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August 5, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

National Practice Leader - US Retirement Services Practice
for Lockton Companies in ANY STATE

New Business Consultant
for The Retirement Advantage, Inc. in GA

Corporate Compliance and Legal Counsel
for Beneco in AZ

Pension Administrator II
for Beneco in AZ

Plan Administration Assistant Manager
for The Retirement Advantage, Inc. in WI

Retirement Plan Consultant
for The Retirement Advantage, Inc. in ANY STATE, WI

Internal Sales Consultant
for The Retirement Advantage, Inc. in WI

IRA Manager
for Reliance Trust Company in GA

Client Services Associate III
for Reliance Trust Company in GA

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Webcasts and Conferences

Impact of Supreme Courtís DOMA Decision on Qualified Plans
September 11, 2013 WEBCAST
(Actuarial Systems Corporation (ASC))

Small Business Health Insurance Options Program (SHOP) Overview -- Webcast
August 6, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

What the New Healthcare Law Means for Your Small Business -- Webcast
August 8, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

What is a Marketplace and How can it Help my Business in Oregon -- Webcast
August 13, 2013 WEBCAST
(U.S. Small Business Administration (SBA))

What Retirement Plan Professionals Should Know About The Health Care Reform Law
September 25, 2013 in TX
(ASPPA Benefits Council Dallas/Ft Worth)

Same-Gender Marriage Rulings: Impacts on Employee Benefit Plans Across the Nation -- Webcast
September 30, 2013 WEBCAST
(Lorman Education Services)

Recent IRS Audits: Providing Effective Opportunity; Avoiding/Correcting Defects in Loans and Hardship Withdrawals -- Webcast
August 21, 2013 WEBCAST
(American Society of Pension Professionals & Actuaries (ASPPA))

EBSA's Strategic Enforcement Plan
September 17, 2013 in MI
(ASPPA Benefits Council of Detroit)

View All Webcasts and Conferences

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

Revenue Sharing Payments as Plan Assets (PDF)
"[W]hether a revenue sharing payment is a plan asset depends on whether the plan has a beneficial ownership interest in the funds. A beneficial ownership interest requires some sort of contractual right (either express or implied) to the funds.... Whether a revenue sharing payment is a plan asset is important because the existence of plan assets helps to identify the plan's fiduciaries." (United Retirement Plan Consultants)  


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Can San Jose Cut Pensions of Current Employees?
"Most attempts to reduce pension costs, including a statewide reform pushed through the Legislature by Gov. Brown last year, spare current workers but give new hires a lower pension, delaying savings for years or decades. Critics who think underfunded and overly generous public pensions are a runaway train say there is a quicker way to brake growing costs: Give current workers lower pensions for the work they do in the future." (CalPensions)  

Lessons to be Learned From a Flawed 401(k) Fee Study
"Whether Professor Ayers follows through on his threats or not, 2013 is a good time to revisit your plan's investment menu and its fee structure and to make certain that your plan is operating properly in view of what is 'reasonable and necessary.' It may also be a good time to review your plan terms and practices to be certain that they understand what is required of them under the plans and ERISA's fiduciary duty rules so as to protect participants and to minimize grounds for fiduciary liability generally.... [T]he largest area for improvement in fiduciary governance generally tends to be the clear identification of plan fiduciaries and the delineation of fiduciary functions and responsibilities in order to limit exposure." (Benefits Bryan Cave)  

Tough Road Ahead for Plans Swindled by 401(k) Champ Hutcheson
"Mr. Hutcheson was sentenced Wednesday to 17 years in prison in Idaho on wire fraud charges. Federal prosecutors accused him of misappropriating for personal purposes $5.3 million in retirement plan assets belonging to a pair of multiple employer retirement plans ... So-called MEPs act as a retirement plan that can be used by groups of employers, provided there is no common ownership among them. Though the adviser has been ordered to remit the money to the retirement plans -- $2.03 million to G Fiduciary and $3.27 million to RSPT -- the plans and their participants aren't optimistic." (Investment News; free registration required)  

Who's Keeping an Eye on Your IRA?
"IRAs are now the biggest repositories of private-sector retirement savings in the U.S., with $5.4 trillion in assets, versus $4.1 trillion in so-called defined-contribution plans, which include employer-sponsored 401(k)s. IRAs also have fewer investor protections, their fees can be higher, and returns lower. So you need to be especially vigilant when setting up and monitoring these accounts." (The Wall Street Journal; subscription may be required)  

A New Way to Calculate Retirement Income
"BlackRock unveiled what it calls the 'Cori' index to help savers calculate how much they need to save to generate a specific lifetime income starting at age 65.... But what may be of greater help to people between the ages of 55 and 65 is a new BlackRock calculator, based on the Cori index, into which you can punch a few numbers and get a quick take on where you stand." (The Wall Street Journal; subscription may be required)  

Census Bureau Says State Pension Assets Fell in 2012
"State-administered public pension systems posted investment gains of $91.8 billion in the 12 months ended June 30, 2012, against payouts of $196.7 billion. Investment returns were down sharply from $414 billion in the previous 12 months. Total assets fell 1 percent to $2.52 trillion in fiscal 2012, a setback as pensions systems try to make up assets lost in the 2008-2009 financial crisis. State pension fund assets totaled $2.77 trillion in 2007, 9 percent above current levels." (Reuters)  

Analysis Determines Detroit Pension Funds in Better Shape Than Orr Says
"Kevyn Orr, the city's emergency manager, has estimated the underfunding of the city's two pension funds at $3.5 billion. The pension fund managers disagree, saying the funds are more than 90% funded, meaning that there are adequate resources to pay almost all future liabilities. The Bond Buyer reported Friday that Morningstar, a major investment adviser, found that the actuarial assumptions made by the two pension funds to come up with their more optimistic assessment were in line with industry practice." (Detroit Free Press)  

Postal Reform Bill Finds $6 Billion Surplus in Retirement Plans
"Changes to the way the Office of Personnel Management calculates how postal employees pay into their retirement plans could help the U.S. Postal Service dig itself out of debt by generating a $6 billion surplus. That's one of the highlights of the new Senate postal reform bill. The bipartisan Postal Reform Act of 2013 (S. 1486) ... aims to help USPS to pay down some of the $15.9 billion it owes the Treasury in outstanding debt." (Federal News Radio)  

First Circuit Holds Private Equity Fund May Be Liable for Portfolio Company's Pension Liability
"For private equity funds and their sponsors, the Sun Capital case highlights the importance of taking controlled group liability considerations into account in structuring investments. Funds should also evaluate their current exposure to the pension liabilities of their portfolio companies and consider adjustments to their ownership structures and involvement in the management and operation of their portfolio companies. Given that Sun Capital did not decide the issue of control, significant thought should be given to having any one partnership owning 80 percent of a portfolio company that has a pension plan." [Sun Capital Partners III LP v. New England Teamsters & Trucking Indus. Pension Fund, 2013 WL 3814984 (1st Cir. July 24, 2013)] (Pepper Hamilton LLP)  

Manage Your Multiple Retirement Accounts 'Holistically'
"The key is to manage [multiple retirement account] assets holistically, financial advisers say. That means applying your asset-allocation plan -- what percentage of your money you want in stocks, bonds and alternative investments -- across all of your and your spouse's retirement savings." (The Wall Street Journal; subscription may be required)  


A Federal Plan to Avert the State and Local Government Pension Crisis
"[T]he program would essentially serve as an insurance agency.... [C]ities, and perhaps states, would be permitted to sell bonds to cover their pension liabilities, with the federal government guaranteeing repayment. Participants would pay fees -- a kind of insurance premium -- to finance the program, so there would be no net cost to Washington.... [In] exchange for what would amount to federal bond insurance, the cities would have to agree to certain reforms of their pension and health care programs for current and former workers. At a minimum, those reforms should include a single national standard for projecting returns on pension investments -- remarkably, there isn't one -- and negotiated reductions in current benefits." (The New York Times; subscription may be required)  


Five Reasons Not to Contribute to Your 401(k)
"[1] You don't have an emergency fund.... [2] Your employer doesn't match contributions.... [3] You're swimming in debt.... [4] You fear future tax increases.... [5] Lack of flexibility and high fees." (MarketWatch)  


Operational Implications of a Floating NAV Across Money Market Fund Industry Key Stakeholders (PDF)
"The purpose of this paper is to explore the dramatic cost and operational impact of what might seem to be a small change in share price accounting protocol. The research in this paper examines the compliance costs across key stakeholders within the [money market fund (MMF)] industry if all MMFs changed to a floating [net asset value (NAV)]. We believe that the loss of economies of scale associated with a dual system of pricing some funds on a fixed NAV basis and others on a floating NAV basis -- as the SEC has proposed -- would be more expensive and complicated than the costs and system upgrades described in this paper." (Center for Capital Markets Competitiveness (CCMC), U.S. Chamber of Commerce)  


Text of Comments by Towers Watson to DOL on Proposals for Lifetime Income Illustrations in Pension Benefit Statements (PDF)
"We are concerned that a mandate will lead to an overly complex notice that will not be particularly useful to plan participants and might leave participants with the often incorrect impression that the plan will pay an annuity. Furthermore, we are concerned that a mandate may result in plan sponsors doing less than they might otherwise (or currently) do in this area out of concern for conflicting with mandated information or for exposing themselves to risks." (Towers Watson)  


Text of Comments by Jane White to DOL on Proposals for Lifetime Income Illustrations in Pension Benefit Statements (PDF)
"The communication must take into account assets in participants' rollover accounts and at previous employers, not just the balance at the current employer.... The projected income stream should be based on the assumption of a long lifespan and modest investment returns; otherwise the projections could be overly optimistic.... [T]he projection should deduct estimated taxes that will be owed when people take distributions.... [T]he vast majority of participants would benefit from software that not only takes the 'big picture' of all of their retirement savings but advises them on how much to save to achieve retirement security based on their current savings and how many years until they are scheduled to retire." (Jane White for Retirement Solutions, LLC)  


Text of Comments by Milliman to DOL on Proposals for Lifetime Income Illustrations in Pension Benefit Statements (PDF)
"We suggest the addition of a statement that individuals wishing to make direct withdrawals from their account instead of annuitizing their account should plan to withdraw roughly one-third less than the amounts illustrated or risk exhausting their account during their lifetime.... We propose that it is important to mention the payment of taxes.... There should be a convention for rounding the monthly values to avoid an implied level of precision in the calculations." (Milliman)  


Text of Comments by SIFMA to DOL on Proposals for Lifetime Income Illustrations in Pension Benefit Statements (PDF)
"We believe that regulatory efforts to encourage additional education should promote a range of approaches to help participants understand the lifetime income that is generated from their defined contribution account balance. While individualized benefit statement illustrations are one method, they are not the only way to engage participants at different points in their careers. Relying on one method may lead to a decline in the breadth and quality of educational tools now available to participants[.]" (Securities Industry and Financial Markets Association (SIFMA))  


Text of Amicus Brief of American Benefits Council and U.S. Chamber of Commerce to Fourth Circuit in Tatum v. RJR Pension Investment Committee (PDF)
"In this case, Appellant and his amici propose a radical interpretation of the 'prudent man' rule under ERISA that cannot be derived from ERISA and, if ad opted, would threaten the creation and maintenance of employee benefit plans. In particular, their proposed new interpretation would create an unworkable standard for fiduciary responsibility, thus creating uncertainty for fiduciaries, inviting litigation even where the decisions of the fiduciaries have clearly been prudent, unnecessarily putting fiduciaries at risk of personal liability, raising the cost of administering employee benefit plans (including the insurance or indemnification needed to enable fiduciaries to serve), and thus discouraging the formation and continued maintenance of employee benefit plans." [Tatum v. RJR Pension Investment Committee et al., No. 13-1360, (4th Cir., filed Aug. 2, 2013] (American Benefits Council)  

Benefits in General; Executive Compensation

[Official Guidance]

DOL Announces 'Strategic Plan Outreach' for 2014-2018, Will Provide Series of Webchats
From Secretary of Labor Thomas E. Perez: "We are updating the Department's Strategic Plan. The development and implementation of the Plan will reinforce our priorities and reaffirm and hone the Department's mission to ensure access to opportunity for all.... I urge all DOL stakeholders to actively participate in the development of the Department's Strategic Plan by reviewing our proposed strategies and providing your feedback and comments about the direction we are taking." [EBSA is participating in a publicly available "webchat" on Aug. 8 at 2 p.m. Eastern time, entitled "Strategic Goal 4: Secure Retirement, Health, and Other Employee Benefits and, For Those Not Working, Provide Income Security." More information is online.] (U.S. Department of Labor)  

[Guidance Overview]

IRS and Treasury Officials Provide Informal Views on HDHPs, 401(k) Plans, and More
"[T]he [JCEB] report's 22 Q&As, which cover a wide range of issues, including questions about defined benefit pension plans, annuity distributions, ESOP loans, nonqualified deferred compensation arrangements under Code sec. 409A, and Code sec. 457(b) plans of tax-exempt employers. (Interestingly, the officials declined to answer a question about merging a 401(k) plan that allows Roth contributions with one that does not but indicated that they expect to be able to respond next year.) While the answers in the report do not necessarily represent IRS or Treasury policy, they provide helpful insight regarding the issues addressed." (Thomson Reuters / EBIA)  

Clawbacks in Word, Not Deed
"[I]n the almost 10 years since clawback policies became a hot topic among investors, there is little indication that they have resulted in significant recoveries. High-profile cases occasionally emerge -- Ina Drew, the former head of JPMorgan Chase's chief investment office, returned some pay after the disastrous losses she oversaw in the London whale matter. But examples like these are few and far between. So some investors are taking up the issue again." (The New York Times; subscription may be required)  

Press Releases

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