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November 19, 2013          Get Health & Welfare News  |  Advertise
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Actuary - Remote/Virtual
The Retirement Plan Company, LLC
in ANY STATE

Data Conversion Specialist
Transamerica Retirement Solutions
in NY

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Nationwide Insurance
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Westwood Trust
in TX

Member Services Representative
DC Retirement Board
in DC

Retirement Plan Administrator
Warren Averett Staffing & Recruiting
in AL

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Webcasts and Conferences

Health Insurance Marketplaces: The First 8 Weeks
November 22, 2013 in DC
(Alliance for Health Reform)

Employee Benefits Conference
December 3, 2013 in IL
(Illinois CPA Society)

Making Sense of Required Minimum Distributions
December 5, 2013 WEBCAST
(SunGard Relius)

Litigation Risks Related to the Patient Protection and Affordable Care Act (PPACA)
December 11, 2013 WEBCAST
(WEB)

Surviving DOL Investigations of Plans: Part II
December 18, 2013 WEBCAST
(Drinker Biddle & Reath LLP)

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, Issue 2013-8, November 18, 2013 (PDF)
Topics include: [1] Form 8822-B -- use it to notify IRS within 60 days of a change in responsible party for your retirement plan; [2] Retirement plan seminars from 2013 IRS Nationwide Tax Forums -- watch recordings without cost using the 'audit' option, or pay a fee to earn continuing education credits; and [3] Indian fishing rights-related activity is compensation -- proposed guidance allows retirement plan contributions from these amounts. (Internal Revenue Service)  


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[Guidance Overview]

Handout for November 21 IRS Phone Forum: The Employee Plans Team Audit (Large Case Examinations) Program (PDF)
43 slides, describing the special audit program for plans having more than 2,500 participants. Topics include: History of EPTA, Criteria for an EPTA Case, Types of EPTA Audits, EPTA Processes/Procedures, Working with Electronic Data, FY 2013 EPTA Enhancements, EPTA Pilot, and EP Exam Priorities. (Internal Revenue Service)  

First Circuit Distinguishes Between Current and Former Employees for Retroactive Benefit Amendments
"[W]hen a pension plan is amended to enhance benefits based on prior service, are those benefit enhancements protected accrued benefits that cannot be reduced by a future amendment, or are they gratuitous benefits that can be taken back? The First Circuit [recently] decided that if the benefit enhancement is adopted while the employees are still employed, the resulting benefits are protected, but if they are adopted after retirement or termination of employment, they are not protected by ERISA." [Bonneau v. Plumbers & Pipefitters Local 51 Pension Trust Fund, No. 13-1515 (1st Cir. Nov. 15, 2013)] (Littler)  

Self-Dealing Takes on New Meaning with Rollover-as-Business-Startup IRA
"'In essence, Mr. Ellis formulated a plan in which he would use his retirement savings as startup capital for a used car business,' Judge Paris stated. 'Mr. Ellis effected this plan by establishing the used car business as an investment of his IRA, attempting to preserve the integrity of the IRA as a qualified retirement plan. However, this is precisely the kind of self-dealing that section 4975 was enacted to prevent.'" [Ellis v. Commissioner, T.C. Memo 2013-245 (U.S.T.C. Oct. 29, 2013)] (fi360)  

The DOMA Decision and Retirement Plans: Discussion and Checklist for Plan Sponsors (PDF)
"Because of the Windsor decision and subsequent guidance, many same-sex couples now qualify for certain favorable retirement plan provisions previously reserved for opposite-sex couples. To ensure compliance, plan sponsors should evaluate their plan documents, forms, and operations and review plan administration for those services ... A post-Windsor (DOMA) plan sponsor checklist is provided at the end of this Regulatory Brief." (Vanguard)  


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A Switch to Mark-To-Market Accounting for Defined Benefit Plans Has Little Impact on Key Financial Metrics
"Returns on share price in the period surrounding the earnings announcement showed no statistically significant abnormal return values. Financial analysts' reports and quarterly earnings calls showed very few questions and no direct criticisms of the mark-to-market implementations by the companies. Ratings agencies such as S&P, Moody's, and Fitch were already using mark-to-market accounting as part of their longstanding practices. Internal management received the benefit of removing drags on earnings, while ultimately gaining more favorable earnings per share without the penalty of past poor performance." (SEI)  

Employees Shy Away from Savings Amid Retirement Health Worries
"US employees who save for retirement through their employers' 401(k) plans are not planning to save more for retirement over the next year as compared to last year. And those closest to retirement are decreasing their planned savings, despite increasing concern about health care costs in retirement." (Mercer)  

Rhode Island Cities Spend $6.6M on Pension Fees; Key Investment Data Missing
"Tiverton ... paid more to invest its pension money than almost any other municipality during the 2011-12 fiscal year: 0.96% of the assets in its pension fund.... The state spent 0.62% of assets.... Two places -- Coventry and West Warwick -- were unable to provide any of the fee or performance data about their pension investments ... Three other communities -- Johnston, North Providence and Scituate -- couldn't provide data on how much they spent to invest their pension assets." (WPRI.com)  

Social Security and Equity Investments: Lessons from Railroad Retirement
"Some have advocated investing Social Security trust fund assets in equities. A similar proposal adopted by the railroads in 2001 suggests two key hurdles: political risk and financial risk. For political risk, the railroads created an independent trust; a better fit for Social Security might be to limit investments to index funds. For financial risk, the railroads set up an automatic mechanism to respond to shocks; Social Security would need a similar mechanism." (Center for Retirement Research at Boston College)  

CBO Cost Estimate for S. 1302, Cooperative and Small Employer Charity Pension Flexibility Act
"S. 1302 would ... alter the funding requirements of certain private pension plans that are maintained by more than one employer where the employers are either cooperatives or charities. CBO estimates that enacting S. 1302 would increase offsetting receipts (which are recorded as an offset to direct spending) by $33 million over the 2014-2023 period. [JCT] estimates that enacting the bill would increase revenues by $145 million over the 2014-2023 period. In total, CBO and JCT estimate that enacting S. 1302 would reduce deficits by $178 million over the 2014-2023 period." (Congressional Budget Office)  

[Opinion]

Drawing a Line Against Too Much 401(k) Paternalism
"Auto-enrollment and auto-escalation work. They are here to stay, and will gain in popularity. That said, smaller employers are beginning to use it, but the employer match is still the key to employee participation.... The 401k has failed the have-nots, not the 'average' participant.... If you're comfortably middle class, you can make the 401k work as a retirement vehicle. Any less income requires a herculean effort at saving and real sacrifice to your current standard of living." (Fiduciary News)  

Benefits in General; Executive Compensation

BLS Employment Cost Index, September 2013 (PDF)
"Compensation costs for civilian workers increased 0.4 percent, seasonally adjusted, for the 3-month period ending September 2013 ... Benefits (which make up ... 30 percent of compensation) increased 0.7 percent ... Benefit costs increased 2.2 percent for the 12-month period ending September 2013, compared with the 2.4 percent increase for the 12-month period ending September 2012.... The increase in the cost of benefits [for private-industry workers] was 2.0 percent for the 12-month period ending September 2013, compared with a 2.2 percent increase in the period ending in September 2012. Health benefit costs increased 2.7 percent. In September 2012, the increase was 2.3 percent." (U.S. Bureau of Labor Statistics)  

ISS Accepting Peer Group Updates Starting November 20, 2013
"ISS will be accepting updates to Russell 3000 companies' self-selected peer groups from November 20, 2013 [through] December 9th.... If your company revised its peer group since last year's proxy and used this revised peer group for compensation decisions that were made for the year that will be required to be disclosed in your next proxy ... for shareholder meetings between February 1, 2014 and September 15, 2014, you should consider participating so that ISS has your correct self-selected peer group when it develops its own peer groups for assessing your company[.]" (EdwardHauder.com)  

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