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April 30, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Retirement Sales Support Assistant
for Third Party Administration Firm in GA

Senior Benefit Specialist / Team Leader
for Marsh & McLennan Agency in NJ

Director, Annuity Pricing
for Prudential in CT

Portfolio Solutions Strategist/Investment Actuary
for T. Rowe Price in MD

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Webcasts and Conferences

408(b)(2) Workshop for Responsible Plan Fiduciaries
in Colorado on May 10, 2012 presented by Castle Rock Investment Company

"SunGard Relius Form 5500 and 401(k) Plan Workshops" - San Francisco
in California on May 30, 2012 presented by SunGard

"SunGard Relius Form 5500 and 401(k) Plan Workshops" - Seattle
in Washington on May 30, 2012 presented by SunGard Relius

"SunGard Relius Form 5500 and 401(k) Plan Workshops" - Nashville
in Tennessee on May 31, 2012 presented by SunGard Relius

"SunGard Relius Form 5500 and 401(k) Plan Workshops" - New Orleans
in Louisiana on June 7, 2012 presented by SunGard Relius

Legislative and Regulatory Update with Richard Hochman
in Missouri on May 30, 2012 presented by ASPPA Benefits Council of Greater St. Louis


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[Guidance Overview]
Tax-Exempt Common Control Rules of the Final 403(b) Regulations of July 26, 2007
"These regulations address control group rules for tax-exempt entities. There are four tax-exempt common control rules. They generally do not apply to church or church-controlled organizations." (McKay Hochman)


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[Guidance Overview]
2011 Tax Year FATCA Reporting by U.S. Persons of Participation in Foreign Retirement Plans and Deferred Compensation (PDF)
"[One] major part of FATCA requires reporting of foreign accounts by individual US persons, generally beginning with the 2011 tax year. Such reporting involves a requirement to file new IRS Form 8938, which accompanies the individual's US tax return, usually one of the 1040 series, and which is due at the same time.... For purposes of the Form 8938, non-US. pensions and deferred compensation, whether funded or not, and including equity-based compensation and stock options, may be treated as a foreign account subject to reporting." (Groom Law Group)

Federal Reserve Bank Is No Friend of Defined Benefit Retirement Plans
"In the past five years, the sponsors of the largest plans have poured $164.4 bil.lion into the plans, and yet their aggregate funding shortfall has increased by $368 bil.lion to $258.3 bil.lion and their average funded status has fallen to 81.6% from 108.6%.... Certainly, the stock market plunge in 2008 and 2009 is partly to blame, although the losses have largely been recovered. The larger culprit is the Federal Reserve and its low interest rate policy, which has driven down the discount rate companies must use in valuing their future liabilities, and thus has increased the current value of those liabilities despite substantial corporate contributions." (Pensions & Investments)

Large Connecticut Public Employee Union Rallying Support for State-Run Retirement Plan for Private Companies
"One of Connecticut's largest public employee unions is trying to rally support in the waning days of the General Assembly session for a study of whether state government should offer a retirement plan to private citizens. But one of the key lawmakers behind the proposal conceded late last week that the chances of passage this year are poor with the legislature scheduled to adjourn in less than two weeks." (CT Mirror)


PSCA's Eastern Regional Conference – Take Advantage of Discount Pricing   [Advert.]

Sponsored by PSCA (Plan Sponsor Council of America)

PSCA’s 2012 Eastern Regional Conference will be the most comprehensive retirement-focused, one-day meeting on the east coast. It's being held at the Westin Peachtree Plaza in Atlanta, Georgia on Wednesday, May 9. To register please click here.


Objective-Based Approach to Participant DC Investing Is Needed
"[P]lan sponsors might want to think about presenting investment options to participants in a different way—one that aligns more closely with the way participants think about their own retirement needs. The typical participant does not think about those needs in terms of asset categories: growth vs. value; large cap vs. small; international vs. U.S. Rather, they tend to think in terms of their own basic objectives and needs. Broadly speaking, these can be divided into four key categories: growth, income, inflation protection and liquidity." (Pensions & Investments)

Switch from DB to DC for New Hampshire Retirement System Taking Shape Despite Opposition
"A bill to transition the state's retirement system into a 'defined contribution' plan will be finalized by House lawmakers in the coming weeks, despite strong opposition from public employee unions and an uncertain reception in the Senate. House Republicans have been considering the move since last year's pension reform effort, which increased contribution rates for employees and has been challenged in court by a coalition of unions." (Concord Monitor)

Ford's Lump-Sum Buy-Out Offer Is a First for a U.S. Pension Plan
"The Ford executives didn't explain the timing, but observers said they believe Ford is making the offer now because it will cost less than in the past. Under a provision of the Pension Protection Act, new corporate bond rates were recently phased in, replacing 30-year Treasuries.... 'I'm not aware of anyone who has done this without terminating or annuitizing their plan,' said Jeremy Gold, president of Jeremy Gold Pensions, New York, an actuarial consulting firm. 'All your lump summing for employees is part of that (kind of) event, but ... I'm not aware of this being done on an optional basis[.]'" (Pensions & Investments)

Pensions for Elected State Officials: Target for Reform?
"It's the latest quirk in the hodge-podge of laws and practices, drawing the attention of a [California] legislative committee, that gives some elected officials pensions, prohibits pensions for other elected officials and allows some to choose no pension. Elected official pensions are 'under consideration' and 'may be included' in the proposal made by a two-house legislative committee on pension reform[.]" (Calpensions)

401(k) Salary Deferrals: Better as Single-Sum, or Divided Per-Paycheck?
"If your plan allows you to max out with one contribution or just a few over several pay periods—and still get your full match—well, then, putting your money to work sooner than later is likely a wise move, particularly if you have a bullish outlook for the year. But you may find restrictions or drawbacks at the plan level. Seventy-one percent of employers issue their match on a payroll basis, calculating it as a percentage of your compensation during that payroll period[.]" (CNN Money)

Can a Public Pension Plan File Bankruptcy? Historic Northern Mariana Islands Chapter 11 Case Might Tell
"[A motion was filed recently] on the behalf of two anonymous retirement plan participants, arguing that the plan cannot file for Chapter 11 restructuring because it's not a person under the bankrup.tcy code and because it's a governmental unit.... [An attorney said] that by filing for bankrup.tcy, the fund was permitting the local government to avoid its obligation to its retirees." (Investment News)

Would Tax Increases at the Top Affect Savings and Investment?
"Capital gains tax increases do reduce after-tax returns to saving, and this may cause some taxpayers to save and invest less. But, other people may save and invest more in order to reach a certain savings goal, balancing out those who scale back. On the whole, the Congressional Research Service ... concludes that capital gains tax rate increases appear to have 'little or no effect' on private saving." (Center on Budget and Policy Priorities)

Wellness = Retirement Savings
"[Principal proposes] that plan sponsors and their financial professionals consider an alternative approach to help undersaving participants contribute more towards retirement. Instead of focusing only on urging employees to save more, you might want to expand the focus to include helping employees find ways to spend less. Specifically, [Principal proposes] helping employees spend less on the major expense that is linked to the workplace—the cost of their healthcare." (Principal)

Advances in Managing Pension Asset Volatility
"Defined benefit ... pension plans face significant and complex risks as they struggle to recover both from the asset losses sustained during the financial crisis and from the negative impact of today's low interest rate environment. Current portfolios—commonly consisting of equities, bonds and alternative assets—do not employ sophisticated risk management techniques, leaving pension plans exposed to material losses in the event of a severe or sustained market decline." (Milliman)

Reality Check on IRA Investments in Real Estate
"The IRS applies a term—prohibited transaction or 'PT'—to any use of IRA assets for personal gain other than preservation of a retirement income stream. The prohibited transaction rules disallow a number of specific transactions, such as selling real estate to or buying it from your IRA, or personal or immediate family member use of real estate owned by an IRA, but they also generally prohibit 'self-dealing' which is defined to include any act of a fiduciary (i.e., you) by which IRA income or assets are used for the fiduciary's own interest." (E Is for ERISA)

Multiple Employer Plans: An ERISA Enigma (PDF)
"Although the basic concept has been with us for many years, multiple employer plans (MEPs) have been growing in public awareness. Formerly the domain of Professional Employer Organizations ... and shared employee situations, several plan administration and investment firms are promoting multiple employer retirement plans of otherwise unrelated employers (sometimes called 'open MEPs') as a mechanism to reduce costs and fiduciary exposure while providing various benefits to employees." (Journal of Pension Benefits)

Ohio Lawmakers Ready to Consider Reforms for Public Employee Retirement Systems
"More than two years ago, the pension boards [of each of Ohio's five public employee retirement systems] submitted new funding plans to the General Assembly that called for employees working longer for fewer pension benefits. The proposals do not call for taxpayers to pay more. [Senate President Tom Niehaus] said legislation is being drafted based on those plans and updated." (Dayton Daily News)

[Opinion]
How Retirement Benefits Might Sink the States
"Chicago Mayor Rahm Emanuel recently offered a stark assessment of the threat to his state's future that is posed by mounting pension and retiree health-care bills for government workers. Unless Illinois enacts reform quickly, he said, the costs of these programs will force taxes so high that, 'You won't recruit a business, you won't recruit a family to live here.' We're likely to hear more such worries in coming years." (The Wall Street Journal)

[Opinion]
Illinois Pension Reform Plan: Taxpayer Costs Must Be Fixed, Not Unlimited
"The discussions going on in Springfield regarding pension reform still have not addressed the key concern: taxpayers must have a reasonable, fixed annual cost going forward. They cannot be on the hook for everything that can and will go wrong between now and 2062. Any increased pension costs beyond the agreed, affordable fixed taxpayer portion must either be paid for by other employees or result in automatic pension decreases." (Champion News)

Benefits in General; Executive Compensation

[Guidance Overview]
IRS Proposes Regs Allowing Deduction for Some Employee Local Lodging Expenses
"Despite the characterization of local lodging as a personal expense, employers could still take a compensation deduction for local lodging. However, the working condition fringe rules (for lodging provided in-kind) and the accountable plan rules (for lodging reimbursements) could not be used to provide local lodging on a tax-free basis when the exception created by Notice 2007-47 for temporary lodging did not apply. The proposed regulations provide more certainty for employers wanting to provide local lodging on a tax-free basis." (Thomson Reuters/EBIA)

Hedging Nonqualified Deferred Compensation Plans (PDF)
"NQDC Plans create both economic and accounting volatility; companies who sponsor plans may decide a hedge of the NQDC liability is prudent to offset these risks. The NQDC Plan appears as an operating expense on the employer's income statement ... and creates an increasing liability on its balance sheet until benefits are paid. The eventual payment of the benefits will result in a funding requirement. The change in the size of the NQDC Plan due to change in value of the underlying reference investments creates volatility on the plan sponsor's income statement." (BNY Mellon)

Employee Benefits Developments, April 2012
The newsletter covers recent rulings, opinions, and cases; the two cases both involve Retained Asset Accounts. (Hodgson Russ LLP)

Press Releases



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