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May 16, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Corporate Benefits Manager
for PVH Corp. in NJ

401(k) Recordkeeper/Account Manager
for AAAA Benefits, Inc. in NC

Retirement Plan Administrator
for Northeast Professional Planning Group, Inc. in NY

Retirement Plan Document Sr. Specialist
for Charles Schwab in TX

Retirement Recordkeeping Director
for Charles Schwab in TX

Plan Implementation Manager
for Aspire Financial Services in FL

401(k) Plan Administrator
for Third Party Retirement Plan Administration Firm in GA

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Webcasts and Conferences

2013 Health Meeting
June 10, 2013
(Society of Actuaries) in MD

Medical School for Actuaries Seminar
June 12, 2013
(Society of Actuaries) in MD

Introduction to Reinsurance Boot Camp
June 12, 2013
(Society of Actuaries) in MD

Current Developments - Spring 2013 Webcast
June 11, 2013
(ASC Institute) WEBCAST

The Pension Risk Transfer Process: A Dietrich & Associates hosted live webinar
May 23, 2013
(Dietrich & Associates, Inc.) WEBCAST

Health Care Reform for Employers: Now What?
June 12, 2013
(Lorman Education Services) in LA

Self-Auditing Your Employee Benefits: A Guide to What May Need Fixing
June 12, 2013
(Lorman Education Services) WEBCAST

Health Care Reform for Employers: Now What?
June 18, 2013
(Lorman Education Services) in IN

IRC Section 105(h) Testing and Design Alternatives 2013
June 24, 2013
(Lorman Education Services) WEBCAST

Executive Compensation: Strategy, Design, and Implementation Seminar
June 20, 2013
(American Law Institute Continuing Legal Education Group (ALI CLE)) in NY

Executive Compensation: Strategy, Design, and Implementation Webcast
June 20, 2013
(American Law Institute Continuing Legal Education Group (ALI CLE)) WEBCAST

A Busy 2013 for Executive Compensation Webcast
June 20, 2013
(Winston & Strawn) WEBCAST

Texas HR & Employee Benefits Summit
July 15, 2013
(Forum Events Inc) in TX

Government, Legal and Regulatory Conference 2013
June 17, 2013
(Insured Retirement Institute (IRI)) in DC

Ethics for Professional Plan Administrators
June 18, 2013
(National Institute of Pension Administrators) WEBCAST

View All Webcasts and Conferences


[Official Guidance]

Presentation Handout for Upcoming May 23 IRS Phone Forum on 403(b) Correction Issues (PDF)
Topics include: Changes made in Rev. Proc. 2013-12 that impact 403(b) Plans; What failures can be corrected under Rev. Proc. 2013-12; Correction Issues with 403(b) Plans; Correction under Rev. Proc. 2008-50; and Correction under Rev. Proc. 2013-12. (Internal Revenue Service)


Retirement Plan Solutions for Employee Benefits Professionals

Sponsored by SunGard Relius Education

Fundamentals is a 3-day course that combines an introduction to 401(k) plans with a comprehensive study of defined contribution plan requirements and challenges of qualified plan administration, including the new EPCRS procedure. Learn more.

[Official Guidance]

Disaster Relief Relating to PBGC Deadlines in Response to Severe Storms, Straight-Line Winds and Flooding in Illinois
"This Disaster Relief Announcement provides relief relating to PBGC deadlines [to] any person responsible for meeting a PBGC deadline (e.g., a plan administrator or contributing sponsor) that is located in the disaster area for which the [Internal Revenue Service] has provided relief ... [On] May 14, 2013, IRS provided relief in connection with filing extensions for Form 5500 series returns as a result of the disaster for taxpayers who reside or have a business in the disaster area. The relief generally extends from April 16, 2013 through July 1, 2013. The disaster area consists of Cook, DeKalb, DuPage, Fulton, Grundy, Kane, Kendall, Lake, LaSalle, McHenry and Will counties." (Pension Benefit Guaranty Corporation)

[Guidance Overview]

DOL Considering Requiring DC Plans to Provide Lifetime Income Illustration (PDF)
"According to the DOL, the assumed 3% annual increase in the rate of future contributions is based on an expectation that wages, particularly for younger workers, will increase at an even higher rate.... However, for those individuals already contributing the maximum elective deferral amount to a 401(k) plan, this assumption may be too high when inflation is lower than 3%. Similarly, a 7% rate of return may not be achievable for employees near retirement age who invest more conservatively and may create an unreasonably high projected retirement annuity." (PricewaterhouseCoopers)

Personality Type Theories and Investing
"Individuals are different in the way they process information, vary in the way they behave when faced with a financial decision, and have different risk preferences, so it is essential that advisors interact with each client effectively. This often means that you must change the way you speak to different types of clients even though your advice may be similar across your client base." (Morningstar Advisor)

Be Careful if ROBS is Your Business Financing Strategy
"A recent tax court opinion highlights the importance of meeting all legal requirements with these arrangements.... The business owed money to the seller of the assets used in the business and the individual IRA owners had personally guaranteed that debt. The individuals later converted their IRAs from traditional IRAs to Roth IRAs. The business was sold a few years later and the individuals assumed that the gain on the sale would be tax free when received by the Roth IRAs and tax free when distributed to the individuals who owned the Roth IRAs.... The IRS [claimed] that the personal guarantees by the IRA owners of the note to the seller constituted an indirect loan to the IRA itself.... The tax court noted that the owners did not discuss the personal guarantees with the advisor and in any case the advisor was the promoter of the arrangement so was not an independent advisor upon whose advice the owners could rely to avoid penalties." [Peek v. IRS and Fleck v. IRS, Nos. 5951-11, 6481-11 (U.S.T.C. May 9, 2013)] (Leonard, Street and Deinard)

Most 401(k) Participants Will Invest in Target-Date Funds by 2017
"Target-date funds' popularity over the last 10 years has soared, among both plan sponsors and participants, so odds are your plan offers these as an investment option.... 55 percent of all participants and 80 percent of new entrants will be invested in such a professionally managed option by 2017." (Thompson SmartHR Manager)

Redefining Retirement Readiness
"[This study examines] how workers feel about their own retirement and financial situations, what they look for with respect to support and guidance, and how they would respond to employers who offer them additional Retirement Readiness support." [Includes links to summary, detailed findings, and infographics.] (ING)

Adviser Benchmarking: Why Bother?
"It will help you gather and organize data you should have.... It will validate your understanding of your own business.... It will force you to answer questions that are important to consider.... It may entice you to look at things you have ignored but shouldn't.... It replicates information and questions that are needed for due diligence." (Investment News)

Reenrollment in Retirement Plans: Better Process, Same Great Benefits
"[Reenrollment] can be a powerful method to address a plan's asset allocation problems and the inertia of plan participants. Reenrollment resets participant investments, directing current and, typically, future holdings into a qualified default investment alternative (QDIA) such as a balanced fund, managed account, or life-cycle or target-date fund." (Vanguard)

Pension De-Risking Through Lump Sum Offers
"Lump sums can be a useful tool to reduce the size of pension obligations, but they must fit within the context of an organization's overall financial and HR strategies. If the plan sponsor's objective is to reduce its pension risk, the first question is: 'Are we better off settling our liabilities, either through lump sum payments or other risk transfer mechanisms such as an annuity purchase, or are we better off trying to manage these risks ourselves?'" (Towers Watson)

Brief on Appeal Filed by Plaintiffs in Tussey v. ABB Case
"The following summary is taken directly from the Plaintiffs' brief: The district court properly found ABB breached its duties by [1] allowing Fidelity to receive excessive recordkeeping compensation through revenue sharing in the amount of $13.4 million.... [2] moving all participant investments from the stellar-performing Wellington Fund into the untested Fidelity Freedom Funds for no prudent and loyal reason and in violation of the IPS.... [3] selecting higher-cost share classes of Plan mutual funds... [4] The district court properly found Fidelity breached its fiduciary duties by earning income from Plan assets as they floated between accounts." [The full text of briefs filed to date can be found at the link.] (Plan Tools, LLC)

Variable Annuity Plans May Benefit Employers and Employees
"[W]ith a variable annuity structure, both single and multiemployers as well as their employees share many of the advantages of both traditional [DB] and [DC] plans. [A] chart highlights both important advantages and disadvantages of [DC] and traditional [DB] plans, as well as the advantages shared by variable annuity plans." (Retirement Town Hall)

Employee Ownership Update, May 15, 2013
By NCEO Executive Director Loren Rodgers. Articles discuss loan-funded share plans in Australia; whether fiduciary rules for appraisers are on indefinite hold; and the Seventh Circuit's affirmance of the presumption of prudence by plan fiduciaries in a 401(k) case. (National Center for Employee Ownership)

Cypen & Cypen Newsletter, May 16, 2013
Articles include: [1] NASRA issue brief treats state and local government spending on public employee retirement systems; [2] Has DC plan design come full circle? [3] What to know before selling pension/settlement income streams; [4] Pension funds with the highest equity allocations; [5] Pension funds with the largest hedge fund portfolios; and [6] Thirty-fourth annual police officers' and firefighters' pension trustees' school. (Cypen & Cypen)

Government Plans are Exempt from ERISA -- But What is the Definition of 'Government'?
"Some employers may not actually be government entities, and public private partnership may inject ERISA back into the framework. This new case gives you the tests to apply to determine whether a government entity exists, which then means ERISA does not apply.... Some entities that look like government entities may not meet the tests stated." [Smith v. Regional Transit Authority, No. 12-3059 (E.D. La. May 10, 2013)] (Lane Powell PC)

House Bill Seen Slowing DOL's Fiduciary Push
"[A] congressional panel will consider legislation that would, among other things, require the SEC and DOL to coordinate their separate efforts on a fiduciary-duty regulation.... The House bill would require the SEC to coordinate its fiduciary-duty work with other federal agencies before proposing a rule, according to two financial industry lobbyists. This provision could have the effect of slowing the DOL's fiduciary work to the SEC's pace." (Investment News)

How to Reduce Employee Cravings for 401(k) Loans
"Plan sponsors should consider some options to limit the amounts of loans while still offering them: 1. Allow only one outstanding loan at a time.... 2. Limit participant loans for hardship reasons only." (Employee Benefit News)

Seventh Circuit Moves Closer to Eliminating Stock Drop Liability in ESOPs
"The Seventh Circuit rejected the Sixth Circuit's standard, preferred by the named plaintiff and the Secretary of Labor, which states that the Moench presumption is overcome when a plaintiff can show that a reasonable fiduciary would have come to a different investment decision. For the Seventh Circuit, this sets the bar too low, in light of the conflicting position in which ESOP fiduciaries find themselves." (Seyfarth Shaw LLP)

Automatic 401(k) Saving Features No Fail-Safe to Retirement Success
"Workers can always opt out of the auto-saving features, but they usually don't ... On the plus side, automation leads many who would otherwise save nothing to steadily sock away a slice of their paycheck. But the 3% default contribution rate favored by employers doesn't come close to the savings rate needed for a secure retirement: roughly 12% to 15%, experts say, including both worker and employer contributions." (Kiplinger)

Six Reasons a 401(k) Is Better Than a Pension
"[B]lindly claiming that the pre-401(k) days are better is just inaccurate, because there are plenty of reasons the do-it-yourself system is better. Here are a few to consider: Not every employer offered pensions, even when they were popular.... The assets in 401(k)s vest much sooner, and you own the funds.... You can control taxes a little better with an IRA or 401(k).... If you really need it, you have access to the money.... There's a chance that your heirs will get some money.... Your 401(k) plan may have high fees, but low-cost investments are possible." (U.S.News and World Report)

Consumer Fact Sheet: The Basics of Investing
"The Insured Retirement Institute (IRI) and the National Retirement Planning Coalition (NRPC) released a new fact sheet focused on the basics of investing as part of their six-month national retirement planning campaign.... According to research by IRI, only about 17 percent of Boomers believe that they are extremely or very knowledgeable about making financial investments. Even more alarming, more than 40 percent of Boomers say that they are not very or not at all knowledgeable about investing." (Insured Retirement Institute)

State and Local Government Employees Postponing Retirement
"[A recent study] asked supervisors what changes their retirement-eligible employees had made about their plans for retirement and found 37.6% indicated employees postponed their retirement date, 21.7% said employees accelerated their retirement date, 23.6% reported employees made no changes to their retirement date and 20.5% said 'don't know.'" (PLANSPONSOR.com)

401(k) Sponsors Take to Social Media
"The use of social media, including Web sites and blogs, LinkedIn, Facebook, You Tube and Twitter, is strongest among mid-sized plan sponsors, who represent plans with total assets of $20 million to $100 million. Among this group, 77 percent use some form of social media, with Web sites or blogs being the most popular and LinkedIn being the second most popular." (Financial Advisor)


Pension Predators in New York
"By insisting that they are making advances, not loans, these firms elude state supervision, including usury laws, licensing regulations and the federal Truth in Lending Act, which requires lenders to disclose borrowing costs. These and other subterfuges have enabled the companies to ambush pensioners with 'advance' loans that carry interest charges ranging ... from 27 percent to 106 percent. This is clearly illegal in New York[.]" (The New York Times)


Is Real Estate the Best Asset Class?
"Every pension fund should have an allocation to real estate. This is arguably the best asset class in terms of risk-adjusted returns over the last 20 years. But ... pension plans with liquidity concerns have to gauge their liquidity risk and adjust their weightings accordingly." (Pension Pulse)


Just How Useless Is the Asset Management Industry?
"After costs, actively managed mutual funds trail the market. Yet while passively managed, much-lower-cost index funds have been available since 1976 ... most investors still put most of their money in the hands of active managers. Why they do this a long-running puzzle." (Harvard Business Review; free registration required)


Why the Industry Needs to Accept Some Blame for Flaws in PBS Frontline's 'Retirement Gamble'
"If a smart journalist, looking for as much information as possible about retirement plans and interviewing dozens of plan participants, plan sponsors, and academics, still can't understand his own retirement plan, then it may be that those doing the explaining aren't doing a very good job. Some of the blame for inaccuracies and missing information in the documentary is reflective of confusion and missing information in the industry." (RIABiz)

Benefits in General; Executive Compensation

[Official Guidance]

IRS to Be Closed on May 24 and Four Other Days -- Filing and Payment Deadlines Unchanged (PDF)
"The Internal Revenue Service announced ... additional details about the closures planned for May 24, June 14, July 5, July 22 and Aug. 30, 2013.... [A]ll IRS operations will be closed on those days. This means that all IRS offices, including all toll-free hotlines, the Taxpayer Advocate Service and the agency's nearly 400 taxpayer assistance centers nationwide, will be closed on those days.... No tax returns will be processed and no compliance-related activities will take place." (Internal Revenue Service)

[Guidance Overview]

Minnesota Employers Affected by Same-Gender Marriage
"Generally, self-funded medical plans and retirement plans are not required, but can offer, coverage or survivor benefits, respectively, to an employee's same-gender spouse. For insured plans, new and renewed contracts underwritten in Minnesota will likely be required to cover a spouse of a same-gender marriage, but there should be future guidance on this and other interpretation issues." (Faegre Baker Daniels LLP)

CEO Pay Levels Increased Slightly in 2012 as Companies Continue to Navigate Say-On-Pay Era
"After seeing CEO pay jump a significant 11 percent in 2010, 2012 marked the second consecutive year that total compensation showed only modest increases. Base salaries grew 1.3 percent to $1.15 million in 2012, while annual incentive payments were flat at $2.1 million. For the third year in a row, however, long-term incentives (LTI) increased, growing 3.8 percent to $7 million. In sum, total direct compensation increased a modest 3.6 percent to $10.1 million in 2012." (Hay Group)

Minnesota Legislation Allowing Same-Gender Marriage: Impact on Employee Benefit Plans
"An employer who provides coverage under an insured life insurance plan will likely find that spouse is defined to include a same-gender spouse so that same gender spouses will likely be eligible for spousal life insurance coverage and will be considered default beneficiaries." (Dorsey & Whitney LLP)

Proposed Deferred Pay Rules Present Tax-Saving Opportunities
"Until the Section 409A regulations are finalized, the proposed rules can be used to correct unvested amounts deferred under a plan in the year of failure before the amounts vest without disclosure ... Alternatively, employers that want greater certainty and are willing to follow expanded reporting requirements could subject their deferred pay programs to the IRS correction program[.]" (Bloomberg BNA)

2013 Say on Pay Results as of May 15
"So far 1,175 companies have held Say on Pay votes in 2013. 13 companies have failed with an average 61% 'Against' vote.... 73% of companies have received a greater than 90% 'For' vote." [Article includes chart with breakdown by company size and industry.] (Steven Hall & Partners)

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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