[Guidance Overview]
Final 408(b)(2) Regs
"The purpose of this regulation is to have the service provider give disclosure to the plan sponsor and fiduciary in order for them to fulfill their obligations to determine both the reasonableness of what is being paid and the potential conflicts of interest that may affect the performance of those services."
(McKay Hochman)
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[Guidance Overview]
When Is a Plan Top-Heavy?
"The determination date is the last day of the preceding plan year. For example, for a calendar year plan for the 2012 top-heavy test, the determination date would be December 31, 2011. For the first plan year, the last day of the first plan year would be the determination date for both the first plan year and the second plan year. For example for a calendar year plan that starts in 2012, the 2012 plan year determination date would be December 31, 2012, and the determination date for the 2013 plan year would also be December 31, 2012."
(McKay Hochman)
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Do Tax Rates Go Up or Down in Retirement?
"The decision about whether to opt for Roth tax treatment of your retirement assets — where you pay taxes upfront in exchange for tax-free withdrawals later on — requires you to make a judgment about whether your taxes will be higher in retirement than they were while you were working. That's a lot harder than it sounds ..."
(Morningstar)
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White House Pushes Semi-Retirements for Federal Workers
"President Obama's 2013 budget proposal calls on Congress to allow federal employees to work part-time while also collecting partial pension checks and earning partial retirement benefits for their part-time service.... It would save money — the administration estimates $720 mil.lion over the next decade — by spacing out retirements and new hires. And it would help alleviate the government's brain drain problem[.]"
(Federal Times)
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San Diego Tackles Municipal Pensions
"[A city pension overhaul measure proposed for the June ballot] would end guaranteed pensions for newly hired employees and instead provide 401(k) accounts for everyone except police. The measure would also freeze salaries at which pensions are calculated for five years."
(Los Angeles Times)
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Fees for 401(k) Retirement Plan Must Be Listed Starting This Year
"According to national retirement experts, there are plans where participants lose 3, 4, even 5 percent of earnings each year to fees. Fees make a big difference because U.S. 401(k) holdings amounted to $2.9 tril.lion in September. So fees in the billions are collected each year by plan administrators. The Government Accountability Office reports that small fees have big effects over time. One GAO calculation shows that an additional 1 percentage point charged to a $20,000 portfolio for 20 years would reduce the amount a 401(k) participant has at retirement by 17 percent."
(Herald-Whig)
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Federal Workers' Pensions in Cross Hairs Amid Budget Battle
"Congress is considering extending a two-year federal pay freeze for another year, through 2013. Bills designed to reduce the federal workforce continue to be introduced. And another measure is pending that includes across-the-board requirements for more contributions to pensions."
(Bloomberg via Pensions & Investments; free registration required)
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Small Cues Change Savings Choices
"In randomized field experiments, we embedded one- to two-sentence anchoring, goal-setting, or savings threshold cues in emails to employees about their 401(k) savings plan. We find that anchors increase or decrease 401(k) contribution rates by up to 1.4% of income."
(The National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full text)
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Tax Cut Extension Passes; Everyone Claims a Win
"With each party claiming that it had pocketed an election-year victory, Congress on Friday voted to extend payroll tax cuts and unemployment benefits and sent the legislation to President Obama, ending a contentious policy fight that left lawmakers with the political bruises to show for it."
(The New York Times; free registration required)
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Another Snafu in DOL'S Plan to Update Fiduciary Standard
"Executives at retirement industry organizations were miffed after receiving a letter from the Labor Department [dated February 10], giving them until [February 17] to tell the agency whether they can provide data on IRAs.... the letter from the Labor Department, which was dated Feb. 10 ... The department e-mailed the industry groups [on February 16], informing them that it was pushing back the deadline to Feb. 24."
(InvestmentNews)
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An Analysis of Risk-Taking Behavior for Public Defined Benefit Pension Plans
"[G]overnment accounting standards strongly affect public fund investment risk ... Unlike private pension plans, public funds undertake more risk if they are underfunded and have lower investment returns in the previous years ... pension funds in states facing financial constraints allocate more assets to equity[.]"
(Upjohn Institute)
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Union Pushing U.S. Companies to Reveal Auditor Ties
"Auditor rotation became a hot-button issue last year as regulators considered ways to make auditors more independent and skeptical when checking companies' financial statements. Many companies have had the same audit firm for decades, raising questions about whether auditors are too chummy with clients and over-reliant on them for a steady stream of revenue."
(The New York Times; free registration required)
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Correcting a Plan After Participation by Ineligible Employees
"If an ineligible employee(s) has been allowed into a plan, an available correction procedure is to amend the plan retroactively under the EPCRS self-correction program, ... and to submit the plan to the IRS for a determination letter.... How is this correction to be handled after May 1, 2012 for preapproved plans?"
(McKay Hochman)
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[Opinion]
Why Variable Annuities Have No Place in Your 401(k) Plan
"The unpredictable economy of the last five years has sparked many discussions about what, if anything, can be done to ensure guaranteed payouts in retirement plans. Some of the big insurance companies have suggested that putting annuities in 401(k) plans could be the answer and Uncle Sam may be listening too. If so, it's the wrong answer."
(Forbes)
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[Opinion]
Promoting Greater Transparency for 403(b) Plan Fees
"Over the past few years, new 403(b) regulations have changed the landscape significantly. While multivendor plans remain an option (unlike single vendor 401(k) plans), the 403(b) regulations require plan sponsors to adopt a written plan document and ensure that the plan operates in accordance with its terms. In addition, new mandatory procedures include limits on contributions and distributions and requiring a third-party administrator to monitor employee eligibility."
(The Agbay Group)
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[Opinion]
Politicians Put Taxpayers at Risk Chasing Gain for Pension Plans
"Politicians are setting up taxpayers and government workers for an even bigger crash by forcing retirement funds into risky investments, chasing gains required to pay promised benefits. That means trillions of dollars in higher taxes to provide no services or millions of betrayed public workers who will not get pension checks."
(Watchdog.org)
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[Opinion]
Congress Gets Better Pension Deal than Federal Workers in New Bill
"Members of Congress will get more lucrative pensions than new federal employees under a little-known provision in the bill that extends payroll tax relief and unemployment insurance, the head of the American Federation of Government Employees said[.]"
(American Federation of Government Employees)
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Benefits in General; Executive Compensation
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Press Releases
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