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November 20, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Relationship Manager
for Retirement Alliance, Inc. in NH

Daily Valuation Administrator
for First Savings Retirement Services in PA

Participant Service Center Representative
for New York Life Retirement Plan Services in MA, NJ

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Webcasts and Conferences

Required Minimum Distributions
Nationwide on November 30, 2012 presented by McKay Hochman Co., Inc.

Distribution Retirement Planning
Nationwide on November 29, 2012 presented by McKay Hochman Co., Inc.


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Year-End 401(k) Plan Notices Due to Employees (PDF)
Chart summarizes various year-end employee notices required by law, including their deadlines. (Wyrick Robbins Yates & Ponton LLP)


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Getting a Second Wind, DOL Likely to Breathe Harder on Investment Advisers
"Advisers might want to spend the remaining weeks of the year checking their agreements with retirement plans. They will want to ensure that they have spelled out their fees and services and that, if they are performing fiduciary services such as fund selection, their pay is properly structured in order to avoid a prohibited transaction." (Investment News; free registration required)

Bankrupt San Bernardino Seeks Renegotiation of CalPERS Debt
"Wall Street has already signaled that it intends to fight CalPERS' historical primacy as a creditor in the San Bernardino case. The pendency plan, which must be adopted by a deeply split city council before it can take effect, ... proposes deferring payments to CalPERS, negotiating payments over time and discussing the 'reamortization' of its CalPERS liability -- that is, renegotiating or adjusting its dues to the pension fund." (Reuters)

Pension Fund Gains Mean Worker Pain
"Private-equity firms borrow money to buy companies and then seek to maximize profit, often by reducing labor costs.... Much less attention has been given to a key backer of the private-equity industry: public-employee pension funds, which pour billions of dollars into corporate takeovers. With the stock market stalled and interest-rates at record lows, private equity deals have promised relatively high returns, which public officials need to pay benefits for workers retiring in coming decades." (Bloomberg BusinessWeek)

Learning from the DC Participant Experience
"Half (51%) of study respondents have access to an adviser through their defined contribution (DC) plan, 19% do not and 30% do not know if they have access to an adviser. Among those with access, the most preferred method by every age group to work with the adviser is in person, but this is especially true for the oldest and youngest participants. Forty percent of the Silent Generation (born 1925 to 1942) want in-person meetings with advisers compared with 48% of Gen Y." (PLANSPONSOR.com)


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Form 5500 Reporting Update - December 4

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Automatic Enrollment, Employee Compensation, and Retirement Security
"[This study's] data [shows] significant negative correlation between employer match rates and automatic enrollment provision. [The authors] find no evidence that total costs differ between firms with and without automatic enrollment, and no evidence that defined contribution costs crowd out other forms of compensation, suggesting that firms might be lowering their potential and/or default match rates enough to completely offset the higher costs of automatic enrollment without needing to reduce other compensation costs." (Center for Retirement Research at Boston College)

The Choice 401(k) Investors Must Make Before They Choose
"In the end, each investor, especially retirement investors, need to know the nature of their investment goals. Most importantly, they need to recognize the true time horizon of those goals.... [E]ither the Total Return Method or the Assigned Asset Method can be used. Each has its advantages. Each has its drawbacks. Professional providers are aware of these. Individual investors may not be." (Fiduciary News)

Majority of Women Financially Unprepared for Retirement
"Approximately 58 percent of single women over the age of 45 who have any kind of savings or retirement account have less than $50,000 saved, while only 22 percent have more than $100,000 saved. At the same time, these women are aware of their need to step up their savings efforts, as only 5 percent of 45-54-year-old women and 16 percent of 55-64-year-old women believe they are saving enough for their twilight years." (Financial Planning)

Are Annual 403(b) Universal Availability Notices Required?
"[A] compliance check that the IRS sent to education institutions to determine compliance with the 403(b) regulations ... asks, 'How often do you communicate the opportunity to begin elective 403(b) salary deferrals?' and 'How often do you communicate the opportunity to change an existing 403(b) deferral election?' Open-ended questions like these suggest that these communications are required at a particular frequency. The regulations do not specify a required frequency." (Porter Wright Morris & Arthur LLP)

Variable Annuity Sales Fall Most in 12 Quarters
"Sales of variable annuities fell the most in 12 quarters as insurers ... scaled back offerings of the equity-linked retirement products under pressure from low interest rates and stock market volatility. Variable annuity sales declined 8 percent in the third quarter from a year earlier to $36.6 billion, according to data from industry group Limra." (Bloomberg)

Why Rising 401(k) Balances May Not Be Enough
"Fidelity Investments reported [recently] that the average balance of the 401(k) accounts it manages has hit a 12-year high. But while the increase in balance amounts is one positive development, there are still reasons to doubt that Americans are saving enough for retirement. Several recent studies have suggested that savings rates need to rise sharply before most Americans can expect to comfortably exit the workforce at 65." (NASDAQ)

Forecast 2013: Retirement Industry Changes to Come
"What does the future hold for the retirement industry in the New Year? ... [Y]ou can expect at least some of our lawmakers' focus to return to ... tax reform and a re-proposal of the definition of fiduciary. Add to that an increased enforcement climate from both the IRS and the DOL, and things could be tougher for retirement advisors and plan sponsors in 2013, especially as more fallout finally appears from fee disclosure regulations. On the upside, there are, at long last, plenty of pressures (and even legislation) to try to help employees actually save for their own retirement." (BenefitsPro)

MassMutual Finds Younger Participants the Majority
"Generation X and Generation Y account for 55% of the participants in defined contribution (DC) plans administered by MassMutual. Only 41% of participants were Baby Boomers, according to third-quarter data; however, Boomers still control the most assets (61%). Gen X and Gen Y hold 31% of DC plan assets on MassMutual's platform." (PLANSPONSOR.com)

Hold Out or Opt Out? Deciding Between Retirement and Disability Applications in Recessions
"[E]stimates indicate that retirement beneficiaries are more likely to apply for SSDI as unemployment increases -- and, conversely, eligible individuals who have not yet claimed benefits are less likely to apply when unemployment rises. But after accounting for unobserved characteristics associated with both the decision to apply for disability insurance and Social Security benefits, individuals are no more likely to apply for disability benefits when unemployment is high." (Center for Retirement Research at Boston College)

A 401(k) That Promises Never to Run Dry: Guaranteed Annuities
"Like many large employers, United Technologies, based in Hartford, Conn., closed its traditional pension plan to new workers a couple of years ago. The retirement plan that replaced it tries to solve one of the 401(k)'s biggest shortcomings and a thorny problem for retirees: protecting hard-earned savings from a volatile stock market while ensuring the money will never run out." (CNBC)

Company President Was Liable as Fiduciary for Diverted 401(k) Contributions; Breach Not Dischargeable in Personal Bankruptcy
"The [DOL] sued the president of several related companies to establish his personal liability for more than $67,000 in employee contributions never remitted to the employer sponsored benefit plans and to prevent him from discharging this liability in his pending personal bankruptcy action.... The court further concluded that the president had committed 'defalcation' while acting in a fiduciary capacity. Defalcation is something more than negligence or accident but less than fraud or embezzlement. Consequently, his liability was not dischargeable under bankruptcy law." (Haynes and Boone, LLP)

Four Costly Mistakes that Retirees Make about Social Security
"What is the biggest fear of today's retirees? Running out of money. What can Social Security offer? Guaranteed income for life that increases over time. Seems like a match made in heaven. Yet 70% of retirees continue to claim Social Security benefits before their full retirement age, even though their benefits will be reduced for life." (Investment News; free registration required)

IRS Issues Relief to Assist Victims of Hurricane Sandy
"Under the relaxed rules, a plan loan can be made by making a 'good-faith diligent effort under the circumstances' to comply with the generally-applicable procedural requirements so long as, as soon as practicable, the plan administrator makes a reasonable attempt to assemble any forgone documentation.... NOTE: To qualify for this special relief, a hardship distribution must be made by no later than February 1, 2013." (Benefits Bryan Cave)

IRS Announces Plan Loan and Hardship Withdrawal Relief for Hurricane Sandy (PDF)
"Plan sponsors can use the relaxed rules announced by the IRS to offer some immediate relief to affected employees. While select budget legislation has been introduced to finance the response to the disaster, it does not presently include proposals to exempt Hurricane Sandy distributions from the 10% premature distribution penalty or to increase the maximum loan limit. Whether changes comparable to those allowed for Katrina and certain other disasters will materialize remains to be seen." (Buck Consultants)

IRS Provides Retirement Plan Relief for Hurricane Sandy Victims (PDF)
"To qualify for such relief, the participant taking the hardship withdrawal or loan (or such participant's child, parent, grandparent, other dependent or spouse) must have had a principal place of residence or employment on October 26, 2012 in one of the geographic locales that has been designated by the Internal Revenue Services as a covered disaster area. These include various counties in New York, New Jersey, Connecticut and Rhode Island. To be an eligible Hurricane Sandy-related hardship withdrawal, the hardship withdrawal must be needed as a result of Hurricane Sandy and must be made on or after October 26, 2012 and no later than February 1, 2013." (Chadbourne & Parke LLP)

IRS Provides Relief for Retirement Plan Participants Affected by Hurricane Sandy
"If an eligible plan does not currently provide for in-service distributions, the Announcement still permits loans and hardship distributions to be made from the plan for any hardship arising from Hurricane Sandy, so long as: (1) The distribution is not made from qualified non-elective contributions (QNECs), qualified matching contributions (QMACs) or from earnings on elective contributions. (2) The plan is amended to permit the distribution[.]" (Practical Law Company)

U.S. Public Plan Funding Slips, Asset Values Rise in Fiscal 2011
"Funding levels for the largest U.S. public retirement systems dipped 1.2 percentage points to 75.8% in fiscal year 2011 while the actuarial value of assets grew 2.7% to $2.65 trillion ... The median investment return was 21% for plans whose fiscal years ended June 30, 2011, roughly three-fourths of those surveyed. Those whose fiscal years ended Dec. 31, 2011, saw a median return of less than 1%, because of poor market returns in the second half of last year." (Pensions & Investments)

Innovative Strategies to Help Maximize Social Security Benefits
"No other vehicle can match the combination of inflation-fighting increases, longevity protection, investment risk elimination, and spousal coverage that Social Security can -- potentially making it one of the most valuable sources of retirement income. On average, Social Security accounts for about 40% of income in retirement. However, many retirees today do not understand how their Social Security benefits really work. Sadder still, most never focus on how to help maximize the very benefits that may help sustain them throughout retirement." (Prudential)

[Opinion]

Reaction Varies on Illinois Governor's Web Site Explaining State's Pension Woes
"Featuring a cartoon snake named 'Squeezy' and photos of adorable children, Gov. Pat Quinn's new online campaign to get Illinoisans excited about pension reform quickly inspired mock Web pages and criticism from unions, lawmakers and the Twitterverse. But some social media experts, and a few fellow Democrats, called it an innovative approach to a complex issue that could work in Quinn's favor. That is, if the Chicago Democrat can capitalize on the spike in attention and overcome the parody." (Daily Chronicle)

[Opinion]

Twinkies Defense Is Private Equity's Pension Offense
"The liquidation filing of Hostess Brands -- the maker of consumer fattening favorites such as Ho Hos and Twinkies -- also means that Americans may soon gorge themselves on the company's massive pension liabilities. Hostess' liquidation -- just like the recent bankruptcies of well known companies like Friendly Ice Cream and Eddie Bauer -- raises the prospect that sophisticated private equity and distressed debt hedge fund investors are using courts to cast off unwanted pension obligations on U.S. taxpayers and put a losing investment back on the track." (TheStreet.com)

[Opinion]

Pooling of Pension Funds Remains a Dream?
"Some very smart people have made the case for boosting DB plans but it seems like Ottawa still doesn't get it or refuses to admit that no bank, no insurance company and definitely no mutual fund can compete with our large, well governed DB plans. Some pension experts have argued that we need hybrid plans, but [the author is] not for that proposal either. DB, DB, DB, all the way! Make sure they are properly funded, large enough to benefit from economies of scale and well governed so they attract and retain the right people to manage pension assets in public and private markets." (Pension Pulse)

[Opinion]

New Jersey Voters Reaffirm Commitment to Pension Reform
"NJ voters, just like Wisconsin voters, have chosen to protect their state's pension reform legislation at every turn. The success of pension reform in these two 'blue' states shows that a tremendous amount of political will exists nationwide to solve America's pension challenges, and if a politician is brave enough to touch this 'third rail of politics' -- the public is prepared to defend them all the way." (Truth in Pensions)

Benefits in General; Executive Compensation

ISS Policy Updates for 2013: Golden Parachutes and Realizable Pay
"ISS' consideration of realizable pay may mitigate or exacerbate CEO pay-for-performance concerns.... [T]he SEC had expressed concern about companies' 'realized pay' disclosures because there was not common a definition for that term, which made comparisons difficult for investors and (fears the SEC) potentially misleading. An ISS-created standard might solve that problem." (Winston & Strawn LLP)

Plaintiffs' Law Firms May Be Gaining Steam With Say-On-Pay Suits
"[P]laintiffs' firms have orchestrated a new strategy to hold companies liable: suits to enjoin the shareholder vote because the proxy statement fails to provide adequate disclosure concerning executive compensation proposals. Such suits have met with some success -- with two court orders enjoining shareholder meetings and five settlements prior to companies' annual meetings." (Pillsbury Winthrop Shaw Pittman LLP)

ISS Releases 2013 Policy Updates (PDF)
"For 2013, ISS will update its peer group selection approach for purposes of running its pay-for-performance assessment of Russell 3000 companies and will add a realizable pay analysis to the qualitative review conducted on large-cap companies identified as "high concern" on the quantitative screen." (Frederic W. Cook & Co., Inc.)

Has the Executive Benefits Pendulum Swung Too Far?
Excerpt: "A series exploring the value of providing executive benefit plans.... In recent years, executive benefits have undergone significant changes and faced intense scrutiny. This has been daunting for executives and companies alike. Today, both face enormous challenges and uncertainties." Articles include [1] Introduction - Has the Pendulum Swung Too Far? [2] Non-qualified Benefits Lead to Prudent Long-Term Management; [3] Regardless of Tax Rate Changes, Deferred Compensation Will Remain Important; [4] Beyond Deferred Compensation; [5] Deferred Comp Matches: Why They Make Sense; [6] A Guide to Executive Benefit Technology; and [7] Total Plan Management. (The Todd Organization)

Health vs. Wealth: Are Employees Making the Right Benefits Choices?
"'The rising cost of health care is leading companies to shift more cost to employees, as well as to offer employees a robust menu of voluntary benefits to address key financial risks,' said Stephen Pelletier, president of Prudential Group Insurance ... 'When it comes to making these decisions companies are providing more information and decision tools than ever to help employees make choices that meet both their shorter-term health and longer-term wealth protection needs.'" (Prudential)

Press Releases



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