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BenefitsLink Retirement Plans Newsletter

March 14, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Senior Counsel - Benefits
for Aon Hewitt in IL

Jr. Plan Administrator
for Cornerstone Group in RI

Senior Technical Manager
for Benetrends, Inc. in PA

Retirement Plan Compliance Specialist
for MidAmerica Administrative & Retirement Solutions, Inc. in FL

Retirement Plan Project Manager
for Progressive Employee Benefits Firm in Atlanta in GA

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Webcasts and Conferences

Pension Focus Conference
in Missouri on May 2, 2013 presented by Pension Consultants, Inc.

Hope is Not a Strategy - A Pension Risk Management Framework Video
Nationwide on March 25, 2013 presented by Mercer

The ACA Roadmap: Shared Responsibility Requirements
Nationwide on April 16, 2013 presented by ABA Joint Committee on Employee Benefits

View All Webcasts and Conferences

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[Official Guidance]

PBGC Benefits Payable in Terminated Single-Employer Plans for April, 2013
"The second quarter 2013 interest assumptions under the allocation regulation will be 2.50 percent for the first 20 years following the valuation date and 3.20 percent thereafter. In comparison with the interest assumptions in effect for the first quarter of 2013, these interest assumptions represent no change in the select period ... a decrease of 0.17 percent in the select rate, and an increase of 0.19 percent in the ultimate rate ... The April 2013 interest assumptions under the benefit payments regulation will be 1.00 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for March 2013, these interest assumptions are unchanged." (Pension Benefit Guaranty Corporation)


HRA Plans and the Annual Limit Prohibition Free Webinar from ftwilliam.com on March 28

Learn about recent guidance suggesting HRAs must be integrated with a major medical plan to be exempt from HCR's prohibition on annual limits. We'll cover other less-discussed exemptions that apply to HRAs under health care reform.

[Guidance Overview]

IRS Requiring Retirement Plan Document Restatements for Determination Letters
"The restatement requirement means that sponsors of individually designed plans will need to prepare formal restated plan documents at least every five years.... Sponsors may want to submit the restatement on a proposed basis so any changes requested by the IRS as part of the determination letter process can be incorporated into the final document before its formal adoption" (Towers Watson)

[Guidance Overview]

IRS Retirement Plans Correction Program Is Whole New Ballgame
"[T]hrough March 31, 2013, correction submissions can be made under Rev. Proc. 2008-50 or Rev. Proc. 2013-12 but must be entirely in conformity with one or the other, including a new mailing address.... Effective April 1, all VCP submissions must include two new forms: Form 8950 (Application for Voluntary Correction Program) and Form 8951 (Compliance Fee for Application for Voluntary Correction Program). At this point, these forms are only available on the Internet." (Warner Norcross & Judd LLP)

[Guidance Overview]

New Disclosure Requirements for Certain DB Plans
"The model supplement contains the required statements and the table in which the employer is to insert, for each of the applicable plan year and the two preceding plan years, the funding target attainment percentage, the funding shortfall and the minimum required contribution, all three calculated, first, using the MAP-21 segment rates and, second, without using the MAP-21 segment rates." (Sidley Austin LLP)

[Guidance Overview]

IRS PLR Addresses Account-Opening Bonuses in IRAs and 529 Plans (PDF)
"For IRAs, the Service conceptualized the bonus as interest or other earnings (e.g., a dividend) paid on the IRA, and ruled that the firm had no reporting obligation either under Internal Revenue Code section 6041 pursuant to a statutory exception for such payments (section 6049(b)(2) and (4)) or 'any other information reporting requirements of the Code.' Although not explicitly addressed, the implication of this ruling is that the bonus (i) is not taxable to the IRA owner until distributed and (ii) does not count against the IRA annual contribution limit." (Sutherland)


Register Today - PSCA's Western Regional Conference - April 3

Sponsored by PSCA (Plan Sponsor Council of America)

Join PSCA and top DC plan experts at this conference in Dallas designed to educate plan sponsors about the latest issues and trends affecting DC plans. Gain the tools you need to manage your plan effectively. Register by Mar. 22 and save $100.

[Guidance Overview]

Retirement Plan Sponsors Navigate New IRS Procedures in Correcting Plan Failures (PDF)
"IRS's Employee Plans division has been on the stump educating the retirement plan community on what the new procedure means to plan sponsors when it be- comes effective April 1. Meanwhile, retirement plan practitioners have begun coming to terms with the requirements of the procedure, which was revised from the version issued in 2008." (Bloomberg BNA)

'Notice of Exempt Solicitation' Causing Trouble for Hewlett-Packard
"[M]aybe [Hewlett-Packard's] real problem is its investors are ticked off. New York City Comptroller John C. Liu filed this notice of exempt solicitation announcing that the New York City Pension Funds will vote against two Hewlett-Packard directors 'because of their failure to protect investors from costly, misguided acquisitions.'" (Dodd-Frank.com, a blog by Leonard, Street and Deinard)

Are Americans Stressed Over Retirement Investing?
"According to a new Franklin Templeton Investments survey, 73% of respondents reported they find thinking about retirement saving and investing causes them stress and anxiety.... 37%, of respondents said they are more concerned about outliving their assets or having to make major sacrifices to their retirement plans today than 12 months ago. In response, 67% indicated they would make financial sacrifices now in order to live better in retirement." (Financial Planning)

Fewer Workers Tapping 401(k) for Loans as Economy Improves
"[A recent survey found that] loans increased in 37 percent of the companies, down from 49 percent of companies in 2008. A quarter of the companies polled said they saw an increase in hardship distributions from plans, down from 43 percent of companies that reported this in 2008." (NBCNews.com)

Long Time Separation Does Not Equal Divorce for Purposes of Beneficiary Designation
"The participant designated his son as beneficiary in 2005, while he was separated, but not divorced, from his wife.... The participant died in 2011 survived by his estranged wife and his son.... The court noted that the participant's intention was clear: he wanted his 401(k) account to go to his son. However, because the participant was still legally married to his estranged wife, she was the one who was entitled to a survivor benefit under the terms of the plan." {Gallagher v. Gallagher, No. 12-400 2 TSH (D.C. Mass, Feb. 26, 2013)] (Leonard, Street and Deinard)

Correcting a Code Section 415 Violation in a 401(k) Plan
"At first reading, the ordering rule seems to indicate that employers can regularly resolve 415 violations in favor of the participants (i.e., make the full nonelective contribution and return elective deferrals). However, a closer reading of EPCRS indicates otherwise. A plan sponsor may self-correct an operational failure (including a 415 violation) only if the plan has practices and procedures reasonably designed to promote compliance." (SunGard Relius)

Research Ties Economic Inequality to Gap in Life Expectancy
"The widening gap in life expectancy between [two adjacent Florida counties (Putnam and St. Johns)] reflects perhaps the starkest outcome of the nation's growing economic inequality: Even as the nation's life expectancy has marched steadily upward, reaching 78.5 years in 2009, a growing body of research shows that those gains are going mostly to those at the upper end of the income ladder." (The Washington Post)

From DOL: 'Tips on Using the Fee and Investment Information From Your Retirement Plan'
"While there are a number of factors to consider in making sound investment decisions, start with the information provided by your plan. Your plan administrator should provide you with key information about certain investment options offered by the plan every year. This information is provided in a format that allows you to compare the investment options." (Employee Benefits Security Administration)

European Pension Plans Struggle with Burden of 'Data Challenge'
"The demand for more frequent and granular data has increased exponentially amid the renewed focus on governance and transparency over the past five years for all pension schemes.... [N]early 73 percent of European pension [plans] cite demands from internal governance and risk management functions as a challenge and 87 percent believe governance demands will escalate over the next five years." (State Street Corporation)

88% of Corporate DC Plans Kept Employer Match Through Financial Crisis
"[T]he survey also found that 8% of sponsors suspended matches and hadn't restored the contribution. Four percent suspended or eliminated the match, then partially restored the contribution ... 1% of plans eliminated the match and completely restored it." (Pensions & Investments)

Global Institutional Annuity Market Update: Liability De-Risking and Plan Terminations (Year-End 2012 Edition) (PDF)
"In the second half of 2012, there were 72 group annuity placements worth a total of about $34 billion in premium ... There were 40 placements worth a total of about $600 million in the third quarter, and 32 placements worth about $34 billion in the fourth quarter. General Motors executed a large deal for its retirees by initially offering a lump sum and then annuitizing the remainder. On the heels of the GM deal, Verizon annuitized its retirees. These deals were revolutionary in their size, scope and complexity and should be the impetus for other large transactions in the future. Both deals closed in the fourth quarter." (Aon Hewitt)

More on the Moench Decision (PDF)
"Relying on the leading case of Moench v. Robertson, a number of courts have held that a fiduciary investing in company stock is entitled to a presumption that it acted consistently with ERISA. Two recent Circuit Court of Appeals cases, decided one day apart last September, apply this presumption in contradictory ways." (The Wagner Law Group)


SEC Nails Illinois, But the Snake Slithers Away
"On Monday, the Securities and Exchange Commission announced it had settled securities fraud charges with Illinois. The state agreed to pay no fine, admit no guilt, and never again do what it didn't admit to doing in the first place.... [S]tate leaders flat out decided not to put away the money required to fund these plans. This was much easier than cutting the programs that their voters love. They then failed to disclose this material fact to investors who would buy Illinois bonds and finance more of the state's follies." (MarketWatch.com)


What Investment Advisors Get Wrong in Retirement Planning
"As baby boomers approach retirement, says [Don Froude, president of Ameriprise's Personal Advisors Group], advisors' focus should shift away from returns and yields and toward determining clients' goals for retirement and personal legacy. 'I've built my career on baby boomers, and most of it was in the accumulation phase,' says Froude, who has worked in the industry for more three decades. 'And now, with 10,000 retiring every single day, I would submit to you that more than 95% of those people don't have an earthly clue how they're going to get through tomorrow.'" (On Wall Street)


Retiring the 401(k)
"Americans have had more than 30 years to learn the ins and outs of this massive experiment in tax-deferred investing, but as Alicia Munnell, the director the Center for Retirement Research says, 'we just don't know how to do it'.... More education isn't going to fix the problem. As the Economist [magazine] points out, financial education can actually lead to worse decision-making. And although the 401(k) costs $240 billion a year in tax deductions, research shows it doesn't make people save any more than they otherwise would." (Reuters)


Getting the Facts Straight on Retirement Age
"[A recent article] connects different the life expectancies of the poor and rich to the debate over whether Social Security should provide more years of retirement support as people live longer. He mistakenly leaves the impression that adjusting the retirement age for increases in life expectancy hurts the poor the most. In fact, such adjustments take more away from the rich." (Gene Steuerle of the Urban Institute)


Text of Request for IRS Guidance Regarding In-Plan Roth Conversions (PDF)
"It is critical that Treasury and the Service provide guidance as soon as possible because the amendments to Code section 402A(c)(4) are already effective." (American Benefits Council)


Areas Needing Guidance Regarding In-Plan Roth Conversions (PDF)
"Can a plan allow employer contributions that are not vested to be transferred ... ? Are there any restrictions on the kinds of contributions that can be transferred? ... Can a plan limit in-plan Roth transfers to particular contribution sources? ... Must distribution restrictions continue to apply to transferred amounts or are they eligible to be distributed like other rollover contributions? ... What portion of a transfer from elective deferrals is deemed earnings for purposes of a later hardship distribution?" (American Benefits Council)

Benefits in General; Executive Compensation

Citi, Wells Fargo Broaden Executive Pay Clawbacks Due to Pressure from NYC
"Three more top banks, including Citigroup Inc., will expand the reach of clawbacks for executive pay when things go wrong, increasing to six the number of leading financial companies that have bowed to pressure from New York City's Comptroller.... The agreements comes after four months of negotiations with the comptroller, overseer of $127.5 billion of pension funds, which has made clawbacks a priority for the second year in a row." (MarketWatch.com)

Has the DOL's 'Right To Know' Rule Resurfaced?
"The DOL's proposed survey, intended to obtain information about the precise issues that prompted it to propose 'Right to Know' rules in the first place, could mark the revival of this regulation and emphasizes the DOL's focus on worker misclassification issues. The survey is scheduled to last until May 2014." (Vedder Price)

Press Releases

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