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August 6, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Virtual Actuary
for The Retirement Plan Company, LLC in ANY STATE

Retirement Account Analyst
for Alerus Financial in MI

Account Manager
for Lincoln Financial Group in ANY STATE

Manager, Defined Benefit Operations
for Prudential in CT

Consulting Actuary
for Charles Schwab & Co., Inc. in OH

Team Manager Defined Benefit Operations
for Charles Schwab & Co., Inc. in OH

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Webcasts and Conferences

Communication Issues for Ongoing ESOPs
October 15, 2013 WEBCAST
(National Center for Employee Ownership)

Fiduciary Implications of Stock Drop Lawsuit in 401Ks and ESOPs
October 29, 2013 WEBCAST
(National Center for Employee Ownership)

Handling the ESOP Repurchase Obligation Seminar
October 22, 2013 in MN
(National Center for Employee Ownership)

Health Care Reform for Employers: Now What? - Scott, LA
October 16, 2013 in LA
(Lorman Education Services)

Health Care Reform for Employers: Now What? - Warwick, RI
October 16, 2013 in RI
(Lorman Education Services)

Department Of Labor Strategic Plan Outreach Webchat - Strategic Goal 4
August 8, 2013 WEBCAST
(U.S. Department of Labor)

The New GASB Pension Standards Series -- Webcast
August 7, 2013 WEBCAST
(American Institute of Certified Public Accountants (AICPA))

2013 Webinar: IRA Contributions
August 13, 2013 WEBCAST
(Ascensus)

2013 Webinar: Comparing Roth & Traditional IRAs
August 13, 2013 WEBCAST
(Ascensus)

39th Annual Conference
May 7, 2014 in TX
(SouthWest Benefits Association)

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]

Text of Revised IRS Form 5306 and Instructions (PDF)
Revised August 2013. "Sponsoring organizations, employers, or employee associations, use Form 5306 to request a ruling as to: [1] Whether a trust or custodial account agreement meets the requirements of section 408(a), 408(c), 408(p), or 408A, or [2] Whether an individual annuity meets the requirements of section 408(b), 408(p), or 408." (Internal Revenue Service)  


[Advert.]

New! ftwProposal Pro The newest addition to the ftwilliam.com Product line!

Sponsored by ftwilliam.com

ftwProposal Pro helps illustrate the best plan options from data that is entered or populated from the plan document or administration software. Contact us about the auto-solve tool, customized reports, how to maximize benefits and more!



[Guidance Overview]

DOL Reminds Plan Sponsors and Committees of Certain Fiduciary Responsibilities
"Regardless of whether and when payments to a plan's record-keeper might constitute plan assets, the DOL made the point that a plan sponsor's or committee's (or other responsible plan fiduciary's) decision to maintain an arrangement that provides payments to a plan service provider ... is subject to ERISA's fiduciary rules. The Opinion cautions plan fiduciaries that they must understand and carefully evaluate the arrangement." [DOL Advisory Opinion 2013-03A, July 3, 2013] (Epstein Becker Green)  

[Guidance Overview]

Court Ruling Creates Potential Liability for Investment Funds, May Have Broader Implications
"Although the [First Circuit's opinion in Sun Capital Partners III LP v. New England Teamsters & Trucking Indus. Pension Fund] is technically limited to withdrawal liability to a union-sponsored multiemployer pension plan under MPPAA and ERISA (and the court went out of its way to stress this point), the holding almost certainly would be extended to liability for underfunded single-employer defined benefit pension plans. There is some concern that the court's holding or analysis may be extended to other situations in other employee benefits contexts, including retirement plan non-discrimination testing across portfolio companies under common control and COBRA liability." (Goodwin Procter)  

Response to Controversial Yale Letters: An Open Letter to the 401(k) Community and a Critical Analysis of the Recent 401(k) Plan Cost Study (PDF)
"[The authors] believe that the Study's findings are not reliable as an indicator of the reasonableness of fund fees either on an aggregate industry-wide or a plan-by-plan basis or for determining whether there has been a breach of fiduciary duty in any individual case. The primary deficiencies are: [1] Failure to consider fiduciary practices that have lead to cost reductions in recent years; [2] Failure to consider plan design differences and services in relation to costs; [3] Failure to consider the impact of revenue sharing; [4] Use of outdated information; [5] Reliance on data from the Form 5500 which may be misplaced; [and] [6] Failure to consider or misapplication of other data, e.g., failure to consider the impact of ERISA accounts, assuming that plans invest in funds that bear front-end loads and use of an inappropriately limited universe of plans." (Drinker Biddle)  

A Yale of a Tale
"[A]side from the fact the study is based predominately on fee information from Form 5500 filings for the 2009 plan year, the study also appears to have limited its focus to publicly traded mutual funds and not all investments available under the plans in the study. And while the Professor rightly reminds plan sponsors that 'fiduciary duties are the most stringent imposed by law, and require administrators to act solely in the interest of plan participants', his study fails to consider a significant factor in measuring fiduciary's adherence to duties with regard to plan cost -- the value of the services the plan receives in exchange for the fees." (The Wagner Law Group)  


[Advert.]

PSCA's 2013 National Conference, Sept. 9-12, in Scottsdale, AZ

Sponsored by PSCA (Plan Sponsor Council of America)

Join leading defined contribution plan experts for keynotes presentations, workshops, roundtables, and networking opportunities at the premier industry conference of the year. Use discount code BLMDISC for an additional $150 off your registration.



What's an Appropriate Fee for a 401(k) Plan?
"Many looked to the DOL's 2012 401k Fee Disclosure Rule as a way to get more clarity on what an appropriate fee might be. In the end, the failure on the part of the DOL to provide required reporting guidelines doomed that hope.... All benchmarking services suffer from a lack of regulatory consistency in reporting fees. Unlike mutual funds, where all expenses must conform to a rigorous reporting structure, 401k plans have nothing similar. This may be about to change." (Fiduciary News)  

Piercing the Veil: Private Equity Fund Found to Be 'Trade or Business' Under MPPAA
"There is a dearth of guidance from the [PBGC] on the definition of 'trade or business' ... No regulations have been issued, and the sole guidance is a 2007 opinion letter in which the PBGC applied a two-part test to determine if a private equity fund is a 'trade or business' that could be subject to withdrawal liability.... Although the First Circuit found that the PBGC opinion letter was due a limited amount of deference, it essentially disregarded it, employing its own 'investment plus' standard ... The court explained that the 'plus' portion of the analysis was very fact-dependent, with no one factor being dispositive." (Benefits Bryan Cave)  

Chicago Sees Pension Crisis Drawing Near
"The pension fund for retired Chicago teachers stands at risk of collapse. The city's four funds for other retired city workers are short by $19.5 billion. At least one of the funds is in peril of running out of money in less than a decade. And starting in 2015, the city will be required by the state to make far larger contributions to the funds, which could leave it hundreds of millions of dollars in the red -- as much as it would cost to pay 4,300 police officers to patrol the streets for a year." (The New York Times; subscription may be required)  

Washington Post Co.'s Star Asset: A Fat Pension Fund
"But while all [of Washington Post Co.'s] assets have their merits, here is one asset that gets much less attention: its hugely over-funded pension.... That's a pension plan that owes its recipients just under $1.47 billion, but has $2.07 billion in assets -- in other words, it is over-funded by a cool $604 million." (The Wall Street Journal; subscription may be required)  

Avoid Common Pension Investment Mistakes
"A good process for constructing a pension plan's portfolio follows these steps: [1] Determine the time horizon; [2] Evaluate which asset classes to include; [3] Choose the percentage of each asset class based on risk and reward; [and] [4] Select fund managers within each asset class. Many plan sponsors start at the end of the process by asking, 'Which managers should we hire?' Based on historical research, asset allocation is literally 18 times more important than fund manager selection." (Society for Human Resource Management)  

Text of Third Circuit Opinion Affirming Dismissal of Suit Alleging Fidelity Charged Excessive Fees (PDF)
"Fidelity was a fiduciary only for purposes of administering the plan, not for purposes of negotiating or collecting its compensation. At the time of the disbursement, the fee structure was set and Fidelity lacked discretion to change it. What differentiates this case from cases in which we have held that Section 406(b) applied is the fact that Fidelity, at the time it collected the fee, had no actual control or discretion over the transaction at issue -- the price of the previously bargained-for fees." [Danza v. Fidelity, No. 12-3497 (3rd Cir. July 29, 2013)] (U.S. Court of Appeals for the Third Circuit)  

S&P 1500 Pension Plans' Funding Levels Rise to Highest Point Since 2008
"Funding levels of pension plans sponsored by S&P 1500 companies continued a strong rebound in 2013, with the aggregate deficit decreasing by $10 billion during the month of July, resulting in a $212 billion deficit as July 31, 2013, according to Mercer. The funded ratio (assets divided by liabilities) increased from 88% to 89% during July, up 15% since the end of 2012 and reached their highest level since October 2008." (Mercer)  

Funded Status of U.S. Corporate Pensions Rises to 88.2 Percent in July
"The funded status of the typical U.S. corporate pension plan in July increased 1.6 percentage points to 88.2 percent ... Year to date, the funded ratio is up 11.1 percentage points ... For U.S. corporate pension plans, the July improvement was driven by a 2.7-percent increase in assets, which was propelled by strong U.S. equity returns. Liabilities for the typical plan increased 0.9 percent as the discount rate on Aa corporate bonds fell four basis points to 4.65 percent." (BNY Mellon)  

Pension Deficits Still Widening at Top U.K. Companies
"[P]ension [plan] deficits for companies in the UK's FTSE 100 blue chip stock index grew to 43 billion pounds ($65.9 billion) at June 30 compared with 42 billion a year before, as fund assets didn't generate enough cash to cover obligations.... 'The (pension fund) deficit remains stubbornly high in spite of 21.9 billion pounds in company contributions,' LCP said in its 20th annual survey of FTSE 100 company pension [plans]." (Reuters)  

Second Quarter Performance Flat for U.S. Institutional Plan Sponsors
"Institutional plan performance was flat in the second quarter of 2013, with the median plan in the Northern Trust Universe losing about 0.1 percent, as weak returns from fixed income and international equities canceled out gains from U.S equities in the three months ending June 30. The Northern Trust Universe tracks the performance of about 300 large U.S. institutional investment plans, with a combined asset value of approximately $855 billion[.]" (Northern Trust)  

How Investor Behavior Is Redefining Performance (PDF)
"What are the forces that will shape the future of the investment management industry over the next decade? ... The future of the investment industry will be determined by the actions investors take -- healthy or unhealthy, rational or irrational.... But how are investors acting? Why are they behaving that way? Is the industry delivering meaningful value?" (State Street Corporation)  

The DB vs. DC Debate: Focus Should Be on Outcomes, Not Performance
"Richard Hiller, senior vice president [at TIAA-CREF] argues that the performance of retirement plans should be evaluated and compared on the basis of the intended objective.... Hiller believes that a well-designed defined contribution plan can deliver the same level of retirement benefits as a good defined benefit plan... '[A] lot of what's going on in the 401(k) world today is to try to make those plans more of a true retirement plan than a supplemental plan.'" (Institutional Investor)  

[Opinion]

Text of Comments by Plan Sponsor Council of America to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"PSCA does not support a mandate.... It will be helpful for the Department to explain how it determined that its authority under Section 505 permits this broad interpretation of Section 105.... The safe harbor in the intended regulation will result in a major reduction in the availability of other retirement income calculators, to the detriment of participants.... The ANPRM should be product neutral... Projections are critical to any lifetime income... [T]he Department should issue guidance relating to the provision of retirement income calculators similar to the guidance issued under Interpretive Bulletin 96-1 that relates to participant investment education." (Plan Sponsor Council of America)  

[Opinion]

Rethinking Retirement: Three Steps Employers and Congress Must Take
"First, let's aim to make the best practices endorsed by the Pension Protection Act of 2006 the new norm for all workplace savings plans. Let's go 'full-auto': auto-enrollment, re-enrollment annually, auto escalation to higher deferrals, and automatic qualified target date or balanced funds, and protection from litigation, for every workplace savings plan in America.... The second big step ... is to extend some form of workplace savings access to all working Americans. Many of the ideas proposed so far to do this, such as the auto-IRA concept or proposals for simplified 401(k)s, would actually be quite inexpensive for companies to implement.... The third action step we need to take is to lift the bar on savings rates across the workplace savings system from the roughly 7% level we've achieved today to a new baseline of 10%-Plus." (Robert L. Reynolds, President and CEO, Putnam Investments)  

[Opinion]

Comments by Pension Rights Center and National Women's Law Center to DOL on Proposals for Lifetime Income Illustrations in Pension Benefit Statements (PDF) (PDF)
"We urge the Labor Department to adopt a lifetime income calculation requirement, including joint and survivor calculations where appropriate, for defined contribution plan participant benefit statements. A lifetime income calculation for current account balances should be a requirement, not an option.... [W]e suggest that projected account balances and the accompanying lifetime income calculations be made optional, and not a requirement for benefit statements." (Pension Rights Center; National Women's Law Center)  

Benefits in General; Executive Compensation

Planning for Life During Retirement: The Middle-Income Boomer Perspective
"Middle-income Boomers expect their retirement to be defined by greater mental stimulation (63%), more physical activity (44%) and more personal satisfaction (41%), but less retiree health insurance from former employers (60%), less financial security (47%) and less care provided by family members (47%) than the retirement of previous generations.... Boomers envision retirement care of the future to include the use of remote monitoring technology (78%), independent living communities (78%), high-priced care (76%), outpatient care (74%) and long-term care insurance (72%). Nearly eight times as many Boomers (84%) prefer to receive care at home as those preferring a nursing home facility (11%) or care at the home of one of their children (11%)." (Bankers Life and Casualty Company Center for a Secure Retirement)  

Helping Key Employees Understand the Benefits of a Non-Qualified Plan
"Personal enrollment consultations by a retirement specialist can increase the benefit perception, thus the success of your non-qualified plan. During a personalized consultation, the retirement specialist should: [1] Highlight the plan details including a quick review of 401(k) plan IRS limits. [2] Ask questions to identify participation goal ... [3] Review deferral election options ... [4] Highlight the investment options.... [5] Explain distribution options.... [6] Gather beneficiary information or explain how to enter the information on the plan website." (Retirement Town Hall)  

Here's Your Chance to Provide Input to ISS
"Companies and executive compensation professionals generally have four opportunities each year to interact with ISS: Two opportunities to make general comments on ISS policies, and Two chances (maybe) to address ISS' specific findings as to their company or client. The first opportunity is open now.... The policy survey will close on September 13 and ISS will release the results at the end of September." (Winston & Strawn LLP)  

Press Releases

Survey of Employer Reactions to DOMA
International Foundation of Employee Benefit Plans

New Time & Attendance Tool Available from FutureOffice Network
Davidson Marketing Group -- FutureOffice Network

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