EmployeeBenefitsJobs.com logo BenefitsLink.com logo

BenefitsLink Retirement Plans Newsletter

July 29, 2014          Get Health & Welfare News  |  Advertise
         Past Issues  |  Search

Employee Benefits Jobs

Retirement Plan Specialist
Larson Financial Group
in MO

Senior Retirement Platform Consultant
1st Global
in TX

Retirement Plan Specialist
Financial Services Company - Pasadena, CA
in CA

Prospect Development Consultant
Transamerica Retirement Solutions
in CA, FL, IA, IL

Post Your Job

View All Jobs

RSS feed for jobs RSS Feed: All Jobs


Webcasts and Conferences

ACA’s Impact on Global Workforces
July 31, 2014 WEBCAST
(International Foundation of Employee Benefit Plans [IFEBP])

Choosing a Retirement Solution for Your Small Business
August 6, 2014 WEBCAST
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

What the New Healthcare Law Means for Your Small Business
August 14, 2014 WEBCAST
(Small Business Majority)

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]

ESOP Loans and Share Allocations Require Close Review
"Of particular note in [IRS Technical Advice Memo 201425019] was the statement that the, 'requirement [in the prohibited transaction exception for ESOP loans] includes both an operational and a documentary component.' In other words, not only does the ESOP loan document need to be stated correctly ... but also, the related allocation of shares in the ESOP that results from the loan payment needs to be correct in operation.... In the past, companies that had loan documents that were properly structured to meet the exception, but that allocated the shares incorrectly in operation, could often treat the allocations as clerical errors and simply reallocate correctly, without the allocation being labeled a prohibited transaction." (McGladrey)  


[Advert.]

ASPPA Annual Conference on October 26-29 in Washington DC

Sponsored by ASPPA

We don't just set the bar, we're constantly raising the bar for America's Retirement. And we unleash that tenacity at every ASPPA Annual Conference.



[Guidance Overview]

IRS Provides New Safe Harbors for Validation of Rollover Contributions (PDF)
"Rollovers made electronically will qualify for either of the new safe harbors as long as the distributing plan administrator or IRA trustee provides the required information regarding the source of funds to the administrator for the receiving plan. If the distributing plan is not required to file Form 5500 ... the EFAST2 records will not be an option for confirming plan status.... Plan administrators may develop other processes for making reasonable conclusions that a potential rollover contribution is a valid rollover contribution." (Prudential)  

Are Some Flexible Funds Proving Academics Wrong?
"Tactical target-date funds are outperforming those that don't zig when the market zags.... Looking at returns through the end of 2013, target-date funds for series that stick to the strategic glide path have an average five-year total return rank in the 54th percentile, while those that use tactical management have a 39th percentile average rank. (On average, the former group beat 54% of its peers, while the latter outpaced 61%)." (Morningstar Advisor)  

Why Are Target Date Funds So Popular?
"The short answer to this question is 'Because their employers have chosen TDFs on their behalf.' Or more precisely, advisors choose TDFs (Target Date Funds) because employers rely on their advisors for this decision. Most assets are there by default. They belong to participants who can't or won't make an investment election. So why do financial advisors like them?" (Paladin)  

Panel Rules That Los Angeles City Hall Must Toss Out Pension Reforms
"[A] labor panel voted to toss out new retirement rules touted by budget officials as a way to save the city $4 billion over the next three decades. The five-member Employee Relations Board sided with a report concluding that the city of L.A. violated labor rules when City Hall officials enacted new pension rules, including raising the retirement age to age 65, without negotiating with the unions." (Los Angeles Newspaper Group)  


[Advert.]

Super Saver Rate Ends Friday for Benefits Conference

Sponsored by University Conference Services

45+ workshops led by benefits experts cover such hot button issues as retirement readiness, ACA's Cadillac tax, employee engagement, private exchanges and more. Exclusively for employers. Earn 14.5 HRCI credits. Register by August 1 and save $200!



Why Hire an Unbundled Service Provider?
"The perceived disadvantages of 'unbundling' recordkeeping and administrative services generally fall into two areas: [1] the belief that adding more parties adds more cost, and [2] the belief that adding more parties adds more complexities for the employer.... The additional benefits of using an ' 'unbundled' arrangement include: [1] the ability to replace one service provider without changing them all; [2] more sophisticated plan designs and plan documents; and [3] more comprehensive and technically proficient services." (Retirement Management Services)  

A New Reality for ESOP Fiduciaries
"[A]fter the ESOP fiduciary [at a privately-held employer] seeks a redemption of shares by the sponsoring employer or its non-ESOP shareholder(s) and explores with the employer's board of directors the feasibility of a third-party sale or reorganization of senior management and business strategy, the options are exhausted. It will be difficult for a particular group of participants to plausibly argue that a reasonable fiduciary would have acted differently." (Holland & Knight)  

GASB Statement 67 and Statement 68: Calculation Specifics on Individual Entry Age Normal and Recognition of Deferred Inflows/Outflows
"This [article] discusses the individual entry age (IEA) actuarial cost method. The IEA cost method is specifically identified in the new standards as the only appropriate method for determining a plan's total pension liability, which is the portion of the present value of benefits attributable to past service. This article will also discuss the calculation of the amortization period to be utilized in recognizing gains or losses that are due to demographic experience or actuarial assumption changes in the annual expense under GASB 68." (Milliman)  

HATFA-14 and Discount Rates: The Latest in 'Pension Smoothing' Provisions
"On July 15, 2014, the U.S. House of Representatives voted 367-55 to approve H.R.5021, the Highway and Transportation Funding Act (HATFA-14) ... [The legislation] would extend the MAP-21 funding stabilization provisions for five years (through 2020).... HATFA-14 revises the minimum and maximum percentage ranges for a plan year ... The proposals relating to the applicable minimum and maximum rates are generally effective for plan years beginning after December 31, 2012." (Milliman Retirement Town Hall)  

IRS Continues to Mull Section 412(d)(2) Plan Amendments
"At a [recent] meeting with ASPPA and ACOPA's Government Affairs representatives ... the IRS ... indicated that closing agreements with regard to IRC Section 412(d)(2) amendments are being put on hold while they discuss the matter internally and consider and possible resolutions. We are hopeful that this is the first step in the right direction on this matter." (American Society of Pension Actuaries [ASPPA])  

ESOPs and 401(k) Plans: Coordination Tips for Administrators
"[F]or ESOP providers, the [408(b)(2) regulations] require that there be a specific written agreement outlining the scope of work, direct and indirect compensation, termination compensation, and manner of receipt. Investment entities, brokers, and their fiduciaries that hold plan assets (such as the investments from an ESOP non-stock account) must provide information on fees and expenses related to the investments.... When you provide more than one qualified plan to your employees, plan administration should be done in harmony. The delivery of compliance services should be seamless." (Tom Roback, Blue Ridge ESOP Associates, via LinkedIn)  

IRA Withdrawals During 2012: How Much and When (PDF)
"For those at or above the required minimum distribution (RMD) age of 70-1/2, the withdrawal rates at the median (mid-point) appeared close to the amount that is required to be withdrawn, though some were significantly more. In contrast, among individuals under age 60, 10 percent or fewer had a withdrawal. Significantly, when looking at the distribution of the withdrawal rates for those ages 70 or older, the median of the three-year average withdrawal rates also show that most individuals are withdrawing at a rate that is likely to be able to sustain some level of post-retirement income from IRAs throughout their retirement years." (Employee Benefit Research Institute [EBRI])  

Text of 2014 Annual Report of the Board of Trustees of the Social Security Trust Funds (PDF)
258 pages. Excerpt: "The Trustees project that the asset reserves of the OASI Trust Fund and of the theoretical combined OASI and DI Trust Funds will be adequate over the next 10 years under the intermediate assumptions. However, the projected reserves of the DI Trust Fund ... are depleted in the fourth quarter of 2016. At the time reserves are depleted, continuing income to the DI Trust Fund would be sufficient to pay 81 percent of scheduled DI benefits.... For the combined OASI and DI Trust Funds to remain solvent throughout the 75-year projection period: [1] revenues would have to increase by an amount equivalent to an immediate and permanent payroll tax rate increase of 2.83 percentage points (from its current level of 12.40 percent to 15.23 percent; a relative increase of 22.8 percent); [2] scheduled benefits during the period would have to be reduced by an amount equivalent to an immediate and permanent reduction of 17.4 percent applied to all current and future beneficiaries, or 20.8 percent if the reductions were applied only to those who become initially eligible for benefits in 2014 or later; or [3] some combination of these approaches would have to be adopted." [Also available are Supplemental Single-Year Tables, Documentation of Key Assumptions, and Model Documentation.] (The Board of Trustees, Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds)  

[Opinion]

Text of Testimony of Urban Institute to House Ways and Means Subcommittee on Social Security: 'What Every Worker Needs to Know About an Unreformed Social Security System'
"In this testimony before the House Ways and Means Committee Subcommittee on Social Security, Eugene Steuerle, Institute Fellow and Richard B. Fisher Chair at the Urban Institute discusses the fairness, efficiency and adequacy questions that arise almost no matter how much growth Congress maintains in Social Security. In particular he addresses three troubling aspects of an otherwise successful program: unequal justice; middle age retirement; and impact on the young." (Urban Institute)  

[Opinion]

Statement of Robert Greenstein on the 2014 Social Security Trustees' Report
"The trustees caution that their projections are uncertain. For example, they estimate an 80 percent probability that trust fund exhaustion would occur between 2029 and 2038 -- and a 95 percent chance that it would happen between 2028 and 2041." (Robert Greenstein, President, Center on Budget and Policy Priorities)  

Benefits in General; Executive Compensation

[Guidance Overview]

Text of IRS Guidance to Practitioners Regarding Professional Obligations Under Revised Treasury Circular No. 230 (PDF)
"The provisions of Circular 230 apply to: Attorneys; Certified Public Accountants; Enrolled Agents; Enrolled Actuaries; Enrolled Retirement Plan Agents; Appraisers ... The following is a summary description of certain obligations under [the June 2014 revision of] Treasury Circular No. 230. This summary does not address all provisions of the Regulations." (Internal Revenue Service [IRS])  

Status of the Social Security and Medicare Programs: A Summary of the 2014 Annual Reports (PDF)
28 pages. Excerpt: "[Social Security's Disability Insurance (DI)] Trust Fund reserves ... declined to 62 percent at the beginning of 2014, and the Trustees project trust fund depletion late in 2016, the same year projected in the last Trustees Report.... The Trustees project that the Medicare Hospital Insurance (HI) Trust Fund will be the next to face depletion after the DI Trust Fund. The projected date of HI Trust Fund depletion is 2030, four years later than projected in last year's report." (Social Security and Medicare Boards of Trustees)  

Fact Sheet: Social Security and Medicare Trustees Reports
"Taken in combination, Social Security's retirement and disability programs have dedicated resources sufficient to cover benefits for the next 19 years, until 2033. However, the projected depletion date for the separate Social Security's Disability Insurance (DI) Trust Fund is only two years away, in late 2016." (U.S. Department of the Treasury)  

2014 Proxy Season Review: Good Marks for Most U.S. Companies, but No Room for Complacency
"Say-on-pay results from 2014 annual meetings reveal that, after four years of mandatory say on pay, most U.S. companies are achieving consistently strong shareholder support for their executive pay programs. While that may not be surprising following a year in which both the S&P 500 and Russell 3000 logged annual returns over 30%, focusing on market performance as the sole cause of the support short-changes the improved dialogue and engagement among companies and their shareholders since enactment of Dodd-Frank's say-on-pay mandate." (Towers Watson)  

Delaware Chancery Court Awards Victory to the Good Guys in an Executive Compensation Disclosure Case
"When a company files a supplement to its proxy, the plaintiff's firm usually will demand attorneys' fees from the company and, if the company demurs, file a lawsuit seeking attorneys' fees. That is what happened in Raul v. Astoria Financial Corporation.... [T]he Court declined to award attorneys' fees to plaintiff ... [saying,] 'If, on the other hand, the stockholder has simply done the company a good turn by bringing to the attention of the board an action that it ultimately decides to take, she is not entitled to coerced payment of her attorneys' fees by the stockholders at large.'" [Raul v. Astoria Financial Corp., No. 9169-VCG (Del. Ch. June 20, 2014)] (Winston & Strawn LLP)  

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: