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BenefitsLink Retirement Plans Newsletter

April 10, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Manager of Retirement Plan Processing
for Aspire Financial Services in FL

Pension Administrative Support
for TPA in Tampa, FL in FL

Benefits Administrator/Analyst
for General Atomics in CA

Account Manager II/III
for Lincoln Financial Group in ANY STATE, IN

Manager, RegulatorySupervision (Retirement Plan Compliance)
for Prudential in CT

Qualified Plan Administrator
for Trust Company of America in CO

On-Site Education Specialist
for Milliman in AR

Operations Daily Processing Supervisor
for Alliance Benefit Group of Houston, Inc. in TX

Processor for Defined Contribution Plans
for Alliance Benefit Group of Houston, Inc. in TX

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Webcasts and Conferences

Overview of Types of Plans
Nationwide on April 16, 2013 presented by McKay Hochman Co., Inc.

Qualified Plan Essentials Plus Series
Nationwide on April 16, 2013 presented by McKay Hochman Co., Inc.

Roadmap to Compliant Wellness Programs
Nationwide on April 30, 2013 presented by ABA Joint Committee on Employee Benefits

"401(k) Plan Workshop 2013: Tax Reform and the 401(k) Plan" - Appleton
in Wisconsin on May 8, 2013 presented by SunGard Relius

"401(k) Plan Workshop 2013: Tax Reform and the 401(k) Plan" - Detroit
in Michigan on May 8, 2013 presented by SunGard Relius

"401(k) Plan Workshop 2013: Tax Reform and the 401(k) Plan" - Bloomington
in Illinois on May 10, 2013 presented by SunGard Relius

View All Webcasts and Conferences


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[Official Guidance]

From SSA: FAQs for Individuals About the Potential Private Benefit Information Notice
"[Question:] I received an SSA Potential Private Retirement Benefit Information notice. What does this mean? [Answer:] This notice was sent to you by the Social Security Administration (SSA) because you filed a claim for social security benefits. It is a reminder about private employer retirement benefits that you have earned, also called 'deferred vested benefits.' The [IRS] provided this information to SSA. The information is provided to the IRS by the plan administrators of the private retirement plans that you participated in while you were an employee. You may have already received some or all of these benefits." (Employee Benefits Security Administration)


[Advert.]

Learn About Compensation with ftwilliam.com and Earn CE Credit

Sponsored by ftwilliam.com

On April 18th, we will explore the common definitions of compensation used in retirement plans for allocations and testing. The "big three" definitions will be discussed in detail (W-2, withholding and 415) as well as self-employed compensation.


[Guidance Overview]

Using an 11(g) Retroactive Amendment to Convert a Cross-Tested Plan to an Integrated Plan
"In some instances, the practitioner determines that the cross-tested plan no longer works effectively because one or more younger nonhighly compensated employees have been replaced by older employees.... A plan does not need to satisfy requirement that the additional allocations under the 11(g) amendment separately satisfy the coverage and nondiscrimination requirements if the plan sponsor is amending the plan to conform to one of the nondiscrimination safe harbors (e.g., nonintegrated or integrated)." (SunGard Relius)

The Impact of a Retirement Savings Account Cap (PDF)
"The retirement plan account savings cap in the White House budget proposal is reportedly tied, not to a hard dollar limit, but rather one that would finance, in 2013, an annuity of $205,000 per year in retirement ... The corresponding account balance threshold would fluctuate over time, based on discount rates -- and that means that the number of accounts that could exceed the threshold in the future could be significant. For example, based on a time series of annuity purchase prices for males age 65 going back to late 2006, the actuarial equivalent of the $205,000 threshold could be as low as $2.2 million. At that level, nearly three percent (2.99 percent) of 401(k) accounts are projected to be impacted. Of course, a higher interest rate environment could result in an even lower cap threshold." (EBRI)

Insolvent Union Pension Plans May Double by 2017
"The PBGC's financial payouts to failed multiemployer plans continues to increase, but the GAO warns that the insurance fund would be exhausted in two to three years if projected insolvencies of either of two large plans occur in the next 10 to 20 years. The agency also said it expects the number of insolvencies to more than double by 2017; and financial assistance to plans that are insolvent or are likely to become insolvent in the next 10 years would likely exhaust the insurance fund within the next 10 to 15 years." (ABC News)

Will You Be 'Chained' to a Smaller Check in Retirement?
"If Congress were to approve it, the change would directly affect the wallets of current -- as well as future -- recipients of Social Security. So what is this different formula? Here are some answers about the politically charged proposal that would affect nearly all Americans who are -- or plan to be -- retired." (National Public Radio)

Consumers Union to Create 'Adjustable' Pension Plan for Employees
"Under the new pension plan, the employer will contribute a fixed 6% of salaries plus $100,000 each year to the plan. The retirement benefit will then be calculated each year on an adjusted basis depending on the plan's performance in the prior year. The company would then have no further financial commitment or unfunded liabilities to the plan." (Pensions & Investments)

Retirement Education Increasingly Tech-Driven
"The responsibility for planning and saving for retirement increasingly rests on individuals -- and video, quizzes, games, podcasts, presentations and other multimedia tools are primary sources for educating individuals on financial matters and promoting financial literacy ... Fact sheets, prospectuses and other downloadable resources, while generally available, are potentially off-putting.... [S]eamless navigation and quick access are critical to user acceptance and use[.]" (On Wall Street)

Boomers Close to Retirement Prefer Guaranteed Income
"Baby Boomers close to retirement prefer protection of their retirement savings over a risky return [according to a recent survey] ... Despite the market's recent strength, Transition Boomers -- those ages 55 to 65 and closing in on retirement -- said they would protect their retirement savings with a guaranteed return rather than chance a loss in the market[.]" (PLANSPONSOR.com)

SEC's Money Fund Proposal Coming in Next Two Months
"The SEC has been readying its proposal as the Financial Stability Oversight Council, a super-panel of regulators formed by the Dodd-Frank Act, looks over its shoulder. The FSOC, which is headed by the U.S. Treasury secretary, issued a report in November that recommended several reform options, including a floating share value and capital buffers." (Treasury & Risk)

Under 50 and Grabbing a State Pension in Massachusetts
"In the past three years, there have been 475 state workers who retired before age 50 ... New reforms went into effect for state workers hired after April 2, 2012.... But state workers hired before those reforms are grandfathered in to the old rules, including a provision that hands out pension checks to anyone working at least 10 years by age 55.... Retirement officials estimate that nearly all the 86,000 members currently in the pension system can retire under the old rules." (Boston Herald)

Three (Bad) Reasons 401(k) Investors Are Over-Cautious
"Investors look at the short-term, especially after market collapses like 2008/09, because they revert to a 'safety first' mentality.... For those unwilling or unable to work with an individual adviser, ... the best way to cure the problem of over-cautiousness comes down to this simple rule: 'Don't look at the short-term media.'" (Fiduciary News)

Find Extra Money for Retirement by Looking for Small Savings in Your Everyday Life
"Here's a look at some possible savings you might have missed: Refinance Your Mortgage.... Check in With Your Utility Companies.... Pay Only For What You Use.... Shop around for a credit card.... Plan your dinner menu.... Skip the latte." (PennLive.com)

Frontline to Critique 401(k) Plans
"Public Television's well respected and Pulitzer Prize winning show 'Frontline' is the latest media outlet to critique and raise questions about 401k plans and how Wall Street deals with them. One quote from the prevue ... 'This whole thing is a scam ...' The 'Retirement Gamble' is set to air on April 23rd and will raise 'troubling questions about how America's financial institutions protect our retirement savings.' The program it is sure to cause concerns[.]" (401kHelpCenter.com)

Public Pension Plan Litigation Summary, April 2013 (PDF)
44 pages. "[I]t is difficult to get a comprehensive overview of the state of public pension reform litigation and the many lawsuits around the country because court decisions and litigation documents are very difficult to find online.... [This] state-by-state review ... represents a centralized resource that monitors the lawsuits and court decisions currently challenging public pension reform." (Laura and John Arnold Foundation)

The Retirement Crisis in the United States: What Can Be Done?
"Depending on the design of the plan, the answer could be a defined benefit plan, a defined contribution plan, or a strategic combination of the two. Possible solutions can be categorized from basic to more radical. One proposal is to convert traditional pension plans to cash balance plans rather than merely freezing them.... A middle ground solution might be to introduce a profit sharing element to the retirement plan package." (Retirement Town Hall)

Don't Miss the Big Change in Portfolio Rebalancing
"Normal rebalancing rules would suggest that with a 25 percent gain in stocks since the start of last year, investors should start lightening up on equities by the same percentage. Meanwhile, they should be buying bonds to restore that balance. But bond prices are so high, and yields so low, that many investing allocation experts are leery of loading up on more fixed income, especially with the Federal Reserve is in its sixth year of keeping interest rates low, and rates expected to rise when the policy ends." (U.S.News and World Report)

A Scare Tactic Could Boost Retirement Savings
"Should the federal government require 401(k) plans to tell participants how much monthly income their retirement accounts will generate? According to a new study ,,, participants who know how much sustainable monthly income their 401(k) accounts can generate are likely to save more than those who don't." (MarketWatch)

Online Investor Education: Using Web Resources for Retirees (PDF)
"[A]nnuity and retirement plan providers ... are utilizing new technologies and similar methods for educating consumers on general financial principles and key product information.... [V]ideos and other multimedia were determined to be a primary source for educating consumers. Additional methods include quizzes, games, podcasts and presentations that focus on a wide array of financial topics." (Insured Retirement Institute)

African American Investors Optimistic About Financial Future and the Economy, But Concerned About Retirement
"Despite proactive planning and intentional cuts in spending, African American investors remain focused on day-to-day living expenses, with a large majority concerned about having enough money to retire. Three in five (60%) African American investors express confidence in their own financial future, slightly higher than the national response (52%), while half (52%) report they are better off now than they were three years ago, same as the general population." (Wells Fargo)

[Opinion]

Obama Budget Slams Small Business Retirement Plans
"Without any further incentive to keep the plan, many small business owners will now either shut down the plan or reduce contributions for workers. This means that small business employees will now lose out not only on the opportunity to save at work, but also on contributions the owner would have made on the employee's behalf to pass nondiscrimination rules.... Even President Obama's own pension, based on reasonable actuarial assumptions, is worth at least $5 million dollars. That's 40% more than the small business retirement savings cap permitted under the President's budget." (American Society of Pension Professionals & Actuaries)

[Opinion]

Is PBGC a Better Trustee?
"In the past decade, the problems of allowing the PBGC to serve as plan trustee have become increasingly apparent.... The first is that serving in this dual role -- as both the federal agency responsible for guaranteeing pensions and as the fiduciary trustee of the participants of the terminated plan -- has imposed overwhelming administrative burdens on the PBGC that are, unfortunately, beyond its ability to handle.... The second problem with agreeing to the appointment of the PBGC as the plan's trustee is that the PBGC has an inherent conflict of interest.... [T]he PBGC's insurance program is funded by plan sponsor insurance premiums, and because of this lack of public funding, the PBGC is often concerned with its own fiscal bottom line." (Pensions & Investments)

[Opinion]

The Pension Rate-of-Return Actuarial Fantasy
"Counting on 7.5% when Treasury bonds are paying 1.74%? That's going to cost taxpayers billions.... Pension math is more art than science. Actuaries guess, er, compute how much money is needed today based on life expectancies of retirees as well as the expected investment return on the pension portfolio. Shortfalls, or 'underfunded pension liabilities,' need to be made up by employers or, in the case of California, taxpayers." (The Wall Street Journal)

[Opinion]

Increasing Social Security Benefits is Not the Answer
"What do you do with a program that's unsustainable and about to start hemorrhaging cash? ... Ezra Klein ... argues that because one of Social Security's crises is 'It's not generous enough to counteract the sorry state of retirement savings nationwide' the solution should be 'We need to make Social Security much more generous.' ... Klein's policy flight of fancy avoids the biggest crisis facing Social Security: It's not sustainable unless reformed." (U.S. Chamber of Commerce)

[Opinion]

Mark Iwry's Recommends: 'Create a Stronger, More Powerful 401(k)'
"The President has proposed a major expansion of retirement savings coverage.... '[A]utomatic IRAs' would extend the power of automatic enrollment to those employees who don't have access to a 401(k), by letting them use their employer's payroll system as a conduit to channel their savings through automatic enrollment into [IRAs]." (Mark Iwry, Senior Adviser to the Treasury Secretary, via Bloomberg)

[Opinion]

22 Tough Questions for Rhode Island's Pension 'Reforming' Treasurer
"[Rhode Island Treasurer Gina] Raimondo's overhaul or reform of the state pension will, in the years to come ... turn out to be disastrous for taxpayers and state workers ... Hail Mary passes and other high risk gambles rarely succeed and, even if they do, are not appropriate for pensions thousands of state workers depend upon for retirement security.... Given the amount of money at stake, and the potential detrimental impact upon workers and taxpayers, don't let anyone tell you that getting comprehensive answers to these questions is too much to ask." (Edward "Ted" Siedle, in Forbes)

Benefits in General; Executive Compensation

Liberate Employers from Benefits Burden
"Given that employer-linked benefits are not optimal for anyone, it seems like a good time to take a look at alternatives.... [One proposal] involves establishing third-party Benefit Administrators -- trusted intermediaries with expertise in designing, delivering, and managing health and retirement benefits. These administrators could be banks, insurance companies, investment companies, or new entities created specifically for this purpose. These entities would compete among themselves for employers' business and also for individuals who want to buy their benefits directly." (MarketWatch)

Public Still Unwilling to Cut Entitlement Benefits to Reduce Deficit
"[T]he public continues to say it is more important to keep Social Security and Medicare benefits as they are than to take steps to reduce the budget deficit. There has been little change in these opinions over the past two years. A [recent] survey found that 55% of Americans put the priority on keeping Social Security and Medicare benefits as they are over reducing the deficit. These majorities run across all age groups. In comparison, about a third (34%) say taking steps to reduce the deficit is more important." (Pew Research Center)

Press Releases

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

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