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July 24, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Pension Plan Administrator
for TPA in CA

Vice President, Participant Communications
for Transamerica Retirement Solutions Corporation in NY

Internal Business Development Specialist
for Benefit Plans Plus LLC in MO

Defined Contribution Pension Analyst (Entry Level)
for United Retirement Plan Consultants in CO

Retirement Plan Sales Consultant
for Trinity Pension Consultants, Inc. in OH

Defined Contribution Relationship Manager
for Trinity Pension Consultants, Inc. in OH

401(k) / Retirement Plan Administrator / Consultant
for SuperiorUSA Corporation in MN

Employee Benefits Conversion Specialist
for Chemical Bank in MI

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Webcasts and Conferences

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[Official Guidance]

Presentation Slides for July 25 IRS Phone Forum on EPCRS (PDF)
39 slides. Describes operation and use of the Employee Plans Compliance Resolution System for correcting plan mistakes. The presentation focuses on 401(k) plans. (Internal Revenue Service)  


Don't miss the ASPPA 2013 Annual Conference at Natl. Harbor, MD!

Sponsored by ASPPA

Attend ASPPA's Annual Conference to inform Congress that they can't overlook pension issues! Registration includes: visits to Capitol Hill, 70+ sessions on topics shaping the industry, networking with 1,500+ retirement plan professionals, and more!

[Official Guidance]

Information for IRS Approved Continuing Education Providers: June and July 2013 Provider Q&A Sessions (PDF)
"You can continue to offer continuing education programs, including existing test preparation programs, as long as you are advertising that participation is voluntary and not required for any return preparer who is not an enrolled agent (EA) or enrolled retirement plan agent (ERPA). You also have the option to reconfigure your former registered tax return preparer (RTRP) test preparation programs as basic tax preparation programs. Existing EA test preparation programs can continue to be given for voluntary credit for those aspiring to become EAs." [Other topics include: IRS Recommended Notification to Program Participants; Reporting PTIN Data; Program Approval; Program Evaluations; Participants Taking Programs Multiple Times; Enrolled Agents Requirements for CE; Attendance & Recordkeeping; Advertising CE Programs; Changing Provider Point of Contact Information; Provider Public Listing; Provider Fee] (Internal Revenue Service)  

[Guidance Overview]

Next Round of DC Plan Restatements Is Just Around the Corner for Many Plan Sponsors (PDF)
"[T]he second six-year restatement cycle officially got under way on February 1, 2011, when the IRS opened its doors for document providers to submit restated [pre-approved] documents for approval.... [T]he IRS is now reviewing those documents.... [We] expect the IRS to issue opinion and advisory letters for these documents (commonly referred to as 'PPA restatements' ...) in early 2014. Once those letters are issued, adopting employers will have approximately two years to re-adopt those documents ... Employers that have individually-designed plan documents are subject to a different five-year restatement cycle." (Prudential)  

[Guidance Overview]

DOL Extends Annual Participant Fee Disclosure Deadlines
"This relief is limited to the information in the annual disclosures. It does not affect the requirements to: [1] Provide quarterly expense disclosures; [2] Notify participants of changes; [3] Update investment information on web sites In addition, the FAB notes that this is technically just a change in DOL enforcement policy. Arguably, participants could still claim the employer violated the employees' ERISA rights by waiting 18 months to provide the annual disclosures." (SunGard Relius)  

[Guidance Overview]

DOL Gives Relief from Fee Disclosure Rules
"[As] with all guidance, there are some holes. The DOL relief notice addresses only the comparative chart. The deadline for the annual notice of plan-related information was not extended. There is some suggestion that the DOL is considering replacing the hard deadline at the end of the 12-month 'at least annually' period with a 30-day or 45-day window during which such charts could be provided." (Fox Rothschild LLP)  


SWBA 2013 Executive Benefits Forum - Sept. 26 - Dallas, TX

Sponsored by SouthWest Benefits Association

The SWBA Executive Benefits Forum will be led by nationally recognized ERISA expert, Sal Tripodi, and will focus on advanced issues in participant loans, safe harbor 401(k) plans and the employee plans compliance resolution system.

[Guidance Overview]

Additional Guidance on Timing of Fee Disclosure for ERISA Plans (PDF)
"This is an excellent opportunity for plan sponsors to better organize the mailings to participants. Coordinating the annual fee disclosure notice with Qualified Default Investment Alternative (QDIA) mailings, year-end total benefits statements, or even quarterly statements can both reduce mailing and fulfillment costs and provide an opportunity to deliver consistent messaging across plan communications. In addition, plan sponsors can use this as an opportunity to synchronize the effective date of investment return data across fee disclosure materials, quarterly statements, and participant websites." (Buck Consultants)  

New Retirement Trend: Managed 401(k) Plans
"In the managed 401(k) approach, financial pros take over all the investment decisions and create a portfolio based on an investor's age and financial goals. These programs offer guidance, such as suggesting when a worker needs to increase the amount of savings to reach retirement goals, but do not let the employee make actual investment choices.... Left to their own devices, people often let fears drive investment decisions, which can lead to inadequate returns." (FoxBusiness.com)  

401(k) Plan 'Orphan Accounts' Cost Plan Sponsors Billions
"According to one of the more reliable estimates, from Charles Schwab, 43 percent of assets held by 401(k) participants who left their jobs in the first quarter of 2008 had not been moved a year later. (The rest of those holdings either were rolled over into IRAs, taken as cash distributions or moved into new employer plans.) It is estimated that there are 15 million so-called 'orphaned' retirement accounts out there. That means that nobody has claimed them, or touched them in years and that plan sponsors have no way of reaching out to their owners." (BenefitsPro)  

Proposed SAFE Retirement Act Would Transfer Public Pension Risk to Private Insurers
"The SAFE Retirement Act would overhaul the method in which risk is borne in a participating governmental DB plan. For each year of pension benefit service accrued by an employee in a new SAFE plan, the plan would purchase a deferred annuity contract from a private insurer that would cover the employee's benefit earned in that year's accrual. Such contracts would be purchased annually, thereby completely funding in each year the annually accumulated benefit, while transferring the risk from both the employee and the government." (Retirement Town Hall)  

Senator Hatch Introduces Legislation Reforming Retirement Savings Rules
"Most of the changes would affect account based plans (such as 401(k) and other defined contribution plans) and IRAs.... Simplified fiduciary rule for selection of annuity provider in a DC plan... Easing of RMD rules... Easing of hardship withdrawal rules... Changes to the 401(k) automatic enrollment/automatic increase safe harbor rules and a new safe harbor... Sole Treasury jurisdiction over IRA prohibited transaction rules; [and] joint DOL-Treasury jurisdiction retirement plan prohibited transaction rules." (October Three)  

Trustee of Defunct New York City Garment Companies' Pension Plans Settles DOL Suit Alleging Misuse of More Than $4.2 Million in Plan Assets
"The [DOL] has obtained a consent judgment in federal court in which the trustee of two defined benefit pension plans admits to entering into $4,232,915 in alleged unlawful plan transactions between 2002 and 2010. [The] trustee and fiduciary to the pension plans ... also agrees to restore, up to that amount, any shortfall in assets owed to the plans' participants and beneficiaries.... The lawsuit alleged that [the trustee] authorized the pension plans to make improper loans and transfers of plan assets over several years to multiple recipients[.]" (Employee Benefits Security Administration, U.S. Department of Labor)  

Understanding the True Impact of Single Premium Immediate Annuities on Retirement Income Sustainability
"[A] single premium immediate annuity (SPIA) provides a lifetime stream of income that by definition cannot be outlived, and the potential for long-lived retirees to earn mortality credits creates the potential to earn significantly more cumulative return than what bonds alone can pay.... While it's true that for extreme longevity scenarios, SPIAs provide an unparalleled return and enhance retirement outcomes, the strategy as commonly implemented is also an indirect form of a bucket strategy that disproportionately liquidates fixed-income assets in the early years and lets the rest of the (risky) portfolio run. By reducing withdrawals from risky assets in the early years, the exposure to potentially unfavorable return sequences is diminished, even as the total allocation to equities rises throughout retirement." (Michael Kitces in Nerd's Eye View)  

The 'Yale Professor Letters': What Sponsors Need to Know (And Do) Now
"The study has a number of deficiencies that call into question both its accuracy and the conclusions it draws.... As a measure of fiduciary performance, a comparison of plans based solely on cost is at best incomplete and misleading ... Many plan sponsors ... have already taken action to reduce plan costs and provider compensation from 2009 levels (upon which the study's findings are based). For these plan sponsors, the letters (and the study) are moot.... [M]ost 401(k) plans are well-managed, and it is inappropriate to suggest that, of a set of well-managed plans, some (e.g., those with 'expenses above average') are mismanaged --that is, that the fiduciaries have breached their fiduciary duties." (DrinkerBiddle)  

Michigan Court Stays Challenges to Detroit Bankruptcy Filing
"The Michigan Court of Appeals on Tuesday ordered a temporary halt to three lawsuits that seek to derail Detroit's municipal bankruptcy after the state's attorney general sought to overturn lower court rulings, including one that found the bankruptcy filing unconstitutional. The lawsuits were filed by city workers, retirees and pension funds earlier this month in anticipation that the bankruptcy petition by Detroit would lead to cuts in retirement benefits." (Reuters)  

The Paradox of Prudence
"Although markets and existing target-date series lack the history necessary to judge a glide path's outcome, Monte Carlo analysis can simulate thousands of possible allocations that a glide path could take and calculate the probability of success (and failure) for investors. These models require many assumptions and inputs, so it is nearly impossible to compare one provider's output with another's[.]" (Morningstar Advisor)  

Benefits of Bundling from a Visual Learner's Point of View
"The benefits of integrating -- or bundling -- defined benefit plan services range from enhanced administrative oversight to time and cost savings to accuracy to employee appreciation. As a visual learner, [the author appreciates] a good illustration to help understand why." (The Principal Blog)  

Has Detroit Over-Inflated Its Pension Liabilities?
"The retiree health care value has been carried on Detroit's books at the level that [Emergency Manager Kevyn Orr] cites for some time. But the unfunded pension liability has always been listed on Detroit's financial documents as $650 million, rather than $3.5 billion that Orr claims. The pension shortfall was even listed as $650 million in February by the state's Detroit Finance Review Team. What happened?" (Reuters)  

Experts Warn of Retirement Crisis
"When a volunteer group of actuaries is seriously concerned about the risk of mass numbers of people outliving their savings and becoming impoverished in old age, that should be a warning flag to public and private policymakers and decision-makers.... The report calls for a robust national debate on the challenges of planning for longevity risk -- the risk of living beyond expectations -- and the value of generating a secure lifetime retirement income." (CBS MoneyWatch)  

Benefits in General; Executive Compensation

[Guidance Overview]

Location of Taxpayer Affects Claim for FICA Refund on Past Severance Pay
"For a taxpayer in the Sixth Circuit: The taxpayer will have to wait six months after filing a claim for refund with the IRS before it can file a suit for refund. The two-year limit on when lawsuits for refund must be filed will not begin until and unless the IRS lifts the suspension and issues a disallowance of the claim for refund. For a taxpayer outside of the Sixth Circuit: Under section 6532, the taxpayer has two years from the date of a notice of claim disallowance in which to file a lawsuit to obtain a refund." (Calhoun Law Group)  

[Guidance Overview]

Pillsbury Executive Compensation Update, Spring/Summer 2013 (PDF)
"[N]ew tax laws enacted in 2012 require the design and purpose of current and future deferred compensation to be reviewed. Further, as companies become more global, it has become necessary to understand how foreign laws may impact these arrangements.... [This publication] explore[s] new developments regarding global stock plans compliance issues, and the legislative impact on the taxation of stock options and other forms of equity compensation, as well as how the 2012 tax law makes deferred compensation a more attractive benefit." (Pillsbury Winthrop Shaw Pittman LLP)  

Balancing Costs, Risks, and Rewards: The Retirement and Employee Benefits Landscape in 2013
"Respondents report that their companies continue to de-emphasize DB plans in favor of DC plans. Finance executives are more actively considering their options for managing the remaining risk in their DB plans.... Respondents express concern about employees' ability to ensure adequate funding for their retirement. They say they are considering the options available for enhancing DC plan offerings, including the addition of lifetime income guarantees to target-date funds.... The rising cost of healthcare continues to be a top concern, but almost all respondents agree that providing a balanced mix of health insurance, retirement, and group benefits, including voluntary benefits, is important to their companies' success." (CFO Research and Prudential Financial)  

Federal District Judge in Ohio Rules State Must Recognize Marriages from Other States
"[A] federal judge in Cincinnati on Monday ordered state officials to recognize the unions of same-sex couples who were married in other states but live in Ohio.... Although conceding that the Supreme Court's ruling last month in United States v. Windsor did not directly involve state power to ban same-sex marriages, U.S. District Judge Timothy S. Black declared that the Court's ruling was pointing toward that issue. He also applied some of the equality principles in the Windsor majority opinion to support his order." (SCOTUSblog)  

Press Releases

NAGDCA Encourages Employers to Celebrate National Save for Retirement Week
National Association of Government Defined Contribution Administrators

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