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March 8, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Retirement Benefits Specialist
for DIRECTV in CA

Senior Associate
for Craford Benefit Consultants in OR

Retirement Plan Services Manager
for Dixon Hughes Goodman LLP in VA

Retirement Plan Administrator
for Bates & Company, Inc. in FL

VP, Contracts
for Prudential in NJ

Clinical Consultant / Disability Insurance
for Prudential in NJ

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Webcasts and Conferences

July Business Services Advisor Symposium - Coming to Englewood, CO
in Colorado on April 4, 2013 presented by Rekon Intelligence

ABC of Greater Twin Cities: Washington Update & New EPCRS Program & Real Life Corrections
in Minnesota on April 16, 2013 presented by Greater Twin Cities ABC

View All Webcasts and Conferences


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[Official Guidance]

Text of EBSA Field Assistance Bulletin 2013-01: ERISA's Annual Funding Notice Requirements Following MAP-21
"This memorandum provides guidance to [EBSA] national and regional offices on compliance by plan administrators of single-employer defined benefit pension plans with section 40211(b)(2) of [MAP-21, which] amended the annual funding notice requirements of section 101(f) of [ERISA] to require additional disclosure of the effect of segment rate stabilization on the funding of single-employer defined benefit plans. This memorandum also includes a supplement to the model annual funding notice that plan administrators of such plans may use to comply with these new requirements." (Employee Benefits Security Administration)


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[Guidance Overview]

Dodd-Frank Title VII: Cleared Swaps and ERISA Plans (PDF)
"Importantly, the DOL largely based its Opinion on its interpretation that neither Congress, in enacting Dodd-Frank, nor the CFTC in issuing the Regulation, contemplated that Clearing Members or CCPs would act as ERISA fiduciaries to plan customers." (Winston & Strawn LLP)

[Guidance Overview]

Trucker Huss Benefits Report, February 2013 (PDF)
Articles in this issue: [1] Department of Labor Issues Update to the Delinquent Filer Voluntary Compliance Program; [2] IRS Issues New Retirement Plan Correction Program; and [3] Roth Conversions after the Fiscal Cliff. (Trucker Huss)

Employee Benefits Practitioners Advised to Review Circular 230 Closely
"[A] practitioner would be in violation of several provisions of Circular 230 if he or she recommended including undocumented workers in a plan's census, knowing the employer does not intend to provide a benefit to such individuals, and nevertheless provided a written opinion regarding nondiscriminatory coverage testing under Code Sec. 410(b) based on the plan census." (Wolters Kluwer Law & Business)

Pension Funds Becoming Source of Financing for Many Public Projects
"As long-term investors, pension funds are increasingly being seen as an alternative financing option as banks, under balance sheet pressure, continue to de-leverage and decrease lending. The UK government has been urging pension schemes to step in to fund initiatives, such as infrastructure projects, where public investment has dried up." (Financial Times)


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2012 Year in Review, Trends in Employee Financial Issues
"In 2012, a greater percentage of employees reported having borrowed funds or taken a hardship withdrawal from their 401(k) -- 32% versus 25% in 2011. Both the decline in financial wellness and the increase in the percentage of employees that reported having taken a retirement plan loan or hardship withdrawal were most pronounced among lower-income employees, women, and Generation X." (Financial Finesse; free registration for download of full report)

Auto Rollovers: They're Not Just for Crash Test Dummies
"[M]any plans have never adopted an auto rollover provision. Default IRAs are handy because they get the liabilities out of the plan and eliminate the need to keep track of long forgotten, barely vested participants and pay their [PBGC] premiums.... [Many] IRA providers .. accept the auto rollovers ... [at] no cost to the plan sponsor." (Retirement Town Hall)

Four Myths About Public Pension Retirees
"1. Retirement benefits make people rich.... 2. What a racket! Some retirees didn't even have to contribute to their plans for their entire career! ... 3. The biggest problem is that retirees are living longer.... 4. It's the economy! These issues were inevitable!" (Governing)

'Assignment' of Inherited IRA Won't Work
"The son proposes to assign half of the inherited IRA to the daughter ... would that be treated as a taxable distribution of the account? ... Assigning an inherited IRA to another person would cause the assigned portion (or possibly the entire account) to lose its status as an IRA and be deemed distributed. Furthermore... 'doing the right thing,' as the son proposes to do, is not regarded as a benign benevolence--it triggers a gift tax!" (Morningstar Advisor)

Fidelity Faces More Complaints About Float Income
"Three Massachusetts residents [have] accused Boston-based Fidelity ... of using income generated from retirement fund assets to offset Fidelity's own operating expenses. Their lawsuit, filed in U.S. District Court in Massachusetts, seeks class-action status for participants in 401(k) plans sponsored by EMC Corp, Bank of America Corp and Safety Insurance Company. Fidelity denied any wrongdoing." (Reuters)

401(k) Plan Financial Statement Oversight (PDF)
"How can a fiduciary be 'on top of their game'? ... [T]hree examples of which plan fiduciaries should be mindful, when reading their plan's publicly reported financial statements[:] Using an incorrect auditor's report... [2] Incorrectly disclosing certified contributions/distributions... [3] Beware the partial termination!" (WithumSmith + Brown, PC)

ERISA Concerns for Annuity Contracts in DC Plans
"If there are annuity contracts in the retirement plans, are they from highly rated insurance companies? Is the annuity product specifically designed for retirement plans? Is the annuity reasonably priced? 'You can't have excessively expensive products inside ERISA plans,' [said Fred Reish, partner and chairman of the financial services ERISA team at Drinker Biddle & Reath]." (PLANADVISER.com)

2012 Pyramis Global Institutional Investor Survey (PDF)
"Nearly one in three institutional investors say they don't have the resources or expertise to manage their portfolios at the faster tempo demanded by tactical asset allocation strategies, but they see dynamic portfolio management as a crucial element in extracting alpha from volatile markets.... Nearly half of [U.S. corporate plans] believe that LDI or strategies that rely heavily on fixed income will predominate a decade from now.... [Among those] who manage U.S. public sector pensions ... the traditional mix of sixty percent equity and forty percent high-quality bonds is enjoying a revival." (Pyramis Global Advisors)

Helping Your 403(b) Plan Stay Healthy
"[T]erminating a 403(b) plan isn't easy. While the final 403(b) regulations permit plan terminations and consider it appropriate to distribute assets to participants upon a plan termination, that doesn't mean it is possible to do so." (The Principal Blog)

Are Employers with Auto-Enroll 401(k) Plans Less Generous?
"Auto-enrollment boosts participation rates sharply, but there has also been a downside. The average initial default contribution rate in auto-enroll plans is just 3 percent -- far too low to generate meaningful account balances." (Reuters)

Retirement Index Ranks United States 19th In Quality, Trailing Behind Most Industrial Nations
"Retirement, as the previous generation has known it, is taking a beating thanks to diminished incomes, a need to tap into 401(k)s early and ongoing battles over how long the government can continue to fund entitlement programs such as Social Security and Medicare.... While the U.S. is just getting started on having policy discussions on how to reduce the cost of healthcare, the countries who bested the U.S. are much further along." (The Huffington Post)

Public Pension Fund Conference at Resort in Hawaii Draws Boycotts
"The National Conference on Public Employee Retirement Systems' leadership did make the decision to hold their 2013 annual conference at a luxury resort in Hawaii before the financial crisis struck, hammering public pension funds' investments and leaving them with a funding gap of at least $770 billion. Now that decision has put them in a tough spot, and some NCPERS members say they can not be seen jetting off to Hawaii in such tough economic times as these." (Thomson Reuters TrustLaw)

America's Commitment to Retirement Security: Investor Attitudes and Actions, 2013 (PDF)
"About nine out of 10 households with DC accounts agreed that these plans helped them think about the long term and made it easier to save. About half of DC-owning households indicated they probably wouldn't be saving for retirement if it weren't for their DC plans. In addition, saving paycheck-by-paycheck made about three-fifths of DC-owning households surveyed less worried about the stock market." (Investment Company Institute)

Implementing Defined Contribution Public Pension Reform: Five Case Studies (PDF)
"States and cities are considering shifting from the defined benefit to defined contribution model of pension funding for their employees ... Five case studies -- the private sector, the federal government, and the states of Michigan, Utah, and Rhode Island -- are presented ... to tell the stories of successful pension reform." (American Principles Project)

When Teachers Choose DC Retirement Plans: The Florida Story (PDF)
"[Findings include:] [1] [A quarter] to a third of new Florida teachers opted for the DC plan despite the fact that the DB plan was the default ... [2] teachers with more career options -- notably individuals with advanced degrees or math and science specialties -- are more apt to favor the DC plan.... [3] analysts found only a weak relationship between teachers' value added (to student achievement) and their choice of pension plans ... [4] many short-timers are using the DC option to leave with something rather than nothing[.]" (Thomas B. Fordham Institute)

Did We Just Hit 'Peak Pension'?
"[T]he $915 billion liability at the $20 billion club -- which implies the total worldwide pension liability for all U.S.-listed corporations is roughly $2.3 trillion -- may be as high as it will ever get." (Russell Investments)

Affluent Americans Naively Optimistic About Their Retirement Readiness
"[W]hile most affluent Americans have a retirement plan in place (84%) and feel confident about their retirement readiness (80%), they may be underestimating how much money they will need once they retire. Survey respondents estimate they will need on average about $66,000 in annual income, significantly less than their current average income of $115,000." (Financial Planning)

More Employees Embrace 401(k) Plans
"In the fourth quarter of last year, 81% of employees either started or increased the money they put towards their 401(k), while 19% either stopped or decreased their contributions... That is the strongest positive and negative ratio the has seen since [Bank of America Merrill Lynch] started the report in 2009[.]" (Financial Planning)

Reports of the Death of Retirement Savings Greatly Exaggerated
"In a new report, Fidelity Investments suggested that Americans may be saving more for retirement than previous surveys have indicated.... While American workers still have a long way to go in achieving their retirement savings goals, the report demonstrates progress -- and as such, likely will serve as ammunition in the coming battle over the adequacy of the nation's voluntary-retirement system." (Investment News; free registration required)

SEC Said to Review Floating Price for Money Funds With IRS
"Discussions have centered on the tax treatment of small gains and losses for investors in funds ... IRS officials have told the securities regulator that they don't have much flexibility to interpret current tax law ... The discussions suggest SEC staffers are developing a more detailed proposal to force money funds to adopt a floating share price, a move the industry has said would destroy their appeal." (Treasury & Risk)

IRS Employee Plans Division Unveils Operating Priorities for Fiscal Year 2013
"The Work Plan includes four operating priorities: 401(k) plans, governmental plans, 403(b) plans, and International.... IRS EP said that it will continue to analyze and use the data from the 401(k) questionnaire project and dialogue with 401(k) stakeholders to address compliance in the 401(k) market segment." (Wolters Kluwer Law & Business)

[Opinion]

Are Pension Funds the New Banks?
"It's critical to understand why pensions are becoming the long-term financiers of these infrastructure projects and what risks these assets carry as pensions flood into this space." (Pension Pulse)

[Opinion]

Public Pensions Need to Evolve
"Public plans around the world cannot sustain today's level of benefits in the face of increased life expectancy, two financial crises in a decade, and low expected investment returns.... The consensus is that it is not reasonable to place the entire burden on new employees or on the future benefits of today's workers, but that retirees as well have to participate." (MarketWatch)

[Opinion]

The New York City Pension Plan Folly
"The New York City retirement systems are proudly trumpeting the progress they are making toward their goal of a $3.5 billion hedge fund portfolio on behalf of three of their five pension plans. They are abandoning their prior investment of $450 million in commingled hedge 'fund of funds' managed by the Permal Group. The pension plans will be redirecting those funds directly into hedge funds. [The author of this linked article has] nothing but sympathy for the beneficiaries of these pension plans." (U.S.News and World Report)

Benefits in General; Executive Compensation

Prime ERISA Areas for Supreme Court Review (PDF)
"This article focuses on four distinct areas of ERISA litigation that are in need of clarification by the Supreme Court during the current or upcoming terms. They involve the evidence to be considered in a benefits denial claim under the de novo standard of review; the standard of review in a breach of fiduciary case where a profit sharing plan invests in employer stock that is declining in value (the so-called 'stock drop' cases); an employer's modification or termination of retiree health care benefits in collective-bargaining contexts in light of the terms of the employee benefits plan and the collectively bargained agreement; and the plan administrator's enforcement of subrogation clauses under a health care plan." (Prof. Kathryn J. Kennedy, The John Marshall Law School, in the Tax Management Compensation Journal)

Supreme Court Declines Review of Ruling in Fifth Circuit ERISA Preemption Case
"The Supreme Court's denial of UHC's petition in this case leaves unresolved the existing split among the U.S. circuit courts of appeal regarding the interpretation and application of ERISA preemption to certain state law claims." (Haynes and Boone, LLP)

Fourth Circuit Opens Door to Extrinsic Evidence in Considering Claim for Benefits
"[T]he Court held that 'a district court may consider evidence outside of the administrative record ... when such evidence is necessary to adequately assess the Booth factors and the evidence was known to the plan administrator when it rendered its benefits determination'.... [The] Court suggested a dramatically increased discovery burden, requiring the administrator to make exhaustive searches into past decisions -- something for which the administrator would not necessarily have had any reason to search in reviewing the claimant's benefit claim, as every claimant's case is based upon its own unique facts. " [Helton v. AT&T, Inc. Pension Benefit Plan, 2013 U.S. App. LEXIS 4575 (4th Cir., Mar. 6, 2013)] (Wombyle Carlyle)

Cypen & Cypen Newsletter for March 7, 2013
Covers employee benefit developments with an emphasis on governmental plans. Topics include: [1] How does smoothing affect funding of defined benefit plans? [2] Union did not have standing to challenge termination of member who settled and released city; [3] Agreement by county to provide perpetual healthcare benefits to employees may be implied; [4] Disability rate among government benefit recipients varies. (Cypen & Cypen)

Press Releases

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