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June 27, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Part Time On Call Participant Counselor
for Diversified in AR, CA, DC, GA, HI, MI, NC, NJ, OH, UT

Defined Contribution and Defined Benefit Director and Manager
for The Angell Pension Group, Inc. in RI

Compliance Manager
for Retirement Alliance in NH

Retirement Plan Administrator II
for Katz, Sapper & Miller in IN

Group Benefit Sales Regional Director
for MetLife in LA, TX

Claims Manager
for Wabash Memorial Hospital Association in IL

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Webcasts and Conferences

Federal Health Care Reform: A Strategic Update Seminar
in Massachusetts on July 19, 2012 presented by New England Employee Benefits Council

Retirement Plan Insights Seminar
in Massachusetts on August 7, 2012 presented by McKay Hochman Co., Inc.

Live Discussion of Supreme Court Health Care Decision
Nationwide on June 28, 2012 presented by Bloomberg / Kaiser Health News


We also publish the BenefitsLink Health & Welfare Plans Newsletter (free): Subscribe

[Official Guidance]

Text of 'Frequently Asked Questions and Answers' on Offshore Voluntary Disclosure Program (PDF)
The program is available and applies to persons who failed to file Form 8938 for 2011. Excerpt from Q&A 5: "What are some of the civil penalties that might apply if I don't come in under the OVDP and the IRS examines me? How do they work? [Answer:] Depending on a taxpayer's particular facts and circumstances, the following penalties could apply: ... for failing to file form 8938 reporting the taxpayer's interest in certain foreign financial assets, including financial accounts, certain foreign securities and interests in foreign entities, as required by I.R.C. Section 6038D. The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return." (Internal Revenue Service)


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[Guidance Overview]

IRS-Authored Overview of Procedures for Non-Resident U.S. Taxpayers Who Failed to Report Foreign Bank and Financial Accounts (FBARs)
"While more details will be forthcoming, taxpayers utilizing the new procedure will be required to file delinquent tax returns, with appropriate related information returns, for the past three years and to file delinquent FBARs for the past six years. All submissions will be reviewed, but, as discussed below, the intensity of review will vary according to the level of compliance risk presented by the submission. For those taxpayers presenting low compliance risk, the review will be expedited and the IRS will not assert penalties or pursue follow-up actions. Submissions that present higher compliance risk are not eligible for the procedure and will be subject to a more thorough review and possibly a full examination, which in some cases may include more than three years, in a manner similar to opting out of the Offshore Voluntary Disclosure Program." (Internal Revenue Service)

[Guidance Overview]

IRS Announces Efforts to Help U.S. Citizens Overseas Including Dual Citizens and Those with Foreign Retirement Plans
"[T]he IRS will provide a new option to help some U.S. citizens and others residing abroad who haven't been filing tax returns and provide them a chance to catch up with their tax filing obligations if they owe little or no back taxes. The new procedure will go into effect on Sept. 1, 2012.... [T]he new procedures will allow resolution of certain issues related to certain foreign retirement plans (such as Canadian Registered Retirement Savings Plans). In some circumstances, tax treaties allow for income deferral under U.S. tax law, but only if an election is made on a timely basis. The streamlined procedures will be made available to resolve low compliance risk situations even though this election was not made on a timely basis." (Internal Revenue Service)

[Guidance Overview]

Another Question is Answered in the Who's the Employer Q&A Column
"What is the likelihood that the DOL's stance on open MEPs will be overturned by the courts or by Congress?" (BenefitsLink.com)

[Guidance Overview]

Recent DOL Advisory Opinions Undermine Advantages of Open MEPs
"[T]he Advisory Opinions are not technically applied in a prospective basis. What it means is that the obligation to file Form 5500 separately and have audits performed would have been present throughout the time the employer was in the MEP. Based on that, the DOL could take the position that employers who did not file Form 5500's and have audits (if needed) for all the years they participated in the Open MEP are potentially subject to penalties for failing to file Form 5500s." (McDonald Hopkins LLC)

How America Saves, 2012 Report
Annual report on how U.S. workers are saving and investing for retirement, based on an analysis of Vanguard's full-service recordkeeping plans. Along with looking at the overall retirement saving and investing behavior of Vanguard's more than 3 mil.lion participants, How America Saves this year includes supplemental reports on participant patterns in the DC retirement plans of 12 specific industries. (The Vanguard Group, Inc.)

CalPERS Buys Large Stake in Real Estate Investment Advisory Company
"The California Public Employees' Retirement System (CalPERS) ... announced that it has invested approximately $100 mil.lion in Bentall Kennedy, becoming a one-third owner in one of North America's largest real estate investment advisors.... Bentall Kennedy has been a real estate partner with CalPERS for more than 15 years through a number of investments." (California Public Employees' Retirement System)

The Changing Landscape of Private Pension Plans in the United Kingdom
"This report ... brings together the latest data on the state of private pensions in the UK. The report examines the main factors that have played a role in shaping recent trends in private sector pension provision. It also highlights how employers are responding to the challenges of providing workplace pensions and considers the future of pensions in the private sector in the UK." (Pensions Policy Institute)

Changes in Actuarial Assumptions Brings Jump in Contributions Needed for Jacksonville, Florida Police and Fire Pensions
"Jacksonville will have to pony up some $122 mil.lion a year to keep the Police and Fire Pension Fund fiscally sound—more than half again what it's paying now and far more than anticipated. The increase stems from a new actuarial valuation report that requires the fund to change several of the assumptions that help determine how much money it needs." (jacksonville.com)

7 Equations to Build a Secure Retirement
"The Judeo-Christian world has its 10 commandments. Newton has his three laws of motion. And now retirement has its seven equations.... Here's a look at the equations that both students of retirement and would-be students need to know if they want to build a bulletproof retirement plan." (MarketWatch)

Rising Number of 401(k) Retirement Plan Participants Opting for Diversified, Professionally Managed Allocations
"One-third of all Vanguard 401(k) plan participants invested their entire account balance in a professionally managed asset allocation and investment option in 2011, according to Vanguard's How America Saves 2012, an annual report on how U.S. workers are saving and investing for retirement. The report ... noted that the increasing prominence of so-called professionally managed allocations—in a single target-date or balanced fund or through a managed account advisory service—is one of the most important trends in 401(k) and other defined contribution (DC) plans today. In 2011, 33% of all Vanguard participants were invested a professionally managed allocation program: 24% in a single target-date fund (TDF); 6% in a single traditional balanced fund, and 3% in a managed account advisory program. The total number is up from 9% at the end of 2005." (MarketWatch)

Senate Leaders Say Pension-Related Proposals Would Cover Cost of Keeping Student Loan Rates Low
"About $5 bil.lion of the measure's $6 bil.lion cost would come from Democratic pension-related proposals, including a change in how companies compute the money they must set aside to fund their pensions. The change would make their contributions more consistent year to year and in effect lower them—which business desires—and result in fewer corporate tax deductions for those payments. In addition, fees that companies pay to have their pensions insured by the quasi-government Pension Benefit Guaranty Corp. would rise to reflect increases in inflation." (The New York Times; free registration required)

Public Pensions Face Severe Underfunding
"As of 2010 and under current accounting rules, public pension plans had 76 cents for every dollar they must pay retirees in the future, according to an analysis by the Center for Retirement Research at Boston College. Under the new accounting rules, cash on hand would be just 57 cents on the dollar—nearly twice the shortfall. The new rules won't change the underfunded status of all public pensions—only those that are running such a large deficit that they are all but certain to need to borrow money to make good on their obligations. The plans must now account for those future borrowing costs, which translates into strikingly higher deficits." (TIME)

Aon Hewitt 401(k) Index for May 2012
The Index tracks monthly 401(k) investment transfer activity and as monthly stock market activity. Excerpt: "Defined contribution plan participants transferred monies from equities into fixed income investments as the stock markets dropped substantially during May ... Daily transfer volume also remained low compared to historical levels, particularly given the substantial market declines." (Aon Hewitt)

Why Better Reporting Won't Lead to Healthier Public Pensions; Somebody Must Get Pinched
"Taxpayers and pensioners do have an interest in pension underfunding, but in practice the reporting of larger numbers ('You thought you owed $6 bil.lion but really you owe $16 bil.lion') tends to cause their eyes to glaze over. What really moves taxpayers and pensioners to demand reform is when changes in liabilities translate to changes in cash flows: Either governments must start putting lots more money into a pension fund, driving taxes up or spending down; or the pension fund's ability to send actual checks is called into question." (Bloomberg)

Freeing Some Seniors from Required IRA Distributions Might Be Worth the Cost, Tax Policy Official Says
"A provision in President Barack Obama's budget proposal would permit individuals with less than $75,000 in their retirement accounts to avoid required minimum distributions from their individual retirement accounts at age 70.5.... [J. Mark Iwry of the Treasury Department] noted that elderly investors with the smallest accounts aren't using their tax-advantaged IRAs as a way to pass wealth on to others. Rather, they genuinely need the money to live on during retirement." (Investment News; free registration required)

Very Few Investors Read Through a Variable Annuity Prospectus
"Investors continue to eschew leafing through variable annuity prospectuses, with only 17% of 255 retirees and pre-retirees saying they bothered to take a look, according to a recent poll ... The participants had at least $100,000 in investible assets, including their workplace retirement plans but exclusive of real estate." (Investment News; free registration required)

If Obama Re-Elected, Expect 'Aggressive' Regulation of Investment Advisers
"For the past six months, no regulations have been sent by the Labor Department's Employee Benefits Security Administration ... to the White House, according to Bradford Campbell ... who served as assistant labor secretary in charge of the EBSA from 2007 to 2009. ... [That] means that a rule that would significantly expand the definition of 'fiduciary' for anyone providing investment advice on retirement plans is unlikely to surface until after the election. The rule, which was withdrawn in October 2011 amid fierce industry opposition, still must be re-proposed and approved by the Labor Department. Once it is sent to the White House, it will take up to three months for it to be vetted by the Office of Management and Budget." (Investment News; free registration required)

Thrift Savings Plan Expects Budget to Grow As More Federal Employees Retire
"The Federal Retirement Thrift Investment Board anticipates managing an additional 4.4 percent in Thrift Savings Plan assets by fiscal 2017 and growing the size of its budget by 25 percent. The board also expects more federal retirees, more options—such as the new Roth offering—and more participants withdrawing partial amounts from their accounts in the next five years[.]" (Government Executive)

July 1 Deadline Approaching for Disclosure of Service Provider Fees
"Plan sponsors of plans subject to the rules should contact their vendors to request confirmation that the vendor will deliver the mandatory disclosures on time. For vendors who claim they are not subject to the regulation, a plan sponsor should ask the vendor to explain, in writing, why the vendor is not a 'covered service provider.' A plan sponsor wishing to reach out to its vendors could begin by reviewing its most recent Schedule C to Form 5500, which should provide at least a good starting point for a list of service providers that might fall into the regulation's definition of 'covered service provider.'" (Verrill Dana LLP)

Designing DB Plan Statements for Participants: Just Getting By, or Adding Value? (PDF)
"[This article summarizes] the [Pension Protection Act] benefit statement requirements related to defined benefit plans, and explore[s] some considerations to help you determine the best alternative for both plan sponsors and plan participants." (Milliman, Inc.)

Text of Remarks on Annuity Products by the Associate Director of the Division of Investment Management, U.S. Securities and Exchange Commission
"Having watched the market movements of the past decade, investors near or in retirement are naturally wary as they turn their attention from saving to the task of funding a steady income that they will not outlive. That is part and parcel of the variable annuity business and the central appeal of the products you offer, and this should be a great time to be in the business. However, the volatility that has characterized the recent economic environment has strained many firms' ability to offer the products that investors are seeking for this purpose. Despite sales of variable annuities having increased approximately 12% in 2011 over 2010, some of the large established firms in the variable annuity space have either left the business or curtailed offerings. The dynamic climate of changing economics and changing participants in the business makes this a time that calls for care in the design of variable products and attention to investor protection." (Securities and Exchange Commission)

FINRA and SEC Warn About Annuity Risks
"FINRA views variable annuities (VAs) as complex products, Daniel Sibears, executive vice president of member regulation programs at FINRA, [said]. VAs today 'are more complicated with more riders and features,' and like any other complex product that's on FINRA's radar screen, he warned ... that FINRA is looking closely at disclosure, suitability and yield chasing practices associated with VAs." (Investment Advisor)

[Opinion]

Text of Comments by Group of Tax-Qualified State-Sponsored Public Plans to IRS on Definition of 'Governmental Plan' (PDF)
"[The] Code section 414(d) regulations should recognize these prior privatizations (i.e., privatizations commenced prior to a certain date) as not requiring the removal of privatized employees from a governmental plan and not adversely affecting a plan's governmental plan status.... The Notice does not currently provide a de minimis rule permitting the participation of a small number of non-governmental employees in a governmental plan, with the exception of certain employees of a labor union or a plan under Code section 413(b)(8)." (Groom Law Group)

Benefits in General; Executive Compensation

[Guidance Overview]

SEC Finalizes Rules on Listing Standards for Compensation Committees and Consultants
"Similar to the proposed rules, the final rules do not define independence. Instead, they give the national securities exchanges flexibility to establish minimum independence criteria for compensation committee members, subject to the approval of the SEC. Notably, unlike the independence criteria applicable to members of a listed company's audit committee (see Section 10A of the Exchange Act), the rule does not require the national securities exchanges to adopt listing standards prohibiting a director who receives compensatory fees from the issuer or who is an affiliate from being independent." (Wilson Sonsini Goodrich & Rosati)

[Guidance Overview]

SEC Issues New Rules on Independence for Compensation Committees
"[T]he SEC approved a new final rule requiring securities exchanges to adopt standards for ensuring the independence of board members serving on compensation committees of publicly-traded companies (or in the absence of such a committee, the board members that oversee executive compensation matters on behalf of the board) and their engagement of compensation advisers and legal counsel. SEC Chairman Mary L. Schapiro states that the new rule will 'enhance the board's decision-making process on executive compensation matters, particularly the selection, engagement and oversight of compensation advisers, and will provide more transparency with respect to conflicts of interest of consultants engaged by boards.'" (McDonald Hopkins LLC)

New York State Agencies Issue Proposed Regs Limiting Administration Expenses and Executive Compensation of Firms Getting State Funds
"[T]hirteen New York State agencies released very similar proposed regulations on May 16, 2012, placing a limit on the funds that can be used for administrative expenses and executive compensation by entities, both for-profit and not-for-profit, that receive state funds or state-authorized payments to provide services. These regulations are generally available for public comment from May 30, 2012 to July 14, 2012, and are scheduled to become effective on January 1, 2013." (Proskauer Rose LLP)

SEC Adopts Rules for Listing Standards Related to Compensation Committees and Consultants
"Because the exchanges' existing independence standards provide that a director is per se non-independent if, for example, (1) the director received more than $120,000 from the issuer in compensation for any 12-month period during the last three years or (2) the director was an employee of the issuer at any time during the last three years, it is unclear whether the exchanges will make minimal modifications to their existing independence standards or will instead use the SEC's implementation of Section 952 of the Dodd-Frank Act as a basis for imposing more rigid and exacting independence requirements for members of a compensation committee." (McKenna Long & Aldridge LLP)

Conducting a Vendor Search: Benefits and Best Practices for Use by Plan Sponsors
"Conducting a vendor search can be a detail-laden, time intensive process that takes up to six months to complete. If the vendor search results in the selection of a new vendor, the conversion can disrupt the norm and create anxiety.... The benefits of conducting a vendor search substantially outweigh the potential short-term inconveniences. Applying some battle-tested best practices along the way will not only help mitigate those inconveniences, but also ultimately result in the selection of the most suitable vendor to the plan." (Multnomah Group)

Retired Stockton, California Employees Might Get Kicked in the Teeth
"Stockton's bankrup.tcy will probably resemble the 2008 case of another California city, Vallejo, which exited court protection last year, bankrup.tcy attorney Dale Ginter said. Both cities have been hurt by high labor costs, particularly health insur.ance for retirees, he said. 'Retirees are not going to be happy,' said Ginter, who represented retired Vallejo workers in that city's bankrup.tcy. 'My prediction is that retiree health care is cut. I wouldn't be surprised to see it cut to zero.'" (Investment News; free registration required)

Stay-At-Work Boomers Expected to Drive Competition in U.S. Labor Market
"An aging population, longer and healthier lifespans and changes to retirement-benefit plans will mean rising competition for jobs and limited wage gains even after the economy strengthens. About 74 percent of Americans say they plan to work past age 65, according to a May study ... Thirty-nine percent said they need to earn to make ends meet or maintain their lifestyle, and 35 percent wanted to stay employed." (Bloomberg)

Stockton, California Decides to File for Bankrup.tcy
"On Tuesday night, in preparation for the bankrup.tcy filing, the City Council voted 6-1 to enact a plan to slash retiree health coverage starting this year and possibly eliminate it next year. Stockton also will use bankrup.tcy protection to suspend contracts with its public employee unions to cut city employee pay and benefits." (Sacramento Bee)

Survey Shows Widening Work-Life Services, Greater Employee Yearning for More Palatable Programs
"Email, instant messaging, laptops, digital teleconferencing and flexible schedules have dramatically changed the way people live and work, as well as how their personal and professional lives intersect. But a recent national poll of 570 working Americans concludes that, despite breathtaking advances in technology and greater workplace flexibility, work-life balance is still very much a work in progress." (Employee Benefit News)

EBSA's Apprenticeship and Training Plans Web Page
Includes a well-organized set of links to official guidance, news releases, and other EBSA publications. Excerpt: "For apprenticeship and training programs that cover private sector workers and are financed out of trust funds, the Employee Benefits Security Administration has a role in overseeing the plans under [ERISA]. ERISA includes within its definition of 'employee welfare benefit plan' any plan fund or program that was established or maintained to provide 'apprenticeship or other training programs.' Most private sector collectively bargained apprenticeship and training programs are covered by ERISA because the Labor-Management Relations Act requires that the expenses of any joint labor/management apprenticeship committee be defrayed out of monies placed in a separate fund." (Employee Benefits Security Administration)

Press Releases



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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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