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September 12, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Part Time On Call Retirement Planning Consultant
Transamerica Retirement Solutions
in AR, CA, GA, HI, MO, NJ, NY, UT

Daily Processing Distribution Client Service Associate
Alliance Benefit Group of Houston, Inc.
in TX

Employee Benefits Administrator
The National Bank & Trust Company (NB&T)
in IL

Trading & Corrections Associate
ASPire Financial Services LLC
in FL

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Webcasts and Conferences

2013 Fall Forum - Las Vegas
November 18, 2013 in NV

Health Reform - Beyond the Basics: Determining Household Size for Medicaid and Premium Tax Credits
September 25, 2013 WEBCAST
(Center on Budget and Policy Priorities)

19th Annual Funniest Celebrity Contest: Fundraiser for Pension Rights Center
September 25, 2013 in DC
(Pension Rights Center)

Compensation Data Bank (CDB) Executive Survey Results
September 17, 2013 WEBCAST
(Towers Watson)

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

Text of DOL Advisory Opinion 2013-04A: Whether Delivery of a 'Summary Prospectus' Satisfies Certain Disclosure Requirements of PTE 77-4
"PTE 77-4 does not define the term 'prospectus.' However, the summary prospectus, under the SEC's rule, must provide investors with 'key information' about a fund's investment objectives, fees, investment strategies, risks and performance. Additionally, the summary prospectus must include a legend containing an internet address and telephone number for obtaining a statutory prospectus for the relevant mutual fund free of charge. Under such circumstances, it is the Department's view that the delivery of a summary prospectus to a second fiduciary satisfies the prospectus distribution requirement solely for purposes of section II(d) of PTE 77-4." (U.S. Department of Labor)  


Practical Law Exclusive Offer for BenefitsLink Subscribers

Sponsored by Practical Law Company (PLC)

Whether you're a new or seasoned attorney, PLCEmployee Benefits & Executive Compensation provides resources to help you work smarter and faster. We cover retirement plans, health & welfare plans and executive compensation arrangements. Learn more.

[Official Guidance]

Text of DOL Grant of Individual PTE Involving UBS AG Located in Zurich, Switzerland
"Entities within UBS's Global Asset Management and Wealth Management Americas divisions that function as 'qualified professional asset managers' (QPAMs), shall not be precluded from relying on the relief provided by [PTE 84-14], solely due to the failure to satisfy the condition in section I(g) of PTE 84-14 as a result of their affiliation with UBS Securities Japan Co. Ltd. (UBS Securities Japan), against whom a judgment of conviction for one count of wire fraud (the Conviction) is scheduled to be entered in the District Court of Connecticut ... provided [certain specified] conditions are satisfied[.]" (Employee Benefits Security Administration, U.S. Department of Labor)  

[Official Guidance]

PBGC Interest Assumptions for Benefits Payable in Terminated Single-Employer Plans, October 2013
"The fourth quarter 2013 interest assumptions under the allocation regulation will be 3.00 percent for the first 20 years following the valuation date and 3.31 percent thereafter. In comparison with the interest assumptions in effect for the third quarter of 2013, these interest assumptions represent no change in the select period ... an increase of 0.40 percent in the select rate, and a decrease of 0.12 percent in the ultimate rate ... The October 2013 interest assumptions under the benefit payments regulation will be 1.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for September 2013, these interest assumptions represent an increase of 0.25 percent in the immediate annuity rate and are otherwise unchanged." (Pension Benefit Guaranty Corporation)  

[Guidance Overview]

Analysis and Recommendations of IRS Advisory Committee Regarding the Employee Plans Compliance Resolution System
"[The] Employee Plans subgroup of the ACT elected to undertake a critical review of EPCRS, including both technical and operational aspects, with the goal of identifying those aspects that have helped to make the program so successful as well those that must continue to evolve to ensure that success continues for years to come.... [The] EP Subcommittee is making [specific] recommendations [in these general areas] ... [1] Institutionalize the culture of correction for future generations of Voluntary Compliance (VC) staff. [2] Maximize VC resources to ensure that the more complex cases are directed to those with the backgrounds and experience to most efficiently resolve them.... [3] Facilitate more cost effective correction by plan sponsors by further streamlining the submission process, creating additional de minimus thresholds and expanding the use of reasonable estimates when actual data is not available.... [4] Address errors for which the practitioner community would like added clarity." (Internal Revenue Service Advisory Committee on Tax Exempt and Government Entities)  

[Guidance Overview]

IRS Is E-ager for E-filing (PDF)
"Plan sponsors filing at least 250 forms using the form count in IRS' proposed rule are likely already filing the form 5500 and Schedule SB and MB electronically under the DOL's Efast program. The effect of the proposal will be to spur more electronic filings of Form 8955-SSA under the IRS Filing Information Returns Electronically (FIRE) system.... In addition to spurring additional e-filing by plans, IRS expects to add items to the Form 5500 dealing with requirements under the Internal Revenue Code that had been removed to facilitate DOL's mandate." (Buck Consultants)  


ACI's 6th Annual ERISA Litigation Conference -- October 24-25 -- New York

Sponsored by ACI (American Conference Institute)

Advanced forum designed to bring together the nation's leading in-house experts and outside counsel for a two-day seminar geared towards developing winning litigation strategies and exploring new and emerging theories of liability from the plaintiffs' bar.

DOL to Conduct Audit Quality Study
"The [EBSA Office of the Chief Accountant (OCA)] will begin to send letters to sponsors of selected plans this month requesting the sponsor have the plan auditor send copies of the respective audit workpapers to the OCA's offices for review. Plan sponsors are expected to respond to the OCA inquiry letter within 15 days. Any questions regarding the study should be directed to the OCA offices." (Schneider Downs)  

Upcoming October 16 IRS Phone Forum: The Employee Plans Team Audit Program
"Learn about EPTA, our large case audit program. We'll cover everything from how the program originated to how we select plans for examination, to how we examine them. We'll also touch on our initiatives on internal controls and International issues. Finally, we'll discuss common issues we find on these examinations." (Internal Revenue Service)  

Pension Risk: How Much Are You Really Taking?
"One question new to the 2012 survey was, 'What downside variation on the plan funding ratio is acceptable to you?' The majority of plan sponsors (90%) responded with a figure between 0% and 10%.... [A]verage asset allocations in the DB plans we analyzed were roughly 60% equity/alternatives and 40% intermediate-term bonds, indicating a likely large mismatch between assets and liabilities and, consequently, exposure to large declines in funding ratios.... [B]oth historical and projected funding-status volatility were well beyond the 10% variability ceiling with which sponsors reported being comfortable." (Vanguard)  

Target Date Funds:The Other 401(k) Scandal (PDF)
42 presentation slides. Excerpt: "The Scandal isn't 2008. It's today. [With respect to Fund Companies:] Nothing has changed to correct 2008; Package Product for Profit; Bogus objectives; Confusing terms, like 'To' versus 'Through.' [With respect to Fiduciaries, Sponsors and Consultants:] Apathy & laziness; Breach of fiduciary duty." (Target Date Solutions)  


Free online seminar from PenChecks Trust. Register now.

Sponsored by PenChecks Trust

Understand the concerns in dealing with abandoned or terminated plans. Attend "What Trustees in Bankruptcy Need to Know About Pension Plans," a free online seminar for industry professionals. Register now.

Plan Sponsors Beware: Newsletters Encourage Frequent Trading in 401(k) Accounts
"Expect these trading newsletters to become more popular as their proponents become more skilled at marketing them. As a result, it is probably only a matter of time before some participants in your plan are trading in their accounts.... The mutual fund families will penalize participants who trade frequently in their accounts by assessing redemption fees, locking up their balances in certain funds or prohibiting them from making transfers. Participants who trade their accounts are generally unaware that the fund companies can and will take these actions." (Employee Benefit News)  

What Matters Most for Retirement Accumulations
"This exercise ... is not specifically about what [one hypothetical employee] can do to improve her situation. Rather, it concerns the broader subject of what can be done by all relevant parties: participants, companies, plan sponsors, and providers. The United States, we are told, faces a retirement crisis, with 401(k) plans being a big part of the problem. All right, fine. Let's see how to get better 401(k) results." (Morningstar)  

Blacks and Hispanics Are Falling Behind Whites in Retirement Coverage
"In 1990, black workers were almost as likely as white workers to have pensions ... Over the next two decades, blacks started falling behind whites. By 2010, only 43 percent of black workers age 26-61 were participating in an employer-based retirement plan, compared to 50 percent of white workers the same age. Hispanics, meanwhile, who already lagged behind both groups, fell even farther behind." (Economic Policy Institute)  

Federal Role in Delphi Pension Flap Confirmed; Salaried Retirees Encouraged
"A federal inspector general [has] confirmed what the employees had long suspected: that while negotiating General Motors' structured bankruptcy in 2009, federal officials played a role in the decision to make sure that most of Delphi's unionized retirees would get their full pensions, but the salaried retirees would not. That fact, combined with court orders forcing the government to turn over documents regarding the auto bailout that the government had long fought to keep secret, gives the salaried workers at least a little hope that some day they may get their full pensions back." (Buffalo News; subscription may be required)  

House Oversight Committee Hearing Addresses SIGTARP's Report on Treasury's Role in the Delphi Pension Bailout
At the link are video of the September 11, 2013, hearing, along with links to testimony by witnesses: The Honorable Christy L. Romero, Special Inspector General for the Troubled Asset Relief Program; Barbara D. Bovbjerg, Managing Director, Education, Workforce and Income Security, U.S. Government Accountability Office; A. Nicole Clowers, Director, Financial Markets and Community Investment, U.S. Government Accountability Office; Matthew A. Feldman, Partner, Willkie Farr & Gallagher, LLP; Steven Rattner, Chairman, Willett Advisors, LLC; Harry J. Wilson, Chairman & CEO, MAEVA Group, LLC; and Harvey R. Miller, of Weil, Gotshal & Manges LLP. (Committee on Oversight and Government Reform, U.S. House of Representatives)  

Text of GAO Testimony Before House Subcommittee, on Key Events Leading to Termination of Delphi Pension Plans
"[C]ourt filings and statements from GM and Treasury officials suggest that Treasury deferred to GM's business judgment on decisions about the Delphi pension plans -- that is, their sponsorship and the decision to honor existing top-up agreements.... Treasury agreed with GM's assessment that the company could not afford the potential costs of taking over sponsorship of the Delphi hourly plan, but that the company had solid commercial reasons to honor previously negotiated top-up agreements with some unions.... Treasury's multiple roles created potential or perceived conflicts of interests." (U.S. Government Accountability Office)  

M&A and Private Equity Consequences of the Sun Capital Decision
"The court made it clear that the management fee offset precluded the general partner from arguing that it entered into the management contracts ... for its own account, and not in its capacity as the general partner of PE Fund IV.... The court's opinion strongly suggests that the fee offset mechanism was the critical fact to push PE Fund IV over the line under the 'investment plus' test.... If, under Sun Capital, a private equity fund and all of its wholly-owned portfolio companies form 'one employer' for ERISA liability purposes, these entities may also be 'one employer' for purposes of tax-advantaged benefits plans compliance rules." [Sun Capital Partners v. New England Teamsters & Trucking Industry Pension Fund, No. 12-2312 (1st Cir. July 24, 2013] (Sidley Austin LLP)  

Sixth Circuit Upholds Pension Plan's Right to Stand by Employee's Choice of Benefit Calculation
"[The court stated] that their primary job was not to determine whether the pension participant ... affirmatively elected to have his pension calculated under the 'Account Balance' method -- or passively elected to use the default 'Final Average Pay' method by doing nothing. Instead, the 6th Circuit judges said they simply needed to determine whether the benefits committee acted 'arbitrarily and capriciously' in determining that [the participant] elected to use the so-called AB I method. They ruled that the committee did not, affirming an earlier decision in favor of the plan sponsor[.]" [Durbin v. Columbia Energy Group Pension Plan, No. 12-3910 (6th Cir. April 17, 2013)] (Thompson SmartHR Manager)  

Over 80 Percent of Respondents Are Exposed to Financial Scams
"[F]inancial fraud solicitations are commonplace, many Americans are unable to spot fraudulent sales pitches, and older Americans (age 65 and older) are particularly vulnerable.... More than 8 in 10 respondents were solicited to participate in a potentially fraudulent offer. And 11 percent of all respondents lost a significant amount of money after engaging with an offer. More than 4 in 10 respondents found an annual return of 110 percent for an investment appealing, and 43 percent found 'fully guaranteed' investments to be appealing. Americans age 65 and older are more likely to be targeted by fraudsters and more likely to lose money once targeted." (FINRA Investor Education Foundation)  


Yoga Lessons for Investment Fiduciaries
"Part-time habits seldom generate results.... An investment that makes sense for one portfolio may be imprudent for another organization.... Investment fiduciaries need to allocate sufficient time and energy for continuing education ... [and] understand what ineffective fiduciaries have done and avoid their mistakes, whenever possible.... Getting bogged down with details and ignoring the constructs such as prudence and loyalty could pave the way for litigation, poor performance and worse.... [K]now that your work -- if done well -- has a highly positive impact on countless individuals." (Pension Risk Matters)  


The 401(k) Industry Braces Itself for Fruits of a CalPERS Rethink
"[CalPERS], the nation's largest pension fund, already made a relatively quiet move to an all-passive equity strategy in its more microscopic and less-known 401(k)-like $1.6 billion Supplemental Income Plan.... On Monday Sept. 16, CalPERS Investment Committee at its monthly meeting will vote on its major long-term strategies dubbed its investments belief policy. The committee is voting on seminal 'belief' changes for the giant $260 billion pension fund going forward, with possibility raised of relying far more on passive funds in its accounts. Right now, the giant pension fund is 65% active and 35% passive in its equity portfolios." (RIABiz)  


Tools to Better Understand Your 401(k)
"In the interest of plain language -- whether driven by government mandate or voluntary industry compliance -- employees and retirees with 401(k)s and individual retirement accounts would be better off with clear answers to practical questions. Here are 10 basic retirement plan questions that merit clear and helpful answers, and some tips about trends and where to find answers." (U.S.News & World Report)  

Benefits in General; Executive Compensation

Text of Second Circuit Ruling on Award of Attorney's Fees Under ERISA After Settlement During Litigation (PDF)
"The present case raises the question, in part, that the Supreme Court did not resolve in Hardt: what must a party achieve or obtain to show some degree of success on the merits [that will support a grant of attorney's fees].... [In] evaluating ERISA fee applications, the catalyst theory remains a viable means of showing that judicial action in some way spurred one party to provide another party with relief, potentially amounting to success on the merits.... Where, however, the parties already have received a tentative analysis of their legal claims within the context of summary judgment, a party may be able to show that the court's discussion of the pending claims resulted in the party obtaining relief. This is in line with the underlying policy considerations of ERISA that we are to construe broadly." [Scarangella v. Group Health, Inc. et al., No. 12-2750-cv (2nd Cir. Sept. 10, 2013)] (U.S. Court of Appeals for the Second Circuit)  

Supreme Court Set to Weigh in on When a Cause of Action Accrues Under ERISA
"The Supreme Court accepted certiorari in this case to resolve the split in the circuits. Heimeshoff argues 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 potentially allow the limitations period to waste away while the claimant is going through the plan's administrative review process, forcing participants into a 'Catch-22' of having to file an ERISA lawsuit before they have exhausted their administrative remedies as required by law." (Benefits Bryan Cave)  

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