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BenefitsLink Retirement Plans Newsletter

January 28, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Operations Data Management Consultant
for MassMutual Financial Group in CT

401(k) Recordkeeping Specialist
for Pen-Cal Administrators, Inc. in CA

Division Manager
for DST Systems, Inc. in MO

Lead Client Experience Marketing Manager (Retirement Plan Services)
for T. Rowe Price in MD

Vice President & Regional COO
for United Retirement Plan Consultants in NJ

Manager, Document and Technical Services
for Charles Schwab & Co., Inc. in TX

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Webcasts and Conferences

Updated Guidance on Play or Pay: Health Care Reformís Shared Responsibility Provision
Nationwide on January 24, 2013 presented by Thomson Reuters / EBIA

Employment Practices Liability Webinar
Nationwide on February 27, 2013 presented by Davidson Marketing Group -- FutureOffice Network

State Budget Squeeze: What's Next?
in New York on January 30, 2013 presented by Century Foundation, The

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[Official Guidance]

Text of IRS Announcement 2013-13 Correcting Address for Determination Letter Submissions (PDF)
"This announcement contains corrections to Revenue Procedure 2013-6, as published on January 2, 2013 (2013-1 I.R.B. 198). In particular, this announcement clarifies that applications for determination letters should continue to be submitted to the Covington, KY address in section 6.15 of Rev. Proc. 2013-6." (Internal Revenue Service)


IRS Phone Forum Feb. 28 - Overview of the 2012 Cumulative List of Plan Qualification Changes

Sponsored by Internal Revenue Service

The list of plan changes to be used by plan sponsors and practitioners submitting determination letter applications during the period beginning February 1, 2013 (Notice 2012-76) will be discussed by Donald Kieffer, IRS Employee Plans Senior Tax Law Specialist. Preregistration required. Attendees are encouraged to submit questions in advance.

Fiscal Cliff Legislation and Retirement Benefits 2013 Explained
"How has the new law changed that equation -- changed the relative value of in-plan vs. out-of-plan savings? [A table in this article] provides a summary of the impact of the new legislation in that regard (assuming a $17,000 contribution left in the plan for 10 years and earning a 3% return) for three different types of taxpayers[.]" (October Three)

S&P Lowers Illinois Credit Rating, Blames Pensions
"Illinois' already disastrous financial situation worsened Friday as another credit rating agency downgraded its rating to the worst of any state in the country, blaming lawmakers' ongoing failure to resolve a multibillion-dollar pension crisis. Standard & Poor's rating service said Friday that the rating on the state's general obligation bonds was downgraded to A- from A." (The New York Times; free registration required)

Bucking Trend, Traditional Pensions Back in Discussion in Alaska
"A bill before the Alaska Legislature would put defined benefits for state employees back in play after pension reform in the state eliminated the option.... Currently, new employees give 8 percent of their paychecks to their 401k-style plans. Under the bill, they could choose to give 8 percent of their salary to a defined-benefit plan instead," (Governing)

Attorney Mary Jo White Is Switching Sides
"The critical question is whether Mary Jo White can be as zealous in protecting the investing public's interests as she was in defending her Wall Street clients as a litigator ... The transition in mindset back to government service doesn't always come naturally for white-collar defense lawyers." (Investment News; free registration required)

Bank of America Wins Suit Over Investing in Affiliated Funds
"The 4th U.S. Circuit Court of Appeals on Jan. 14 upheld the dismissal of a plan participant suit against Bank of America Corp. that alleged the bank violated ERISA rules in selecting and holding bank-affiliated mutual funds among the investments for the company's 401(k) and defined benefit pension plans.... The appellate judges ruled that the plaintiffs' appeal lacked constitutional standing, which arises from an actual or imminent threat of injury and a demonstrated causal relationship between the alleged injury and the challenged action. They also concluded that it was unlikely that a favorable decision could redress the damage claimed, as the plaintiffs did not allege they were denied benefits." (Thompson SmartHR Manager)

Overview of Laws in Other Countries Encouraging Broad-Based Employee Ownership
"[M]ajority employee owned companies outside the U.S. are relatively rare and employee ownership is generally found almost entirely in listed companies with employees owning a small percentage of shares.... [C]ountries that want sustained, substantial, and broad employee ownership in companies need to provide ways that the ownership is not based on employees making decisions to use current income to buy shares, but rather on company contributions with tax benefits for the companies and/or sellers to employee ownership plans doing this." (National Center for Employee Ownership)

U.K. Corporate DB Plans Closing at Faster Pace
"U.K. corporate defined benefit pension plans are closing at the fastest pace since 2005, with only 13% of DB funds open to new employees in 2012 compared to 19% the previous year, according to [a recent] annual survey ... The number of companies that froze their DB plans also rose, to 31% in 2012 compared to 23% the previous year[.]" (Pensions & Investments)


Now That Sen. Harkin Is Retiring, Who Will Rescue Our Retirement?
"When last July Harkin announced legislation to make 'bold changes to the private retirement system and Social Security' the changes were minor. Employers who don't offer a 401(k) plan would have to set up a retirement plan in which employers would have to make 'modest contributions' to employee accounts. Our employer contribution rate is a fraction of that of other countries; for example it's 9 percent in Australia, nearly 12 percent in Denmark, 8 percent in Hungary, 6.5 percent in Mexico and 7.3 percent in Poland. Why simply require employers with no plan to offer an even less generous plan?" (The Huffington Post)


Qualified Plans at Risk When Jumbled with True Tax Expenditures
"Eighty percent of 401(k) plan participants come from households making less than $100,000 in annual income. 71.5% of moderate income ($30,000 to $50,000) people save when a tax-advantaged plan is available at work. Only 4.6% of this group saves when no plan is available at work and they must use the IRA structure for tax-advantaged savings. It appears that, even with the lower paid group, the tax expenditures are fulfilling their intended purpose. Will a significant reduction in the deferral and overall limits in an effort to raise revenue harm these results? The lesson of 1986 suggests that it is likely and will depend on the extent of any reduction." (Benefits Bryan Cave)


Chicago Plays Politics with Retirement Pensions
"Divesting assets to make a moral or political statement is nothing new. Decades ago, many public pension funds pulled their investments out of firms doing business in South Africa to protest apartheid.... However, it is one thing for an individual to make this decision about his or her own personal investments. That is the individual's personal choice. It is another thing for a city or state's pension board -- that is obligated to fully fund the promises made to its employees -- to jump ship and sell highly lucrative stocks at a potential loss. Regardless of one's moral or ethical viewpoint on guns, alcohol or tobacco, the decision of a pension board to divest without considering the performance of said assets is simply irresponsible and reprehensible." (National Center for Policy Analysis)


Tax Incentives for Retirement Saving Are Not Working -- Can We Find a Better Way?
"Why should the government, as agent of the ant-like taxpayers that pay its bills, behave any differently toward grasshoppers who don't have the self-discipline to save during their working years? The most common response is to justify government support for retirement as a form of social insurance.... At the same time, skeptics have a valid point when they warn against incentivizing grasshopper-like behavior. It is reasonable to want public policy to encourage people to save for their own retirement even while providing a safety net for those whose efforts fall short." (EconoMonitor)


Pensions Betting Big on Private Equity?
"[W]ith interest rates at a historic low, that 8% bogey will be extremely difficult to meet in the next decade. Shifting more assets into private equity might help pensions meet their target return but it also exposes them to other risks such as illiquidity risk, valuation risk, manager selection risk, lack of transparency and potential conflicts of interest." (Pension Pulse)

Benefits in General; Executive Compensation

[Official Guidance]

Text of EBSA Notice Describing Changes to Delinquent Filer Voluntary Compliance Program
"This Notice describes changes to the ... Delinquent Filer Voluntary Compliance Program [or 'DFVC'].... The Department's DFVC Program website has been updated periodically since 2002 to reflect the adoption of technical changes to the Program. Most recently, the DFVC Program website was updated to reflect the Department's final regulation mandating electronic filing of annual reports as part of the implementation of a wholly electronic ERISA Filing Acceptance System (EFAST2) for those reports.... This Notice also describes an existing online penalty calculator and Internet-based payment system for the DFVC Program.... This Notice is intended to be a comprehensive update and restatement of the DFVC Program that incorporates the changes that have been made in the DFVC Program since the 2002 Notice." (Employee Benefits Security Administration)

[Guidance Overview]

Disclosing Compensation Consultant Conflicts
"The SEC has added new Item 407(e)(3)(iv) to Regulation S-K requiring that a financial institution holding company include a disclosure in the annual proxy statement addressing whether the work performed by any compensation consultant raised a conflict of interest and, if so, the nature of the conflict and how it was addressed.... Disclosure is required in a proxy statement filed with respect to any annual shareholders' meeting at which directors will be elected occurring on or after January 1, 2013." (Vorys, Sater, Seymour and Pease LLP)

[Guidance Overview]

Complying with New Compensation Committee and Compensation Adviser Independence Standards
"Complying with these proposed amendments will require that financial institution holding companies amend the (or, in some cases, adopt a) compensation committee charter and take certain other actions, as described [in this article], beginning in mid-2013. These compensation committee requirements apply only to financial institution holding companies whose securities are traded on the national securities exchanges ... Other financial institution holding companies and financial institutions should keep these standards in mind as 'best practices' and be prepared for the possibility that similar requirements may be imposed through the bank regulatory process." (Vorys, Sater, Seymour and Pease LLP)

Executives Should Reconsider Qualified Plans
"The American Taxpayer Relief Act of 2012, while keeping federal income tax rates the same for almost all Americans, significantly increased ordinary income and capital gains rates for executives and other high earners. By raising the threshold at which top rates apply, the Act makes deferring compensation attractive, because there is more likelihood the compensation may be subject to tax at lower marginal rates when it is received," (PLANADVISER.com)

LIMRA Study Finds Most Small Businesses Do Not Offer Employee Benefits
"Only 47 percent of small businesses (2-99 employees) in the United States offer benefits to their employees, the lowest level in two decades of LIMRA research.... 78 percent of small businesses in the U.S. are family-owned. Family-owned firms experienced a sharper decline in benefit penetration between 2005 and 2012 than non-family-owned firms, with only 40 percent of these businesses offering insurance benefits in 2012 (compared with 47% in 2005)." (LIMRA)

Investors Worry More About Long-Term Care Than Retirement Planning
"[In a recent study,] investors were asked, How worried are you about each of the following regarding your personal finances? The most common response was 'being able to afford healthcare and the support I need in my old age,' which had 26% of respondents 'highly worried.' Down the line, in fifth place, was 'having enough money set aside for retirement,' with 14% of investors highly worried about their retirement funds." (Financial Planning)

Press Releases

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