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BenefitsLink Retirement Plans Newsletter

February 18, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Senior Manager - Operations
for J.P. Morgan in KS, MO

Retirement Plan Specialist (Defined Benefit)
for Transamerica in MA

Sr. Investment Analyst
for Gallagher Retirement Services in IL

Investment Analyst
for Gallagher Retirement Services in IL

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Webcasts and Conferences

Retirement Plan Insights Seminar
in Pennsylvania on May 7, 2013 presented by McKay Hochman Co., Inc.

Retirement Plan Insights Seminar
in Illinois on June 11, 2013 presented by McKay Hochman Co., Inc.

Multiple Employer Plans (MEPs) Webcast
Nationwide on March 20, 2013 presented by American Society of Pension Professionals & Actuaries (ASPPA)

DOL Audits of Health and Welfare Plans: Be Prepared to Show Compliance With Health Care Reform and Other Laws
Nationwide on February 14, 2013 presented by Thomson Reuters / EBIA

EPCRS and Beyond: Protecting Your Clients and Your Practice!
Nationwide on March 21, 2013 presented by ASCi

Health Care Reform Impact on Globally Mobile Employees Webinar
Nationwide on February 27, 2013 presented by Baker & McKenzie

The Definition of "Compensation" - How It Impacts Your Benefit Plans Webinar
Nationwide on April 24, 2013 presented by Baker & McKenzie

View All Webcasts and Conferences


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Frozen DB Plans Face Non-Discrimination Peril
"The problems arise most often when defined benefit plans are closed to new hires. As the earnings of participants in the closed plans grow, so does the disparity between the richness of their benefits and those of other employees for whom a defined contribution plan is their only choice. So, more participants in the closed plan are moving into the highly compensated employee category, while newer employees and turnover keep overall benefit values lower in other plans." (Pensions & Investments)


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The IRS's Retirement Plan Correction Program Has Been Updated and Expanded
"Revenue Procedure 2013-12 also added a 'safe harbor' correction method for an employer's failure to heed section 403(b)'s 'universal availability' requirement -- the requirement that all eligible employees be permitted to make elective deferrals to the plan. The safe harbor requires that an employer provide a 'missed deferral' contribution on an employee's behalf equal to the greater of: (a) 3% of the employee's compensation; or (b) the amount equal to the maximum elective deferral that would entitle the employee to the full plan match had the employee been able to make elective deferrals." (Littler Mendelson P.C.)

Employers Push 401(k) Auto-Enroll a Bit More
"While automation achieves its basic goal of increasing savings, however, it seems to contradict one of the original justifications for 401(k)s -- that individuals want to be in charge of their own retirement planning. Proponents say that is partly because many conditions have changed since the first 401(k) plans were established three decades ago." (The Boston Globe)

A Plan Sponsor's Fiduciary Calling to Improve the Retirement Readiness of Plan Participants (PDF)
"The U.S. Department of Labor's '404a-5 Regulations' impose an implied duty on plan sponsors to promote the financial literacy of the plan's average participant, and to educate participants on how they may save and invest through their plan.... [P]lan sponsors should strongly consider implementing the following best practices to promote retirement readiness: 1. Evaluate Retirement Readiness at Plan-Level.... 2. Implement Retirement Readiness Communication and Education Program.... 3. Integrate Readiness Assessment into Education Program.... 4. Adopting Plan Design Changes to Promote Retirement Readiness." (The Wagner Law Group)

AFL-CIO Group Says Report Bolsters Case Against Proposed Florida Pension Reform
"The Florida Retirement Security Coalition issued a stinging rebuke ... of Florida House Speaker Will Weatherford's efforts to reform Florida's pension system. Ok, that's hardly news coming from an outfit managed by the AFL-CIO.... But the group pegged [this] lament on a [recent] report ... that had been ordered by Weatherford to study the economic impact of the reform. It surely wasn't Weatherford's hope that the report would be used as ammo against his proposal." (Miami Herald)


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Fiscal Trouble Ahead for Most Future Retirees
"For the first time since the New Deal, a majority of Americans are headed toward a retirement in which they will be financially worse off than their parents, jeopardizing a long era of improved living standards for the nation's elderly, according to a growing consensus of new research. The Great Recession and the weak recovery darkened the retirement picture for significant numbers of Americans. And the full extent of the damage is only now being grasped by experts and policymakers." (The Washington Post; free registration required)

Macy's to Freeze Pension Plan at End of Year
"The company also announced it will increase the company contribution to its existing 401(k) plan on Jan. 1, 2014, and on that day will also create a new defined contribution plan, which 'will be implemented to provide for income deferral and company matching contribution opportunities with respect to compensation in excess of amounts eligible for such opportunities under the company's 401(k) plan.' The defined benefit pension plan was closed to new participants on Jan. 1, 2012." (Pensions & Investments)

NY City Teachers Pension Fund Dumps Gun-Makers' Stocks
"[T]he $46.6 billion teachers pension fund owned about $13.5 million in the shares of five companies -- Alliant Techsystems Inc., Olin Corp., Forjas Taurus SA, Smith & Wesson Holding Corp., and Sturm, Ruger & Co. Inc.... [T]he boards of trustees of the other four city pension funds haven't made a decision on whether to keep or divest gun and ammunition stocks." (Pensions & Investments)

Employee Ownership Update for February 15, 2013
NCEO Executive Director Loren Rodgers discusses a letter to the Financial Accounting Standards Board on disclosure requirements affecting ESOPs, an increase in employee-owned businesses in the UK, and employee ownership in Fortune's 100 Best Companies to Work For. (National Center for Employee Ownership)

[Opinion]

Employer Stock in a 401(k): Caveat Emptor
"The implications associated with holding some employer securities (e.g., 10% of an account balance) aren't generally significant, but higher levels of employer stockholdings (e.g., over 25%) can significantly reduce the likely 401(k) balance at retirement.... [E]mployer stock just generally isn't worth the risk." (MarketWatch.com)

[Opinion]

Defining Actuary (and Journalist)
"what are 'generally recognized and accepted actuarial principles and practices' for public pension funding? Using asset smoothing, open-amortization periods, 8% interest assumptions, and any gimmick that will understate the contribution yet provide as much of an illusion of solvency as is possible? Sitting idly by as your client refuses to fund the ARC? Providing justification for benefit enhancements or contribution holidays as your client may find necessary? If you are not willing to toe this line you are not going to get hired so only those willing to prostitute their principles get hired and the perverted actuarial standards they sign on to practice become generally accepted." (Burypensions)

[Opinion]

PBGC Should Investigate Causes of Pension Failures
"All-too-often when investments and plans fail, forensics reveal there are guilty parties. The death was foreseeable and preventable. Again, all-too-often investors rely exclusively upon the reassurances of the very culprits who recommended the strategies or investments in the first place to the effect that the demise of the investment or plan was due to uncontrollable, unforeseeable market forces." (Forbes)

Benefits in General; Executive Compensation

Ohio Board of Tax Appeals Finds Supplemental Executive Retirement Plan Excludable from Income for Local Income Taxes (PDF)
"The decision may create refund opportunities.... In the ruling, a pension was described as any plan sponsored by an employer that provides for post-retirement income that's designed to supplement their income for life. After reviewing a number of factors the BTA recognized that although SERP fell within the scope of a nonqualfied deferred compensation plan, such designation did not preclude it from also being defined as pension income which is excludable under the subject municipal law." (PricewaterhouseCoopers)

Several Ex-Partners Ask Judge to Reject Dewey's Bankruptcy Plan
"One objection ... highlighted the outsize compensation packages that Dewey's management used to poach star lawyers from other firms.... At the heart of the complaints is a 'partner contribution plan' to which nearly two-thirds of Dewey's former partners agreed. That plan requires the partners to return a portion of their pay from 2011 and 2012 to compensate creditors.... Among its problems, [some ex-partners] say, is that it benefits some of the members of Dewey's leadership at the expense of the rest of the partnership." (The New York Times; free registration required)

Corporate Stock Option Tax Deduction in the Cross-Hairs Yet Again
"Sen. Levin described the proposals as eliminating 'a loophole that allows large corporations to exploit what is in effect a federal subsidy that helps pay for the compensation awarded to their executives.' However, under his approach, companies would be able to take a deduction for stock options that may never produce compensation if the stock price declines. Some estimates predict that the provision would raise $25 billion over 10 years." (HR Policy Association)

Press Releases

2013 403(b) Survey Questionnaire
Plan Sponsor Council of America (PSCA)

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Phone (407) 644-4146
Fax (407) 644-2151

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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