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BenefitsLink Retirement Plans Newsletter

January 8, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Account Manager, Retirement Services
for Lockton Insurance Brokers, LLC - Recognized by Best Insurance as a Best Place To Work in Insurance - 2010, 2011, 2012 in CA

Advisory Services Administrator
for Alerus Financial in MI

Advisory Services Operations Manager
for Alerus Financial in MI

VP Compliance/Operations
for ADP in NJ

Pension Administrator
for Retirement Strategies, Inc. in GA

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Webcasts and Conferences

Health & Welfare Plans Legislative Update
Nationwide on January 31, 2013 presented by TRI-AD

Retirement Plans Legislative Update
Nationwide on March 21, 2013 presented by TRI-AD

Retirement Plan Compliance Assistance Seminar
in California on March 7, 2013 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

View All Webcasts and Conferences

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[Guidance Overview]

2012 in Review: ERISA Individual Prohibited Transaction Exemptions (PDF)
"DOL published 20 individual prohibited transaction exemptions (PTEs) in 2012, the same number as in 2011. Under DOL's 'EXPRO' procedure, which permits expedited consideration of transactions substantially similar to other transactions for which exemptions have been recently provided, DOL has reported 15, which is more than the eight exemptions granted in 2011." (Sutherland)


2013 Advanced Pension Conference in Orlando

Sponsored by SunGard's Relius Education

401(k) compliance survey, TPA partnerships, recapture and forfeiture accounts, fee disclosure, participant forms, early eligibility and rehired employees, plan amendments, Tax Reform and more. 19 hours of CE credits. Register before January 14 and save $150.

[Guidance Overview]

Fiscal Cliff Legislation Provides New In-Plan Roth Conversion Opportunity for 401(k), 403(b), 457(b) Plans
"Plan sponsors who previously considered but rejected implementing an in-plan Roth conversion feature for their plans due to the modest benefit previously available to employees may now want to reconsider whether such an approach makes sense in light of the greater benefits provided under the new law.... Under the new, expanded conversion right, an eligible plan that permits regular non-rollover Roth contributions could allow participants to convert any pre-tax vested amounts to Roth amounts within the plan - whether or not participants are eligible to withdraw such amounts." (Ballard Spahr)

[Guidance Overview]

Puerto Rico Treasury Announces Key Benefit Plan Limits for 2013 (PDF)
"The Internal Revenue Code for a New Puerto Rico [legislation], enacted in 2011, synchronized most (but not all) of the [qualified plan] limits with those applicable to U.S. qualified plans. Key differences [include]: [1] Puerto Rico qualified plans that are not dual-qualified still have lower elective deferral limits than their U.S. qualified and dual-qualified plan counterparts. [2] The Age 50 catch-up deferral limit for Puerto Rico qualified plans (including all dual-qualified plans other than the U.S. government's Thrift Savings Plan) is $1,500 -- considerably less than the $5,500 catch-up maximum for U.S. qualified plans." (Buck Consultants)

What Will 2013 Bring to the World of 401(k)?
"'[I]t should be easier and easier for plan sponsors to identify truly high quality advisors with client-friendly business models,' [says] Mike Alfred, Co-Founder and CEO, BrightScope in San Diego ... 'Call me a pessimist ... but I'm skeptical we'll see any comprehensive or transformative regulatory step forward on the fiduciary standard in 2013. As it relates to the 401k business, we'll see more top plan advisors moving to specialized firms with fiduciary business models. The most forward-thinking broker-dealers will carve out special designations and exemptions for their top plan advisors so they can more effectively compete in the marketplace.'" (Fiduciary News)

Donating Retirement Assets to Charities: Qualified Distributions from IRAs Extended by New Law
"This is especially good news for those who might not need the income from an IRA for living expenses. 'The generation that is currently in the Required Minimum Distribution stage of their retirement accounts was one of the best generations at saving money,' said [a financial consultant]. 'They did not live beyond their means'.... Those who want to gift their retirement assets to a charity under this provision must answer these questions: Am I old enough? Does my retirement account qualify? Does the charity qualify?" (MarketWatch.com)


Increase the Profitability and Potential of Your Investment-Only Business

Sponsored by Financial Research Associates, LLC

DCIO industry innovators, retirement platforms, advisors, and consultants provide insights and strategies to survive and thrive in the Defined Contribution Investment-Only market. Mention FMP164 during registration to receive a 10% discount.

Tax Treatment of Qualified Retirement Plans Likely to Dovetail with Tax Reform in 2013
"Retirement industry lobbyists have dedicated lots of energy to educating members of Congress and their staffs on the distinction between tax deferrals and outright tax deductions, but realize the budget scoring method simply doesn't factor in taxes paid later.... Like the 1986 tax reform, which cut the deductibility of 401(k) contributions by 70%, many observers think one likely outcome in the current hunt for more federal tax revenue could result in limits on tax deductions of retirement plan contributions for upper-income earners." (Pensions & Investments)

401(k) Plans' Cost-Effectiveness Becomes More Clear As Use Increases
"Contrary to the popular belief that defined benefit retirement plans are more costly for employers to administer, data from the U.S. Bureau of Labor Statistics indicates that private-industry employers now spend more per employee hour worked for defined contribution plans. When DC plan costs are divided by the number of workers enrolled, however, costs for employer sponsors are higher for the more limited number of participants in the increasingly rare DB plans[.]" (Thompson SmartHR Manager)

Orange County Rewarded as Pension-Bond Issues Boom
"Orange County, California, which has rebounded from the second-biggest U.S. municipal bankruptcy, is set to tap into the largest wave of pension-bond sales since 2008. Across the U.S., from the seaside city of Fort Lauderdale, Florida, to Oakland, California, localities sold $980 million of the taxable securities in 2012 to finance public-worker retirement obligations ... That's up from $670 million in 2011, spurred in part by demand for extra yield with municipal interest rates touching 47-year lows." (Bloomberg BusinessWeek)

Illinois House Bill Raising Required Employee Pension Contributions Stalls
"The prospects of Illinois lawmakers resolving a $97 billion unfunded pension liability dimmed as the House adjourned today without any clear indication that a majority would support a bill making state employees and teachers pay more for their retirement benefits.... Illinois has the weakest pension system in the U.S., with 39 percent funding for five major groups of public employees ... Lawmakers have repeatedly failed to overcome political obstacles to fixing the system." (Bloomberg)

The Hard Choices on Public Pensions
"With the city's police and firefighters' unions agreeing to go along with significant pension reforms passed last year, Providence, R.I., has become a leader among the many state and local governments that have acted recently to make their retirement systems more sustainable. But halfway across the country, Illinois is emerging as the poster child for what happens when the public sector shirks its pension responsibilities." (Governing)

New Report Shows Corporate Pension Funding Deficit Widened in 2012
"It was a good year on the asset side, with these pensions experiencing a $90 billion gain. But it was a rough year on the liability side, with interest rates driving a $164 billion increase in the pension benefit obligation.... [I]nterest rates have been the story for the last four years and that's not going to change in 2013." (Retirement Town Hall)

Historically Low Interest Rates Increase Pension Funding Deficit by $74 Billion in 2012
"2012 mirrored 2011, with declining discount rates driving the funded ratio lower. There was, however, good news on one side of the balance sheet: The pension asset portfolios gained 9.3% versus an expected 7.8%. Furthermore, in three out of the last four years (2009, 2010, and 2012), pension fund returns have exceeded their expectations, even as funded status worsened due to lower discount rates." (Milliman)

Record Pension Funding Gap Threatens Company Earnings
"Having finished 2012 with their highest year-end pension deficits ever, S&P 1500 retirement plan sponsors are feeling greater financial pressure and will report decreased earnings in 2013 ... Falling interest rates were the cause of pension plans' losses despite overall annual asset growth of approximately 16% in the U.S. stock market. Discount rates fell by more than 80 basis points compared with year-end 2011[.]" (Treasury & Risk)

Pension Plan Deficits in Great Britain Show No Progress
"[T]he accounting deficit of defined benefit pension schemes in the UK increased very marginally over the month of December and for 2012 as a whole.... [T]he estimated aggregate IAS19 deficit for the defined benefit schemes of the FTSE350 companies stood at 62bn GBP (equivalent to a funding ratio of 89%) at 31 December 2012. This compares to a deficit figure of 61bn GBP at the end of November (funding ratio of 90%) and a figure of 61bn GBP at the end of December 2011 (funding ratio of 89%)[.]" (Mercer)

NHL's Tentative Deal Would Create New DB Plan for Players
"It's unclear what the new DB plan will mean for the players' current defined contribution plans, the National Hockey League Retirement Plan, (United States), New York, and the NHL Club Pension Plan and Trust, Toronto. The U.S. plan, a 401(k), had $22.6 million in assets as of June 30, 2011, according to the league's latest Form 5500 filing. The size of the Canadian plan could not be learned." (Pensions & Investments)

New Year's Retirement Savings Checkup for Plan Participants
"[A]s important as diligent saving is, your savings rate alone can't tell you whether you're on track for a secure retirement. To know for sure, you've got to undertake a more comprehensive review of your retirement planning efforts. You can do that by performing [an] annual New Year's Retirement-Planning Checkup. It consists of just three simple steps: 1. Figure the odds.... 2. Evaluate your portfolio... 3. Schedule updates." (Fidelity.com)


Time to Eliminate the Limited-Scope Audit Loophole
"Plans increasingly use limited-scope audits. In 2010, some 70% of plans, accounting for $3.3 trillion of assets, used limited-scope audits, up from 46%, accounting for $520 billion, in 1987 ... In all, some 84,000 plans filed audited financial statements with the EBSA, representing $5.7 trillion in assets in 2010 ... The new Congress taking office in 2013 should seek to eliminate the exemption and require full audits of pension programs." (Pensions & Investments)


Corporate Pension Plans Still Reeling After 2012?
"Canada's corporate pension hole marginally improved last year but 97% of the plans have a solvency deficit.... [D]e-risking into bonds might sound like a stupid strategy as most investors are now advised to shift assets away from bonds but this is the first step for many corporations looking to follow GM and Verizon into an annuity settlement.... Many corporations are looking to unload pension risk to insurers ... but a cash-rich corporation that is not topping up its employee pension plan is not making a wise financial decision and is sending the wrong message to its employees[.]" (Pension Pulse)

Benefits in General; Executive Compensation

[Guidance Overview]

Year-End Tax Bill Provides Extensions and Expansions of Various Employee Benefits
"Because the $125 monthly exclusion was not changed until 2013, employers had to withhold income tax and FICA taxes on monthly mass-transit and vanpool benefits greater than $125 that were provided during 2012. The retroactive increase in the exclusion for these benefits for 2012 will be reflected on 2012 Form W-2s and affected employees will recover any extra withholding on their 2012 tax returns." (McGuire Woods LLP)

[Guidance Overview]

Revised New York Regulations Limit Use of State Funds for Executive Compensation by Service Providers as of April 1
"The regulations prohibit the use of more than $199,000 of state funds or state-authorized payments to compensate a 'covered executive' ... [which includes] directors, trustees, managing partners, officers and key employees, all as defined in Form 990 instructions ... whose compensation in whole or in part is an administrative expense.... [I]ndividuals such as department chairs and chief medical officers are not 'covered executives' if they fulfill administrative functions that comprise program services." (Proskauer Rose LLP)

[Guidance Overview]

Effects of the Fiscal Cliff Legislation on Stock Compensation
"[T]he American Taxpayer Relief Act does not have any that directly relate to stock compensation -- though, of course, increases in the rates on income tax, capital gains, and dividends indirectly affect the value of equity awards. [But] changes in tax rates under the new legislation apply to income from stock option exercises, restricted stock and RSU vesting, ESPP purchases, sales of stock, and dividends." (myStockOptions.com)

Press Releases

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