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BenefitsLink Retirement Plans Newsletter

May 9, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Director, Plan Administration
for The Newport Group in FL, TX

Defined Contribution Plan Administrator
for Pension Consulting Firm in CA

Benefits Analyst
for Debevoise & Plimpton LLP in NY

Proposal Writer/Editor
for New York Life Retirement Plan Services in MA

Client Relationship Manager
for The Newport Group in FL, TX

for Spectrum Pension Consultants, Inc. in WA

PT Benefit Enroller Specialist - English and/or Bilingual
for Total Benefit Concepts in ANY STATE

Installation Coordinator
for Ascensus in MN, PA

Account Executive
for Ascensus in PA

Vice President, Relationship Development
for Financial Services in IL

for University of California Office of the President in CA

Section Manager - Retirement Plan Services Participant Communications
for T. Rowe Price in MD

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Webcasts and Conferences

FREE Webinar: What All Employers Need To Know About New Immigration Rules
July 16, 2013
(Davidson Marketing Group -- FutureOffice Network) WEBCAST

FREE Webinar --Employees and Social Media: What Employers Really Need to Know
August 20, 2013
(Davidson Marketing Group -- FutureOffice Network) WEBCAST

Form 8928 and Excise Tax Compliance: Avoiding Penalties Under HCR, COBRA, and Other Rules
May 23, 2013
(Thomson Reuters) WEBCAST

HDHPs and HSAs in Action
May 16, 2013

View All Webcasts and Conferences

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


[Guidance Overview]

403(b) Plan Pre-approval Program: Some Issues and Answers
"It is very hard to predict when pre-approved plans will be available in the marketplace. We expect it will be at least a few years until plans are approved by IRS (all mass submitter plans are typically approved on the same day). That approval opens the window for restatements. The applications for pre-approval currently open June 28, 2013 and are due April 30, 2014.... Once documents are approved, the restatement window will be 'in excess of one year'." (Wolters Kluwer Law & Business / ftwilliam.com)


Attend the Women Business Leaders Forum in Austin, June 10-13!

Sponsored by ASPPA

The Women Business Leaders Forum will focus on HR hot topics, business growth for succession or sales, social media, technology and TPA trends. It will be a mix of general sessions and roundtables with plenty of time to network with your peers.

[Guidance Overview]

Preparing Participant-Directed Retirement Plans for 2013 Disclosures
"Due to the threat of a prohibited transaction, service providers are motivated to close any disclosure gaps identified by the plan. Still, potential headaches exist.... [The DOL] failed to create a standard disclosure format for the 408(b)(2) Disclosure information. Furthermore, recordkeepers are not required to synthesize information provided by unaffiliated investment issuers. Accordingly, the administrator of a participant-directed plan with a large investment menu may need to assimilate a slew of different disclosure formats." (Pillsbury Winthrop Shaw Pittman LLP)

[Guidance Overview]

DOL Requests Comments in Advance of Proposed Regulation on Lifetime Income Estimates in Plan Participant Statements (PDF)
"The [advance notice of proposed rulemaking] effectively requests comments on all aspects of the proposed regulation it posits, including ... Are the mechanics of making the estimates of future account balances and income payments appropriate? For example, should Social Security retirement age be used instead of NRA? ... Would this approach adequately address the liability concerns expressed in response to the RFI? ... Are there ways to make the regulation more cost effective? For example, what would be the cost/benefit effect of requiring the estimates only annually, rather than quarterly? Would it be helpful for DOL to publish tables for making the estimates based on the safe harbor assumptions?" (Sutherland)

[Guidance Overview]

Real Estate Investment Trust Valuation Guidelines Published
"[Recent] guidelines [from the Investment Program Association] follow a 24-month period of discussion about how best to value non-listed Real Estate Investment Trusts (REITs) and supercede the 1989 valuation standards for Direct Participation Programs (DPPs) and 1993 and 1994 modifications. One advantage cited by the authors of these guidelines is that a third party assessment may be superior to variable methods currently being used by broker-dealers who must report the value on investor statements." (Good Risk Governance Pays)

CalPERS Claims Bankrupt San Bernardino Has More Cash Than First Admitted
"When it declared bankruptcy the city said it was overwhelmed by pension debt and could barely make payroll, and did not have the cash to keep current on its payments to CalPERS, America's biggest public pension system with assets of $256 billion. But a CalPERS attorney asserted in a court hearing on Tuesday that the city had $26.8 million in the bank as of January of this year -- far more than the $4.2 million that the city said it had on hand." (Thomson Reuters)


How will you deal with benefits issues like retirement readiness, ACA and ERISA?

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Plunging Interest Rates in April Inflate Corporate Pension Funding Deficit by $37 Billion (PDF)
"The funded status of the 100 largest corporate defined benefit pension plans deteriorated by $37 billion during April ... . As of April 30, the funded ratio fell to 81.2%, down from 82.8% at the end of March. The projected benefit obligation (PBO), or pension liabilities, increased by $60 billion during April, raising the Milliman 100 PFI value to $1.711 trillion from $1.651 trillion at the end of March[.]" (Milliman)

New Lawsuits Challenge Church Plan Exemption from ERISA Claimed by Catholic Hospitals
"Over the last 5 weeks ... individual lawsuits [have been filed] against four mega non-profit hospital conglomerates alleging that they are not entitled to the Church Plan exemption under ERISA. Each defendant is alleged to have violated the minimum funding, notice, plan document, trust, and fiduciary rules of ERISA in sponsoring their defined benefit pension plans.... In total, the plaintiffs allege at least $2.1+ billion in underfunding, plus unspecified other damages[.]" (Plan Tools, LLC)

Push to Curb Payments to Deceased Social Security Beneficiaries Intensifies
"Despite recent progress on curbing improper payments, the federal government continues to send an unacceptably high number of checks to ineligible deceased beneficiaries, a Senate panel asserted on Wednesday. Lawmakers, auditors and agency officials embraced a series of remedies to improve accuracy of the Social Security Administration's Death Master File included in the 'program integrity' proposals in President Obama's fiscal 2014 budget." (Government Executive)

District Court Limits Collection of Withdrawal Liability Against Private Equity Funds
"If other courts adopt the district court's analysis in the Sun Capital Partners' case, then the PBGC Advisory Opinion will cease to serve as a vehicle for holding private equity funds liable for withdrawal liability. However ... the district court's decision turned on the role that the Sun Funds played with respect to the operation of the Employer. The funds were found to be acting as passive investors and were not involved in the active management or operation of the company. Implicit in the court's decision is that if a private equity fund's activities cross the threshold from passive investing to active management of an enterprise, then the private equity fund may be engaging in a trade or business for controlled group purposes." (Proskauer's ERISA Practice Section Blog)


Content is King: Never Lack the Tools to Connect

Sponsored by NIPA (National Institute of Pension Administrators)

NIPA's Customer Marketing Tools feature designed templates and expert-driven content to enhance plan knowledge for advisors and plan sponsors - all part of NIPA TPA Business Owner membership! Now available on a variety of topics.

The Need for Robust SEC Oversight of Self-Regulatory Organizations
"Because of the inherent conflict of interests involved in self-regulation, robust SEC oversight over SROs is indispensable.... [T]here have been a growing number of enforcement actions by the Commission against SROs, who failed to meet their legal and regulatory obligations under the law.... SROs must have strong compliance cultures and adequate and dedicated compliance resources to provide the first line of defense; however, when SROs fall short, the SEC needs to stand ready to take action. The SEC's oversight of SROs is an important component to instill public confidence in the securities industry." (SEC Commissioner Luis A. Aguilar)

Bankruptcy Court Rules Grant of Security Interest in IRA to Broker/Dealer Not a Prohibited Transaction
"A grant of a security interest in the assets of an IRA by a debtor to the broker/dealer acting as IRA custodian was not a prohibited transaction ... because it secured no actual lending obligation and by its terms was not applicable in the event of any conflict with ERISA or the Code, according to a U.S. Bankruptcy Court in Tennessee. Thus, the nearly $40,000 held in the debtor's traditional and Roth IRAs remained exempt from her bankruptcy estate." (Wolters Kluwer Law & Business)

OPM Is Pursuing Incremental Information Technology Improvements for Processing of Retirement Claims, After Canceling a Modernization Plagued by Management Weaknesses
"For over two decades, OPM has been attempting to modernize its federal employee retirement process by automating paper-based processes and replacing antiquated information systems. However, these efforts have been unsuccessful, and the agency canceled its most recent large-scale retirement modernization effort in February 2011.... GAO is not making new recommendations at this time. GAO has previously made numerous recommendations to address IT management challenges that OPM has faced in carrying out its retirement modernization efforts." (U.S. Government Accountability Office)

Cypen & Cypen Newsletter for May 9, 2013: QDROs and Governmental Plans
"Hardly a week goes by now without a governmental pension plan being served with a Qualified Domestic Relations Order (QDRO). As a rule, the QDRO purports to direct payment of a portion of the retiree's pension benefits to his or her spouse as part of a plan for equitable distribution of the parties' marital assets. What to do? Simply put, do nothing -- other than advise the party for whose benefit the QDRO was obtained (or the attorney who obtained it) that the QDRO cannot be enforced against a governmental plan which contains an anti-alienation clause." (Cypen & Cypen)

Considerations for Fiduciaries Choosing Target Date Funds As QDIAs in 401(k) Plans
"As many small plans do not have sufficient investable assets to have bargaining power when negotiating with mutual fund platform providers, the mutual fund choices available to these plans are often limited.... [I]t becomes more important for the fiduciaries to understand the specific characteristics and assumptions of the TDFs in their lineup. This need is magnified because many of the assumptions about TDFs in general do not always reflect reality." (Bloomberg Law)

Working with a Financial Advisor Lowers Boomers' Retirement Debt
"[B]oomers who developed retirement income plans generally were more optimistic about their retirement finances. Of the pre-retirees surveyed, 27% said they worked with financial advisors to develop retirement income strategies. Among pre-retirees who worked with advisors, 73% said that did not expect to carry debt into retirement." (On Wall Street)

Defined Contribution Plan Fees: One Plan Sponsor's Perspective (PDF)
"It did take some convincing for the Benefits and the Investment Committee to move away from a revenue-sharing approach and agree to charge participants' accounts directly for record keeping. ... Record keeping fees are not driven by how large an account balance you have; they are driven by the cost of maintaining your record -- making that cost fairly easy to quantify. Therefore, we decided to charge participants a quarterly account maintenance fee. It's not a large amount and it's fully transparent." (NEPC)

401(k) Index Observations, April 2013
"After an active start to the year, defined contribution plan participants' daily transfer volumes continue to decline since January -- to 0.024% of balances per day in April, according to the Aon Hewitt 401(k) Index. The trailing 12-month average remains at 0.025%, while the 2013 average through April is 0.030%. There were three days in April with transfer activity above normal, which remains the same as March." (Aon Hewitt)

BancorpSouth Announces Voluntary Early Retirement Program
"The early retirement offer has been made to 418 employees, or approximately 10 percent of the Company's workforce, who were eligible because they met job classification, age, and years-of-service criteria as of March 31, 2013. The program offers pension plan enhancements based on each eligible employee's age and years of service. Of the 296 employees who have already responded, 194 have accepted the offer." (BancorpSouth)

$153 Million Settlement Announced in Class Action Shareholder Suit Against Fannie Mae, KPMG
"The settlement would end litigation begun in 2004 with a complaint alleging that Fannie Mae, KPMG, and others were involved in issuing false and misleading financial reports in violation of federal securities laws. The Ohio Public Employees Retirement System (OPERS) and State Teachers Retirement System of Ohio (STRS) were class members and lead plaintiffs of the lawsuit." (Ohio Attorney General Mike DeWine)

Don't Let 'Dead' 401(k)s Skew Your Retirement Preparation
"Americans typically work at seven different companies during their career, and most of them have something to show for each stop along the way.... New research on the contents of Americans' IRAs and 401(k)s suggests that these orphaned retirement plans often languish untouched since the last automatic-deposit contribution, like dusty museums of our financial needs at the time, and out of whack with our current age and attitude toward investing." (CNBC)

Just Over Half (56%) of Americans Say They're Financially Prepared to Live to the Age of 75
"[I]t's clear the number of Americans expecting to retire young is very small, while the number expecting to work into their 70s and 80s is considerable. Specifically: 6% expect to retire before the age of 60; 52% expect to retire in their 60s; 32% expect to retire in their 70s; 10% expect to retire in their 80s." (Northwestern Mutual)

Study of Largest 403(b) Plans Give Clues on How to Serve Broader Market
"Only a third of organizations believe they have met the challenge of motivating employees to save enough.... [P]lan sponsors believe only 40 percent of their participants will be well prepared for retirement.... A little more than a quarter of plan sponsors do not believe they have completely met the challenges of managing their fiduciary responsibility." (LIMRA)

Financial Planners as Fiduciaries
"Those who offer financial planning services, in situations unrelated to ERISA's realm, like other financial advisors, may or may not have a fiduciary duty to their clients depending on the specifics of the engagement. Financial planners, much like other functional fiduciaries, are deemed to have fiduciary responsibility when their activities fall under the definitions found in applicable laws, regulations, or professional standards that impose a fiduciary standard of care." (fi360)

Status of Pooled Registered Pension Plans in Canada
"The PRPP is intended to provide a 'low cost' and accessible retirement savings vehicle for Canadians who do not currently participate in an employer sponsored pension plan.... While PRPPs are not yet available in any jurisdiction other than the federal jurisdiction, as I discuss below, a number of provinces have either drafted legislation introducing PRPPs or have indicated that they are considering introducing legislation to implement them." (Osler, Hoskin & Harcourt LLP)

UK Adults in Denial About Retirement Saving Shortfall
"The 65% who are struggling to save fall into three categories: one in three (30%) are 'hassled and overstretched', nearly one in five (19%) are 'in denial' about the issue and a further 16% are 'lost and confused' about the steps they need to take. Just 16% of adults show signs of being 'savvy and sorted' by taking a conscientious approach to saving for retirement. A further 19% are 'cautious optimists' who appreciate the need for action and are confident they still have time to prepare." (Equity Release Council via Pendragon PensionSurveys)


Pensions and Politics: Lack of Retirement Readiness Could Mean Big Changes
"[T]he retirement issue is getting closer to the point of no return. Politicians will jump in to allegedly save the day. Part of the problem is that there is a battle of interests with few constituencies aligned to move in the same direction. When this occurs, a central authority typically intervenes.... How will politicians respond to younger persons who do not want to shoulder the high costs of social safety net programs and seniors who want them?" (Pension Risk Matters)


Professionalism for Financial Planners
"The securities industry must recognize that the fiduciary standard operates as a constraint on greed. Through its application certain insidious business practices -- such as payment for shelf space, the receipt of soft dollar compensation far in excess of the value of research supplied to mutual funds, and 'double dipping' of fees, are prohibited under such a standard." (Ron Rhoades, via Scholarly Financial Planner)


Text of IRI Statement on DOL's Income Illustrations Notice
"We strongly support educational initiatives that enhance Americans' understanding of their retirement savings options and help them to develop plans for their future financial security. Providing such income illustrations will help them understand how much income can be generated from savings and adjust their savings and investment strategies accordingly so they can attain financial security during their retirement years." (Insured Retirement Institute (IRI))

Benefits in General; Executive Compensation

[Guidance Overview]

PCAOB, Auditors and Executive Compensation
"Some commenters objected to the initial proposal on the grounds that auditors might influence the design of compensation programs or require the auditor to substantively judge the executive compensation programs. The [Public Company Accounting Oversight Board] thinks it solved these problems by emphasizing that the purpose of the procedures is to further the auditor's risk assessment of material misstatement rather than to determine the appropriateness of executive compensation." (Dodd-Frank.com, a blog by Leonard, Street and Deinard)

Press Releases

Grant, Kay Named to IRS Leadership Posts
Internal Revenue Service (IRS)

FASAC Survey Now Available at www.fasb.org
Financial Accounting Standards Board (FASB)

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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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