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August 1, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Retirement Plan Administrator
for Capella, Inc. in ANY STATE

Absence Management Administrator
for Sandia National Laboratories in CA

Defined Contribution Consultant
for Mercer in IL

Executive Administrative Assistant
for Retirement LLC & Jennings Law Firm in IL

Pension Administrator
for GF Pension Corp. in PA

Project Manager
for Verisight, Inc. in CA

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Webcasts and Conferences

Valuation Challenges for Ongoing ESOPS
October 1, 2013 WEBCAST
(National Center for Employee Ownership)

Becoming S Corporation ESOP
October 8, 2013 WEBCAST
(National Center for Employee Ownership)

5th Annual Leadership Summit on Member Retention & Customer Service for Consumer-based Health Plans
September 19, 2013 in MA
(World Congress)

Use Automatic Rollovers and Missing Participant IRAs to Improve Retirement Plan Performance
August 21, 2013 WEBCAST
(PenChecks, Inc.)

What Trustees in Bankruptcy Need to Know About Pension Plans
September 18, 2013 WEBCAST
(PenChecks, Inc.)

Making the Case for Debit Cards in Retirement Plan Distributions
October 2, 2013 WEBCAST
(PenChecks, Inc.)

Employee Benefits Producer Training Program
September 16, 2013 in WI
(International Foundation of Employee Benefit Plans)

Fusion Forum 2013
August 21, 2013 in WA
(Pension Plan Specialists)

General Fiduciary Provisions/Conflicts of Interest
September 4, 2013 in OH
(ASPPA Benefits Council of Central Ohio)

View All Webcasts and Conferences


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

Civil Service Retirement System and Federal Employees' Retirement System: Opportunity for Annuitants to Elect Survivor Annuity Benefits for Same-Sex Spouses
"The Office of Personnel Management (OPM) is providing notice of a 2-year opportunity for annuitants who are in legal same-sex marriages to elect survivor annuities for their spouses under the Civil Service Retirement System (CSRS) and Federal Employees' Retirement System (FERS). All retirees who are in legal same-sex marriages have through June 26, 2015, to inform OPM that they have legal same-sex marriages that now qualify for recognition and to elect survivor annuities for their spouses based on their recognized marital status." (Office of Personnel Management)  


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[Official Guidance]

Text of SEC Final Rule: Broker-Dealer Annual Reporting, Audit and Notification Requirements (PDF)
316 pages. The publication date in the Federal Register has not yet been set. Excerpt: "The amendments include a requirement that broker-dealer audits be conducted in accordance with standards of the Public Company Accounting Oversight Board (PCAOB) in light of explicit oversight authority provided to the PCAOB by the [Dodd-Frank Act] to oversee these audits. The amendments further require a broker-dealer that clears transactions or carries customer accounts to agree to allow representatives of the Commission or the broker-dealer's designated examining authority (DEA) to review the documentation associated with certain reports of the broker-dealer's independent public accountant and to allow the accountant to discuss the findings relating to the reports of the accountant with those representatives when requested in connection with a regulatory examination of the broker-dealer. Finally, the amendments require a broker-dealer to file a new form with its DEA that elicits information about the broker-dealer's practices with respect to the custody of securities and funds of customers and non-customers." (U.S. Securities and Exchange Commission)  

[Official Guidance]

Text of SEC Final Rule: Financial Responsibility Rules for Broker-Dealers (PDF)
318 pages. The publication date in the Federal Register has not yet been set. Excerpt: "The [SEC] is adopting amendments to the net capital, customer protection, books and records, and notification rules for broker-dealers promulgated under the Securities Exchange Act of 1934 ... These amendments are designed to address several areas of concern regarding the financial responsibility requirements for broker-dealers. The amendments also update certain financial responsibility requirements and make certain technical amendments." (U.S. Securities and Exchange Commission)  

[Official Guidance]

Text of SEC Fact Sheet on New Rules Increasing Protections for Investors Whose Assets Are Held by Broker-Dealers (Annual Reporting, Audit and Notification Requirements)
"The new rules amend a broker-dealer reporting rule (Rule 17a-5) and the broker-dealer notification rule (Rule 17a-11) under the Securities Exchange Act of 1934.... Under the rule amendments: [1] A broker-dealer that has custody of the customers' assets must file a 'compliance report' with the SEC to verify they are adhering to broker-dealer capital requirements, protecting customer assets they hold, and periodically sending account statements to customers. The broker-dealer also must engage a PCAOB-registered independent public accountant to prepare a report based on an examination of certain statements in the broker-dealer's compliance report. [2] A broker-dealer that does not have custody of its customers' assets must file an 'exemption report' with the Commission citing its exemption from requirements applicable to carrying broker-dealers. The broker-dealer also must engage a PCAOB-registered independent public accountant to prepare a report based on a review of certain statements in the broker-dealer's exemption report." (U.S. Securities and Exchange Commission)  

[Official Guidance]

Transcript and Recording of IRS Phone Forum: 403(b) Corrections and Examination Trends
Excerpt: "The goal of this session is to provide a summary of the changes made in Revenue Procedure 2013-12 to the corrections for 403(b) Plans. Specifically, what we'll focus on is what 403(b) failures can be corrected under the Voluntary Correction Program.... While the primary focus of this session will be on Corrections under Revenue Procedure 2013-12, we also need to look back to the prior Revenue Procedure, and that's Revenue Procedure 2008-50, because that guidance will be helpful when it comes to analyzing whether a 403(b) operational failure that occurred prior to January 1, 2009, is eligible for correction." [Editor's note: The slides to which the speakers refer in this May 23, 2013 phone forum are online (click).] (Internal Revenue Service)  

[Guidance Overview]

What Are 'Reasonable Interest Rates' for Participant Loans? (PDF)
"[T]he use of a benchmark such as a prime rate is not in itself a violation of the rules, but plan sponsors must be able to demonstrate their rationale behind the rate selection. Plan sponsors can justify their selection by conducting an analysis of certain factors specific to the plan and carefully documenting and maintaining records of the process. The analysis should include a review of: (1) comparable commercial loans; (2) current market conditions; (3) artificial limitations; and (4) the rate of return." (United Retirement Plan Consultants)  

[Guidance Overview]

Proposed DOL Amendment to ERISA PTE 80-26 Could Dampen Investing (PDF)
"In virtually every type of plan service, service providers can incur losses, liabilities and out-of-pocket expenses. Indemnities by plan sponsors, account holders and others have been a feature of the vast majority of all service contracts entered by plans since ERISA was enacted.... By casting uncertainty over these commonly used risk-sharing measures, and effectively disallowing the indemnification for these standard risks, the DOL's action in amending PTE 80-26 will likely result in the restructuring of a significant number of contracts between IRA account holders and plan sponsors and the service providers of those accounts and plans." (Groom Law Group)  

In Split Vote, SEC Beefs Up Broker-Dealer Custody Rules
"Under the new requirements, a broker must file a quarterly report, called Form Custody, telling the SEC whether and how it maintains control of its clients' funds. Currently, a broker has to file an annual report about client assets over which it has custody. That document must include audited financial statements from an independent public accountant registered with the Public Company Accounting Oversight Board. The new SEC rules require that the broker allow the SEC or the Financial Industry Regulatory Authority Inc. to review the work papers of the accountant, if requested." (Investment News; free registration required)  

Annual Survey of Public Pensions (2012): State-Administered Defined Benefit Data
"The Survey of Public Pensions: State-Administered Defined Benefit Data provides revenues, expenditures, financial assets, membership, and liabilities information for defined benefit public pension systems. Data are shown by state, for the state-administered systems. There are 227 state-administered defined benefit public pension systems, all of which are represented here." (U.S. Census Bureau)  


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Pension Finance Update as of July 31, 2013 (PDF)
"Overall, July was a good month for investments. Our traditional 60/40 portfolio gained more than 3% and is up 9% so far during 2013, while a 20/80 portfolio gained 1% in July but remains down 1% so far this year.... Higher stock markets and higher interest rates are both good news for pension sponsors. So far, 2013 has delivered on both counts." (October Three)  

Change in Average 401(k) Account Balances by Age and Tenure, Updated as of August 1, 2013
Reports show change in average account balances grouped by age and tenure, from January 1, 2011 through August 1, 2013. (Employee Benefit Research Institute (EBRI))  

A Look at 2012 Defined Contribution Participant Experience (PDF)
"Participants in Large Private Sector plans have consistently higher balances than in other types of employers/plans, followed by participants in Higher Education plans. Across employer types, there is a gender gap in retirement savings: Men have higher account balances than women. Women are more likely (than men) to take a hardship withdrawal; men are more likely (than women) to take a loan. K-12 Education plans have the 'oldest' participants (average age 52.0 in 2012). Small-Mid Private employer plans have the 'youngest' participants (average age 45.6 in 2012)." (ING)  

S&P 500 Companies Post Record Level of Pension Underfunding (PDF)
"Data shows that S&P 500 defined [benefit] pensions reached an underfunding status of $451.7 billion in fiscal 2012, a $97 billion increase over the $354.7 billion posted in 2011 and a $200+ billion increase over the $245 billion posted in 2010. OPEB underfunded levels increased to $234.9 billion in 2012 from $223.4 billion in 2011 and $210.1 billion at the end of 2010. Combined, the amount of assets that S&P 500 companies set aside to fund pensions and OPEB amounted to $1.60 trillion in 2012, covering $2.29 trillion in obligations with the resulting underfunding equating to $687 billion, or a 70.0% overall funding rate." (S&P Dow Jones Indices)  

Company Pensions in Peril as Underfunding Hits Record
"Young workers may want to start counting on something other than company pensions to fund their retirements.... [T]he plans of S&P 500 companies are underfunded to the tune of $451.7 billion, a number that has grown some 27 percent in just the last year alone, according to data released Wednesday by S&P Dow Jones Indices. While firms have plenty of cash to cover older workers currently on the payroll or in pension plans, that may not be the same once the younger generation gets ready to stop working." (CNBC)  

Capital Requirements for Pension Funds in the Wake of Dodd-Frank
"Dodd-Frank's central clearing of swap contracts adds new capital requirements: initial margin and variation margin.... The new capital requirements -- both initial and variation margins -- can seem imposing, and have many plan managers concerned about the impact on their strategy.... Our analysis shows that most funds in our sample group with margin requirements of more than $1 million have ample eligible collateral, in the form of high-grade government or corporate bonds, to meet their initial margin requirements." (Northern Trust)  

PBGC Welcomes Court Decision on Private Equity Pension Obligations
"The PBGC has argued since 2007 that private equity funds are 'trades or businesses' that should be held liable for pension withdrawal liability. 'The [First Circuit Court of Appeals] ruling on private equity funds helps us protect the benefits of all plans connected to these firms,' said PBGC General Counsel Judith Starr ... 'Without it, they could walk away from benefit obligations leaving plans in poor financial shape.'" (Pensions & Investments)  

How to Quit Working and Keep Getting Paid: Securing a Paycheck Throughout Retirement
"The next wave of expected retirees want help planning a secure stream of income in retirement, according to a recent survey of U.S. retirement plan participants ... Other findings include: [1] 55% see generating a stable income as a top priority versus generating returns (27%), or preservation of capital (25%); [2] 69% believe that some sort of guaranteed monthly income stream will be necessary in addition to Social Security; and [3] 64% of respondents plan to take monthly withdrawals to cover their expenses while only 6 percent prefer a lump sum payout from their plans[.]" (State Street Corporation)  

Chicago City Deficit to Hit Nearly $1 Billion Soon If No Pension Reform
"Chicago is facing a $338.7 million budget gap in 2014 -- 27 percent below long-term forecasts and $30 million less than the hole closed a year ago -- but the bottom will drop out in 2015 without pension reform, a top mayoral aide said Wednesday. Budget Director Alex Holt said the deficit will rise to $994.7 million in 2015, when the city is required by state law to make a $600 million contribution to stabilize police and fire pension funds and start them on the road to 90 percent funding." (Chicago Sun-Times)  

'Independent Fiduciary' Advocate Matthew Hutcheson Gets 17 Years for Stealing Retirement Funds
"Matthew D. Hutcheson, a famed 401(k) fiduciary advocate, was sentenced to more than 17 years in prison today for making off with more than $5 million from his retirement plan clients. In April, after an eight-day trial, a federal court jury in the U.S. District Court for the District of Idaho found Mr. Hutcheson guilty of 17 counts of wire fraud. The criminal case is running alongside a related civil case filed by the Labor Department, also in the federal court in Idaho." (Investment News; free registration required)  

Examining the Use of Electronic Signatures for Retirement Plan Documents
"[T]here apparently is little use of e-signatures in signing retirement plan documents and amendments. Because [IRS] procedures may require every retirement plan to be amended as often as each year, use of e-signatures could make the retirement plan industry more efficient and possibly help reduce plan administration costs ... This article reviews the applicable law relating to e-signature of retirement plan documents, the reaction of the [IRS] to recent e-sign legislation, and proposes a procedure for e-signing retirement plan documents that should meet such legal requirements." (Journal of Pension Benefits)  

Defined Contribution Plan Participants' Activities, First Quarter 2013 (PDF)
"DC plan withdrawal activity in the first quarter of 2013 remained low and was similar to the prior year's activity.... The commitment to contribution activity in 2013:Q1 continued at the high rate observed in 2012:Q1.... Most DC plan participants stayed the course with their asset allocations as stock values generally rose during the first three months of the year.... DC plan participants' loan activity edged down slightly by March 2013, although it continues to remain elevated compared with five years ago." (Investment Company Institute (ICI))  

Three Retirement Variables You Can Improve
"Play around with retirement calculators enough and you will probably wish you could change your savings rate, investment returns or inflation in your lifetime. After all, a seemingly tiny improvement in these numbers will drastically increase your chances of securing a comfortable retirement. Fortunately, there are ways that you can actually change these three variables in order to improve your retirement security[.]" (David Ning in U.S.News & World Report)  

DOL Obtains Preliminary Injunction Against Kentucky-Based Plan Fiduciaries
"The U.S. District Court for the Eastern District of Kentucky on July 26 granted in part the U.S. Department of Labor's motion for a preliminary injunction against George S. Hofmeister and Bernard Tew, former fiduciaries of four Lexington-based pension plans: the Hillsdale Salaried, Hillsdale Hourly, Revstone Casting Fairfield GMP Local 359, and Fourslides Inc.... The lawsuits alleged that the defendants engaged in a series of prohibited transactions resulting in the misuse of approximately $12.1 million from the Hillsdale Salaried pension plan, approximately $22.5 million from the Hillsdale Hourly pension plan, approximately $4.4 million from the Revstone Casting Fairfield GMP Local 359 pension plan, and approximately $500,000 from the Fourslides Inc. pension plan." (Employee Benefits Security Administration, U.S. Department of Labor)  

[Opinion]

Why the Fallout from a Yale Law Professor's Letters to 401(k) Plan Sponsors Remains Radioactive
"'PBS spent all of this time and the DOL has done all of these disclosures and it's all been a big yawn, but a Yale professor puts a stamp on 6,000 envelopes and the next thing you know it has started a tempest and you've got to tip your hat,' [said Greg Carpenter, CEO of Employee Fiduciary LLC].... Certainly those 6,000 envelopes put plan sponsors on an awkward footing. If they do nothing, they fear that an eager plaintiff's attorney could use the letters as evidence they were aware of their steep fees and chose to neglect their fiduciary duties." (RIABiz)  

[Opinion]

Pension Risk-Sharing: Making It Fairer
"Theoretically, the way pensions are currently structured in the United States, sponsors bear all the risks in defined benefit plans and employees bear all the risks in defined contribution plans, such as 401(k)s. Placing all of the risks on one party or another doesn't seem like an optimal outcome. And sponsors of defined benefit plans, at least, are looking for a better arrangement -- a little in the United States, more in Canada, and a lot in The Netherlands." (Alicia H. Munnell in MarketWatch)  

[Opinion]

Paying People to Buy While Punishing Them for Saving
"Two years ago, [an] NCPA report ... detailed how today's 45- to 64-year olds are spending their money and why many of them are ill-prepared for retirement. Compared to the same age group 20 years ago, more of today's pre-retirees are paying mortgages that will go well into their retirement years. This may very well be in part due to the fact that homeownership is an overemphasized public policy goal (compared to saving), and the tax system is none to happy to help those who want to buy." (National Center for Policy Analysis)  

Benefits in General; Executive Compensation

[Guidance Overview]

Windsor Decision Brings Equal Benefits to Some Same-Sex Couples and Compliance Concerns to Employers
"Employers should check with their insurance carrier and legal counsel to determine whether state law requires the carrier to cover same-sex spouses and whether their plan document and summary plan description must be amended to reflect the extended coverage. Employers who extend coverage to same-sex spouses also will have to determine whether employees will be allowed to add a same-sex spouse to a health plan midyear based on the employees' 'change in status.' ... When employers must stop imputing income remains an open question... Employers will likely see an increase in qualified domestic relations orders ('QDROs') resulting from the dissolution of same-sex marriages." (New Jersey Chapter, Association of Corporate Counsel)  

Recent Litigation Provides Lessons for Employers and Executives on Nonqualified Deferred Compensation Plans
"In the past few years, including 2013, we have seen federal court cases that show both employers and their executives who participate in nonqualified deferred compensation (NQDC) plans how to avoid costly litigation and to obtain better protection of NQDC plan benefits in the face of certain financial risks. These risks often are exacerbated by a lack of planning for contingencies that may arise if the employer undergoes a change in control or becomes insolvent.... Two ways to help avoid costly litigation in the future are to (1) design NQDC plans with specific successor liability and change-in-control provisions and (2) fund these plans with rabbi trusts so as to lessen concerns about payouts under the plans." (Bloomberg Law)  

Press Releases

US Labor Department Renews its Memorandum of Understanding with Securities and Exchange Commission
Employee Benefits Security Administration (EBSA), U.S. Department of Labor

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David Rhett Baker, J.D., Editor and Publisher
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