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February 1, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Relationship Manager
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Webcasts and Conferences

401(k) Essentials Plus Series
Nationwide on April 18, 2013 presented by McKay Hochman Co., Inc.

Hot Topics in Executive Arrangements: Employment and Other Tax Issues
Nationwide on March 7, 2013 presented by ABA Joint Committee on Employee Benefits

Best Practices for S Corporation ESOPs
in Arizona on February 7, 2013 presented by National Center for Employee Ownership

Deep Dive into the Play or Pay Penalty Components Webinar
Nationwide on February 7, 2013 presented by Bass, Berry & Sims

Incentive Plans That Support Employee Ownership Plans
Nationwide on February 12, 2013 presented by National Center for Employee Ownership

Don't Do That With Your ESOP: Legal and Fiduciary Issues
Nationwide on February 19, 2013 presented by National Center for Employee Ownership

View All Webcasts and Conferences

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[Guidance Overview]

Puerto Rico Treasury Clarifies Taxation of Distributions from Retirement Plans (PDF)
"Reg. 8324 now provides when plan participants will be required to include as gross income the value of the contributions made by the employer to a plan if: (1) the plan is tax qualified; (2) the plan is not tax qualified; (3) the plan is not tax qualified when the contributions were made but secured such qualification thereafter; and (4) the plan is tax qualified when the contributions were made but is disqualified at some point thereafter. It also provides when the beneficiaries of a plan participant will be required to include as gross income the benefit received from the plan: (1) upon the death of the plan participant; (2) as alimony; (3) as child support; or (4) as the share of the participant's former spouse in the marital properties." (McConnell Valdes)


The NAPA/ ASPPA 401(k) SUMMIT is Bigger and Better in Las Vegas!

Sponsored by ASPPA

Join us in exciting Las Vegas at Caesar's Palace and get the latest government and regulatory updates that affect you and find out why 1,300+ retirement plan professionals return every year.

[Guidance Overview]

Fee Disclosure Communication: Reality vs. Illusion (PDF)
"Those of us in the industry cannot believe that anyone remotely connected with a 401(k) plan is not already aware of these coming disclosures. However, while awareness may be high among service providers, the details of who, when, and how remain murky, especially in smaller plans.... Fee disclosure may seem like yet another raft of paper that will be mostly ignored by plan sponsors and participants. However, media coverage and plaintiffs' attorneys will keep the issue front and center, especially for participants." (Simoneaux Consulting Services)

Interest Rate Pressures on Pensions Wipe Out Billions in Company Profits
"Pension charges wiped out more than $20 billion in fourth-quarter earnings at major American companies, as persistently low interest rates leave some of those with the largest retiree burdens no choice but to assume they need more money now to cover liabilities later. Actuaries warn there is little chance for improvement on the horizon for defined benefit pension programs, as rates linger at historically low levels and the Federal Reserve shows no inclination to raise them. The only hope, they say, is for rates to turn around -- though when, no one really knows." (Reuters)

At Least the Texans Know How Much They Owe Their Pension Plan
"Too little public information on public pension finances is readily available. Many plans do not report their actual investment returns to the state's Pension Review Board. Several of the state's largest pension plans also have 'infinite amortization periods,' meaning that they can never eliminate their unfunded liabilities as currently structured.... Although plan assets have rebounded since 2010, overall they are still below pre-recession levels." (California Public Policy Center)

Solving the Annuity Puzzle: Low Use of Lifetime Distributions
"In retirement plans, one of the more intransigent concerns for policy makers, providers, and plan sponsors alike is what has been called the 'annuity puzzle' -- the reluctance of American workers to embrace annuities as a distribution option for their retirement savings. What economists call 'rational choice theory' suggests that at the onset of retirement individuals will be drawn to annuities, because they provide a steady stream of income, and address the risk of outliving their income. And yet, given a choice, the vast majority don't." (Nevin Adams via EBRI)

Public Pension Plan Investment Return Assumptions, Updated January 2013 (PDF)
"As of the third quarter of 2012, state and local government retirement systems held assets of approximately $3 trillion.... This brief discusses how investment return assumptions are established and evaluated and compares these assumptions with public funds' actual investment experience." (National Association of State Retirement Administrators)

On Socially Responsible Investing, Pension Costs and Debt: An Interview with New York State Comptroller Tom DiNapoli
"An affable and friendly guy, DiNapoli generally doesn't look for fights but he's had them, of late, with Gov. Andrew M. Cuomo, over how to soften the staggering costs of pensions for municipalities. His big concerns these days: ..." (Newsday)

California Turns Corner With Upgrade While Pensions Choke Illinois
"Both states have raised taxes. Both are controlled by Democrats, and both have seen unemployment decline. California Governor Jerry Brown, returning to the office he first held three decades ago, cut long-term retiree obligations, saving as much as $55 billion over 30 years. Illinois has skipped pension fund payments and failed to bolster America's weakest retirement system, with a deficit that grows $17 million a day." (Bloomberg)

Fourth Circuit Says DB Participants Lack Standing to Challenge Investments in Sponsor-Affiliated Funds
"The Fourth Circuit held that the pension plan participants could not show an injury in fact because, by the very nature of a defined benefit plan, their level of benefits 'is unaffected by the performance of the Plan's underlying investments.' The court also found it significant that the pension plan was overfunded when the participants filed their claims.... Taken to its extreme, the case could be interpreted as effectively foreclosing participant claims based upon how a well-funded defined benefit pension plan is invested. It remains to be seen whether the Fourth Circuit would take a different view in a case involving a plan that was significantly underfunded." [David v. Alphin, No. 11-2181 (4th Cir. Jan. 14, 2013)] (Employee Benefit News)

State Pension Plans Better Funded Than Local Counterparts
"Despite a better record of making their annual contributions, locally administered pension plans are less funded than their state counterparts, largely due to more conservative investments, according to new research ... [which] found 72% funding for local pension plans, vs. 76% for state plans." (Pensions & Investments)

New Regs Leave 401(k) Biz 'Wide Open' for Investment Advisers
"[I]ncreased focus from the Labor Department on fee disclosure and fiduciary duty has left plan sponsors searching for specialist advisers who can help them comprehend the rules and meet their obligations. More of those small-business owners are demanding that advisers act as fiduciaries[.]" (Investment News; free registration required)

PBGC to Pay Retirement Benefits for Hawker Beechcraft
"[PBGC] will assume benefit payments for more than 9,500 workers and retirees from two of Hawker Beechcraft, Inc.'s pension plans. The settlement also includes $2.5 million to those salaried retirees whose benefits exceed those paid by PBGC under rules set by Congress.... [T]he bankruptcy court approved a settlement between Hawker Beechcraft and PBGC in which two plans covering salaried employees would be assumed by the agency. The third plan, with 8,300 participants, will be frozen and remain with the company." (Pension Benefit Guaranty Corporation)

Senate Committee Asks: Are Workers Saving Enough for Retirement?
Video of Full Committee hearing on January 31, 2013. Includes testimony by Edward Moslander, Senior Managing Director, TIAA-CREF; Julia McCarthy, Executive Vice President, Fidelity Investments; Cindy Hounsell, President, Women's Institute for a Secure Retirement; and Dr. Brigitte C. Madrian, Aetna Professor of Public Policy and Corporate Management, Harvard Kennedy School. Includes links to written testimony. (U.S. Senate Committee on Health, Education, Labor & Pensions)

Making Saving for Retirement a Priority
"Given that most of Gen X and Y consumers will have to rely primarily on their savings to fund their years in retirement (only 16 percent have defined benefit plans), there seems to be a lack of understanding on the importance of systematically saving throughout their careers and the benefits of compound interest." (LIMRA)


Operate Public Pensions for Security, Not Politics
"Every few years, politicians come up with the notion of using public pension funds to make political statements. The most recent incarnation is the effort to divest public pension and retirement plans from companies that make firearms.... Such responses have a powerful emotional appeal in the wake of the Newtown murders. And on a gut level, they might seem to make sense. But there are strong arguments not to use public pension plans to accomplish public policy goals. Divestiture will have no impact on the targeted companies and will create risks for already vulnerable plans.... Adding a new criterion to the investment decision may increase the likelihood of mistakes." (The New York Times; free registration required)


Birth of an Industry Leads to Need for Specialization by Investment Advisors
"With the introduction to the 'F' word by fi360 in the early 2000's, followed by the Pension Protection Act of 2006, the additional provider and participant disclosures last year, and now the proposed amendment to the definition of an ERISA fiduciary, the competency threshold for selling retirement plans should no longer begin and end with the ability to select and monitor investments." (fi360 Blog)


Text of Comments to FSOC on Proposed Regulation of Money Market Funds (PDF)
"[W]hile MMFs can currently be included as cash and cash equivalents due to their fixed share price and daily liquidity, the proposed rules may prohibit MMFs from being included as cash and cash equivalents and instead require that they be treated as short-term investments. Such a change would create complex and burdensome administrative expenses and potentially threaten compliance with debt covenants that mandate certain levels of cash equivalents." (Association for Financial Professionals)

Benefits in General; Executive Compensation

[Guidance Overview]

IRS Legal Memorandum Addresses Stock Options and Other Transaction-Related Deductions
"On January 28, 2013, the [IRS] published a generic legal advice memorandum (GLAM), AM2012-10, addressing the timing under the consolidated return regulations of certain deductions that commonly arise in an acquisition, including compensation deductions attributable to amounts paid to cash out a target company's non-qualified stock options (NQOs) and stock appreciation rights (SARs) held by employees.... The GLAM is not binding legal authority, but is a significant statement of the IRS's position with respect to what can be a material issue in an acquisition. If the IRS is correct, option deductions and certain other deal-related deductions that cannot be allocated to the post-closing periods will be immediately useable only if the target is profitable, or possibly if it had been profitable in prior periods and can claim a refund." (Wilson Sonsini Goodrich & Rosati)

[Guidance Overview]

SEC Approves Listing Standards for Compensation Committees
"The SEC approved the standards substantially as proposed in October 2012 ..., including recent amendments to the proposals that made a few minor changes (including extending the phase-in schedule for issuers that cease to be smaller reporting companies and clarifying that assessing the independence of compensation advisers is not required for advisers whose roles are limited to consulting on broad-based, nondiscriminatory plans or providing noncustomized data)." (McGuire Woods LLP)

Examples of Disclosures Regarding Conflict-Free Compensation Advisors
"New S-K Item 407(e)(3)(iv) provides that if any compensation consultant has played a role in determining or recommending the amount or form of executive and director compensation, and the consultant's work has raised any conflict of interest, then disclosure of the nature of the conflict and how the conflict is being addressed is required.... [Although the rule] does not require any disclosure if the compensation consultant's work did not raise any conflict of interest ... a review of 20 proxy statements filed [during January showed that] 12 companies (60%) made disclosures that their compensation consultant had no conflict of interest.... The disclosures also contain interesting discussions of procedures and practices companies are using in this area." (Dodd-Frank.com, a blog by Leonard, Street and Deinard)

Hodgson Russ Employee Benefits Developments, January 2013
Articles include: Fiscal Cliff Legislation Contains Benefit Plan Changes; IRS Extends Date to Amend Defined Benefit Plans for Section 436 Restrictions; IRS Publishes Final Regulations on New PCORI Fees Imposed on Health Plans; Proposed Regulations Limit Executive Compensation and Administrative Expenses for Service Providers Contracting With New York State; and IRS Creates Exception to Anti-Cutback Rule for Lump Sum Payments by Plan Sponsor in Bankruptcy. (Hodgson Russ LLP)

Press Releases

NAPA and ASPPA Announce 401k Advisor Leadership Award Finalists
American Society of Pension Professionals & Actuaries (ASPPA)

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