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BenefitsLink Retirement Plans Newsletter

March 21, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Data Conversion Specialist - Client Implementation
for Transamerica in NY

Customer Service Representative
for YMCA Retirement Fund in NY

Payroll & Benefits Manager
for Paramount Staffing in IL

Consulting Actuary
for New York Life Retirement Plan Services in MA

Retirement Plan Consultant
for CPA Firm in OH

Pension Administration Project Manager - Multiple Locations Available
for Aon Hewitt in CT, GA, IL, TX

Director of System Benefits
for University System of Georgia in GA

Reviewing Actuary
for Kravitz, Inc. in ANY STATE, CA

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Webcasts and Conferences

2013 403(b) Update
Nationwide on April 10, 2013 presented by McKay Hochman Co., Inc.

Ethics Case Studies One
Nationwide on April 25, 2013 presented by McKay Hochman Co., Inc.

Ethics Case Studies Two
Nationwide on June 25, 2013 presented by McKay Hochman Co., Inc.

“Employer Play or Pay” - The Basics plus New Rules and New Hurdles
Nationwide on February 28, 2013 presented by Crowley Fleck PLLP

EPCRS, Determination Letter and DFVCP Update
Nationwide on April 18, 2013 presented by ABA Joint Committee on Employee Benefits

Plan Sponsors and Washington: What You Need to Know Recorded Webcast
Nationwide on April 4, 2013 presented by Vanguard

View All Webcasts and Conferences

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[Official Guidance]

Are You an Ineligible 403(b) Plan Sponsor?
"If your organization was never eligible to sponsor its 403(b) retirement plan, [here's how to] use the IRS Employee Plans Compliance Resolution System's Voluntary Correction Program (VCP) to resolve this failure." (Internal Revenue Service)


The Industry's Best Document System… See for yourself!

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[Guidance Overview]

'Blue Book' Clarifies Distribution Restrictions Following In-Service Roth Conversions
"The 'Blue Book' for [the American Taxpayer Relief Act of 2012], as released by [JCT] in February 2013, clarifies the provisions authorizing in-service rollover distributions of 401(k) funds to Roth 401(k) plans. Significantly, the Blue Book explains that amounts subject to a distribution restriction in a 401(k), 403(b), or 457(b) plan before an in-plan transfer remain subject to the applicable distribution restrictions after the transfer." (Wolters Kluwer Law & Business)

Nation's Largest Pension Plan Considers Using More Indexed Funds
"[CalPERS] is considering the move because external active managers have failed to keep pace with the markets. This news is nothing new to people who closely track active management performance.... . It has been know in academia and in the consulting industry that a majority of active managers underperform the indexes they are trying to beat. It's also known that choosing a winning manager is extremely difficult because there is so much noise in the data." (Forbes)

Despite Recovery, Retirement Readiness Still Shaky
"The recovery has, perhaps ironically, underscored how far away most Americans are from a decent retirement even when economic times are better. And while a few bad years can derail retirement plans, it is becoming uncomfortably clear that even many years of increased attention to retirement savings might not be enough to make a big difference." (U.S.News and World Report)

CalSTRS' $73 Billion Funding Gap Is California's 'Most Difficult Fiscal Challenge'
"The $161.4 billion California State Teachers' Retirement System, West Sacramento, is scheduled to run out of money to pay benefits in 2044, the result of increases in benefits for educators in the late 1990s and poor returns following the financial crisis ... The [California Legislative Analyst's Office] report urges that the most prudent course is to reach full funding over the next three decades but says that will cost an additional $4.5 billion a year over current payments." (Pensions & Investments)


Annual Funding Notice Deadline is April 30! Are you ready?

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Addressing CalSTRS' Long-Term Funding Needs (PDF)
"[T]he longer it takes for the state to increase contributions to the CalSTRS system, the more costly it generally will be to erase the unfunded liability.... Waiting to address the funding problem would leave the system with fewer assets in the meantime -- making it much more vulnerable to sharp, future declines in the stock market. If CalSTRS' assets were depleted, benefits would have to be paid on a pay-as-you-go basis.... CalSTRS currently estimates that the annual cost of providing benefits under a pay-as-you-go method could be about 50 percent of teacher payroll." (California Legislative Affairs Office)

Quality of Life Matters in Setting Goals for Retirement Saving
"A seemingly large retirement nest egg may give some the impression of wealth, but if the expenses are not in line with the income generated, that large retirement balance may not last through all your retirement years.... It all comes down to changing your mindset about wealth, focusing less on the retirement balance number and more on quality of life." (Smart401k.com)

Seventh Circuit Reads Plan Language to Discount Plaintiffs' Rate Argument Over Value of Lump Sums
"Before the PPA, this increase [in the discount rate used for determining a lump sum payout] would have violated ERISA's anti-cutback provision.... The plan did contain a 'contractual anti-cutback' provision, but this applied only to a participant's 'accrued benefits.' These were defined by the plan as the value of a participant's straight-life annuity. In other words, nothing in the plan prevented a retroactive reduction in a participant's benefits if they opted for a lump sum payment." [Dennison v. MONY Life Retirement Income Security Plan, No. 12-2407 (7th Cir., Mar. 6, 2013)] (Seyfarth Shaw LLP)

401(k) Loans Usually Not Taken Out Frivolously, Senators Told
"Evidence shows that workers aren't dipping into their 401(k)s to cover frivolous purchases.... [L]ast year, only 2% of participants took a hardship withdrawal and the great majority of those workers did so for sound reasons: In 54% of the cases, workers were trying to avert eviction or foreclosure. Medical expenses were the second most common reason for the withdrawals (15%), while paying educational expenses came in third." (Investment News; free registration required)


Free Registration Offer for PSCA's Western Regional Conference April 3

Join us in Dallas for an in-depth look at the issues and challenges facing DC plan sponsors today. BenefitsLink is sponsoring 10 free registrations for plan sponsors -– click here and use discount code BLWRCDISC.

Single-Employer DB Plans: How They Work, Why They Are Important, and the Challenges They Face (PDF)
18 presentation slides. Excerpt: "There are good reasons that many companies would like to continue to maintain a single-employer [DB plan], including providing important benefits to long-service employees and retaining needed employees. Financial pressures, many of which can be addressed, have been overwhelming those good reasons and causing companies to leave the DB plan system. It is not too late to address the problem." (Davis & Harman LLP, on behalf of the American Benefits Council)


California Legislative Analyst's Office Recommends $4.5 Billion Rate Hike for Funding California Teachers' Pension
"The nonpartisan Legislative Analyst's Office ... recommended that the Legislature adopt a plan to fully fund CalSTRS in 30 years -- an estimated cost of $4.5 billion a year, a hefty addition to current annual contributions totaling $5.7 billion. That's not likely to happen as the state, with a budget back in the black from an improving economy and a voter-approved tax increase last fall, faces demands to restore what some say were $20 billion in classroom cuts during five years of deep deficits." (CalPensions)


Please Don't Sue Us, We're Just the Actuaries
"[F]rom an actuarial funding perspective [the July 1, 2012 actuarial valuations for the New Jersey public retirement system] are a train wreck. Liabilities and contributions are grossly understated while the 'actuarial' value of assets is pure fiction. So how's an actuary to avoid getting sued? Here's how Milliman and Buck are coping." (Burypensions)


We Are Witnessing the Greatest Retirement Crisis in American History
"Americans today are aware that corporate pensions have been virtually eliminated and that the few remaining private, as well as the nation's public pensions, are in jeopardy. Even if you are among the lucky few that have a pension owed to you, you cannot rest assured that it will be there for all the years you'll need it. Whether you know it or not, someone out there is busy trying to figure out how to screw you out of your pension. Americans also know the great 401k experiment of the past 30 years has been a disaster. It is now apparent that 401ks will not provide the retirement security promised to workers." (Forbes)


Is the SEC Letting States Get Away With Fraud?
"In its complaint against Illinois last week, the Securities and Exchange Commission offered about a dozen instances of how officials 'misled' or failed to properly 'disclose' information to potential investors about the worrying condition of the state's employee pension funds. Some of these lapses, like failing to tell investors that the state's basic plan to finance its pension system was inadequate in the first place, might strike the average investor as serious omissions." (RealClearMarkets)

Benefits in General; Executive Compensation

Discounted Stock Options Are Deferred Compensation Subject to Section 409A
"[T]he U.S. Court of Federal Claims ruled ... that section 409A of the Internal Revenue Code applies to discounted stock options, with the potential adverse tax consequences that the entire appreciation in the option position is subject to the 20% penalty tax under section 409A in addition to ordinary income tax and that this tax would be payable on option vesting rather than on exercise." [Sutardja v. United States, No. 11-724T (Fed. Cl., Feb. 27, 2013)] (Morgan Lewis)

Litigation Over Proxy Statement Disclosure -- Another Update
Attorney Michael Melbinger, author of the linked article, writes to contribute "some (hopefully) useful advice to companies that have not yet filed their proxy statements and are seeking approval of a new or amended plan stock plan (including those seeking only approval of additional authorized shares or performance goals for 162(m)). In a measured response to the plaintiffs' claims in many of these lawsuits and letters, [Winston & Strawn has been] suggesting additional disclosure regarding dilution and other data that would allow that figure to be calculated, including the following tweaks (to the extent not already in the disclosure): ..." (Winston & Strawn LLP)

Cypen & Cypen Newsletter for March 21, 2013
Covers employee benefit developments with an emphasis on governmental plans. Topics include: [1] A Spouse Is a Spouse Is a Spouse; [2] Assessing Stable Value After 2008; and [3] Florida Public Pension Trustees Association Creates Public Pension Institute. (Cypen & Cypen)

Best Practices and Core Principles for the Development, Dispensation and Receipt of Proxy Advice (PDF)
"[A]nnual proxy solicitations increasingly have become a referendum on a growing and sometimes conflicting array of issues. ... We have set forth core principles and a series of specific improvements to serve as a basis for proxy advisory firms, public companies, and investment portfolio manager organizations to engage in a dialogue to create a system that brings transparency and accountability to proxy advisory firms and fosters strong corporate governance." (U.S. Chamber of Commerce's Center for Capital Markets Competitiveness)

District Court Decision Creates More Uncertainty for ERISA Co-Fiduciaries on Contribution Claims
"[T]he court viewed ERISA's silence on contribution among co-fiduciaries to allow it to identify a federal common law right based on its belief that right was not inconsistent with ERISA's structure and intent.... [The] ongoing divide [among the circuit courts of appeal] over the power of federal courts to supplement ERISA's express terms may have wide-ranging effects on ERISA's provisions and remedies that go far beyond the question of contribution among co-fiduciaries." [Guididas v. Community National Bank Corp., No. 8:11-cv-2545-T-30TBM (M.D. Fla., Nov. 5, 2012)] (Jenner & Block via Employee Relations Law Journal)

Press Releases

ASPire Financial Names 403(b), 457 Head
ASPire Financial Services

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