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GAO Says Federal Agencies Should Collect Data and Coordinate Oversight of Multiple Employer Plans
"For this report, GAO examined (1) the characteristics of private-sector MEPs, (2) the advantages and disadvantages of MEPs and how their perceived advantages are used to market them, and (3) how IRS and Labor regulate MEPs.... GAO recommends that Labor lead an effort to collect data on the employers that participate in MEPs. GAO also recommends that Labor and IRS formalize their coordination with regard to statutory interpretation efforts with respect to MEPs. Furthermore, Labor and IRS should jointly develop guidance on the establishment and operation of MEPs."
(U.S. Government Accountability Office)
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$3 Trillion at Risk Due to Availability of Limited Scope Audits Under ERISA, Says DOL Inspector General
"For 2010, the most recent complete year available, about 84,000 plans filed audited financial statements with EBSA, representing 93 million participants and $5.7 trillion in assets, according to the OIG. The trouble is the percentage of plans electing limited scope audits has grown from about 46% in 1987 to approximately 70% in 2010. The reported value of assets excluded from plan audits has similarly grown from about $520 billion (43%) in 1989 to $3.3 trillion (58%) in 2010."
(Forbes)
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[Guidance Overview]
IRS Issues PLRs Permitting Retirees in Pay Status to Change Election to Lump Sum
"In [two] cases, the IRS determined that although the window period would result in a modification to the payment period and an increase in the payment amount, the window period was permissible under the minimum distribution rules because the modification and increase would result from a plan amendment, as permitted under the regulations."
(Haynes and Boone, LLP)
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PBGC Issues Premium Rate Guidance Relating to Changes in 2013
"[I]n 2013, for the first time, plans that previously elected to use the Alternative Premium Funding Target to determine unfunded vested benefits are eligible to revoke that election and use the Standard Premium Funding Target. Because an election to use the Alternative Premium Funding Target must remain in effect for at least five years, a plan cannot revoke a prior election for the 2013 plan year unless the election was first effective for the 2008 plan year."
(Haynes and Boone, LLP)
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Postal Service Expects 15,000 to 20,000 Buyouts
"[The] American Postal Workers Union ... said full-time career employees are eligible for a $15,000 payment in two installments; $10,000 in May of 2013 and $5,000 a year later. Most who take the offer will leave at the end of January."
(The Oregonian)
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Employers Expressing Doubt in Retirement Readiness of 401(k) Plan Participants
"[A recent Towers Watson] survey reveals significant employer concern that their DC plans are both underutilized and misunderstood by their employees. Only one in five respondents (22%) believe employees generally make informed decisions about their retirement savings, and only 26% believe their employees have realistic expectations about what DC plans can provide. Nearly one-half of respondents (48%) expect a greater number of older workers will ultimately delay retirement."
(AOL Daily Finance)
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[Advert.]
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Advanced forum brings together leading in-house counsel and outside defense attorneys to engage in developing winning litigation strategies and overcoming new and emerging theories of liability from the plaintiffs' bar. BenefitsLink discount code: BL 200
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Employees Did Not Prove Intent by Seller and Buyer Companies to Interfere with Employees' Attainment of Benefits
"Terminated employees who were not rehired following a sale of an employer's facilities did not present sufficient evidence to prove that their employer and the purchasing company had conspired to prevent the employees from obtaining and receiving pension benefits in violation of ERISA Section 510 ... The [Tenth Circuit Court of Appeals] explained that a claimant, such as these employees, must show that the determinative or motivating factor for an employer's actions is to block attainment of benefit rights. " [Apsley v. The Boeing Company (CA-10)]
(Wolters Kluwer Law & Business)
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EBSA Leader Borzi Says Public DC Plans Should Copy Corporate Plan Fee Disclosure Rules
"Even though the Department of Labor has jurisdiction over only private retirement plans, the agency's top pension official is suggesting public defined contribution plans adopt the same fee disclosure that the DOL requires of corporate America.... Ms. Borzi also had some advice for plan trustees: If an investment manager can't explain its investment strategy, 'get rid of 'em.'"
(Pensions & Investments)
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Reports Paint Improving Corporate Funding Picture in September
"Plans have ramped up their interest in equity hedging strategies in recent months as fixed-income returns struggle in a low-interest-rate environment.... The cumulative asset return over the last 12 months has been 15%, but the funded status has actually dropped to 74.5% from 77.4%."
(Pensions & Investments)
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Third Quarter Gives Canadian Pension Plans a Boost
"While the third quarter was positive, the overwhelming majority of Canadian pension plans are still faced with significant solvency deficits ... Plan sponsors should generally be planning for significant increases in cash funding requirements over the next few years."
(Mercer)
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Large Pension Plans Enjoy Net Reduction in Liabilities During September
"It may be too late in the year to call it a comeback—the funding deficit for these 100 pensions has grown by more than $100 billion in 2012. But two months in a row of funded status improvement is still welcome news. Not surprisingly, the recent deficit reduction was driven in large part by cooperative interest rate movement."
(Retirement Town Hall)
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September Brings $45 Billion Improvement in Pension Funded Status
"Pension liabilities of the 100 largest corporate defined benefit pension plans fell by $30 billion in September while the corresponding pension assets improved by $15 billion, lowering the Milliman 100 PFI pension deficit to $453 billion and increasing the funded ratio to 74.5%. The September 30, 2012, funded ratio still lags its December 31, 2011, value of 78.7%."
(Milliman)
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The Fine Print on Stable Value Funds: How Stable Is the Issuer?
"In a time when municipal bankruptcy has been filed this year by a number of California cities, when [the] state of California is effectively insolvent, and when the credit rating of the government of the United States has been downgraded twice in the last three years, it's useful to place a GIC's guarantees in proper context: They rest entirely on the full faith and credit of the insurance company itself that issues the GIC."
(Morningstar Advisor)
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Japan's Giant Pension Fund Eyes Property, Private Equity
"The head of Japan's Government Pension Investment Fund (GPIF), the world's biggest public pension fund, said it may venture into alternative assets, such as infrastructure and private equity funds, as an ageing population puts more stress on the pension system.... Japan's population is expected to fall by 30 percent to below 90 million by 2060, when the proportion of those aged 65 or older will have almost doubled from 2010[.]"
(Business Recorder)
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[Opinion]
California's New Pension Program for Private Sector Employees Is Groundbreaking
"'This legislation will help millions of hard-working Californians save for retirement, and we thank Governor Brown for signing it,' said Karen Friedman, executive vice president and policy director for the Pension Rights Center. 'While Congress is exploring solutions at a national level, the passage of the California law is further recognition of the retirement crisis and the need to expand coverage to low- and moderate-wage earners.'"
(Pension Rights Center)
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Benefits in General; Executive Compensation
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2012 Year-End Action Possibly Needed for 409A Plans Providing for Payments Contingent Upon Release
"Under IRS-approved correction procedures, employers may amend noncompliant arrangements to provide either: that the payment will be made only on the last day of the specified period for executing and not revoking a release (e.g., payment will be made on the 60th day following the employee's separation from service regardless of when the terminated employee delivers the executed release to the employer); or that if the specified payment period (e.g., within 60 days after the employee's separation from service) straddles two tax years of the employee, the payment must be made in the later of those tax years."
(Sidley Austin LLP)
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409A Transition Relief Expires at Year-End; Employers Should Review Their Nonqualified Deferred Compensation Plans
"The IRS has provided general corrective guidance for certain 409A compliance issues. The guidance included transition relief involving release-based payments, but that relief expires on December 31, 2012. Consequently, employers should review and, if necessary, revise before the end of this year their 409A plans and arrangements that provide release-based payments. Failure to do so may constitute a 409A violation with adverse tax consequences to the employee."
(Ballard Spahr)
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Proposed IRS Regs Permit Deduction of Certain Local Lodging Expenses as Employee Business Expenses
"The proposed regulations also provide a safe harbor, under which an employee can deduct local lodging expenses if: (i) the lodging is necessary for the individual to participate fully or to be available for a bona fide business meeting, conference, training activity, or other function, (ii) the period during which such local lodging is provided does not exceed five calendar days and does not recur more than once per calendar quarter, (iii) the employer requires the employee to remain at the activity or function overnight and (iv) the lodging is not lavish or extravagant and does not provide a significant element of personal pleasure, recreation or benefit."
(Bloomberg BNA)
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Seventh Circuit Holds Internal Grievances About Employer Fiduciary Duty Breaches Are Actionable Under ERISA Sec. 510
"Concluding that the language of Section 510 of ERISA was 'ambiguous' and 'a mess of unpunctuated conjunctions and prepositions,' the Seventh Circuit concluded that, 'an employee's grievance is within Section 510's scope whether or not the employer solicited information.' The court did, however, reiterate the high threshold to prevail on a Section 510 claim: 'It does not mean that Section 510 covers trivial bellyaches—the statute requires the retaliation to be "because" of a protected activity.... What's more, the grievance must be a plausible one, though not necessarily one on which the employee is correct.'"
(Drinker Biddle)
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Higher Medicare Taxes Coming for High-Income Wage Earners in 2013
"Under the [ACA], workers earning more than $200,000 a year ($250,000 for joint filers) must pay higher Medicare hospital insurance (HI) taxes beginning in 2013. The new tax is 2.35% (an increase of 0.9%) of applicable wages above those thresholds, so a worker earning $300,000 a year will pay HI taxes of 1.45% on $200,000 plus 2.35% on $100,000. There is no change to the employer's share of the HI tax."
(Towers Watson)
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Press Releases
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