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April 17, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Senior Client Development Officer
for COUNTRY Financial in AZ, NV, OR, WA

Client Relationship Consultant
for Gallagher Benefit Services, Inc. in OH

401K Administrator
for Farmer & Betts in OR

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Webcasts and Conferences

What You Need to Know About the IRS Final 401(k) Questionnaire Report and Next Steps Phone Forum
Nationwide on May 13, 2013 presented by Internal Revenue Service (IRS)

Start Early to Take Charge of Your Financial Future - A Webcast for College Seniors and Young Workers
Nationwide on April 30, 2013 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Health Care Challenges Facing North Carolina's Workers and Job Creators Field Hearing
in North Carolina on April 30, 2013 presented by U.S. House Education and the Workforce Committee

Plan Sponsor Basics: 401(k) Plan Issues Recorded Webcast
Nationwide on May 8, 2013 presented by Morgan Lewis & Bockius LLP

View All Webcasts and Conferences

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[Guidance Overview]

Tax-Exempt Employers Will Be Able to Adopt Pre-Approved 403(b) Plan Documents
"[E]ligible employers adopting 403(b) plans for their employees will be able to rely on the acceptability of the form of the plan document only if it has been pre-approved under Revenue Procedure 2013-22. However, public schools that have adopted the model plan language in Revenue Procedure 2007-71 will be entitled to reliance under that revenue procedure, absent further notice from the IRS." (McGuire Woods LLP)


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.

CalPERS Panel Approves Contribution Hike on Split Vote
"Over five years, the new method increases employer rates to the level needed to project 100 percent funding in 30 years. Under the old method, plans for the state, local governments and non-teaching school employees are projected to be 79-86 percent funded in 30 years.... [T]he total increase from current rates is a little less than 50 percent ... [A]bout half of the increase was planned under the old method." (CalPensions)

CalPERS Takes Steps to Address Funding Level Risk
"In addition to reaching full funding in 30 years, the new method will also help avoid large increases in employer contribution rates in extreme years, while maintaining a reasonable level of change in normal years. However, employer contributions will rise by nearly 50 percent in the short-term as the plan is implemented. To mitigate the initial rate increases, the Committee voted to delay implementation for all employers including State and schools until Fiscal Year 2015-16." (California Public Employees' Retirement System)

Retirement Failures Will Be Costly, Fidelity President Warns
"With the Social Security system poised to fail and traditional pension systems disappearing, more and more current workers are completely unprepared for what comes next, argued Fidelity Investments head Ronald P. O'Hanley ... [He] called for improved financial literacy, and he condemned recent proposals, including the original Simpson-Bowles deficit reduction plan, which would eliminate tax deferrals for retirement savings." (Deseret Morning News)

Grand Jury Blasts San Mateo County for Failing to Rein in Soaring Pension Costs
"The San Mateo County Employees' Retirement Association (SamCERA), which handles the county's retirement program, told the grand jury that as of June 30, 2012, the unfunded liability figure was about $1.08 billion. But that assumes the association's assets will perform at a level which hasn't been reached in recent years, according to the civil grand jury.... [W]hen taking into account actual investment performance and current economic conditions, the grand jury projected a shortfall closer to $2 billion." (San Jose Mercury News)


SouthWest Benefits Association 38th Annual Conference - May 8-10 - New Orleans

Sponsored by SouthWest Benefits Association

Staying up to date in the world of benefits has never been more critical. Changes in regulations, technology and the economy continue to influence benefits structures. Participation in the SWBA Conference is the most cost-effective way to stay informed.

Text of Grand Jury Report on San Mateo County Employee Retirement Plan Funding (PDF)
"Instead of meaningfully addressing [the San Mateo County Retirement Plan (SamCERA)]'s unfunded liability problem, the Board of Supervisors has adopted a strategy best described as 'hope' ... The Grand Jury recommends to SamCERA's Board of Retirement that it be more realistic in setting its assumed rate of return; improve the reporting of its financial results; and employ only money managers for the alternative investment portion of SamCERA's investment portfolio who rank in the top 10% of their peers." (San Mateo County Grand Jury)

Fidelity is Targeted Again, This Time Regarding Its Own In-House Plan
"Fidelity has been named as a defendant in a suit brought by a participant in its own in-house 401(k) plan.... The chief allegation is that it was disloyal and a prohibited transaction to only offer Fidelity proprietary funds.... Fidelity has yet to file a motion to dismiss, but if the plaintiff can get into the discovery stages, it has the potential to be quite explosive." (Plan Tools, LLC)

The Interaction of Social Security Disability and Retirement Benefits
"[A claimant who] has been collecting Social Security disability benefits on her own earnings record ... is not able to file a restricted claim for spousal benefits only when she turns 66. That claiming strategy is available only to someone who is filing for benefits for the first time at full retirement age.... [In] order to file a restricted claim for spousal benefits only, you must be eligible for both a retirement benefit on your own record and for a spousal benefit at full retirement age." (Investment News; free registration required)

Highlights of 2013 DC Consulting Trends Survey (PDF)
"Consulting firms report an increase in their DC client base from an average of 110 clients in 2012 to 130 this year.... [C]onsultants are providing custom target-date services (up from 7 to 8) and managed accounts (up from 6 to 11) to more clients relative to 2012....Almost all firms (96%) are willing to serve as 3(21) non-discretionary advisor, two-thirds of firms (67%) are willing to accept 3(38) discretion over manager selection, and 61% are willing to accept 3(38) discretion over the glide path." (PIMCO)

BofA to Settle Pension Funds' Mortgage Lawsuit
"Bank of America said Wednesday that it would pay $500 million to settle the lawsuit brought by the Maine State Retirement System and other pension funds who said Countrywide had misled them about the quality of the mortgages they bundled together and sold to investors before the crisis." (The Washington Post)

How To Invest $3 Per Day For Retirement
"Most recent college graduates have not put a lot of thought into retirement. This is usually because they believe it to be too far away, or that they don't have any expendable income to invest. What they do not realize is how severely they are hampering their odds of an enjoyable retirement. It is crucial to start investing as soon as possible, even without a substantial initial investment." (Seeking Alpha)

ESOP Dividends Deduction Targeted by Obama Budget Proposal
"The Obama budget proposal would repeal the deduction for dividends paid with respect to stock held by an ESOP sponsored by a C corporation (excluding C corporations with annual receipts of $5 million or less).... [The] administration here is arguing that concentration of employees' retirement savings in company stock subjects those savings to increased risk without necessarily offering a commensurate return. Moreover, the administration believes that to the extent current payments of dividends to ESOP participants can spur a productivity incentive effect, the effect may be more likely in small employer settings." (Porter Wright Morris & Arthur LLP)

Using Incentive Compensation to Motivate Advisers and Other Staff Members
"Nearly half of all U.S. financial advisers receive a portion of their compensation based on certain production-based parameters. About 47% of senior planners and 45% of junior planners earned incentive-based compensation last year, in addition to a salary and bonus ... Incentive-based earnings typically make up about 40% to 45% of a wirehouse adviser's total compensation[.]" (Investment News; free registration required)

94% of Pension Plans Underfunded
"A low-interest-rate environment is wreaking havoc with corporate defined benefit plans ... [A recent study] found that 94% of pension plans are underfunded.... [This is despite the fact that] defined benefit plans in [the] study yielded a median 11.8% rate of return for 2012. This performance combines with the 3.6% median plan return for 2011, the 11.9% median plan return for 2010 and the 16% median plan return for 2009 to mark four consecutive years of gains for these plans after the global market dislocation events of 2007 and 2008." (Advisor One)

Cash Balance Plans Challenge 401(k) Supremacy
"Cash balance (CB) plans are the fastest growing of the defined benefit pension plans and could overtake 401(k) plans within the next few years ... While many small to mid-sized businesses are seeing the benefits of the flexibility, transparency, and employee satisfaction offered by these newly-regulated plans, management of the assets continues to present challenges." (The Wall Street Journal)

Seventh Circuit Finds Company Owners Personally Liable for $3.1 Million Withdrawal Liability Assessment
"The Messinas owned and leased several residential properties adjacent to Messina Trucking and leased commercial property to Messina Trucking from which it conducted its operations.... [T]he property was held by the owners in their personal capacities and not in corporate form. Therefore, the owners in their unincorporated landlord 'trade or business' have been rendered personally liable for the withdrawal liability. The owner's personal assets are now at risk, including assets that are unrelated to the property used for company operations." [Central States Southeast & Southwest Areas Pension Fund v. Messina Products, LLC, Nos. 11-3513 & 12-1333 (7th Cir. Feb. 8, 2013)] (McDermott Will & Emery)

To DB, or not to DB?
"[A]n organization's entire benefits program should be reviewed to determine what place the DB plan has. Here are some questions that should be asked[.]" (The Principal Blog)

GAO Report to Congress on Multiemployer Pension Plans Recommends Timely Action on Structural Reforms
"The new GAO report, which closely follows the PBGC and NCCMP reports released earlier this year, may help fuel Congressional interest in reforming the laws affecting multiemployer plans." (Segal)

More Pension De-risking Ahead
"With interest rates still low by historical standards, companies may be reluctant to undertake transactions for fear rates will soon move higher, leaving them having priced near the low in rates. But the low rates also mean it's cheap to borrow, and borrowing to finance a de-risking may alleviate companies' concerns about the timing of a transaction[.]" (Treasury & Risk)

Michael Kitces Signs on to Address 'Issues' at Brightscope
"Mr. Kitces said his role will be helping Brightscope figure out how to improve the usefulness of adviser data for consumers, 'while being a little more sensitive to advisers,' he said. The firm's adviser listings and rankings generated criticism when the service was launched in 2011. Some advisers complained about what they felt were inaccuracies in the data. Mr. Kitces was among them." (Investment News; free registration required)

Australia's Retirement System: Strengths, Weaknesses, and Reforms -- and Lessons for the U.S. (PDF)
"While both the United States and Australia have restricted compensation structures that create conflicts of interest, Australia is actively promoting the availability of advice, using standardized information on risks and fees and an expansion of 'simple advice,' and has imposed a fiduciary mandate on those who advise plan participants." (Center for Retirement Research at Boston College)

In the UK, DB Industry Calls Time Out on Its Love Affair with Equities
"[O]ver the next 12 months, 41% of UK pension schemes expect to reduce their exposure to UK equities, with 28% planning a reduction in allocations to global equities throughout 2013. However, some pension schemes said that they see equities as a buying opportunity indicating the traffic is not all one-way." (Aon Hewitt)


Investment Advisors and Custom Asset Allocation Solutions
"[M]any target-date fund managers have broadened their asset class exposure in recent years. In reality, the real challenge going forward is how to hedge for downside equity risk and rising interest rates. Cost effective risk management that works is also where the industry is headed." (The Center for Due Diligence)


Philadelphia Mayor Holds Closed Meeting With Wall Street to Discuss Asset Sales
"Philadelphia is bankrupt. Without even seeing the details, it is safe to assume untenable union wages and pension benefits are at the heart of it all. A 47.6% funded pension is rather telling in and of itself." (Mish's Global Economic Trend Analysis)


Comments to the House Ways & Means Committee on Options for Increased Retirement Security
"Reforms that could help increase savings in the short-term under existing plans: Expand the Saver's Credit and make it refundable.... Enable reverse-match SEPs.... Provide incentives for defined benefit plans.... Limit leakage through tax reform.... Encourage options to encourage annuitization.... Create an Office of Participant Advocate within the Internal Revenue Service.... The key principles for a new system are: Universal Coverage.... Secure Retirement.... Adequate Income." (Pension Rights Center)


Comments to Ways & Means Pensions/Retirement Tax Reform Working Group, on Preserving Tax Incentives for Retirement Plans (PDF)
"Changes in the retirement plan tax incentives could compel each plan sponsor to reevaluate and redesign its retirement plan offerings and could force them to consider eliminating their plans entirely. Even seemingly small changes in laws and regulations often generate confusion and enormous costs for individuals and employers." (American Benefits Council)

Benefits in General; Executive Compensation

[Guidance Overview]

Deadline Approaches for Amending Compensation Committee Charters
"By July 1, affected companies must comply with recent amendments to the listing rules of the NYSE and NASDAQ relating to compensation committees.... [R]ules of both the NYSE and NASDAQ have exemptions from some of the new criteria for controlled companies, smaller reporting companies and foreign private issuers, asset-backed issuers, limited partnerships, and management investment companies. Smaller reporting companies and foreign private issuers should review these exemptions to determine whether they need to amend their compensation committee charters." (Morgan Lewis)

Summary of Administration Budget Proposals That Affect Benefits and Employment (PDF)
9 pages. Excerpt: "Why study proposals? Whether enacted or not in a current session, they reveal the thinking of those in power and give strong hints on how to plan for the future. [This article] summarizes the Administration proposals which will directly affect retirement savings, employee benefit plans, executive compensation, and the workplace." (Davis, Malm & D'Agostine P.C.)

GAO Evaluates IRS Website and Finds Long-Term Strategy Needed to Improve Interactive Services
"U.S. taxpayers visited the IRS's website over 375 million times during 2012. IRS officials noted there are over 110,000 web pages and downloadable documents plus some basic interactive tools, such as calculators, on IRS.gov. In December 2011, GAO reported that taxpayers benefit from the increased web services, and IRS could realize substantial savings by transferring taxpayers away from costly telephone interactions." (U.S. Government Accountability Office)

Addressing Sections 280G and 4999 in Executive Employment Agreements
"These provisions ... generally impose a 20% excise tax on, and deny the employer a tax deduction for, certain payments and benefits provided in connection with a change in control of a corporation.... [Links in this article provide] a sampling of recent executive employment agreements ... with summaries of their respective provisions addressing IRC Sections 280G and 4999." (Practical Law Company)

Press Releases

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