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BenefitsLink Retirement Plans Newsletter

May 15, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Attorney
for Constangy, Brooks & Smith, LLP in AL

Account Executive
for Alliance Benefit Group in MN

Daily Team Associate III
for MBM Advisors, Inc. in TX

Client Delivery Analyst - Health and Welfare
for The Savitz Organization in PA

Benefits Consultant, Small Group
for Northwestern Benefit Corporation of Georgia in GA

Manager Retirement Administration
for Freeport-McMoRan Copper & Gold Inc. in AZ

Retirement Plan Services Representative
for Capital Group Companies in CA

Director, Business Support-Institutional Investment Solutions
for Prudential in CT

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Webcasts and Conferences

Teaching Business Literacy
July 16, 2013
(National Center for Employee Ownership) WEBCAST

What ESOP Participants Should Know About the Law, Regulations, and the Courts
July 23, 2013
(National Center for Employee Ownership) WEBCAST

Effective ESOP Communications Committees
July 30, 2013
(National Center for Employee Ownership) WEBCAST

Solving Cross-Testing Heartaches!
June 5, 2013
(National Institute of Pension Administrators) WEBCAST

View All Webcasts and Conferences


 

[Official Guidance]

PBGC Interest Assumptions for Benefits Payable in Terminated Single-Employer Plans, June 2013
"The June 2013 interest assumptions under the benefit payments regulation will be 0.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for May 2013, these interest assumptions represent a decrease of 0.25 percent in the immediate annuity rate and are otherwise unchanged." (Pension Benefit Guaranty Corporation)


[Advert.]

DATAIR! More Choices -- Better Guidance -- Less Cost

Sponsored by DATAIR Employee Benefit Systems, Inc.

Documents, SPDs, Amendments, Administrative Forms
401(k)/Profit Sharing, 403(b), DB and Cash Balance Plans
(888) 328-2474    Sales@DATAIR.com    www.DATAIR.com


[Guidance Overview]

Roth Adoption and the New In-Plan Conversion Feature
"[The authors] anticipate that the Roth feature will appeal to successful plans -- those with high levels of savings and well-diversified plan assets -- where the sponsor is seeking to add incremental plan features for consideration by participants. For sponsors overseeing plans with below-average participation and savings rates, or poorly diversified plan assets, the Roth feature is likely to remain less important than optimizing savings and investment behaviors." (Vanguard)

Industry Experts Question DOL's Lifetime Income Illustration
"Attendees and panel speakers at [the recent EBRI] Policy Forum ... said DOL was taking a step in the right direction by drawing up guidelines for ways plan sponsors can show participants how their current and future retirement savings will shape their future income stream. But among the questions the organization's leader posed was whether the proposal's longevity projections were too short." (Thompson SmartHR Manager)

IRS to Focus on Safe Harbor 401(k) Plans, Other Concerns Highlighted in Questionnaire Results
"The Internal Revenue Service has identified an increasing number of small employers that maintain multiple tax-qualified retirement plans, an arrangement that is not a violation of tax code rules but that raises questions, [Monika A. Templeman, director of Employee Plans examinations at IRS] said during an agency-sponsored phone forum.... 'More plans means more complexity and more need for internal controls, so we are a little bit concerned,' she said." (Bloomberg BNA)

Rethinking Target Date Funds: Fulfilling Fiduciary Responsibilities (PDF)
"[S]ignificant differences among target date offerings exist -- asset allocation, underlying design and philosophy -- presenting a challenge for plan sponsors in the selection and monitoring of target date strategies." (Plan Sponsor Advisors)


[Advert.]

The US Pensions Summit is the forum bringing elite buyers and sellers together.

Sponsored by marcusevans

This event takes place behind closed doors and offers service providers and senior investment executives an intimate environment for a focused discussion of key new drivers shaping public and private pension plans. July 22-24, 2013 - Chicago.


Fiduciary Obligation to Select Appropriate Share Classes
"[The Tibble v. Edison] trial court found, and the appellate court agreed, that plans must use their purchasing power to select the appropriate share class. The practical consequence is that advisers should make recommendations based on the share classes available and must educate plan sponsors about the available share classes, including their costs, and plan sponsors (typically acting through their plan committees) must understand that multiple share classes may be available and must investigate which are best for their plan and participants. That could be a daunting task." (FredReish.com)

What Is Derailing Retirement for the Baby Boomers?
"Retired and pre-retired Americans report they've lost, on average, $117,000 in retirement savings because of events that they did not anticipate ... Over half those surveyed (57%) expressed regret about not beginning to save earlier. About a third (37%) admitted to believing they would be in better financial shape if they knew more about investing. Three in ten (29%) said a written financial plan would have helped them be in better shape for retirement." (PLANSPONSOR.com)

Donald Watkins Settles Lawsuit with Detroit Pension Funds, Will Pay $4.25 Million
"In 2008, pension funds for public works and public safety employees sued Watkins after his air cargo company ... went bankrupt. Watkins had persuaded the pension funds to loan $30 million to the company, the lawsuit said.... Watkins struck back against the pension funds, claiming that trustees for the funds attempted to extort favors from him, including donations to former Detroit Mayor Kwame Kilpatrick's legal defense fund, campaign contributions and use of Watkins' private plane. Watkins said he refused to participate in the pay-for-play scheme." (Alabama.com)

Recession Not Entirely at Fault for Retirement Crisis
"Beyond the effects of the recession, the average respondent experienced a total of four 'derailers' in their lifetime, including family and lifestyle choices that have lasting financial consequences. Nearly two in five of the respondents (37%) experienced five or more unanticipated events, costing them approximately $144,000." (Financial Planning)

Drinker Biddle Retirement Income Team Newsletter, May 2013 (PDF)
Articles include: [1] Projecting Retirement Income; [2] NAIC Update: Spring 2013 Meeting; [3] Distribution Payments in "Guise": An SEC Examination Priority; [4] Converting Defined Contribution Plan Benefits To Annuities Through Rollovers to a Defined Benefit Plan: Practical Considerations for Employers; [5] FINRA's 2013 Regulatory and Examination Priorities Include Variable Annuity Sales Practice Issues; and [6] Selecting an Annuity Provider. (Drinker Biddle)

IRA Withdrawals: How Much, When, and Other Saving Behavior
"The bottom-income quartile of [households between ages 61 and 70] had a very high percentage (48 percent) of households that made an IRA withdrawal, and their average annual percentage of account balance withdrawn (17.4 percent) was higher than the rest of the income distribution. Among households between ages 71 and 80 that are subject to RMDs, those that have a withdrawal exceeding the RMD amount had average withdrawal amounts that were more than double the amounts taken by those that withdrew only the RMD amount." (EBRI)

The Changing Face of Retirement Worldwide: The Aegon Retirement Readiness Survey 2013
"The 2013 [Aegon Retirement Readiness Index (ARRI)] scores show a decline from those in 2012. The total ARRI score dropped from 5.19 out of 10 to 4.89, with all 10 countries surveyed in 2012 registering a decline. Although in some countries there are now some signs of recovery from the economic crisis, the change in ARRI scores across the board was negative....Nearly two-thirds (64%) of respondents believe that future generations will be worse off in retirement than current retirees." (AEGON)

Five Retirement Myths Worth Changing
"[W]ith only 7 percent of workers possessing a guaranteed pension ... some one-third of Baby Boomers will end up in poverty. 'If you're the most successful one in your family, you'll be the bank [for your less well-off siblings],' [psychologist Ken] Dychtwald said ... As a result, many of us will have to re-invent ourselves and scrap the conventional notion of a do-nothing retirement at 65." (Forbes)

Coming to Your Emotional Rescue: Dynamic Asset Allocation
"Because of concerns plan sponsors may have in adopting a liability-driven investing (LDI) strategy, using [dynamic asset allocation (DAA)] helps transition to LDI over time.... As the funded status improves (or as interest rates increase), this strategy shifts plan funds from equities into longer-duration fixed income investments." (The Principal Blog)

[Opinion]

A Bad Idea: Obama's Proposed Cap on Retirement Savings
"The President's cap on retirement savings would set a bad precedent by establishing the false premise that retirement savings accounts should be capped. This could start a misguided descent down a slippery slope that would end up making middle-class retirements less secure.... Congress should allow taxpayers to save as much as they can every year tax-free for any purpose with no cap on the total value of their savings. They would pay tax only when they withdraw their savings to spend for whatever purpose they choose." (The Heritage Foundation)

[Opinion]

Beware of Target-Date Funds
"[D]espite the growing popularity of TDFs, flaws with these types of investments abound.... TDFs encourage people to be lazy.... TDFs don't properly tackle the issue of longevity.... TDFs undermine the crucial role of professional investment advice.... TDFs are not adequately diversified." (Advisor One)

[Opinion]

What Would Adam Smith Say About the Fiduciary Standard?
"The fiduciary standard of conduct operates to restrain greed, where other measures of constraint are generally believed to be ineffective. Stated differently, fiduciary status operates to constrain the otherwise-permitted actions of the financial advisor, in order to not usurp the opportunities presented to the client due to the information asymmetry present. In essence, the fiduciary standard constrains conduct, where trust reasonably placed by the client in the advisor would be subject to betrayal." (Ron Rhoades, via Scholarly Financial Planner)

[Opinion]

The 401(k) Debate
"The shift to 401(k) plans comes across as a harmful move by U.S. employers. Yet the move to defined contribution plans (the general term for these plans) has been a global phenomenon ... The complexity and decision overload described in the documentary are becoming passe .... The documentary missed the critical role played by employers in overseeing their plans; it also overlooked the fiduciary rules they must follow." (Vanguard)

Benefits in General; Executive Compensation

The State and Local Government Workforce: 2013 Trends
"Twenty-two percent of retirement-eligible employees accelerated their retirement date in 2013, the same as 2012. The number of governments making changes to health and retirement benefits remains high, with 56 percent modifying health benefits in 2013 and 44 percent making changes to retirement plans. The change most often cited was to shift more health care costs from the employer to employee (reported 52 percent of governments that made changes). Twenty-eight percent of governments that made changes created wellness programs." (Center for State & Local Government Excellence)

Minnesota Employers Affected by Same-Gender Marriage
"Based on the rules of construction in Minnesota's civil marriage law, it is likely that Minnesota group health insurance contracts will extend coverage to a same-gender spouse if a 'spouse' must be eligible for coverage. However, Minnesota insurance law cannot regulate the terms of the employer's plan, such as the portion of the premium paid by the employer for such coverage.... [E]mployers can design retirement plans to treat same-gender spouses similar to opposite-sex spouses. For example, a retirement plan can name a spouse, regardless of sex, as the default beneficiary, but employers are not required to do so." (Faegre Baker Daniels LLP)

More Thoughts About the Proposed Regs under Code Section 162(m)(6) Capping Deductible Compensation at Covered Health Insurance Providers
"[H]ow does a covered health insurance provider legally 'get around' this ridiculous limit? The answer is that -- generally, it does not get around the limit. It simply loses the deduction. Code Sec. 162(m)(6) has no compensation policy shaping goal or other tax related purpose. Congress intended to make Section 162(m)(6) punitive and, therefore, included no exceptions to the limit." (Winston & Strawn LLP)

Press Releases

ERISA Surety Bonds Now Online at Surety1
Surety Solutions Insurance Services, Inc. (Surety1)

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