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September 4, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Webcasts and Conferences

Effective Wellness Plans in Employee-Owned Companies
November 5, 2013 WEBCAST
(National Center for Employee Ownership)

401(k) Plans: Beyond the Basics 2013 - Denver
October 2, 2013 in CO
(SunGard Relius)

How Will Health Care Reform Impact You in 2014?
November 13, 2013 WEBCAST
(Lorman Education Services)

Legislative and Regulatory Update with Stephen Forbes
September 18, 2013 in CA
(Western Pension & Benefits Council - Orange County Chapter)

Voluntary Fiduciary Correction Program Workshop
September 5, 2013 in OR
(Employee Benefits Security Administration (EBSA), U.S. Department of Labor)

Who's On Your Fiduciary Roster? - Recorded
September 18, 2013 WEBCAST
(Conrad Siegel Investment Advisors, Inc.)

View All Webcasts and Conferences

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

Withdrawal Liability Can Be Discharged in Bankruptcy: Good Thing to Know
"The Court ... noted that 'money that is owed to the Fund is not in the Fund, and is therefore not yet a Fund 'asset' and also noted that ... a debtor is not a fiduciary unless he was a fiduciary before the debt arose -- the failure to pay the debt cannot create a fiduciary status that did not previously exist. The Court also held that, unlike delinquent contributions, withdrawal liability could not be characterized as a plan asset because it arises by statute, not contract, and necessarily arises after the contractual relationship ends. So by its very nature, it is not a 'delinquent contribution.'" [Carpenters Pension Trust Fund v. Moxley, No. 11-16133 (9th Cir. Aug. 20, 2013)] (Fox Rothschild LLP)  


401(k) Professionals: Apply to receive your QKA credential today!

Sponsored by ASPPA

Work in some aspect of retirement plan administration? Want to specialize in the administration of 401(k) plans? The QKA credential is for you! Get your Qualified 401(k) Administrator (QKA) Credential and show that you're serious about your career!

New Mexico Court to Hear Case Over Educator Pension Cuts
"The [New Mexico] Supreme Court is to hear ... a case brought by four retirees, who say the state Constitution protects their pensions from reductions like those required under a law enacted earlier this year. The retirees contend ... they are legally entitled to the cost-of-living adjustments previously promised, which would have been 2 percent this year without the change in law.... The attorney general's office and the Educational Retirement Board ... said the Constitution includes a provision that allows pensions to be modified to preserve the solvency of a retirement plan." (Sacramento Bee)  

No Notice of Plan Termination: Is Lawsuit Attacking Termination Time-Barred?
"[If] an employer commits a fiduciary breach and engages in no cover-up, but the plaintiff waits more than six years to sue, is the breach nonetheless a non-event under the law? The answer is YES. ERISA is a carefully calibrated statute and is intended to offer plan sponsors incentives to establish plans voluntarily, and one incentive is a very favorable statute of repose for fiduciary breaches." [Laskin v. Siegel, Nos. 12-3041 & 12-3153 (7th Cir. Aug. 29, 2013)] (Seyfarth Shaw LLP)  

American Airlines Participants Banned from Trading T. Rowe Funds: Are Your Plan Participants Next?
"There are some participants in every 401(k) plan who view their account as a trading account rather than a long-term investment. Most of the participants in the American Airlines plan who were barred from trading T. Rowe Price funds had exhibited trading patterns with holding periods of less than one year. The mutual fund families have always said that frequent traders raise fund management costs for all fund investors." (Employee Benefit News)  

DOL Releases 2011 Versions of Private Pension Plan Bulletins and Form 5500 Data
See the various links for 2011 under these headings: "Reports", "Excel Tables" and "XML Tables." (U.S. Department of Labor)  


Lost Participants, Relative Search, Obituaries & Verify Death Data Instantly!

Sponsored by Pension Benefit Information, Inc.

PBI's Research Center provides Instant access to locate Participants, Relatives, review Obituaries and Access to PBI's comprehensive Death Database. Some utilities are even Free! Contact PBI today to obtain access at 415-482-9611 or email inquiry@pbinfo.com.

2013 Global Survey of Accounting Assumptions for Defined Benefit Plans
"Most long-term bond yields trended downward significantly during the year, and discount rates followed suit. Funded status remained steady for the majority of countries in this analysis. This is likely due to an increase in plan liabilities caused by the decline in discount rates, which offset any asset gains realized in these plans.... The majority of surveyed countries have implied life expectancies between 20 and 25 years. The impact of the differences in this assumption will vary depending on whether the typical payment form is lump sum or annuity." (Towers Watson)  

Pension Liability Looms Over U.S. States' Economies
"Public pension liabilities in five U.S. states could represent more than 40 percent of their local economies, according to an analysis ... by a conservative group that lowered the assumed rate of return for pensions' investments.... Ohio has the greatest shortfall as a percentage of its gross state product, at 56 percent, followed by New Mexico, at 53 percent[.]" (Reuters)  

Promises Made, Promises Broken: State Pension Underfunding Totals $4.1 Trillion
"Comprehensive research into the funded status of state level defined benefit public pension plans reveals that public employee retirement promises are underfunded by $4.1 trillion. Combined, state public pension plans are just 39 percent funded.... With their rejection of an unsatisfactory approach to calculating public pension liabilities, GASB and Moody's have joined a chorus of financial economists and other observers warning that pension funding practices are dangerous for both taxpayers and public employees alike." (State Budget Solutions)  

Issue Brief: State Hybrid Retirement Plans (PDF)
"Although a hybrid retirement plan may take one of many forms, this brief examines two broad types in use in the public sector. The first is a cash balance plan, which marries elements of traditional pensions with individual accounts into a single plan ... The second type combines a smaller traditional DB plan with an individual defined contribution (DC) retirement savings account ... Despite variability among these plans, most contain the core features known to promote retirement security: mandatory participation, shared financing between employers and employees, pooled assets invested by professionals, a benefit that cannot be outlived, and survivor and disability protections." (National Association of State Retirement Administrators [NASRA])  

Capturing Alpha with Private Equity
"Why should a pension plan investor include private equity in their portfolios? To paraphrase a famous U.S. presidential campaign theme, 'It's the Alpha, Stupid!'. High quality private equity managers have proven for over 30 years that they can generate excess returns on a risk adjusted basis. This short, insightful piece takes a look at how private equity managers generate alpha and how to pick the best managers." (Pantheon)  

Retirement Readiness: the One True 401(k) Benchmark Every Fiduciary Should Measure
"The DOL apparently feels, with some justification, that it's unfair to punish plan sponsors for outcomes not in their control. The plan sponsors are only held responsible for leading their employees to the company's 401k plan, not for getting those same employees to sip the fine water of promise offered by the retirement plan.... in the spirit of the definition of 'fiduciary' that comes from trust law (i.e., always acting in the sole interest of the beneficiary), what can -- and should -- the 401k plan sponsor be doing above and beyond the call of ERISA to meet their fiduciary duty? ... Retirement readiness is fast becoming a concept more and more plan sponsors are embracing." (Fiduciary News)  

For Financial Advisors, a 401(k) Opportunity
"[A]dvising 401(k) plans is less profitable than traditional wealth management: 25 to 50 basis points vs. 1%. But those fees aren't the end goal. Rather, by working with small, local employers, advisors say they can position themselves as a destination for rollovers and open the door for other wealth management relationships." (Financial Planning)  

The New Math of Retirement
"There have long been certain metrics ... that advisors have used in order to structure their clients' portfolios to achieve a comfortable retirement.... Unfortunately, biology, markets and politics have conspired to invalidate those assumptions.... Thanks to better health care, lifestyles and living standards, a 65-year-old man today has a 30% chance of living to 90 -- and a 65-year-old woman has a 40% chance of reaching 90 ... But will all these nonagenarians have any money left?" (On Wall Street)  

Pension Plan Immunization Strategies: How Close Can You Get?
"[T]he key elements to consider when creating an all-bond or nearly all-bond portfolio designed to fully hedge or 'immunize' the obligation to make pension payments ... include: [1] Exposure to interest rate sensitivity at different points on the yield curve, which is different from the pension liability. [2] Exposure to rates such as Treasury or swap rates, which are different from the corporate bond rates used to measure pension liabilities. [3] The net expected yield on a portfolio.... Although a perfect match with pension payment liabilities is not achievable with any strategy, carefully weighing all of these factors will help plan sponsors reach their desired objectives." (Vanguard)  

Bond Fund Investing in a Rising Interest Rate Environment
"[If] you have a relatively long investing horizon as most participants do in a Qualified Retirement Plan or if you are entering retirement in a few years, there is some upside to rising rates. [1] Coupon/interest/dividend payments will be higher on newly issued bonds. This will help the retirees and 'savers' relying on relatively safe investments to gain more income in order to cover fixed expenses and/or grow principal. [2] Assuming the bond fund is set to reinvest dividends and capital gains, then each reinvestment is buying shares at a lower price because the rise in interest rates caused the value of the underlying bonds to fall." (Schneider Downs)  

PBGC Director Gotbaum Says Lump-Sum Cash-Outs Are Like Cigarettes: Legal But Bad for You (PDF)
"Improvement is needed in the disclosures, regulations and education that warn defined benefit plan participants about the risks of taking lump-sum cash-outs, [PBGC Director Joshua] Gotbaum told a packed room at the [August 29 ERISA Advisory] council meeting.... [L]ump-sum cash-outs are cheaper than buying annuities because the market price of annuities has risen, he said. Second, regulatory guidance about offering annuities is not as clear as that for offering lump sums ... Third, some people have lost faith in all financial institutions, which makes lump sums more attractive, he said." (Bloomberg BNA Pension & Benefits Reporter, via Pension Rights Center)  

Slides and Handouts for Upcoming Meeting of National Association of Government Defined Contribution Administrators
Presentations include: 403(b) Pre-Conference Workshop; Financial Literacy and Investor Resources from the SEC; Coping with IRS 457 Audits; Increasing Participant Retirement Security; Talkin' Bout My Generation; Fees; Making Your List and Checking it Twice; Retirement Solutions for Challenging Times; Stable Value Funds; How to Retain Participants/Assets in the Plan After Separation; Roth 457/Roth Conversions; and The Yin and Yang of Retirement System Challenges. (National Association of Government Defined Contribution Administrators, Inc. [NAGDCA])  

Employee Ownership Update for September 3, 2013
"The NCEO has released the 2013 Employee Ownership 100 list, naming the nation's largest companies that are at least 50% owned by an ESOP or other broad-based employee ownership plan.... Over 400 companies have responded to the NCEO's biannual survey on executive compensation practices in ESOP companies. The deadline to complete the survey is September 4 at 5 pm (Pacific)." (National Center for Employee Ownership [NCEO])  

DOL Sues San Francisco's California Pacific Bank: Nearly $1.4 Million in ESOP Assets Allegedly Mismanaged
Excerpt from DOL press release: "The department alleges that after terminating the ESOP in 2010, the fiduciaries violated [ERISA] by failing to liquidate and distribute plan assets in cash to plan participants as required. Because the bank is not a publicly traded company, participants were left with shares of the company's stock they could not easily liquidate for cash, if at all. Agency investigators determined that the participants would have received approximately $1.24 million if the plan's 97,237 shares had been liquidated and distributed in cash at their assessed December 2009 value." (U.S. Department of Labor)  

Observers Say Cincinnati Pension Is 'A Frankenstein's Monster'
"A group of area organizers have placed a charter amendment on the November ballot that would freeze current benefits and force the city [of Cincinnati] to create a 401(k)-style defined contribution retirement plan. Depending on whose prognosis is believed, the amendment could either get Cincinnati out of the pension business and return the city to financial solvency -- or kill the patient on the operating table." (Cincinnati.com)  


Comments of National Academy of Social Insurance to House Ways and Means Committee on Chained CPI and Other Benefit Adjustments (PDF)
"The chained CPI would result in substantial benefit cuts for beneficiaries, especially as they grow older. Older beneficiaries rely more heavily on Social Security than do younger beneficiaries. NASI's public opinion research finds that, given a range of policy options, Americans prefer to gradually raise Social Security taxes and to improve benefits slightly for vulnerable groups." (National Academy of Social Insurance [NASI])  


Case Against Fidelity Regarding In-House Plan Heats Up
"The plaintiffs propose to amend the complaint in two substantive ways: adding [26 more] named plaintiffs and adding fact and class allegations regarding terms that purportedly mandate that any plan investment in mutual funds must be in mutual funds managed by Fidelity Management and Research Company.... It appears the reason to have so many in the lawsuit is to respond to Fidelity's argument in their filed Motion to Dismiss that you need a plaintiff in each fund that is alleged to be improper. The plaintiffs have gone to great lengths to add details on the all the different investment funds used by the proposed additional named plaintiffs." (FRA Plan Tools, LLC)  


The Retirement Equity Act and Beyond
"Women have made enormous strides over the past three decades, in the workplace and beyond -- and it's important to reflect on the men and women who fought for the changes that have led to greater gender equality. One of those changes was introduced 29 years ago: The Retirement Equity Act became law, ushering in important protections for America's workers and their families.... The act lowered the minimum age requirement for pension plan participation, it prevented plans from penalizing parents who took time off to raise families, it allowed pension plans to make court-ordered payments to former spouses and it mandated spousal consent for workers to waive survivor benefits. In short, it began to recognize the working patterns of women, who remain more likely to interrupt their careers to take care of a family member, and provided greater retirement protection for women throughout the country." (Phyllis Borzi via DOL Blog)  

Benefits in General; Executive Compensation

[Guidance Overview]

IRS 'Place of Celebration' Rule for Same-Sex Marriages Expands Rights and Simplifies Plan Administration (PDF)
"By the September 16, 2013 effective date, employers and plan administrators should ... [1] treat all same-sex spouses as 'spouses' for [retirement] plan purposes. This is particularly important for beneficiary designations (obtaining proper spousal consent) and paying plan benefits particularly in the event of death ... [2] If health, welfare and fringe benefits are currently provided to same-sex spouses ... stop imputing income no later than September 16, and clarify plan documents and summary plan description ... [3] If health, welfare and fringe benefits are not currently provided to same-sex spouses ... consider whether to add such benefits[.]" (Groom Law Group)  

[Guidance Overview]

The Demise of DOMA's Core: Employer Response Avenues in the Wake of Windsor (PDF)
"As a practical matter, until additional guidance is issued, definitive answers to the multifarious open issues, beyond those addressed in Revenue Ruling 2013-17, remain elusive. In addition to tax and financial implications, employers must also consider the impact of their decisions on employee relations, such as: (i) whether to extend all or some benefits to lawfully married same-sex spouses who reside in jurisdictions that do not recognize their marriage; and (ii) whether to require proof of same-sex marriages if the employer does not require proof of opposite-sex marriages." (Haynes and Boone, LLP)  

Benefits for Same-Sex Couples: Impact of the DOMA Decision
"When describing their progress in adjusting to meet new DOMA ruling requirements, 34.4% of organizations said they are currently in a wait-and-see mode, 25.4% have had initial planning discussions and 12.9% have already begun to adjust benefits. One-quarter of organizations (25.1%) have already noticed an increase in HR contacts from employees regarding the DOMA decision ... About one in eight organizations (12.1%) has already communicated effects of the DOMA decision with employees and an additional 46.3% intend to do so." (International Foundation of Employee Benefit Plans [IFEBP])  

[Guidance Overview]

Did Taxes Slay Your Last Stock Options Profits?
"While a cashless exercise is the most popular way to go, senior executives have to consider the sizable tax savings considerations to exercising non-qualified stock options early.... Now that the Medicare tax increases the maximum Federal income tax rate to 41.95% vs. 23.8% for capital gains tax, the timing on your NQSO exercise can make a big impact on your after-tax rewards." (SFG Wealth Planning Services, Inc.)  

Postal Service Inspector General Puts Retirement and Leave Benefits Under the Microscope
"The U.S. Postal Service's internal auditor is seeking private sector input on the best way to administer paid time off and retirement benefits ... The reports will 'reveal the ways in which the Postal Service could benefit from adopting the identified best practices' for its retirement and leave benefits programs, the inspector general said ... USPS spends $5 billion annually to provide paid time off for its employees ... The forthcoming audit, with the help of the IG's private sector partner, will 'inform the Postal Service whether there is an opportunity to reduce leave costs.'" (Government Executive)  

Unfunded and Unsecured: Nonqualified Deferred Comp Lessons from Kodak's Chapter 11
"Thirty years after the start of the Kodak [Executive Deferred Compensation Plan (EDCP)], Kodak filed for bankruptcy in January 2012 ... Kodak's Plan of Reorganization ... stipulates that EDCP participants with balances totaling $15 million will receive 4-5% of their earned salaries and incentive awards. Delivery will not be in cash but in common shares of the new Kodak to be issued upon the company's emergence from Chapter 11.... What warning signs were ignored by those who got stuck with amounts remaining in the plan? Probably no one event stands out more than others, but when three decades' worth of red flags are added up, the outcome seems almost unavoidable." (myStockOptions.com)  

Proposed Legislation Threatens Executive Compensation Tax Deductions
"In early August, U.S. Senators Jack Reed and Richard Blumenthal introduced the 'Stop Subsidizing Multimillion Dollar Corporate Bonuses Act' (S. 1476) in the U.S. Senate.... Specifically, the bill proposes: [1] To eliminate the existing Section 162(m) exceptions for commission payments and qualified performance-based compensation; [2] To include all current and former employees (whether or not they are or were ever executive officers) within the scope of Section 162(m); and [3] To impose the limitations of Section 162(m) to public companies subject to periodic reporting under Section 15(d) of the Exchange Act (not just public corporations with securities registered under Section 12 of the Exchange Act, as is currently the case)." (Proskauer's ERISA Practice Center)  

With the CEO Pay Ratio Rules in Sight, Will the SEC Focus Next on Pay-for-Performance Disclosure?
"[A]bout one-quarter of large U.S. companies already provide detailed disclosures of pay-for-performance alignment in their proxies and about double that number routinely assess pay-for-performance outcomes, even though many don't disclose their analyses because they're not yet required to do so.... [C]ompanies are increasingly focused on alternative pay definitions in their evaluation and disclosure of pay-for-performance alignment. Earned (realized) pay has taken the lead over other forms of pay[.]" (Towers Watson)  

Press Releases

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