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February 28, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Relationship Manager
for T. Rowe Price in CA

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Webcasts and Conferences

(K)onvergence Summit
in New York on June 17, 2013 presented by EACH Enterprise

Recent Research on Employee Owned Companies
Nationwide on April 16, 2013 presented by National Center for Employee Ownership

Handling the Repurchase Obligation- Legal Issues
Nationwide on May 7, 2013 presented by National Center for Employee Ownership

Handling the Repuchase Obligation: Planning for the Repurchase Obligation
Nationwide on May 14, 2013 presented by National Center for Employee Ownership

Handling the Repurchase Obligation- Valuation
Nationwide on May 21, 2013 presented by National Center for Employee Ownership

Equity Compensation in Pass-Through Entities
Nationwide on May 22, 2013 presented by National Center for Employee Ownership

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[Official Guidance]

PBGC Updates Pension Insurance Data Tables, Plans More Frequent Updates
"The Pension Benefit Guaranty Corporation [has] released its annual pension insurance data tables. These Excel-format tables capture statistical trends in the world of private defined benefit pensions. In addition, the agency announced plans to update the data tables more frequently. Rather than wait to publish a full annual update, PBGC will give users access to the most recently published data for each of about 70 topics." (Pension Benefit Guaranty Corporation)


[Advert.]

EPCRS Webcast: Protect Your Clients & Your Practice

Sponsored by ASC

Every retirement plan practitioner needs to know about recently updated IRS plan correction procedures (EPCRS). Attend this webcast, March 21st, and receive 2 hours of CE credit for ERPA, NIPA and ASPPA, Enrolled Agent and JBEA. Click here to sign-up!


[Guidance Overview]

IRS Relief Available until April 1 for 403(b) Plan Sponsors Under Audit
"Though plans under audit typically cannot voluntarily correct plan errors (and must pay a higher penalty to correct those errors), plan sponsors availing themselves of the transitional relief will pay only the reduced penalty that applies to voluntary corrections under [EPCRS].... The recent IRS announcement expanded this transitional relief to 403(b) plan sponsors that are audited or notified of a 403(b) plan audit between now and April 1, 2013.... [T]he VCP program is generally unavailable for plans under audit." (McDermott Will & Emery)

[Guidance Overview]

GASB Accounting and Reporting Standards for Defined Benefit Pension Plans (PDF)
"State and local governments must recognize their pension liability by reporting the 'net pension liability' in their financial statements. 'Net pension liability' is the amount by which the total pension liability exceeds the pension plan's net assets (now referred to as a plan net position) available for paying benefits. When a pension plan's assets are greater than the total pension liability, a 'net pension asset' exists. This reporting change will require governments to report their pension liability as part of its financial position." (Prudential)

Float Income: Small Stream, Big Waves
"In order to avoid a prohibited transaction of fiduciary self-dealing, the service agreement must clearly state that the trustee may retain float income as additional compensation and provide a formula to estimate the dollar amount of compensation. Float income must be included in a discussion of the reasonableness of the service provider's fees." (Retirement Town Hall)

Stockton's CalPERS Payments Will Be Tested in Upcoming Bankruptcy Trial
"Three Wall Street bond creditors, who could lose millions in the bankruptcy, say the city is refusing to face up to its obligations -- and is giving CalPERS a sweetheart deal at the expense of other creditors. Stockton is continuing to make its $29 million in annual pension payments to [CalPERS]." (Sacramento Bee)

Retirement Age Would Increase Under Puerto Rico Governor's Pension Proposal
"The plan will run out of assets in 2014 ... The governor's plan includes lifting the retirement age in stages, to 65 from 58 for workers who have been in the system the longest, and to 67 from 60 for the newest employees ... Employees would also pay 10 percent of their salaries toward retirement, [up] from about 8 percent[.]" (Bloomberg)

California Pension Liabilities May Swell to $328.6 Billion
"New credit evaluation standards for public pension liabilities proposed by Moody's Investors Service would swell unfunded liabilities for California's state and local public pension plans to $328.6 billion from $128.3 billion ... [T]he unfunded pension liabilities would come to $8,600 per resident of the most populous U.S. state[.]" (Reuters)

IRS Finds High Percentage of Errors on W-2 Reporting of 401(k) Elective Deferrals
"[The IRS] ... found 75 percent needed to correct these forms because they: reported that some employees had elective deferrals that exceeded the annual limit; failed to use the code 'D' in Box 12 when reporting 401(k) elective deferrals; or incorrectly reported in Box 12 elective deferrals made to 403(b) or 457 plans or other non-qualified amounts." (Thompson SmartHR Manager)

The Next Step to a Uniform Fiduciary Standard
"SEC Chairman Elisse Walter ... predicted that the SEC will issue a formal request for information regarding the costs and benefits of a rule imposing a uniform standard of conduct. The SEC hopes to receive comments not only from investment advisers, broker-dealers, and the other 'usual suspects,' but also from investors -- both retail and institutional.... [M]any expect broker-dealers to argue that a true fiduciary standard would require financial advisors to increase their fees and reduce their product offerings, and in the process close the door on many small investors seeking basic investment advice." (Fi360)

Pennsylvania Supreme Court Overturns Longstanding Precedent; Acceptance of Early Retirement Package Does Not Preclude Receipt of Unemployment Benefits
"'[T]he "voluntary" layoff option [VLO] forbids the denial of UC benefits merely because an employee has accepted, voluntarily, a plan offered by the employer.' On this basis, the court rejected the Commonwealth Court's refusal 'to apply the VLO proviso because employees voluntarily accepted early retirement packages or because their jobs were not in danger if they did not accept the package,' finding that the legislative intent behind the VLO proviso was to equate 'those that fall within the VLO proviso' with those who find themselves involuntarily unemployed." [Diehl, Jr. v. UCBR, No. 51 MAP 2011 (Penn., Dec. 28, 2012)] (Wolters Kluwer Law & Business / CCH)

Americans Anxious About Retirement Readiness
"As aging Americans are increasingly burdened by debt, spiraling health-care costs and diminishing pension coverage, an increasing number of researchers argue that a long era of improved living standards for the elderly is now in jeopardy." (The Washington Post; free registration required)

DOL Recovers More Than $43 Million for Madoff Victims (PDF)
"Under the settlement agreement ..., $34,363,636 will be paid to a settlement fund for the plan investors. In the settlement entered into on Dec. 13, 2012, KeyCorp, Austin Capital's parent company, paid $9,090,909 to a settlement fund for plans that invested with Austin funds, for a total recovery for the plans of $43,454,545. The money in both settlement funds will be distributed to the plans by an independent fiduciary selected by the department. Austin Capital Management also will pay a civil penalty of $4,345,455." (Employee Benefits Security Administration)

Investments of Defined Contribution Plans: A Path to Improve Long-Term Outcomes (PDF)
"[W]ith the recent growth in target date funds ... and pooling of strategies in these funds, the traditional benefits of asset pooling are now becoming increasingly available [to DC plans]. However, before further improvements can happen, regulations and the emphasis on the perceived benefits of daily valuation and daily liquidity need to reflect something more akin to global best practices." (Towers Watson)

[Opinion]

Changing to 401(k) Pension Plan Would Be Costly for Floridians and Public Employees
"The [Florida Retirement System] is one of the soundest public pension systems in the country. Because it would severely reduce new money coming into the system, the plan to bar new employees actually would increase what the state -- or school districts, or counties, or the employees -- would have to contribute over the next three decades to keep the system sound." (Palm Beach Post)

[Opinion]

Five Reasons to Choose a Traditional 401(k) Over a Roth
"There are more obstacles to withdrawing money early.... You can deduct the contributions automatically from your paycheck.... You can move to a lower tax state before you withdraw the money.... A Roth IRA conversion is possible during low income years.... You could pay a lower tax rate in retirement." (U.S.News and World Report)

[Opinion]

Even Younger Americans Should Be Anxious About Retirement
"[S]hifting workers into 401(k)s, [Canadian Registered Retirement Savings Plans] or defined-contribution plans is effectively condemning them to pension poverty. Moreover, instead of reducing public debt, you will see a worsening of the debt profile of many developed economies as taxpayers will bear the burden of exploding social welfare costs. It will also severely hamper productivity, the ultimate determinant of the wealth of a nation." (Pension Pulse)

[Opinion]

Getting Bucked
"That's what happened [this week] when Buck Consultants was sued by the city of Providence, RI for multiplying some number by 9 instead of 10. In a plan that is 31.85% funded due primarily to a set of funding rules designed specifically to understate contributions Buck accidentally understated them too much by making a math error that even politicians could grasp." (Burypensions)

Benefits in General; Executive Compensation

[Official Guidance]

IRS Expands Voluntary Worker Classification Settlement Program
"The Internal Revenue Service has expanded its Voluntary Classification Settlement Program (VCSP), paving the way for more taxpayers to take advantage of this low-cost option for achieving certainty under the law by reclassifying their workers as employees for future tax periods.... Normally, employers are barred from the VCSP if they failed to file required Forms 1099 with respect to workers they are seeking to reclassify for the past three years. However, for the next few months, until June 30, 2013, the IRS is waiving this eligibility requirement." (Internal Revenue Service)

Employers Ask Court to Outlaw Federal Defense of Marriage Act
"278 employers signed on to a friend-of-the-court brief ... [which] says, 'DOMA forces [the businesses] to administer dual systems of benefits and payroll, and imposes on them the cost of the workarounds necessary to protect married colleagues' ... [I]n those states that allow gay marriage, companies must treat employees with same-gender spouses as single for federal tax withholding and benefits, and many employers keep two sets of books -- one for state and one for federal purposes." (UPI.com)

You Make $70k But Cost Your Boss $88k
"How much does an employee really cost? While that depends on benefits -- and several layers of taxes -- it typically ends up being 18% to 26% more than a worker's base salary. It can be even higher for larger companies." (CNNMoney.com)

Benefits Litigation Update, February 2013 (PDF)
Articles in this issue included: DOMA Update; Obamacare: Round 2; and Important Issues in Pending Cases. (Epstein Becker & Green, P.C.)

The U.S. Is Aging Faster Than Anticipated
"Although the latest census forecast still says the number of Americans 65 and older will double over the next 30 years to 80 million, the government now believes the under-65 crowd will grow more slowly than estimated four years ago.... The nation will be affected in significant ways due to an increasing number of retired Americans and relatively fewer young people paying taxes and earning money to support themselves and their families." (Next Avenue)

[Opinion]

Text of Amicus Brief by 278 Employers to Supreme Court Arguing for Overturning of Federal Defense of Marriage Act (PDF)
"We are located in or operate in states that recognize marriages of certain of our employees and colleagues to spouses of the same gender. At the same time, we are subject to section 3 of the federal Defense of Marriage Act ... which precludes federal recognition of these marriages. This dual regime uniquely burdens amici. It puts us, as employers, to unnecessary cost and administrative complexity, and regardless of our business or professional judgment forces us to treat one class of our lawfully married employees differently than another, when our success depends upon the welfare and morale of all employees. Amici write to advise the Court concerning the impact on the employer of these conflicting legal regimes." (Via the American Benefits Council)

[Opinion]

Shareholders Need Robust Disclosure to Exercise Their Voting Rights as Investors and Owners
"In recent years, investors have increasingly focused on corporate accountability. In December 2009, the SEC took steps to enhance the information that companies provide to shareholders in connection with the solicitation of proxies. The amendments required public companies registered under the federal securities laws to make new or revised disclosures about compensation policies, the qualifications of board members, the board's leadership structure and role in risk oversight, and board diversity policies, among other things. Many public companies have made a good effort to enhance the quality of their proxy statements ... [but] many other companies continue to fall short of providing the robust, clear, and useful disclosure required by law." (Accountability-Central.com)

Press Releases

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