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Benefits in the News

Older News | November 23, 2014

arrow icon CMS Issues the HHS Notice of Benefit and Payment Parameters for 2016 Proposed Rule
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
11/21/2014 [Guidance Overview]

"[CMS] today issued a notice of proposed rulemaking to improve consumers' experience in the Health Insurance Marketplace and to ensure their coverage options are affordable and accessible. To establish the new consumer standards for 2016, the proposed rule seeks to implement several [ACA] provisions on payment parameters for issuers and Marketplaces. Today's proposed rule would build on previously issued standards and provisions, which are making high-quality health insurance available to millions of Americans. The proposed rules for 2016 would further strengthen transparency, accountability, and the availability of information for consumers about their health plans."
arrow icon Text of IRS Final Regs: Minimum Essential Coverage and Other Rules Regarding the Shared Responsibility Payment for Individuals
Internal Revenue Service [IRS]
11/21/2014 [Official Guidance]

26 pages. "This document contains final regulations relating to the requirement to maintain minimum essential coverage enacted by the [ACA] ... These final regulations provide individual taxpayers with guidance under section 5000A of the Internal Revenue Code on the requirement to maintain minimum essential coverage and rules governing certain types of exemptions from that requirement."
arrow icon Text of HHS Proposed Regs: Notice of Benefit and Payment Parameters for 2016
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
11/21/2014 [Official Guidance]

324 pages. "This proposed rule would set forth payment parameters and provisions related to the risk adjustment, reinsurance, and risk corridors programs; cost sharing parameters and cost-sharing reductions; and user fees for Federally-Facilitated Exchanges. It would also provide additional standards for the annual open enrollment period for the individual market for benefit years beginning on or after January 1, 2016, essential health benefits, qualified health plans, network adequacy, quality improvement strategies, the Small Business Health Options Program [SHOP], guaranteed availability, guaranteed renewability, minimum essential coverage, the rate review program, the medical loss ratio program, and other related topics." [HHS Fact Sheet also available.]
arrow icon Text of IRS Notice 2014-76: Individual Shared Responsibility Payment Hardship Exemptions That May Be Claimed on a Federal Income Tax Return Without Obtaining a Hardship Exemption Certification from the Marketplace (PDF)
Internal Revenue Service [IRS]
11/21/2014 [Official Guidance]

7 pages. "In several pieces of published guidance, HHS has identified hardships affecting an individual's ability to obtain minimum essential coverage, which, pursuant to guidance issued by the Treasury Department and the IRS, permits a qualifying individual to claim a hardship exemption on a Federal income tax return without obtaining a hardship exemption certification from the Marketplace. This notice recognizes the following hardships identified by HHS and allows a qualifying individual (or the taxpayer who may claim a qualifying individual as a dependent) to claim a hardship exemption on a Federal income tax return without obtaining a hardship exemption certification from the Marketplace. Individuals seeking a hardship exemption that is not on this list can apply for an exemption through the Marketplace."
arrow icon Text of IRS Rev. Proc. 2014-62: Calculation of Individual Premium Tax Credit, and Indexed Required Contribution Percentage for Determining Eligibility for Affordable Employer-Sponsored Minimum Essential Coverage (PDF)
Internal Revenue Service [IRS]
11/21/2014 [Official Guidance]

"This revenue procedure provides indexing adjustments for certain provisions under sections 36B and 5000A of the Internal Revenue Code. In particular, it updates ... the Applicable Percentage Table for 2016. This table is used to calculate an individual's premium tax credit. This revenue procedure also updates the required contribution percentage in Section 36B(c)(2)(C)(i)(II) for plan years beginning after calendar year 2015. This percentage is used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under Section 36B.... Additionally, this revenue procedure cross-references the required contribution percentage under Section 5000A(e)(1)(A) for plan years beginning after calendar year 2015, as determined under guidance issued by the [HHS]. This percentage is used to determine whether an individual is eligible for an exemption from the individual shared responsibility payment because of a lack of affordable minimum essential coverage."
arrow icon Testimony at Connecticut Hearing on Proposed State-Sponsored Retirement Plan for Private-Sector Employees, November 19, 2014
State of Connecticut Retirement Security Board

Page includes links to testimony and presentation slides by Prof. Jacob Hacker, Yale University; Prof. Ian Ayres, Yale Law School; Teresa Ghilarducci, Director of the Schwartz Center on Economic Policy Analysis at the New School; Aaron Friedman, National Practice Leader, Principal Financial, on behalf of the Securities Industry and Financial Markets Association (SIFMA); and a combined presentation on "EZ IRA" by Mark Agustin, Chief Operating Officer, Aspire Financial; Steven Dimitriou, Managing Partner, Mayflower Advisors; and Andy S. Aziz, Managing Director, True Payroll Integration.
arrow icon ACA Fees, and Forms, and Delays, Oh My!
Ogletree Deakins

"In the latest round of delays under the [ACA], ... the deadline for health plans to provide enrollment information to the transitional reinsurance program has been extended to December 5, 2014.... [E]mployer health plan sponsors should take note of [these additional upcoming] ACA-related deadlines: ... And [here are] a few reminders of ongoing obligations and other recent changes that employers should keep on their radar screens[.]"
arrow icon Text of Comments by Investment Company Institute to EBSA on Standards for Brokerage Windows in Participant-Directed Individual Account Plans (PDF)
Investment Company Institute [ICI]
11/21/2014 [Opinion]

"We believe the Department's existing guidance pertaining to brokerage windows provides a clear road-map for plan fiduciaries ... We are not aware of any gaps or areas where further guidance from the Department is desired. Nor are we aware of any problems associated with the inclusion of brokerage windows in plans that would necessitate additional guidance or rulemaking by the Department. Before proposing any changes to the existing framework surrounding brokerage windows, it is imperative that the Department first identify a problem in need of a solution."
arrow icon 2015 Is Lurking: Are Your Health and Welfare and Cafeteria Plans Up-to-Date?
Porter Wright Morris & Arthur LLP

"While very few changes are mandatory, there have been several legal developments over the past year that present the opportunity to make design changes to these plans. So curl up by the fire with a hot cup of cocoa and those plan documents and review this list of potential year-end health and welfare and cafeteria plan amendments."
arrow icon Text of Comments by U.S. Chamber of Commerce to PBGC on Proposed Reporting of Distribution Methods, Payment of Premiums (PDF)
U.S. Chamber of Commerce
11/21/2014 [Opinion]

"[T]he PBGC intends to revise the 2015 premium filing procedures and instructions to require reporting of certain undertakings to cash out or annuitize benefits for a specified group of former employees. We strongly discourage collection of this information as we see no benefit to it and also because no reason has been offered for it. In addition, it is not clear exactly what type of information will be sought."
arrow icon Recent Developments Suggest Plan Changes That Benefit Both Employers and Employees
Epstein Becker Green

"[R]ecent changes in tax law and court decisions in the ERISA area encourage employers to revisit their retirement plans and consider pocketbook and non-pocketbook improvements for the employer and employee alike. [1] Tax aspects of qualified retirement plans can save money for both employers and employees; [2] The benefits of a contractual claims limitation period; [3] The benefits of a contractual venue selection clause; [4] The standard of judicial review in the context of top hat plan benefit disputes; and [5] Fiduciary exception to the attorney-client privilege in plan administration."
arrow icon Text of OPM Proposed Regs: Establishment of the Multi-State Plan Program for the Affordable Insurance Exchanges
Office of Personnel Management
11/21/2014 [Official Guidance]

83 pages. "This proposed rule clarifies the approach used to enforce the applicable requirements of the Affordable Care Act with respect to health insurance issuers that contract with OPM to offer [Multi-State Plan (MSP)] options. This proposed rule amends MSP standards related to coverage area, benefits, and certain contracting provisions under section 1334 of the Affordable Care Act. This document also makes non-substantive technical changes."
arrow icon People Who Wanted Market-Driven Health Care Now Have It in the Affordable Care Act
The Brookings Institution
11/21/2014 [Opinion]

"The United States never adopted a simple national health plan to cover everyone. Instead, we have relied primarily on employer-based health insurance, generously favored by tax laws.... Millions of people were left out of employer-based coverage and were not old enough or poor enough to qualify for the public programs. For 50 years, we have been arguing over how to fill that hole. Meanwhile, health care became more effective but also more expensive, and the number of people without coverage grew.... The compromise was to combine markets with regulation, sometimes called 'managed competition,' now called 'the Affordable Care Act.' "
arrow icon Text of IRS Rev. Rul. 2014-32: Qualified Transportation Fringe Benefits Using Smartcards, Restricted Debit Cards, Cash Reimbursement Arrangements (PDF)
Internal Revenue Service [IRS]
11/21/2014 [Official Guidance]

Revenue Ruling 2014-32 updates previous guidance on the use of smartcards, debit or credit cards, or other electronic media to provide qualified transportation fringe benefits to employees. This revenue ruling also provides guidance on the use by employees of debit cards for paying mandatory shipping fees on transit passes. Finally, the revenue ruling provides that after December 31, 2015, employers may no longer provide qualified transit fringe benefits under a bona fide cash reimbursement arrangement in cases in which a terminal-restricted debit card is the only readily available transit pass in the employer's geographic area.
arrow icon The Way We Pay for Health Care Is Broken, and Here's Why
The Washington Post; subscription may be required
11/21/2014 [Opinion]

"Across the nation, large employers, health systems, health plans and other purchasers have endeavored to transform health care through innovation. The goal is to increase access, enhance care quality and improve the health of populations while controlling costs and bettering value. However promising, these new care models are unsustainable in the predominantly fee-for-service environment where payment is dictated by volume and not linked to quality or efficiency. This payment model doesn't realize the potential that investments in prevention can have in improving health and reducing costs over the long-term."
arrow icon Health Enrollment Counting Error Shows Where Is Still Broken
The New York Times; subscription may be required

"Though the consumer-facing part of appears to be working much better than last year, the administration acknowledges that what it calls the 'back end' of the health insurance enrollment system is still unfinished.... The House Oversight and Government Reform Committee asked for the enrollment records behind the [September enrollment] number. Caitlin Carroll, a spokeswoman for the committee, said it came in the form of 289 Excel spreadsheets, each with the enrollments for an individual health plan in a given state."
arrow icon Private Exchanges for Employer-Sponsored Health Plans: Panacea or Problem?
Solutions Law Press

"[E]mployers ... will want to critically review the vendor contracts and operating systems of the vendors that will participate in the program ... [for] prudence for inclusion, prohibited transactions, and other legal compliance, as well as to ensure that the contract by its terms holds the vendor responsible for delivering on service and other expectations created in the sales pitch.... [S]pecial attention should be given to fiduciary allocations, indemnification and standards of performance, business associate or other privacy and data security assurances required to comply with HIPAA and other confidentiality and data security requirements[.]"
arrow icon Annuities Make Their Way Into Defined Contribution Plans
Thompson SmartHR Manager
11/21/2014 [Guidance Overview]

"Concerns [had been] raised regarding potential discrimination if a TDF is made available only to a select group of participants within a certain number of years before retirement ... [IRS Notice 2014-66] concludes that a series of TDFs offered in a DC plan in which participation in some TDFs is restricted to participants of certain ages can be treated as a single [benefit, right or feature within the meaning of the regulations under Code section 401(a)(4)], provided that a number of conditions are met[.]"
arrow icon EEOC Needs to Coordinate Wellness Guidance With ERISA Agencies, Attorneys Say
Bloomberg BNA

"The [EEOC's] lawsuit alleging that Honeywell International Inc.'s wellness program violated anti-discrimination laws is a 'gross overstep' that should provide a 'wake-up call' to President Barack Obama's administration to take a better coordinated approach to developing wellness program guidance for benefits plan sponsors, said benefits attorneys with Groom Law Group Chartered.... While the three agencies responsible for enforcing the [ACA] -- the [DOL] and departments of Treasury and [HHS] -- have 'gone above and beyond' in providing guidance to the plan sponsor community to encourage the use of wellness programs, the EEOC hasn't developed any sponsor guidance, instead relying on its enforcement guidelines, said Thomas F. Fitzgerald, principal."
arrow icon Do Tax Incentives Increase 401(k) Retirement Saving? Evidence from the Adoption of Catch-Up Contributions
Center for Retirement Research at Boston College

"Compared with similar workers under age 50, the study finds that contributions increased by $540 more among age-50-plus individuals who had approached the 401(k) tax-deferral limits prior to turning 50, suggesting that the older individuals respond to the expanded tax incentives. For this group, the elasticity of retirement savings to the tax incentive is quite high: a one-dollar increase in the tax-deferred limit leads to an immediate 49-cent increase in 401(k) contributions."
arrow icon Notes from Intersector Meeting With PBGC, October 15, 2014 (PDF)
American Academy of Actuaries, Society of Actuaries, Conference of Consulting Actuaries, and ASPPA College of Pension Actuaries
11/21/2014 [Guidance Overview]

7 pages. Topics discussed include: [1] Update from PBGC; [2] Post termination audit; [3] Premium increase; [4] Multiemployer system; [5] Single and multiemployer benefit guarantee; [6] Actuarial assumptions review; [7] Proposed RP-2014/MP-2014 mortality table; [8] Risk-transfer data; [9] HATFA guidance. Also includes PBGC handout: Draft Risk-Transfer Questions for 2015 Premium Filings.
arrow icon Notes from Intersector Meeting with IRS/Treasury, October 15, 2014 (PDF)
American Academy of Actuaries, Society of Actuaries, Conference of Consulting Actuaries, and ASPPA College of Pension Actuaries
11/21/2014 [Guidance Overview]

12 pages. Topics discussed: [1] Update from IRS/Treasury; [2] HATFA and IRS Notice 2014-53; [3] Automatic approval for change in actuary; [4] Longevity annuities in defined benefit plans; [5] Update on closed plan nondiscrimination; [6] Multiple Employer Plan Funding; [7] Possible partial sunset of IRC 432 multiemployer zone rules; [8] Notice of funding waiver request; and [9] Hybrid plan final and proposed regulations.
arrow icon Section 408(b)(2) Disclosures: Dropping a Dime on Delinquent Covered Service Providers
ERISA Fiduciary Administrators LLC
11/21/2014 [Guidance Overview]

"[T]he threat of reporting [a delinquent Covered Service Provider (CSP) to EBSA] provides leverage to obtain accurate disclosures ... [A Responsible Plan Fiduciary (RPF)] that continues to utilize the services of a delinquent CSP after the 90-day grace period, loses the relief available under the special class exemption, and the ongoing relationships would almost certainly constitute a prohibited transaction.... [It's] clear the EBSA has launched an initiative to examine plan providers and this reporting requirement supports that initiative."
arrow icon Reforming Roth Provisions May Be Key to Improving Retirement Saving Rates for Millennials
Employee Fiduciary

"[The author proposes] the following two changes to the Roth provision, effective for all 401k plans: [1] Roth accounts should be required for all sponsors offering a 401k plan.... [2] Roth contributions should be tax deductible up to a $10,000 per year limit, and a lifetime limit of $100,000.... Younger workers would benefit the most, as they would have the longest investment horizon. With these changes, the new objective in retirement saving would be maxing out the $100K as soon as possible in an employee's working life."
arrow icon Mainstream Wellness Program Challenged in EEOC v. Honeywell
Epstein Becker Green

"Despite the ACA's laudable policy goals of promoting affordable health care and transforming America's workers into a healthier and more productive workforce, the EEOC decided to file the Orion and Flambeau suits, and far more surprisingly, the Honeywell suit -- after dragging its feet for 14 years on providing meaningful guidance.... [T]he lack of long-sought EEOC guidance on how to promote participation through reasonable incentives and costs, coupled with concerns stemming from undue litigation risks, may challenge the use of certain financial incentives that could make the use of wellness programs more effective."
arrow icon Is Self-Insuring the Answer for Employer Health Plans? It Depends on the Question.
Fox Rothschild LLP

"It may be that simple plan design changes can be made that make your current funding status more affordable.... Even if the employer contracts out for administration services, the obligations of compliance still fall to the employer.... Self-funded plans are subject to testing requirements that are not in place for insured plans. Plus there are the added reporting requirements of being self-funded. The annual cost of these types of administrative issues has to be taken into account before making a final determination."
arrow icon BLS Reports on Trends in Employment-Based Health Insurance Coverage
Gabriel Roeder Smith & Company

"Health insurance constitutes the largest share of non-cash compensation for private-sector workers and rose from 32% of non-cash compensation in 1991 to 39% in 2012.... Between 1991 and 2012, the cost of health insurance paid by employers tripled while wages only rose 83%. From 1991 to 2002, employee access to employer-provided health insurance declined, primarily due to relatively low rates of access among part-time workers."
arrow icon EEOC Casts Uncertainty on Popular Wellness Programs
Blank Rome LLP

"The EEOC has not issued any guidance as to what constitutes a 'voluntary' wellness program for purposes of the ADA, but has suggested informally that even a program that rewards participation rather than penalizing non-participation may not be voluntary.... [T]he ADA's limits on wellness programs, unlike those under HIPAA and the ACA, apply to all wellness programs, not just those offered as part of a group health plan."
arrow icon The Changing Face of Retirement for Women: Balancing Family, Career and Financial Security (PDF)

48 pages. "Only one-fifth (20%) of women overall feel they are on course to achieve the income in retirement they anticipate they will need. Furthermore, twice this amount (40%) simply don't know whether they are on course or not.... Half (49%) of women in work are not confident they will be able to retire with a lifestyle that they consider comfortable.... Women are most confident about retirement in emerging economies, notably in China, India and Brazil."
arrow icon For Women, the Path to a Financially Secure Retirement Is Filled with Many Obstacles

"Asked what words they associate most with retirement, survey respondents used positive words most often, such as 'leisure' (45%) and 'freedom' (39%). However, one-quarter (24%) of women associated retirement with 'insecurity' and almost one-fifth (18%) with 'poverty.' Only 20% of women overall feel they are on course with saving for a secure retirement, but twice this number (40%) simply do not know whether they are on course or not."
arrow icon How One Executive Ended Up With $196 Million in an IRA

"Wealthy individuals can get around the annual IRA contribution limit of $5,500 for 2014 ... Company founders can fill retirement accounts with stock that isn't publicly traded. They use low values to stay technically under the contribution limit. After the stock rises in value, they can convert it into something more liquid. The GAO report said IRAs were designed as a retirement savings vehicle, not as a way to shield wealth."
arrow icon The Right Fit: Global Bonds and Defined Contribution Plans
Alliance Bernstein

"At a time when US defined contribution plans are seeking to control risk and enhance returns, hedged global bonds can improve outcomes for participants and sponsors.... Many smaller plan sponsors now have the ability to add a global bond offering as a complement to their US bond offering, and to guide participants toward increased allocations to it. Even better, larger plan sponsors have the flexibility to incorporate global bonds directly into their core bond option."
arrow icon Text of Comments by NAPA to EBSA on Standards for Brokerage Windows in Participant-Directed Individual Account Plans (PDF)
American Society of Pension Professionals & Actuaries [ASPPA]
11/20/2014 [Opinion]

"To encourage small employers to sponsor defined contribution plans, employers with 99 or fewer employees eligible to participate in the plan should be allowed to open [self-directed brokerage (SDB)]-only plans so long as each participant positively elects his or investment choices on the SDB account application form.... Fiduciaries of retirement plans with 100 or more eligible employees must designate a core menu of investment options before an SDB window can be offered to participants and beneficiaries ... The financial reporting rules for Form 5500 should continue to permit aggregate reporting of plan assets held in SDB accounts under the 'other' category of Schedule H."
arrow icon Pension Actions in Atlanta and Jacksonville Stand, Stall on Courts' Whim
National Tax-Deferred Savings Association [NTSA]

"Atlanta, Ga. and Jacksonville, Fla. are both in the southeast, both face fiscal pressures over their public pension systems like many other cities, and both have been taken to court over their attempts to ameliorate that stress. But the similarities end there -- the courts took different tacks on their efforts to rein in public pension issues."
arrow icon How to Keep Information Overload from Ruining Your Plans for Retirement
Deseret News

"There is no shortage of retirement advice and products today. In fact, according to the Deloitte Center for Financial Services, companies spent $1.14 billion advertising retirement products in 2011. Beyond all that advertising, you only have to type in the words 'retirement advice' into your favorite search engine to find page after page of information on retirement services and strategies. But according to some finance professionals, all that incoming information isn't necessarily a good thing."
arrow icon Judge to Hear Arguments Over Illinois Pension Reform Law

"Lawyers for the state will try to convince a judge in state capital Springfield that the law is crucial to save the state's sinking finances. Attorneys for public labor unions and others will argue the law is invalid because it trounces on state constitutional protections for public worker retirement benefits. Illinois has the worst-funded state retirement system and its huge unfunded pension liability has helped pound its credit ratings to the lowest level among states."
arrow icon PBGC Reports Five-Fold Increase in Multiemployer Program Deficit
McGuireWoods LLP

"Employers who participate in multiemployer plans, as well as their controlled-group affiliates, investors and lenders, need to understand the current and potential future status of these plans. In particular, they should determine: What is the current and projected future funding level of the plan? Are other employers withdrawing from the plan? How is the plan protecting against future insolvency? Who are the employer's controlled-group affiliates and is there a risk that investors will face controlled-group claims? What is the employer's estimated withdrawal liability? Are there appropriate transactions available to the employer to mitigate its risk consistent with ERISA, including withdrawal from the plan and a transfer of liability from the multiemployer plan to the employer's single-employer plan?"
arrow icon Final Rules on Health Insurer Pay Deduction Limit Impose Calculation and Recordkeeping Challenges
Towers Watson

"In contrast to the $1 million pay deduction cap under Section 162(m) of the tax code that applies to all public companies, the health insurer deduction cap imposed under Section 162(m)(6) has a broader reach that applies to all employees (not just the CEO and next three highest-paid executives) and does not include exceptions for performance-based compensation or commissions. However, exceptions are provided for contributions to, or distributions from, certain types of retirement plans and benefits that are excludible from gross income (e.g., health benefits)."
arrow icon 2015 Obamacare Deductible and Out-of-Pocket Averages

"The average bronze plan deductible for 2015 is $5,181, up from $5,081 in 2014. The average 2015 bronze plan deductible for an individual is 326% higher than the average deductible amount documented for employer-sponsored health plans (deductibles in employer-sponsored health insurance were $1,217 on average for individual coverage according to the Kaiser Family Foundation's 2014 Employer Health Benefits Survey)."
arrow icon A Guide to Calculating Employer Matching Contribution Limits

"When [annual contribution] limitations are announced, the focus has typically been on any increase in contributions participants can make to their retirement accounts. However, an equally important part of the equation accounts for any increase in matching contributions that the employer will make on behalf of the participant. With the annual compensation limit increasing to $265,000 from $260,000, the limit on the maximum amount of matching contributions participants can receive from their employer will also increase." [A table demonstrates the effect of the increase at various levels of matching contributions.]
arrow icon Obamacare: A Blessing for Some Small Businesses, and a Nightmare for Others
The Washington Post; subscription may be required

"Now entering the second year under some of the law's key provisions, the reviews from small employers have been anything but uniform. Some say they can now afford plans for the first time, thanks to new government-run insurance exchanges ... Other small businesses haven't fared nearly as well. New coverage standards have resulted in some companies' plans being cancelled, while others say their premiums have skyrocketed as insurers conform to the new rules.... And there are more changes to come."
arrow icon Individual Account Retirement Plans: An Analysis of the 2013 Survey of Consumer Finances
Employee Benefit Research Institute [EBRI]

"The percentage of all families with an employment-based retirement plan from a current employer decreased from 38.8 percent in 1992 to 36.2 percent in 2013 ... [T]he percentage of family heads who were eligible for [DC] plans and chose to participate held essentially stable at 78.2 percent in 2010 to 78.7 percent in 2013. The percentage of families owning [IRAs] or Keoghs was also unchanged from 2010 (28.0 percent) to 2013 (28.1 percent).... [T]he median (mid-point) account balance of those families owning an individual account retirement plan increased in 2013: The value was $22,992 in 1992, reached $38,608 in 2001, and increased to $59,000 in 2013."
arrow icon Reforming Executive Compensation to Accelerate Change
HealthLeaders Media

"Adjusting executive compensation structures provides an opportunity for organizations to positively impact retention and decrease turnover. An overwhelming majority of executives surveyed ... identified the need for changes to executive compensation to attract, retain, and engage leaders. In fact, 33% of executives said the compensation structure in their organization needed major enhancements, while 49% said only minor enhancements were needed."
arrow icon San Bernardino Will Not Cut Pensions, Restarts Skipped CalPERS Payments

"A court filing Monday officially revealed, after a mediator lifted a gag order, that under a deal announced in June San Bernardino has begun repaying skipped CalPERS payments ($13.5 million plus fees and interest) and will not cut pensions in bankruptcy. Stockton did not want to cut pensions, saying they are needed to be competitive in the job market. But a federal judge ruled in the Stockton case that CalPERS pensions can be cut in bankruptcy, where federal law prevails over state attempts to protect pensions."
arrow icon Preparing Employees for Retirement is Growing Concern for Plan Sponsors

"Nearly 70 percent of the plan sponsors surveyed are thinking about making design changes to their plans -- almost twice as many in 2012.... Investment expertise remains important, with 67 percent of sponsors making investment menu changes in the past two years, up from 35 percent in 2012.... Fewer than 20 percent of plan sponsors surveyed said that their advisor was consistently communicating the activities they perform for the plan."
arrow icon Indexed Universal Life Products Fill Growing Gap in Retirement Plans

"Unlike 401(k) products that some call a 'time bomb' with regard to tax rates when the time comes to draw down on the assets, [indexed universal life products (IULs)] offer the ability to take loans and withdrawals against the policy. Come time to retire, IULs produce steady cash flow. As nearly everybody knows by now, millions of Americans are going to be desperate for those cash flows in a few years."
arrow icon So You Think You're Financially Prepared to Retire? Here Are Spreadsheet Tools to Test That Assumption
Ken Steiner, FSA Retired

"Generally [this author's focus] is to help individuals who are already retired establish an annual spending budget.... This post is aimed at individuals who are close to retirement but are unsure of whether they have sufficient financial assets to meet their needs throughout retirement.... [T]he first step ... is to determine your spending needs in retirement.... The second step ... is to determine your total expected income for a year from all sources ... This is where the spreadsheet tools available on this website come into play."
arrow icon Amid Crackdown, Some Companies Rethink How to Sell Stock to ESOPs
The Wall Street Journal; subscription may be required

"Some business owners are rethinking how -- and on what terms -- they will sell their firms to employee stock ownership plans in the wake of a [DOL] crackdown on inflated valuations that could jeopardize worker savings.... In June the [DOL] reached a landmark $5.3 million settlement with GreatBanc Trust Co., a ... trustee for more than 200 such plans, including many for small businesses.... [T]he settlement led to tougher scrutiny of potential conflicts of interest on the part of valuation firms and trustees."
arrow icon ACA Tasks: Preparing for the Shared Responsibility Excise Tax (PDF)
Morgan Lewis
11/20/2014 [Guidance Overview]

37 presentation slides. Topics: [1] Excise Tax: How it works, Which employees it applies to, Practical observations; and [2] Reporting: General rules; Individual mandate, Employer mandate, Practical observations.
arrow icon Using Defined Contribution Plans to Improve Retirement Readiness
Towers Watson

Infographic. "[M]any employers are still concerned their employees will not be ready to retire as planned. Employers can optimize their programs' effectiveness by measuring, monitoring and implementing changes based on how well the plan features help employees reach savings goals.... Automatic enrollment in DC plans is commonplace, but companies are missing opportunities to increase its value by adding automatic deferral increases.... Improving communication and adding new approaches will be top priorities in the next two to three years."
arrow icon GAO Report on Individual Retirement Accounts: IRS Could Bolster Enforcement on Multimillion Dollar Accounts, But More Direction from Congress Is Needed
U.S. Government Accountability Office [GAO]

"This report [1] describes IRA balances in terms of reported FMV aggregated by taxpayers; [2] examines how IRA balances can become large; and [3] assesses how IRS ensures that taxpayers comply with IRA tax laws.... Congress should consider revisiting its legislative vision for the use of IRAs. GAO makes five recommendations to IRS, including approving plans to fully compile and digitize new data on nonpublicly traded IRA assets and seeking to extend the statute of limitations for IRA noncompliance. IRS generally agreed with GAO's recommendations."
arrow icon Are Retirees Falling Short? Reconciling the Conflicting Evidence
Center for Retirement Research at Boston College

"Studies showing that households are saving optimally hinge crucially on assumptions that people are willing to accept declining consumption as they age ... While other studies have found consumption does not decline early in retirement, new analysis suggests that many will be unable to maintain this pace over their full retirement.... To bolster retirement preparedness, policymakers may want to consider ways to encourage more private saving, such as requiring 401(k)s to adopt auto-enrollment and auto-escalation policies and to apply these policies to current workers as well as new hires."

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