NIPA (National Institute of Pension Administrators)

Retirement Plan Specialist
for MidAmerica Administrative & Retirement Solutions, Inc. in FL

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[Official Guidance]

IRS Draft of Revised Form 5300 (PDF)
"This is an early release draft of an IRS tax form, instructions, or publication, which the IRS is providing for your information as a courtesy. Do not file draft forms. Also, do not rely on draft instructions and publications for filing." (Internal Revenue Service)

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[Guidance Overview]

IRS Releases Draft Revised Form 5300 and Instructions
"Because the draft revised Form 5300 contains numerous changes, plan sponsors and their advisors will need to carefully review the revised instructions, once they are finalized, in anticipation of submitting a Form 5300. Although the IRS did not propose an effective date for the revised Form 5300, it could replace the current version effective for determination letter submissions filed as early as February 1, 2013 (i.e., effective for Cycle C filers)." (McDermott Will & Emery)

Rhode Island Judge Has Stake in Pension Case Outcome
"Can a judge rule impartially on pension cuts when her mother, her son, her uncle and even she herself all have a stake in preserving the status quo? ... [W]hile the overhaul means the judge's pension will be smaller despite having to contribute more, she said that was true of all judges in the state: 'If my financial interest should require disqualification, then all other state judges would be similarly required to recuse themselves.'" (The New York Times; free registration required)

Peer Pressure Can Boost Retirement Savings
"More than half of the respondents to a new consumer survey ... said they would be motivated to save more for retirement if they discovered that their nest eggs didn't measure up to those of their peers." (Investment News; free registration required)

Year-End Compliance Reminders for Defined Contribution Plans Governed by ERISA (PDF)
"Every year, plan sponsors must make sure their plans meet certain compliance requirements, including those listed [in this article]. This publication identifies the materials you need to review and will help you prepare for year-end." [Editor's note: includes descriptive list of administrative and testing issues.] (Prudential)

[Advert.]

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Year-End Compliance Reminders for ERISA-Exempt Defined Contribution Plans (PDF)
"This information applies to defined contribution plans, such as qualified governmental plans (including 'grandfathered' 401(k) plans), qualified church plans that do not elect to be covered by ERISA ('non-electing church plans'), 403(b) plans, and section 457 plans that are not subject to Title I of ERISA. Every year, defined contribution plan sponsors should make sure their plans meet certain compliance requirements, including those listed below. This publication identifies the materials you need to review and will help you prepare for year-end." [Editor's note: includes descriptive list of administrative and testing issues.] (Prudential)

Funded Status of Corporate Pensions Rises to 74.4 Percent
"Rising equity markets in November helped drive the funded status of the typical U.S. corporate pension plan to 74.4 percent, a 0.8 percentage-point increase ... Despite the November gain, the funded status for the typical plan has decreased 0.9 percentage points for the year through November 30 ... Assets for the typical plan in November rose 0.7 percent on the strength of rising equities markets. Liabilities fell 0.3 percent as the Aa corporate discount rate rose four basis points to 3.76 percent[.]" (BNY Mellon)

More Boomers Encountering 'Unplanned' Early Retirement
"The prospect of an unplanned early retirement is real, and is happening more frequently since the US economic downturn. (This is consistent with results from prior surveys, where the percentage ranged from a low of 37% in 2007 to a high of 52% in 1991.) Advisors need to discuss with their clients the risk of early retirement as much as the desire for early retirement." (LifeHealth Pro)

Fiscal Cliff Might Mean 64% Decrease in Allowable 401(k) Contributions
"As Congress tries to come up with a plan to avoid the fiscal cliff, a compromise between the Republicans and Democrats will consider eliminating deductions and imposing tax hikes on families making more than $250,000 per year. At the heart of the compromise is a proposal to reduce 401k contributions by as much as 64%." (Newswire)

Changing the Retirement Readiness Game
"There is a growing expectation that advisors must help educate employers about the benefits of retirement income solutions offered at the workplace. Research from the ING Retirement Research Institute tells us that employees are asking for financial guidance, and are increasingly looking to their employers as a resource." (On Wall Street)

Pension Bondholders Support San Bernardino Bankruptcy Filing
"The city's second-largest group of creditors have added their guns to the city's bankruptcy battle as an ally for now, pitting them against CalPERS and the San Bernardino Public Employee Association. Pension obligation bond holders -- investors who collectively own more than $100 million in bonds the city issued in 2005 to re-fund its obligations to [CalPERS] -- filed the document with U.S. Bankruptcy Court[.]" (The Sun)

Do 401(k) Plans Really Help Increase Retirement Savings?
"[A new study] considers whether 401(k) plans push people to save more or simply cause them to put a portion of the money they would have saved anyway into a 401(k), essentially keeping their savings levels the same. Considering that the U.S. government provides more than $100 billion annually in tax subsidies for tax-deferred 401(k) plan contributions, questions about the effectiveness of 401(k) plans for increasing retirement savings are worth considering." (Business Finance)

NAPFA to Make CFP Designation a Prerequisite for Membership
"To foster the evolution of financial planning as a widely accepted and understood profession, [the National Association of Personal Financial Advisors] announced Tuesday that, starting Jan. 1, it will only accept the CFP designation for anyone applying to become NAPFA-registered planners.... NAPFA's National Board recognized that the profession needed to rally around a singular professional designation in the same way the public trusts that professionals with CPA, MD, or JD marks are meeting education, training and ethics requirements, the association said in a statement." (On Wall Street)

Surprise! Plan Sponsors Choose Advisers Based on Comfort and Fit, Not Fees
"Fees are important to plan sponsors shopping for financial advisers, but they're not necessarily a deal breaker.... [P]ricing came in fourth when employers were asked to cite the reasons they selected a particular adviser. The top three: participant services, fiduciary services/ compliance, and personal fit and sales process." (Investment News; free registration required)

State Street Unsuccessful in Request for Supreme Court Review of 6th Circuit Decision in Stock Drop Case
"The U.S. Supreme Court ... will not review the ... Sixth Circuit's decision on the extent to which Section 404(c) of the [ERISA] shields plan fiduciaries from claims of imprudent investment in employer stock ... In its petition for review, State Street [had] asked ... whether ERISA Section 404(c) provides fiduciaries of otherwise-qualified plans a defense to liability against an imprudent investment claim when the participant's control over the investment is the proximate cause for the loss. It [had] also asked the court to consider ... whether liability under ERISA Section 409(a) for a breach of fiduciary duty claim requires that the breach constitute the proximate cause of the loss." [State Street Bank and Trust Co. v. Pfeil, No. 12-256 (cert. denied 12/3/12)] (Bloomberg BNA)

Effects of an Individual Development Account Program on Retirement Saving
"[This study examines] the 10-year follow-up effects on retirement saving of an Individual Development Account (IDA) program [that] included financial education, encouragement to save, and matching funds for several qualified uses of the savings, including contributions to retirement accounts. The results indicate that, as of 2009, 6 years after the program ended, the IDA program had no impact on the propensity to hold a retirement account, the account balance, or the sufficiency of retirement balances to meet retirement expenses." (Brookings)

How Retirement Provisions Affect Tenure of State and Local Workers
"The 'backloaded' benefit structure of public sector defined benefit plans favors long-tenure workers over short-tenure workers. However, when a defined benefit plan is combined with either Social Security or a defined contribution plan, the degree of backloading is reduced. Not surprisingly, then, the analysis shows that public workers with either Social Security or a defined contribution plan are less likely to stay until retirement age. Giving workers more flexibility to switch jobs leads to better employment matches." (Center for Retirement Research at Boston College)

Bankruptcy Court Rules That Variable Annuity Purchased with 401(k) Rollover Is Exempt from Bankruptcy Estate
"A debtor was authorized under the Bankruptcy Code to exempt a variable annuity contract that had been purchased with funds rolled over from her 401(k) account, a Bankruptcy Court in New Jersey has ruled. The variable annuity constituted a qualified retirement annuity, for purposes of the exemption, because it was designed as an income substitute for wages." [In re Kiceniuk (Bankr. D.N.J. 2012)] (Wolters Kluwer Law & Business)

Financial Peace of Mind Is Now Four Times More Important Than Accumulating As Much Wealth As Possible (PDF)
"[AIG] surveyed Americans age 55 and older to better understand how ... their retirement mindsets are unfolding. Americans continue to show great resourcefulness and resilience amidst the uncertainty, focusing on more responsible retirement planning, less risky investments and delayed retirement. Financial concerns remain top of mind and few say their retirement has become more secure in the past year." (AIG)

[Opinion]

Don't Fall Prey to 401(k) Cutback Paranoia
"Unfortunately, whenever the possibility of changes to laws governing retirement accounts comes up, the same scary stories make the rounds among personal finance discussions.... [T]here's no reason to think that policymakers would try to undo the enormously popular institutions that have been in place for decades. With so much political power vested in wealthy people at or near retirement age, a lot of influence wants 401(k)s to stay in their current form." (Motley Fool)

[Opinion]

401(k) Tax Subsidies and the Path of Least Resistance
"[S]ome suggestions for lowering the 401(k) contribution limit... are likely to have a disproportionate impact on moderate income workers, not just the high earners. Capping contributions at 20% of pay (or $20,000, if less) is likely to hit almost everyone, not just the high rollers.... [I]f, in fact, we have a retirement crisis in this country, and if we know that people will generally take the path of least resistance, why would Congress make the path to saving for retirement harder?" (Benefits Bryan Cave)

[Opinion]

Employer Groups Respond to IRS Request for Information About Hybrid Retirement Plans (PDF)
Set of eleven questions from the Treasury Department, with detailed answers provided by three employer groups, addressing funding calculations for hybrid plans. (American Benefits Council, Coalition to Preserve Defined Benefit Plans, ERIC)

[Opinion]

Text of Comments to Treasury on Proposed Regs for Hybrid Retirement Plans (PDF)
"[T]he anti-cutback relief should be unconditional for lookback and stability period changes made to conform to the regulations.... [A]ny stability period between the minimum and maximum period should be permitted.... [T]he plan's interest crediting rate should be permitted to be based on the returns on [any] subset [of plan assets], as long as the subset meets the diversification standard.... [The section 401(a)(26) regulations] should be clarified to reflect the recognition in the hybrid plan regulations that a plan's benefits can be based on the return on plan assets, such as by using such return as the plan's interest crediting rate." (American Benefits Council, Coalition to Preserve Defined Benefit Plans, ERIC)

[Official Guidance]

DOL Releases Advance Copies of 2012 Form 5500 and Form 5500-SF Annual Report (PDF)
"Modifications to the Form 5500 and Form 5500-SF for plan year 2012 [include] [1] Optional Paid Preparer Information.... Filers may optionally enter preparer's name and address. Although the preparer information is optional at this time, the IRS encourages filers to provide preparer information on the new lines. [2] Optional Trust Information.... Filers may optionally enter the trust's name and trust EIN. Although this trust information is optional, the IRS encourages filers to provide such information on the new lines. [3] Multiemployer actuarial information reporting has been clarified for changes in adjustable benefits, and for amortization charges under the funding standard account statement for this plan year. [4] The Schedule SB instructions have been updated to advise that additional detail is requested for the prior year's excess contributions to be added to the prefunding balance." (Employee Benefits Security Administration)

[Guidance Overview]

IRS Issues Guidance on Additional Medicare Tax on High Earners (PDF)
"The additional 0.9% tax -- which applies only to the employee's share of FICA -- applies to wages under [FICA] (with no cap), compensation subject to [Railroad Retirement tax], and earned income subject to [Self-Employment tax]... The employer must withhold the additional 0.9% tax from wage/compensation that exceeds the $200,000 wages threshold ... To the extent that the employer fails to withhold such amount, the employer is liable ... for the missed withholding (unless actually paid by the employee on his or her Form 1040)." (Groom Law Group)

[Guidance Overview]

Proposed Regs Exempt Most Retirement Savings Distributions from 3.8% Net Investment Income Tax, But Not All (PDF)
"Taxable plan distributions would be taken into account in determining whether the AGI threshold is met .... Logically, the same result should obtain for most but not all equity-based compensation arrangements. For example, dividends received after a section 83(b) election is made with respect to a restricted stock award may be subject to section 1411.... In contrast, the taxable portion of annuity payments or withdrawals from and surrenders of nonqualified annuity contracts -- i.e., annuity contracts purchased outside of qualified retirement plans, commonly to accumulate retirement savings -- would be 'investment income' for this purpose[.]" (Sutherland)

[Guidance Overview]

IRS Issues Proposed Regs on 3.8% Net Investment Income Tax
"Starting in 2013, Sec. 1411(a)(1) imposes a tax equal to 3.8% of the lesser of an individual's net investment income for the tax year or the excess (if any) of the individual's modified adjusted gross income for the tax year over a threshold amount.... The tax also applies to estates and trusts, with different threshold amounts." (Journal of Accountancy)

Jason Steed Receives Voluntary Benefits Leadership Award
Pacific Resources

Women in Pensions Network Announces New Board Members
Women in Pensions Network

ING U.S. Study Sheds Light on Peer Comparison and the Retirement 'State of Savings' in America
ING Retirement

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