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August 2, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Defined Benefit Project Manager
for Milliman in TX

401(k) Sales Account Executive
for Caldwell Trust Company in FL

Relationship Manager
for T. Rowe Price in MD

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Webcasts and Conferences

The Health Care Reform Decision: The Impact on Multiemployer Plans
Nationwide on August 9, 2012 presented by International Foundation (of Employee Benefit Plans, or IFEBP)

Health Care Reform Virtual Conference
Nationwide on August 16, 2012 presented by International Foundation of Employee Benefit Plans

COBRA Workshop
in Oregon on August 20, 2012 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

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[Guidance Overview]

DOL Eliminates Fee Disclosure Requirement for Brokerage Windows
"While ERISA fiduciaries will welcome this news, the relief offered by the revised bulletin is limited in some respects. For example, all participant-directed investments under defined contribution plans, including brokerage windows and similar arrangements, remain subject to plan-related disclosure requirements, such as the requirement to provide participants with information about administrative fees and expenses. Moreover, the bulletin suggests that ERISA fiduciaries retain additional obligations concerning investments under a brokerage window or similar offering that the DOL intends to define by working with the benefits community to establish 'a practical and cost-effective' approach." (Ballard Spahr)

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[Guidance Overview]

Application of the 'Otherwise Excludible Employee' Rule to Cross-Tested Plans
"Generally, the average benefit percentage test (the second step in the average benefit test) requires an employer to aggregate all qualified plans maintained by the employer. However, if the employer elects to apply the otherwise excludible employee rule, the employer may not aggregate the benefits under the portion of the plan benefiting otherwise excludible employees." (SunGard Relius)

Long Beach, California, Amid Budget Shortfall, Faces Cuts in City Services
"Faced with a $17.2 mil.lion budget shortfall, Long Beach Mayor Bob Foster on Wednesday called for consolidating departments and contracting services out, and vowed to push for pension reform against one union he called 'intractable.' ... Foster applauded police and fire unions for agreeing to pension reforms, which officials say lessens the shortfall.... So far, officials say, eight of the nine unions have agreed to pension reform." (Los Angeles Times)

401(k) Plan Brokerage Windows Get a Reprieve
"A survey of defined contribution plans across a variety of sizes and industries by consulting firm Aon Hewitt showed that 29 percent offered a self-directed brokerage window in 2011, up from 18 percent in 2007. The bigger the plan, the more likely the option." (Society for Human Resource Management)

Average 401(k) Balance Declines 2 Percent in Second Quarter As Stocks Slip
"Fidelity Investments [reported] that the average balance among its nearly 12 mil.lion accountholders was $72,800 at the end of June. That's 2.4 percent less than at the end of March, and largely unchanged from last year's second-quarter average. It didn't help that the Standard & Poor's 500 stock index fell 2.8 percent during this year's second quarter. Investors worried about the European debt crisis and slow economic growth at home." (The Washington Post; free registration required)

Revisiting the Hybrid Option
"Smaller employers appear to be embracing cash-balance plans at a double-digit rate. Large employers, however, are another story, though some experts suggest greater regulatory clarity could spur more to add the option going forward." (Human Resource Executive Online)

Bond Insurer Says CalPERS Is Getting Preferential Treatment Among Stockton, California, Creditors
"That may set the stage for a fight over whether cities in dire circumstances legally have the ability to change obligations under pension plan benefits agreed to in much better times. CalPERS, the California Public Employees' Retirement System, so far has said that the cities don't have that ability. A Stockton proposal to creditors in May, which was made before Chapter 9 proceedings began, showed the city on the far outskirts of the San Francisco Bay Area was ready to fully pay pension fund payments but largely abandon payments on $121 mil.lion of pension obligation bonds backed by Assured Guaranty. Assured calculated that the loss on bond principal would be 83 percent. That amounts to $100 mil.lion, which Assured would have to cover." (Reuters)

San Bernardino, California, Files for Bankrup.tcy Protection
"San Bernardino listed assets and debt of more than $1 bil.lion in a filing today with U.S. Bankrup.tcy Court in Riverside, California. It's the third California community to seek court protection from creditors in just over a month....The city faces insolvency because of accounting errors, deficit spending, pension and debt costs, and lack of revenue growth, according to the report." (Bloomberg BusinessWeek)

Broadening the Approach to Preparing for Retirement (PDF)
"Although young adults aged 18 to 34 were found to be less involved and engaged in retirement planning than older boomers as confirmed by their relatively lower score, the good news is that the Study found that a large majority of young adults do, in fact, find retirement planning to be important (88 percent) and more than half think it's interesting (60 percent). In fact, 45 percent of young adults under age 35 said they are currently saving in an IRA or Roth IRA." (BMO Retirement Institute)

NCR Adds Lump-Sum Option Under Frozen DB Plan
"NCR Corp., Duluth, Ga., will offer a voluntary lump-sum payment option to deferred vested participants in its frozen $2.7 bil.lion U.S. defined benefit pension plan. The action is part of what the company calls phase two of its pension strategy and affects about 23,000 participants, said William Nuti, chairman, president and CEO ... 'We are very focused on eliminating pension entirely and from the point of view of not being in the pension business, if you will, going forward.'" (Pensions & Investments)

Florida Retirement System Ekes Out Small Return
"Florida Retirement System, Tallahassee, returned 0.29% on its investments for the fiscal year ended June 30, outperforming the defined benefit pension plan's customized benchmark by 77 basis points ... As of June 30, the retirement system returned 11.77% over three years, 1.56% for five years, 6.43% for 10 years, 6.11% for 15 years, 8.08% for 20 years and 8.38%; for 25 years." (Pensions & Investments)

Living Expenses Confound Boomers Nearing Retirement
"Retirement may be a stone's throw away for older boomers but a survey finds that many are in the dark about how much it'll take to fund their golden years. Two-thirds of about 1,100 respondents aged 55-60, and one-third of those 61-65, say they're not certain how much money they'll need to cover basic living expenses once they stop working." (AARP)

A Preliminary Assessment of the Funding Situation for Local Government Pensions
"State government pensions have attracted considerable media and scholarly attention. Less well understood are the nation's 3,196 locally administered plans. This paper represents a first step toward filling this gap. After reviewing issues common to state and local plans, it summarizes existing data and research on local pensions. Based on their own technical assumptions, local plans are as well funded as their statewide counterparts ... However, applying a lower discount rate and generalizing from the nation's largest municipal plans (those with assets above $1 bil.lion), researchers have estimated aggregate unfunded liabilities of $574 bil.lion[.]" (Lincoln Institute of Land Policy)

Same-S.ex Marriage Laws Present Challenges for Retirement Plan Sponsors (PDF)
"Sponsors of retirement programs that are not subject to ERISA ... will need to recognize and comply with applicable state marriage, civil union and domestic partnership laws. However, several federal tax aspects of their plans (such as required minimum distributions) will remain covered by federal law, including the DOMA definition of 'spouse.' Sponsors of retirement programs that are subject to ERISA are technically only required to comply with the federal DOMA rules when identifying participants' spouses for various plan purposes. However, plan sponsors that have large employee populations in any of the states that recognize same-s.ex marriages, civil unions, or domestic partnerships that are the equivalent of marriage, may want to voluntarily incorporate those rules to the extent possible." (Prudential)

Police Chief's $204,000 Pension Shows How Cities Crashed
"Stockton, California, Police Chief Tom Morris ... lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000 -- the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries. Stockton, which filed for bankrup.tcy protection on June 28, is among California cities ... confronting rising pension costs as they contend with growing unemployment and declining property- and sales-tax revenue. The pensions are the consequence of decisions made when stock markets were soaring, technology money flooded the state, and retirement funds were running surpluses." (Bloomberg)

Consider PBGC Premiums Before Reducing DB Contributions
"Under the new law, the funded status of an average plan could improve by 10% or more in 2012, which would reduce the 2012 annual contribution cost. However... this legislation will 'significantly' increase [PBGC] premiums, so plan sponsors may want to continue keeping their plans well-funded by contributing more than the minimum required under the legislation." (PLANSPONSOR.com)


Lincoln, Nebraska, Police and Firefighters Oppose Move from DB to 401(k)
"As recently as 2008, the Lincoln [Nebraska] Police and Fire Pension Fund was 100 percent funded. Today, it is 81 percent funded, and the reduction is due to the devastating recession our nation has experienced. As the market recovers, so will the pension fund.... Closing a defined benefit plan and funding a new defined contribution plan will increase costs to the city for no fewer than 15 years." (JournalStar.com)

Benefits in General; Executive Compensation

[Official Guidance]

Text of Final IRS Regs: Deductions for Entertainment Use of Business Aircraft (PDF)
The proposed version of the regulations were published in 2007, followed by a hearing in October 2007. The comments received by the IRS and the revisions to the proposed regs are discussed in the preamble. The final regulations apply to taxable years beginning after August 1, 2012. (Internal Revenue Service)

[Official Guidance]

Text of Proposed IRS Regs on Reimbursed Entertainment Expenses (PDF)
"This document contains proposed regulations explaining the exception to the deduction limitations on certain expenditures paid or incurred under reimbursement or other expense allowance arrangements. These proposed regulations affect taxpayers that pay or receive advances, allowances, or reimbursements under reimbursement or other expense allowance arrangements. These proposed regulations clarify the rules for these arrangements." (Internal Revenue Service)

[Guidance Overview]

IRS Issues Final Regs on Entertainment Use of Company Aircraft
"The immediacy of the effective date of the final regulations serves as the first clue that the Service has rejected most of the taxpayer comments received on the 2007 proposed regulations and Notice 2005-45. The final regulations reaffirm the Service's commitment to classifying aircraft expenses based on each passenger's reason for being on a flight, as opposed to applying a primary flight purpose test for identifying disallowed entertainment expenses." (Miller & Chevalier Chartered)

Say-on-Pay Voting Eases Opposition to Board Nominees, According to 2012 Proxy Voting Data
"In director elections, the spike in opposition votes detected in the aftermath of the financial crisis represented the sentiment of the investment community regarding executive compensation.... The more recent trend reversal in opposition votes shows that, while say-on-pay voting practices may still need fine-tuning, they are producing the desired effect of favoring corporate-investor engagement on a matter that is critical to shareholder value creation." (The Conference Board)

Many Teachers Lack Confidence in Their Retirement Outlook; Rising Health Care Costs Possible Culprit
"Overall, just 19 percent of full-time public sector workers are very confident in their retirement income prospects, according to the survey results.... Other findings include: 49 percent of teachers believe that they will need to replace 70 percent or more of their pre-retirement income each year in retirement so that they can live comfortably. Among K-12 teachers, the average preferred retirement age is 59 years and the average expected retirement age is 63 years." (National Council on Teacher Retirement)

Eight Flex Trends That Will Affect Your Company
"[The 2012 National Study of Employers from the Families and Work Institute and the Society for Human Resource Management] shows companies are more likely today than seven years ago to allow employees to choose their start and stop times, work from home or other alternative locations and take time off during the workday to tend to personal business as long as they make up the hours later. Here are eight trends identified by the study. 1. Flextime and telework are the new normal ... 2. Part-time work and extended career breaks have lost favor ... 3. FMLA compliance is hit-or-miss ... 4. Less-expensive child-care assistance is on the rise ... 5. Elder-care leave and assistance is catching up ... 6. More employees are turning to EAPs ... 7. More employers value volunteerism ... [and] 8. Employers are adopting new metrics." (Business Management Daily; free registration required)

Compensation Costs Up in June
"Wages and salaries for private industry workers increased 1.8 percent from June 2011 to June 2012. The increase for the 12-month period ending June 2011 was 1.7 percent. The increase in the cost of benefits was 1.9 percent for the 12-month period ending June 2012, down from the June 2011 increase of 4.0 percent. Compensation costs for state and local government workers increased 1.6 percent for the 12-month period ending June 2012, essentially unchanged from the June 2011 increase of 1.7 percent." (U.S. Bureau of Labor Statistics)

Employee Ownership Update for August 1, 2012
NCEO Executive Director Loren Rodgers discusses a new report that ESOP companies generate more jobs; a new ESOP capital gains tax deduction in Iowa; the JOBS Act's exclusion of shares from compensation plans from the shareholder threshold for being treated as a public company; employee ownership in South Africa; a Forbes writer's comments on ESOPs; and IRS continuing education credit at NCEO events. (National Center for Employee Ownership)

Press Releases

US Department of Labor’s ERISA Advisory Council to Hold Public Meeting Aug. 28-30
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))

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