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June 25, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Outside Retirement Plan Sales Consultant
for The Online 401(k) in TX

Benefits Attorney
for New York City Law Firm in NY

DCIO / Retirement (Internal) Intermediary Sales Consultant
for T. Rowe Price in MD

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Webcasts and Conferences

"Fundamentals of 401(k) and Other Qualified Plans" - a 3-day Seminar, Chicago
July 24, 2013 in IL
(SunGard Relius)

Toto, We Aren’t in Kansas Anymore… 409(p) Anti-Abuse Testing
July 18, 2013 WEBCAST
(National Institute of Pension Administrators)

What Every Benefit Consultant in TPA Needs to Know About Healthcare Reform
August 20, 2013 WEBCAST
(National Institute of Pension Administrators)

Exchange Notices: Are You Prepared? -- Teleconference
July 10, 2013 WEBCAST
(Employers Council on Flexible Compensation (ECFC))

IRS Tax Forum
July 9, 2013 in FL
(Internal Revenue Service (IRS))

IRS Tax Forum
July 30, 2013 in TX
(Internal Revenue Service (IRS))

Case Study: Serigraph — The Company that Solved Healthcare -- Webinar
June 27, 2013 WEBCAST
(Corporate Research Group)

Wouldn't It Be Nice -- Webinar
July 9, 2013 WEBCAST
(Conrad Siegel Actuaries)

Strategies for Small Group Employers -- Recorded Webinar
July 10, 2013 WEBCAST

Shifting Challenges: Mental Health in the ACA Era
July 2, 2013 in DC
(Alliance for Health Reform)

View All Webcasts and Conferences


[Guidance Overview]

403(b) Pre-Approved Plan Program to Begin Accepting Applications
"[The IRS will] accept applications beginning June 28, 2013, and issue opinion and advisory letters to 403(b) pre-approved plans that meet the requirements of Internal Revenue Code Section 403(b) and the 403(b) final regulations. An employer that adopts a sponsor's 403(b) pre-approved plan generally has assurance that its plan document complies with IRC Section 403(b). Please note that the IRS does not intend to establish a determination letter program for individually designed 403(b) plans at this time." (Internal Revenue Service)


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[Guidance Overview]

When Is EPCRS Available to Correct 403(b) Plan Operational Failures?
"For most plans, an operational failure is when a plan sponsor does not follow its plan's terms. That general definition now applies to IRC Section 403(b) plans but only for failures that occurred on or after January 1, 2009." (Internal Revenue Service)

[Guidance Overview]

The ESOP Determination Letter Application Review Process
"A team of ESOP specialists reviews all ESOP determination letter applications to ensure that the plan document meets applicable requirements under the Internal Revenue Code and related regulations. This article provides information on: [1] How we review ESOP determination letter applications; [2] How to check on the status of your letter; [3] When you must provide documentation for your controlled group election; [4] Plan provisions permitting transfers from non-ESOP plans." (Internal Revenue Service)

[Guidance Overview]

IRS Employee Plans News, June 24, 2013
Issue no. 2013-02. Articles include: [1] IRS Nationwide Tax Forums; [2] How much salary can you defer if you're eligible for more than one retirement plan? [3] Is a frozen defined benefit plan subject to the top-heavy minimum benefit rules? [4] 403(b) pre-approved plan program; [5] Voluntary Correction Program fees for multiple failures; [6] Tips to avoid processing delays with your Voluntary Correction Program Submission; [7] Updated submission kits for plans that missed the EGTRRA deadlines; [9] Form 5300 -- use April 2011 version; [10] Employee Stock Ownership Plans Determination Letter application review process; [11] Employee Plans Compliance Unit (EPCU) -- non-governmental 457(b) plans project examination; [12] Tips for hardship distributions; [13] SEP plan eligibility requirements. (Internal Revenue Service)

Oregon House Passes Bill to Consider State-Run Retirement Savings Plan for Private Employees
"The Oregon House of Representatives voted ... to pass a bill creating a task force to look at a statewide retirement plan for private-sector workers. House Bill 3436 now heads to the Senate after passing today on a 33-25 vote. It creates a task force that explores ways of boosting retirement savings among Oregonians and whether to set up a statewide retirement savings plan[.]" (The Oregonian)


PSCA's 2013 National Conference, Sept. 9-12, in Scottsdale, AZ

Sponsored by PSCA (Plan Sponsor Council of America)

Join leading defined contribution plan experts for keynotes presentations, workshops, roundtables, and networking opportunities at the premier industry conference of the year. Use discount code BLMDISC for an additional $150 off your registration.

Judge Dismisses Suit Over Verizon Annuity Buyout
"'Because the ... class has not alleged that the [summary plan description] lacked any description that [it] was required to include, the court dismisses the ... claim," [U.S. District Court Judge Sidney Fitzwater of the Northern District of Texas] said in his ruling. The judge also said execution of the annuity contract was not a 'fiduciary function' and that the court cannot 'reasonably infer' that the $1 billion premium payment to execute the deal was 'unreasonable.'" (Pensions & Investments)

Text of District Court Opinion in Verizon Annuity Purchase Case (PDF)
"[The DOL regulation requiring specific contents in a summary plan description] is focused on the benefits to be provided under the Plan rather than on the source of the benefits per se and does not relate to whether the Plan itself must continue to pay the benefits.... Verizon was not acting in a fiduciary capacity when it amended the Plan to direct the purchase of an annuity for participants meeting certain criteria. What may be fiduciary functions, however, are aspects of Verizon's execution of the amendment's directive. For instance, the selection of the annuity provider is a fiduciary function.... Although the court is granting Verizon's motions, it will grant ... leave to replead." [Lee v. Verizon, No. 3:12-CV-4834-D (N.D. Tex. June 24, 2013)] (U.S. District Court, Northern District Texas)

Misjudged Lifetime Annuity Guarantees May Cost Life Insurers Billions
"Life insurers in the U.S. face charges against earnings potentially totaling billions of dollars from miscalculations about the number of customers who would exercise lifetime-income guarantees sold with the retirement products known as variable annuities ... The grim outlook from [Moody's Investors Service] comes as some insurers are continuing to explore ways to reduce the liability they face from the big blocks of guarantees on their books. Over the past couple of years, many insurers have clamped down on fund choices, raised fees, forbid additional account contributions and sought to buy back the contracts." (The Wall Street Journal; subscription may be required)


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How Useful are Form 5500s for Business Development? Five Tips and Insights
"Form 5500s filed since 2009 are available online for free ... Bigger plans have more information ... Form 5500 data in spreadsheets is available from 1999 through the present day ... Plan characteristic codes are priceless for prospecting ... Schedule C service codes can tell you the services your competition is providing." (Plan Tools, LLC)

MetLife U.S. Pension Risk Behavior Index, 2013 (PDF)
"[A] large majority of plan sponsors indicated that they have already adopted, or they plan to adopt, a liability-driven investment (LDI) strategy as an element of reducing or mitigating risk for their plan(s) or immunizing their portfolio(s), including dynamic asset allocation strategies or increasing their allocations to fixed income. Additionally, quite a few plan sponsors have indicated that they are planning to include lump sum offers to vested former workers and/or retirees as part of their strategy.... Underfunding of Liabilities continues to be the most important risk factor[.]" (MetLife)

Solutions Not Bailouts: Recommendations of the NCCMP Retirement Security Review Commission (PDF)
50 slides. Presentation to the American Benefits Council prepared by: Randy G. DeFrehn, Executive Director NCCMP; Christopher E. Condeluci, Of Counsel, Venable LLP; and Michael Kiely, Managing Director Federal Government Affairs, United Parcel Service. (American Benefits Council)

Seven Basic Investment Concepts Every 401(k) Participant Must Understand
"1. The Risk-Return Relationship ... 2. Diversification ... 3. Asset Allocation ... 4. Time is on Your Side ... 5. Don't Time the Market ... 6. Pay Attention to Fees that Matter ... 7. Monitor and Adjust as Needed." (Fiduciary News)

Settlement Reached in Cigna 401(k) Suit
"Participants in a Cigna Corp. 401(k) plan have reached a preliminary agreement with the company and several other defendants to settle a class-action suit in which the participants had alleged a breach of fiduciary duties in the management of the plan.... The agreement ... calls for a $35 million payment ... by the defendants, including Cigna and a unit of Prudential Financial Inc.... [T]he Cigna plan will hire an independent monitor to review plan management and some investments.... [T]he monitor will review decisions regarding possible changes in a stable value fund, the issuance of an RFP for a record keeper and a list of the plan's investment options." (Pensions & Investments)

IRS Announces New Compliance Check Project for Non-Governmental 457(b) Plans
"The IRS has stated that it will focus on various issues, including whether: (1) the deferrals reported on the Forms W-2 are in fact being made to a 457(b) plan; (2) the employer is eligible to have a 457(b) plan and what type of tax-exempt employer it is (e.g., governmental, non-governmental or a dual status entity); (3) the eligibility under the 457(b) plan is limited to a select group of management or highly compensated employees; (4) the 457(b) plan includes features that are not permitted under federal law (e.g., loans); and (5) unforeseeable emergency distributions have been made." (Quarles & Brady LLP)

Court Orders Fiduciaries to Restore $283,530 in Retirement Assets for Employees at Heartland Foods in Indianapolis
"The [DOL] announced that the owners of Heartland Foods Inc. will restore $283,530 to the Heartland Foods Inc. 401(k) Profit Sharing Plan under terms of a consent judgment and order. The decision follows an investigation by the [EBSA] that found [two] co-owners ... transferred assets from the plan to the company's checking account and failed to properly manage the plan's assets, comingling employee contributions with the company's general operating accounts in violation of [ERISA]." (Employee Benefits Security Administration, U.S. Department of Labor)

Investment Advisors Answer TDF Questions
"Fund families and plan providers aren't likely to be champing at the bit for uniformity.... [It] is a fiduciary best practice to offer the same set of 'ingredients' to all participants, even within the QDIAs.... As for overlaying a glide path across custom QDIAs, it is not the execution that is difficult for many firms but rather the application of the correct investment thesis.... The average asset allocation of the top 30 TDFs at the point of retirement is 44% fixed income, 38% equity, 13% cash and 5% TIPS/real estate/commodities. This allocation is suitable for the average participant ... Benchmarking is a necessary evil if you are going to run custom models. There are likely to be times of high tracking error and times of low tracking error; it behooves the advisor to proactively discuss with prospective and current clients." (fi360)

U.K. Creates New Employment Status: Employee Shareholders
"The UK Government has put in place legislation to create a new type of voluntary employee ownership arrangement, under which employees would give up some of their employment rights in exchange for shares in their employing company. The aim is to boost employee productivity and to remove the perceived barrier presented by a fear of employment disputes, which the Government believes is deterring businesses from hiring. The Employment Rights Act 1996 will be amended by the Growth and Infrastructure Act 2013 to create a new type of employee -- the 'Employee Shareholder' who will give up the right to claim unfair dismissal in return for shares in the employer's company." (Locke Lord)


Traditional Pension Plans Can Still Work -- Really.
"As exploding pension costs divert money from classrooms and other public services, some free-market and school-reform organizations have argued that education funding would be better protected if governments moved to 401(k) plans. That would be throwing the baby out with the bath water. Properly managed, defined-benefit plans can work just fine." (Bloomberg)


Text of Letter from Members of Congress to Treasury Regarding Nondiscrimination Requirements for Frozen DB Plans (PDF)
"When a soft freeze is implemented for a [DB] plan, the grandfathered group remaining in the plan earning benefits can cause the pension plan to inadvertently violate ... nondiscrimination testing requirements.... As a result ... many companies are required to implement a 'hard freeze' by completely closing the plan and eliminating future benefit accruals to all participants ... This is not the right answer and cannot be what Treasury intended ... since the regulation at issue is designed to help participants, not to undermine their retirement security[.]" (28 Members of Congress, via American Benefits Council)


Coalition Opposes Proposed Oregon State-Run Retirement Program, Says It Duplicates Private-Sector Options
"A number of other states, including Washington, have carefully studied, and then rejected, government-run retirement plans for private employees. California is currently engaged in another study expected to cost up to $2 million. It makes no sense for Oregon to duplicate these efforts. Employers and employees in Oregon have numerous cost-effective private options to address retirement security concerns." (American Council of Life Insurers and 21 other organizations)


FINRA's 1942 Failure: Effects on Trust, Capital Formation and the U.S. Economy
"In the year following the commencement of World War II, when all Americans had their attention diverted to the enormous threats from abroad, FINRA (formerly known as the National Association of Securities Dealers, or NASD) adopted rules of conduct for its [members]. Strangely missing from such rules was a fiduciary standard of conduct for brokers (i.e., registered representatives of broker-dealer firms) when providing personalized investment advice. Over seven decades have passed, and FINRA has yet to rectify its error." (Ron Rhoades)

Benefits in General; Executive Compensation

[Official Guidance]

Text of DOL FAQs for Participants and Beneficiaries Following the Oklahoma Tornado
22 Q&As, including: "Q2: My employer's place of business is closed. I cannot locate my plan administrator. Who do I contact to file a claim for benefits or to obtain other documents such as certificates of prior coverage, or replacement identification documents? ... Q7: My employer did not pay my insurance premium. May I pay the premium to continue my coverage? Q8: I had COBRA coverage prior to the Oklahoma tornado. The location I was sending my COBRA premium to is closed. Where do I send my premium? ... Q13: How can I make changes in the way my 401(k) plan account is invested if it was affected by the events of the Oklahoma tornado? ... Q14: Can I get money out of my retirement plan if I need financial assistance to help me at this time? ... Q20: If my employer faces economic difficulties as a result of the events of the Oklahoma tornado, can my employer terminate my retirement plan, and if so, what happens to my benefits? ... Q21: All of the records concerning my employment with the retirement plan sponsor and my participation in the retirement plan were destroyed as a result of the events of the Oklahoma tornado. What do I do?" (Employee Benefits Security Administration, U.S. Department of Labor)

NAIC Proposals: Another Wakeup Call on Pay Disclosures, Especially for Mutual Insurers
"Outside boards at many large mutual insurers have asked management to develop pro-forma versions of both the Compensation Discussion and Analysis and the compensation tables routinely required of public companies by the SEC.... Mutual insurers that have yet to go down this path will likely have an added incentive to do so, given recent pay disclosure proposals issued by the National Association of Insurance Commissioners (NAIC). Mutual insurers may need to pay special attention to the NAIC proposals as they contemplate requirements for pay disclosure that are directionally similar to those required for public companies." (Towers Watson)

Press Releases

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