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July 15, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Retirement Plan Service Specialist - Part-time
for Christian Retirement Ministries in CO

Project Manager - Benefits Administration
for Publix Super Markets, Inc. in FL

Sales Consultant, Actuarial Services
for Benefit Plans Administrative Services, Inc. (BPAS) in NY

Compliance Manager
for Transamerica in OH

Project Manager New Business Installation
for Transamerica in OH

Benefits Compliance Manager
for A Great Company Near San Antonio in TX

Deputy Director of Operations
for ACCG - GEBCorp in GA

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Webcasts and Conferences

Preparing for ACA Financial and Reporting Mandates and New 2013 HIPAA Rules -- Webcast
July 16, 2013 WEBCAST

Preparing for 2014 Open Enrollment Focusing on New ACA Requirements -- Webcast
July 30, 2013 WEBCAST

2013 Retirement Planning Fair - Sacramento
August 23, 2013 in CA
(CalPERS (California Public Employees' Retirement System))

2013 Retirement Planning Fair - Long Beach
September 13, 2013 in CA
(CalPERS (California Public Employees' Retirement System))

Why Employee Wellness Programs Fail (And What You Can Do About It) -- Webcast
July 22, 2013 WEBCAST
(Corporate Research Group)

Premera Blue Cross Case Study: Successfully Measuring Employee Engagement in Wellness Programs -- Webcast
July 29, 2013 WEBCAST
(Corporate Research Group)

Smoking Cessation: The Importance of Integrated Behavioral Interventions -- Webcast
August 6, 2013 WEBCAST
(Corporate Research Group)

Priority Health Case Study: Five Steps to a Proven Successful Worksite Wellness Program -- Webcast
August 20, 2013 WEBCAST
(Corporate Research Group)

IRA Institute Spring Session
September 10, 2013 in IL
(Retirement Industry Trust Association (RITA))

Multi-Employer Pension Plans: Continued Participation or Withdrawal? -- Webcast
August 20, 2013 WEBCAST
(Strafford Publications)

View All Webcasts and Conferences

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Pensions Sue Banks Over Credit-Default Swaps
"Three Danish pension funds and their investment-management company filed a lawsuit ... alleging antitrust violations and saying the banks 'unreasonably restrained competition' in the $25 trillion credit-default-swaps market. The funds allege that the harm done to investors as a result of anticompetitive practices was 'in the tens of billions of dollars.' They asked the court for injunctive relief in addition to [unspecified] monetary damages[.]" (The Wall Street Journal; subscription may be required)


Have you Seen ASC Recently? A Free Demo

Sponsored by ASC

See for yourself how our comprehensive software system (Valuation, Documents, 5500s and more) will help you operate more efficiently, work more accurately and provide quality service to your plan sponsors. Join us Aug 5th for a free demonstration. Click here.

Coming Employer Crackdown on 401(k) Loans?
"Out of the 12.3 million employees in Fidelity plans, one out of every five 401(k) plan participants has a loan outstanding, and one in nine took a new loan in the past year, with an average loan amount of $9,000, while 2.3% of participants took hardship withdrawals.... [H]alf of borrowers take more than one loan, and ... the likelihood of taking a hardship withdrawal rises dramatically among multiple borrowers (climbing steadily from 6% for those who have taken one loan to 27% for those who have taken 7 loans)." (Forbes)

The Dangers of Borrowing from Your 401(k)
"Here's why you should be cautious about taking a 401(k) loan: You may not be able to borrow much... Quick repayment is required.... A loan could become a distribution.... Missing out on market returns.... Less retirement preparedness." (U.S.News & World Report)

Fiduciary Ball Squarely in SEC's Court
"As the SEC wades through the approximately 150 letters that it has received, here are some of the options that the commission is likely to consider: Propose a rules-based fiduciary duty.... Propose a principles-based fiduciary standard.... Harmonize broker-dealer and investment adviser regulations." (Investment News; free registration required)

'Before It's Too Late: A Retirement Security Newsletter from Phyllis Borzi', July 15, 2013 Issue
Biweekly newsletter by Phyllis Borzi. Articles include Deadline for Lifetime Income Comments Extended; Helping Small Business Owners with Fee Disclosures; and a description of a recent NIRS report. Excerpt: "[T]he 85% of Americans that NIRS reports are concerned about their retirement prospects are right to worry.... Some 83% of Americans report favorable views of pensions, and 82% say those with pensions are more likely to have a secure retirement. Moreover, 84% indicate that all Americans should have access to a pension to be self-sufficient in retirement. We often hear that defined benefit pensions are consigned to history and that no one should count on them for retirement. It seems as if the majority of the American people do not agree." (Phyllis Borzi, Assistant Secretary for the Employee Benefits Security Administration)

6th Circuit: Mere Existence of Cross-Collateralization Provisions in IRA Did Not Spoil Asset Protection in Bankruptcy
"The court stated: 'The mere existence of a "cross-collateralization agreement," as the Internal Revenue Service calls it, doesn't by itself disqualify an IRA from exempt status. At most, it is the actual use of such an agreement and the prohibited extension of credit through it in a later transaction that might disqualify a retirement account.' Although Mr. Daley eventually won his case [in the 6th Circuit, after having lost on the issue in bankruptcy court and in federal district court], financial advisers should check clients' IRA agreements ... [and have] that language removed, as some custodians are already doing, or move the funds to another custodian." (Investment News; free registration required)

On Transparency: CalPERS Explains Its Decision
"CalPERS decision to delay the release of a database that contains publicly available pension information is not a retreat in transparency. Since 2011 we have fulfilled more than 110 PRA requests for all or a subset of the same pension data and we will continue to release the information that is required by law. The delay in the database is out of respect for our members' concerns and a reflection of our desire to find the right balance between access to public data and the more important safety and security of our members." (CalPERS)

8th Circuit Finds Prenuptial Agreement Did Not Waive Surviving Spouse's Right to Deceased Participant's 401(k) Account (PDF)
"As a whole ... the antenuptial agreement is equivocal whether Kathy waived her rights at all. Sections B(8)(b) and (c) of the antenuptial agreement contemplate the future execution of a waiver or consent to change in beneficiary.... In light of this promise to execute a waiver and in the absence of the fulfillment of this promise, Kathy could not have meaningfully acknowledged the effect of any waiver of her spousal rights in the antenuptial agreement.... [T]he antenuptial agreement failed to inform Kathy -- in clear and express terms -- that she both had a spousal right to receive the funds in the MEC 401(k) Plan and that she was waiving this right." [MidAmerican Pension and Employee Benefits Plan Administrative Committee v. Cox, No. 12-3563 (8th Cir. July 12, 2013)] (U.S. Court of Appeals for the Eighth Circuit)

'Sharing' the Burden of Plan Investment Fees by Participants: What Everyone Is NOT Talking About
"Fees collected via the investments (revenue sharing), which are not normalized at the fund level, are a major source of inequitable fee allocations at the participant level. Since the revenue sharing varies by fund and since participant investment allocations differ, revenue sharing collected as a fee is not a uniform percentage across participant balances nor is it a fixed dollar amount per participant account. These variations create inequitable fee allocations ... Plan sponsors need to understand that several fee collection methods exist in the industry today, which can create inequitable fees at the participant level. While the details of fee collection methods vary, the end result is the same[.]" (Milliman)

401(k) Index Observations: Monthly Details, June 2013
"Defined contribution plan participants' daily transfer volumes remained steady in June, with transfers averaging 0.035% of balance totals per day ... Employee discretionary contributions, another measure of participant sentiment, decreased to 63.8% in equities for June. This is down from levels recorded at 64.0% both at the beginning of the quarter and at the end of May. By the end of June, participants' overall equity allocation decreased to 62.2% from 62.5% at the end of May. The second quarter began with participant's equity allocation at 61.8% of total assets." (Aon Hewitt)

Nearly Three-Fourths of Millennials Have Made No Preparation for Retirement
"[A recent] survey found that almost 70 percent of Millennials have not taken any action to plan or save for retirement. Not that they are completely myopic about their projected source of retirement income. Concerns about the sustainability of Social Security no doubt account for a significantly less proportion of Millennials than Baby Boomers (54 percent vs. 85 percent) counting on Social Security as their primary source of retirement income." (Spectrem Group)

The Drip of Leaking Retirement Plans
"Financial advisors have done a poor job of guiding retirement plans to force workers to shore up their cash positions before carrying on about stocks, bonds and target date retirement accounts. Both findings are closely related... [If] sponsors helped workers secure a cash position first, as a default, and only then started to think about the traditional retirement account questions of growth versus income and stocks versus bonds." (InsuranceNewsNet.com)

How Much Can I Afford to Spend in Retirement? Better Plan on Living to 95
"If we only knew when we were going to die, planning would be so much easier. Some retirees believe that it is sufficient and appropriate to base withdrawals on their current life expectancy.... [T]he very significant downside of this strategy is that withdrawals may not keep pace with inflation ... if you have the good fortune of outliving the life expectancy you used for planning purposes when you first retired.... [It] is much more prudent to assume that you will live to your mid-90s (unless you have already reached your 90s) rather than use published life expectancies when developing your spending budget." (Kenneth A. Steiner, FSA Retired)

Proposals for Changing Pension Taxation in the U.K. (PDF)
"This report provides an overview of the pension tax relief system and examines the rationale for tax relief. It also considers the extent to which tax relief incentivizes pension saving and considers some alternatives to the current system, including adjustments to the current system, changes to the tax free lump sum and the use of a single rate of tax relief." (Pensions Policy Institute)


Yale Professor Notifying Particular Plan Sponsors of Upcoming Publicity of Their Investment Costs
"We have recently learned that a Yale Law School professor has sent a letter to thousands of 401(k) plan sponsors. The professor is doing a 'study' on the financial impact of plan fees and has identified the employers receiving the letter as sponsoring a 'potential high-cost plan.' ... The letter says the findings of the study are expected to be published in Spring 2014, including distributing the findings to news media and through social media, with the corporate names of identified plan sponsors highlighted.... The tone of these letters, frankly, is shocking." (NAPA Net)


Comments of National Association for Fixed Annuities to DOL on Pension Benefit Statements (PDF)
"We encourage the [DOL] to promote and foster greater financial literacy and awareness, especially in retirement income planning. Any regulation can and should create initiatives to promote retirement income planning awareness and education.... While we agree with what appears to be the Department's goal for simplicity, we encourage the Department to take from the approach used in the insurance industry's state illustration regulations and examine a range of economic outcomes and a greater, and more realistic, range of resultant income possibilities. This range of possible outcomes is far more helpful to a consumer than a singular, static result that undoubtedly will be irrelevant or worse, incorrect, in later years." (National Association for Fixed Annuities (NAFA))


Comments of American Council of Life Insurers to DOL on Pension Benefit Statements (PDF)
26 pages. Excerpt: "We encourage the Department to include in its pension benefits statement rule that a participant's accrued benefit be expressed as estimated guaranteed monthly lifetime income payments. This will help to educate workers as to the value of their plan savings as a source of retirement income. It will assist them in evaluating such factors as their income need, savings adequacy, and the amount of income devoted to retirement savings. It reframes the defined contribution plan as a retirement plan that is intended to generate retirement income, rather than just a capital accumulation or savings plan." (American Council of Life Insurers (ACLI))


How Detroit Came to Betray Its Retirees
"For elected officials, frequent defaults on pension obligations to save operating cash became something close to standard operating procedure.... [This] blows a hole in the 30-year projections and long-term solvency, and it requires bigger payments from the city than would originally have been necessary.... Detroit officials have also made a habit of convincing unions to accept pension sweeteners ... rather than pay increases. But that has raised pensions costs and had the unintended effect of shrinking the city's work force to the point where employee contributions can't keep pace with the needs of current pension recipients. The city has just 9,700 workers but 21,000 retirees drawing benefits." (Detroit Free Press)


Newly Allowed Ads for Private Placements Will Entrap Many Investors
"Hedge funds, private-equity firms -- and perhaps most dangerous of all, startup companies -- now will be free to run advertising on television, the Internet, magazines and wherever else they wish, to attract new investors. Free to run amok is more like it.... [T]he SEC could have done much more to ensure that by allowing private placements to be advertised, it isn't inadvertently placing investors in harm's way." (Investment News)


Designing 401(k)s That Really Work
"Lost in the hour-long [PBS Frontline] documentary -- and the subsequent reactions of anger, despair and ruffled feathers -- were many of the positive developments and solutions that are driving change in the 401(k) industry. One such trend is the recognition from a growing number of retirement professionals that 401(k)s can incorporate the best traits of a defined-benefit plan." (Investment News; free registration required)

Benefits in General; Executive Compensation

[Guidance Overview]

Q&As from Treasury and IRS Meeting with ABA Joint Committee on Employee Benefits, May 2013 (PDF)
16 pages. Topics include: Cost of Living Adjustments for High Deductible Health Plans; Collateral for Plan Loan; Benefit Election Following Reemployment; Correction for Exclusion from Plan; Determination Letter Applications: Amendments Adopted After Plan Restatement, Inability to Submit Missing Executed Plan Documents, and Off-Cycle Determination Letters; Correction of Overpayments with or without Spouse as Joint Annuitant; Merger of Plan with Roth Contributions; Various questions about 409A and 457 Plans; Section 162(m) Performance Pay; Change in ESOP Loan Duration; and Actuarial Adjustment of Cash Balance Benefit. (Joint Committee on Employee Benefits, American Bar Association)

[Guidance Overview]

Same-Sex Marriage Requires Changes to Employee Benefit Plans
"After Windsor, ambiguity remains about whether or not any welfare plan must offer coverage to same-sex spouses. However, insured plans in states that recognize such marriages will likely automatically provide for that coverage. Self-insured plans may not be required to do so under current law but may want to in order to preserve uniform treatment across states and to avoid potential liability for treating same-sex and opposite sex spouses differently." [The linked article includes a list of affected employee benefit plans and employer action steps.] (Latham & Watkins)

[Guidance Overview]

Supreme Court DOMA Decision Creates Compliance Conundrum for Employers (PDF)
14 pages. Excerpt: "As the number of states recognizing same-sex marriage grows, employers who take an inclusive approach to providing plan benefits may decide to roll back coverage for domestic partners ... If an employer has been grossing up employees to compensate them for the denial of federal tax preferences, they may wish to re-evaluate whether to continue the practice and for what groups of employees.... Using multiple definitions of spouse, in addition to complicating the administration of employer plans and uniform application of various employment policies, may inadvertently create employee relations issues. For that reason, employers may want to consider a uniform definition of spouse for as many plans and policies as possible." (Buck Consultants)

[Guidance Overview]

Implementing the DOMA Ruling: What Should Employers Be Doing Now?
"Determine how you will identify same sex spouses.... Decide how you will handle same sex spouses in your plans during this period before official guidance is issued.... Confirm your third-party administrators/providers are updating policies and preparing to provide required notices to same-sex spouses ... Decide whether to provide COBRA notices to same-sex spouses of participants (and their covered children) who are currently in the COBRA election period.... Ensure your payroll systems are updated ... Amend your retirement, cafeteria and wrap plan documents[.]" (McKenna Long & Aldridge LLP)

Supreme Court DOMA Decision Grants Valuable Social Security, Medicare Benefits to Same-Sex Couples
"Social Security and Medicare benefits -- two cornerstones of retirement planning long enjoyed by most married Americans -- will be a bonanza for couples in the 13 states that recognize gay marriage. Gay and lesbian couples will be eligible for valuable spousal and survivor benefits that could be worth tens, maybe hundreds, of thousands of dollars to each household.... For those living in states that accept only same-sex civil unions, the federal benefits will not be so generous. The Obama administration will not extend federal-worker benefits to domestic partners who are not legally married." (The Wall Street Journal; subscription may be required)

Putting Off Retirement May Help Stave Off Alzheimer's
"As Americans increasingly delay retirement, a new French study indicates this scenario may have a silver lining: a lower risk of developing Alzheimer's disease. Researchers analyzing health and insurance records of more than 429,000 self-employed workers found a 3 percent reduction in dementia risk for each extra year at the age of retirement. Workers evaluated had been retired for an average of more than 12 years, and 2.65 percent of the group had dementia." (U.S.News & World Report)

Cypen & Cypen Newsletter, July 11, 2013
Article titles include: S&P 1500 Pension Plans Funding Levels Rise to Highest Point Since 2008; States Adjusted Pension Liability Medians; The Case for Passive Investing; Disability Applicant's Subjective Complaints Should Have Been Considered; GASB Releases Guide to Implementation of Statement 67 on Financial Reporting for Pension Plans; New York City Mandates Paid Sick Leave for Employees Working in the City; and Meanwhile, Florida Heads in the Opposite Direction. (Cypen & Cypen)

Press Releases

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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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