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September 30, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Retirement Services Manager
District of Columbia Retirement Board
in DC

Retirement Plan Administrator
HCS Retirement Services, LLC
in UT

Account Manager, Employee Benefits
Lenox Advisors
in CT, NJ, NY

Systems Development Analyst
New York Life Retirement Plan Services
in MA

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Webcasts and Conferences

Affordable Care Act 101 Webinar
October 3, 2013 WEBCAST
(U.S. Small Business Administration (SBA))

Wake Up Summit 2013
October 1, 2013 in MA
(Sun Life Financial)

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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]

SEC Plan of Operations During a Lapse in Appropriations (PDF)
"This document describes the [SEC's] plan for operating in the event of a lapse in appropriations that results in an SEC shutdown (referred to in the rest of this document as a 'lapse in appropriations').... The SEC will remain open and operational in the event the federal government undergoes a lapse in appropriations on October 1, 2013. Any changes to the SEC's operational status after October 1 will be announced on www.Sec.Gov." (U.S. Securities and Exchange Commission)  


[Advert.]

Free Webcast: PPA Restatements Update

Sponsored by ASC

Put ASCi's expertise to work for you! Join 30-year, ERISA expert, Charles Lockwood, J.D., LL.M. for a discussion about the upcoming PPA restatement process, October 23rd. Click here for more info.



[Guidance Overview]

IRS Employee Plans News, September 27, 2013 (PDF)
Topics include: [1] Employee Plans Guidance phone forum (October 29, 2 p.m. EDT) -- learn about EP's Priority Guidance Plan and other projects for the new fiscal year (Oct. 2013-Sept. 2014); [2] Single-employer defined benefit pension plan sponsors can't get automatic approval to change the plan year to delay MAP 21 PBGC premium increases; and [3] Reminder notices to file Form 5500-EZ or 5500-SF if you did last year. (Internal Revenue Service)  

[Guidance Overview]

ERISA Accounts Meet Plan Asset Rules in New DOL Guidance (PDF)
"[A] plan recordkeeper may receive sub-transfer agency fees to track participant-level ownership of shares. The DOL has recognized that such payments can improve efficiency and reduce the cost of administrative services. At the same time, the complexity of revenue sharing practices contributes to the need for the plan-level fee information required by recently effective regulations. Among other things, these regulations are intended to give plan sponsors the tools to oversee revenue sharing and ensure that plans do not pay excessive amounts for services as a result of such indirect payments." (The Wagner Law Group, via 401k Advisor)  

[Guidance Overview]

How Do You Spell Relief? E-P-C-R-S
"[T]he program is designed to place plan participants in the position they would have been in had the error in question not occurred in the first place. This may involve making additional contributions, revising compliance testing or reversing improper payouts. EPCRS ... offers the flexibility to craft custom fixes in unique situations or when one of the samples is not practical.... Although it can be inconvenient, EPCRS does require that full correction be made, including errors that may go back multiple years." (Preferred Pension Planning Corporation)  

[Guidance Overview]

What IRS Guidance After DOMA Decision Means for Employee Benefits (PDF)
"What plan sponsors should do immediately: Develop a policy regarding employee benefits issues for same-gender spouses in states that do not recognize same-gender marriages.... Large organizations with operations in multiple states should reflect state-specific requirements ... and conduct information sessions for personnel responsible for benefits administration.... Contact vendors to ensure awareness and compliance (actuary, rollover vendor, qualified domestic relations order administrator, for example).... Communicate the law to employees and remind them of the importance of up-to-date beneficiary designations." (ERISAdiagnostics, Inc. via Thompson Publishing)  

The Rise of Semi-Retirement
"[A recent] survey found that 19 percent of respondents between ages 55 and 64 consider themselves to be semi-retired, and another 32 percent hope to move into semi-retirement before retiring full time. The idea of semi-retirement is also popular among younger people, with 43 percent of 25- to 34-year-olds and 41 percent of people between ages 35 and 44 hoping to semi-retire. Workers between ages 45 and 54 are slightly less inclined toward semi-retirement, with only 27 percent planning to do so." (U.S.News & World Report)  

Stockton May Dodge Pension Battle If Deals Hold
"Chances of the Stockton bankruptcy producing a landmark ruling to cut pensions dimmed last week, when the city announced a deal with one bond insurer and a tentative deal with another one. The two big bond insurers, who unsuccessfully opposed Stockton's eligibility for bankruptcy, [had] argued that a city plan to cut bond debt was unfair because the largest creditor, CalPERS, would be untouched." (Calpensions)  

'Very Likely' Pension Plan Solution Could Be Presented Soon to Illinois Legislature
"[State Rep. Elaine Nekritz of Northbrook noted the 10-member legislative panel] has agreed upon a framework that includes reducing 3 percent annual compounded cost of living adjustments in pensions to half of the Consumer Price Index while reducing employee contributions.... Still, she said, 'I don't think there's any way we can avoid being sued by the public employees -- whether it be actives (current employees) or retirees.'" (Chicago Tribune; subscription may be required)  

Detroit Pension Proposal Would Push Workers, Retirees Into 401(k) Plan, Shut Out New Employees
"Hoping to stanch some of the red ink flowing from Detroit, its emergency manager is riling the workforce with a proposal to close the city's pension plans to new employees by the end of the year and move the city to a 401(k)-style system that has become the norm in the private sector. Detroit's underfunded obligations of about $3.5 billion for pensions and $5.7 billion for retiree health coverage are part of the city's $18 billion debt load and a major reason emergency manager Kevyn Orr filed for bankruptcy protection in July." (The Washington Post; subscription may be required)  

The Best Company Retirement Plans
"The most lucrative plans routinely provided the average worker $12,000 to $20,000 a year to sock away, above and beyond their pay -- more than three to five times the average company contribution in retirement plans of a similar size around the country, according to the analysis. One plan topped $30,000. The differences among plans could have a significant impact on when workers will be able to retire, and how comfortably." (The Wall Street Journal; subscription may be required)  

Millennials Lagging in Retirement Readiness
"[J]ust 17% of both women and Millennial workers and 10% of low-income employees said they are confident they will be able to meet their retirement income goals. Overall, one in five (20%) of those interviewed for the report said they were on track to meet their previously determined retirement benchmarks -- up from 14% during the survey's first iteration, released in 2011." (PLANSPONSOR.com)  

Thoughts for Plan Sponsors and TPAs on Correcting Plan Mistakes
8 Q&As, including: What kind of operational errors are common? Are such errors sometimes the result of service provider mistakes? How do service providers and plan sponsors respond? Does insurance come into play? Do you have any suggestions on best practices? (401k Advisor via DrinkerBiddle)  

Between a Rock and a Hard Place: DC Plan Fiduciaries Are Feeling the Squeeze (PDF)
"[S]trategy is often a responsibility that fits internal fiduciary strengths. Implementation and plan administration, on the other hand, can be areas of weakness, as today's fee and performance demands drive the utilization of more institutional-grade investment structures in DC plans. The goal of this paper is to draw attention to this emerging 'responsibility vs. capability' gap, and to highlight options plan fiduciaries have for addressing this situation." (Russell Investments)  

My 401(k) Doesn't Provide Matching Contributions: Should I Still Participate?
"When deciding (or prioritizing) between IRAs and 401(k)s, there are a few aspects you'll definitely want to consider: contribution limits, the diversity of funds available and whether the money is deducted from your paycheck pre- or post-tax. IRAs also have eligibility requirements that may make your choice obvious." (InvestorPlace)  

[Opinion]

Wild West in Government 403(b) Continues
"There are many compensation schemes for [Compliance Third Party Administrators (CTPAs)], but one in particular has emerged as the winner, 'vendor pay'. The 'vendor pay' model works exactly like it sounds, the vendor of a product pays a fee (tied to some participant metric) to the school employer's chosen compliance company. In [the author's] opinion, this arrangement is problematic in certain circumstances." (The Teacher's Advocate)  

[Opinion]

Recommendations of Investor-as-Purchaser Subcommittee to SEC on Broker-Dealer Fiduciary Duty (PDF)
"[P]ersonalized investment advice to retail customers should be governed by a fiduciary duty, regardless of whether that advice is provided by an investment adviser or a broker-dealer.... [T]he fiduciary duty for investment advice should include, first and foremost, an enforceable, principles-based obligation to act in the best interest of the customer. In approaching this issue, the SEC's goal should be to eliminate the regulatory gap that allows broker-dealers to offer investment advice without being subject to the same fiduciary duty as other investment advisers but not to eliminate the ability of broker-dealers to offer transaction-specific advice compensated through transaction-based payments." (U.S. Securities and Exchange Commission)  

[Opinion]

Text of AFL-CIO's Letter to Congress Opposing H.R. 2374, the Retail Investor Protection Act (PDF)
"While the terms of the bill appear slight -- requiring the [SEC] to make certain findings before issuing a new fiduciary rule and requiring the [DOL] to wait for the [SEC] before it promulgates its companion rule -- it would thwart DOL's ability to protect workers' retirement savings.... The protections being developed by the DOL are long overdue. While ERISA's fiduciary rules are intended to protect workers' retirement savings from fraudulent, deceptive, and misleading practices, the [DOL's] rulemaking has not kept pace with the dramatic changes in the retirement income landscape over the past four decades. There are critical gaps in the current rules that must be addressed." (AFL-CIO)  

[Opinion]

Response to Rolling Stone Coverage of Public Pensions
"The problem with defined benefit plans in the public sector is that, without any funding rules, actuaries get hired to provide the lowest possible contribution amounts for the highest possible benefit levels so as to appease both taxpayers and public workers. When investments do not return 8% and all the pension padding and spiking games play out, exposing the inadequacy of the assets set aside to pay for those pension promises, then partial default is inevitable." (Burypensions)  

Benefits in General; Executive Compensation

[Official Guidance]

Treasury Department's Contingency Plan in the Event of a Lapse in Appropriations
"IRS would halt non-automated collections and tax processing activities, but would continue activities necessary for the protection of government property. These activities include, but are not limited to, processing tax payment remittances; computer operations necessary to prevent loss of data in process and revenue collections; retaining minimal personnel to maintain safe conditions for essential personnel; maintaining criminal law enforcement and undercover operations; and the protection of statute expiration, bankruptcy, liens and seizure cases. The IRS would halt taxpayer services such as responding to taxpayer questions, including telephone customer service functions." (Internal Revenue Service)  

[Official Guidance]

Text of IRS Request for Applications for the Advisory Committee on Tax Exempt and Government Entities
"The [IRS] is requesting applications for membership to serve on the Advisory Committee on Tax Exempt and Government Entities (ACT). Applications will be accepted for the following vacancies, which will occur in June 2014: Two (2) employee plans; two (2) exempt organizations; three (3) federal, state, and local governments; two (2) Indian Tribal Governments; and one (1) tax-exempt bonds.... Written applications or nominations must be received on or before Nov. 4, 2013." (Internal Revenue Service)  

[Guidance Overview]

Preliminary 2014 Proxy Season Checklist
"At this time, there are relatively few new items that need to be considered for the upcoming proxy and 10-K season." [Editor's note: Article includes an extensive interactive checklist of ongoing issues.] (Dodd-Frank.com, a blog by Leonard, Street and Deinard)  

Identifying the Proper Party Defendant in ERISA Benefits Claims: A Circuit Survey
"Plan sponsors, administrators, and insurers share responsibility by adopting unclear plan documents and participant communications. The result is frequent and costly motion practice as defendants seek dismissal of claims and sort out among themselves responsibility for the payment of benefits and costs of legal defense. This article ... provides a circuit-by-circuit survey of case law on this proper party issue." (Bloomberg Law)  

Stockton Releases Bankruptcy Plan; CalPERS Payments Unaffected
"The massive plan document submitted to the Stockton City Council [on Friday, September 27] reinforces the concept that CalPERS would be held harmless while other creditors would suffer losses. The city pays CalPERS about $29 million a year ... The proposed plan 'significantly impairs the interests of former employees and retirees with respect to health benefits,' the document says." (Merced Sun-Star)  

Employer May Be Liable to Participants for Mishandling FICA Tax Under a Nonqualified Plan
"[T]he court felt the plaintiff had framed his suit as one for plan benefits that were improperly reduced and held that such a claim is not subject to the limits on suits for improper tax withholding. The court rejected all of the company's other arguments, thus clearing the way for this claim to go to trial.... [T]he case should make employers that sponsor nonqualified retirement plans aware that if they fail to comply with the special FICA tax-timing rules for such plans, they might face participant claims for additional benefits that go well beyond the risk of IRS penalties." [Davidson v. Henkel Corp. No. 12-cv-14103 (E.D. Mich. July 24, 2013)] (Towers Watson)  

[Opinion]

Text of Comments by American Benefits Council to IRS and EBSA on Form 5500 Report and Schedules (PDF)
"First, the Agencies should revise Schedule C so that the information required of pension plans is consistent with the information provided pursuant to the Department's regulations under ERISA section 408(b)(2). Second, the Agencies should consider expanding the small plan threshold for filing purposes from 100 participants to 250 participants. Finally, the Agencies should not remove the ability of plans to use a limited scope audit." (American Benefits Council)  

Press Releases

Statement on City of Stocktonís Proposed Plan of Adjustment
CalPERS (California Public Employees' Retirement System)

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