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December 2, 2013          Get Health & Welfare News  |  Advertise
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PlanTech, LLP
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ERP Actuaries & Consultants
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Transamerica Retirement Solutions
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Cash Balance Actuaries, LLC
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Webcasts and Conferences

SEC Amendments to Broker Dealer Reporting and Financial Responsibility Rules
December 5, 2013 WEBCAST
(Regulatory Compliance, LLC )

2013 Form 1099-R Series
December 10, 2013 WEBCAST
(McKay Hochman Co., Inc.)

A Look Around the Corner to 2014: The Impact of the Affordable Care Act Implementation
December 18, 2013 WEBCAST
(Deloitte)

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  LinkedIn   Twitter   Facebook Hand-picked links to the web's best news articles,
official guidance, jobs, webcasts and more.
[Official Guidance]

Text of PBGC Update to Appendix D to Part 4044 -- Tables Used to Determine Expected Retirement Age
"This rule amends the Pension Benefit Guaranty Corporation's regulation on Allocation of Assets in Single-Employer Plans by substituting a new table for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination with valuation dates falling in 2014. This table is needed in order to compute the value of early retirement benefits and, thus, the total value of benefits under a plan." (Pension Benefit Guaranty Corporation [PBGC])  


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[Guidance Overview]

2014 Regulatory Limits Poster and Compliance Calendar
"The regulatory limits for 2014 poster describes regulatory limits for elective deferrals and catch-up contributions as well as deadlines for returning excess contributions and other important requirements. The related 2014 compliance calendar for defined contribution plans shows recurring compliance and notice requirements for qualified defined contribution plans." (Vanguard)  

IRS Releases 2014 Form 1099-R with New Code
"The IRS released the 2014 tax year Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc, last week (on November 27). The separate Form 1099-R instructions have not yet been released. A notable change in the 2014 Form 1099-R under 'Instructions for Recipient' is the addition of a new distribution code for Box 7 -- code K, Distribution of IRA assets not having a readily available FMV." (Ascensus)  

Dudenhoeffer v. Fifth Third Bank at the U.S. Supreme Court: DOL Brief and the ESOP Sponsor / Fiduciary Boundary Dispute
"The DOL argues not only that the Supreme Court needs to hear this case, but that it should reframe the questions, rule that an ESOP is an investment that is subject to divestment and prudence review in the same manner as other investments, rule that the presumption does not exist at the initial state, and rule that the presumption of prudence does not exist, at all.... A U.S. Supreme Court ruling that the presumption of prudence does not apply at the initial stage, or a ruling that the presumption does not apply at all, would seemingly eviscerate the statutory boundaries that favor ESOPs, and likely have a significant chilling effect. Employers would have to consider whether the ESOP model remains viable and is worth the risk. For publicly traded companies, such a decision could cause a precipitous sell-off of employer stock that drives down the stock price." (Porter Wright Morris & Arthur LLP)  

Change in Average 401(k) Account Balances as of December 1, 2013 (PDF)
Report shows change in average account balances grouped by age and tenure, from January 1, 2011 through December 1, 2013, for "consistent" participants (those who had an account balance at the end of each of those years). (Employee Benefit Research Institute [EBRI])  

Illinois Legislators Set Forth Pension Reform Proposal
"All pension matters, except pension pickups, are removed from collective bargaining.... The State will contribute (i) $364 million in FY 2019, (ii) $1 billion annually thereafter through 2045 or until the system reaches 100% funding, and (iii) 10% of the annual savings resulting from pension reform beginning in FY 2016 until the system reaches 100% funding.... Employees will contribute 1% less of their salary toward their pension.... For those 45 years of age or under, the retirement age will be increased on a graduated scale.... Beginning July 1, 2015, up to 5% of Tier 1 active members have the option of joining a defined contribution plan." (Burypensions)  

Illinois Gives Plan Details for Bailout of Pensions
"Seeking to repair one of the nation's worst-financed public pension systems, legislative leaders in Illinois on [Nov. 29] began urgently trying to sell a rescue plan that cuts cost-of-living increases for retirees, raises the age of retirement for some employees, and sets a cap on pensions for those with the highest salaries." (The New York Times; subscription may be required)  

Illinois Union Leaders Bash Pension Reform Proposal
"AFSCME's [Anders] Lindall said the cuts to the COLA would reduce the total value of a typical retiree's pension payments by some 30 percent over 25 years of retirement. Union leaders had questions about some aspects of the deal, including a provision to prohibit collective bargaining on most 'pension matters.'" (Chicago Tribune; subscription may be required)  

Private Equity Performance and Underfunded Pensions
"While the downside possibilities are real, ... 'lessons learned' from the Sun Capital decision enable a [private equity fund general partner] to take action preemptively as a way to potentially 'maximize value from portfolio companies while also mitigating future risk.' Savvy asset managers can adapt their due diligence process to help avoid any issues that could preclude an exit within the typical three to seven year time period from an initial funding round." (Pension Risk Matters)  

Pension Finance Update as of November 30, 2013 (PDF)
"November saw a continuation of very good news for pension sponsors, a microcosm of a phenomenal 2013 -- driven by rising stock markets and higher interest rates. The two 'model' plans we track each saw improvements, with traditional 'Plan A' seeing a 3% improvement in funded status, while the more conservative 'Plan B' improved almost 1% during November. For the year, Plan A is now up 23% and Plan B is up more than 6%." (October Three Consulting)  

Top 10 401(k) Questions You May Be Too Embarrassed to Ask (Part I)
"What is a mutual fund? ... What is vesting? ... What is a Roth contribution option? ... What is an index fund? ... What is a bond?" (Smart401k)  

Dynamic Asset Allocation for Defined Benefit Plans
"Dynamic asset allocation ... preserves a favorable funded status when attained, and it offers the potential to capitalize on yield-curve movements by purchasing bonds at a time when fixed income is more favorably priced. A two-pronged approach to dynamic asset allocation can be effective. One glide path would increase bond holdings every time interest rates improve the funded ratio, and a second would apply a different percent increase when improvement was due to contributions or strong return-seeking asset performance." (Towers Watson)  

Automatic Enrollment Does Not Mean Automatic Retirement
"[T]he average default contribution rate for employees enrolled under an automatic-enrollment feature is 3.4%, well below the average maximum matching rate of 5.1% and way below the amount most financial planners suggest employees will need to contribute in order to achieve a comfortable retirement: 10-15%." (Financial Finesse)  

[Opinion]

What Do Lifetime Income Projections Achieve?
"As Stanford economist John Shoven has noted: 'You can't finance 30-year retirements with 40-year careers without saving behavior that is distinctly un-American.' Americans hoping for a financially secure retirement will likely need to save more and retire later. And seeing a big number on an account statement can lull a worker into a false sense of retirement readiness.... [Is] a mandatory lifetime income illustration a good idea? They're a great idea for those who are going to pay attention to it. These, however, are probably the workers who already save more than their co-workers. So we might get a policy that's a good idea but increases the dispersion of retirement savings outcomes." (ThinkAdvisor)  

[Opinion]

The 401(k) Was Never Intended to Be the Retirement Plan
"In 1981, the 401(k) was expanded into a supplemental retirement plan, and the IRA was enlarged so that people with traditional defined benefit retirement plans could also contribute to IRAs and still get a tax deduction. These changes seemed fairly enlightened. Ironically, this marked the beginning of the end of America's progress toward retirement security." (Raleigh News and Observer)  

[Opinion]

Is Canada on the Right Path?
"[If] we get companies out of the business of managing pensions and enhance the CPP, pension portability wouldn't be an issue and we wouldn't need these multi-employer plans which severely underperform our large Canadian public pension funds.... Canada has some of the best public pension funds in the world and we should build on their success, not try to reinvent the wheel or introduce policies that are doomed to fail. Also, we need to recognize the benefits of DB plans to our economy and bolster them for all Canadians." (Pension Pulse)  

Benefits in General; Executive Compensation

[Guidance Overview]

NASDAQ Relaxes Compensation Committee Independence Standards
"The amendments replace [the] prohibition [on acceptance of fees] with a requirement that a listed company's board of directors, when determining that director's eligibility to serve on the compensation committee, consider the source of compensation of a director, including any consulting, advisory or other compensatory fee paid by the company to the director. The proposal would also: [1] Amend IM-5605-6 to state that when considering the sources of a director's compensation, the board should consider whether the director receives compensation from a person or entity that would impair the director's ability to make independent judgments about the company's executive compensation. [2] Remove the carve-out from the definition of compensatory fees for board or committee fees and fixed retirement plan compensation." (Practical Law Company)  

Electronic Disclosures: Not as Simple as Sending an E-Mail
"Plans can distribute all manner of plan communications electronically, including SPDs, open enrollment materials, summaries of material modification, COBRA and HIPAA notices and even the summary of benefits coverage notice required under PPACA. But the rules for electronic distribution are [different] depending on whether employees have work-related computer access. The primary difference is the requirement of obtaining consent." (Fox Rothschild LLP)  

Employers Set 2014 Holiday Schedules
"Almost all U.S. employers will give workers a day off next year on Christmas Day, Thanksgiving and New Year's Day ... [M]ost full-time employees (78%) will receive six to 10 paid holidays per year, while most part-time workers (51%) will receive up to five paid holidays per year." (Business Management Daily; free registration required)  

Hodgson Russ Employee Benefits Developments, November 2013
Articles include: Religious Employers and the Women's Contraceptive Mandate; Guidance on HRAs and Other Employer Payment Plans; IRS Says Plan May Not Automatically Revoke Spouse as Beneficiary Upon Legal Separation; and SunTrust Stock Drop Case Dismissed. (Hodgson Russ LLP)  

Big CEO Signing Bonuses Draw Criticism from Governance Activists
"Golden hellos are often a sign of other compensation dysfunctions, says Greg Ruel, a GMI senior research analyst. On average, companies dinged by GMI for giving out big upfront payments also have received grades of D for their overall pay practices. Chesapeake Energy (CHK) and Best Buy (BBY), two that have been flagged by GMI for offering golden hellos, also in recent years lost so-called say-on-pay votes, nonbinding stockholder polls on pay plans granted by their boards. Those ballots were evidence of shareholder dissatisfaction -- and ultimately prompted changes in the companies' compensation practices." (Bloomberg BusinessWeek)  

[Opinion]

Text of Comments by Frederick W. Cook and Co., Inc. to SEC on Proposed Pay Ratio Rules (PDF)
"Among all the possible changes the Commission could make to the proposed rule, dropping non-U.S. employees would by far save the most time and expense for multi-national companies, while dramatically increasing the relevance and potential value to investors by eliminating the distortions listed in the proposed rule.... We recommend that the proposed rule be revised to allow the issuer the option of making full- time equivalent adjustments for part-time employees and temporary or seasonal employee, to avoid an obvious apples-to-oranges comparison." (Frederick W. Cook and Co., Inc.)  

Press Releases

HealthCare.gov Progress and Performance Report
Centers for Medicare & Medicaid Services (CMS)

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