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October 25, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

401(k) Administrator
Nicholas Pension Consultants
in CA

Sr. Customer Relationship Manager, Retirement Plan Administration
Ohio National Financial Services
in OH

Relationship Manager - Advisor 401K Market
Fidelity Investments
in TX

Sr. Retirement Plan Administrator
PPS, Inc.
in CA

Retirement Plan Associate, Recordkeeping & Administration-Entry Level
Leading Retirement Solutions
in WA

Executive Assistant - Sales
Verisight, Inc.
in CA

Health and Welfare Consulting Actuary
Verisight, Inc.
in IL

Client Relationship Manager
The Newport Group
in CA, FL, TX, VA

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Webcasts and Conferences

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

Defined Benefit Plans and Cross Testing Overview
October 30, 2013 WEBCAST
(NH Hicks)

Qualified Plan Essentials Plus Series
November 15, 2013 WEBCAST
(McKay Hochman Co., Inc.)

ERISA Workshop 2013 - Boston
November 20, 2013 in MA
(SunGard Relius)

ERISA Workshop 2013 - New York
November 21, 2013 in NY
(SunGard Relius)

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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 IRS Notice 2013-66: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates, October 2013 (PDF)
"This notice provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under [Internal Revenue Code section] 430(h)(2) ... [and] provides guidance as to ... the 30-year Treasury weighted average rate under section 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under section 417(e)(3)(D) ... These rates reflect certain changes implemented by [MAP-21]." (Internal Revenue Service)  


Learn About PPA Restatements from our Experts and Earn CE Credit Free!

Sponsored by ftwilliam.com

On 11/5 join us for an overview of the ftwilliam.com PPA Document. We will cover new features and options in the draft document submitted to the IRS and what to expect during restatements. You will also see a tour of the new and improved user interface.

Fidelity Opens Cheapest Single-Industry ETFs in Asset Push
"Fidelity on Oct. 24 started 10 funds, focused on industries ranging from energy to telecommunications, with an annual expense ratio of 0.12 percent, cheaper by 2 basis points than Vanguard Group Inc.'s lineup of similar ETFs, according to a regulatory filing and data compiled by Bloomberg. The ETFs, distributed by Fidelity, are managed by BlackRock, the world's biggest money manager." (On Wall Street)  

Overcoming Participant Inertia: Automatic Features That Improve Outcomes While Improving Your Plan's Bottom Line (PDF)
"[T]oday's plan participants are falling short of building retirement reserves that will provide income to last a lifetime.... One solution can be found in the addition of plan auto-enrollment and auto-escalation features.... [A]ccumulated data suggests that a 5-6% default deferral rate with a 2% annual acceleration up to a cap of at least 10-12% significantly improves the likelihood of successful retirement outcomes while maintaining participation levels well above the national average." (Prudential Retirement)  

2013 Global Survey of Financial Advisors: Building a Practice to Meet Modern Market Challenges
"49% of advisors agreed there are very few tools available to adequately remove the 'guesswork' associated with managing investments in today's markets. Almost half of financial advisors globally (49%) believed/reported a traditional portfolio allocation is no longer the best way to pursue return and manage investment risk for most investors. Three in four advisors (73%) globally said they have had conversations with clients on the subject of alternative investments -- the highest incidences being found in the U.S. (84%) and the Middle East (81%). There was overwhelming acquiescence that financial advisors need more education (75% in agreement)." (Natixis Global Asset Management)  

Few Advisers Recommend Alternative Investments
"Financial advisers shy away from alternative investment products because most are too difficult to explain to clients ... Only a quarter of advisers invest regularly in hedge funds, private equity and commodities ... These results leave advisers with a conundrum, as nearly 70% of those surveyed reported that they need to use new portfolio strategies to gain healthy, low-risk returns for clients, rather than relying on traditional methods[.]" (InvestmentNews)  


The Most Common Mistakes Made by Qualified Plan Sponsors and How to Fix Them - November 21 Webinar

Sponsored by Lorman and BenefitsLink

This live webinar explains the EPCRS program and the advantages, disadvantages and risks associated with each correction option. Registration discount for BenefitsLink readers.

Washington State's High Court Hears Arguments Over Changes to Retirees' Pensions
"At issue are two actions by lawmakers. In 2007, the Legislature repealed pension 'gain-sharing' that benefited retirees when the markets were doing well. Then in 2011, it ended cost-of-living increases for pensions for public employees enrolled in two older pension plans. Lawsuits were filed by various unions and others opposed to the changes, including the Washington Federation of State Employees." (Associated Press via The Seattle Times)  

Pensions Ask Retirees to Pay Back Tens of Thousands
"Some pension plans have overpaid retirees for years -- now they're demanding their money back. For retirees, it can mean owing tens of thousands of dollars. And with little warning, their pension checks are being slashed to cover their debt.... Karen Ferguson, director of the Pension Rights Center ... said that, in most cases, retirees have no idea they are being overpaid since 'the way a benefit is figured in a typical pension plan is impossible for an ordinary person to fathom.'" (CNNMoney.com)  

PBGC Finds Deep Pocket in Japan: U.S. Court Finds Parent Liable for Termination Underfunding
"Companies that do not do business in the United States may have thought that they could not be reached by PBGC's long arm, but a [recent federal court decision] has given PBGC's collection efforts a big boost.... Note that parent companies are not the only entities that can be pursued. Controlled group liability includes brother-sister subsidiaries and certain businesses controlled by the same five or fewer individuals. And the court's decision would appear to apply to efforts to collect multi-employer plan withdrawal liability from foreign entities as well, as the same statutory definition of controlled group applies there." [PBGC v. Asahi Tec Corp., No. 10-1936 (D.D.C. Oct. 4, 2013)] (Osler, Hoskin & Harcourt LLP)  

House Subcommittee to Discuss Proposed Multiemployer Pension Reforms
"On Tuesday, October 29 at 10:00 a.m., the Subcommittee on Health, Employment, Labor, and Pensions, chaired by Rep. Phil Roe (R-TN), will hold a hearing entitled, 'Strengthening the Multiemployer Pension System: How Will Proposed Reforms Affect Employers, Workers, and Retirees?' The latest in a series of hearings on multiemployer pension reform, [live webcast and witness list will be available here.]" (Subcommittee on Health, Employment, Labor, and Pensions, U.S. House of Representatives)  

Are Private Equity Funds Engaged in Business for ERISA or Tax Purposes?
"There is no clear definition of trade or business either for ERISA purposes or for income tax purposes.... Tax advisors to PE funds should carefully evaluate the potential effects of the [Sun Capital] decision on their ERISA liabilities and the tax treatment of their investors and managers. The only apparent positive consequence of trade or business status for tax purposes would be that the expenses of the PE fund would be deemed ordinary deductions under section 162 rather than expenses of generating profit under section 212. The other consequences are generally negative." (McGladrey)  

Pension Trust for Artists: Designer Retirement Plan May Rock the Art World
"The idea behind [the Artist Pension Trust (APT)] is simple enough: create a retirement plan for artists by assembling a collection of the artists' works and eventually selling them off to build cash in the account.... The APT model is based, according to its founders, upon risk diversification: the value of the participating artist's pension account will reflect, in part, the proceeds from the sales of his or her works, as well as the proceeds from sales of the works of other artists.... It is entirely possible that APT could, over time, be a significant factor in determining, i.e., supporting the market prices of contemporary art. That's pretty ambitious and remarkable for any start-up -- even more unexpected from ... a retirement plan." (Forbes)  

Gauging the Burden of Public Pensions on Cities (PDF)
"This ... study starts with a question: how much do residents of a city pay for pensions -- not just for city pensions, but also for school district and county pensions in their jurisdiction? Using a sample of 173 cities ... the research team ... found that overall pension costs equal 7.9 percent of the total revenue base.... [T]the researchers found a wide variation in pension costs among the cities they studied ranging from 12.3 percent for the highest cost quintile to 2.7 percent for the lowest cost quintile.... [The authors] conclude that, although some cities face significant problems, pension costs are less of a burden to most cities than has been widely reported." (Center for State & Local Government Excellence)  


Text of ACOPA Comments to IRS on Mortality Tables to be Used under Sections 430(h)(3)(A) and 417(e)(3)
"ACOPA recommends that IRS continue to publish combined static mortality tables.... [A]lthough the more refined approach to mortality assumptions may be appropriate for large plans, there will be little or no benefit from such refinement for small plans. In fact, static tables work well in the small plan environment and ACOPA respectfully suggests that moving away from static tables for small plans would be form over substance at substantial cost." (American Society of Pension Professionals & Actuaries [ASPPA] and ASPPA College of Pension Actuaries [ACOPA])  


How Much Can I Afford to Spend in Retirement? Enough Already with the 4% Rule
"[T]he 4% Rule is far from an optimal decumulation strategy. And making unspecified modifications to it to address some of its flaws does not make it appreciably better. Rather than rely on set and forget strategy that is supposed to be 'safe' with respect to the risk of outliving one's assets (but may result in significant underspending), you need to periodically crunch your numbers based on your situation. The spreadsheets and actuarial process set forth in [the author's] website make this task relatively easy." (Kenneth A. Steiner, FSA Retired)  


Defined Benefit Pensions: Still the Best Bang for the Buck
[A recent TIAA-CREF/Arnold Foundation paper] fails to offer a concrete cost analysis that supports their assertion that DC plans provide benefits at a cost equivalent to that of DB plans. NIRS stands by our research. The structural DB cost advantages quantified in [the 2008 NIRS Study] 'A Better Bang for the Buck' -- derived from well-documented research on investment returns, fees, and asset allocation -- remain valid based on current data about DB and DC plan features and performance." (National Institute on Retirement Security)  

Benefits in General; Executive Compensation

Employer Liability for Mishandling FICA Tax Under Nonqualified Plan
"[T]he employer informed retirees ... that FICA tax should have been paid on the present value of participants' entire benefit at retirement (i.e., the date when the amount deferred was both vested and reasonably ascertainable).... Failing to apply these FICA timing rules to a nonqualified plan [that is not an account balance type of plan] at retirement ... means the employer must withhold FICA taxes on all benefits later paid under the plan.... Paying FICA taxes as actual payments are made after retirement hurts participants because the Social Security wage base limit is applied on an annual basis, and these individuals might not have other FICA wages after retirement. This exposes more benefit payouts to the higher 6.2% portion of the total FICA tax and not just to the smaller Medicare portion of the tax." [Davidson v. Henkel Corp., E.D. Mich., July 24, 2013] (Towers Watson)  

Healthcare Help from a Financial Adviser
"Most financial advisers spend years developing expertise in the likes of asset allocation and investment fund selection. Until recently, they barely addressed the second-largest budget item of their older clients: health-related costs. This is beginning to change, though, as demand for help with health-care planning drives more advisers to add another line to their resume: Medicare consultant." (MarketWatch)  

Institutional Shareholder Services Releases 2014 Draft Policies for Comment
"Institutional Shareholder Services (ISS) has released certain 2014 draft proxy voting policies for public comment, which include possible changes and clarifications to its current policies on the pay-for-performance quantitative screen and the board response to majority-supported shareholder proposals. The comment period for these draft policies ends on November 4, 2013." (Practical Law Company)  

Press Releases

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