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BenefitsLink Retirement Plans Newsletter

May 8, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Qualified Retirement Plan Administrator (401k/DB)
for Compensation Planning Inc. in RI

Director, Account Management - Large Market
for Lincoln Financial Group in IL, IN

Retirement Plan Sales Consultant
for Polycomp Administrative Services, Inc. in CA

401(k)/Defined Contribution Plan Administrator
for The Senex Group in CA

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Webcasts and Conferences

What's New in Pensions?
June 17, 2013
(ASPPA Benefits Council Dallas/Ft Worth) in TX

ERISA Pension Plans in 2013: Due Diligence for Hedge and Private Equity Funds - Avoiding the Pitfalls with Alternative Investments for Institutional Investors and Fund Managers
June 5, 2013
(Strafford Publications) WEBCAST

Retirement Security Panel Discussion: Intergenerational Challenges Webcast
May 21, 2013
(International Foundation of Employee Benefit Plans) WEBCAST

ABC of Greater Twin Cities: Full Day Seminar
June 11, 2013
(ASPPA ABC Greater Twin Cities) in MN

South Carolina Business Coalition on Health - 7th Annual Meeting
May 14, 2013
(South Carolina Business Coalition on Health) in SC

Health Care Reform: 2014 Is Just Around The Corner Webinar
May 22, 2013
(Spencer Fane Britt & Browne LLP) WEBCAST

Private Healthcare Exchanges: Helping Employers Dive in to the Private Exchange Market
July 17, 2013
(Employee Benefit News) in IL

The Affordable Care Act - A Practical Workshop on Employer “Pay or Play” Webcast
May 30, 2013
(McDonald Hopkins) WEBCAST

View All Webcasts and Conferences

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[Official Guidance]

Text of IRS Notice 2013-32: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates for May, 2013 (PDF)
"This notice provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under Section 430(h)(2) ... the interest rate on 30- year Treasury securities under Section 417(e)(3)(A)(ii)( II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under Section 417(e)(3)(D) as in effect for plan years beginning after 2007. These rates reflect certain changes implemented by [MAP-21]." (Internal Revenue Service)


DATAIR! New Features – Flexible Pricing – Module Integration

Sponsored by DATAIR Employee Benefit Systems, Inc.

Proposals, Testing, Administration, 5500s, 1099Rs, Plan Documents
401(k), New Comparability, 403(b), Non-qualified Plans
(888) 328-2474    Sales@DATAIR.com    www.DATAIR.com

[Guidance Overview]

Waiver of 60-Day Rollover Requirement Granted to Taxpayer Who Was Not Provided Written Notice of Rollover Requirements
"The IRS found that the information supplied by the taxpayer was consistent with his assertion that his inability to complete a timely rollover was due to the plan's failure to provide proper written notice. This included documentation showing that the remaining amount was still in his money market account and had not been used for any other purpose. Therefore, the IRS waived the 60-day rollover requirement for the remaining amount and granted the taxpayer 60 days from the issuance of the letter ruling to contribute that amount to an IRA." (Wolters Kluwer Law & Business)

[Guidance Overview]

IRS Outlines for CPE for FY 2013
"[This IRS web page provides links to] is a series of articles from the Employee Plans Continuing Professional Education (CPE) Technical Instruction Program for Fiscal Year 2013. These materials were designed specifically for training purposes only. Under no circumstances should the contents of these articles be used or cited as authority for setting or sustaining a technical position." Articles listed include: [1] Plan Qualification, Rev. Proc. 2007-44; [2] Plan Qualification, Recent Updates to the Cumulative List (2010-2011); [3] Qualification Changes, Cumulative List; [4] Overview of Hybrid Plans (Cash Balance and Pension Equity Plans); and [5] Section 401(k)/(m) -- ADP/ACP Tests. (Internal Revenue Service)

[Guidance Overview]

DOL Seeks Input on Lifetime Income Illustrations for Benefit Statements
"Since the [proposed regulation] solicits comments on reasonable alternatives to proposed regulations, including if there is a way to get plan administrators to voluntarily provide participants and beneficiaries with helpful lifetime income illustrations, it is unclear what illustrations (if any) the proposed regulations will require. While employers generally have been hesitant to offer annuities in their defined contribution plans due to regulatory barriers, guidance that makes it easier for defined contribution plans to offer participants the option of purchasing annuity contracts is expected soon ... If that guidance is issued shortly, coordination between this expected guidance and the guidance the ANPRM contemplates may be necessary." (Practical Law Company)

Is Outsourcing DB Plans Productive?
"Outsourcing a [defined benefit] plan's administrative tasks could be advantageous for some companies. The process of gathering data, calculating pension amounts, preparing retirement paperwork, and setting up payments may become too cumbersome for in-house personnel to maintain. In addition, the vast array of regulations may be too much for some administrators to keep up with." (Retirement Town Hall)


Learn, Network and Sell at the SPARK National Retirement Industry Conference - June 16-18, Washington DC

Sponsored by SPARK (Society of Professional Asset Record Keepers)

Join top industry recordkeepers, asset managers, TPAs, advisors, marketing and sales executives for unequaled educational and networking opportunities. Learn the latest market trends, business strategies, regulatory and legislative issues, and product developments.

Pension Funds See Opportunity in Real Estate
"For most of the downturn, these real-estate funds struggled to raise money because their main source, big pension funds, were risk-averse and still licking their wounds from when these bets went wrong.... [CalPERS] lost nearly half the value of its real-estate portfolio between July 2008 and June 2009 -- more than $10 billion. But these days, many pension funds are reconsidering -- or trying for the first time -- riskier real estate in an effort to boost returns at a time of low interest rates. These funds project up annual returns as much as 20%." (The Wall Street Journal)

New York State Investigating Pension-Advance Firms
"New York's top banking regulator has begun an investigation into pension-advance firms, the lenders that woo retirees to sign over their monthly pension checks in return for cash. The regulator, the Department of Financial Services, sent subpoenas to 10 companies in the business on Tuesday. Federal and state authorities say that such advances are actually loans that require customers to sign over all or portion of their monthly pension checks in exchange for a lump sum payment." (The New York Times; free registration required)

Borzi: Exemptions from Conflict of Interest Will Be Part of New Fiduciary Proposal
"During the last 60 days, most of the concern expressed about exemptions has focused on IRAs, said Rick Meigs, president of 401khelpcenter.com LLC. 'There are not a lot of concerns about qualified retirement plans.' Meigs said the chief concern focuses on broker-dealers and their ability to collect commissions for selling securities to their clients. Once they are required to meet a fiduciary standard instead of the traditional suitability standard, 'they would be driven out of business without an exemption that allows them to collect commissions.'" (RIABiz)

Pension Finance Update, April 30, 2013 (PDF)
"After a strong first quarter, pension finances took a step back last month, with lower interest rates pushing pension liabilities up by more than assets, though plans remain solidly 'in the black' so far this year. The two 'model' plans ... both saw funded status decline 1%-2% last month, but, for the year, [the] traditional 'Plan A' is ahead by 6%, while 'Plan B' remains about 1% up." (October Three)

The Proposed Pension Cap: Who Would Really Be Affected?
"Most taxpayers and employers aren't actuaries. Who is going to convert IRA and 401(k) balances into equivalent annuities? How are employers supposed to get information about benefits provided by prior and future employers? How will investment performance affect the limits? Investment earnings could continue under the proposal without regard to the cap, but what if there is a negative return or an investment's value sharply declines? What if additional contributions are permitted for a temporary loss, and then the investment rebounds?" (Osler, Hoskin & Harcourt LLP)

Schedule C Bulletin -- Service Provider Information Abstract of 2010 Form 5500 Private Pension Annual Reports (PDF)
"This report captures important information that is reported on the Schedule C. The parts of the Schedule C that are of interest are: [1] Part I, Service Provider Information -- Item I, Information on Persons Receiving Only Eligible Indirect Compensation and [2] Part I, Service Provider Information -- Item 2, Information on Other Service Providers Receiving Direct or Indirect Compensation." (U.S. Department of Labor)

State and Local Government Spending on Public Employee Retirement Systems, May 2013 Update (PDF)
"Changes to benefit levels and required employee contributions adopted by states and cities have been diverse, dependent in part on such factors as the legal authority to make changes to benefits or required employee contribution rates, and the plan's financial condition prior to the 2008-09 market decline. Generally, states and cities with a history of paying their required pension contributions are in better condition and have needed more minor adjustments to benefits or financing arrangements compared to those with a history of not adequately making their contributions." (National Association of State Retirement Administrators)

Plan Sponsors Focus on Retirement Readiness
"Automatic enrollment has had a positive impact on plan participation by employees, according to 86 percent of plan sponsors who have implemented it. The Roth 401(k) continued to increase in popularity, with 53 percent of plan sponsors reporting that their plans now offer a Roth option, a 6 percent jump from 2011. Individual financial counseling and advice is being offered by more plan sponsors -- from 50 percent in 2011 to 61 percent in 2012 -- further underscoring the emphasis they are placing on participant education." (Society for Human Resource Management)

Retirement Readiness Worries Persist Despite Record 401(k) Balances
"Only 12% of plan sponsors feel that most of their employees are or will be financially prepared for retirement, down from 15% who felt so a year ago. The vast majority of sponsors (70%) feel that only some of their employees will be prepared. The lack of confidence comes despite increased account balances averaging [a record] $85,000[.]" (Financial Planning)

Illinois Pension Reform Proposal Looks to Stop Non-Employees from Getting Pensions
"The moves follow Tribune/WGN-TV disclosures that found dozens of people enrolled in state pension systems without holding state jobs. They ranged from employees of the Illinois Principals Association and other school groups that lobby state government to about 40 employees with the Special Olympics. The discovery illustrated how private employees gained entrance into the worst-funded state retirement system in the nation with a pension debt approaching $100 billion." (Governing)

Growth in 403(b) Plans Make Them More Attractive to Plan Service Providers
"[T]he healthcare and higher education 403(b) markets represent $485 billion or 67 percent of the total 403(b) market ... [H]igher education plans have higher average participation rates (82 percent versus 65 percent in healthcare) and are more likely to offer a match (82 percent versus 72 percent). In addition, higher education plans are more likely to use multiple providers (17 percent versus five percent for healthcare)." (LIMRA)

Are 401(k) Matches an Endangered Species?
"More companies are delaying employee eligibility for matching contributions until employees have been with the company or participated in the 401(k) plan for a certain period of time. The percentage of employers offering immediate eligibility declined from two-thirds in 2011 to 56% in 2012 ... Among the 44% of plan sponsors delaying matching contribution eligibility, 12% require a waiting period of less than a year, 23% use a one-year waiting period and 9% use some other length of time." (Business Finance)


Despite Risks, Retirement Savers Plow Into Target-Date Funds
"A torrent of money flowing into target-date funds suggests many retirement investors may be ignoring the risks of this key category. These funds now represent the second-most-popular allocation after U.S. large-stock funds within defined-contribution plans like 401(k) accounts ... Some target-date funds are much more volatile than others, depending upon their allocation. Their internal risks are poorly understood, fund expenses are high and they yield varying results." (Reuters)


U.S. Needs Mandatory Retirement Savings Plan Like Aussie Superannuation System
"The U.S. should implement a form of mandatory savings, akin to Australia's superannuation system, because Social Security, defined benefit plans and defined contribution plans aren't providing, in aggregate, a comprehensive foundation for retirement, Laurence Fink, chairman and CEO of BlackRock, said ... Mr. Fink said he didn't have a specific plan, adding that he wasn't recommending the abandoning of current retirement plans.... Any mandatory retirement system would have to be phased in, he added." (Pensions & Investments)


Why Frontline's 'The Retirement Gamble' Is Important
"[1] It highlights a critical problem that affects 90 million Americans who invest in the $13 trillion mutual fund industry. [2] It highlights three problems which are widespread, but not often publicly discussed: the impact of high mutual fund and 401(k) fees; the conflicts-of-interest that prevail in the financial industry sales and advice industry; and wealth destruction. [3] It presents the problem facing millions of Americans who face a financially insecure retirement future [4] It addresses how millions of unprepared investors are now engaged in a do-it-yourself retirement planning process. [5] It shows how employers have transferred all retirement planning and investment risks, and most of the costs, to their employees." (MutualFundReform.com)


Bold 401(k) Overhaul Proposal from Knight Kiplinger
"There's no longer any debate over whether working Americans are accumulating enough savings and employer contributions, supplemented by Social Security, to live comfortably in retirement. Indisputably, they are not, and the matter is getting critical.... Fortunately, scrapping the present system isn't necessary. Reform would be enough -- as long as it's a bold overhaul, not just tinkering around the edges." (Kiplinger)

Benefits in General; Executive Compensation

Maryland to End Benefits for Its Employees' Domestic Partners
"With eleven states, the District of Columbia, and three Native American tribes having legalized same-gender marriage, employers that have domestic partner benefits are increasingly reexamining their policies in that area. In many instances, domestic partner policies were originally adopted based on a perception that employees with same-gender partners were disadvantaged relative to those with opposite-sex partners, due to the fact that same-gender marriage was not recognized under applicable state law.... Some factors to consider are set forth [in this article]." (Calhoun Law Group)

Slowdown in CEO Compensation in Many (but Not All) Technology Companies
"[T]arget compensation for technology CEOs increased 4.4% at the median, which lagged the 6.4% increase for chief executives across all industries. Increases in pay opportunity were largely attributable to increases in long-term incentives (measured by the grant-date value of stock options, restricted stock and performance plans), which grew by 4.7% among CEOs in the tech sector and 5.6% in general industry." (Towers Watson)

Deferred Share Units Require Canadian Directors to Hold Their Equity Until Retirement (PDF)
"The unintended effect of [deferred share units('DSUs')] (a hold until retirement obligation) may become an issue for some board members. The only way for directors to monetize DSUs is to resign from the Board, which the vast majority of directors would be very reluctant to do. Companies should consider whether to provide alternative forms of equity compensation (market purchased shares or treasury [restricted share units]) for directors who have met their share ownership requirements." (Meridian Compensation Partners, LLC)

Early Vote Outcomes Show Shareholders Continue Their Overwhelming Support for Say-on-Pay Proposals (PDF)
"Thus far, of the 229 Russell 3000 companies that have reported vote results on [management 'say on pay' (MSOP)] proposals, only 5 companies have failed to receive majority support.... Over three-fourths of these Russell 3000 companies have received at least 90% shareholder support for their MSOP proposals, while approximately 3.5% of these companies received shareholder support ranging from 50% to 70%[.]" (Meridian Compensation Partners, LLC)

Press Releases

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

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