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December 9, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Retirement Plan Consultant
in CA

Pension Administrator
Pension Parameters Financial Services, Inc.
in NJ

Client Relationship Manager
Goldleaf Partners
in MN

Plan Analyst
Verisight, Inc.
in IL

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Webcasts and Conferences

The IRS and DOL Have Spoken: Same-Gender Partner Benefits in a Post-Windsor World
December 18, 2013 WEBCAST
(Thompson Interactive)

Ethics Case Studies One
December 18, 2013 WEBCAST
(McKay Hochman Co., Inc.)

Alternatives in DC Conference
February 11, 2014 in NY
(Pensions & Investments)

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 2013-9, December 9, 2013 (PDF)
Includes links to an IRS web page summarizing retirement plan deadlines during December 2013 and January 2014; information about filing Form 8955-SSA electronically (must be done before the FIRE system goes offline from Dec. 13 through Jan. 20, 2014 although paper filings can be filed at any time); a link to the annual report of the IRS Advisory Council; an article entitled Reducing or Suspending Safe Harbor 401(k) Matching and Nonelective Contributions Midyear; and an article entitled Internal Controls Protect Your Retirement Plan. (Internal Revenue Service)  


ASPPA On Tour- Coming to a City Near You!

Sponsored by ASPPA

ASPPA on Tour is the ultimate conference experience for retirement plan professionals. With the perfect balance of national and regional content, each of our five stops will stimulate, motivate and challenge you. Registration for LA is now open!

[Guidance Overview]

2013 Year End 'To Do' List for Retirement Plan Sponsors
Includes items needing attention for: [1] All Qualified Plans; [2] 401(k) Plans; [3] Defined Contribution Plans (other than 401(k) Plans); [4] Defined Benefit Plans; [5] Section 403(b) Plans; and [6] 2014 Retirement Plan Limits. (Snell & Wilmer L.L.P.)  

In ERISA Stock Drop Case, The Solicitor General Got It Backwards (PDF)
"Contrary to the solicitor general's view, the presumption of prudence is, in fact, firmly rooted in ERISA's statutory scheme.... Perhaps more interesting, however, is the second issue raised in Fifth Third's petition, which the solicitor general found unworthy of the Supreme Court's review.... The Sixth Circuit's holding -- that ERISA fiduciaries can be liable for misstatements in SEC filings simply because those filings are incorporated by reference into plan documents -- is just plain wrong as a matter of law and policy." (Alston & Bird, LLP via Law360)  

IRS Releases 2014 Instructions for Forms 1099-R, 5498
"A notable change for the 2014 Forms 1099-R and Form 5498 is much more detailed reporting of hard-to-value assets in IRAs, but this reporting for both IRS forms is optional for 2014.... As cited in the instructions, [several] new codes and descriptions for Form 5498 Box 15b give some indication of the types of hard-to-value assets the IRS expects to be reported in these boxes." (Ascensus)  

[Guidance Overview]

Puerto Rico Qualified Retirement Plan Amendment and Determination Letter Filing Deadlines (PDF)
"Plan sponsors of defined benefit and defined contribution plans that intend to be qualified in Puerto Rico generally must adopt the following amendments by April 15, 2014: Annual compensation limitation... Definition of employer .... Rollovers .... For defined contribution plans that intend to be qualified in Puerto Rico, plan sponsors generally must also adopt the following amendments by April 15, 2014: Highly compensated employees ... Pre-tax contributions .... Catch-up contributions .... After-tax contributions .... Plan loans." (Groom Law Group)  


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[Guidance Overview]

Planning for ERISA Single-Employer Defined Benefit Plan Operation in 2014 (PDF)
"In addition to checking to ensure routine tasks are monitored ... such as making required minimum distributions, sending suspension of benefits notices, and attending to the myriad annual reporting and disclosure requirements -- administrators must be on the alert to some not-so-common tasks ... Is plan administration in order? ... Are your documents in good shape? .. Have you communicated with your actuary?" (Buck Consultants)  

[Guidance Overview]

Planning for ERISA Single-Employer Defined Contribution Plan Operations in (PDF)
"In addition to [various] testing and reporting requirements, plan sponsors may want to perform an annual 'checkup' (i.e., an audit of operational practices and fiduciary responsibilities). A plan checkup should address plan expenses, plan design considerations, participant fees and plan investments. The checkup should confirm the plan's compliance with the terms of the document and investment policy statement, if any. Review compliance test results with an eye toward making necessary plan design changes to improve testing results or eliminate testing altogether." (Buck Consultants)  

How To Increase Your Employees' Retirement Income (PDF)
"Most employees with 401(k) plans are paid a lump sum upon retirement. When faced with the challenge of generating a retirement income from this payout, many of them miscalculate. Plan sponsors are in a unique position to help their employees generate a favorable retirement income. This article will investigate three commons ways employers can improve their employees retirement income: [1] Systematic withdrawals, [2] Immediate annuities, [3] Hybrid products." (Mercer)  

Did IRS Inaction Prompt Some to Freeze DB Plans?
"Skeptics point to the IRS list of 2013-2014 regulatory priorities, which includes guidance on closed defined benefit plans as one of 40 retirement projects, and to the fact that negotiations with the IRS and industry groups are reaching the two-year mark.... The problem has become acute in recent years as more defined benefit plans closed to new employees; the non-discrimination testing rules, which were intended to prevent lopsided benefits in ongoing plans, did not address that shift." (Pensions & Investments)  

Divorce, Women's Earnings, and Retirement
"Using a longitudinal approach and a fixed-effects model, we consider three main questions. First, what is the effect of divorce on women's earnings? Second, do these changes persist over the lifecycle? Third, what is the effect on the timing, type, and level of benefit as women enter into the Social Security retirement program?" (Kenneth A. Couch, Christopher R. Tamborini, Gayle Reznik, and John W.R. Phillips via SSRN)  

Report of Findings: 2013 Risks and Process of Retirement Survey (PDF)
"[P]re-retirees expect to retire later, at a median age of 65, whereas retirees actually retired at a median age of 58. Pre-retirees are more likely to say they will work in retirement than retirees actually did.... Expense reduction and debt management are the major strategies used to avoid running out of money and there is little use of financial risk management products. The preferred spending strategy is to preserve principal and spend only investment earnings and pension/Social Security income." (Society of Actuaries)  

Retirement Savings: How Much Do Workers Really Have?
"Roughly 45% of workers have retirement savings outside of their current employers' plans, and such savings average 55% of these workers' total retirement accumulations. The median amount of outside retirement savings is $49,000 for workers ages 51 through 60, and $30,000 for workers ages 30 to 40. Among survey participants, DB plan benefits tend to be more valuable than DC account balances: median $164,200 for DB versus $33,000 for DC." (Towers Watson)  

Asset Allocation During Retirement: Rethinking Withdrawal Strategies
"[1] At a 4% withdrawal rate, the results for different asset allocations and glide-path strategies are remarkable similar.... [2] At a 5% withdrawal rate, a higher stock allocation is critical.... [3] At the lower withdrawal rate, ... a rising glide path looks reasonable once stocks make up at least a large minority of assets.... [4] There's certainly enough in the [Wade Pfau and Michael Kitces] paper to suggest that current institutional practices should be re-examined." (Morningstar Advisor)  

How Do Financial Resources Affect the Timing of Retirement After a Job Separation?
"The availability of resources like Social Security retirement benefits, high net worth, and defined benefit pensions appear to encourage more rapid labor force exit and retirement, rather than supporting job seekers during a long search.... [R]etirement is only modestly more likely when the unemployment rate is high, and a greater duration of unemployment insurance benefits has little effect on retirement timing.... These results suggest little tolerance for long job searches -- regardless of labor market prospects -- and indicate that those who can afford to retire will do so rather quickly." (Center for Retirement Research at Boston College)  

Iowa Economic Development Authority Starts ESOP Education Sessions
"The idea behind promoting ESOPs, economic development officials have said, is that business owners who sell their company to their employees keep the business in Iowa, instead of selling it to an entity outside of the state." (Des Moines Register)  


Allowing Detroit to Cut Retirees' Pensions is 'Unprecedented and Unconscionable'
"This decision sets a terrible precedent. Allowing a city to cut its retirees' pensions is a signal to other cities across the country that they don't need to fund their pensions responsibly and that they can renege on these promises when they run into trouble." (Pension Rights Center)  


More on the Public Pension Problem
"CalPERS has an estimated unfunded liability of $100 billion, while CalSTRS reports a funding gap of $70 billion. They both still discount their future liabilities using a ridiculously high rate of 7.5% based on rosy investment projections (if they used Ontario Teachers' discount rate of 4.75%, they'd be insolvent). And in the case of CalPERS, it pays hefty fees on private equity and hedge fund managers." (Pension Pulse)  


What the Founding Fathers Believed: Stock Ownership for All Employees
"James Madison warned that inequality in property ownership would subvert liberty.... John Adams favored distribution of public lands to the landless to create broad-based ownership of property... We propose a new strategy: to expand capital ownership and capital income for normal workers through programs that encourage broad-based employee stock ownership of firms, widely available profit-sharing, and all-employee stock options and stock grants in firms that now restrict ownership, stock options and bonuses to only the highest-level executives." (PBS)  


Letter from Employer Organizations to Congressmen and Senators Opposing Any Further Increases in PBGC Premiums (PDF)
"Just last year, Congress imposed a $9 billion increase in PBGC premiums under [MAP-21, which] is to be fully phased in by 2015. In the span of just two years, the flat rate premium will have increased by 40 percent and in three years, the variable rate premium will have increased by over 100 percent, which translates into millions of dollars in additional costs for companies that offer pension benefits to their employees. The first increase was implemented this year, and the final increase is not effective until 2015. Thus, it is premature for Congress to consider additional premium increases before the most recent increases are fully realized." (American Benefits Council and sixteen other employer organizations)  

Benefits in General; Executive Compensation

[Official Guidance]

Text of IRS Notice 2013-80: Standard Mileage Rates for 2014 (PDF)
"The standard mileage rate for transportation or travel expenses is 56 cents per mile for all miles of business use (business standard mileage rate).... The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization under Section 170.... The standard mileage rate is 23.5 cents per mile for use of an automobile (1) for medical care described in Section 213, or (2) as part of a move for which the expenses are deductible under Section 217." (Internal Revenue Service)  

2013 Year End Benefit Plan Compliance Update and Reminders for Employers
"Employment practices that affect the administration of benefit plans should also be reviewed. Chief among these practices is the classification of workers as employees or independent contractors. In this regard, we note that both the IRS and DOL intend to focus on worker classification issues in the coming year. This enforcement activity could affect both welfare plans and retirement plans, so employers should put this issue at the top of their compliance work plans for 2014." (Verrill Dana LLP)  

Stock Plan and Award Litigation:Risk Management Checklist
"Be sure to fully document award grant dates, and to be sure the exercise price for stock options is not below-FMV on the date on which all approvals are received for the award.... When employees terminate employment or otherwise face expiration of their stock options, consider sending them a plan prospectus or other notice in order to avoid nuisance claims ... Although there is no fiduciary duty to structure awards in a manner that qualifies for a Code 162(m) exemption, the compensation committees of public companies should endeavor to do so when feasible." (Executive Pay and Loyalty)  


Towers Watson CEO Pay Ratio Comments Urge SEC to Provide Greater Flexibility and Year-to-Year Predictability
"We recommended that the SEC permit companies to use either a consistent definition of compensation or a consistently applied job level to determine the universe of employees where the median employee can be found. Once that universe is identified, the company would then be required, as under the proposed regulations, to identify the median employee within that universe, using statistical sampling if desired." (Towers Watson)  

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