EmployeeBenefitsJobs.com logo BenefitsLink.com logo

BenefitsLink Retirement Plans Newsletter

April 18, 2014          Get Health & Welfare News  |  Advertise
         Past Issues  |  Search

Employee Benefits Jobs


Webcasts and Conferences

2014 Webinar: Conducting Your Own Compliance Audit
May 13, 2014 WEBCAST
(Ascensus)

Voluntary Fiduciary Correction Program and Abandoned Plan Workshop
May 21, 2014 in KY
(EBSA [Employee Benefits Security Administration, U.S. Department of Labor])

View All Webcasts and Conferences


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

FATCA Compliance Updates (PDF)
"The long-awaited final Form W8-BEN-E is designed to assist U.S. withholding agents in collecting the information needed to properly classify foreign payees for FATCA compliance purposes. The final form contains over 20 new FATCA entity classifications and certifications, but the portion addressing retirement plan exemptions mirrors the draft form. The IRS has not yet issued instructions to accompany the final form." (Buck Consultants)  


[Advert.]

WEB's mission is to further the development of benefits professionals

Sponsored by WEB - Worldwide Employee Benefits Network

We are committed to helping define the role of the benefits professional in the 21st century, and as changing market forces reshape the profession, WEB will help its members meet the challenges ahead.



[Guidance Overview]

DOL Proposes Qualified Plan Fee Disclosure Guide
"Pending the finalization of this proposed rule, an employer should consider doing the following to assess the adequacy of the fee disclosures provided by the plan's covered service providers: [1] review the disclosures already provided to determine if the 'basic framework' information has been provided; [2] request a specific analysis of the fees and how they are calculated, and a glossary of terms and examples to assist in the review of the analysis; and [3] review any recordkeeping agreement or investment adviser's agreement to determine how fees contractually are required to be disclosed." (Wolff & Samson)  

[Guidance Overview]

408(b)(2) Guide and More
"The first [DOL concern] is that some covered service providers are not giving fiduciaries information that specifically applies to their plan.... The Department's view is that the disclosures should include only the services and compensation for the plan receiving the disclosures. The second concern is that service providers are using overly-broad ranges to make disclosures.... [We] anticipate that the DOL will begin their first wave of 408(b)(2) investigations in the second half of this year." (FredReish.com)  

IRS Safe Harbor for Accepting Rollover Contributions: on the Interplay Between Rev. Rul. 2014-9 and Form 5310
"The Form 5310 Application for Determination for Terminating Plan instructions, updated in December 2013, added an odd and time-consuming new requirement, 'Submit proof that any rollovers or asset transfers received [during the year of plan termination and five prior plan years] were from a qualified plan or IRA (for example, DL [determination letter] and timely interim amendments).' ... [E]ven if the administrator were attempting to rely on the safe harbor with respect to an invalid rollover, which is not what is happening when the employer requests a determination letter, the administrator would not have that type of documentation." (Porter Wright Morris & Arthur LLP)  

Both Sides in Tussey vs. ABB Case File Requests to Appeal Court Ruling
"In its appeal of the $13.4 million judgment vs. ABB, the company said the appeals court took a 'myopic focus on a single component of the (total) fee,' arguing that it should have taken into account the aggregate fee for its plans. 'In other words, the net return is what matters to the investor,' said the appeal ... In appealing the reversal of the Fidelity float income decision, the plaintiffs said the appeals court panel majority 'disregarded ... settled law' in its ruling that float income wasn't a plan asset.... The ABB attorneys' objection to the mapping ruling centered on its claim that plaintiffs' waited too long to file a complaint[.]" (Pensions & Investments)  

The Cash Balance Capital Preservation Guarantee Quantitative Analysis
"For a generic 60/40 portfolio, employers have experienced one material floor risk in the past 63 years -- 1974, which cost 0.2% of total payroll for our 5% of pay plan. For more aggressive portfolios the cost can be somewhat higher -- the 'worst case' cost historically was 1.5% of total payroll in 2008 for a 100% stock portfolio. For more conservative (40/60 or less) portfolios, employers have not seen a material floor risk in any year since 1950. Interestingly, the 'least risky' portfolio is 20/80, not 100% bonds, which speaks to the benefit of asset diversification." (October Three Consulting)  

Can the SEC Fix Target-Date Funds?
"The Investment Advisory Committee (IAC), a group of regulators, consumer advocates, academics and others who advise the SEC on matters of concern to consumers, earlier this month recommended a number of changes to the proposed TDF regulations. And that has caused the SEC to go back to the drawing board." (MarketWatch)  

Millennials Eschew Retirement Plans for Online Brokerage Accounts
"74% of affluent millennials -- those with more than $100,000 in investable assets -- have assets in online brokerage accounts, while only 67% have assets in a defined contribution plan. This cohort is alone among working age segments to be more likely to invest assets in online brokerage accounts than retirement plans ... For example, only 30% of millennial investor assets are allocated to employer-sponsored retirement plans, in contrast to Generation X, the next age cohort, which has allocated 48% of their assets to such plans." (Financial Planning)  

District Court Rejection of Challenges to Verizon Annuity Purchase Supports Derisking Strategy (PDF)
"[T]he court simply reiterated its prior ruling that Verizon was not acting as fiduciary when it amended the plan to direct the annuity purchase because 'the disputed decisions involve Verizon's role as settlor, not Plan fiduciary' ... [T]he court rejected the claim that Verizon's decision to purchase annuities from a single provider, Prudential, the day after it amended the plan to provide for it, was a fiduciary breach.... [T]he court stated, 'at bottom, plaintiffs are disagreeing with the rights of a settlor under ERISA, and such a disagreement must be addressed to Congress through requests for legislative changes to ERISA, not through litigation that complains of the decisions that ERISA empowers a plan sponsor as settlor to make.'" [Lee v. Verizon Communications, No. 3:12-CV-4834-D (N.D. Tex. Apr. 11, 2014)] (Groom Law Group)  

IRS Defers Effective Date of Bobrow Decision to 2015 Distributions
"The IRS will not apply the new one rollover per 12-month rule to any rollover that involves a distribution occurring before Jan. 1, 2015.... [T]he IRS indicated it had received comments about 'the administrative challenges' presented by the Bobrow interpretation of section 408(d)(3)(B). The announcement affords trustees and custodians time to alter their internal processing of IRA rollovers." (McGladrey LLP)  

Unpaid Employer Contributions as Plan Assets: Expansion Of Liability Under ERISA
"In a distinct trend, federal courts have found that, depending on the text of the underlying plan documents, unpaid employer contributions due under a CBA may be viewed as plan assets, such that the representatives of an employer who exercise fiduciary control over those plan assets can be held individually liable for the unpaid amounts (together with interest and penalties) under ERISA. These cases will no doubt help plan trustees and administrators collect monies owed to the plan. They also should serve as cautionary warnings to contributing employers to ensure that they fully understand the obligations that they are undertaking when they agree to contribute to ERISA funds pursuant to CBAs." (Proskauer Rose LLP)  

Treasury Department Starting Unit That Includes Oversight of Public Pension Funds
"The Treasury Department is creating an Office of State and Local Finance to coordinate the department's efforts to oversee developments in state and local financial markets, including public pension fund liabilities. Kent Hiteshew was named the office's first director ... Mr. Hiteshew is currently managing director at J.P. Morgan Chase, responsible for public finance in the Northeast U.S. as well as the bank's housing finance group." (Pensions & Investments)  

[Opinion]

Text of Letter from American Academy of Actuaries to Congressional Leaders on Pension Funding Provisions of Recent Legislative Proposals (PDF)
"MAP-21 was designed to provide short-term funding requirement relief to plan sponsors in light of economic conditions and included a schedule on which its impact would be reduced. Recent proposals ... would defer this phase-out, and by doing so, [lower] the ongoing funding requirements. Extending these temporary provisions accelerates tax revenue while deferring the pension cost to future generations, distorts the pension measurements, and undermines the benefit security of plan participants while increasing the risk exposure to the PBGC." (American Academy of Actuaries)  

[Opinion]

Hundreds of Thousands of Participants Could Lose Benefits If Closed DB Plan Testing Issue Is Not Fixed (PDF)
"A nondiscrimination testing rule contained in U.S. Treasury Department regulations will effectively compel many defined benefit plans across the country to completely freeze all benefits in the next few years... The American Benefits Council has for several years been proposing a very simple solution. If the grandfathered group is a nondiscriminatory group when the plan is first closed (or at a later date), then the plan is permitted to be tested with the employer's defined contribution plan on a benefits basis.... We urge Congress to move forward with that legislative proposal to prevent hundreds of thousands of participants from losing benefits." (American Benefits Council)  

Benefits in General; Executive Compensation

The Next Stage in Executive Compensation's Evolution
"Among the most impactful drivers of change over the past decade have been so-called best practices, regulators and proxy advisors. On the plus side, these forces supported a number of improvements in pay design and governance. However, on the downside, they've helped to create a compliance-driven and 'play it safe' environment.... [We] hear an undue focus on narrow pay issues and standardized rules, that third-party opinions have supplanted empirical research and that pay programs have become increasingly similar across organizations. The notions of customization ... and differentiation ... have received short shrift." (Towers Watson)  

Press Releases

Connect   LinkedIn   Twitter   Facebook
BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
Phone (407) 644-4146
Fax (407) 644-2151

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

Copyright © 2014 BenefitsLink.com, Inc. -- but feel free to forward this newsletter without further permission from us, if you do not modify the newsletter in any way (including this lower portion).

All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of that content. You may not alter or remove any trademark, copyright or other notice from copies of the content.

Links to Web sites other than those owned by BenefitsLink.com, Inc. are offered as a service to readers. The editorial staff of BenefitsLink.com, Inc. was not involved in their production and is not responsible for their content.

Useful links: