The Ledger—Defined Contribution PlansFirst Quarter 2015

Summary of Legislative, Judicial, and Regulatory Retirement News

Issued by Lockton® Retirement Services

DEFINED CONTRIBUTION COMPLIANCE CALENDAR

Pages 10-11

INSIDE THIS ISSUE

BEACON ALERTSPage 8

RETIREMENT SERVICES GUIDANCE

Page 9

LEGISLATIVE UPDATE, REGULATORY UPDATE, AND

COURTS UPDATEPages 1-7

JESSICA SKINNER, J.D.Vice President, Compliance AttorneyLockton Retirement Services816.960.9295 | jskinner@lockton.com

SAM HENSON, J.D.Vice President, Director of Compliance ServicesLockton Retirement Services816.751.2245 | shenson@lockton.com

AUTHORS

L O C K T O N R E T I R E M E N T S E R V I C E S

FIDUCIARY TRAINING MODULEPages 12-16

LEGISLATIVE UPDATE

Congress Announces New Retirement Security Caucuses

On March 2, 2015, the House and Senate announced the creation of new bipartisan retirement security caucuses in each house of Congress. A caucus is a group of congressional members that join together to pursue common legislative objectives. The House caucus is being co-chaired by Representatives Mike Kelly (R-PA) and Richard Neal (D-MA) and the Senate caucus is being co-chaired by Senators Rob Portman (R-OH) and Ben Cardin (D-MD). The primary mission of each will be to educate policy makers and the public about how national retirement policies can encourage Americans to save more money and plan more responsibly for their retirement.

Our view is that the caucuses could help further many desirable proposals floating around Congress. Portman and Cardin have a long history of leadership in retirement legislation. As House members in 2001, they were the authors of legislation to expand and improve retirement plans (ultimately included in the Economic Growth and Tax Relief Reconciliation Act [EGTRRA] as well as numerous other retirement-related measures). The legislation in EGTRRA raised plan savings limits, allowed “catch-up contributions,” added the “Saver’s Credit,” facilitated plan-to-plan portability, and made many other positive changes to retirement

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plans. Likewise, Neal has a history of leadership on retirement policy, supporting automatic individual retirement accounts (IRAs), expanding access by easing participation rules, enhancing automatic enrollment and automatic escalation, and has proposed many other changes that would improve and simplify plan administration. Kelly is in his third term in Congress and has shown interest and leadership in retirement plan policy matters.

REGULATORY UPDATE

Fiduciary Definition Update—Lines in the Sand

In January, President Obama announced that the Department of Labor’s (DOL’s) long-awaited fiduciary rulemaking project was on its way to the Office of Management and Budget (OMB) for review before being released for public comment. At stake in the fight, according to the White House’s Council of Economic Advisers, is a retirement investment market in which more than 40 million American families have assets of more than $7 trillion in IRAs, the majority of which comes from rollovers from employer-sponsored retirement plans.

In response, the White House has been met with intense challenges. In February, Ann Wagner (R-MO) introduced the Retail Investor Protection Act that would require the DOL to wait for the Securities and Exchange Commission (SEC) to propose its fiduciary proposal under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which gives the SEC broad authority to impose a uniform fiduciary duty for broker-dealers and investment advisers when providing personalized investment advice to retail customers. Wagner proposed similar legislation in June 2013, also called the Retail Investor Protection Act, which picked up support from 30 Democrats in 2013 but died after it was received in the Senate.

In March, two House Republican Representatives, John Kline (R-MN) and Phil Roe (R-TN), demanded proof of coordination between the SEC and DOL, citing the same conflict in Wagner’s bill. Kline and Roe argue the DOL should not release its proposal until Congress is certain about the coordination. They issued a letter addressed to DOL Secretary Thomas E. Perez demanding that all communications between the DOL and the SEC regarding any coordination that occurred after September 19, 2011, be made public. Kline and Roe gave Perez a March 18 deadline to provide the information. In the letter, Kline and Roe said policy makers have warned that the DOL’s approach could conflict with the SEC rule and could result in higher costs and uncertainty.

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Fast forward to April, and the DOL finally issued the proposed regulations, entitled the “Conflict of Interest Rule.” The proposed rule broadly updates the definition of fiduciary investment advice by extending fiduciary status in a wider array of advice relationships than existing rules, and covers the following categories of advice: investment recommendations, investment management recommendations, appraisals of investments, and recommendations of persons to provide advice for a fee, or to manage plan assets. Anyone who provides advice within these areas would fall within the definition of fiduciary if they:

� Represent they are acting as a fiduciary; or

� Provide advice pursuant to an agreement, arrangement, or understanding that the advice is individualized or specifically directed to the recipient for consideration in making investment or investment management decisions regarding plan assets.

The new proposal includes a number of significant carve-outs from the fiduciary rule including one sponsors will benefit from. Internal employees of a plan sponsor not receiving additional compensation for the advice they are providing, beyond their normal compensation as employees of the plan sponsor, will not be deemed as providing fiduciary advice.

While the White House and DOL are marching forward, the battle is far from over. There will be a 75-day comment period that ends on approximately July 26. Then 30 days after the comment period, a public hearing must be held. After the hearing, the DOL will need time to absorb the public comments and prepare the final rule, which would then need to be sent to OMB for review. The rule would become effective 60 days after publication in the Federal Register, once it is back from OMB. As a result, DOL enforcement could start by the end of 2016. While there is a great deal of news on this proposal, and plan sponsors should certainly be educated, be very clear, the most significant impact is on participants and rollover advisers.

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GAO Report Recommends Additional Protections for 401(k) Automatic Rollovers

A new report released by the Government Accountability Office (GAO) examined the effects of job changes on the savings of 401(k) plan participants who leave savings in a former employer’s 401(k) plan. Under current law, when a participant has saved less than $5,000 in a 401(k) plan and changes jobs without indicating what should be done with the money, following a notice to the participant, the plan can transfer the account savings into an IRA which the GAO called a “forced-transfer.” The GAO report, studied:

� What happens over time to the savings of participants in forced-transfer IRAs: Using current fee and return data from 10 providers, the GAO projected forced-transfer IRA outcomes over time and found that because fees outpaced returns in most of the IRAs analyzed, these account balances tended to decrease over time. The GAO also described the provision in the law that allows a plan to disregard previous rollovers when determining if a balance is small enough to force out; for example, a plan can initiate a transfer for a participant with a balance of $20,000, if less than $5,000 is attributable to contributions other than rollover contributions.

� The challenges 401(k) plan participants face keeping track of retirement savings in general: The GAO indicated that many 401(k) plan participants have difficulty keeping track of their savings, especially when they change jobs. The report noted that although the Social Security Administration (SSA) provides information to individuals on benefits they may have from former employers, the information is not provided in a consolidated or timely manner.

� How other countries address similar challenges of inactive accounts: The GAO reviewed the process with which inactive accounts were handled with six other countries: Australia, Belgium, Denmark, the Netherlands, Switzerland, and the United Kingdom. The report found that these countries use forced-transfers that help preserve account value and provide a variety of tracking tools, referred to as “pension registries.”

The GAO report made several recommendations to the DOL and SSA, including:

� Congress should consider amending the current law to permit alternative default destinations when transferring participant accounts out of plans.

� Congress should repeal a provision allowing plans to disregard rollovers when identifying balances eligible for transfer to an IRA, thus reducing the number of eligible transfers.

� The SSA should make information on potential vested plan benefits more accessible to individuals before retirement, such as by consolidating information on potential vested benefits with the Social Security earnings and benefits statement.

� The DOL should expand the investment alternatives currently available under the DOL’s safe harbor regulation (generally money market funds, certificates of deposit and other low investment risk vehicles).

� The DOL should convene a taskforce to explore the possibility of establishing a national pension registry.

First Quarter 2015 • The Ledger—Defined Contribution

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JUDICIAL UPDATE

Supreme Court asks the Government to Comment on RJ Reynolds Stock Plan Dispute

Just months after issuing its ruling on employer stock plans in Fifth Third Bank v. Dudenhoeffer, the US Supreme Court indicated that it may revisit the topic. The Court signaled its continued interest in employer stock plans on March 9, when it invited the US Solicitor General to file a brief in a case involving the proper standard for holding plan fiduciaries liable for selling off employer stock in RJR Pension Investment v. Tatum. In this case, the Fourth Circuit U.S. Court of Appeals found that an employer stock plan fiduciary could be liable for selling off stock unless a prudent fiduciary “would have” made the same decision. Previously, R.J. Reynolds had escaped liability at the district court level, with that court approving the company’s actions after concluding that a prudent fiduciary “could have” made the same decision. This 2-1 split ruling holding R.J. Reynolds Tobacco Co. to a heightened standard of care caused waves in the employer stock community, leading R.J. Reynolds and multiple industry groups to urge the court for rehearing in front of a full panel of judges. The Fourth Circuit declined these requests last fall, and R.J. Reynolds petitioned the Supreme Court for intervention.

An invitation to the US Solicitor General typically signals the justices’ interest in a particular topic and is thought to increase the likelihood that the court will ultimately hear the case. In this situation, the stakes are very high for employers with company stock and the difficulty in having to prove that any other prudent fiduciary would have made their same decisions.

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Slayer Rule Denies 401(k) Benefits to Murderer

In Skadden v. Little, a federal court in New York ruled that the son of a slain former employee of a law firm is the sole beneficiary of the employee’s 401(k) account. In a March 6 opinion, the US District Court for the Eastern District of New York granted summary judgment on an action brought by the law firm to settle the beneficiary status of its former employee’s 401(k) account, which had named both the employee’s son and her grandson as beneficiaries. The court applied New York’s “Slayer Rule” in finding that the employee’s grandson was not entitled to the 25 percent of the account for which he had been the named beneficiary. The grandson pled guilty to first-degree manslaughter in connection with the employee’s death and is currently incarcerated.

In the rare, but unfortunate circumstance an employer must determine who the appropriate recipient of benefits is when a participant has been murdered by the intended beneficiary, very special care should be taken. Most states have enacted slayer statutes, which generally provide that an individual who kills someone cannot benefit from his or her crime and, therefore, forfeits all benefit rights he or she possessed as the primary beneficiary. Some courts have held that these state slayer laws may be preempted under ERISA’s broad preemption doctrine, but under federal common law principles, the same outcome as in the states is likely to be reached. Regardless, an employer facing this situation should seek ERISA counsel to determine the proper course of action.

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Court Rules: Float Income Not Plan Asset

Fidelity has successfully fended off multiple lawsuits accusing it of violating ERISA by keeping or improperly using “float income” generated by its plans. The ruling came in the consolidation of four class actions challenging whether float income earned on monies pending a transaction was a “plan asset.” The plaintiffs alleged that if float was a plan asset, then Fidelity breached its fiduciary duties and committed a prohibited transaction by keeping this float income for its own benefit.

In a nutshell, Fidelity received a withdrawal request from a mutual fund, it then moved the funds to a redemption bank account or to an interest-bearing disbursement bank account, depending on whether the participant elected disbursement by electronic transfer or by check. Fidelity then allocated the float income to mutual funds or to offset bank expenses, rather than disbursing it to the plan. While the plaintiffs admitted that the assets of the mutual fund were not plan assets, they argued that the plans’ ownership of shares in the mutual funds made the plans the “beneficial” owners of the money transferred to handle the withdrawal requests from the mutual funds.

The court disagreed, explaining that nothing in the plan documents changed mutual fund assets into plan assets simply because they were transferred to an account from which they would be distributed to participants, and acknowledged that this could have been provided for in the plan documents but was not, and distinguished this from a case in which disbursements had been made contrary to the plan documents.

The court also noted that Fidelity’s fiduciary obligations were discharged once it made disbursements in accordance with the plan documents. The most interesting aspect of this decision was that the court questioned DOL guidance that suggested a trustee’s use of float income is a prohibited transaction unless the trustee discloses and negotiates retention of the float income with the plan fiduciary. The court noted that this DOL guidance failed to address the more important question of whether the funds in the disbursement accounts were in fact plan assets. This guidance also predated three recent circuit court decisions that held these types of funds are not plan assets.

The lesson learned from the litigation is to have a conversation with a recordkeeper up front, prior to executing a service agreement that discusses the proposed treatment of any potential float income, and then to incorporate the plan sponsor’s desired treatment into the terms of the plan and the service agreement. Doing so would then avoid the plan asset problem entirely.

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BEACON ALERTS, YEAR-TO-DATE

IRS Provides Welcome Changes for Fixing Common Plan Errors—April 9, 2015The IRS has long understood that the complexity of plan administration for employers can lead to mistakes. Rather than requiring employers to formally

apply to the IRS for approval of the correction of these errors, the IRS created the Employee Plans Correction Resolution System (EPCRS).

First Quarter 2015 • The Ledger—Defined Contribution

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RETIREMENT SERVICES GUIDANCE, YEAR-TO-DATE

Illinois Becomes First State to Enact Retirement Plan Mandate—January 12, 2015On January 4, Illinois enacted the nation’s first state mandate for private

sector employers to provide a retirement plan for employees. Senate Bill

2578 creates the Illinois Secure Choice Savings Program (the Program),

requiring Illinois employers who do not currently offer a plan to auto

enroll employees into an Individual Retirement Account (IRA).

Plan Sponsors Get an Extension for Annual Participant Fee Disclosures—March 18, 2015On March 18, 2015, the United States Department of Labor (DOL)

announced it will allow retirement plan administrators a two-month

extension period to provide the required annual participant-level fee

disclosures.

President’s Budget Targets Retirement Plans—April 3, 2015Over the last few years, the discussion about employee benefits in

Washington has been almost exclusively centered on health reform, but

for the most part, that battle has already been won and lost. The focus

has now shifted toward retirement, focusing on employee readiness,

access to plans, plan design, and most unfortunately, a perception of

missed tax revenue.

IRS Says Plan Sponsor Must Document Hardship Distributions—April 17, 2015Hardship distributions have become very common in retirement plans

that wish to provide an avenue for participants to access their savings

during the toughest of economic times. However, plan sponsors offering

this option are on notice by the IRS, the duty to document is on you.

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DEFINED CONTRIBUTION PLANS COMPLIANCE CALENDAR

DEF INED CONTR IBUT ION COMPL IANCE CALENDAR

9

MAY 2015

When Due Description Sent to/Filed With Action

May 15 Distribute 2015 plan year first quarter benefit statements.

Participants and beneficiaries who may direct investments. No filing requirement.

Statement informing participants of their accrued benefit at normal retirement age and, if not vested, when vesting will occur. Must describe any permitted disparity or floor-offset provision. For individual account plans, must also note value of each investment.

May 2015S M T W T F S

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3 4 5 6 7 8 9

10 11 12 13 14 15 16

17 18 19 20 21 22 23

24 25 26 27 28 29 30

31

June 2015S M T W T F S

1 2 3 4 5 6

7 8 9 10 11 12 13

14 15 16 17 18 19 20

21 22 23 24 25 26 27

28 29 30

DEF INED CONTR IBUT ION COMPL IANCE CALENDAR

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JUNE 2015

When Due Description Sent to/Filed With Action

June 29 Make ADP/ACP corrective distributions (for 2014 plan year) from plan with EACA.

Affected participants. No filing requirement.

Unless QMACs or QNECs are used to satisfy the ADP/ACP testing requirements, plan that meet all of the EACA requirements (including the annual notice requirement and the requirement that all eligible employee are covered by the EACA for the plan year) have a six-month period to correct failed ADP/ACP tests before the corrective distributions are subject to an employer paid 10% excise tax.

June 2015S M T W T F S

1 2 3 4 5 6

7 8 9 10 11 12 13

14 15 16 17 18 19 20

21 22 23 24 25 26 27

28 29 30

July 2015S M T W T F S

1 2 3 4

5 6 7 8 9 10 11

12 13 14 15 16 17 18

19 20 21 22 23 24 25

26 27 28 29 30 31

DEF INED CONTR IBUT ION COMPL IANCE CALENDAR

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JULY 2015

When Due Description Sent to/Filed With Action

July 29 Distribute SMM. Affected Participants. No filing requirement.

Distribute SMM, if required; distribution of an updated SPD satisfies this requirement.

July 31 Distribute annual benefit statements for 2014 plan year (non-participant-directed plans).

Participants and beneficiaries with accounts. No filing requirement.

Statement informing participants of their accrued benefit at normal retirement age and, if not vested, when vesting will occur. Must describe any permitted disparity or floor-offset provision. For individual account plans, must also note value of each investment.

July 31 Form 5500. Sent to participants and beneficiaries on written request. Filed with DOL. Electronic filing is required.

Annual report filed by employee benefit plans subject to ERISA and IRS for purposes of providing plan information to DOL and IRS. Filing requirements vary with type and size of plan. A short form is available for plans with fewer than 100 participants as of the first day of the plan year, that are exempt from financial audit requirements, are fully invested in certain secure investments and hold no employer stock. Only certain schedules are required to be filed with Form 5500-SF.

July 31 Form 8955-SSA. IRS. Annual registration statement identifying separated participants with deferred vested benefits.

July 31 Form 5558 (5500 extension). IRS. To request extension of time in which to file Form 5500 or Form 8955-SSA or both (maximum 2½ months).

July 31 File Form 5330: Return of Excise Taxes Related to Employee Benefit Plans.

IRS. Used to report and pay excise taxes on prohibited transactions and excess 401(k) plan contributions that occurred in prior year.

July 2015S M T W T F S

1 2 3 4

5 6 7 8 9 10 11

12 13 14 15 16 17 18

19 20 21 22 23 24 25

26 27 28 29 30 31

August 2015S M T W T F S

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2 3 4 5 6 7 8

9 10 11 12 13 14 15

16 17 18 19 20 21 22

23 24 25 26 27 28 29

30 31

First Quarter 2015 • The Ledger—Defined Contribution

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Fiduciary Training ModuleQ1 2015

L O C K T O N R E T I R E M E N T S E R V I C E S

PERMISSIBLE PLAN EXPENSES AND THOSE THAT FALL ON THE WRONG

SIDE OF THE FENCEIt is a simple concept; plan expenses are either payable from the plan’s assets, or they are not. In practice, it can be much more difficult.

The Employee Retirement Income Security Act (ERISA) requires the plan fiduciary to evaluate all fees paid by the plan to ensure those expenses are related to a necessary fiduciary function. The kicker is, many expenses incurred by a plan are not related to a fiduciary function but are instead settlor in nature and are not permissible plan expenses. Expenses that fall outside of  the fiduciary bucket must be paid for directly by the employer and may not come out, derive or originate from plan assets. The failure to pay an expense from the proper source can result in significant penalties and costs for a plan sponsor.

Settlor Functions vs. Fiduciary Functions

In plan sponsorship, one of  the most difficult questions to address is, what is the difference between settlor and fiduciary functions. Settlor functions are those that relate to the employer’s business, such as the establishment, design or termination of  a plan. All settlor decisions are made relative to the employer’s role as the settlor of  the plan trust and are discretionary, meaning that they are not mandated by regulation or law, and generally benefit the employer as opposed to participants and beneficiaries. As such, these expenses are the sole responsibility of the employer and cannot be paid for out of plan assets. In contrast, expenses that are fiduciary in nature are those expenses that are incurred in the day-to-day operation of  the plan. Fiduciary expenses are necessary for the administration and maintenance of  the plan and primarily benefit the employees. Expenses derived in this manner are allowable plan expenses.

The “Test (s)”

Unfortunately, the Department of  Labor has issued only partial guidance in this area, and has arguably made the waters muddier. The decision of  what side of  the fence an expense falls is a fiduciary decision and will open the decision maker to ERISA’s fiduciary liability provisions.

The first question to ask yourself  as the plan sponsor is, do the plan’s terms allow the payment of  the expense, and if  so, is it reasonable. By answering yes to these questions, the next step is to determine if  the expense is related to a fiduciary or a settlor function. In making this determination, there are two primary questions to ask:

� Is the expense discretionary on the part of the employer?

� Will the expense primarily benefit the employer?

If  the answer to both questions is YES: This is a settlor expenses and not payable using plan assets.

If, however, the answer to both questions is NO: the expense is fiduciary in nature and may be paid using plan assets.

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In the typical situation where there are dual benefits, and the answer to one question is YES, and the other is NO: The general rule is that the plan pays a portion of  the expense which correlates to the relative benefits obtained by the participants. A fiduciary, independent of  the employer, should make the determination of  which expenses should be paid by the plan.

Grand Scheme of Things

In defined contribution plans, expenses paid out of  plan assets directly affect the participants’ account because the expense is a charge against their account balances. Knowing what expenses are permitted plan expenses and making sure all plan expenses fall on the fiduciary side of  the fence is an important issue for plan fiduciaries to evaluate and apprise themselves of  when hiring service providers.

PERMISSIBLE PLAN PAID EXPENSES GUIDE:

PERMISSIBLE PLAN PAID EXPENSES

L O C K T O N R E T I R E M E N T S E R V I C E S

Category Expense Payable by the Plan Expense not Payable by the Plan Comments

Plan Wide Administrative Services

Savings plan recordkeeping and

communication feesX

Custodial services fees X

Independent fiduciary X

Accounting and audit

fees related to Form 5500

preparation

X

Submission to IRS to request a

determination letterX

Plan amendment required to

comply with ERISA or tax lawX

Soliciting, evaluating proposals

from new and existing vendorsX

If vendor is performing a

nonsettlor function

Settlor Decisions

Plan design for new plan or

amendment not required to

comply with ERISA or tax law

X

Draft plan documents after

design established and after

formal action taken to adopt

amendment

X

If amendment is not to comply

with ERISA or tax law

Legal and consulting fees

associated with termination of

plan

X

First Quarter 2015 • The Ledger—Defined Contribution

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In the typical situation where there are dual benefits, and the answer to one question is YES, and the other is NO: The general rule is that the plan pays a portion of  the expense which correlates to the relative benefits obtained by the participants. A fiduciary, independent of  the employer, should make the determination of  which expenses should be paid by the plan.

Grand Scheme of Things

In defined contribution plans, expenses paid out of  plan assets directly affect the participants’ account because the expense is a charge against their account balances. Knowing what expenses are permitted plan expenses and making sure all plan expenses fall on the fiduciary side of  the fence is an important issue for plan fiduciaries to evaluate and apprise themselves of  when hiring service providers.

PERMISSIBLE PLAN PAID EXPENSES GUIDE:

PERMISSIBLE PLAN PAID EXPENSES

L O C K T O N R E T I R E M E N T S E R V I C E S

Category Expense Payable by the Plan Expense not Payable by the Plan Comments

Plan Wide Administrative Services

Savings plan recordkeeping and

communication feesX

Custodial services fees X

Independent fiduciary X

Accounting and audit

fees related to Form 5500

preparation

X

Submission to IRS to request a

determination letterX

Plan amendment required to

comply with ERISA or tax lawX

Soliciting, evaluating proposals

from new and existing vendorsX

If vendor is performing a

nonsettlor function

Settlor Decisions

Plan design for new plan or

amendment not required to

comply with ERISA or tax law

X

Draft plan documents after

design established and after

formal action taken to adopt

amendment

X

If amendment is not to comply

with ERISA or tax law

Legal and consulting fees

associated with termination of

plan

X

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Lockton Retirement Services

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Category Expense Payable by the Plan Expense not Payable by the Plan Comments

Settlor Decisions

Fiduciary liability insurance

X

However, if premium is paid

by plan, insurer must have

recourse against fiduciary for

breach (ERISA Section 410);

however recommended that

the company pay

Bonding X

Investment Services

External portfolio manager fees X

Sales charges (loads and

commissions)X

Investment management

agreement termination feesX

Product termination fees X

Sanctions and Penalties Imposed on the Plan

Regulatory sanctions/penalties

on the plan

X

However, not sanctions

or penalties imposed on a

plan administrator or other

individuals/entities related to

the plan

Correction Errors

Qualification error (e.g., EPCRS

compliance fee)X

Fiduciary error correction (e.g.,

fees associated with VFC)X

Actuarial Services

Form 5500’s reconcile APBO Depends on purpose; e.g.,

if to prepare 5500, may

be reimbursed by plan; if

for settlor function, such

as financial accounting

for company, may not be

reimbursed by plan

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Lockton Retirement Services

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Category Expense Payable by the Plan Expense not Payable by the Plan Comments

Actuarial valuations Depends on purpose; e.g.,

if to prepare 5500, may

be reimbursed by plan; if

for settlor function, such

as financial accounting

for company, may not be

reimbursed by plan

Required contribution

calculationsX

Strategic contribution

calculationsX

OPEB estimated disbursements Depends on purpose; e.g.,

if to prepare 5500, may

be reimbursed by plan; if

for settlor function, such

as financial accounting

for company, may not be

reimbursed by plan

OPEB discussions and revised

benefit limits in the 401(h)

Depends on purpose; e.g.,

if to prepare 5500, may

be reimbursed by plan; if

for settlor function, such

as financial accounting

for company, may not be

reimbursed by plan

Asset/liability studies Depends on purpose; e.g.,

if to prepare 5500, may

be reimbursed by plan; if

for settlor function, such

as financial accounting

for company, may not be

reimbursed by plan

Performance reporting and

investment manager searchesX

Plan study of options available

to comply with lawsX

Nondiscrimination testing for

tax qualificationX

Nondiscrimination testing of

proposed plan changeX

First Quarter 2015 • The Ledger—Defined Contribution

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Lockton Retirement Services

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The communication is offered solely for discussion purposes. Lockton does not provide legal or tax advice. The services referenced are not a comprehensive list of all necessary components for consideration. You are encouraged to seek qualified legal and tax counsel to assist in considering all the unique facts and circumstances. Additionally, this communication is not intended to constitute U.S. federal tax advice, and is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending any transaction or matter addressed herein to another party.

This document contains the proprietary work product of Lockton Financial Advisors, LLC, and Lockton Investment Advisors, LLC, and is provided on a confidential basis. Any reproduction, disclosure, or distribution to any third party without first securing written permission is expressly prohibited.

Securities offered through Lockton Financial Advisors, LLC, a registered broker-dealer and member of FINRA, SIPC. Investment advisory services offered through Lockton Investment Advisors, LLC, an SEC registered investment advisor. For California, Lockton Financial Advisors, LLC, d.b.a. Lockton Insurance Services, LLC, license number 0G13569.

Category Expense Payable by the Plan Expense not Payable by the Plan Comments

Determination of minimum

funding requirementsX

Determination of FAS87 or

FAS106 expense for accounting

purposes

X

Determination of maximum

deductible employer

contribution

Depends on purpose; more

detail needed

Participant communications

(e.g., employee statements,

SPD, benefit calculations)

X

Asset/liability forecasting

relating to pension funding or

investment policy

X

(investment policy)

X

(pension funding)

Asset/liability forecasting

relating to plan design or

financial accounting issues

X

Modeling the financial impact

of proposed changes in a

benefit plan

X

Notes

Our Mission

To be the worldwide value and service leader in insurance brokerage, employee benefits, and risk management

Our Goal

To be the best place to do business and to work

© 2015 Lockton, Inc. All rights reserved.

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The communication is offered solely for discussion purposes. Lockton does not provide legal or tax advice. The services referenced are not a comprehensive list of all necessary components for consideration. You are encouraged to seek qualified legal and tax counsel to assist in considering all the unique facts and circumstances. Additionally, this communication is not intended to constitute U.S. federal tax advice,

and is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending any transaction or matter addressed herein to another party.

This document contains the proprietary work product of Lockton Financial Advisors, LLC, and Lockton Investment Advisors, LLC, and is provided on a confidential basis. Any reproduction, disclosure, or distribution to any third party without first securing written permission is expressly prohibited.

Securities offered through Lockton Financial Advisors, LLC, a registered broker-dealer and member of FINRA, SIPC. Investment advisory services offered through Lockton Investment Advisors, LLC, an SEC-registered investment advisor. For California, Lockton Financial Advisors, LLC, d.b.a. Lockton Insurance Services, LLC, license number 0G13569.

For Plan Sponsor Use Only