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August 28, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

ERISA/Benefits Attorney
for New York City Law Firm in NY

Daily Trader - Temporary
for Mercer Advisors Inc. in AZ

Retirement Platform Manager
for New York Life Retirement Plan Services in MA

Manager, Health and Welfare Administration
for Buck Consultants in AZ

Defined Contribution Plan Administrator
for Interactive Retirement Systems, Ltd. in MN

Plan Compliance Consultant
for T. Rowe Price in MD

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Webcasts and Conferences

401(k) Questionnaire Final Report
September 17, 2013 WEBCAST
(McKay Hochman Co., Inc.)

2013 403(b) Update
September 19, 2013 WEBCAST
(McKay Hochman Co., Inc.)

2013 Fall Forum
October 28, 2013 in TX

Affordable Care Act 101 for Small Business
September 26, 2013 WEBCAST
(U.S. Small Business Administration (SBA))

Health Care Reform for Employers: Now What?
November 19, 2013 in CA
(Lorman Education Services)

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]

VCP Submission Fees Include New Discounts
"Form 8951 was created for the calculation of fees for a VCP submission and contains the [a fee schedule] and all the discounts ... that are available for specific failures, including some new discounts.... [This article includes] a chart of the special discounts found on Form 8951. These discounts are available if the only failure that has occurred is the one subject to the discount." (McKay Hochman)  


DATAIR! New Features Flexible Pricing Module Integration

Sponsored by DATAIR Employee Benefit Systems, Inc.

Proposals, Testing, Administration, 5500s, 1099Rs, Plan Documents
401(k), New Comparability, 403(b), Non-qualified Plans
(888) 328-2474Sales@DATAIR.comwww.DATAIR.com

[Guidance Overview]

PBGC Premiums: Reading the MAP-21 Fine Print
"The variable rate premium is based on the amount of unfunded vested benefits (UVB). The UVB is the excess, if any, of the premium funding target over the fair market value of plan assets.... However, the calculation of the premium funding target is unaffected by the higher MAP-21 interest rates. Therefore, the premium funding target will be significantly higher than the plan's liability for purposes of minimum funding." (Retirement Town Hall)  

[Guidance Overview]

Partial Plan Terminations Revisited
"[D]uring an IRS audit of a plan that experienced a partial plan termination, an IRS agent required the employer to fully vest all participants who terminated during the plan year in which the partial termination occurred. The full vesting requirement was imposed regardless of whether the basis for the termination was voluntary or involuntary.... [The authors] discussed this issue with the author of Revenue Ruling 2007-43, and confirmed it is the author's (and the IRS's) position that once it is determined that a partial termination has occurred all plan participants who terminated their employment during the 'applicable period' ... for any reason must be made 100% vested." (McKay Hochman)  

Courts, Not IRS, May Be Ultimate Arbiter of Church Plan Exemption (PDF)
"Recent Internal Revenue Service rulings on the 'church plan' status of retirement plans sponsored by large hospital systems, including a ruling apparently received by the Saint Peter's Healthcare System Retirement Plan, indicate that the IRS is disinclined to modify its long-standing interpretation of [the] church plan exemption ... '[T]he real fight for those who believe the IRS has been getting this wrong for decades is going to be in the courts. I wouldn't be surprised at all to see the Supreme Court being the final arbiter,' [said one practitioner]." (Bloomberg BNA Pension & Benefits Reporter via Pension Rights Center)  

Some Pension Funds Embrace Riskier Assets
"Among 224 large corporate pensions studied by Fitch, plans were on average 8.5% invested in illiquid 'Level 3' assets, a significant boost from 7.8% at the end of the year-earlier period. Some 66 of those plans held illiquid assets worth more than 10% of their plans, which Fitch says is concerning. 'Plans with more than 10% of assets in Level 3 assets may call for further investigation, because these include relatively illiquid holdings,' Fitch said[.]" (The Wall Street Journal; subscription may be required)  


Don't miss out on the eSeminar Summer Special! Registration ends 8/31.

Sponsored by McKay Hochman

McKay Hochman provides a comprehensive retirement plan resource for financial institutions and TPAs. We offer plan documents, compliance support services, continuing education, online resource library, and more. Visit www.mhco.com for details.

Foreign Retirement Plans Seen Scrutinized in U.S. Effort
"The U.S. has been pushing banks and individuals to report overseas assets, making it tougher to hide money abroad with new rules and penalties rolling out under [FATCA]. The next wave of scrutiny will cover retirement accounts ... Foreign retirement plans generally must agree to report their U.S. account holders to avoid a 30 percent withholding tax on U.S.-sourced interest, dividends and proceeds from the sale of securities beginning July 1. Global companies with programs overseas will need to catalog their funded retirement plans to figure out which ones may be exempt[.]" (Bloomberg)  

401(k) Plan Balances Held Steady, Deferral Rates Increased in Second Quarter
"At the end of the second quarter, the average 401(k) balance remained relatively steady over the previous quarter, ending at $80,600, and up nearly 11 percent from $72,800 during the second quarter 2012. For employees who were continuously employed and in a 401(k) plan for the last 10 years, the average balance rose to $211,800, up nearly 19 percent from a year ago. Additionally, for the past four years, more employees increased their 401(k) deferral rate than decreased it." (Fidelity Investments)  

No Money Damages for Participants Challenging Alternative Pension Investments
"A group of participants challenging Weyerhaeuser Co.'s defined benefit plan investment strategy can proceed with their claims for equitable relief, but they lack standing to seek monetary damages for an alleged $2.4 billion in plan losses ... The proposed class action alleged that plan fiduciaries' decision to invest more than 81 percent of plan assets in alternative investments such as hedge funds and private equity caused the plan to lose $2.4 billion in 2008 alone. The lawsuit presents relatively novel claims, given that most challenges to investment choices and strategies have taken place in the context of defined contribution plans, rather than defined benefit plans[.]" [(Palmason v. Weyerhaeuser Co., No. 2:11-cv-00695-RSL (W.D. Wash. Aug. 23, 2013)] (Bloomberg BNA)  

How Has the Financial Crisis Affected the Consumption of Retirees?
"The crisis had little effect on those 40 percent with very small amounts of financial assets and the top 5 percent with very large amounts. In contrast, the broad middle class did experience declines in consumption: At one extreme, households that invested in short-term deposits and tried to live off the interest saw significant declines. At the other extreme, investors in balanced portfolios who gradually drew down their wealth lost more modest amounts." (Center for Retirement Research at Boston College)  


ESOP Company Symposium, Ownership Solutions for ESOP Companies

Sponsored by NCEO (National Center for Employee Ownership)

The ESOP Symposium is a three-day event in Minneapolis, MN on Oct 22-24, 2013 where you will hear from leading experts and with their guidance work through issues specific to established ESOP companies in structured interactive sessions.

The Search For Missing 401(k) Money
"There are tens of thousands of workers who are due lost 401(k) money, but there is no one central depository where you can look for what's rightfully yours. Thankfully, the [PBGC] is finally getting around to asking how it can help -- only seven years after Congress instructed it to do so as part of the Pension Protection Act of 2006.... The Investment Company Institute surveyed its members and those that responded reported lost 401(k) account balances ranging from $2 to $72,304. The average of the highest account balance numbers provided by the members who provided data was $42,380." (Forbes)  

Six Things to Worry About in Your 401(k)
"You took the automatic deferral rate as a recommendation.... You picked a great fund -- ten years ago.... Your future is leaking away.... You are ignoring your 401(k).... You are obsessing over your 401(k).... You are not thinking about income." (Seeking Alpha)  

New York's Rates for Required Local Government Contributions Decline for First Time in Five Years
"Rates paid by government employers outside New York City for the fiscal year that starts April 1 will fall to 20.1 percent of wages from 20.9 percent for most employees, and to 27.6 percent from 28.9 for police and firefighters ... [Comptroller Thomas DiNapoli said,] 'Strong investment performance, along with revision in actuarial smoothing, has lowered the employer contribution rate.'" (Bloomberg)  

Judge Speeds Hearing on Detroit Bankruptcy Eligibility But Delays Pension Issues
"[Federal Judge Steven Rhodes] said he would delay hearing objections to the bankruptcy that center on potential cuts to retiree pensions, which unions and retiree groups argue are protected by the Michigan state constitution. The judge wrote in his order that he 'appreciates the extraordinary importance of the pension rights,' but he will not consider arguments about potential cuts to pensions until after he decides whether the city is eligible for bankruptcy." (Reuters)  


Do Today's Guaranteed Living Benefit Annuity Riders Really Offer Enough to Be Worthwhile?
"[At] the most basic level, using income guarantees is a 'floor with upside' approach to investing for retirement income.... Yet in today's environment, the combination of lower prospective returns and higher annuity costs is presenting a troubling new alternative: that guaranteed income riders no longer [represent] a 'floor with upside' but instead are a floor that will be almost impossible not to fall down to and hit.... [If] there really is little upside to the income guarantee, then it may be more appealing to skip the guaranteed living benefit rider altogether and instead just buy a single premium immediate annuity for a comparable guarantee and invest the rest, or just invest and spend conservatively using a safe withdrawal rate approach and simply ride out any intervening market volatility!" (Michael Kitces in Nerd's Eye View)  


Saving Pensions Will Require Unions to Face Reality
"[As] a nation, we are currently on track to pay more money each year in pensions to retired government workers than we pay in Social Security to everyone else.... This is not a valid social contract.... There are really two primary issues that ought to be the focus of debate: [1] What is a realistic rate of return, after adjusting for inflation, for pension funds over the next 30 years? [2] If you don't believe that pension funds are going to continue to deliver 7% returns, 4% real returns after inflation, year after year for the next three decades, do you fix the system by converting participants to an adjustable defined benefit, or by converting participants to a 401K?" (California Public Policy Center)  


The Conspiracy for Failure in 401(k) Plans
"Employees need to know how much their 401(k) plan costs and what high costs might mean, long-term, for their retirements.... [Y]ou might be better off in a low-cost employer plan that has no employer match than in a high-cost employer plan with a generous match -- that's how destructive high costs can be." (Houston Chronicle)  


Mispricing Annuities, Then and Now
"In London, England, almost two centuries ago a very clever chap by the name of John Finlaison wrote an urgent letter to the chancellor of the British Exchequer, imploring the government to change the way it priced and sold life annuities to the public.... You would think that governments and pension and insurance industries would learn to reduce mispricing errors and better manage their risks by now.... [N]ow history has been repeating itself with variable annuities. This time around it isn't human longevity that's causing problems. Rather, it is human rationality that is rupturing the pricing models." (ThinkAdvisor)  

Benefits in General; Executive Compensation

ERIC Releases Results of Poll on Benefits Offered to Same-Sex Couples
"ERIC President and CEO Scott Macey [said,] '[N]early 3/4 of the ERIC members who responded to our poll have not yet decided how to handle the benefits of spouses of same-sex marriages in states that do not recognize such marriages. For most of these employers, guidance from the government is crucial.'" (The ERISA Industry Committee [ERIC])  

Expected SEC Rulemaking Puts Pay Ratio, Pay for Performance Back Into Focus
"Expanding on comments by Chair Mary Jo White in late July, SEC Director of Corporation Finance Keith Higgins indicated in a recent speech that pay ratio will be one of the top three rules the Commission will propose this fall. However, he said that there were still many difficult issues to work through, especially whether the Commission will seek to define 'all employees' broadly or narrowly and how median employee compensation will be calculated." (HR Policy Association)  

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