or the plaintiffs’ bar. While such a sentiment continues to grow within the retirement plan community, it is not grounded by the evidence.
The most obvious feature of variable annuity products is that they provide retirement savers with the opportunity and choices for accumulating wealth through the market during their productive years, then help them manage their assets during the decumulation phase of their life as well.
The Department of Labor’s (DOL) regulatory effort in the area of state IRAs has already sown the seeds for potential shifts in the retirement system as a whole. We expect this will signal another shift away from employer-based retirement programs.