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BenefitsLink Retirement Plans Newsletter

April 25, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Loan and Withdrawal Specialist
for Kravitz, Inc. in CA

Retirement Program Analyst
for Trinity Health in MI

Health Compliance Consultant
for The Segal Company in DC

Vice President, Defined Benefit Business Development
for Transamerica Retirement Solutions in ANY STATE

Benefits Program Strategy Analyst 3/4
for University of California Office of the President in CA

Virtual Defined Benefit Pension Plan Administrator
for The Angell Pension Group, Inc. in ANY STATE

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Webcasts and Conferences

Work, Health, and Wellbeing: Strategic Solutions for Integrating Wellness and Occupational Safety and Health in the Workplace
January 27, 2014
(Harvard School of Public Health Executive and Continuing Professional Education) in MA

Health Care Reform’s Large Employer Play or Pay Penalties Recorded Webcast
May 8, 2013
(Snell & Wilmer) WEBCAST

Pay or Play – What Not for Profits Need to Know Webcast
May 1, 2013
(Pilot Employee Benefits) WEBCAST

Growing Your Book of Pension Business
May 7, 2013
(Western Pension & Benefits Council - Orange County Chapter) in CA

DOL Audit Triggers and Targeting Techniques, and What to do if You’re Audited
May 16, 2013
(National Institute of Pension Administrators - San Francisco Bay Area Chapter) in CA

Preparing Employees for Retirement Workshop
May 17, 2013
(New England Employee Benefits Council) in MA

IRI Marketing Forum
May 15, 2013
(Insured Retirement Institute (IRI)) in NY

View All Webcasts and Conferences

We also publish the BenefitsLink Health & Welfare Plans Newsletter (free): Subscribe


[Official Guidance]

VCP Submission Kit for Plan Sponsors Who Missed the April 30, 2010 Deadline to Adopt a Pre-Approved DC Plan (PDF)
"This kit guides you through the steps in filing a submission for a VCP compliance statement. It includes instructions and a sample submission correctly completed. It's designed for sponsors that: [1] maintained a pre-approved defined contribution plan but failed to adopt a new plan document by April 30, 2010, and; [2] are correcting the failure by adopting a pre-approved defined contribution plan that reflects the provisions of EGTRRA." (Internal Revenue Service)


The ftwilliam.com Product Line Has Launched Electronic Signature Capability

Sponsored by ftwilliam.com

Wolters Kluwer – ftwilliam.com is proud to be among the first Retirement Software vendors to offer document e-signature capability via ftwPortal Pro, our secure web-portal. E-sign any document using our software. Contact us for a demo and learn more.

[Official Guidance]

Determination Letters for Governmental Plans Don't Address Pick-Up Contributions and Excess Benefit Arrangements
"Governmental plan sponsors may request a PLR from the IRS for a: [1] determination that their plan has a valid 'pick-up contributions' arrangement under IRC Section 414(h)(2) and all related revenue rulings, or [2] ruling that their plan's excess benefit arrangement is a qualified governmental excess benefit arrangement under IRC Section 415(m)(3)." (Internal Revenue Service)

[Guidance Overview]

New Anti-Cutback Relief for ESOPs
"Notice 2013-17 offers certain ESOP sponsors anti-cutback relief if they amend their plan to eliminate a distribution option that met prior diversification requirements. The relief is for sponsors who must amend their ESOPs for the new diversification requirements of [Internal Revenue Code section] 401(a)(35). The relief is available if the amendment is effective by the later of the: last day of the first plan year beginning on or after January 1, 2013, or end of the plan's remedial amendment period for the new ESOP diversification requirements." (Internal Revenue Service)

Brokers Slammed in PBS Documentary
'"The 401(k) is one of the only products Americans buy that they don't know the price of it,' says Teresa Ghilarducci, an economist at The New School. 'It's one of the products Americans buy that they don't know its quality. It's one of the products Americans buy that they don't know its danger.' Advisers are blamed for steering investors into high-fee investments such as actively managed mutual funds in order to boost their own income." (Investment News; free registration required)

Illinois Schools Facing Complete Elimination of All Sports Because of State Gridlock Over Pensions
"Without cuts or other funding reform to the pension program, Cahokie and handful of other districts might find their state funding cut back so severely that they will struggle to pay their core operational expenses, let alone the funds needed to back sports, music and arts programs." (Yahoo Sports)


Proven Distribution Strategies to Amplify Sales in Defined Contribution

Sponsored by Financial Research Associates, LLC

Consultants, Advisors, Plan Sponsors and Platforms discuss what's going on in defined contribution investment-only and how you can be part of it at the DCIO Market Share Summit. June 25-26, Miami Beach. Mention FMP164 during registration for 10% discount.

Americans Are on Track to Replace 61% of Their Current Income in Retirement
"Workers who are eligible for a workplace retirement plan are on track to replace 73% of their income versus 41% for those who do not have such access, according to the LIS survey. Active participants in a 401(k) plan are currently on track to replace 79%." (PLANSPONSOR.com)

Study of Retirement Plan Participation and Asset Allocation, 2010 (PDF)
"Those who own an individual retirement account (IRA) are more likely to be invested all in stocks if they also have a 401(k)-type of plan. Those who participate in both a defined benefit (DB) pension plan and a 401(k)-type plan were less likely to allocate the latter to all interest-earning assets, such as bonds, meaning they also will invest more in stocks. As family-head IRA owners' ages increased, the likelihood that they were invested all in stocks decreased." (EBRI)

Oregon Governor to Sign Bill to Cut State Pension Expenses via COLA Reductions
"[The bill] would lower the state's public pension costs by more than $800 million over the next two years ... The state Senate approved the bill, which forces savings largely by reducing cost of living increases for retired public-sector employees, earlier this month." (Reuters)

Your 401(k) Plan, Your Responsibility
"The generations of Americans currently in retirement have predominantly received income from two sources: Social Security and pensions. However, since the early 1980s, the burden of funding future retirements has fallen on the individual. A significant decline in the number of pensions and an increase in the number of 401(k) plans have contributed to the current shortfall of retirement savings for many." (TheStreet.com)


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Millennials Are Tech Savvy, Tightfisted Savers
"The Millennial generation, which ranges in age from 18 to 34, has been raised during the stock market crash and the Great Recession.... Most of their debt is credit card and student loans. Although they are considered responsible, it's unclear how well they will manage debt as they take on mortgages and other major loans ... And it's also unclear how well they will invest for their future." (USA TODAY)

Most Retirement Plan Participants Have Ignored New Fee Disclosures
"Only 30% of 401(k) plan participants said they 'paid attention' to the fee disclosures they received last year ... The rest, 70%, said they paid 'little' to 'no attention' to the new information about fees that has been published in the last year. More than half (65%) of investors surveyed have a 401 (k) plan (44% retired and 72% non-retired)." (PLANADVISER.com)

FINRA Withdraws BrokerCheck Social Media Proposal
"[FINRA] has temporarily withdrawn a controversial proposal to require advisors, brokers and firms to incorporate links to the BrokerCheck database when they post content to social media sites. Critics [had] warned that the rule would have imposed an unrealistic mandate on advisors, and effectively put social media outlets off limits for industry practitioners.... 'We withdrew the filing in order to give further consideration to the comments received in response to the SEC's publication of the proposed rule change,' [said a FINRA spokeswoman]. 'We plan to refile.'" (On Wall Street)

Could This Be the Year for Federal Pension Reform?
"'Military and civilian pensions are both out of line with pension benefits available to the average worker in the private sector, and in some cases, out of line with each other across different categories of federal employment,' the new version of the plan states. Simpson-Bowles recommends 'gradually' increasing federal civilian pensions 'so that new federal employees ultimately pay about one-half the cost of their pensions, and existing federal employees pay one-quarter.'" (Government Executive)

What Is a 'Neutral' View on Interest Rates?
"[A] certain level of change in interest rates is already priced in to every bond. If rates rise more quickly than the priced-in amount, then ... less duration is better. But if rates fall or if they rise by less than the amount that was priced-in, then investors gain by being long duration.... [A] view that 'rates will rise' is only of value in determining an investment strategy if that view has a timeline built into it; a slow increase in interest rates would lead to different portfolio positions being required than a fast increase in rates would." (Russell Investments)

Puerto Rico Residents Age 45+ Favor Pension Benefits for Public Employees
"Adults in Puerto Rico are anxious about their own retirement. Three-fourths of Island residents age 45 and older are concerned about having enough for retirement. Only about a third have traditional pensions provided by an employer.... Island residents recognize public pension reform is needed and moreover, believe retiree benefits are already too low. The vast majority believe the retirement system is in need of major changes." (AARP)

PBS Special Slams 401(k)s
"Many of the experts interviewed say 401(k)s are a favorable choice for the industry, including brokers who sell them as middlemen. However, they say they are no longer advantageous for the people who actually use them, citing excessive fees and lack of clear guidance ... The solution [that writer and producer Martin Smith] and his documentary team seem to suggest is that index funds are a much safer investment for most people looking to save for retirement." (Employee Benefit News)

Plan Sponsors: Check Your Plan Loan Administration
"[P]lan sponsors should check their loan practices and procedures to make sure that appropriate evidence (beyond a participant representation) is being obtained in connection with residential loans.... [T]he plan sponsor should monitor the administrator periodically to ensure that the policies and procedures are actually being followed." (DrinkerBiddle via Mondaq; free registration required)


Why 401(k)s Have Failed
"Unfortunately, while Frontline's Martin Smith and his many great guests focused on costs (too high), poor guidance and employer neglect, the larger point is that employers don't have to provide 401(k)s at all -- and probably shouldn't. The 401(k) plan was never meant to be a mainstream pension plan and is a poor substitute for one. It's a voluntary program that was intended to supplement retirement savings -- one of those quirky little options in the byzantine tax code that employers seized upon as a way to save money while pretending that they were doing the right thing by their employees." (John Wasik in Forbes)


PSCA Offers Free Membership to Producer of PBS Documentary
"The program revealed that producer Martin Smith is actually a small-company plan sponsor. [PSCA] congratulates him for this. However, it appears Mr. Smith is not aware of his responsibilities. In the show, Mr. Smith stated that he was too busy to look at the fine print in his own plan. When he eventually examined his plan's investment alternatives, he wondered, 'How did this get in here?' The answer, of course, can be found by looking in a mirror. We hope that Mr. Smith understands his responsibilities as a plan sponsor and a fiduciary." (Plan Sponsor Council of America)


ACLI Responds to PBS Frontline Program on Retirement Savings
"There is no better way to save for retirement than through a workplace retirement plan. Workplace retirement plans can provide employees with numerous convenience features, including payroll deduction, a menu of investment options, and tax deferral. Saving through the workplace can also reduce an employee's taxable income. Moreover, many employers assist the retirement security of their employees by matching a portion of retirement plan contributions." (American Council of Life Insurers)


Here Are the Facts on Fees and 401(k)s
"Thanks to innovation, increasing transparency, and the dynamics of a highly competitive market, 401(k) mutual fund fees also have been falling -- even as plans offer more and better services to participants.... [A] study to determine the average annual fees for 401(k) plans in 2011, totaling all administrative, recordkeeping, and investment fees, ... found that the median participant-weighted 'all-in' fee for plans was 0.78 percent of assets. That's 78 cents for every $100 in assets -- or approximately $248 per year, per participant." (Investment Company Institute)


I'll Have What She's Having: How a So-Called Retirement Expert Would Worsen Our Retirement
"[Professor Teresa] Ghilarducci has proposed lowering the employer and employee contribution rate to retirement accounts.... Given that employees typically contribute 5 percent of their paychecks and employers kick in a 3 percent contribution this would lower the combined contribution rate by three percentage points -- which is already three percentage points lower than the 8 percent employer contribution rate for regular pensions." (The Huffington Post)


Time for Public Employee Unions to Pick Up the Tab
"It's time for public employee unions to wake up and take a look around. Government services are shrinking, cities are crumbling, and they're enjoying pay and benefit packages that many in the private sector would kill for. They need to give a little back. Yeah, I know, some of them already have. But it's time for a little more. On healthcare contributions. On raises. On pensions. On retirement ages." (Steve Lopez in the Los Angeles Times)


'Troublesome to Think There's a Moral Distinction' Between Bonds and Pensions
"In 'our value system,' which respects contracts, [Richard Ravitch] added, these are 'equal kinds of obligations.' There should be no difference, Ravitch said, between a state or municipal promise to pay off its bond and a state or municipal promise to pay retirement benefits to a person who has worked for that state for decades." (Public Sector Inc.)


Want to Buy a Business? You Can Tap Your 401(k)
"When ROBS-financed enterprises are successful, profits can be used to buy stock back from the 401(k) gradually, reducing the plan's exposure to the business and diversifying the investment mix. That's possible, of course, only if the business succeeds.... Should the tax benefits of an 401(k) or IRA be used for something as risky as a business startup?" (Reuters)


Statement of Financial Services Institute in Response to FINRA Withdrawal of 'Brokercheck' Rule
"We applaud FINRA's decision to withdraw its proposed rule which would have required financial services firms and financial advisors to prominently display a link to BrokerCheck to social media -- something that is out of the control of firms and advisors. While FSI greatly values expanding investor knowledge of and use of BrokerCheck, we believe that the proposed rule was vague, highly burdensome and did not appropriately achieve this goal." (Financial Services Institute)


Did Australia Fix a Retirement Crisis?
"Sure, Australians are saving more for retirement but they're savings are going to a defined-contribution plan which leaves millions vulnerable to the vagaries of public markets. When markets rise, people are happy but when they tank, they get anxious about their retirement. In other words, they don't have the security and peace of mind that comes with predetermined pension payments from a defined-benefit plan." (Pension Pulse)

Benefits in General; Executive Compensation

State and Local Government Workforce: 2012 Trends
"[Workforce changes in] the area of health care: [1] Shifted more health care costs to employees (51 percent, down from 72 percent last year); [2] Shifted more health care costs to retirees (11 percent, down from 23 percent); [3] Created wellness programs (26 percent, down from 33 percent). In the area of pensions: [1] Raised employee contributions to pension plans for current workers (24 percent, up from 22 percent last year); [2] Increased employee contributions for new hires (27 percent, up from 23 percent last year)." (Center for State & Local Government Excellence)

Discounted Stock Options in the Cross-Hairs of Section 409A Compliance (PDF)
"[E]mployers should: [1] carefully document the process for determining the fair market value of their stock and related option exercise prices in accordance with the final regulations under Section 409A, and [2] establish and consistently follow stock option grant procedures to avoid any potential disputes in the future." (Groom Law Group via Bloomberg BNA Pensions & Benefits Daily)

Why You Need a Holistic View of Pay and Performance
"To ensure an effective pay strategy, the creation of value needs to be viewed from quantitative and qualitative perspectives, over multiple timeframes, and in light of short- and long-term outcomes." (Towers Watson via WorldatWork)

Pharmaceutical Companies, Investor Coalition Develop Industry Standard-Setting Principles for Clawback Policies
"Many top companies have clawback policies but these policies are only triggered when there is a financial restatement and seek to recover compensation that has already been paid. The agreed-upon recoupment principles also contemplate the recoupment of compensation that has not yet been awarded or vested. A 2012 [study] found that while 85% of the companies surveyed had clawback policies, only 25% of these policies contain an ethical misconduct trigger not associated with a financial restatement." (PRNewswire)

2012 Trends in Nonqualified Deferred Compensation Among Plan Sponsors and Participants (PDF)
"Plan sponsors continue to show strong support for maintaining these plans. Nearly all -- 97 percent -- agreed they are likely to continue to offer NQDC benefits in the next 12-month period, with one-third (34 percent) of employers planning to offer different investment options." (The Principal Financial Group)

Will Prohibiting Executive Stock Pledging Benefit Shareholders? The Argument for Sensible Pledging Policies
"ISS policy states that '[p]ledging of company stock in any amount as collateral for a loan is not a responsible use of equity,' adding that pledging may have a detrimental impact on shareholders if the officer is forced to sell (such as to meet a margin call) ... [I]t's possible the ISS policy will have an unintended consequence that negatively affects shareholders if anti-pledging policies discourage executives from holding company stock." (Towers Watson)

Press Releases

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