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BenefitsLink Retirement Plans Newsletter

July 13, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Administrator - DC Plans
for American Pension Advisors, Ltd. in IN

Retirement Security Education Counselor
for Prudential in NJ

Director, Product Development
for Prudential in NJ

Customer Service Associate - Part time
for Prudential in PA

Corporate Paralegal - Employee Benefits & Compensation
for Smith Anderson Law Firm in NC

Retirement Plan Administrator
for United Retirement Plan Consultants in RI

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Webcasts and Conferences

"Brokerage Accounts and 404a-5: Making Sense of the Rules" Web Seminar
Nationwide on August 9, 2012 presented by SunGard Relius

"403(b) Plans for 401(k) Practitioners 2012" - A 3-part Web Seminar
Nationwide on August 14, 2012 presented by SunGard Relius

The Mental Health Parity and Addiction Equity Act (MHPAEA) Compliance Assistance Webcast
Nationwide on August 2, 2012 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Apprenticeship Plans and Fiduciary Responsibilities Webcast
Nationwide on July 26, 2012 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

We also publish the BenefitsLink Health & Welfare Plans Newsletter (free): Subscribe


[Official Guidance]

PBGC Interest Assumptions for Paying Benefits from Terminated Single-Employer Plans, Updated August 2012 (PDF)
"The interest assumptions are intended to reflect current conditions in the financial and annuity markets. Assumptions under the benefit payments regulation are updated monthly. This final rule updates the benefit payments interest assumptions for August 2012." (Pension Benefit Guaranty Corporation)

Retirement Plan Professionals: Attend the ASPPA Annual Conference   [Advert.]

Sponsored by ASPPA

Get ready for what lies ahead for the retirement plan industry in 2012 by attending The 46th ASPPA Annual Conference: Attend more than 70 interactive sessions on hot topics shaping the industry & network with over 1,500 retirement plan professionals.

[Guidance Overview]

Pension Funding Legislation Offsets Low Interest Rates, Increases PBGC Premiums
"Effective generally with the 2012 plan year, [MAP-21] has the effect of reducing, at least in the short term, minimum required pension contributions that generally have become increasingly high due to the low interest rate environment. However, effective with the 2013 plan year, the Act significantly increases premiums that all plans must pay to the [PBGC], ... with even higher premiums for underfunded plans. Employers will need to analyze both the short- and long-term implications of the Act, including whether the slower funding offered by the Act is advisable due to higher PBGC premiums for underfunded plans." (Thompson Hine)

[Guidance Overview]

Correcting a Cross-Tested Plan
"As cross-tested plans have become more popular, practitioners find themselves confronted with situations in which the cross-tested plan functions well for a couple of plan years but then no longer works, or works less well because of changes in demographics. Consequently, practitioners not only must understand how to design cross-tested plans but they must also understand how to resolve situations in which the design no longer works. [These] FAQs address several of the questions relating to corrective amendments." (SunGard Relius)

[Guidance Overview]

Participant Fee Disclosure: Top 10 List of Issues to Consider
"The Q&As [in this article] describe 10 things you should consider as you comply with the new rules. [Items include:] Q: Can I rely on the disclosures given to me by my vendors? A: No.... Q: What if the disclosures have gone out to my plan participants already? A: Some vendors have already sent out the participant-level disclosures directly to participants, without waiting for affirmative approval from plan sponsors.... Q: What should I do if the "benchmark" for a particular investment option that vendors are using for the participant fee disclosures is different from the benchmark used for that option in my plan's Investment Guidelines?... Q: What should I do with the plan-sponsor-level disclosures I received from my 401(k) plan vendors?" (McDermott Will & Emery)

Five Questions to Ask Before Handing Money to a Financial Adviser
"Despite two years under the Dodd-Frank financial reform law, millions of investors are still highly vulnerable when it comes to advisers. Buffeted by relentless lobbying by the financial services industry, the strongest pieces of Dodd-Frank have yet to be implemented. Here are key questions you need to ask a prospective financial adviser before you sign up: 1. How are you compensated? ... 2. How are you licensed? ...3. What products do you sell? ...4. Can you prepare a comprehensive financial plan? ...5. Are you a fiduciary? ...And don't hesitate to keep asking hard questions, especially in light of the fraud stories hitting headlines." (Reuters)

Baby Boomers Keeping Eyes on Retirement Prize
"In a survey of still-working adults age 55 and older, the majority of the respondents say they are not delaying retirement and believe they will be financially prepared to retire when the time comes.... 61 percent of the respondents plan to retire in less than 10 years, including 46 percent who believe they will be financially prepared to retire in the same time period. Among this same group, 59 percent said that they are either not delaying retirement or plan to retire at a younger age than originally anticipated." (Bloomberg Businessweek)

Fiscally Troubled San Bernardino, Calif., Awaits CalPERS Pension Tab
"The Southern California city of San Bernardino has seen its workers' pension costs more than double since 2006, adding to the fiscal stress that led it to the brink of bankrup.tcy. Next week, the city of 209,000 will learn annual returns of the California Public Employees' Retirement System, which may say it failed to meet its investment target. When the nation's biggest public pension underperforms, the most-populous state and its municipalities may have to help make up the difference, straining budgets that are still rebounding from the recession that ended in 2009." (Bloomberg BusinessWeek)

Nine Things Investment Advisors Must Do to Keep 401(k) Plan Sponsors Out of Hot Water
"It's no longer good enough for investment advisors to pick a few mutual funds for sponsors of 401(k) plans and then adjourn for lunch. Financial advisors need to also consider it their jobs to protect 401(k) plan sponsor boards, corporate officers and other plan fiduciaries from an increasingly active and high ERISA bar" (RIABiz)

IRS Explains Participant Notice Requirements for Funding-Based Pension Restrictions (PDF)
"When Section 436 requires all future benefit accruals to cease, the notice must be provided to any participant who would otherwise be benefiting under the plan on the date the restriction first applies to the plan. Accordingly, a notice would have to be provided to every active participant but not to former employees or beneficiaries.... [S]ituations that will benefit from this limit on the notice requirement include plans with multiple benefit structures due to mergers and amendments where prohibited forms of payment are only available for grandfathered benefits because of anticutback protections." (Buck Consultants)

Pension Titans: Plan Funding and Asset Allocation by the Biggest 50 Multinational Sponsors
"[Here is] defined benefit fund information from the annual reports of companies in the Dow Jones Global Titans index. This executive summary provides commentary and information on the plan sponsors' funded status, asset allocation and other key topics. The Dow Jones Global Titans 50 index measures the performance of the largest multinational companies. Fifty stocks are selected for the index, based on float-adjusted market capitalization, revenue and net income." (Pensions & Investments)

Sixth Circuit Rules That Plan Sponsor's Transfer to New QDIA Absent Participant Election Did Not Violate ERISA (PDF)
"In essence the DOL explained that, upon proper notice, participants who previously elected an investment vehicle can become non-electing plan participants by failing to respond. As a result, the plan administrator can direct those participants' investments in accordance with the plan's default investment policies and with the benefit of the Safe Harbor protections. ... the DOL emphasized that '[w]henever a participant or beneficiary has the opportunity to direct the investment of assets in his or account, but does not direct the investment of such assets, plan fiduciaries may avail themselves of the relief provided by this final regulation, so long as' the other Safe Harbor requirements are satisfied." [Bidwell and Wilson v. University Medical Center, Inc. and Lincoln Retirement Services Company, LLC (6th Cir. June 29, 2012)] (Sixth Circuit Court of Appeals)

Wisconsin State Employee Pensions Get Moody's Shock Treatment
"State officials might want to take a second look at the highly touted Wisconsin Retirement System. The costs and transparency of state and local pensions may soon be on the rise in Wisconsin and across the nation, driven up by proposed changes from Moody's Investors Service, the global credit rating agency. The changes could mean that Wisconsin Retirement System is underfunded by nearly $30 bil.lion—and that could ultimately drag on government bond ratings." (WisconsinReporter.com)

Auto Features Are Better for Participants in Self-Directed Retirement Plans
"The study surveyed 201 plan executives that offer at least one of three features—automatic enrollment, automatic escalation and qualified default investment alternatives. Eight-five percent of respondents said automatic features are 'especially effective' in helping participants who are less educated on retirement matters." (Pensions & Investments)

Social Security's Coming Crisis Quantified: $20.5 Tril.lion
"Now that health care is off the front burner, it's time to fix Social Security. Social Security's trustees say the system needs only "modest changes." In fact, the system is desperately broke. The proof is buried deep in the trustees' own 2012 report in a complex table, numbered IV.B6. The system's actuaries prepare the report's tables. But what the trustees make of them is up to the trustees. Clearly this year, as in others, the trustees ignored table IV.B6. How else could they have come up with their blase statement that Congress should address Social Security's finances 'in a timely way'?" (Investment News)

What 401(k) Participant Fee Disclosure Could Mean for You
Video: "If you're like many working Americans, there's a good chance you participate in your company's 401(k) plan. But you may not know that your plan has fees. Even if you do, you might not be sure exactly what those fees are. That's about to change. Thanks to new government regulations, everyone eligible to participate in a 401(k) plan in which they can direct their investments will be receiving a statement disclosing the fees associated with their plan. [This video provides] details on the types of fees you may be paying and, more importantly, for tips on how you can get the most from your 401(k)." (Schwab)

Retirement Plan Trustees Agree to Correct Improper Plan Loans Totaling More Than $1.7 Mil.lion
"To resolve a lawsuit filed by the U.S. Department of Labor, a federal judge in Chicago has signed a consent order between the United Employee Benefit Fund in Northbrook and the secretary of labor to amend the United Employee Benefit Fund's governing documents so that they comply with requirements of [ERISA] and the Internal Revenue Code. An investigation by the department's Employee Benefits Security Administration found that the fund's trustees made loans to participants that were improper, unsecured and allowed to become delinquent. Pursuant to the consent order, the amount of the improper loans—totaling more than $1.7 mil.lion—will be subject to corrected loan documentation, repaid by plan participants or treated as taxable distributions." (Employee Benefits Security Administration)

Benefits in General; Executive Compensation

[Official Guidance]

Listing Standards for Compensation Committees and Disclosure Regarding Compensation Consultant Conflicts of Interest: A Small Entity Compliance Guide
"Under the new rule, the exchanges will be directed to prohibit the listing of an equity security of certain issuers that are not in compliance with Section 10C's compensation committee and compensation adviser requirements. Smaller reporting companies are exempted from these requirements.... Small entities that have equity securities listed on an exchange and that are not smaller reporting companies would generally need to comply with any new standards adopted by the exchange pursuant to Rule 10C-1 if they wish to maintain their listing on the exchange." (Securities and Exchange Commission)

[Guidance Overview]

Higher Income Workers Face Extra Medicare Tax Next Year
"On June 11, the Internal Revenue Service (IRS) issued the first set of guidance, in the form of 20 FAQs posted on its website, regarding the additional Medicare Tax that is effective beginning January 1, 2013 under new Code section 3101(b). This informal guidance is designed to facilitate system changes and payroll compliance, and provides some limited relief with regard to the withholding requirements. The [linked article] provides a brief summary of the tax, and the responsibilities imposed on employers and employees to comply with the new provisions. [The authors] note that, in 2013, higher income taxpayers may also face the additional 3.8% tax (new Code sec. 1411) on certain 'net investment income.' Both of these new taxes were created under the 2010 health care reform law." (Groom Law Group)

Dewey Partners Mull Settlement with Bankrup.tcy Estate
"Former Dewey & LeBoeuf partners, stung by demands that they repay as much as $103.6 mil.lion to compensate the bankrupt firm's creditors, said Thursday they are considering whether to pay the hefty sums.... The terms of the clawback plan were laid out during a meeting in New York on Wednesday. They called for 709 former partners to give back a portion of the $455 mil.lion the firm distributed to partners since 2011.... At least five of the former partners said that the compensation figures listed in the emails conflicted with what they believed they were actually paid in those years. Two former partners said the changes could materially affect their decisions to pay up and settle." (Reuters)

Cypen & Cypen Newsletter for July 12, 2012
Covers employee benefit developments with an emphasis on governmental plans. Topics in this issue include: Funded Status of U.S. Pensions Rebounds; Pension Interest Rate Stabilization; PBGC Premiums; Phased Retirement Authority; Why Chief Justice Roberts Dared Not Invalidate Obamacare; Enforcement of Ordinance Blocking Pension Fund From Suing City Blocked; Pension Legislation Is Win-win for U.S.; Large Public Employee Retirement Systems Show Record Earnings; Goldman's First Take on Pension Highlights, Challenges and Changes for 2012; SEC Commissioner Addresses Public Pension Attorneys; Wisconsin Retirement System Ain't Broke (So Don't Try To Fix It); Geographic Differences and Trends in Employment-based Retirement Plan Participation. (Cypen & Cypen)

Press Releases

A Call for Papers
(University of Michigan, Stephen M. Ross School of Business)

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