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September 3, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

DC Relationship Manager
Trinity Pension Consultants, Inc.
in OH

Defined Contribution Plan Administrator
Carroll Consultants, Ltd.
in PA

Defined Contribution Plan Administrator
Wells Thomas, LLC
in CT

Operations Analyst
Western & Southern Financial Group
in OH

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Webcasts and Conferences

Financing an ESOP Transaction
November 12, 2013 WEBCAST
(National Center for Employee Ownership)

2013 Fall Forum
November 18, 2013 in NV

Health Care Reform for Employers: Now What?
November 21, 2013 in IA
(Lorman Education Services)

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

Defined Contribution Industry Divided Over How to Provide Lifetime Income Information
"Industry members are debating among themselves and with [DOL] officials over explaining lifetime income calculations without leaving themselves vulnerable to lawsuits, impairing new-product development or creating unrealistic expectations for participants.... The internal debate includes whether such lifetime income spending illustrations should be mandated, and what legal safe harbor the DOL should offer when projecting account balances and converting current and projected account balances into lifetime income streams." (Pensions & Investments)  


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

[Guidance Overview]

Treasury and IRS Highlight Closed Plan DB Issues in Priority Guidance Plan
"For some time, sponsor organizations and some policymakers have been advocating a legislative or regulatory 'fix' to the 'closed group problem.' Generally, these proposals involve allowing the closed group to continue to pass the nondiscrimination test if it passed the test at the date of the initial event which, of course, it would have had to in order to comply under current law.... There is concern at IRS, however, that such a rule could be abused." (October Three)  

The Independent Fiduciary: A Brief History and Recent Developments (PDF)
"This article discusses some of the ways independent fiduciaries have been utilized to address conflicts of interest involving ERISA plans. While focusing primarily on DOL uses of an independent fiduciary in crafting both individual and, to some extent, class exemptions from the prohibited transaction provisions of ERISA, the article also considers a number of other applications.... [T]he DOL's practice necessarily guides the approaches taken by plans and their advisors outside of the DOL exemption scenario, while also suggesting potential future directions for the use of independent fiduciaries by ERISA plans." (BNA Tax Management Compensation Planning Journal, via Evercore Trust Company)  

Five Irrational Retirement Decisions
"Passing up a 401(k) match.... Missing out on retirement tax breaks.... Ignoring 401(k) fees.... Cashing out a 401(k) plan.... Claiming Social Security at 62." (U.S.News & World Report)  

How the 401(k) Revolution Created a Few Big Winners and Many Losers
"This chartbook assesses the impact of this shift from pensions to individual savings by examining disparities in retirement preparedness and outcomes by income, race and ethnicity, education, gender, and marital status. Though assets in individual and pooled retirement funds have grown faster than income in recent decades, aggregates and averages can be misleading. Retirement insecurity has worsened for most Americans as retirement wealth has become more unequal." (Economic Policy Institute)  


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.

Pension Finance Update as of August 31, 2013 (PDF)
"Pension plans saw a modest pullback in August, with asset declines outpacing liability declines. The two 'model' plans we track each saw drops in funded status of less than 1% last month, although year-to-date, 'Plan A' remains ahead 15% while the more conservative 'Plan B' is up almost 4%." (October Three)  

Sales Swing Upward Across Annuity Industry During Second Quarter 2013 (PDF)
"Industry-wide annuity sales for the second quarter rose 9.9 percent to nearly $54.5 billion from $49.6 billion in the previous quarter, but were down 1.4 percent from $55.3 billion in the second quarter of 2012. Fixed annuity sales rose to their highest quarterly level since the fourth quarter of 2011." (Insured Retirement Institute)  

Unmatched 401(k) Contributions: Are There Better Alternatives?
"[One advisor] suggests following this list of priorities: [1] 401(k) contributions that receive a full match. [2] Repayment of credit-card debt. [3] Roth IRA contributions, up to the annual limit. [4] Unmatched 401(k) contributions." (Financial Planning)  

Change in Average 401(k) Account Balances by Age and Tenure, Updated as of September 1, 2013 (PDF)
Report shows change in average account balances grouped by age and tenure, from January 1, 2011 through September 1, 2013. (Employee Benefit Research Institute [EBRI])  

First Year of Retirement: Where Does the Money Go?
"[V]irtually all of the retirement calculators require workers to guesstimate the amount they will spend in retirement. Many people lowball the figure for the first year, when new retirees outspend their expectations with celebratory trips and hobby supplies. Spending tends to slow down later, as retirees age, settle into routines and travel less." (Fidelity)  

Spain Proposes Pension Reforms Tied to Life Expectancy
"Spain is pushing for state pension reforms that would link payments to life expectancy and to economic cycles, without raising the retirement age ... The proposals, which the government [has] presented to unions ... would include de-linking pensions from inflation as of next year, tying them instead to a more complex formula that also takes into account the system's revenues." (Reuters)  

France's President Draws Heat from Business for Tax-Driven Pension Revamp
"[President Francois] Hollande's proposal to fix France's pension system -- under which working lives will be extended to 43 years by 2035 from 41 years currently -- banks on up-front savings coming from raising contributions to the system over the next four years. The plan drew squeals from executives in a country where the current government and its predecessor have increased taxes by 70 billion euros ($93 billion) in the past three years and the economy has barely grown." (Bloomberg)  

Retirement Lessons from Australia, Canada and the Netherlands
"In none of these three countries does the average worker individually bear all of the risks related to saving and investing to produce a level of retirement plan income that, combined with social security, provides a basic standard of living.... All three countries provide relatively higher retirement income for low- and middle-wage workers through their social security and universal/quasi-universal employer plans combined than does the U.S." (National Institute on Retirement Security)  


Reinventing the Concept of Retirement
"Traditionally, we work hard until we reach age 65, and then we stop working cold turkey. At least that's the theory. As life expectancy increases, however, the amount of money we need at retirement increases, for many to unattainable levels. The result is 'retirees' who continue to work, often in low-paying hourly jobs in the retail or food industries. Something is broken." (U.S.News & World Report)  


The Perverse Effects of Pension Plan Regulation
"Since the birth of [ERISA], well-meaning regulators have been building the road to [DB] perdition brick by brick. This massive construction project originally was planned to clear a path to the protection of rank-and-file employee retirement benefits.... In a sadly predictable paradox, a regulatory framework built to provide retirement income security and near-zero risk to participants rapidly is creating a system that has no guarantees at all." (Contingencies Magazine [American Academy of Actuaries])  


401(k)s Are Replacing Pensions. That's Making Inequality Worse.
"Overall, the percentage of workers participating in all employer-based retirement plans declined over the past couple decades, across all age groups. That's because the top-earning people are choosing to put a lot more money away, while those who earn less can't afford to. Retirement savings by the top fifth of income earners have risen markedly, while they've declined or risen only slightly for most everyone else[.]" (The Washington Post; subscription may be required)  


Pension Fund Divestment Is No Answer to Russia's Homophobic Policies
"A group of California state senators ... has called for California's public employee pension plans to protest Russia's homophobic laws and policies by ceasing to make Russian investments. While the senators are right to denounce Russia's assault on human rights, they are wrong to call for the divestment of the Golden State's public pension funds. The divestment of pension funds is not a proper means of advancing this or any other political protest, as meritorious as such protest may be." (Prof. Edward Zelinsky, OUPblog)  


Dispelling Public Pension Plan Myths in Canada
"64% of Canadians don't believe Canada has a good workplace pension system. Seventy-three percent of those say that employers aren't offering sufficient pension plans.... [R]ather than cutting DB pension plans, we should look at ways to ensure they can continue to contribute to the well-being of retirees. And we should look at improving the retirement system for those who lack DB coverage." (Benefits Canada)  


Canada Needs More DB Plans
"[P]ublic sector workers pay a lot for the privilege of a DB plan. They work hard, are forced to save and their pensions are managed by well-governed pension plans, allowing them to retire with a modest income which they can count on in their golden years. This isn't rocket science; it's good pension policy and we need to expand this coverage to more Canadians." (Pension Pulse)  


Lessons from San Bernardino Bankruptcy
"Some American states have over a hundred different public pension systems. Policy experts tend to view this as inefficient and advocate consolidated systems at the state level as a remedy. But the potential benefits of centralization -- lower administrative costs and more professionalization -- should be weighed against the thin empirical evidence for it and the dangers of creating a bully like CalPERS, which plays a major role in shaping policy. San Bernardino retirees would still have the right to protest pension cuts in bankruptcy even were there no CalPERS." (Public Sector Inc.)  


Enrich Your 401(k) In One Simple Move Using the Bogle Gospel
"The father of the index fund is hoping to reach the multitudes stuck in moribund 401(k)s wallowing in overpriced actively managed funds.... 'Most of the market is noise,' he [said]. 'Most people don't look out long enough to see the magic of compounding returns over the tyranny of compounding costs in which Wall Street gets 70 percent of returns.'" (Forbes)  

Benefits in General; Executive Compensation

[Guidance Overview]

IRS Details Benefit Parity for Same-Sex Spouses, but Creates Some Unpleasant Consequences
"Not all of the consequences of Federal tax recognition of same-sex marriage are positive. Under the Affordable Care Act, couples in a legal same-sex marriage now must combine their incomes for purposes of determining eligibility for premium tax credits and cost sharing on the healthcare exchanges, beginning in 2014. This may prevent some persons in same-sex marriages from receiving federal financial aid they would have qualified for, as unmarried individuals." (E is for ERISA)  

[Guidance Overview]

IRS and Treasury Recognize Same-Sex Marriage for Federal Tax Purposes Using a 'State of Celebration' Rule (PDF)
"The Revenue Ruling significantly streamlines benefit plan administration. By permitting plans to treat all legally married couples the same, regardless of their current state of residence or work, the Revenue Ruling eliminates the need for multiple benefit administration schemes at the federal level.... Notably, the Revenue Ruling and FAQs provide a different marriage recognition standard than the [DOL's] guidance regarding the [FMLA], leading to some continuing inconsistency with respect to treatment of same-sex couples." (Paul Hastings LLP)  

[Guidance Overview]

A Marriage Made in Washington: Treasury and IRS Recognize Same-Sex Marriages for Tax Purposes (PDF)
"At this time the Ruling may not be relied upon retroactively with respect to matters relating to qualified retirement plans and certain other arrangements. The IRS has promised future guidance on how Windsor and the Ruling will apply to cafeteria plans, qualified retirement plans and other tax-favored arrangements for periods prior to September 16, 2013.... The Ruling indicates that future guidance will take into account the impact of retroactivity on all taxpayers involved, including plans, plan sponsors, employers, employees and affected beneficiaries, and will provide sufficient time for qualified plans to be amended and corrected as necessary to preserve existing favorable tax treatment." (Sutherland)  

[Guidance Overview]

Treasury and IRS Issue Ruling Clarifying Tax Treatment of Employee Benefits for Same-Sex Couples
"[A] qualified retirement plan will be required to provide spousal consent rights to the spouse of an employee in a legal same-sex marriage even if the couple resides in a state that does not recognize same-sex marriage.... While the federal tax treatment for health plans has been clarified, the state tax treatment remains unclear. The Ruling does not necessarily change state tax laws regarding the treatment of same-sex couples. This could result in difficulty for employers, especially those with operations in multiple states." (Quarles & Brady LLP)  

Text of IRS Chief Counsel Memorandum on Reporting Requirements for Attorney's Fees Paid to Employee Pursuant to Settlement Agreements (PDF)
"In the absence of a specific allocation for attorney's fees in these settlement agreements, attorney's fees paid by an employer as part of a settlement agreement with a former employee, which are includable in income, are subject to employment taxes to the extent they are wages attributable to an employment-related claim. The Service's position is that payments constituting severance pay, back pay, and front pay are wages for employment tax purposes." (Internal Revenue Service)  

Defense Research Institute Submits Amicus Brief to Supreme Court Addressing ERISA Statute of Limitations
"In her brief on the merits, Mrs. Heimeshoff has argued that plans should not be allowed to impose a limitations period that begins before the claimant exhausts administrative remedies and is able to file suit because doing so could allow the limitations period to waste away while the claimant is going through the plan's administrative review process. In its amicus brief on the merits DRI supported the Hartford's position, which is consistent with well settled statutory and contractual principles that the clear terms of a plan must be upheld and that courts should not re-write unambiguous terms of a plan. DRI argued that the protections of the administrative claims process that are guaranteed through the Department of Labor's claims procedure regulations and relevant case law make the hypothetical concerns predicted by Mrs. Heimeshoff to be highly unlikely, and should they occur, the mechanism of equitable tolling employed by federal courts is an adequate means to address the matter." (Defense Research Institute [DRI])  

Florida Pension Manager Pushes Back Against Executive Compensation
"Officials at the Florida State Board of Administration [FSBA] toughened their proxy-voting stand against compensation packages for CEOs and other top executives in the past year ... According to its global proxy voting report issued in August, the FSBA, which oversees $165 billion, voted against management on 18.5% of 24,261 proposals at 2,876 U.S. companies in the 12 months ended June 30. The votes against management were down slightly (from 19%) over the previous year." (Pensions & Investments)  

New U.K. 'Employee Shareholder' Rules Incorporate Waiver of Certain Employment Claims
"Provided the necessary formalities are complied with, employee shareholders will have no right to claim for ordinary unfair dismissal, a redundancy payment, or request flexible working or leave to undertake study or training. In addition, an employee shareholder will be required to give a minimum of 16 weeks? notice of early return from maternity or additional paternity leave, rather than the standard eight and six week requirement." (McDermott Will & Emery)  

Press Releases

Principal's Zimpleman Named 2013 EBRI Lillywhite Award Winner
Employee Benefit Research Institute (EBRI)

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