EmployeeBenefitsJobs.com logo BenefitsLink.com logo

BenefitsLink Retirement Plans Newsletter

August 9, 2013          Get Health & Welfare News  |  Advertise
         Past Issues  |  Search

Employee Benefits Jobs

Benefits Manager
for Montgomery County Government, Maryland in MD

Manager, Account Management
for Lincoln Financial Group in IN

HIPAA Specialist-Aurora, IL
for Unite Here Health in IL

Retirement Plan Administrator
for Small quality-oriented firm in CA

VP, Business Development
for Prudential in CT

Client Service Consultant / Team Leader
for Rapidly growing financial advisory firm with a national presence in NC

Post Your Job

View All Jobs

RSS feed for jobs RSS Feed: All Jobs

Webcasts and Conferences

Elevate Your Expertise: Self-directed Retirement Conference
October 21, 2013 in TX
(Retirement Industry Trust Association (RITA))

Hidden Employee Benefits Liabilities in Private Equity Portfolio Companies -- Recorded Webcast
August 23, 2013 WEBCAST
(Morgan Lewis & Bockius LLP)

401(k) Plans: Beyond the Basics 2013 - A 2-day seminar, 6 Cities, September - October
September 11, 2013 WEBCAST
(SunGard Relius)

Health Care Reform for Employers: Now What? - Akron, OH
October 17, 2013 in OH
(Lorman Education Services)

Health Care Reform for Employers: Now What? - Timonium, MD
October 24, 2013 in MD
(Lorman Education Services)

West Coast Defined Contribution Conference
October 27, 2013 in CA
(Pensions & Investments)

"Advanced Cross-Tested Plans: Adding More Tools," 12 Cities, September - October
September 11, 2013 WEBCAST
(SunGard Relius)

Succession Planning: Keys to Selling your Financial Advisory Practice -- Webcast
August 14, 2013 WEBCAST
(Advisor Successions, LLC)

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]

EBSA Moves Forward with Plan for Use of Focus Groups and Survey Regarding Pension Benefit Statements; Seeks OMB Approval
"This new [Information Collection Request under the Paperwork Reduction Act] seeks OMB approval to conduct a survey and an experiment on participants in an existing household American Life Panel (ALP) via the Internet and to conduct four focus groups of non-panel members. The survey and focus groups would explore whether information contained in sample benefit statements can be presented in a way that improves recipients' understanding of the statements and helps them better plan for retirement. Specifically, the EBSA would collect data through four focus groups that will pretest the model benefits statements, each containing slightly different information, and a survey of 2,900 ALP respondents. For additional substantive information about this ICR, see the related notice published in the Federal Register on January 22, 2013 (78 FR 4458)." (Employee Benefits Security Administration (EBSA), U.S. Department of Labor)  


DATAIR! More Choices -- Better Guidance -- Less Cost

Sponsored by DATAIR Employee Benefit Systems, Inc.

Documents, SPDs, Amendments, Administrative Forms
401(k)/Profit Sharing, 403(b), DB and Cash Balance Plans
(888) 328-2474    Sales@DATAIR.com    www.DATAIR.com

[Official Guidance]

PBGC Announces Enhanced Features on Self-Service Web Site for Plan Participants
"MyPBA (My Pension Benefit Account) is our secure online service that lets you, the participant, handle certain common transactions with PBGC. Participants in PBGC-trusteed plans can use PBGC's fast, free, and secure online service tool to apply for pension benefits, update contact information, adjust federal income tax withholding, and more.... [T]he new MyPBA recently got a facelift complete with features designed to give participants a more convenient option to calling the agency's Customer Contact Center. Some of the new and improved items include: [1] login; [2] registration; [3] email communications." (Pension Benefit Guaranty Corporation)  

[Guidance Overview]

Empty Heads Are No Excuse When Dealing with Revenue Sharing
"Following [DOL Advisory Opinion 2013-03A], employers are on notice that they must be able to at least answer the following questions regarding their 401(k) and other defined contribution plans ... Do any of your investment funds generate revenue sharing? ... If you have an agreement on revenue sharing, you must be able to answer the following questions. Do you have an ERISA account or budget? ... Is your ERISA account established within your plan trust or is it part of an omnibus account maintained by your record keeper? ... What expenses can be paid from your ERISA budget? ... Who approves the expenses and makes the fiduciary determination that the expenses are reasonable? ... If amounts remain unused in an ERISA account at the end of the year, is the excess allocated to participants? ... Do you track and confirm that your ERISA budget was used as agreed?" (Warner Norcross & Judd LLP)  

[Guidance Overview]

Restructuring a Cross-Tested Plan, Part II
"If a plan is restructured into component plans, may each component plan be tested on a different basis (e.g., one component tested on a benefits basis [cross-tested] and the other component tested on an allocation basis)? ... If one component satisfies nondiscrimination on a benefits basis (cross-tested) and another component satisfied nondiscrimination on an allocation basis, may the plan limit the minimum gateway requirements to the cross-tested component? ... May a plan use restructuring for purposes of the minimum participation requirements (DB plans)?" (SunGard Relius)  

Statement of Carolyn W. Colvin, Acting Commissioner of Social Security, on Payments to Same-Sex Couples
"Social Security is now processing some retirement spouse claims for same-sex couples and paying benefits where they are due.... We continue to work closely with the Department of Justice. In the coming weeks and months, we will develop and implement additional policy and processing instructions. We appreciate the public's patience as we work through the legal issues to ensure that our policy is legally sound and clear." (Social Security Administration)  


Evaluating Your Third-Party Administrator: Are You Getting What You're Paying For?

Sponsored by Lorman and BenefitsLink

Identify key areas for identifying and evaluating proper plan administration. Covers both retirement and health and welfare plans. Registration discount for BenefitsLink readers.

More on Private Equity Funds and Retirement Plans
"[T]he holding company usually does not bother itself with the administrative details ... of its portfolio companies' businesses. It leaves them to the individual companies. Who cares? ... [A]ll of the companies should care. They are part of a controlled group of corporations now. That means that unlike what they did when they were separate self-contained entities, they now must perform their nondiscrimination, coverage, and minimum participation testing on a controlled group basis." (Benefits and Compensation with John Lowell)  

Private Equity Fund Deemed a Trade or Business, May Be Liable for Pensions of Its Portfolio Companies
"In the court's view, an important factor in establishing [Sun Capital Partners'] status as a trade or business was that it derived non-investment returns from the portfolio company." [Sun Capital Partners III, LP v. New England Teamsters and Trucking Industry Pension Fund, 2013 WL 3814984 (1st Cir. July 24, 2013)] (Pillsbury Winthrop Shaw Pittman LLP)  

Five Must-Do's as Age Wave Bears Down on the U.S.
"This demographic tidal wave that has awakened city planners [in Austin, Texas] is washing across the USA, raising concerns about health challenges, adequate housing, mobility for seniors and simply ensuring that this swelling population can live fulfilling lives. The number of Americans 65 and older is likely to more than double in the next 50 years, and experts say that in some ways, we need to begin remaking America to meet the challenges of future generations." (CIO Today)  

Text of District Court Opinion Invalidating Plan's Definition of Normal Retirement Age as Five 'Years of Service' (PDF)
"Plaintiffs ... allege that the [Retirement Benefit Accumulation Plan for Employees of PriceWaterhouseCoopers LLP ('RBAP')] violates ERISA's vesting and accrual standards by defining its 'normal retirement age' as five years of service.... ERISA section 3(24) defines normal retirement age as ... the earlier of -- (A) the time a plan participant attains normal retirement age under the plan, or (B) the later of -- (i) the time a plan participant attains age 65, or (ii) the 10th anniversary of the time a plan participant commenced participation in the plan.... Simply put, as a matter of plain text and ordinary language, the RBAP NRA is not an 'age.' ... Because it violates ERISA, the RBAP NRA must be excised as the mechanism for determining 'the time a plan participant attains normal retirement age under the plan.'" [Laurent v. PricewaterhouseCoopers LLP, et al., No. 06 Civ. 2280 (S.D.N.Y. Aug. 8, 2013)] (U.S. District Court, Southern District of New York)  

Assessing Retirement Readiness: Tips for ERISA Plan Fiduciaries (PDF)
"Without establishing a base line of their participants' retirement readiness, the fiduciaries will be unable to develop meaningful communication campaigns, assess the effectiveness of their decisions, or determine whether or not their vendors are meeting their expectations.... If fiduciaries don't quantify the extent to which a communication campaign changes their participants' retirement readiness, they won't be able to accurately assess the campaign's effectiveness." (Investment Horizons, Inc.)  

Text of PBGC Brief in Opposition to Renco's Motion to Dismiss PBGC's State Law Claim of Fraud (PDF)
"PBGC sought to terminate the plans before the transaction closed. Aware that PBGC was initiating plan termination, Renco misrepresented to PBGC that no transaction was imminent, that no transaction currently under consideration involved Renco's equity in RG Steel, and that Renco would consider entering into a standstill agreement with PBGC. Relying on these misrepresentations, PBGC suspended its termination efforts. Renco closed on a transaction the very next business day, removing Defendants from RG Steel's controlled group. Within five months after Renco removed RG Steel from its controlled group, RG Steel failed and liquidated. PBGC terminated the pension plans and filed this action against Defendants.... Contrary to Defendants' arguments, the Second Circuit has recognized that garden-variety fraud claims are not preempted, even when the fraud occurs in the context of an ERISA-regulated plan. This Second Circuit precedent should be dispositive here." [PBGC v. Renco, No. 13 Civ. 621 (S.D.N.Y., complaint filed 1/28/2013); additional information about the case is here.] (Pension Benefit Guaranty Corporation)  

Roth Reigns: Young Workers Taking a Different Path to Retirement Savings
"In the first quarter of 2013, nearly 17 percent of workers under age 30 are picking a Roth 401(k) defined contribution plan when employers offer it, up from about 15 percent last year ... Overall, 10 percent of the 2 million participants in a select group of defined contribution plans managed by Wells Fargo are choosing to invest through a Roth 401(k) this year, up from 8.9 percent in 2012. Also, 27 percent of employers in the Wells Fargo study now offer the Roth plan, up 5.3 percent from last year." (Workforce; free registration required)  

Michigan's New Income Tax on Pensions Challenged in Court
"Extending the income tax to pensions was part of a tax overhaul adopted by the Legislature in 2011 that scrapped the Michigan Business Tax. People born after 1945 started paying taxes on pension income last year. The lawsuit claims the state broke a promise made in writing to retirees. The lead plaintiff is a retired school teacher who says state-managed pension funds for teachers and state employees made the promise in their official guidelines and tax information forms." (Michigan Radio)  

Cypen & Cypen Newsletter, August 8, 2013
Article titles include: [1] Pension Plan Funding Levels Increase; [2] Leakage in 401(K) Plans Is a Crisis; [3] Despite Recent Hardships, Public Workers Have a Lot To Be Happy For; [4] But State Government Employment Hits 8-Year Low; [5] Florida Retirement System Posts Strong Investment Performance; [6] Social Security Statements Available Online; [7] Research Highlights Importance of Securing Reliable Income in Retirement; and [8] Daughter Cashed Dead Mother's Checks for Nearly 20 Years. (Cypen & Cypen)  


Text of Comments by AFSCME to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"We believe it is essential for plan participants to understand the approximate level of lifetime income that would be provided in retirement based on their current account balance. It is also important that this information on a mandatory basis. AFSCME does not believe it is appropriate for benefit statements to anticipate future contributions to one's plan." (American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME))  


Asset Smoothing in Detroit's Pension Plans
"Asset smoothing might have had some useful purpose in the 1990s when double-digit earnings growth developed lower contribution levels that conscientious actuaries back then worried wouldn't be able to be raised after the inevitable market correction so they manipulated asset values lower to maintain level contributions.... [P]ublic plans have no need for this type of chicanery except to gull an already innumerate public. Governments have the ultimate contribution smoothing method at their disposal: without any funding rules they can arbitrarily name their contribution amount and that number can even be $0 in the worst-funded plan." (Burypensions)  


Text of Comments by AARP to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"We do not anticipate that requiring these illustrations and the disclosures that must accompany them will impose anything more than a nominal cost to employers and plan administrators.... We strongly believe that including both current and projected balances would be most useful, especially for younger savers.... [F]or a married saver an income illustration showing the surviving spouse's benefit from a joint and survivor annuity would also be an important feature... Adding this [to] the income illustration need not be more burdensome for the employer or the plan administrator if they are allowed to base the employee's marital status on the worker's federal income tax filing status." (AARP)  


Text of Comments by Institutional Retirement Income Council to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"[L]ifetime income illustrations and projections should be mandated as part of the participant statements.... [T]he regulation should mandate a set of assumptions in order to obtain consistency.... [W]e propose that ... the retirement age used in all cases should be the Social security retirement age for the individual.... [T]he information should be included in quarterly benefit statements provided to the participants rather than sent as a separate notice." (Institutional Retirement Income Council (IRIC))  


Text of Comments by AFL-CIO to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"The AFL-CIO strongly supports displaying a lifetime income stream derived from the participant's account balance on the benefit statement provided by an individual account plan.... [W]e believe the Department should require this information in the benefit statement.... The AFL-CIO urges the Department to limit the display to a single lifetime income stream illustration using only the current accrued balance, projected to normal retirement age for those participants who are younger.... Benefit illustrations based on future accruals that might or might not occur are unrelated to the purpose of the benefit statement and speculative given the high degree of uncertainty about future contributions." (AFL-CIO)  


Text of Comments by National Institute on Retirement Security to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"NIRS believes that it is important for the Department to make sure that the safe harbor assumptions produce likely outcomes that would be realistic estimates for all employees. For those individuals who would like to see benefit projections based on more aggressive assumptions, those can be completed with often just a few clicks on a website." (National Institute on Retirement Security (NIRS))  


Text of Comments by Buck Consultants to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"Congress has considered this issue of lifetime income in the past. The fact that legislation has been proposed suggests that Congress believes that the Department does not have the authority to regulate on this topic without Congressional mandate.... [We] encourage delaying this requirement until authorized by legislation.... Any mandate by the Department also will result in increased costs that will in many cases be passed along to participants -- further depleting the funds that will be available to them for retirement. Even if the employer picks up the cost, there will likely be an impact to employees because the total dollars allocated for benefits is generally limited." (Buck Consultants)  


Text of Comments by State Street Global Investors to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"[W]hile we support the concept of helping participants gain perspective on their future monthly income potential based on a current balance and an end-state balance, we believe the proposed approach to monthly income projections is just one step and the participant messaging should be carefully crafted to explain that there is room for error based on the uncertainties that a relatively long time horizon for these projections may entail." (State Street Global Investors)  


Kentucky Fried Pensions
"This new book by Chris Tobe, a former trustee of the $14 billion Kentucky Retirement Systems and the first public pension whistleblower to file a complaint with the SEC's Office of the Whistleblower, focuses upon corruption at public pensions.... Tobe establishes a link between corruption related to pension investments and corruption related to underfunding in Kentucky and Illinois. The central thesis is that pension cultures that are willing [to] look the other way regarding unsavory investment dealings will go along with bogus pension funding schemes as well." (Edward "Ted" Siedle, in Forbes)  


Text of Comments by CIEBA to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"CIEBA agrees that providing participants with lifetime income information would be beneficial to employees to help them better prepare for retirement. However, CIEBA believes that the Department should encourage -- but not require -- plan sponsors to provide illustrations of how account balances translate into lifetime income streams.... CIEBA is concerned that mandating a specific approach to retirement income disclosure may disenfranchise the innovation that has already occurred in this area and discourage future innovation. A mandate also disadvantages companies who have voluntarily invested in infrastructure to support income projections using a different approach." (The Committee on Investment of Employee Benefit Assets)  


Professor Ayers' Letter is Legitimate Cause for Concern by Retirement Plan Sponsors
"Business owners -- both large and small -- should support the DOL's 'definition of fiduciary' re-proposal. In the interim -- until all 'retirement plan consultants' are held to ERISA's strict fiduciary standard, plan sponsors remain at risk. The courts are increasingly approving class action claims against plan sponsors on the basis of excessive fees within the mutual funds contained in the plan.... [P]lan sponsors (who are fiduciaries) should not ever rely upon a non-fiduciary retirement plan consultant." (Ron Rhoades)  

Benefits in General; Executive Compensation

[Official Guidance]

DOL Extends Nominations Deadline for 2014 ERISA Advisory Council (PDF)
"[EBSA] continues to solicit nominations to fill five three-year vacancies on the Advisory Council on Employee Welfare and Pension Benefit Plans, known as the ERISA Advisory Council. The deadline to submit nominations has been extended to Sept. 6.... Nominations are being accepted for one vacancy each to represent the fields of employee organizations, employers, accounting, insurance and the general public. Interested persons or organizations may nominate qualified individuals for membership." (Pensions & Investments)  

Pentagon Finalizing Plan to Provide Benefits to Same-Sex Military Spouses
"Defense Secretary Chuck Hagel has issued a memorandum to senior department officials, outlining a plan that could provide same-sex spouses of military members with benefits such as health care and housing subsidies by the end of August. The plan would also give military members in same-sex relationships up to 10 days of leave to travel to a state in which they can legally marry ... The proposal is currently under review by the Justice Department." (Government Executive)  


Congress Should Close Tax Loopholes on Executive Compensation
"[The] Stop Subsidizing Multimillion Dollar Corporate Bonus Act ... aims to close massive loopholes in a 1993 bill that limited deductibility on certain executives' pay up to $1 million, with exceptions for so-called performance-based compensation. [That] bill ... has been a near-complete flop because of corporations' successful efforts to find work-arounds.... Congress' Joint Committee on Taxation estimates the [new] legislation would add more than $50 billion to federal coffers over 10 years by capping the amount of deductible salary at $1 million per employee and eliminating the exception for compensation such as non-equity incentive plans, stock options and stock-appreciation rights." (The New Haven Register)  

Press Releases

Connect   LinkedIn   Twitter   Facebook
BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
Phone (407) 644-4146
Fax (407) 644-2151

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

Copyright © 2013 BenefitsLink.com, Inc. but feel free to forward this newsletter if done without modification in any way.

All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of that content. You may not alter or remove any trademark, copyright or other notice from copies of the content.

Links to Web sites other than those owned by BenefitsLink.com, Inc. are offered as a service to readers. The editorial staff of BenefitsLink.com, Inc. was not involved in their production and is not responsible for their content.

Useful links: