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BenefitsLink Retirement Plans Newsletter

August 26, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Regional Sales Manager
for ASPire Financial Services LLC in IL, MA, NH, NY

Inside Sales Desk Manager
for ASPire Financial Services LLC in CO

401k Internal Wholesaler
for ASPire Financial Services LLC in CO

Account Manager
for The Newport Group in NC

Director, Implementation & Conversions
for The Newport Group in FL

Implementation Specialist
for The Newport Group in CA, FL, TX

401(k) Administrator
for Nicholas Pension Consultants in CA

401(k) Plan Administrator
for Qualified Pension Services, Inc. in MO

Legal Director
for Pension Rights Center in DC

Pension Plan Administrator
for Total Benefit Services, Inc. in CA

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Webcasts and Conferences

Small Business Health Insurance Options Program (SHOP) Overview
September 19, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

Health Care Reform for Employers: Now What?
November 14, 2013 in CT
(Lorman Education Services)

Advanced Cross-Tested Plans: Adding More Tools
September 20, 2013 in IL
(SunGard Relius)

Behavior Economics/Social Security Seminar
September 19, 2013 in MA
(ASPPA Benefits Council of New England)

Healthcare Reform Challenge: Improving Depression Care
August 26, 2013 WEBCAST
(Wellness & Prevention, Inc.)

2014 Retirement Industry Conference
April 9, 2014 in IL

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]

IRS Expands Asset Information on New Form 5498 and Releases New Form 5306
"The IRS recently issued a new draft of the instructions for 2014 Forms 1099-R and 5498. While the draft Form 5498 has yet to be released, the draft instructions indicate significant changes to the way IRA investments will be reported on Form 5498. These changes are slated to take place in 2014." (Groom Law Group)  


QKAs: Take the next step towards achieving professional success!

Sponsored by ASPPA

The QPA credential shows that you've moved beyond basic DC administration and have knowledge regarding defined benefit plans. Employers seek professionals with a QPA because it confers an advanced level of experience with plan administration.

The Impact of a Retirement Savings Account Cap (PDF)
"Simulation results for 401(k) participants assuming no defined benefit accruals and no job turnover show that more than 1 in 10 current 401(k) participants are likely to hit the proposed cap sometime prior to age 65, even at the current historically low discount rate of 4 percent. When the simulation is rerun with higher discount rate assumptions closer to historical averages, the percentage of 401(k) participants likely to be affected by these proposed limits increases substantially." (Employee Benefit Research Institute [EBRI])  

T. Rowe Bans Some American Airlines Employees from Fund Trading
"T. Rowe Price Group has permanently banned about 1,300 American Airlines employees from trading among its funds in their 401(k) retirement plans, a rare move to curb 'collective' trading by subscribers to an investment newsletter. About 800 additional employees have received warning letters about their trading patterns ... An American Airlines spokesman said the company in its role as plan sponsor has acted appropriately. Despite the ban, all plan participants still can put new payroll deductions into T. Rowe Price's funds or cash out of them ... They cannot trade among the four T. Rowe Price funds in the plan, which has about 26 other investment choices." (Reuters)  

CalPERS Pushed to Invest Through Minority Firms
"CalPERS is not investing enough money through minority-owned firms, two trade associations and several money managers say, and some want a legislative audit of 'unfair' decisions, particularly for lucrative private equity funds. The complaints caused CalPERS, which regards itself as an historic leader in investing with minority firms, to respond with plans for better communication with minority firms and a task force to look for ways to identify firms that will be successful." (Calpensions)  

Can Municipal Pensions Be Cut Back? Judge to Rule on San Bernardino Bankruptcy
"Most observers expect federal bankruptcy judge Meredith Jury to rule that cash-strapped San Bernardino ... is eligible for Chapter 9 protection, a year after it declared bankruptcy having effectively run out of cash to meet its day-to-day obligations. A city of just 240,000, San Bernardino could be a precursor for what is shaping up as a central issue in the far bigger bankruptcy case of Detroit: whether an insolvent city can cut already-promised pensions for its workers and pay less into its public retirement funds." (Reuters)  


Best Practices in Designing Behavior-Changing Financial Wellness Programs - October 10 Webinar

Sponsored by Lorman and BenefitsLink

Learn how to move the needle in your employees' financial wellness, with best practices from successful employer programs, as well as how to make a significant impact on individual employees through applied behavioral finance techniques. Registration discount for BenefitsLink readers.

Private Lobbying Groups for Cities, Counties Get Public Pensions in at Least 20 States
"[H]undreds of lobbyists in at least 20 states ... get public pensions because they represent associations of counties, cities and school boards ... Legislatures granted them access decades ago on the premise that they serve governments and the public.... But several states have started to question whether these organizations should qualify for such benefits, since they are private entities in most respects[.]" (The Washington Post; subscription may be required)  

Bridging the Gap in Pension Participation: How Much Can Universal Tax-Deferred Pension Coverage Hope to Achieve?
"In light of the declining pension coverage of low-income workers, policy makers have discussed requiring all employers to offer individual retirement accounts, similar to defined contribution plans. How likely to participate are workers who currently do not have access to a pension plan? ... [The authors] find that currently uncovered low-income workers are fairly likely to participate in a newly offered plan, yet they are much less likely to do so than currently covered workers." (Nadia S. Karamcheva, Geoffrey Sanzenbacher, via SSRN)  

Battle Looming on DC Plan Disclosure of Lifetime Retirement Income
"With the [DOL] considering new rules informing retirees of how long their assets will last them in retirement, now comes the issue of mandating exactly what lifetime retirement income to disclose, and how to disclose it. On one side is the insurance and annuities industry, which believes the DOL is doing workers a favor by showing them how long their retirement assets would last under a guaranteed income program -- a product they happen to sell. On the other side is the mutual fund industry, which says the DOL is taking too narrow an approach and misleading investors and retirees about their assets and incomes in retirement." (InsuranceNewsNet.com)  

Target Date Mutual Funds Average Performance vs. Benchmarks, through June 30, 2013 (PDF)
"For the YTD period ending 6/30/13, commodities were by far the worst performing asset class for the trailing 1, 3, 5 & 10 year periods. The spread between conservative and aggressive TDFs, the best and worst performing TDFs and the average TDF performance vs. the S&P 500 have not only expanded, but exceeded prior ranges." [Page includes chart of Average Target Maturity Fund performance by quarter, 2008-2013, as compared to various benchmarks.] (Center for Due Diligence)  

Target Date Mutual Funds Asset Class Return Drivers, through June 30, 2013 (PDF)
Chart of Asset Class performance for Target Date Mutual Funds by quarter, 2008-2013. (Center for Due Diligence)  

Target Maturity Funds: Report for Second Quarter 2013 (PDF)
"In the second quarter of 2013, the average target maturity fund lost 0.6%.... Funds with exposure to commodities, emerging market equities, and TIPS suffered the most this past quarter, as those asset classes experienced sharp losses between 7-to-10% in the quarter. For the 12 months ended in June, the average target maturity fund returned 11.9%, thanks to strong equity returns during the period." (Ibbotson Associates, Inc. via Center for Due Diligence)  

Higher Earnings Limit Applies for Social Security Benefits at Age 66
"[A] special one-year rule ... applies to earnings during the first year of retirement.... [A]n individual can get a full Social Security check for any whole month a person is retired, regardless of the yearly earnings prior to claiming benefits. For 2013, a person who is younger than full retirement age for the entire year is considered retired if his or her monthly earnings are $1,260 or less. The monthly limit is 1/12th of the 2013 annual earnings limit of $15,120.... Once that individual reaches full retirement age, the earnings restrictions disappear completely." (InvestmentNews)  

Targeted Communication Helps Engage Participants
"Developing a 12-month communication plan is a great way to ensure that you are providing frequent messages about your ESOP to participants. The communication plan is a roadmap that will help you focus your efforts throughout the year.... As you review your communication plan for the year, you should keep in mind that not all participants will be interested in every activity you have planned.... One way to target communication is according to tenure at the company." [Originally published in ESOP Report newsletter, from The ESOP Association.] (The Principal Financial Group)  

BenefitsLink Regrets an Error in Friday's Newsletters: Our Headlines About IRS Form 3922 and Its Instructions
The BenefitsLink Retirement Plans Newsletter for Friday, August 23 linked to the revised IRS Form 3922 and its Instructions, for use by sponsors of Employee Stock Purchase Plans in certain circumstances, but our headlines used the wrong name for the form. They mistakenly referred to ESOPs, not to Employee Stock Purchase Plans. We are very sorry for the error! (BenefitsLink.com)  


Political Investing Harms Public Pension Funds
"Investor activism aimed at increasing shareholder value is appropriate. But a growing amount of it is intended to further social policies rather than returns.... Putting public funds in the activist arena in this way strikes me as seriously bad policy. As the comptroller of public accounts for the state of Texas, I have to manage billions of dollars in taxpayer money, and I have a fiduciary obligation to achieve the very best returns possible. This is a rock-bottom, non-negotiable duty that goes with the office." (Susan Combs in The Wall Street Journal; subscription may be required)  


Text of Comments by ASPPA to IRS on 403(b) Plan LRMs
"The IRS should amend LRM 24 to clarify that for purposes of determining whether a 'Severance from Employment' has occurred, 'Related Employer' status is determined under the definition contained in LRM 22.... LRM 65 should be amended to clarify that any nonvested amounts that must be credited to a separate account and treated as a separate contract ... [require] appropriate separate recordkeeping entries (i.e., separate accounting) and not physical segregation or investment in a separate insurance contract or custodial account." (American Society of Pension Professionals & Actuaries [ASPPA])  

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