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May 24, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Legal Counsel - ERISA - Title I
for T. Rowe Price in MD

Retirement Education Specialist
for The Newport Group in NC

Qualified Retirement Plan Administrator
for PACE TPA in CA

Investment Consultant
for Pension Consultants, Inc. in MO

Lead Marketing Development Writer
for GuideStone Financial Resources in TX

Payroll Data Conversion Specialist - Retirement Plan Services
for John Hancock Financial Services in MA

Relationship Manager
for Prudential in IA

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Webcasts and Conferences

Health Insurance Marketplace 101 Webinar
July 18, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

Health Insurance Marketplace 101 Webinar
July 24, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

Health Insurance Marketplace 101 Webinar
July 31, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

Understanding the Health Insurance Marketplace Webinar
July 25, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

Health Benefits Laws Compliance Assistance Seminar
June 12, 2013 in VT
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))

Worker Wellness Programs: Do They Work?
May 31, 2013 in DC
(Alliance for Health Reform)

View All Webcasts and Conferences


[Guidance Overview]

Roth IRAs Can Only Be Rolled to Roth IRAs
"There is no Internal Revenue Code section or regulation to permit a Roth IRA to be rolled to any plan other than to another Roth IRA.... Even though both the Roth IRA and the Roth 401(k) require a five-year period to be completed in order to satisfy the rules for tax-free earnings, the periods are different in certain ways... Roth IRAs and designated 401(k) Roth accounts have different rules for how partial distributions under age 59-1/2 are withdrawn that impact taxation of the earnings." (McKay Hochman)


Great Lakes Benefits Conference in Chicago, June 13-14!

Sponsored by ASPPA

The Great Lakes Benefits Conference provides an opportunity to discuss employee benefit issues with colleagues and local, regional and national government representatives from the IRS and DOL.

Low Interest Rates Are the Final Straw for Many Company Pensions
"It was no small matter for the ILM Group's executives when they froze the pension plan that has provided retirement security for the firm's employees since 1947.... What finally did the plan in? Rock-bottom interest rates. The very rates, in fact, that helped fuel a stock-market rally and brought ILM double-digit returns on its pension-fund investments in each of the past three years. But because of an accounting twist, the near-zero rates also caused ILM's projected pension obligations -- like those of every other private company that still provides a traditional pension -- to spike, overwhelming the stock-market gains." (The Washington Post)

TDFs in a Rising Rate Environment: What Plan Sponsors Need to Know About Risk (PDF)
"Many plan sponsors were caught by surprise by the widely divergent performance of target-date funds (TDFs) during the market meltdown of 2008-2009.... Largely missing from the discussion, however, is the impact of the financial crisis on the fixed income market and the very real possibility that rising interest rates could contribute significantly to the overall risk level of TDFs and to their return variability, particularly for funds nearing their end date. For some plan sponsors, a custom fixed income solution may provide the flexibility to manage duration with the TDF end date in mind." (Janus)

House Panel Weighs Bill to Slow SEC's Fiduciary Rule
"Supporters of the draft bills presented argued that they would create safeguards against burdensome Dodd-Frank regulations.... One of the proposals, authored by U.S. Rep. Ann Wagner, R-Mo., would require the SEC to identify and articulate a specific harm to retail investors before imposing new fiduciary obligations on broker-dealers." (On Wall Street)

PBGC Protects Pension Benefits at KidsPeace Corporation
"According to PBGC estimates, as of March 31, 2012, the pension plan was 41 percent funded with $69.3 million in assets to pay $168.4 million in benefits. The agency expects to cover $95.6 million of the $99.1 million shortfall." (Pension Benefit Guaranty Corporation)


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.

How to Achieve a Higher Safe Withdrawal Rate With the Target Percentage Adjustment
"Previous studies have evaluated portfolio withdrawal rates assuming a fixed initial withdrawal rate with inflation-adjusted increases thereafter. This study evaluates withdrawal increases zero or greater but not more than inflation. Future increases are contingent upon portfolio performance. A much higher initial withdrawal rate than previously thought possible can be achieved without increasing the probability of failure as long as the retiree reduces or eliminates the inflation increase for years indicated by the Target Percentage." (Journal of Financial Planning)

Obama Picks Two Senate Aides as Next SEC Commissioners
"Kara M. Stein and Michael S. Piwowar, both senior U.S. Senate aides, were nominated today by President Barack Obama to join the Securities and Exchange Commission. Stein would replace Elisse B. Walter as a Democratic commissioner and Piwowar would succeed Troy A. Paredes as a Republican appointee on the five-member commission that oversees the country's capital markets[.]" (On Wall Street)

Proposed Pension Relief Legislation for Charities
"U.S. Reps. Susan Brooks (R-IN) and Ron Kind (D- WI) introduced bipartisan legislation to provide relief to non-profits such as local Girl Scout councils, which now have higher pension funding rules than taxable, for-profit companies.... The Charitable Pension Flexibility Act applies to charity pension plans with multiple entities that are exempt from normal pension funding rules until 2017. This straightforward bill would permit such plans to elect into the normal rules in 2014. A technical correction that previously passed the Senate would have permitted this same option." (PR Newswire)

The Regulators Are Coming
"[EBSA's] budget has decreased for 2014, but this will not affect enforcement.... Fred Reish, a partner in Drinker Biddle's Los Angeles office, said, in his experience, once the investigations are underway, the DOL has looked most closely at prohibited transaction issues by acknowledged fiduciaries.... Reish agreed that the industry can expect to see more enforcement when it comes to IRAs, but added, 'We may also see more about prohibited transaction exemptions like in [PTE 86-128 Class Exemption for Securities Transactions Involving Employee Benefit Plans and Broker-Dealers]. People will definitely need to be a bit more careful with IRAs.'" (PLANSPONSOR.com)

DOL Proposal Would Require Lifetime Income Estimates on 401(k) Benefit Statements
"As healthcare advances increase longevity, plan participants and plan sponsors are becoming more concerned about retirement savings and the participant's ability to sustain an income flow during their lifetime. The DOL proposal is motivated by the premise that providing plan participants with more information will motivate them to make better personal saving and investment decisions with respect to their 401(k) plan." (Leonard, Street and Deinard)


Your Website is a 24/7 billboard of your stature in the industry.

Sponsored by Gross Strategic Marketing

Your Web presence is the most visible component of your marketing strategy. It's a 24/7 billboard of your stature and success in the industry. Your presence can make the difference between being considered…or not.

General Release of Claims Does Not Bar Unaccrued ERISA Whipsaw Calculation Claims
"A class action suit regarding a pension plan's failure to utilize a 'whipsaw' formula properly was not barred by the employees' agreement to a general release of claims in exchange for severance, the [Sixth Circuit] has held. The whipsaw claims had not accrued at the time of the execution of the severance agreements and the releases made no mention of future ERISA claims." [Schumacher v. AK Steel Corporation Retirement Accumulation Pension Plan, No. 12-3061/3063 (6th Cir. Mar. 28, 2013)] (Wolters Kluwer Law & Business)

The Number One Mistake Made by Financial Advisors
"The left brain is logical, linear, sequential, and organized. The left brain likes to plan and budget, and craves order. It is methodical, structured, and incredibly detail oriented. The left side of the brain is usually what draws individuals to the financial planning career path.... However, we are now discovering that it can be a mistake to operate and attempt to work with clients only from the left-brain viewpoint." (Morningstar Advisor)

Sixth Circuit: Plan Fiduciary Reasonably Relied On Benefit Calculations In Communicating To Participant
"The Sixth Circuit also agreed with the district court that the fiduciary breach claim should be dismissed because any misrepresentation made by the committee was not made negligently.... [T]he service provider performed a ministerial function for the plan by managing software to calculate benefits according to unambiguous plan terms, the committee relied on the service provider's program to provide the estimates, and the committee had no reason to doubt the service provider's competence." [Stark v. Mars Inc., No. 12-3956, 2013 WL 1908889 (6th Cir. May 9, 2013)] (Proskauer's ERISA Practice Center Blog)

EBSA Enforcement Strategy: We're Looking at Everything
"On May 17, Marc I. Machiz, Director of the EBSA's Philadelphia Region, highlighted one ERISA violation that his region plans to focus on in the coming months. His region is now making a concerted effort in ferreting out excessive fee cases where retirement plan participants appear to be paying higher aggregate fees than others. Machiz expects that the investigations will attempt to determine who is as fault for excessive fees and why." (Seyfarth Shaw LLP)

DB Plan Participants Cheer After IRS Reverses Church Plan Status
"HCO went bankrupt and shut down a year after winning its 2003 'church-plan' exemption, leaving the pensions of Rich and more than 800 other former employees at risk. The IRS revoked HCO's church-plan status last month after a highly unusual collaboration between pension rights activists and Josh Gotbaum, director of the PBGC." (Reuters)

Miami Commission Considers More Favorable Pension Rules for Executives
"Miami city commissioners, who in recent years have cut severance pay and pensions to balance budgets, could vote Tuesday to allow four of the city's highest earners to return from retirement and collect their pension on top of their hefty salary. The plan could mean millions of dollars of extra pay over the long haul for the city clerk, auditor, city attorney and the city manager." (Governing)

Social Security Disability Insurance: Action Needed to Address Finances
"A temporary reallocation of part of Social Security's 6.2% tax rate from the OASI trust fund to the DI trust fund would ensure that both funds can pay full benefits until 2033. After that, in the absence of further action by Congress in the meantime, scheduled taxes would cover about 75% of scheduled benefits." (National Academy of Social Insurance)

DOL Acts to Free 401(k) Assets for Former Workers of Defunct Syracuse Construction Company
"The 401(k) plan was established in July 1992. The company closed its doors in June 2008, and all its assets were sold at bank auction in August 2008. David Hardy, the plan's sole trustee, filed for bankruptcy in January 2010. Since 2008, no individual has come forth to assume fiduciary responsibility for the plan or to distribute the plan's assets to its participants." (U.S. Department of Labor)

IRA Balances, Contributions and Rollovers, 2011: The EBRI IRA Database (PDF)
"The average IRA account balance in 2011 was $70,915, while the average IRA individual balance (all accounts from the same person combined) was $87,668. The median (mid-point) account balance was $19,619, and the median individual balance was $23,785. Individuals with a traditional IRA originating from rollovers had the highest average and median balance of $110,918 and $31,944, respectively. Roth owners had the lowest average and median balance at $25,228 and $11,344." (EBRI)

What Should I Do With My Old 401(k)?
"If your old plan doesn't offer a top-flight, low-cost investment menu perhaps you are better off rolling the balance to an IRA or to your new employer's plan if one is offered. At any rate, you should pay attention to this money, unlike far too many people who leave an old 401(k) with an old employer and forget about it." (U.S.News & World Report)

EU Spares Pension Funds from Tough Solvency Rules
"The European Commission has decided not to impose tough new capital requirements on pension funds, at least for now, a move that could save defined-benefit programs hundreds of billions of euros.... The Commission had been considering forcing pension funds to hold more capital in reserve to make sure they can meet their obligations, as part of an update of a 2003 directive on employment-based retirement funds." (The Wall Street Journal; subscription may be required)

One in Seven of This Year's Retirees in UK Will Retire with No Pension (PDF)
"One in seven (14 per cent) people planning to retire this year will depend on the State Pension as they have no other pension, according to new research from Prudential. The insurer's Class of 2013 research, the latest of the annual studies conducted by Prudential since 2008, tracks the financial plans and expectations of people entering retirement this year. The study reveals that the average person planning to retire this year will rely on the State Pension for more than a third (36 per cent) of their income. Analysis by Prudential also reveals that nearly one in five (18 per cent) of those planning to retire this year will be below the poverty line." (Prudential UK)

The New Retirement: No Retirement?
"Back when baby boomers were young -- and sex, drugs, and rock and roll were at their height -- many commentators questioned what this feckless generation of do-nothings boded for the future of the country.... Wouldn't those commentators be surprised. Because the boomers now hitting retirement age are hanging onto their jobs like pit bulls, and sometimes forgetting to retire altogether. In fact, it would be easy to conclude that boomers -- those born between 1946 and 1964 -- are a bunch of workaholics." (University of Michigan Institute for Social Research)


Time Again to Raise the Age for Full Social Security Retirement Benefits (PDF)
"A generation ago, the 1983 Social Security Amendments, a bipartisan accord, was adopted to keep Social Security solvent by, among other things, raising the full retirement age -- the earliest age at which an individual can receive unreduced old-age benefits. Thirty years later, Americans are living even longer, and it is time again to consider the options for making the program solvent." (American Academy of Actuaries)


Testimony of Actuaries Before House Committee on Proposed Adjustments to Social Security Benefits (PDF)
"While the American Academy of Actuaries advocates for inclusion of an increase in full retirement age in efforts to restore Social Security's long-term actuarial balance, it has not endorsed any one proposal as there are several approaches that can make this adjustment. Increasing the retirement age can contribute significantly to stemming the impact of the program's inadequate financing as a result of the demographic trend of increased longevity and help put the program back on track toward actuarial balance." (American Academy of Actuaries)

Benefits in General; Executive Compensation

Musing About the Impact on ERISA Plans Depending on the Supreme Court's Rulings on the Issue of [Same-Gender] Marriage
"Assuming the Court does not find all state laws prohibiting [same-gender] marriage unconstitutional, we would be left with the current patchwork of state laws that either permit or prohibit [same-gender] marriage and civil unions. Merely removing Section 3 of DOMA would most likely not herald in a new era of simplicity. What happens if the married [same-gender] couple from New York moves to a state that does not recognize [same-gender] marriage, like Texas?" (Baker Botts LLP)

Senate Finance Committee Staff Report: Tax Reform Options for Economic Security -- Health, Retirement, Life Insurance, Fringe Benefits and Executive Compensation (PDF)
"Following are several potential goals that could serve as guidelines for the [Senate Finance Committee] when reviewing the tax rules that affect the economic security of Americans: [1] Minimize the disruption to business practices and employee expectations inherent in any fundamental tax reform; [2] Simplify the taxation of retirement savings and health insurance; [3] Increase the number of people with enough resources for an adequate standard of living in retirement, and expand access to health insurance; [4] Maximize the bang-for-the-buck of any tax incentives that are retained or reformed; [6] Develop neutral rules regarding compensation and fringe benefits to ensure that business needs and not tax planning drive compensation decisions, while minimizing compliance costs[.]" (Senate Finance Committee Staff)

Your Corporate Structure and Ownership Status Matter
"[W]hen considering your benefit offerings, what plans to provide and how to administer them, make sure your benefit professionals know as much about the ownership structure and corporate form of the company that can be provided. Don't hide the existence of a control group. Make sure everyone know how the company operates, and all other entities that might be considered as related to that company and make sure to ask if the structure has an impact on your benefit plan design." (Fox Rothschild LLP)

Cypen & Cypen Newsletter for May 23, 2013
Article titles include: National League of Cities Says Public Pension Plans Are Not in a Current Crisis; 2013 Trends in State and Local Government Workforce; DB Plans Starting To Allow Lump Sum Distributions; You Work, You Retire and Then You Die; and Couples Retiring in 2013 Will Need $220,000 To Pay Medical Expenses Throughout Retirement. (Cypen & Cypen)

Mere Negligence May Be All That's Required for Clawbacks
"'What the SEC wants to do is push the envelope of Section 304 further, and the next horizon appears to be negligence-based cases without regard to fraud,' says [attorney Junaid] Zubairi ... 'As the SEC staff has made clear in litigation filings, during the investigative phases of these matters there are ongoing discussions about whether mere negligence is enough to trigger a clawback, and the staff is taking the position that it is.'" (CFO.com)

A Preliminary Review of 2013 Directors' Pay
"The median value of total direct compensation for directors increased 4% from the previous year. The mix of pay remained the same, however, with pay typically delivered 45% in cash and 55% in equity. The median cash compensation grew by 3% while the median level of equity compensation increased by 4% over 2012 levels." (Towers Watson)

Press Releases

IHC FORUM East Sets Record Number of Attendees, Sponsors
The Institute for HealthCare Consumerism

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