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BenefitsLink Retirement Plans Newsletter

May 30, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Webcasts and Conferences

Safe Harbor 401(k)s: Plan Design & EPCRS
July 24, 2013 WEBCAST
(McKay Hochman Co., Inc.)

Making Wellness Programs Work Under New Tri-Agency Final Wellness Regulations Webinar
June 4, 2013 WEBCAST
(Solutions Law Press, Inc.)

Briefing on Social Security and Medicare Trustees Reports
May 31, 2013 in DC
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))

Health Care Reform for Employers: Now What?
August 14, 2013 in NV
(Lorman Education Services)

Health Care Reform for Employers: Now What?
August 20, 2013 in OR
(Lorman Education Services)

EPCRS 2013
June 21, 2013 WEBCAST
(McKay Hochman Co., Inc.)

Advanced Webinar on Health Care Reform - Preparation for 2014
June 12, 2013 in CA

View All Webcasts and Conferences


[Guidance Overview]

DOL Proposes Short-Term Relief for -- and then Prohibition of -- Many Cross-Collateralization Agreements for IRAs and ERISA Plans (PDF)
"DOL intends that the six months of temporary relief will provide 'ample time' for financial institutions to remove cross-collateralization provisions from their existing account agreements with ERISA plans and IRAs and to resolve any outstanding debits. In a footnote, DOL also stated that cross-collateralization between a plan account and the corporate account of the plan sponsor could be a violation of the general fiduciary standards of ERISA Section 404." (Sutherland)


Stay Current with Recent ERISA Changes!

Sponsored by ASC

In less than 2 hours, John Griffin, JD, LLM will summarize the ERISA regulatory and legislative developments you need to know. 2 hours of IRS approved CE Credit. Join us June 11th. Click here today.

The Search for Better Retirement Plans
"The most successful retirement-plan use of behavioral prods was the introduction a few years ago of a rule requiring employees to participate in available 401(k) plans -- which remain voluntary -- unless they consciously opted out of the plans.... Not surprisingly, the behavioral tendency of people to do nothing has resulted in much higher participation rates under the opt-in rules than the old opt-out standard." (U.S.News & World Report)

Guaranteed Income: The Next Big Thing for 401(k) Plans?
"There are two kinds guarantees being sold: (1) the guaranteed lifetime withdrawal benefit ... and (2) the deferred income annuity ... [A]ccording to LIMRA Retirement Research, defined contribution in-plan guarantee assets totaled $2.2 billion as of Dec. 31, 2012." (Employee Benefit Adviser)

Investment Returns in Large Taft-Hartley Plans Get Boost from Alternatives
"The median return for large Taft-Hartley defined benefit plans was 5.13% in first quarter, versus 6.04% for small plans ... [but] the performance difference over the last 12 months and last 10 years has been consistently in the other direction, with median returns of large Taft-Hartley plans besting those of small Taft-Hartley plans for seven out of the past 10 years. The 10-year median returns for large and small plans are 8.19% and 7.13%, respectively." (PLANSPONSOR.com)

Terminated Employee's Release Agreement Barred Claim for Additional Pension Benefits
"The Seventh Circuit dismissed a former employee's claim for additional pension benefits after concluding that a release agreement he signed had waived any claims that arose prior to the signing of the release and his claim was not protected by ERISA's anti-alienation provision.... The Seventh Circuit held that pension claims, unlike pension entitlements, are outside the realm of ERISA's anti-alienation provision and therefore can be released." (Proskauer's ERISA Practice Center Blog)


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.

Mercer U.S. Pension Buyout Index Results for April 2013
"[T]he cost of purchasing annuities for retirees reduced slightly over April 2013, from 110% to 109% of the accounting liability.... [T]he margin for buyout over the cost of retaining the plan continues to be relatively small at just under 1% as of April 2013, indicating that buyout premiums are currently attractive for sponsors when compared with all-in retention costs." (Mercer)

Cypen & Cypen Newsletter for May 30, 2013
Article titles include: [1] "Naples Letter" has broader application; [2] DB plans out-perform DC plans; [3] Pensions are top income source for wealthier U.S. retirees; [4] Updated checklist of federal tax rules applicable to public retirement systems; and [5] SEC charges institutional shareholder services in breach of clients' confidential proxy voting information. (Cypen & Cypen)

New DB Plan Design May Provide a Substitute for DC Plans
"The Double DB Pension model ... is designed to replicate the same contribution funding of DC plans, but in a pension plan. The plan has two tiers, with all assets managed in a single trust -- the first tier being a 'regular DB' and the second a 'partner DB.' The regular DB plan is designed to be 100% funded every year, with the partner plan fluctuating based on prior performance[.]" (Pensions & Investments)

Funded Status Measurements for U.S. Pension Plans (PDF)
"Because several different ways can be used to measure a plan's asset and liability value, we end up with many types of funded status measurements applicable for U.S. pension plans. Understanding their definitions and what they are meant to represent is a key to understanding how 'healthy' or 'unhealthy' a pension plan is." [Article starts at page 5.] (Society of Actuaries)

Long-Term Strategy Needed by Social Security Administration to Address Key Management Challenges
"SSA has ongoing planning efforts, but they do not address the long-term nature of these management challenges. For example, SSA is finalizing a service delivery plan, but it only includes detailed plans for the next 5 years and focuses on existing initiatives rather than articulating specific long-term strategies for the agency's service delivery model. Its current strategic plan also largely describes the continuation, expansion, or enhancement of ongoing activities, rather than proposing broad changes to address emerging issues." (U.S. Government Accountability Office)


Should Pensions Think Like Macro Funds?
"[P]ensions need to use sophisticated risk management tools used by the very best hedge funds to lower volatility and achieve better returns.... But increasing allocations to private markets means locking up funds for many years and many smaller pension funds do not have the resources or liquidity profile [of a larger fund]." (Pension Pulse)


401(k) Folly Continues
"Instead of one professionally managed fund that's risk adjusted for the age of the employee (or company's employee group), thousands of off-the-shelf actively managed funds are offered in 401(k)s. Not only is it inefficient, it's wasteful in terms of money that could be invested." (John Wasik in Forbes)


'Coordination' Is Code for Dilution
"With Congress contemplating legislation that would require the [DOL] to coordinate with the [SEC] on fiduciary rule making, the ERISA standard of care is at risk of being watered down to something more palatable to old-guard elements of the brokerage and insurance industries, at the expense of participants and other investors saving for retirement. The suggestion that the activities of the SEC and DOL are not aligned if they are not intermingled is a red herring designed to distract attention from the goal of reform -- improved investor protection." (Blaine F. Aikin in Investment News; free registration required)

Benefits in General; Executive Compensation

[Guidance Overview]

Cost Basis for Stock Compensation: Final IRS Rules Complicate Stock-Sale Reporting on Form 1099-B
"The final cost-basis regulations, which apply to equity awards 'granted or acquired' on or after January 1, 2014, include a few important changes relating to equity compensation that differ from the treatment under the proposed regulations: The cost basis reported to the IRS on Form 1099-B for NQSO exercises cannot include the compensation element that is part of the basis. It can include only the exercise cost. Form 1099-B will not have a box, field, or other item that indicates whether the shares sold were acquired from stock compensation -- a feature that would help to warn you that the basis could be too low." (myStockOptions.com)

Bankruptcy Judge Allows Patriot Coal to Scrap Union Contracts
"Patriot Coal Corp. won approval from a bankruptcy-court judge Wednesday to slash the pay and benefits of thousands of miners, retirees and dependents. The ruling is a major blow to the United Mine Workers of America, which represents the miners and has sought to fend off cuts to its active members and retirees." (The Wall Street Journal; subscription may be required)

The Distribution of Major Tax Expenditures in the Individual Income Tax System
"The 10 major tax expenditures considered here are distributed unevenly across the income scale. In calendar year 2013, more than half of the combined benefits of those tax expenditures will accrue to households with income in the highest quintile (or one-fifth) of the population (with 17 percent going to households in the top 1 percent of the population), CBO estimates. In contrast, 13 percent of those tax expenditures will accrue to households in the middle quintile, and only 8 percent will accrue to households in the lowest quintile ... When measured relative to after-tax income, those 10 major tax expenditures are largest for the lowest and highest income quintiles." (Congressional Budget Office Blog)

CBO Says Top U.S. Tax Breaks to Cost $12 Trillion Over Decade
"The top 20 percent of income earners will reap more than half of the $900 billion in benefits from these tax breaks that will accrue in 2013, the non-partisan CBO said on Wednesday.... [B]enefits for the largest of the tax preferences, the exclusion for employer-paid health benefits, worth $3.4 trillion over 10 years, are more evenly distributed, with well over half of the benefits going to the middle 60 percent of earners. The middle 20 percent of earners also got the biggest benefit from excluding a portion of Social Security and Railroad Retirement benefits, a perk worth $414 billion over 10 years." (Reuters)

Proxy Advisors Drill Down on Pay Program Design Issues
"Here's a look at some of the issues they've been focusing on: Degree of difficulty for annual incentives ... Justification and performance conditions for retention awards ... Duplicate performance measures for both annual and long-term incentives ... Increases in maximum payout potential ... Absolute metrics for long-term incentives ... Severance for departed CEOs[.]" (Towers Watson)


Who Should Actually Have Say on Pay?
"[T]he chief determinants of how shareholders vote appear to be (a) stock performance, and (b) the voting recommendations of proxy-voting advisors ISS and Glass-Lewis, which are based in part on returns to shareholders over the previous three years. To a large extent, say-on-pay ... is a simple exercise in bandwagon-following.... The question is, what kind of impact?" (Harvard Business Review; free registration required)

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David Rhett Baker, J.D., Editor and Publisher
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