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BenefitsLink Retirement Plans Newsletter

June 11, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Senior Relationship Manager
for T. Rowe Price in MD

Retirement Account Manager
for Benefits Resource Group in OH

Business Analyst
for Chesapeake Benefit Partners in MD

Senior Regulatory Reporting Specialist
for TD Ameritrade in CA, CO

401(K) Participant Recordkeeper #7476
for Johnson Financial Group in WI

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Webcasts and Conferences

"Fundamentals of 401(k) and Other Qualified Plans" - a 3-day Seminar, Minneapolis
July 10, 2013 in MN
(SunGard Relius)

The Future of Employer-Sponsored Insurance (Archived Webcast)
June 25, 2013 WEBCAST
(National Institute for Health Care Management Foundation)

View All Webcasts and Conferences


 

Is the Fiduciary Liability of Self-Directed Brokerage Options Too Great for 401(k) Plan Sponsors?
"Brooks Herman, Head of Data and Research at BrightScope, Inc.... looked at the number of 401k plans that filed their Form 5500 with a service code indicating that they offer a self-directed brokerage option and found the number has nearly doubled from 2006 to 2011 ... 'The verdict is still out on whether a plan sponsor is fulfilling their fiduciary duty with a brokerage window: it gives them cover because the plan is not limited to two dozen pre-selected assets, but opens them up to exposure if their participants are buying' highly leveraged ETFs, for example." (Fiduciary News)


[Advert.]

ftwilliam.com, TAG Data, CCH and Aspen Publisher's Customer Conference

Sponsored by ftwilliam.com

Join us August 4-6 and learn from industry specialists! We'll cover hot topics including Coverage & Testing, TPA Workflow, Advanced Plan Design and much more! Make sure to drop in on our hands-on product training sessions with fellow TPAs.


Vanguard Target Retirement Funds Go All Index
"When Vanguard introduced its Target Retirement Funds in 2003, the choice was to develop mostly indexed TDFs even though many in the industry were offering active TDFs. The benefit of choosing passive management was highlighted after passage of the Pension Protection Act of 2006 (PPA), which allowed TDFs as a QDIA. Removing as much risk as possible from funds into which many retirement plan participants are defaulted can make sense from both fiduciary and investing perspectives." (Vanguard)

Participant's Spouse's Interest in QJSA Vests on the Annuity Start Date and Cannot Be Divested by Subsequent QDRO (PDF)
"Because John was married to Melissa at the time of his retirement, and because John and Melissa did not elect to waive the QJSA benefit or elect another benefit option within the 90-day window ..., PBGC concluded that the survivor annuity benefit irrevocably vested in Melissa at the time of John's retirement.... In view of the thorough explication that PBGC offered for its determination -- including the detailed discussion and application of the above-described cases to the issues presented in Plaintiffs' appeal -- the Court finds that PBGC's decision was based upon reasoned decisionmaking and is rationally supported by the record and by applicable law." [VanderKam v. PBGC, No. 09-cv-01907 (D.D.C. May 7, 2013)] (U.S. District Court for the District of Columbia)

SEC Proposes Rule on Money Market Funds
"[This] overview from the American Benefits Council provides some good background on money market funds as well as a summary of the proposed rule. One of the unique aspects of the proposed rule is that it divides money market funds into two categories; one would have a 'floating' NAV and the other would not. The proposal will be open to public comments for the next 90 days." (MJM401k)

Pension Plan De-Risking (Part II): A Closer Look at DB Plan De-Risking Options
"There are key planning issues and legal/regulatory risks to be managed when considering and implementing any de-risking strategy, including regulatory approvals, identification of any legal restrictions or impediments, member communications and whether the desired outcome is achieved. The appropriate strategy could depend on a number of factors, such as the funded status of the DB plan, the business goals of the employer and the employer's tolerance for legal risk and affected employee/former employee reaction." (Osler, Hoskin & Harcourt LLP)


[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.


Employer and President/Trustee Hit With $14 Million in Damages for ESOP-Related ERISA Violations
"The controversy arose from a complex leveraged buyout orchestrated by Alliance Holdings and [its president, David Fenkell, who also served as a trustee of the Alliance Holdings ESOP]. Alliance specialized in purchasing companies with ESOPs, merging these ESOPs into an Alliance ESOP, and then selling the companies for a profit.... Soon after the transaction, the value of ... stock [in Trachte, a company acquired by Alliance,] dropped and so did the account balances of [Trachte ESOP] plan participants." (Seyfarth Shaw LLP)

Large DC Plans Keep Distance from ETF Options
"[E]xecutives at plans larger than $100 million have shown little interest [in ETFs], primarily because the fees they pay for investment options such as institutional shares of index funds, collective trusts and separate accounts are as cheap or cheaper than those of ETFs. In larger defined contribution plans, ETFs might be included in a self-directed brokerage account, but they are rarely offered as core fund options." (Pensions & Investments)

Can You Use Your IRA to Buy Investment Property?
"The real estate you buy must be a business property, not a personal residence, second home or occasional rental. Also, you can't use your IRA to buy a property you already own; it has to be a new purchase directly into the IRA.... You can't get a traditional mortgage loan in an IRA, so you really need to have enough money in your IRA to purchase properties for cash if you plan on having the property as a long-term rental." (Bloomberg)

The History of Reforming the Railroad Retirement System
"The government's Railroad Retirement program is a clear anomaly in the U.S. economic landscape. The program taxes employers and workers in a specific private-sector industry to provide pensions to workers in that industry. Like Social Security, Railroad Retirement had been funded on a pay-as-you-go basis, with Trust Fund assets invested in government bonds. In the 1990s, however, the carriers and unions developed a proposal for reforming the program that involved investing Railroad Retirement assets in equities, similar to private-sector pension funds." (Center for Retirement Research at Boston College)

SEC Charges Top Officials at Investment Adviser in Scheme to Hide Theft from Pension Fund of Detroit Police and Firefighters
The SEC alleges, in its press release, as follows: "[The] founder, president, and CEO of MayfieldGentry Realty Advisors, took the money from the Police and Fire Retirement System of the City of Detroit without obtaining permission. He used it to purchase the shopping properties and title them in the name of a MayfieldGentry affiliate.... MayfieldGentry officials ... devised a plan to secretly repay the pension fund by cutting costs at the firm and selling the strip malls. Their plan ultimately failed when MayfieldGentry could not raise enough capital to put the stolen amount back into the pension fund. Mayfield and his firm agreed to settle the charges by paying back the stolen amount." (U.S. Securities and Exchange Commission)

Fiduciary Advocates Warn SEC Not to Water Down Uniform Standard
"As the July 5 deadline approaches for comments on a SEC cost-benefit analysis of a potential uniform fiduciary standard, investment-adviser groups are concerned about assumptions included in the request for information. The parameters are designed to give respondents an idea of how a uniform fiduciary duty might work. But they are making fiduciary proponents nervous." (Investment News)

[Opinion]

Text of Request for DOL Guidance About Timing of Participant Disclosures (PDF)
"The SPARK Institute requests that EBSA issue guidance that specifies that good faith compliance with the 'at least annually' requirement under the disclosure regulations shall mean furnishing the materials within each calendar year, without regard to the plan year, provided that the materials are furnished no more than 18 months from the date on which the materials were provided during the preceding calendar year." (SPARK Institute)

[Opinion]

The Disconnected Reality of Today's Target Date Funds
"Under [this] Risk Profile paradigm, the various components of a person's risk profile are split out and analyzed separately by a financial professional and this information is used to make a recommendation. TDFs do not have access to Risk Need, Risk Attitude (Tolerance) or Risk Perception -- only, to some extent Risk Capacity. Yet, TDFs are built as a one-stop portfolio for all." (Scott Dauenhauer CFP, MSFP, AIF)

[Opinion]

DB Plans: The Sky Is Not Falling
"Capital accumulation plans (CAPs) are not always the answer. DB plans may look really ugly right now as reality sets in in terms of how much pensions actually cost. But at least the ugliness is being dealt with head on through negotiated benefit and/or contribution changes, which will result in a more secure pension promise to its members. Many surveys tell us that Canadians are willing to give up some current pay in exchange for greater retirement predictability and security. With CAPs, the ugliness is in the risk that at retirement there won't be an adequate income from the plan, forcing people to keep working as the only viable solution." (Benefits Canada)

Benefits in General; Executive Compensation

List of Companies That Have Failed Say on Pay in 2013
"2,228 companies have held Say on Pay votes in 2013; 45 companies have failed with an average 59% 'Against' vote ... Six companies have failed previous votes." [Includes a list of the 45 companies and their voting results.] (Steven Hall & Partners)

Is It Time to Reevaluate the Role (and Pay) of the Lead Director?
"So far this year, 47 S&P 500 companies have faced shareholder votes to create an independent board chair, up from 44 last year and 26 two years ago. But, while the number of shareholder proposals coming to a vote has increased, average support for these proposals has dropped from 35% last year to 28% so far in 2013." (Towers Watson)

Press Releases

Nominations Open for EBRI’s 2013 Lillywhite Award
Employee Benefit Research Institute (EBRI)

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