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December 6, 2013          Get Health & Welfare News  |  Advertise
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Senior DB Calculation Developer
Transamerica Retirement Solutions
in MA

Pension Consultant/Administrator
Third Party Administrators, Inc.
in NH

Manager
National Business Group on Health
in DC

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Webcasts and Conferences

1099-R: An Ongoing Challenge 2013
December 19, 2013 WEBCAST
(SunGard Relius)

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408(b)(2)-Related Contractual Considerations for Service Provider Contracts
"Make sure that the service provider provides you with (and you carefully review) the disclosures required by the [DOL] rules under ERISA Section 408(b)(2) reasonably in advance of the date the contract is entered into, extended, or renewed.... Use [these] disclosures ... to determine whether the proposed contract and the service provider's proposed compensation under the contract are reasonable. Note that the plan fiduciary does not have to provide a representation to this effect (i.e., that the contract and/or the service provider's compensation is/are reasonable) in the contract." (Winston & Strawn LLP)  


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Beneficiary Designations Under 403(b) Contracts: Whose Money Is It Anyway?
"Typically, an ERISA plan is written with a procedure for beneficiary designation. The terms of the plan are supposed to govern.... Service providers [for 403(b) plans] often solicit beneficiary designations. This could cause a great deal of confusion if a participant designates different beneficiaries with different providers, and then these have to be reconciled to the terms of the plan.... [W]hat if the service provider's form indicates the designation only applies to that provider's contract? ... [T]he provider may take the position that they will follow the designation on file, no matter that it conflicts with the terms of the plan." (The Principal Blog)  

Revisiting 401(k) Fees in a Post-Disclosure World
"Revenue-sharing can make a fund's inclusion in the plan a good deal for the record keeper but less so for plan participants.... [M]any plan sponsors could benefit both financially and from a fiduciary standpoint by negotiating record-keeping fees and investment-management fees separately. This unbundled approach to fees can increase transparency and make it easier for the plan sponsor to demonstrate its efforts to minimize fees." (Society for Human Resource Management)  

Illinois Governor Signs Pension Overhaul Into Law
"The overhaul ... cuts benefits for most employees and retirees. It has a June 1 effective date, but could be delayed by the legal challenges as a coalition of unions said lawyers were directed Thursday to file a lawsuit.... The new plan is expected to save the state roughly $160 billion over three decades and guarantees Illinois will make its full annual contribution to the pension funds. Legislative leaders have estimated the plan will reduce the current unfunded liability by about $21 billion and fully fund the retirement systems by 2044." (The Washington Post; subscription may be required)  

Philadelphia vs. Detroit: Pension Funding Isn't the Whole Story
"Detroit's pension-funded ratio was a quite healthy 91%; conversely, the city of Philadelphia appeared to have pension-related issues, with a funded ratio of only 48%.... [D]espite all of its missteps in managing its finances, Detroit's governmental board has always managed to fund annual retirement contributions.... [O]ne of the key takeaways from the study and its resulting rankings is the importance of focusing on a variety of credit metrics rather than just one. This is especially true for Philadelphia, which is cast in a poor light when looking only at pension funding ratios." (SEI)  

Stats on Retirement Plan Coverage Require Careful Assessment
"One of the most commonly cited data points about retirement is that 'only about half of working Americans are covered by a workplace retirement plan.' ... The data point is relatively simple math: the number of workers who say they participated in a workplace retirement plan divided by the total number of workers. But when you take a closer look at the numbers, it's not really that straightforward -- especially since there are various types of workers, and that makes a huge difference in retirement coverage." (Nevin Adams and Jack VanDerhei via EBRI)  

Pension Finance Watch, November 2013
"Capital markets were favorable on all fronts in November. Positive equity returns and an upward movement in interest rates resulted in a 2.1% increase in the Towers Watson Pension Index. The Index value has now moved up almost 24% for the year, to 77.1 -- a level last seen in October 2008." (Towers Watson)  

3Q Annuity Sales at Highest Level in 2 Years
"Bolstered by the highest fixed annuity sales since the second quarter of 2009, industry-wide annuity sales reached $57.5 billion during the third quarter of 2013 -- a 5.5 percent increase from $54.5 billion in the previous quarter and an 8.7 percent increase from $52.9 billion in the third quarter of 2012." (InsuranceNewsNet.com)  

[Opinion]

The Public Pension Problem?
"The legislative response to public pension deficits is predictable and shortsighted. Some reforms, like raising the retirement age and using career average earnings for determining pension benefits, are necessary as people are living longer.... U.S. pension reforms need to incorporate the shared risk model that has worked so well in the Netherlands.... Moreover, U.S. pension funds need to incorporate the same governance model that has allowed Canadian public pension funds to flourish. This means adopting independent investment boards that operate at arms-length from the government and compensating public pension fund managers more in line with what private sector fund managers receive." (Pension Pulse)  

Benefits in General; Executive Compensation

[Official Guidance]

Text of Advance Copies of 2013 Form 5500 Series
Forms include: Form 5500 Annual Return/Report of Employee Benefit Plan with Instructions; Form 5500-SF Annual Return/Report of Small Employee Benefit Plan with Instructions; Schedule A -- Insurance Information; Schedule C -- Service Provider Information; Schedule D -- DFE/Participating Plan Information; Schedule G -- Financial Transaction Schedules; Schedule H -- Financial Information; Schedule I -- Financial Information -- Small Plan; Schedule MB -- Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information; Schedule R -- Retirement Plan Information; and Schedule SB -- Single-Employer Defined Benefit Plan Actuarial Information. (U.S. Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation)  

DOL Releases Advance Copies of 2013 Form 5500 Annual Report (PDF)
"The [DOL, IRS and PBGC] today released advance informational copies of the 2013 Form 5500 annual return/report and related instructions. Modifications to the Form 5500 and Form 5500-SF and their schedules and instructions for plan year 2013 [include] [1] Form 5500-DOL Form M-1 Compliance Information. The Department of Labor published earlier this year final rules under the Affordable Care Act to protect workers and employers whose health benefits are provided through Multiple Employer Welfare Arrangements (MEWAs). [T]he Form 5500 includes a new section 'Form M-1 Compliance Information,' which is being added as an attachment to the Form 5500 for the 2013 plan year. Also, all welfare plans required to file the Form M-1, 'Report for Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities Claiming Exception (ECEs),' must now file the Form 5500 regardless of plan size or type of funding (including small unfunded or insured welfare plans).... [2] Schedule SB. The Schedule SB instructions have been updated to reflect the provisions of the Moving Ahead for Progress in the 21st Century Act ('MAP 21')." (U.S. Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation)  

NASDAQ Proposes Less Stringent Compensation Committee Independence Requirements
"Under the proposed amendment, the prohibition on the receipt of compensatory fees would be eliminated from the rule. Nasdaq proposes instead that in affirmatively determining the independence of any director who will serve on the compensation committee, a company's board must consider the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by the company to the director.... The proposed rule amendment does not eliminate the requirement that members of the compensation committee be 'Independent Directors.'" (Schiff Hardin LLP)  

Employer with Discretion to Reduce or Eliminate Bonuses Prior to Payment Not Entitled to Deduction in Year Bonuses Accrued, Rather Than in Year Paid
"The IRS reasoned that the discretion to reduce or eliminate bonus amounts at any time prior to payment prevents the 'fact of liability' and the 'amount of liability' from being determined until the bonuses are actually paid. The IRS memorandum noted that if a bonus 'pool' is establish by the end of the year but the employer retains discretion with regard to the allocation of the pool among eligible employees, such an arrangement would satisfy the all events test even though the plan provides for such discretion." [IRS Field Attorney Advice Memorandum 20134301F] (Haynes and Boone, LLP)  

Clarification on NASDAQ Compensation Committee Certification
"NASDAQ expects to release the final [certification] form in early January, which will be changed somewhat from the preview ... Listed companies will not file a paper certification with NASDAQ -- but rather will certify electronically through NASDAQ's 'Listing Center' website." (Winston & Strawn LLP)  

[Opinion]

CEO-to-Worker Pay Ratios Are Material to Investors
"The SEC has received over 100,000 comments that are overwhelmingly in support of this disclosure provision.... Many of these investors' letters express concern that existing CEO pay practices are flawed.... High levels of CEO pay relative to other employees can reduce company performance.... Employee productivity, morale, and loyalty suffer when workers see that the CEO is taking more while those same workers do more for less. In contrast, a reasonable pay ratio sends a positive message to the workforce that the contributions of all employees are valued." (The Conference Board)  

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