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January 15, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Executive Director
for Municipal Employer Insurance Trust in PA

Associate, Defined Benefit Plan Administration
for The Savitz Organization in PA

Broker Dealer Branch Examiner
for Great-West Financial in CO

Health and Welfare Benefits Manager
for Southern California Pipe Trades in CA

Chief Operating Officer
for Compliance Service Professional Company in MA

Retirement Planning Consultant
for Diversified in IN

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Webcasts and Conferences

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[Guidance Overview]

Limited Time to Fix 403(b) Written Plan Failure for Reduced Fee
"Revenue Procedure 2013-12 provides a relatively short window to take advantage of a reduced fee to fix 403(b) written plan document failures (the reduced fee expires after December 31, 2013). [This article] will discuss the background and details of the written plan requirement and the fees and due dates under the new EPCRS for correcting written plan requirement failures. Most plans are still waiting for the opportunity to fix written plan failures that occurred on or after January 1, 2010 as will be explained in more detail below. Finally, the last section of the article will address some frequently asked questions about the EPCRS process." (Wolters Kluwer Law ftwilliam.com Business / ftwilliam.com)


Learn About Plan Coverage and Testing with ftwilliam.com Industry Experts

Sponsored by ftwilliam.com

This webinar on January 29 will cover when to test for coverage, 414(s) and general testing; including disaggregation and aggregation and what to look for in your plan document. The ftwilliam.com admin software may be used to illustrate tests and test results.

[Guidance Overview]

IRS Again Modifies Amendment Cycle Rules for Governmental Plans (PDF)
[T]the IRS [has] announced a second modification of the staggered remedial amendment cycle process for sponsors of individually-designed 401(a)-qualified governmental plans. The remedial amendment cycle rules do not currently apply to 403(b) plans or to section 457(b) plans.... [T]he IRS will allow governmental plans to file their second remedial amendment cycle determination letter requests during Cycle E. The Cycle E filing period begins on February 1, 2015, and ends on January 31, 2016." (Prudential)

[Guidance Overview]

New EPCRS Guidance Expands Scope of 403(b) Plan Corrections
"Nearly 20 years after the IRS first established a limited program for the correction of 403(b) plan administrative errors, 403(b) plans have finally been placed on equal footing with qualified plans with respect to the correction of operational, documentary, and demographic failures under the Employee Plans Compliance Resolution System (EPCRS)." (Verrill Dana LLP)

Credit Balance Considerations for Plan Sponsors Under MAP-21
"Some potential credit balance issues facing plan sponsors during the next couple years under MAP-21: [1] Plan sponsors may fund an amount higher than the minimum required, which will require an election to add the excess to the prefunding balance [which] may be used in future years to satisfy contribution requirements. [2] Plans just above the 60%-/80%-funded thresholds (before subtracting credit balance) may have a mandatory burn of credit balance to avoid certain benefit restrictions." (Retirement Town Hall)

Pre-Retirement Access to 401(k) Accounts Is Undermining Retirement Security for Millions
"More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans." (The Washington Post; free registration required)


Registration Begins: 2013 Employee Ownership Conference

Sponsored by National Center for Employee Ownership

Whether you are a veteran or newcomer to the field of employee ownership, this highly interactive conference offers valuable insights and information in five learning tracks, covering both technical and nontechnical topics over three intensive days.

U.S. Pension Investment Consulting Firms and Conflicts of Interest: A Report for Fiduciaries, Internal Audit and Risk Management Professionals (PDF)
"[I]t is nearly impossible for plan fiduciaries to understand the business structure of their pension investment consulting firm simply by attending consultant finalist presentations, reading marketing materials, or visiting the firm's website. Fortunately, the [SEC] Form ADV helps to illuminate the business structure and practices of investment consulting firms ... This report highlights potential conflicts and other due diligence concerns relating to investment consultants [and] provides questions that internal audit and risk management professionals, as well as fiduciaries, might wish to ask any firm that possesses certain high risk business structures and characteristics." (Diligence Review Corp.)

2012 Year-End Pension Funding Drops Below 2011 Levels
"Despite overall annual asset growth of about 16 percent in the broad U.S. equity market, falling interest rates remained the bane of pension funding status, as discount rates fell by more than 80 basis points as compared with year-end 2011. For companies with calendar-based fiscal years, the year-end pension funding deficit is particularly important because it affects their reported balance-sheet liabilities and subsequent-year accounting expense, as well as the required cash contributions to the pension plan." (Thompson SmartHR Manager)

CalPERS Gained 13% in 2012 as Stocks Bury Private Equity
"[CalPERS], the largest U.S. pension at $252.3 billion, earned about 13 percent on invested assets last year, led by increases in stocks and private equity. That compared with a 1.1 percent return in 2011, according to the fund. Private-equity investments, whose reporting lags behind the rest of the results, climbed about 12 percent for the year through September, less than half the target rate, CalPERS said yesterday. Publicly traded shares rose about 17 percent, meeting goals for the period ending Dec. 31." (Bloomberg)

DB Plans: 2012 Year in Review
"Defined benefit pension plans in the U.S. had an historic year in 2012. Interest rates continued to decline in 2012, much as they did for the past three years. The lower interest rates generally resulted in escalating liabilities and deteriorations in pension plan funded status. Assets generally performed above expectations, but still could not keep pace with rapidly rising liabilities." (Retirement Town Hall)

Ten Steps DC Plan Sponsors Should Take in 2013
"1. Define success: Optimize each step leading to 'better' retirement outcomes and spend down strategies.... 2. Recalibrate your default option: Enrollment, deferral escalation and investments.... 3. White label your investment options: Drive participant behavior.... 4. Maximize the impact of your communications strategy: Assess the right content and delivery.... 5. Help participants understand their retirement income: Anticipate the impact of adding projections to participant statements.... [and five more]." (Mercer)

A Glimmer of Interest Rate Hope for Corporate Plan Sponsors
"Pension funding performance in this current recovery is decidedly subpar. Unlike the last recession of 2001-2002, when funding levels began to rise in 2003 and continued to rise through 2007, after the financial crisis of 2008, pension funding crashed to 77 percent, then rose in 2009 and 2010, hitting 84 percent. Funding levels then resumed their decline in 2011 and 2012 and are now below their levels at the height of the financial crisis." (Institutional Investor)

Two Rhode Island Cities Get OK to Use Google Settlement for Pension Funding
"North Providence and East Providence were each awarded $60 million in April after assisting the Justice Department in an investigation into online advertisements distributed by Google for Canadian pharmacies illegally marketing prescription drugs to Americans. The two cities requested using the funds, which are limited to spending areas such as training, equipment and facility upgrades, for pension funding purposes. Attorney General Eric Holder issued the waiver last week that will allow East Providence to use $49.2 million for its law enforcement pension plan and North Providence, $20.6 million for its police plan." (Pensions & Investments)

Chicago Mayor Orders Pension Funds to Review Holdings in Weapons Companies
"'If our fund managers have invested in a company that manufactures or sells assault weapons, I will ask them to remove these investments from our retirement funds,' said [Chicago Mayor Rahm] Emanuel, who ordered Comptroller Amer Ahmad to request the analysis from the city's five pension and retirement funds. The five funds, with total assets of about $12 billion, are the Chicago Laborers' Annuity & Benefit Fund, the Municipal Employees' Annuity & Benefit Fund of Chicago, Chicago Policemen's Annuity & Benefit Fund, Chicago Park Employees' Annuity & Benefit Fund and the Chicago Firemen." (Pensions & Investments)

ESOPs Save Federal Government Billions Due to Fewer Layoffs
"[E]mployee stock owned companies saved the federal government over $37 billion in 2010, a year of high unemployment. How? During the Great Recession of 2010, employees of employee stock owned companies were laid off at a rate more than 4 times less than employees of conventionally-owned companies.... The 2010 [General Social Survey] showed that employee stock owned companies laid off employees at a rate of 2.6% in 2010, whereas the rate for conventionally-owned companies was 12.1%." (The ESOP Association)


Have Mutual Fund Rating Agencies Lost Their Mojo?
"[P]lan sponsors and 401k investors have begun to return to the days of the single managed portfolio as a preferred option.... This consequence calls into question the very relevance of current mutual fund rating services.... [W]hile it's clear the mutual fund rating services may have lost their mojo, it's not necessary certain an alternative has yet surfaced." (Fiduciary News)


UK's Radical Shake-Up of State Pensions
"Pension reform is sweeping the UK and while experts chime in on the latest reforms, the reality is that Brits will be asked to work longer, contribute more and most will receive less in retirement. And the truth is these reforms won't make a difference for those already facing looming pension poverty.... What the UK really needs is major pension reform, introducing a national plan similar to the Canada Pension Plan Investment Board." (Pension Pulse)

Benefits in General; Executive Compensation

New Tax Act Affects Nonqualified Deferred Compensation
"Generally, the rise in tax rates increases the attractiveness of deferring income into the future through nonqualified plans.... Each person's situation is different, however, and you should make projections involving various factors: your calculation of current and future tax rates for both ordinary income and capital gains; the investment return on the compensation you defer; [and] the growth of alternative investment(s) for the after-tax amount of the compensation without deferral[.]" (myStockOptions.com)

[Guidance Overview]

NYSE and NASDAQ Amend Compensation Committee Proposals
"NASDAQ proposes to clarify that a compensation committee is not required to conduct the independence assessment required by proposed Listing Rule 5605(d)(3)(D) with respect to a compensation adviser that acts in a role limited to: consulting on any broad-based plan ... and/or providing [certain] information ... The NYSE has proposed a similar amendment to its proposal, together with amendments addressing transition when smaller reporting companies are no longer eligible for that status." (Dodd-Frank.com, a blog by Leonard, Street and Deinard)

[Guidance Overview]

NASDAQ and NYSE Amend Proposed Compensation Committee Independence Listing Standards
"Among other things, the amendments clarify that the proposed standards would not require compensation committees to conduct an independence assessment with respect to any compensation adviser that only: [1] Consults on a broad-based plan that does not discriminate in scope, terms or operation in favor of executive officers or directors and that is generally available to all salaried employees. [2] Provides information that is not customized for a particular company or that is customized based on parameters that are not developed by the adviser, and about which the adviser does not provide advice." (Practical Law Company)

Nonqualified Retirement Plans Key Component of Pay for Executives at Tax-Exempt Organizations
"According to Mercer's 2012/2013 Executive Benefit and Perquisite Practices Survey for Tax-Exempt Organizations, more than half (58%) of participating organizations offer top executives an employer-paid nonqualified retirement plan -- a plan that does not qualify for tax advantages under the Internal Revenue Code (IRC) -- up from 49% two years ago. These plans are most popular among healthcare organizations (67%) followed by foundations and charities (53% and 39%, respectively). Among all tax-exempt sectors, the prevalence of nonqualified plans significantly decreases when moving down the executive rank." (Mercer)

Employer Action Required to Preserve FICA Refund Claim on Severance Pay
"[E]mployers that have paid a substantial amount of severance in recent years should consider filing a protective claim with the IRS for a refund of FICA taxes paid. Such a filing will extend the period of time for which FICA contributions on severance could be recovered, should the Supreme Court eventually rule against the IRS." (VedderPrice)

Press Releases

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