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July 30, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Benefits Account Administrator/Coordinator- Health & Welfare
for The Plexus Groupe in IL

Pension Consultant
for Farmer & Betts in TX

Director of First Impression & Office Operations
for AFS Financial Group / AFS 401(k) Retirement Services in DC, MD

Conversions Specialist
for The Newport Group in NC

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Webcasts and Conferences

"Cross-Tested/Safe Harbor 401(k) Plan Design and Troubleshooting" Workshop - Dallas
in Texas on August 29, 2012 presented by SunGard Relius

"Cross-Tested/Safe Harbor 401(k) Plan Design and Troubleshooting" Workshop - San Francisco
in California on August 30, 2012 presented by SunGard Relius

"Cross-Tested/Safe Harbor 401(k) Plan Design and Troubleshooting" Workshop - Denver
in Colorado on August 29, 2012 presented by SunGard Relius

"Cross-Tested/Safe Harbor 401(k) Plan Design and Troubleshooting" Workshop - St. Louis
in Missouri on August 30, 2012 presented by SunGard Relius

Webinar - SEP Plans
Nationwide on October 11, 2012 presented by Ascensus

Webinar - IRA Frontline Fundamentals - Part 2
Nationwide on October 23, 2012 presented by Ascensus

HSA Basics
Nationwide on October 25, 2012 presented by Ascensus

Webinar - IRA Basics
Nationwide on October 30, 2012 presented by Ascensus

Webinar - Establishing and Amending IRAs
Nationwide on November 1, 2012 presented by Ascensus

Webinar - Roth IRA Distributions
Nationwide on November 8, 2012 presented by Ascensus

Advanced HSAs
Nationwide on November 13, 2012 presented by Ascensus

QRP Beneficiary Rollovers to Inherited IRAs
Nationwide on November 15, 2012 presented by Ascensus

Choosing the "Right" Retirement Plan
Nationwide on November 21, 2012 presented by Ascensus

Webinar - IRA Reporting
Nationwide on November 27, 2012 presented by Ascensus

Webinar - Understanding and Processing Transfers and Rollovers
Nationwide on November 29, 2012 presented by Ascensus

Webinar - IRA Required Minimum Distributions
Nationwide on December 4, 2012 presented by Ascensus

Rollovers Between Retirement Plans and IRAs
Nationwide on December 11, 2012 presented by Ascensus

Webinar - Conversions and Recharacterizations
Nationwide on December 13, 2012 presented by Ascensus

IRA Essentials
in Illinois on November 13, 2012 presented by Ascensus

Advanced IRAs
in Illinois on November 14, 2012 presented by Ascensus

IRA Essentials
in Nebraska on September 24, 2012 presented by Ascensus

Advanced IRAs
in Nebraska on September 25, 2012 presented by Ascensus

IRA Essentials
in Illinois on November 15, 2012 presented by Ascensus

IRA Essentials
in Nebraska on September 26, 2012 presented by Ascensus

Advanced IRAs
in Nebraska on September 27, 2012 presented by Ascensus

IRA Essentials
in Indiana on October 30, 2012 presented by Ascensus

Advanced IRAs
in Indiana on October 31, 2012 presented by Ascensus


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[Guidance Overview]

Applying the 401(a)(17) Maximum Compensation Limit for Elective Deferrals
"Can 401(k) pretax deferrals be deferred on compensation earned above the 2012 compensation limit of $250,000? For example, an employee earning $600,000 per year ($50,000 per month) wants to begin contributions after August 1, but the employer's payroll company says he can't because his compensation is already over $250,000. Or, the employee wants to defer on his year-end bonus and the payroll company likewise says he can't. Further, this same person earning $50,000 per month defers 3% of payroll beginning in January. The payroll company says he can only contribute $7,500 (5 months at $50,000 @ .03). The employee is over 50, so if he is not stopped, he would put in $22,500 for 2012. Is the payroll company misrepresenting how the compensation cap is applied?" (McKay Hochman Co., Inc.)


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Investors to Face Challenge of Figuring Out New 401(k) Fee Disclosures
"Experts say workers shouldn't underestimate the power the new disclosures could give them over their 401(k) retirement plans, even though the plans ultimately are controlled by their employers. For example, the wider distribution of fee information should motivate employers to prove that their plans are a good deal, or to negotiate better ones if they are not, and to generally exercise their fiduciary responsibilities[.]" (Orlando Sentinel)

Are Americans 'Winging' Their Retirement Plans?
"[A recent] survey indicates that 'retirement planning' is a very loose concept among Americans. In many cases, the approach could be better described as wishful thinking.... [S]ome points of concern raised by the study: 1. Savings rates remain very low... 2. Retirement targets are also too low ... 3. Too many people are relying on guesswork... 4. Funding levels are off target ... 5. People seem to be betting on good health... 6. Many start planning too late." (Reuters via FoxBusiness.com)

Are Public Pensions Following IRS Tax-Delay Rules?
"The IRS is taking a new look at whether public pension systems qualify for tax deferrals, raising questions about nonprofit charter schools in CalSTRS and county systems using 'excess' earnings to fund retiree health care.... Last April, CalSTRS said in a letter to the IRS that a proposed new rule, aimed at excluding non-government employees from public pensions, could make more than 10,000 charter school employees now in CalSTRS ineligible for the retirement system." (CalPensions)

Advisers Can Breathe Easier About SRO—For Now
"Hours after legislation was introduced ... that would maintain the [SEC's] purview over the sector, House Financial Services Committee Chairman Spencer Bachus, R-Ala., suspended indefinitely his measure to shift adviser regulation from the SEC to one or more SROs.... [The bill] came in response to a January 2011 SEC report to Congress -- mandated by the Dodd-Frank financial reform law -- that indicated that the commission lacked the resources to oversee advisers adequately. It recommended three options to increase exams: Establish an SRO, allow the SEC to charge user fees, or expand Finra's reach to include advisers who are dually registered as brokers. Each option would require congressional approval." (Investment News; free registration required)

Reported Probe Into Stable-Value Fund Could Upend Advisers
"A reported inquiry by the [DOL] into a JPMorgan Chase & Co. stable-value fund could put financial advisers in the cross hairs.... The [DOL] could be examining whether the fund holds investments that are inappropriate and whether such risks were disclosed, according to Reuters. Reuters noted that the JPMorgan Stable Asset Income Fund once held as much as 13% of its assets in private-mortgage debt that is rated and underwritten by the firm. That weighting has been reduced to 4%." (Investment News; free registration required)

U.S. Loves Cops and Firefighters—But Not Their Pensions
"Traditionally, U.S. voters have backed generous pay and benefits for the cops and firefighters willing to risk their lives to keep citizens safe. That was especially so after the deaths of many emergency workers in the September 11, 2001, attack on the World Trade Center in New York. But as economic conditions have worsened and many local governments have run into severe fiscal problems, that attitude has started to change. Since the 2007 recession, some cities have tried to roll back pension benefits and pay, among the most rigid and, in some cases, highest expenses in municipal budgets." (The New York Times; free registration required)

Judge Hears Arguments on San Diego Pension Measure
"A city employees' labor union on Friday urged a judge to put a voter-approved pension overhaul on hold while it hammers out details of new 401(k)-style retirement plan for new hires. Ann Smith, an attorney for the San Diego Municipal Employees Association, asked for a delay that would last only until the city and its unions could work out details of the new plan, which will apply to all new hires except police officers. She predicted a deal could be approved by the City Council as early as late October." (Silicon Valley MercuryNews)

CFP Board Rolls Out Enforcement Guidelines for Disciplining Certified Financial Planners
"The Certified Financial Planner Board of Standards has unveiled a new framework for its disciplinary arm to follow when taking action against a member, the first such standards the certification group has issued in its history. The Sanction Guidelines are designed to ensure that the CFP Board's Disciplinary and Ethics Commission is consistent in its oversight and enforcement activities, while also articulating the process for the benefit of members." (On Wall Street)

S&P 500 Companies Might Become More Competitive by Decreasing Pension Liabilities
"Efforts by General Motors Co. (GM) and other companies to reduce pension obligations to employees may be essential for them to prosper worldwide, according to Tobias Levkovich, Citigroup Inc.'s chief U.S. equity strategist.... [C]ompanies in the Standard & Poor's 500 Index had a record $354.7 bil.lion deficit in pension funds at the end of last year, according to figures compiled by S&P. The shortfall widened by 45 percent from 2010." (Bloomberg)

Maryland State Retirement Returns 0.36% for 12 Months
"Maryland State Retirement and Pension System, Baltimore, on Friday announced it returned 0.36% for the fiscal year ended June 30. The $37.1 bil.lion retirement system beat its policy benchmark for the 12 months by 28 basis points. The annualized 20-year return for fiscal year 2012 was 6.83% and the 25-year return was 7.85%.... The system's actuarial return target is 7.75%." (Pensions & Investments)

Pension Plans Keep More Retirees Out of Poverty, Reduce Reliance on Public Assistance
"Defined-benefit pensions, which provide retirees with steady income for the remainder of their lives, are becoming a thing of the past as employers use defined-contribution plans and place more retirement savings responsibility on workers. But those income payments are a major factor behind keeping older American households out of poverty and less reliant on public assistance, according to research ... by the National Institute on Retirement Security[.]" (Investment News; free registration required)

Self-Directed Accounts in Peril
"As the Aug. 30 deadline for 401(k) fee disclosures to participants approaches, financial advisers are fielding calls from anxious plan sponsors about self-directed brokerage accounts. Specifically, employers are fretting about a May bulletin from the Labor Department that they say assigns plan sponsors more fiduciary responsibility for investments an employee selects via a brokerage account. In that case, advisers contend, sponsors may stop offering such accounts." (Investment News; free registration required)

Stable Value Funds: Considerations for Plan Sponsors
"Closures of some stable value funds and capacity restrictions in others have introduced uncertainties to stable value as an option for defined contribution plan participants. Higher fees for wrap insur.ance, constrained wrap availability, and more restrictive investment guidelines have furthermore led some plan sponsors to reassess their stable value offering. Stable value's unique investment strategy and benefits over other fixed income alternatives, as well as a fund's portfolio characteristics and performance, are also important factors. Stable value's bondlike returns with lower volatility, along with its expectation of assurance (but not a guaran.tee) of principal protection, continue to make it an attractive option for both plan sponsors and participants." (The Vanguard Group, Inc.)

Sixth Circuit Upholds Qualified Default Investment Alternative Safe Harbor
"The U.S. Court of Appeals for the Sixth Circuit affirmed that a Section 403(b) plan administrator did not breach its fiduciary duty to plan participants when it changed the plan's default investment fund and automatically transferred participants' investments to the new default fund without first receiving actual investment elections from the participants. [T]he Sixth Circuit upheld the [Kentucky District Court's] decision that the Department of Labor's ... Qualified Default Investment Alternative (QDIA) safe harbor protected a plan fiduciary from liability stemming from losses suffered following a transfer of participant accounts to the plan-selected default investment vehicle, provided adequate notice and other procedural requirements were satisfied." (Morgan, Lewis & Bockius LLP)

Don't Sabotage Retirement to Pay for College
"A child can get a loan to pay for his or her college education, but no one will give the parents a loan to pay for retirement if it turns out they haven't saved enough. Given increasing rates of longevity, rising health-care costs, and what many expect will be only so-so returns from the stock and bond markets in the decades ahead, can anyone ever really be sure they'll have enough money on which to retire?" (Morningstar Advisor)

[Opinion]

Puerto Rico's Underfunded Pensions Increase Risk of Investing in Puerto Rico Bonds
"Puerto Rico bonds offer triple tax-exemption and high yields, but investors should limit their exposure to the commonwealth's debt, [according to an investment advisor]. [H]e highlighted the commonwealth's massive debt, underfunded pension liabilities and resistance to recovery as areas of concern.... Adding to its financial stress are Puerto Rico's large amounts of unfunded pension liabilities, which have recently prompted Standard & Poor's to revise the outlook on $2.9 bil.lion of the Employees Retirement System's senior funding bonds to negative. Based on current funding and disbursement rates, Puerto Rico's two major pension systems, the Employees Retirement System and the Teachers System, are expected to be depleted after 2020 and 2022, respectively." (On Wall Street)

[Opinion]

Public Employee Labor Unions Need Pension Wake-Up Call
"Private companies stopped providing defined benefit plans years ago. Even the heavy industries ruled by labor unions for decades have cut back on lavish employee benefits, mostly because of competition from abroad and trends toward outsourcing manufacturing and services into cheaper labor markets. Elected officials, beholden to labor union lobbyists and the working class, refuse to see these changes in pension benefits. What's worse is the obvious disregard for the financial burden put on their governments." (San Diego Daily Transcript)

[Opinion]

The Senate's Plan for Our Retirement: Inadequacy for All
"[T]he reason why the U.S. is among the pension poorest in the world isn't that not enough people are covered by a 401(k) plan, but that those who are receive a measly matching contribution equal to 3 percent of pay. That compares to 9 percent for Australia, 11.8 percent for Denmark, 8 percent for Hungary, 6.5 percent for Mexico, 7.3 percent for Poland and 9 percent for Slovakia. A 2008 report on retirement savings for Australians projected that Australians in their 20's and 30's are projected to have assets of between $500,000 to $700,000 when they retire—compared to a median balance of less than $100,000 for the typical American retiree. To simply require all U.S. employers to set up an inadequate plan is a disservice to the American population." (The Huffington Post)

[Opinion]

Reality 'Checks'—401(k) Savings More Valuable Than Asserted by Labor Economist
"A recent opinion piece by Teresa Ghilarducci in the New York Times took on what she termed a 'ridiculous approach to retirement' ... [T]he EBRI database of some 2.3 mil.lion active 401(k) participants at the end of 2010 who were between the ages of 56 and 65, inclusive—people who have chosen to supplement Social Security through voluntary savings—[shows] only about half that number (37 percent) with less than $30,000 in those accounts.... [of] those in that group who have more than 30 years of tenure, fewer than 13% are in that circumstance—and neither set of numbers includes retirement assets that those individuals may have accumulated in the plans of their previous employers, or that they may have rolled into Individual Retirement Accounts (IRAs), as well as pensions or other savings... [T]he data makes it clear that voluntary employer-based plans are, in fact, leading to a great deal of real savings accumulated to supplement Social Security. Many in the nation work every day to encourage those savings to be increased." (Nevin Adams via EBRI)

[Opinion]

Time to Challenge California's Doctrine That State Employees Have Guaran.tee of Future Benefit Accruals Under Current Plan Formula
"There is no legitimate basis for concluding that 100 years ago the state Legislature enacted a law which said no future state legislature can ever change the terms of a pension plan for employees for time not yet worked. If all other terms and conditions of employment can be changed prospectively, it is difficult to see why pension accruals enjoy special protection." (Marin Independent Journal)

[Opinion]

More Bad News for San Francisco's City Pension Fund
"A preliminary report of how the city's pension fund performed in the fiscal year 2011-12, which ended June 30, shows it earned a meager 1.6 percent -- far below the assumed rate of return of 7.5 percent. For a fund currently worth $15.3 bil.lion, that's a big difference. 'This is even worse than anyone predicted,' said Public Defender Jeff Adachi, who offered a competing, failed pension reform measure that would have raised more money through employee contributions. 'If this was a movie, it would be a disaster movie called "Pension Armageddon".'" (SFGate)

[Opinion]

Retirees' Choice: Lump Sum or Monthly Checks
"The basic choice itself—between a set amount of money that has to last and a guaran.teed payout for however long you live—seemed almost like an experiment designed by a behavioral economist to test our irrationality about money decisions." (The New York Times; free registration required)

[Opinion]

Statement of CalPERS CEO on Retirement Crisis Report and Plan: Don't Dump the DB
"Defined benefit plans are the cornerstone of retirement security. They are cost effective for both employers and employees. For employers, they are a cost effective tool for recruitment and retention. And for employees, they ensure adequate and predictable income in retirement. Research has shown that a defined benefit plan can offer the same benefit as a defined contribution plan for an almost fifty percent lower cost. This is a result of pooled risk, professional asset management, and lower fees. 'Although there are legitimate discussions to be had about the particulars of pension plans, we believe that defined benefit plans should not be discarded.'" (California Public Employees' Retirement System)

[Opinion]

DOL Advisory Opinions Only a Speed Bump for Open MEPs (PDF)
"A pair of DOL advisory opinions recently concluded that [open multiple employer plans (Open MEPs)] involving unrelated plan sponsors constitutes a series of separate plans sponsored by each employer rather than a single plan. While reducing the appeal of Open MEPs, the DOL's position is not likely to stop their growth because the burdens on plan sponsors are increasing and the need for professional plan management that Open MEPs satisfy is real." (The Wagner Law Group via 401k Advisor)

Benefits in General; Executive Compensation

New Jersey Public Employees Retiring at Slower Pace
"After two years in which teachers, cops, firefighters and other public workers headed for the exits in record numbers as Trenton took aim at their pensions and benefits, the pace of retirements has slowed drastically, the latest records show. A total of 13,865 local and state public workers are expected to call it quits this year, significantly fewer than the 19,585 who retired last year, when Gov. Chris Christie and lawmakers forced them to pick up a greater share of their health and pension costs[.]" (The Star-Ledger)

Cypen & Cypen Newsletter, July 26, 2012
Covers employee benefit developments with an emphasis on governmental plans. Topics in this issue include: Five Myths About Public Employee Pensions; How Big Is the Leakage From 401(K) Loan Defaults and What Can Policymakers Do To Preserve Americans' Nest Eggs?; NASRA's Take on COLAs; Moody's Requests Comment on Adjustments To U.S. State and Local Government Reported Pension Data; Retirement Readiness -- Consensus on a Course of Action; Pension Accounting for Dummies; State Budget Crisis Task Force Report; and Jersey Judges Dodge Increased Pension and Healthcare Contributions. (Cypen & Cypen)

Press Releases



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