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September 19, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

DC Administrator
Summit Benefit & Actuarial Services

Operations Supervisor
Austin Capital Retirement Plan Services, LLC
in TX

Regulatory Consultant
The Standard
in OR

Client Relationship Manager
United Retirement Plan Consultants
in CO

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Webcasts and Conferences

Health Care Reform for Employers: Now What?
December 3, 2013 in WA
(Lorman Education Services)

The Employee Plans Team Audit Program Phone Forum
October 16, 2013 WEBCAST
(Internal Revenue Service (IRS))

What Retirement Plan Professionals Should Know About the Health Care Reform Law
September 25, 2013 in TX
(American Society of Pension Professionals & Actuaries (ASPPA))

Account-Based Plans Under Health Care Reform: New Guidance on Individual Policies, Integrated HRAs, and More
October 24, 2013 WEBCAST
(Thomson Reuters / EBIA)

Latest Developments Regarding 409A
November 4, 2013 WEBCAST
(Winston & Strawn)

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 Employee Plans News, September 18, 2013 (PDF)
Articles include: [1] Modified Favorable Determination Letter 2002 won't include the adoption dates for plan documents or amendments for certain applications; [2] DB Mass Submitter Plan deadline is extended -- to January 31, 2014; and [3] Proposed Regulations would require electronic filing for Forms 5500 and 8955-SSA for filers submitting 250 or more returns. (Internal Revenue Service)  


Don't miss the ASPPA 2013 Annual Conference at Natl. Harbor, MD!

Sponsored by ASPPA

Attend ASPPA's Annual Conference to inform Congress that they can't overlook pension issues! Registration includes: visits to Capitol Hill, 70+ sessions on topics shaping the industry, networking with 1,500+ retirement plan professionals, and more!

[Guidance Overview]

Exercise Caution When Using a Pre-Approved 'Governmental' Retirement Plan
"Generally speaking, a governmental employer can complete, execute, adopt and utilize a pre-approved plan without the necessity of obtaining its own favorable determination letter regarding the plan's tax-qualification from the IRS. However, as with so many things, life is not always that simple. Here are a few cautions and concerns that public agencies that utilize such plans, particularly in California, should be aware of[.]" (Focus on Public Benefits)  

Are These Fees Unreasonable?
"What makes a fee reasonable or unreasonable? As we all know, there is no definitive guidance provided by ERISA and the Department of Labor. Instead, we are left to make the determination based upon the facts and circumstances at hand.... [This infographic describes] the 95th percentile of fees entered into [the firm's benchmarking] system for Investment Advisory Services ... What this means is that 95% of the retirement plans in [the firm's] system pay at or less than [these] amounts[.]" (FRA PlanTools, LLC)  

Pension Funds Paying More for External Managers, Despite Lower Fees
"External management fees now make up 90% of total fund expenses, compared with 83% ... in 1998. Funds in the survey -- which includes public and corporate pension plans, foundations and endowments, and other tax-qualified plans -- spent an average of 54 basis points of total assets to operate their plans in 2012. Average total expenses are up 50% since 1998, and external management fees are up 55% during the same period. Non-management external adviser fees, such as consultants, actuaries and legal counsel, are also up 115% since 1998, but only make up 5% of total fund expenses." (Pensions & Investments)  

Pension Funding Relief Is Tempting But the Price May Be Too High in the Long Run
"The dramatic decline in interest rates since the 2008 financial crisis has played havoc with the funding levels of corporate defined benefit plans, raising required minimum contributions and forcing difficult decisions.... MAP-21 brought much needed relief through a revised method for setting liability discount rates. These new discount rates greatly reduce required minimum contributions, but they lead to an interesting question: Are plan sponsors better off under the new contribution rules?" (Pensions & Investments)  


Compliance, Legislation and Litigation -- SWBA/IRS Annual Conference - Nov. 7-8 - Dallas, TX

Sponsored by SouthWest Benefits Association

Staying up to date in the challenging world of employee benefits has never been more critical to the success of benefits professionals and their companies. Attending the SWBA/IRS Employee Benefits Conference is the most cost-effective way to stay informed.

Federal Employee Thrift Savings Plan to Begin Recognizing Same-Sex Marriages
The retirement savings program for federal employees is changing its policies on spousal rights to include same-sex marriages performed in a jurisdiction that recognizes such marriages.... In the 401(k)-style TSP, certain loan and withdrawal decisions require the consent of a spouse, and on the death of an account holder, the funds automatically go to a spouse if the investor did not designate a different beneficiary." (The Washington Post; subscription may be required)  

Legally-Married Same-Sex Couples Get Retirement Boost from DOL
"In reality, had the agency decided to go with recognizing marriages based on where couples reside, the validity of spousal elections and consents on plans could change if the spouses were to move to a jurisdiction that didn't recognize their marriage. This would be an administrative nightmare for record keepers, as they'd have to keep track of changes in residence and tweak their benefits accordingly." (InvestmentNews)  

French Pension Reform Leaves Big Drain on Finances
"The pension reform ... is aimed at plugging a pension deficit expected to reach 20.7 billion euros ($27.6 billion) by 2020 if nothing is done. But government documents sent to lawmakers together with the pension bill indicate the deficit for public-sector workers' pensions would fall by only 800 million euros under the reform. As a result the state budget will have to absorb a shortfall of 7.9 billion euros, instead of 8.7 billion without the reform[.]" (Reuters)  

U.K. Watchdog Proposes Shake-Up of Poor Value Pensions
"Concerns over value for money, the ability of pensions to provide meaningful retirement income and whether employers and trustees are choosing the right pensions for staff, have discouraged many workers from parting with their cash. [The U.K. Office of Fair Trading (OFT)] and the Pensions Regulator have agreed to ... look at which trust-based schemes, currently managing around 10 billion pounds of pensions savings, could be failing members in these ways. They are also looking into high fees charged to members of older contract and bundled trust schemes with around 30 billion pounds of savings. The OFT estimates that members in pre-2001 schemes pay annual management charges some 26 percent higher than members of schemes launched after this date." (Reuters)  


Winston & Strawn Compensation and Benefits Training Programs

Sponsored by Winston & Strawn, LLP

W&S offers more than 30 customizable Employee Benefits and Executive Compensation training programs. W&S partners are adjunct professors at 3 law schools and regularly provide on-site or web-based training. View this brochure for more information.


Tax Reforms Should Not Favor DB Plans Over DC Plans
"[A]ll forms of qualified deferred compensation provide the same tax benefit: the benefit of deferring tax on compensation until distributions are taken in retirement. Workers get this benefit from both [DC] plans and from [DB] plans, from both employee contributions and employer contributions. Yet the two most prominent tax proposals for retirement plans affect only DC plans ... [and] would arbitrarily punish workers based on how their employer structures their deferred compensation.... [The] proposals would hit workers in the private-sector (where DB plans are increasingly rare) harder than government workers (where DB plans still are the norm)." (Investment Company Institute [ICI])  


Text of Comments by DCIIA to SEC on Proposed Money Market Reforms (PDF)
"[I]nvestors in defined contribution plans do not present a risk of mass redemption that may arise with institutional investors. DCIIA therefore respectfully requests that the Commission consider expanding the proposed retail exemption to permit redemptions, without limitation and without the imposition of fees and gates, by investors through a participant-directed defined contribution plan. DCIIA believes that this would eliminate the communication and operational challenges faced by sponsors of defined contribution plans resulting from the Proposal and allow the continued inclusion of prime money market funds as an investment option for defined contribution plans." (Defined Contribution Institutional Investment Association [DCIIA])  


Text of Comments by Financial Services Institute to SEC on Proposed Money Market Reforms (PDF)
"In general, [FSI remains] opposed to additional MMF reforms. While the SEC's arguments in favor of reform appear to be well-researched, FSI finds them ultimately unpersuasive. In addition to the increase in operational costs to investors, funds, and intermediaries, the SEC has inadequately addressed the widespread disruption likely to occur in the wake of additional regulations[.]" (Financial Services Institute [FSI])  


Text of Comments by The Committee of Annuity Insurers to SEC on Proposed Money Market Reforms (PDF)
"Proposals should be limited so that they do not negatively affect variable insurance contracts. This can be done, for most but not all variable contracts, by exempting those money market funds that only sell their shares to insurance company separate accounts from both Alternatives." (The Committee of Annuity Insurers)  

Benefits in General; Executive Compensation

[Official Guidance]

Text of SEC Proposed Rule: Pay Rate Disclosure (PDF)
162 pages. Excerpt from SEC summary: "The proposed rules ... are designed to comply with the statutory mandate and to address commenters' concerns regarding the potential costs of complying with the disclosure requirement.... [We] are proposing alternatives that we believe will reduce costs and burdens, while preserving what we believe to be the potential benefits, as articulated by commenters, of the disclosure requirement mandated by the Dodd-Frank Act. We note, however, that neither the statute nor the related legislative history directly states the objectives or intended benefits of the provision.... We have considered the statutory mandate of Section 953(b) in the context of other executive compensation disclosure under Item 402, and, where practicable, we have sought to make the mandated disclosure of Section 953(b) work with the existing executive compensation disclosure regime. In light of the significant potential costs articulated by commenters, we believe that it is appropriate for the proposed rules to allow registrants flexibility in developing the disclosure required by the statute." (U.S. Securities and Exchange Commission)  

[Official Guidance]

SEC Fact Sheet on Proposed CEO Pay Disclosure Rules
"As required by the Dodd-Frank Act, the proposal would amend existing executive compensation disclosure rules to require companies to disclose: [1] The median of the annual total compensation of all its employees except the CEO. [2] The annual total compensation of its CEO. [3] The ratio of the two amounts.... The proposed rule would not specify any required calculation methodologies for identifying the median employee in terms of total compensation for all employees. Instead, it would allow companies to select a methodology that is appropriate to the size and structure of their own businesses and the way they compensate employees.... The proposal will be subject to a 60-day public comment period once it is published in the Federal Register." (U.S. Securities and Exchange Commission)  

[Guidance Overview]

Pay Ratio Disclosures Made Simple
"The proposed pay ratio disclosure requirements specify that the ratio must be expressed as a ratio in which the median of the annual total compensation of all employees is equal to one, or, alternatively, expressed narratively in terms of the multiple that the [principal executive officer (PEO)] total compensation amount bears to the median of the annual total compensation amount. For example, if the median of the annual total compensation of all employees of a registrant is $45,790,39 and the annual total compensation of a registrant's PEO is $12,260,000,40 then the pay ratio disclosed would be '1 to 268'[.]" (Dodd-Frank.com, a blog by Leonard, Street and Deinard)  

[Guidance Overview]

SEC Approves Proposed Rule on CEO Pay Ratio Disclosure (PDF)
"It seems likely that the SEC will adopt a final rule sometime in the first quarter of 2014, making it unlikely that the CEO pay ratio disclosure will apply to the bulk of the 2014 proxy season." (Meridian Compensation Partners, LLC)  

[Guidance Overview]

CEO Pay Ratio Rules Provide Significant Flexibility for Companies
"Companies need not calculate the precise Summary Compensation Table total compensation ... number for every employee. Instead, employers would be able to use a definition of compensation of their choosing (such as W-2 wages) and a statistical sampling methodology that is appropriate for the company's size to identify the median employee for their company.... Once the median employee is determined, only then will a Summary Compensation Table calculation need to be done for that particular employee." (Towers Watson)  

[Guidance Overview]

DOL on Board with IRS Approach to Same-Sex Marriage (PDF)
"The guidance does not appear to impact DOL regulations governing the federal Family and Medical Leave Act (FMLA). Whether the DOL's Wage and Hour Division, which enforces the FMLA, acts to change existing FMLA regulations and adopt a 'state of celebration' rule remains to be seen." (Buck Consultants)  

Second Circuit Finds Catalyst Theory May Support Attorneys' Fee Award under ERISA
"The Scarangella decision addresses a question ... of what a party must achieve to demonstrate 'some degree of success on the merits.' In the Second Circuit, under Scarangella, a party can satisfy this standard even if it does not secure complete victory at trial or through dispositive motion practice. So long as its conduct results in judicial action that, in turn, serves as a 'catalyst' for one party to provide another with relief, ERISA attorneys' fees may potentially be recovered." [Scarangella v. Group Health, Inc., No. 12-2750 (2d Cir. Sept. 10, 2013)] (Practical Law Company)  

The Challenges of an Aging Workforce
"With [more baby boomers] opting to stay in the workforce, organizations will be able to continue reaping the benefits of their skills and institutional knowledge. An aging workforce brings far more than experience, however. Along with it comes a new slate of challenges and prejudices that must be addressed if employers hope to realize the full benefit of an increasingly mature workforce. From managing brief, yet damaging indignities, dubbed microaggressions, to accommodating physical limitations to offering flexible work schedules and retraining initiatives, employers are taking steps to ensure their aging population is able to remain on the job." (Human Resource Executive Online)  

State Income Taxes and Married Same-Sex Couples
"[S]ame-sex couples married in a jurisdiction that permits such marriages will be treated as married for federal tax purposes, even if they live in a jurisdiction that does not recognize such marriages. But what about such couples' recognition as married for purposes of state income taxes? ... [E]mployers which are in many instances expanding spousal coverage for same-sex partners under employee benefit plans will need to know the characterization of such coverage for purposes of state taxes. Many would no doubt assume that whether a state will treat couples as married for tax purposes depends on whether it would recognize their marriages generally. However, that may not necessarily be the case." (Calhoun Law Group)  

DOL Announces a 'Place of Celebration' Rule for Employee Benefit Plans
"Although the Release does not provide detailed guidance for employee benefit plans (e.g., with regard to COBRA or HIPAA), the DOL notes that it intends to issue further guidance addressing specific provisions of ERISA and its regulations. In addition, the Secretary of Labor stated in the related press release that he has 'directed the department's agency heads to ensure that they are implementing the decision in a way that provides maximum protection for workers and their families.'" (Proskauer's ERISA Practice Center)  

SEC Proposes Rule to Disclose CEO-to-Worker Pay Ratios
"'This pay data is important to investors because it shines a light on the company pay ladder for all employees, not just the pay of top executives that is already disclosed under current rules,' AFL-CIO President Richard Trumka said ... 'The statistic has so much 'noise' that it's rendered meaningless, failing to take into account key differences between strategy, sectors and geographies, among other factors, all of which impact a company's pay ratio,' [said Irv Becker, national practice leader for the U.S. executive compensation practice at Hay Group]." (Society for Human Resource Management)  

SEC Releases Pay Ratio Disclosure Proposal
"According to the release, all employees means all employees. The release clarifies that all employees employed as of the fiscal year end must be considered when identifying the median annual total compensation, including full-time, part-time, seasonal and/or temporary workers employed by the company or any of its subsidiaries within the U.S. and abroad." (Steven Hall & Partners)  

SEC Issues Proposed Rules on CEO Pay Ratio Disclosure
"To its credit, the SEC recognized that calculating the median of the annual total compensation of all employees of the issuer using the Summary Compensation Table for every employee ... would be literally impossible for most corporations.... [T]he SEC's elegant solution to this problem (at least in the proposed rules) is to allow corporations to use a reasonable method, e.g., W-2 reported wages, of determining WHICH employee(s) represent the median of the annual total compensation of all employees, and require the corporation to use the Summary Compensation Table method for calculating that employees total compensation for comparison against the CEO." (Winston & Strawn LLP)  

U.S. Chamber Calls on SEC to Ensure Pay-Ratio Proposal Provides Investors with Useful Information
"Pay ratios will not give any insight on the performance of a company or its management and fail to give investors decision-useful information or assist with capital formation. This proposal has the potential to drive up compliance burdens and costs for public companies with no benefit to investors -- a formula that continues to make it less attractive to be a public company in the United States." (U.S. Chamber of Commerce)  

Press Releases

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