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January 4, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

New Business Consultant/Sales
for TRA, Inc. in NC, VA

DC Plan Administrator
for Capital Retirement Plan Services, Inc. in PA

Senior Health Benefits Analyst
for The Segal Company in DC

IRT Relationship Manager 3
for Wells Fargo in MN, NC

Retirement Plan Coordinator
for Hefren Tillotson in PA

Senior Vice President, Chief Legal Officer
for USI Consulting Group in CT

Regional Retirement Plan Wholesaler
for Nationwide Insurance in KY, OH

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Webcasts and Conferences

"Plan Corrections: When Good Plans Go Bad" - 19 cities, January 9-25, 2013, Covers EPCRS Rev. Proc. 2013-12
Nationwide on January 9, 2013 presented by SunGard Relius

"EPCRS 2013: What's Changed? What's New? What Does It Mean?" Web Seminar
Nationwide on January 11, 2013 presented by SunGard Relius

"EPCRS 2013: What's Changed? What's New? What Does It Mean?" Web Seminar
Nationwide on January 25, 2013 presented by SunGard Relius

Employers Beware - Taxes and Fees Under the Affordable Care Act
Nationwide on January 29, 2013 presented by ABA Joint Committee on Employee Benefits

"401(k) Testing Techniques" Web Seminar
Nationwide on January 29, 2013 presented by SunGard Relius

"The Fundamentals of Cross-Tested Plans" Web Seminar
Nationwide on February 12, 2013 presented by SunGard Relius

"Fundamentals of 401(k) Plans Web Series"
Nationwide on January 7, 2013 presented by SunGard Relius

FMLA In Real Life
Nationwide on January 10, 2013 presented by International Foundation of Employee Benefit Plans

View All Webcasts and Conferences


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[Guidance Overview]

New EPCRS Released
"The IRS made many revisions, clarifications, and additions to the old EPCRS [including]: [1] Beginning April 1, 2013, all VCP submissions must complete the newly created tax Forms 8950 and 8951. These are currently only in draft form and cannot be used until issued in final form. [2] The old EPCRS provided that the matching contribution had to be contributed as a QNEC as well. The IRS liberalized this requirement. Now, any matching contribution correction under EPCRS can be subject to a vesting schedule and have broader distribution events available, as permitted by the plan. [3] Generally, 403(b) plan corrections will follow the correction for qualified plans. However, because these plans are different, nuances in correction still remain. [4] The IRS clarified many concepts relating to nonamender failures by defining 'good faith amendments,' 'interim amendments,' and 'optional law changes.'" (SunGard Relius)


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Retirement Savers Face Their Own 'Fiscal Cliff'
"A recent survey ... showed that 54% of Americans plan to retire by age 65; for the 36% of Americans whom the studied registered as not actively contributing to a retirement plan, that's a tall order. Taking that a step further, the surprising disconnect was that just 23% of these pre-retirees worried they may never save enough to retire. Apparently, more than 10% of those who contribute nothing towards their retirement believe they will catch up." (MarketWatch.com)

Pension Bonds Add Risk to Public Retiree Crisis
"Oakland's city leaders took a risk when, rather than lay off more staff or cut services, they decided to borrow nearly $213 million to cover pension payments owed to retired city workers. They're betting that the pension fund's investments will earn more than the cost of issuing pension obligation bonds. If they're right, a financial burden is eased. If not, the city is saddled with paying interest on top of the payments it has promised retirees." (The New York Times; free registration required)

S&P 1500 Plan Sponsors Finish 2012 with Highest Year-End Pension Deficit Ever
"The aggregate deficit in pension plans sponsored by S&P 1500 companies increased by $73 billion to a record year-end high of $557 billion as of December 31 2012 ... This deficit compares to an aggregate pension deficit of $484 billion on December 31, 2011. While the December 31, 2012 funded ratio of 74% rebounded from a record low of 70% as of July 31, 2012, overall the ratio declined from the 75% funded ratio seen at December 31, 2011. Despite overall positive annual asset growth of approximately 16% in the broad US equity market, falling interest rates were once again the story for the funding status of pension plans as discount rates fell by over 80 basis points as compared to year-end 2011." (Mercer)

Funded Status of U.S. Corporate Pensions Rises: Strong December Puts Plans in Positive Territory for 2012
"For the month of December, the funded status for the typical plan increased 1.9 percentage points to 76.3 percent, according to the BNY Mellon Pension Summary Report for December 2012. For the year, the funded status was up 1.0 percentage point, the report said. Assets for the typical plan in December rose 0.9 percent as equities markets climbed. Liabilities fell 1.7 percent as the Aa corporate discount rate rose 13 basis points to 3.89 percent," (BNY Mellon)

The Decision to Terminate a Frozen DB Plan (PDF)
"This [article] presents an overview of some of the key financial factors to consider in deciding whether to terminate a frozen DB plan: costs, interest in 'taking risk off the table' and opportunity costs. In addition, the [article] outlines the administrative, actuarial and legal tasks that must be undertaken before a plan can be terminated." (The Segal Company)

January 31 Deadline Nears for New IRS Form 3921 on 2012 ISO and ESPP Purchases
"[E]mployers must report incentive stock option (ISO) and employee stock purchase plan (ESPP) purchases for 2012 by January 31, 2013. This was a new requirement for 2010 purchases, and may have caught some employers by surprise since the IRS had delayed implementation for many years previously. Hopefully by now employers have worked the forms into their January payroll reporting routines." (Holland & Hart)

Banks Refuse to Clear Trades for Pension Plans
"With nine months until they are expected to start clearing over-the-counter derivatives, corporate pension funds in the U.S. are being rejected as clearing clients amid fears that collateral posted to their futures commission merchant (FCM) could be clawed back in the event of the fund's bankruptcy. Bankers and fund managers are hoping for a clarifying statement from the [DOL], but the hold-up is frustrating some pension plans." (FT Alphaville; free registration required)

Why Is Age 65 Still a Retirement Peak Despite New Minimum of Age 66 for Full Social Security Benefit?
"When Social Security's Full Retirement Age (FRA) increased to age 66 for recent retirees, the peak retirement age increased with it. However, a large share of people continue to claim their Social Security benefits at age 65. This paper explores two potential explanations for the 'stickiness' of age 65 as a claiming age: Medicare eligibility and workers' lack of knowledge about their future Social Security benefits." (Center for Retirement Research at Boston College)

Illinois Inches Closer to 'Pension Cliff'
"Despite the state nearing financial jeopardy, achieving reforms will be especially difficult for Illinois. Governor Quinn is well aware of the states long track record of failed pension overhaul negotiations, and he recently pointed out, 'We're trying to do fundamental pension reform that has confounded 12 governors, 13 speakers of the House and 13 Senate presidents over the last 70 years.'" (Truth in Pensions)

NCEO Employee Ownership Update, January 3, 2013
"Starting in 2013, business owners selling their companies will face significantly higher taxes on the sale proceeds. Appropriately structured sales to ESOPs allow sellers to defer capital gains taxes, and higher rates will make that deferral more valuable." (National Center for Employee Ownership)

Chart from U.S. Bureau of Labor Statistics: The Last Private Industry Pension Plans
"Having sufficient income during retirement years is a concern for many Americans. In years past, many employers provided a pension plan -- formally known as a defined benefit plan -- that ensured periodic payments for the life of the retiree and his or her spouse. Such plans are becoming rare for workers in private industry. In 2011, only 18 percent of private industry employees were covered by defined benefit plans; coverage was 35 percent in the early 1990s." (U.S. Bureau of Labor Statistics)

Solvency of Canadian DB Plans Improves Slightly in 2012
"The median pension solvency funded ratio -- or the ratio of the market value of plan assets to liabilities -- is approximately 1 percent higher this year than at the start of 2012.... [I]nterest rates continued their decline pushing up the value of liabilities of pension plans. The discount rate used to calculate the liabilities to be settled by annuity purchases in case of a plan termination went down from 3.31 percent at the beginning of the year to 2.96 percent at the end of 2012.... [E]quities performed well, with Emerging Markets leading the pack at 16.0 percent, followed by International Equities (15.3 percent), U.S. Equities (13.4 percent) and Canadian Equities (7.2 percent)." (Aon Hewitt)

[Opinion]

The Benefits of Unbundled 401(k)s
"[A]dvisers working on company 401(k) plans are going be graded on how well they prepare their plan participants to meet their retirement needs. What an adviser should seek in a 401(k) partnership is the ability to provide the most cost-effective plan that produces the best result for clients. These days, advisers can best accomplish that by adopting what I call 'the iTunes approach' instead of the old-fashioned vinyl approach." (The Wall Street Journal)

[Opinion]

Prevent Debt in Future by Making Changes to Social Security Now
"As more boomers retire, Social Security will add increasingly to debt. By about 2033, the credits will be exhausted and benefits will have to be cut sharply. Because workers retiring in 2033 are already working and should plan for their retirement, we owe it to them to phase the necessary changes in gradually and avoid the sharp drop." (Brookings)

[Opinion]

Don't Frighten the Children (About Illinois Pensions)
"Last summer the state [of Illinois] hired an outside actuarial firm to 'review assumptions and valuations prepared by actuaries retained by the boards of trustees of the State-funded retirement systems....and...recommend changes.' Recently released was their work product, all 190 pages, though only these three pages are likely to be read and only this line likely to be publicized: 'Cheiron reviewed the actuarial assumptions used in each of the five systems' actuarial valuations and concluded that they were reasonable.' Which is what they were paid to conclude." (Burypensions)

Benefits in General; Executive Compensation

[Guidance Overview]

New Tax Rates in Effect for 2013
"[E]ffective January 1, 2013, the Social Security Tax holiday that was in effect in 2011 and 2012 has expired. As a result, the employee-side social security tax withholding rate for 2013 is 6.2%. The Social Security wage base for 2013 is $113,700.... Effective January 1, 2013, the Medicare tax rate applicable to wages in excess of $200,000 ($250,000 for married individuals filing jointly; $125,000 for married individuals filing separately) will increase to 2.35%. Employers are required to withhold and report Medicare tax at the 2.35% rate on all wages over $200,000 with respect to their employees. The Medicare tax on wages of $200,000 or less will remain at the 1.45% rate." (Baker & McKenzie)

[Guidance Overview]

President Signs Fiscal Cliff Bill Including IRA, Retirement Plan and Educational Savings Account Provisions
"Coverdell education savings account (ESA) provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) that were set to expire at the end of 2012 are made permanent. The IRA qualified charitable distribution (QCD) that permits an IRA owner age 70-1/2 or older to contribute up to $100,000 of IRA assets per year tax-free to qualifying charities, has been extended for two years, including 2012 and 2013.... [T]ransition relief ... allows certain distributions taken in January of 2013 to be considered qualifying QCD contributions for 2012, and certain distributions paid directly to IRA owners in December of 2012 to be considered eligible for QCD treatment." (Ascensus)

[Guidance Overview]

Highlights of Fiscal Cliff Legislation Affecting Employee Benefits
"Employers providing educational assistance to employees through a qualified education assistance plan may continue to provide those benefits tax-free to participants of up to $5,250 per year. Although this provision had historically been extended period-by-period, the new legislation has permanently extended employer-provided educational assistance for undergraduate and graduate-level courses beginning after December 31, 2012.... The pre-tax allowance for mass transit expenses has been increased from $125 to $240 per year effective retroactively to January 1, 2012 through the end of 2013." (Holland & Hart)

2012-2013 Regulatory Agendas for Employee Benefits Published by DOL and Treasury (PDF)
"The DOL's agenda and related materials include eight pending projects related to employee benefits, which are listed in the chart [in the linked article] in order of the projected timetable for next steps.... The IRS Business Plan includes 36 pending items addressing retirement benefits and 24 pending items addressing executive compensation, health care and other benefits." (Sutherland)

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