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

Part Time On Call Retirement Planning Consultant
for Transamerica Retirement Solutions in AR, CA, MO, NY, UT

Senior Benefits Specialist (Retirement Plans)
for Assurant in NY

Trust/Fund Relationship Manager 2
for Huntington National Bank in OH

Director of Benefits
for Arnold & Porter LLP in DC

Pension Actuary
for BHA Consulting LLC in GA

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Webcasts and Conferences

Professional Service Agreement Webinar
July 31, 2013 WEBCAST
(AccuDraft, Inc.)

Health Care Reform Workforce Realignment: Beware the Unintended Consequences
August 13, 2013 in CO
(Spencer Fane Britt & Browne LLP)

401(k) Plan Loans and Hardship Withdrawals -- Webcast
August 20, 2013 WEBCAST
(Spencer Fane Britt & Browne LLP)

The Affordable Care Act: How Will It Affect You? -- Webcast
August 29, 2013 WEBCAST
(Employee Benefits Security Administration (EBSA), U.S. Department of Labor)

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  LinkedIn   Twitter   Facebook Hand-picked links to the web's best news articles,
official guidance, jobs, webcasts and more.
[Official Guidance]

Text of FINRA Proposed Rule Change to Revise the Series 16 Examination Program
"The proposed revisions update the material to reflect changes to the laws, rules and regulations covered by the examination and to incorporate the functions and associated tasks currently performed by a Supervisory Analyst." (Financial Industry Regulatory Authority (FINRA))  


The ASC Advantage: See It for Yourself August 5th

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[Official Guidance]

Text of Proposed Rule to Include Additional Rule Violations Eligible for Disposition Under FINRA's Minor Rule Violation Plan (PDF)
"[E]xpanded use of the [Minor Rule Violation Plan (MRVP)] could free up resources better allocated to high-risk matters because MRVP settlements typically are handled more efficiently and expeditiously.... The inclusion of a rule in FINRA's MRVP does not minimize the importance of compliance with such rule ... Rather, the option to impose an MRVP sanction gives FINRA additional flexibility to administer its enforcement program in the most effective and efficient manner, while still fully meeting FINRA's remedial objectives in addressing violative conduct." (Financial Industry Regulatory Authority (FINRA))  

[Official Guidance]

Draft of Instructions and Forms for 2014 Premium Payments to PBGC
These drafts of forms (as MyPAA screen mockups) and instructions would implement the PBGC's July 23 proposal to simplify due dates, coordinate the due date for terminating plans with the termination process, make conforming and clarifying changes to the variable-rate premium rules, provide for relief from penalties, and make other changes. (Pension Benefit Guaranty Corporation)  

[Guidance Overview]

PBGC Proposes New Premium Rules for 2014 (PDF)
"Under current regulations there are three premium due dates that depend on plan size (small, mid -- size, and large) and premium type. The PBGC proposes to use the same due date ... for both types of premiums and for all three plan sizes.... For the transition year, note that small plans would pay two premiums in 2014 -- one for 2013 and one for 2014." (Buck Consultants)  

[Guidance Overview]

Hit the Reset Button? New Option Available for Compliance with Annual Investment Fee Disclosure Rule
"This 'reset' option permits an employer to provide the '2013 comparative chart' after the original 12-month period required by the 404(a) regulations. However, the chart may not be delayed later than 18 months after the initial comparative chart was provided.... The reset option is limited to information required to be disclosed under specific provisions of the regulation[.]" (Benefits Bryan Cave)  


Retirement Education, Plan Documents, and more.

Sponsored by McKay Hochman

McKay Hochman provides a comprehensive retirement plan resource for financial institutions and TPAs. We offer plan documents, compliance support services, continuing education, online resource library, and more. Visit www.mhco.com for details.

[Guidance Overview]

DOL Enforcement Policy Permits Plans to 'Reset' Timing of Certain Annual Participant Information
"The Bulletin leaves one question to be addressed: how strictly we need to read the specified conditions for the 2014 relief.... [I]f the plan has taken administrative steps but no costs have been incurred with respect to the 2013 update (or vice versa), a strict reading of the Bulletin would lead to the conclusion that the only option available to the plan is a 2013 reset... Given the broad rationale for the relief, it is likely that the DOL is seeking to provide the reset opportunity to all plans for 2013 or 2014, at the plan's election." (Littler)  

[Guidance Overview]

What Statute of Limitations? Disqualifying Events Can Spoil Plan Assets Indefinitely
"Although it is true that plan disqualification and the IRS's ability to impose a tax is effective only for taxable years for which the statute of limitations has not expired ... the sponsor's failure to amend the plan document for a new law in a timely fashion is a document failure that may have taken place in a closed year based on the statute of limitations, but it caused the assets in the disqualified plan to be tainted in the current year. As such, the IRS can impose a tax on the current year for a document failure that took place a long time ago, in many cases as a result of actions a plan official who is no longer employed by the plan sponsor or bad advice from a service provider that has since been replaced." (Belfint Lyons & Shuman, CPAs)  

[Guidance Overview]

IRS Updates Retirement Plan Correction Program
"This Regulatory Brief describes some key changes made to EPCRS in the new IRS Revenue Procedure and outlines some fundamental principles that apply to plan corrections. For additional background, this brief also describes how to correct common errors under prior guidance that remains unchanged." (Vanguard)  

Is Now the Worst Time to Retire? Not Even Close
"[T]here have been scarier times for Americans to retire. Before 1940 there was no Social Security. In 1960 the life expectancy for women was 73; for men it was 66. So while retirement may have been sweet, it was short. Until landmark retirement legislation passed in 1974, the companies that offered pensions often required decades of loyalty before benefits were guaranteed, and then frequently laid off employees just before they were eligible to collect. In 1980, retirees may have had nice yields, but they were facing a 13.6 percent inflation rate. So it's not really the worst time in history to retire[.]" (Reuters)  

401(k) Letters Could Expose the Worst Retirement Plans
"If a draft paper [Yale professor Ian Ayres] co-authored with Quinn Curtis, a law professor at the University of Virginia, is any indication of the things to come in his research, the news is pretty dark for companies that have excessive plan fees. Using a legal argument that overpriced plans are breaching an employer's 'fiduciary duty,' Ayres and Curtis examined 'fiduciary losses,' that is, situations in which the employer wasn't looking out for the best interests of employees. Some 60 percent of such losses were due to 'excess fees.'" (Forbes)  

Yale Law School Says Professor's 401(k) Fees Report Will Contain Aggregate Data Only
"The letters from Professor Ayres aren't a precursor to any legal action, and Professor Ayres has no intention of sharing data with plaintiffs' attorneys. While he intends to publicize the results of his research when the project is published, those results will be presented as aggregate data. He does not intend to publicize company-specific data based on 2009 data." (NAPA Net)  

Federal Bankruptcy Judge Blocks Detroit Retiree Litigation in State Court But Will Hear Constitutionality Challenge
"The federal judge handling Detroit's bankruptcy case gave a preliminary victory Wednesday to the city's emergency manager, ruling that municipal unions and others couldn't go to state court to litigate their grievances with the city's bid to shed its retiree obligations. However, federal bankruptcy Judge Steven Rhodes said municipal unions, pension funds and other creditors could still argue in his court that Detroit's July 18 Chapter 9 bankruptcy filing was improper and violated Michigan's Constitution." (The Wall Street Journal; subscription may be required)  

Cypen & Cypen Newsletter, July 18, 2013
Article titles include: Pension and Retirement Security; Big California Funds Perform Big; Pension Smoothing Plan Goes Nowhere; Cross-Collateralization Agreement by Itself Does Not Disqualify IRA From Exempt Status; What a Sustained Low-yield Rate Environment Means for Retirement Income Adequacy; As Funded Status Rises, Mulling a Graceful Glide; SEC Adopts Rule Changes Allowing General Solicitation in Private Placements; the Secure Annuities for Employee (SAFE) Retirement Act of 2013; and Businessweek Says Hedge Funds Are for Suckers. (Cypen & Cypen)  

Why Everyone Should Aspire to Early Retirement
"The goal of early retirement can help motivate you to make smarter financial decisions. Here are a few benefits of trying to retire early, even if you are planning to work longer: You'll get a plan together relatively early.... It keeps you focused on what's important.... It limits lifestyle inflation.... It's a built in safety net.... You're nudged to better manage your investments.... You'll think about retirement life long before you actually retire.... Keeping up with the Joneses will take on a more financially responsible meaning." (U.S.News & World Report)  

Public Pension Deficits Get Renewed Scrutiny Due to Detroit Bankruptcy Filing
"Chicago, Philadelphia, New York, Phoenix and Jacksonville, Florida, are among large cities that had 60 percent or less of what they need in their retirement systems to cover promised benefits ... At least 29 public plans in 16 states are less than two-thirds funded ... Concern that localities aren't doing enough to ensure pensions and related benefits are funded has led munis to weaken compared with Treasuries[.]" (Bloomberg)  

Hedged Long Corporate Bond Approach May Provide Pension Funds with Better Opportunities than Core Strategy
"Many pension funds are invested in core bond strategies benchmarked against the Barclays U.S. Aggregate Bond Index, which includes Treasury securities, U.S. government agency bonds, mortgaged-backed bonds, corporate bonds and a small amount of foreign bonds traded in the U.S. A continuing rise in interest rates could cause core strategies to underperform a hedged corporate bond strategy[.]" (BNY Mellon)  

A Look at Today's Engaged Investor (PDF)
"In the wake of the extremely challenging and often volatile investing environment of the last 15 years accompanied by a decline in investor trust in the financial services industry, we've witnessed the emergence of a new class of investors. This group is more engaged, asks more questions, wants to work with an investment professional but plays an active role in the decision-making process, and has higher expectations for the financial services firms and professionals with whom they work. These engaged investors demand transparency and accountability, and they want a relationship on their terms -- not the terms of their broker." (Charles Schwab & Co., Inc.)  

U.K. High Court Says Pension Plan Participants Do Not Have Priority Over Other Creditors in Employer Bankruptcy
"Pension [plan] members cannot jump ahead of other creditors when a company or bank goes bust, the UK's highest court said on Wednesday in a landmark ruling that clarifies the ranking of creditors in an insolvency. The ruling was the result of a case brought by the administrators of the UK divisions of investment bank Lehman Brothers and Canadian telecoms company Nortel, which filed for bankruptcy protection in 2008 and 2009 respectively." (Reuters)  


Groups Push for Sealing of California Pension Data Despite Their False Premises
"Recent press reporting suggests that legislators in Sacramento, pressured by state employee unions and retiree associations, may be considering amending the California Public Records Act to exempt from public disclosure the names of CalPERS pensioners linked to their retirement payments -- information that's been open to public scrutiny for the past 28 years.... These groups do their members no favors in raising their hopes of protection from imagined threats of exploitation when, whether through lawsuits or legislative action, they cannot possibly deliver on those promises." (San Jose Mercury News)  


Oregon Lawmakers Take a Step Toward Retirement Security for All
"Oregon's state legislature passed [a bill which] ... authorizes the creation of a seven-person task force that will develop recommendations on ways to increase the number of Oregonians saving for retirement through new structures that could be facilitated by the state. The task force's report is due September 1, 2014." (Pension Rights Center)  


Facing Up to America's Public Pension Woes
"As recently as three years ago, the conventional wisdom held that public-pension promises, no matter how extravagant, are sacrosanct even if a city files under Chapter 9 ... The first hint that this thinking might be wrong came after Vallejo, Calif., filed for bankruptcy in 2008. Vallejo successfully restructured its collective-bargaining agreements and ... the city believed that Chapter 9 gave Vallejo the legal authority to alter its pensions as well. But CalPERS ... threatened litigation. The city concluded that any reduced pension costs wouldn't be great enough to offset the legal costs and backed off. Since Vallejo, the pension question has become increasingly hard to avoid." (The Wall Street Journal; subscription may be required)  


The Fleecing Equilibrium: FINRA Regs Protect Brokers, Not Consumers
"[W]e have been calling the FINRA regulatory structure a consumer protection vehicle, and pretty much everybody in the debate has fallen into the trap of thinking of it in those terms. But in fact, the FINRA regulations exist to protect the brokerage firms from the worst consequences of their perverse incentive systems." (Bob Veres in Inside Information)  


Debate Over Detroit Pension Math is Misplaced
"The arcane discount rate debate in the actuarial community is not about which approach generates a legitimate measurement (they both do), but for which purposes it is more appropriate to develop an estimated current market price and which purposes it is more appropriate to develop a budgeting target. There is danger with either measurement being misused, but for ongoing public sector valuations, a budgeting target is more appropriate, so actuarial valuations use a discount rate based on the expected return on assets.... If Detroit's revenues continue to decline, it will be even more difficult to manage a solution for the pension plans. These are the issues revealed by the Detroit bankruptcy, not an arcane dispute on pension math." (Cheiron)  


DOL Proposed 408(b)(2) Regulation Sent to OMB for Review
"We have heard that, based on the DOL's review of 408(b)(2) disclosures, the Department has concluded that plan fiduciaries may, in some cases, have difficulty understanding the required disclosures because of the lengthy, technical and/or multiple disclosure documents that are being distributed. As a result, we believe that the proposed regulation may require a guide (or table of contents) for the 408(b)(2) disclosures." (FredReish.com)  

Benefits in General; Executive Compensation

[Guidance Overview]

Quick Reference Guide for Public Employers, Feb. 2013 Edition (PDF)
24 pages. "This guide is produced annually by the IRS office of Federal, State and Local Governments (FSLG). It is intended to provide a brief introduction to basic Federal employment tax and reporting information issues for governmental employers. For more detailed information in these areas, see IRS Publication 963, Federal-State Reference Guide." The publication's chapter titles are: Compensation; Social Security and Medicare Coverage; Public Retirement Systems; Retirement Plans; Fee-Based Public Officials; Special Situations for Public Workers; Fringe Benefits; Information Reporting; Backup Withholding; Key Dates; Section 218; Social Security Coverage (Flowchart); and Medicare Coverage (Flowchart). (Internal Revenue Service)  

Getting Employees to Take Action: Using Behavioral Economics Insights to Deliver Benefits Messages (PDF)
"Can the way you frame a message really make a big difference in whether people will get a health screening, consider a high deductible health plan or save for retirement? Research in behavioral economics demonstrates that the answer is 'yes!' This article provides practical advice on how employers can use two behavioral economics principles -- framing and social norms -- to create more powerful, effective messages that will lead to action instead of indifference." (Benefits Quarterly published by the International Society of Certified Employee Benefit Specialists (ISCEBS))  

Deducting Investment Management Fees Against Net Investment Income for the 3.8% Medicare Portfolio Surtax
"The rules do specify that the 2%-of-AGI threshold continues to apply against investment management fees -- as it otherwise would -- but the calculation is complicated by the fact that there are other miscellaneous itemized deductions that are not valid deductions against investment income for the 3.8% Medicare tax, and in 2013 the phaseout of itemized deductions for high-income earners also returned and must also be applied against these investment deductions." (Michael Kitces in Nerd's Eye View)  

Press Releases

ProCourse Names Sybesma as Chief Operating Officer
ProCourse Fiduciary Advisors, LLC

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