PLANSPONSOR - November/December 2017 - 7

Best Interest Contract Exemption (BICE) and the Principal
Transactions Exemption, and of the applicability of certain
amendments to Prohibited Transaction Exemption 84-24 (PTEs)
for 18 months, from January 1, 2018 to July 1, 2019. The decision
follows the review of the delay by the Office of Management and
Budget (OMB), at DOL's request earlier in November.
DOL plans to use the 18 months to review the numerous
public comments it has received and to review whether the exemptions
appropriate in light of action by the Securities and Exchange
Commission (SEC), state insurance regulators and other regulators.
The President has also asked DOL to review whether the fiduciary
rule would limit Americans' access to retirement information
and financial advice. The extension is clearly crafted to give
the Trump administration more time to consider what it will ultimately
do with the signature Obama-era rulemaking.
RMDs and Missing Participants
In an early November memorandum for Employee Plans (EP)
Examinations employees, the Internal Revenue Service (IRS)
directed EP examiners not to challenge a qualified plan as failing
to satisfy the required minimum distribution (RMD) standards
under Internal Revenue Code (IRC) Section 401(a)(9) if it has
made a good faith effort to locate missing participants. The
agency explained that, according to the RMD standards, distribution
of a participant's accrued benefit under a qualified plan
must commence after he reaches age 70 1/2 or, assuming he is
not a 5% owner of the plan sponsor, after he retires. In certain
cases, plans have been unable to commence or continue distributions
to a terminated participant or his beneficiary because they
cannot locate him. The memo says EP examiners will not challenge
a qualified plan for violation of these RMD standards if it
has taken the following steps:
* Searched plan, plan-related, plan sponsor and publicly available
records or directories for alternative contact information;
* Used a commercial locator service, a credit reporting
agency or a proprietary internet search tool for locating individuals;
and
* Attempted contact via United States Postal Service (USPS)
certified mail to the last known mailing address and, through
appropriate means, searched for any address or contact information,
including email addresses and telephone numbers.
If a qualified plan has not completed these steps, however,
EP examiners may challenge it.
SEC Introduces New Advisory Committee
The Securities and Exchange Commission (SEC) announced
the formation and first members of its Fixed Income Market
Structure Advisory Committee. The group comprises a diverse
range of outside experts, including those representing the views
of retail and institutional investors, small and large issuers,
trading venues, dealers and self-regulatory organizations,
among others. Its initial focus will be on the corporate bond
and municipal securities markets. Committee members will
provide advice to the SEC on the efficiency and resiliency of these
markets and identify opportunities for regulatory improvement.
The committee was formally established on November 15 for an
initial two-year term, which the commission may renew.
Court Supports Waiver Of
ERISA Statute of Limitations
In an appeal that the Secretary of the Department of Labor (DOL)
brought against the TPP Stock Ownership Plan, the defendants
argued that a waiver of statute of limitation rights they
had agreed upon with the DOL should be nulled; the plan had
acceded to the waiver while trying to negotiate a settlement. The
defendants argued that Employee Retirement Income Security
Act (ERISA) Section 1113(1), which provides for a six-year statute
of limitations on certain ERISA claims, constitutes a statute of
repose, rather than an ordinary statute of limitations, and " is not
subject to waiver-even express waiver. "
The secretary had argued that the " categorical " rule that
statutes of repose may not be waived contradicts governing precedent,
which instead requires a determination as to whether the
applicable time bar is jurisdictional. In reviewing the case, the
U.S. 11th Circuit Court of Appeals considered multiple precedents
and ultimately decided that ERISA, Part 4, does not
" erect a 'jurisdictional' bar, so it is presumptively waivable. " The
appeals court noted, " Congress housed the 'jurisdiction' provisions,
which delineate state and federal courts' subject matter
jurisdiction over ERISA claims in an altogether separate part of
the statute. " Finally, the court cited " good ol' common sense, "
saying that, as a litigant may renounce his most basic freedoms
under the U.S. Constitution, he is able to waive the protection of
ERISA's statute of repose.
Dramatic Multiemployer Insurance Deficit
In its Annual Report 2017, the Pension Benefit Guaranty
Corporation (PBGC) reveals that, by the end of its fiscal year
(FY) 2017, the deficit in its insurance program for multiemployer
plans had risen to $65.1 billion, up from $58.8 billion a
year earlier. According to the agency, the increase was driven
primarily by the ongoing financial decline of several large multiemployer
plans that are expected to run out of money in the next
decade. During FY 2017, the PBGC reports, it gave $141 million
in financial assistance to 72 insolvent multiemployer plans, up
from payments of $113 million to 65 plans in FY 2016. In its most
recent projections, it estimated that, absent changes in the law,
its multiemployer program will likely run out of money by the
end of 2025, if not before. -PS
For in-depth coverage of these topics and more go to
plansponsor.com/compliance.
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