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October 19, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Retirement Plan Consultant
for Ingham Retirement Group in FL

Client Service Representative
for Benetrends, Inc. in PA

Client Service Manager, Taft Hartley
for New York Life Retirement Plan Services in MA

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Webcasts and Conferences

HIPAA Privacy and Security Update: Lessons Learned From Latest Enforcement Actions
Nationwide on October 17, 2012 presented by Thomson Reuters / EBIA

2012: A Retrospective Year in Health Care - Live FutureOffice Network Smartcast
Nationwide on November 1, 2012 presented by Davidson Marketing Group -- FutureOffice Network

Mercer's Analysis of Verizon's $7.5B Pension Annuity Transaction Webcast
Nationwide on October 22, 2012 presented by Mercer

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[Guidance Overview]

IRS Announces IRA and Plan Limits for 2013
"Individuals who are active participants are eligible to deduct their Traditional IRA contributions, only if their MAGI amounts do not exceed certain limits. [These have increased.] ... Individuals may contribute to a Roth IRA only if their MAGIs do not exceed a certain amount. [These have increased.] ... A nonrefundable savers tax credit is available to eligible individuals who make contributions to their Traditional IRAs and/or Roth IRAs, as well as to those who make salary deferral contributions to an employer sponsored retirement plan. This saver's credit is capped at $1,000, and the percentage for which the individual is eligible depends on his/her adjusted gross income (AGI). [The adjusted gross income limits have increased.]" (Appleby Retirement Dictionary)


West Coast Defined Contribution Conference San Francisco Nov. 4-6

Sponsored by Pensions & Investments

Free registration for qualified plan sponsors. Sponsored by Pensions & Investments - learn how to develop a defined contribution plan that helps ensure your participants lifetime income.

[Guidance Overview]

For 2013, IRS Raises 401(k) and Pension Plan Limits
"The overall limit for defined contribution plan deferrals from all sources (employer and employee combined) increases to $51,000 per participant from $50,000. The amount of employee compensation limit that can be considered in calculating contributions to defined contribution plans increases to $255,000 from $250,000." (Society for Human Resource Management)

Bankrupt San Bernardino Halts Pension Payments to CalPERS
"Since July 31, the day before San Bernardino declared bankruptcy, the city has failed to make six biweekly employer contribution payments of more than $1 million to [CalPERS] ... The action taken by San Bernardino is in stark contrast with two other California cities -- Vallejo, which emerged from bankruptcy in 2011, and Stockton, which is seeking bankruptcy protection. Both cities decided to keep current on all payments to the pension fund. How San Bernardino deals with its future obligations to Calpers remains to be decided, but even opening the door to negotiating payments to Calpers is significant[.]" (ThomsonReuters)

What You Don't Know About Your Company's Stock Can Hurt Your 401(k)
"[W]hile the courts have held that it is not a violation of ERISA for employers to offer their own stock in 401(k)s, despite knowing about company risk that might not be evident to all employees, it still unwise for employees to over-invest in that offered stock." (Palisades Hudson Financial Group)

Pension Rights Center Calls for Temporary Halt to Lump Sum Buyouts
"Some of the questions that the group wants Congress to address concerns the security of the annuities being purchased in plan termination; the exposure of the insurance companies that are taking on these large group annuity contracts; and whether individuals truly understand the consequences of trading in guaranteed income for life for a lump sum." (Investment News; free registration required)

Handouts from IRS Phone Forum on Lifetime Annuities (PDF)
25 presentation slides from an IRS Phone Forum held August 28, 2012. Slide titles include: General update, Background, Revenue Ruling 2012-3, Proposed QLAC regulations, Revenue Ruling 2012-4, and Proposed 417(e) regulations. (Internal Revenue Service)

Transcript and Audio from IRS Phone Forum on Lifetime Annuities
Forum held August 28, 2012. Two IRS actuaries, Carol Zimmerman and Larry Isaacs, discussed current IRS projects and guidance issued in February of 2012 on lifetime annuity options for retirees. (Internal Revenue Service)

Caselaw Means Disclosure Obligations Could Be Broader Than DOL Regulations (PDF)
"The development of the government's fee disclosure initiatives coincided with two waves of innovative class actions by attorneys for plan participants ... Its first manifestation was the so-called stock-drop cases .. The second wave [claimed] that plan fiduciaries had breached their duties by failing to understand or monitor the indirect compensation paid to plan service providers. Both the stock-drop and the excess-fee cases assert a duty to disclose that is broader than the impending disclosure regulations[.]" (The Wagner Law Group via 401k Advisor)

Analysis of Verizon's $7.5B Pension Annuity Transaction (PDF)
"While Verizon is the most recent plan sponsor to announce its intention to settle sizeable pension liabilities, it joins a number of other high-profile plan sponsors publicly announcing risk-transfer moves in 2012 ... [Mercer has] seen increased activity and interest from small to midsize employers in instituting risk-transfer strategies. According to [estimates recently calculated with in conjunction with] Oliver Wyman, as much as $100 billion could be transacted in annuity purchases by US corporate pension plans over the next three to four years." (Mercer)

Hedge Funds Reach Record Size Thanks to Recent Strong Returns
"Global hedge funds now oversee $2.2 trillion in assets, up from $2 trillion at the end of the 2011 and more than double what they invested for their wealthy clients in 2005 ... [P]ension funds, endowments and wealthy individuals invested only $31 billion net new capital into hedge funds this year, compared with $70.6 billion in 2011, when funds mostly lost money, and $194.5 billion in 2007 just before the financial crisis." (Reuters)

What's Your Rate of Return on Social Security?
"Is Social Security a good deal?... Could workers make their money grow more quickly with personal accounts? The [SSA] actuaries ... [recently] simulated real (after inflation) annual rates of return on payroll tax contributions for beneficiaries who were born between 1920 and 2004. It showed that some workers might beat Social Security's returns in some years if they took risks in the stock market. But over a lifetime, Social Security's consistent, risk-free and inflation-adjusted returns would be very tough to beat." (Reuters)

Verizon to Close DB Plan to New Union Employees Along with Group Annuity Purchase
"Verizon Communications Inc., New York, will close its defined benefit plans for union employees to new hires and place them exclusively in the company's 401(k) plan, as part of tentative contracts with the Communication Workers of America and International Brotherhood of Electrical Workers unions ... The news comes a day after the company announced it will purchase a group annuity contract with Prudential Insurance Co. of America to transfer $7.5 billion in pension obligations for about 41,000 retired salaried employees who began receiving pension payments before Jan. 1, 2010. Retirees formerly represented by unions are not affected by the buyout." (Pensions & Investments)

Updated Chart of IRS and Social Security Limits Reflects 2013 Limits
The updated chart of maximum limits subject to inflation indexing at Carol V. Calhoun's employee benefits site contains the newly announced 2013 figures, including limits under sections 415, 403(b), 401(k), 457, the Social Security wage base, and the Social Security and Medicare tax rates. The chart also shows those figures as they were in effect for 1996 and later years. (Calhoun Law Group)


'De-Risking' Pensions Could Be Risky to Pensioners
"In the wake of moves by several large companies to 'de-risk' their traditional pension plans, the Pension Rights Center is calling for a moratorium on such actions until Congress can look into the risks posed by these strategies to workers and retirees.... The Center plans to ask Congress to take steps to put a temporary stop to pension offloading and lump-sum buyouts to give policymakers time to examine whether these strategies could result in sellouts of retirement security." (Pension Rights Center)


Self-Directed 401(k)s Are a Joke
"Using self-directed investment through 401(k)-type plans is the economic equivalent of expecting every worker to be her own roofer and surgeon. Most people lack the necessary time, knowledge and highly specialized skills to manage investments and time in order to accumulate enough wealth to sustain them from the day they stop working until they die. The result of creating a population of financial do-it-yourselfers is proving to be shocking and painful, leaving people worse off than need be." (Business Insider)

Benefits in General; Executive Compensation

[Guidance Overview]

FICA's Bigger Bite: Wages Subject to Social Security Tax to Increase in 2013
"The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $113,700 from $110,100 as of January 2013, the U.S. Social Security Administration (SSA) announced on Oct. 16, 2012.... By January 1, U.S. employers should adjust their payroll systems to account for the higher taxable maximum under the Social Security portion of FICA, and notify affected employees that more of their paychecks will be subject to FICA." (Society for Human Resource Management)

'No Soup for You!' If An Employee Doesn't Turn in Medical Certification, FMLA Leave is Not Protected
"[I]f the employee never returns the certification, according to the regs, 'the leave is not FMLA leave.' ... Here, [the employee] suffered the consequences. Because she did not return the medical certification, her employment was properly terminated, despite clear evidence that she otherwise suffered from a serious health condition. As a result, her FMLA interference and retaliation claims were dismissed." [Miedema v. Facility Concession Services, Inc., No. 11-20580 (5th Cir., Sept. 6, 2012)] (FMLA Insights)

Most Employees Don't Act During Benefits Enrollment
"When given a chance each year to change their employee benefits, including retirement savings options, most American workers don't, [according to] a recent poll ... [A]pproximately one in five workers eligible to participate in a benefits enrollment last year failed to act and defaulted to the previous year's choices or their employer's default choices ... Men are twice as likely as women to fail to act, the poll also disclosed." (Thompson SmartHR Manager)

ERISA Litigation Update, October 18, 2012
"Articles in this issue: Sixth Circuit Affirms Dismissal of Challenge to Investment in Qualified Default Investment Alternative (QDIA); District Court Certifies Class in Excessive Fee Case Against Insurer; and Fourth Circuit Follows Cigna v. Amara Dictum Expanding the Scope of Relief Under ERISA's Catch-All Provision." (Goodwin Procter LLP)

How Would the 'Fiscal Cliff' Affect Employee Plan Limits? (PDF)
"If Congress allows the 'Bush-era Tax Cuts', among others, to expire, creating a so-called 'fiscal cliff; -- what will that mean for retirement plans? Aside from changing the relative tax advantage of plan benefits as compared to the taxation of income from investments outside of the plan because of changes in tax rates for capital gains and dividends, the answer is -- nothing. Most other benefit plan limits ... will not be affected by the fiscal cliff with the exception of adoption benefits." (Buck Consultants)

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