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BenefitsLink Retirement Plans Newsletter

June 26, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Executive Assistant
for Mullin TBG - A Prudential Company in FL

Administrative Assistant III
for Verisight, Inc. in MN

Conversion Consultant
for ASPire Financial Services LLC in FL

Sales Representative
for Retirement Security - Advisory Council, LLC in AZ

Enrolled Actuary Consultant
for The Pension Studio, LLC in ANY STATE

Benefits Account Manager
for Gallagher Benefit Services, Inc. in TX

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Webcasts and Conferences

Prohibited Transactions
September 19, 2013 in PA
(ASPPA Benefits Council of Greater Philadelphia)

IRS Tax Forum
August 13, 2013 in LA
(Internal Revenue Service (IRS))

IRS Tax Forum
August 20, 2013 in GA
(Internal Revenue Service (IRS))

Unraveling the Windsor Knot: How the Supreme Courtís Opinion on DOMA Will Affect Employers and Employee Benefits -- Webinar
June 28, 2013 WEBCAST
(Bloomberg BNA)

Ascensus Fall Forum - Boston 2013
September 23, 2013 in MA
(Ascensus)

Ascensus IRA Supertrain - Boston 2013
August 19, 2013 in MA
(Ascensus)

View All Webcasts and Conferences


 

[Official Guidance]

Text of SEC Order Approving Proposed Rule Change Relating to FINRA Rule 8313 (Release of Disciplinary Complaints, Decisions and Other Information) (PDF)
"FINRA proposes to amend Rule 8313 to establish general standards for the release of disciplinary information to the public. The amendment would provide greater information regarding FINRA's disciplinary actions ... The Commission believes that the proposed rule change promotes transparency, consistency across FINRA's programs, and clarity regarding the information FINRA releases to the public and will provide greater access to information regarding FINRA's disciplinary actions." (U.S. Securities and Exchange Commission)


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Pension Buyouts for Retirees Might Increase Risk for the Plan
"The report concluded the post-buyout downside risk is larger because the liabilities remaining have a longer duration, the service cost compounds the effect and the funded status is lower because additional assets need to be transferred to an insurer as a premium for taking on the liabilities. While the risk would be greater, including longevity risk, a buyout would also provide more freedom for companies to take on more investment risk for higher returns since the remaining participants would be active employees and not receiving benefits until years down the line." (Pensions & Investments)

What it Means to be an ERISA Fiduciary: A Comparison to the Securities Laws
"The purpose of this article is to better acquaint BDs and RIAs with the requirements of ERISA, with a particular focus on the standards of conduct, by comparing and contrasting ERISA's requirements to the requirements of the federal securities laws.... [T]he article is primarily focused on ERISA and only looks to the securities laws in order to give the [reader] an appropriate frame of reference rather than going into detail regarding when and how the securities laws apply.... [A] table accompanying this article will serve as a useful reference tool for determining when ERISA applies." (Groom Law Group)

Retirement Assets Total $20.8 Trillion in First Quarter 2013
"Assets in [IRAs] totaled $5.7 trillion at the end of the first quarter of 2013, an increase of 5.1 percent from year-end 2012. [DC] plan assets rose 5.7 percent in the first quarter to $5.4 trillion. Government pension plans -- including federal, state, and local government plans -- held $5.2 trillion in assets as of the end of March, a 5.3 percent increase from the end of the fourth quarter of 2012. [Private-sector DB] plans held $2.7 trillion in assets at the end of the first quarter of 2013, and annuity reserves outside of retirement accounts accounted for another $1.9 trillion." (Investment Company Institute)

Reviewing, Understanding and Using the Actuarial Valuation Report and Its Role in Governmental Pension Plan Funding
"The actuarial valuation report, prepared in accordance with Actuarial Standards of Practice (ASOP), will soon come to play an even more critical role in the wake of the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, because funding information for pensions will no longer automatically be provided in financial reports. That is, the actuarial valuation report will soon be the sole source of information for many financial decision makers desiring to make informed decisions about the funding of pension benefits." (Government Finance Officers Association)

What Type of Professional Retirement Plan Advisor is Right for my Plan? (PDF)
"Most plan sponsors who partner with a specialized Advisor follow a deliberate selection process before hiring their Advisor. This report offers guidance for plan sponsors interested in hiring a specialized Advisor, and helps them understand the different types of Plan Advisors. Findings are based on focus group discussions with plan sponsors who partner with a Professional Retirement Plan Advisor of some kind." (Retirement Advisor Council)

Bundling Up a DB Plan
"[A]pproximately 79% of DB plan sponsors today are currently either unbundled or semi-bundled. This often results in juggling administrative processes among providers -- and that can be more costly and less efficient than a bundled approach.... [O]ne of the most important advantages a plan sponsor can obtain through bundling their DB plan services is gaining access to a professional data management system." (The Principal Blog)

Pennsylvania House Panel Endorses DC Plan in Lieu of Pension Plan for New Public Employees
"A House committee ... endorsed legislation to shift Pennsylvania's major public pension systems to 401(k)-style plans for newly hired employees starting in 2015 ... An all-Republican majority on the State Government Committee voted to push the legislation to the House floor over the objections of Democrats who said it was unfair to state workers and school employees. Republicans said the new system would put Pennsylvania's public pensions on equal footing with the majority of private-sector employees and provide more certainty about the state's pension costs." (Bloomberg BusinessWeek)

401(k)s Stall, Post-Auto Enrollment
"Immediately after the PPA provision became effective in December 2007, employee participation in 401(k)s increased. But since that initial bump, it's been virtually flat for years ... In 2008, participation increased to 73 percent of all employees in workplaces that offered 401(k)s, up from 68 percent in 2007 ... Fast forward to 2011: participation was 74 percent. It has barely budged." (Center for Retirement Research at Boston College)

Providing Lifetime Income Through a 401(k) Plan
"United Technologies Corp. broke new ground in retirement-plan design by incorporating a lifetime income feature into its 401(k) savings plan in 2010. The [plan] offers new hires the option to receive a guaranteed monthly income for their entire life -- borrowing one of the most appealing features from the pension plan.... Retirees can withdraw any amount above the scheduled monthly payments at any time -- but in return for this flexibility, will receive a lower monthly payment afterward." (Institutional Investor)

FINRA Gets OK to Share More Info About Reps' Disciplinary Records
"The SEC approved a proposal by the Financial Industry Regulatory Authority Inc. that allows FINRA to release publicly a copy of any disciplinary complaint or decision it issues, including the names of the parties involved in the matter.... FINRA will announce the effective date of the rule in a regulatory notice that will be published in the next 60 days. The SEC already provides public notice of most complaints it receives against its disciplinary targets. The new FINRA rule would allow the organization to make similar disclosures." (Investment News; free registration required)

Disciplinary and Other FINRA Actions Reported for June 2013 (PDF)
56 pages. Excerpt: "FINRA has taken disciplinary actions against the following firms and individuals for violations of FINRA rules; federal securities laws, rules and regulations; and the rules of the Municipal Securities Rulemaking Board (MSRB)." (Financial Industry Regulatory Authority (FINRA))

Addressing Retirement Readiness
"For the DC plan system to survive, employers must revisit the purpose of the plan. While the DC model began as a supplementary tool for participants with pension benefits, they have transitioned into the primary retirement savings vehicles for millions of participants. Along the way, the ancillary benefits of giving employees flexibility, choice, and access have become the tail wagging the dog of the retirement plan with little thought given to the end goal of a successful retirement." (Multnomah Group)

Low Interest Rates Weigh on Retirement Readiness (PDF)
"[M]ore than a quarter of Baby Boomers and Gen Xers who would have had adequate retirement income under historical averages return assumptions are simulated to end up running short of money in retirement if today's historically low interest rates are assumed to be a permanent condition, if retirement income/wealth is assumed to cover 100 percent of simulated retirement expense.... The impact is lessened if the current low rates are temporary.... The impact is magnified by years of future eligibility for participation in a defined contribution plan." (EBRI)

[Opinion]

Changes in Prospectus by AXA and Hartford: A Troubling New Trend for Existing Variable Annuities
"[In] the process of rotating investment offerings in a 'routine' prospectus change [Hartford] indirectly defaulted a large number of annuity holders into more conservative investments than they may have originally selected... [A] number of [AXA] contract owners with what were purported to be lifetime guarantees are now renewed to complete a 'renewal' process by October 4th or permanently lose their lifetime income protection! ... [A]dvisors will need to be increasingly diligent in reviewing client annuity contracts, or look to outsource to due diligence services that can help to support the process." (Michael Kitces)

[Opinion]

Assessing the Proposed Retirement Savings Cap: Are You Rich or Simply Frugal?
"For a person who starts saving during their mid-life crisis, invests solely in bonds and contributes minimal amounts, a $3 million cap is nothing to worry about. Unfortunately, many people fall into this category. But as young people are faced with the realities of an insolvent Social Security system, it is entirely conceivable that they could have millions in an account by the time they reach retirement age." (National Center for Policy Analysis)

Benefits in General; Executive Compensation

[Official Guidance]

Text of Supreme Court Opinion Ruling DOMA Is Unconstitutional on Equal Protection Grounds (PDF)
5-4 decision; opinion written by Justice Kennedy; dissenting are Justices Roberts, Scalia, Alito, and Thomas. Excerpt from the syllabus: "DOMA is unconstitutional as a deprivation of the equal liberty of persons that is protected by the Fifth Amendment.... By history and tradition the definition and regulation of marriage has been treated as being with in the authority and realm of the separate States.... DOMA rejects this long-established precept. The State's decision to give this class of persons the right to marry conferred upon them a dignity and status of immense import. But the Federal Government uses the state-defined class for the opposite purpose -- to impose restrictions and disabilities." [U.S. v. Windsor, No. 12-307 (U.S. June 26, 2013)] (Supreme Court of the United States)

[Official Guidance]

Text of Supreme Court Opinion Finding Ninth Circuit Had No Jurisdiction to Hear Appeal from District Court's Decision That California Prop. 8 Is Unconstitutional (PDF)
5-4 decision; opinion written by Justice Roberts; dissenting are Justices Alito, Kennedy, Sotomayor and Thomas. Excerpt: "We have never before upheld the standing of a private party to defend the constitutionality of a state statute when state officials have chosen not to. We decline to do so for the first time here. Because petitioners have not satisfied their burden to demonstrate standing to appeal the judgment of the District Court, the Ninth Circuit was without jurisdiction to consider the appeal. The judgment of the Ninth Circuit is vacated, and the case is remanded with instructions to dismiss the appeal for lack of jurisdiction. " [Hollingsworth v. Perry, No. 12-144 (U.S. June 26, 2013)] (Supreme Court of the United States)

[Guidance Overview]

Effect on Benefits Plans of the Supreme Court Decision on DOMA
"[E]mployers with pension and 401(k) plans will be required to recognize [same-gender] spouses for purposes of determining surviving spouse annuities or death benefits. The [same-gender] spouse of an employee will also be able to elect spousal rollovers to his or her own [IRA] upon the employee's death, enabling the surviving spouse to receive payments over his or her lifetime.... [An] employee with a [same-gender] spouse will have to obtain spousal consent to change the beneficiary of his or her retirement benefit ... If a [same-gender] couple divorces, benefits in qualified retirement plans may be split pursuant to a [QDRO].... [T]he decision will simplify life for employers who currently provide welfare benefits to [same-gender] couples by eliminating the current situation in which employers provide tax-free benefits to opposite-sex partners, but must tax benefits to [same-gender] partners. In addition, an employee with a [same-gender] spouse will now be able to contribute to health savings and flexible spending accounts at the same levels as an employee with an opposite-sex spouse. COBRA will apply to [same-gender] spouses." (Thompson Hine)

Links to DOMA and Prop 8 Articles by Leading Law Firms and Others
A list of our collected links about DOMA or Proposition 8 will appear if you click on the title, above. On the resulting web page, click on the title of any link and your web browser will take you to the author's web site for the full text of that item. This list is updated daily. (BenefitsLink.com)

Cancelling a SERP and the Limits of Preemption
"The [Sixth Circuit] found that the dispute over the SERPs concerned a decision to cancel them so as to smooth the sailing for a particular corporate acquisition ... [U]nder those circumstances, the executives who were participants in the SERPs could prosecute a state law claim in state court, on the thesis that it does not affect the terms of the SERPs or the duties imposed by it. The Court found that the state law claims did not require interpreting the SERPs or applying duties owed under them, but only required reference to the SERPs for the specific purpose of determining the damages due the executives if the SERPs were, as alleged, canceled in violation of state law." [Gardner v. Heartland, No. 11-2327 (6th Cir. May 10, 2013)] (Stephen Rosenberg of The McCormack Firm, LLC)

[Opinion]

ERIC Comments on Supreme Court's DOMA Decisions
"ERIC is concerned about the ability of companies that operate nationwide to administer their plans in a uniform manner. [ERISA] was structured to allow employers of all sizes to maintain and offer health and retirement benefits under a single set of rules regardless of where they do business or how many states their employees and retirees reside in. Some possible uncertainties left by the Court's decisions could adversely impact the administration of employer-sponsored benefit plans if it results in having to comply with overlapping and inconsistent state laws." (The ERISA Industry Committee)

Press Releases

Texas Muni CIO to Retire
Texas Municipal Retirement System (TMRS)

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