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July 30, 2013          Get Health & Welfare News  |  Advertise
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Retirement Education Specialist
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Webcasts and Conferences

Health Care Reform for Employers: Now What? - Annapolis, MD
October 15, 2013 in MD
(Lorman Education Services)

2013 Regulatory Update
August 6, 2013 WEBCAST
(Multnomah Group)

Health Insurance Marketplace Training: Becoming a Certified Application Counselor Organization -- Webcast
July 31, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

Health Insurance Marketplace Training: Becoming a Certified Application Counselor Organization -- Webcast
August 1, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

Health Insurance Marketplace Training: Becoming a Certified Application Counselor Organization -- Webcast
August 5, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

Health Insurance Marketplace Training: Becoming a Certified Application Counselor Organization -- Webcast
August 7, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

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official guidance, jobs, webcasts and more.
[Official Guidance]

Text of IRS Announcement 2013-37: Deadline to Submit Opinion and Advisory Letter Applications for Defined Benefit Mass Submitter Plans is Extended to January 31, 2014 (PDF)
"This announcement extends to January 31, 2014, the deadline to submit on-cycle applications for opinion and advisory letters for sponsors and practitioners maintaining defined benefit mass submitter lead plans for the plans' second six-year remedial amendment cycle. Under Rev. Proc. 2007-44, 2007-2 C.B. 54, and Rev. Proc. 2011-49, 2011-44 I.R.B. 608, the submission period for these applications was scheduled to expire October 31, 2013." (Internal Revenue Service)  


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[Official Guidance]

IRS Web Page for 403(b) Pre-Approved Plans
The web page collects official guidance and documents for 403(b) pre-approved plans, and includes links entitled Basics; Drafting Resources; Forms; For Adopting Employers; Correcting Plan Errors; and Videos and Presentations. (Internal Revenue Service)  

[Guidance Overview]

Q&A Guide for Investment Advisors: Understanding the 408(b)(2) Disclosure Regulations
8 pages. Excerpt:"[This is] a series of questions and answers aimed to provide background on the final regulation as well as explain its impact on investment advisers.... [Questions include:] I'm managing the assets of an individual retirement account (IRA) or 'X' type of plan. Do I have to provide the disclosure? ... What types of service providers are covered under the final regulation? ... How does this long definition of 'covered service provider' apply to investment managers and advisers? ... What disclosures are required under the final regulation? ... We always provide our clients with a Form ADV, which describes our fees, and the client also signs an investment management agreement. Does that comply with the rule? ... What happens if I do not comply with the regulation?" (The Investment Lawyer)  

[Guidance Overview]

DOL Amends Underwriter Exemptions
"In light of regulatory developments, including certain Dodd-Frank provisions relating to statutory and regulatory references to credit ratings, on July 9, 2013, the DOL amended the Underwriter Exemptions ... to modify the definition of 'rating agency.' ... [D]isclosures for securities issued on or after the [July 9, 2013] Effective Date and in reliance on the Underwriter Exemptions will need to be revised to reflect the new definition ... In addition, parties to securitization transactions that intend to rely on an Underwriter Exemption will need to consider the appropriate confirmation that at least one agency rating the securities satisfies all of the new requirements under the Amendment." (Mayer Brown)  

Judge Awards Late Lawyer's Benefits to Lesbian Spouse
"A federal judge in Philadelphia ruled Monday that the lesbian spouse -- and not the parents -- of a deceased city lawyer should receive the proceeds of her firm's profit-sharing plan. U.S. District Judge C. Darnell Jones II said the nearly $49,000 payment that Sarah Ellyn Farley earned at Cozen O'Connor belonged to her spouse as a result of the U.S. Supreme Court's decision last month to invalidate the federal Defense of Marriage Act. Farley worked six years at the firm's Chicago office and never in Pennsylvania. She and Jennifer Tobits married in 2006 in Canada and lived in Illinois." (Philadelphia Inquirer)  


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Text of District Court Order Awarding Death Benefit to Same-Sex Surviving Spouse of Deceased Profit-Sharing Plan Participant (PDF)
"Post-Windsor, where a state recognizes a party as a 'Surviving Spouse,' the federal government must do the same with respect to ERISA benefits -- at least pursuant to the express language of the ERISA-qualified Plan at issue here. There can be no doubt that Illinois, the couple's place of domicile, would consider Ms. Tobits [to be] Ms. Farley's 'surviving Spouse' -- indeed it already has made that specific finding under state law. Windsor makes clear that where a state has recognized a marriage as valid, the United States Constitution requires that the federal laws and regulations of this country acknowledge that marriage. In light of that, this Court finds that Ms. Tobits is Ms. Farley's 'Spouse' pursuant to the terms of the Plan." [Cozen O'Connor v. Tobits et al., No. 2:11-cv-00045-CDJ (E.D. Pa. July 29, 2013)] (United States District Court for the Eastern District of Pennsylvania)  

Private Equity Funds Can Be Responsible for Withdrawal Liability of Portfolio Companies: First Circuit
"[A] multiemployer pension fund sued two private equity funds ... for the withdrawal liability of a bankrupt company that they owned and which had ceased contributing to the pension fund.... [T]he U.S. Court of Appeals for the First Circuit: [1] Decided, in a case of first impression, that at least one of the funds was not merely a passive investor but a 'trade or business' that was actively involved in managing the company's activities and received a direct economic benefit from those activities. [2] Remanded the case to the U.S. District Court for the District of Massachusetts to determine whether: [a] the second fund was also a trade or business; [b] and both funds were under common control with the company for withdrawal liability purposes[.]" [Sun Capital Partners III, LP v. New England Teamsters & Trucking Indus. Pension Fund, No. 12-2313 (1st Cir. July 24, 2013)] (Practical Law Company)  

Ruling Affects ERISA Compliance Issues for Private Equity Funds
"[A]t least in the states of Maine, Massachusetts, New Hampshire, and Rhode Island as well as the Commonwealth of Puerto Rico, private equity funds can be businesses. Since [their] primary purpose generally is to make a profit and since they tend to exercise some management authority over the companies in their portfolios, it strikes me that this ruling can be construed to make them (where they have 80% common ownership) a controlled group of companies." (Benefits and Compensation with John Lowell)  

'Before It's Too Late: A Retirement Security Newsletter from Phyllis Borzi', July 30, 2013 Issue
"Several years ago, the Employee Benefits Security Administration developed the abandoned plan program to facilitate a voluntary, safe, and efficient process for winding up the affairs of abandoned individual account plans so that benefit distributions are made to participants and beneficiaries. Now we are in the process of updating and improving the program. So what can you do if you have assets tied up in an abandoned plan or are trying to track down pensions or other retirement accounts? Contact one of EBSA's Benefits Advisors." (Employee Benefits Security Administration, U.S. Department of Labor)  

Detroit's Financial Woes Reveal Tension Between State Constitutions and Federal Bankruptcy Laws
"'It's not just an issue of bankruptcy law and pension law, it's also an issue of federalism,' [Paul Secunda, a Marquette University law professor who specializes in labor and benefits issues] said. 'Can a federal bankruptcy court basically ignore a state constitutional provision and allow a city like Detroit to ignore its previous promises concerning public employee pensions?'" (Montreal Gazette)  

Detroit Bankruptcy Potential Precedent-Setter on Pensions
"'If Detroit is able to impair these pension plans from workers' point of view, despite the fact that there's constitutional language preventing this, it basically is going to let workers everywhere know that they're only protected up to the assets that are set aside,' [said Robert Novy-Marx, a public pensions expert and associate professor of finance at the University of Rochester's Simon School of Business]." (U.S.News & World Report)  

New York State Regulator Steps Up Checks on Municipal Pension Funds
"New York's top financial regulator is ramping up scrutiny of state and city pension funds by using what he says is his office's little-known authority to examine public retirement systems in the state.... 'Detroit's recent financial difficulties show that rigorous oversight regarding the operations and liabilities of public pension funds are vital to protecting taxpayers and retirees, and fostering a strong business climate,' [Benjamin] Lawsky said[.]" (The Wall Street Journal; subscription may be required)  

Best Practices in Defined Benefit Plan Management
"Until recently, the most common approach to [DB plan funding and investment] decisions taken by plan sponsors could be loosely characterized as: Let's make contributions at the minimum level permitted by regulation, and let's use a growth-oriented investment approach, trusting that over time the combination of market returns and legislative smoothing will lead the plan to be fully funded at a reasonable -- and reasonably stable -- cost. That approach doesn't necessarily work anymore." (Treasury & Risk)  

Many IRA and Employer Plan Changes Included in Sen. Hatch's SAFE Act
"Given the fact that general tax reform is likely to include reexamination of the most popular tax incentives (including those for retirement), immediate consideration of such a bill in its current form does not appear likely. At the very least, however, concepts within such a bill may find their way into legislation, whether limited or sweeping." (Ascensus)  

Pension Liability Price Tag for Private Equity Funds and Their Investors
"A private equity fund may not be able to realize its target rate of return because a portfolio company cannot sufficiently grow without cash that is now redirected to support employee benefit plans. A pension plan that has invested in said private equity fund will be none too happy if performance falls short of expectations, especially for something that arguably should have (and could have) been considered and addressed as part of the original deal. An unhappy pension fund investor may turn around and sue a private equity fund for alleged failure to have properly researched 'what if' situations, taken on 'too much' risk and disclosed too little information." (Pension Risk Matters)  

Defined Benefit Plans Outperform Defined Contribution Plans Again
"From 1995 to 2011, DB plans outperformed DC plans by an annual average of 76 basis points. DB plans outperformed DC plans in 13 of the 17 years analyzed. But in 2011, the performance gap between DB and DC plans narrowed by nearly 50%, primarily due to strong DC investment results in 2009. What are the implications for finance executives tasked with making efficient use of their benefit budgets?" (Towers Watson)  

[Opinion]

Comments by Putnam Investments to DOL on Proposed Lifetime Income Illustrations (PDF)
"[Putnam] recommend[s] that the DOL consider a number of modifications to the proposed rules ... [1] Allowing greater flexibility in income projection and balance conversion methodologies so as to enable greater personalization for participants.... [2] Avoiding the establishment of rigid safe harbor methodologies and assumptions that could well calcify into de-facto industry standards and potentially undermine current and future innovation by providers intended to help participants estimate their income in retirement.... [3] Eliminating the requirement that an income amount be reported based on the participant's current balance." (Putnam Investments)  

[Opinion]

ASPPA Calls for Enhancements to Schedule C and Its Instructions
"ASPPA encourages a shift in reporting in Part I to focus solely on information about service providers that received indirect compensation and eliminate the distinction between indirect compensation that is 'eligible' for simplified reporting and indirect compensation that is not 'eligible'.... ASPPA recommends that the DOL update instructions to Part III of Schedule C to provide that the termination of a plan's accountant or enrolled actuary should be reported on Schedule C for the plan year in which the change is first reflected on either the Accountant's Opinion or the Actuarial Schedule[.]" (American Society of Pension Professionals & Actuaries (ASPPA))  

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