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September 18, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Financial Account Representative
for Guidant Financial in WA

IRT Relationship Manager 3
for Wells Fargo in MN

Senior Account Manager
for Nova 401(k) Associates in TX

Retirement Planning Consultant
for Diversified in CA

Vested Interest Account Manager
for PNC in PA

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[Guidance Overview]

Cash Balance Plans: IRS Further Delays Reasonable Interest Rate Rules and Provides Guidance for Plans with Rates Affected by MAP-21 (PDF)
"[T]he IRS recently provided an update on the ultimate timing of the final market rate regulations and on how the 'MAP-21' (the Moving Ahead for Progress in the 21st Century Act) pension funding relief rules may impact interest credits under some cash balance plans.... In our experience, it is unusual for the IRS to indicate that the plan administrator is permitted to make this sort of plan interpretation without a corresponding plan amendment." (Groom Law Group)


[Advert.]

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Wolters Kluwer Law & Business – ftwilliam.com will be hosting a FREE webinar on Wednesday, Sept 26th at 1:00pm CT for a review of the safe harbor plan rules, as well as a discussion on designing safe harbor plans on ftwilliam.com's plan documents.


[Corrected Link] DOL Announces Online Filing Tool for Plan Sponsors to Report Service Providers That Fail to Comply With Fee Disclosure Rule
"The U.S. Department of Labor's Employee Benefits Security Administration announced today that plan sponsors seeking fiduciary relief for a service provider's failure to comply with the department's plan-level fee disclosure rule will be able to use a new online filing system, replacing the option of electronically sending notices to a previously established email address. The online filing tool will better assist plan sponsors who file electronically by ensuring that all required information is submitted, and providing immediate confirmation that notices have been received by the department. 'The revised submission procedures should provide plan sponsors a greater level of confidence that their requests for fiduciary relief have been received and will be efficiently processed and reviewed,' said Assistant Secretary of Labor for EBSA Phyllis C. Borzi." (Employee Benefits Security Administration)

Using Participant Data to Improve Target Date Fund Allocations
"Economic theory says that participants in 401(k) plans should gradually rebalance their portfolios away from stocks and toward less risky bonds as they approach retirement. Conventional target date funds attempt to do so by automatically rebalancing the household's portfolio periodically, but they take account of only one aspect of the individual: his expected retirement age. This paper investigates whether plan providers could improve on this 'one-size-fits-all' approach by making use of information that is known to the employer, namely each employee's income, 401(k) balance, and saving rate." (Center for Retirement Research at Boston College)

The Public Pension Crisis
"In the private sector, ERISA and [the PBGC] provide a mechanism to deal with insolvent pension plans and the outstanding pension obligations of bankrupt private firms. The financial consequences of pension plan insolvency to private companies and their employees may be disastrous, but ultimately they can be resolved in an orderly manner without forcing the company to pay all of its obligations. State and local governments have fewer options." (Boston University School of Law)

Public Pensions May Be at Risk in Bankruptcies
"[I]t's widely assumed that pensions are protected by the California Constitution's ban on 'impairing the obligation of contracts.' Therefore, all of the pension changes [in the recent reform legislation] apply only to future employees. But is the legal barrier to changing current pension promises absolute? Or could Stockton's municipal bankruptcy filing punch a hole through it?" (San Francisco Examiner)

Use of Managed 401(k) Funds on the Rise
"Of those in retirement plans managed by [Vanguard] in 2011, 24 percent were invested in a single target-date fund, 6 percent were in a single traditional balanced fund and 3 percent were in a managed account advisory program. In all, one-third of participants were in a managed allocation plan last year, up from 9 percent at the end of 2005." (CBS MoneyWatch)


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Gamma Ray: Retirement Income Security Is Not All About Alpha
"Investment performance isn't everything when considering the amount of income retirees can count on. Rather, making better financial planning decisions could help increase the income stream clients hope to generate once they've stopped working." (Investment News; free registration required)

The Promise and Pitfalls of In-Plan Variable Annuities (PDF)
"By offering variable annuities (VAs) with guarantees, insurers can help workers of all ages put aside money in an environment in which it's difficult to save. But insurers have yet to find a way to make these products attractive to young consumers and increase usage among mid- and late-career workers who are closer to retirement." (Towers Watson)

Employee Ownership Update for September 17, 2012
NCEO Executive Director Loren Rodgers discusses how many ESOPs there could be, the UK's new minister for employee ownership, AICPA's revision of its publication on valuing stock in private companies, a new director at the Ohio Employee Ownership Center, and who does ESOP valuations. (National Center for Employee Ownership)

UPS, Teamsters Wrap Up Liability Withdrawal Agreement
"Under the withdrawal agreement ... UPS will pay its withdrawal liability in equal monthly installments over 50 years, recording an $896 million liability based on the present value of the payments. The agreement also includes the creation of a new structure in which UPS will be liable only for the pension benefits of its own Teamster-represented employees.... The New England Teamsters pension fund has $6.28 billion in liabilities, or 41.4% funded, and is in critical status, defined by the Pension Protection Act of 2006 as less than 65% funded, according to the pension fund's 2011 Form 5500[.]" (Pensions & Investments)

More Than Two-Thirds of DC Plans Offer Target-Date Funds
"Target-date funds were offered by 68.6% of defined contribution plans in 2011, up from 63.6% a year earlier and 33.4% in 2006, according to an annual Plan Sponsor Council of America survey.... The PSCA survey found that the largest plans—those with at least 5,000 participants—had the highest rate of offering target-date funds at 74.8%. The smallest plans—those with fewer than 50 participants—had the lowest offering rate at 58%." (Pensions & Investments)

[Opinion]

Don't Stick Taxpayers With Underfunded Corporate Pensions
"This relief of pension funding obligations [provided by MAP-21] will undermine the solvency of pension funds in part to address a problem that doesn't exist. Companies protest that they can't afford to adjust to sharply falling discount rates. The costs they face, however, are a mix of costs they should have been able to control and costs they do control." (Bloomberg)

Benefits in General; Executive Compensation

Watch Out for Exec-Pay Tax Deduction Traps
"In addition to reviewing what process is used to ensure that option grants comply with plan terms, it's worth considering how Section 162(m) grant limits are structured under the plan. For example, a company may want to consider using a relatively high share limit based on a 12-month period instead of a multiyear period. Separate limits can also be used for different types of equity awards (such as performance-based full-share awards versus stock options)." (CFO)

Code Section 409A Rears Its Ugly Head Again
"IRS Notice 2010-80 ... may require a minor revision to employment, severance and change in control plans and agreements that require an employee to execute and deliver to the employer a release of claims before receiving payments.... [E]mployers and employees have until December 31, 2012 to make this change. The reason IRS is requiring this change is its paranoia over the possibility that some employers and employees will delay the commencement (and taxation) of severance payments into the following calendar year by 'sitting on' the required release for a few days or a few weeks or, conversely, will accelerate payments into the current calendar year by speeding up the waiver process." (Winston & Strawn LLP)

Ninth Circuit Rules In-House Counsel Internal Communications Before Final Appeal Not Privileged
"[This case of a long-term disability claim brought against the underwriter of an employer-sponsored plan governed by ERISA] shows that: an Insurance Commissioner's ban on discretion language may not affect a plan that is 'amended' rather than having a 'new' policy added; 'bonus' might be considered in calculating 'basic monthly earnings' in some circumstances.... Communications prior to a final appeal decision are not 'preparation for litigation' and therefore are not privileged." [Stephan v. Unum Life Insurance Company of America (9th Cir. September 12, 2012)] (Lane Powell PC)

Confirm Credentials and ERISA Bonds for Internal Staff, Plan Fiduciaries and Vendors
"Bonding exposures can arise in audit or as part of a broader fiduciary investigation. The likelihood of discovery in an audit or investigation by the Labor Department in the course of an audit is high, as review of bonding is a standard part of audits and investigations.... In the best case scenario, where the bonding noncompliance comes to light in the course of an EBSA audit where no plan loss resulted, the responsible fiduciary generally runs at least a risk that EBSA will assess the 20 percent fiduciary penalty under ERISA Section 502(l)." (Insurance Thought Leadership, LLC)

Press Releases

Celebrate Your 401(k)/403(b) Plan Every Day
Plan Sponsor Council of America (PSCA)



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