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December 11, 2013          Get Health & Welfare News  |  Advertise
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Webcasts and Conferences

Power Up Your Practice - Rockville, MD
January 9, 2014 in MD
(Rekon Event Management)

6th Annual Leadership Summit on Consumer Engagement through Health Plan Innovation
March 25, 2014 in FL
(World Congress)

2014 Regional Conference: Philadelphia
May 1, 2014 in PA
(American Society of Pension Professionals & Actuaries (ASPPA))

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[Guidance Overview]

IRS Finalizes Rules for Reduction or Suspension of Safe Harbor Contributions
"[E]mployers who sponsor 401(k) plans that provide safe harbor non-elective contributions may want to consider resending their safe harbor notices in mid-December to include a statement that the employer may amend the plan to reduce or suspend the contributions mid-year. Employers who sponsor 401(k) plans that provide safe harbor matching contributions, however, should not need to add such a statement to their 2014 plan year notices and instead should be able to wait until sending the 2015 plan year notice to include such a caveat." (Porter Wright Morris & Arthur LLP)  


[Advert.]

2014 Advanced Pension Conference in Orlando February 5-7

Sponsored by SunGard's Relius Education

Reasons to attend: We are back at Disney, 21 breakout sessions to choose from plus general sessions, more timely topics, access to our ERISA experts, 19 CE hours, deeper registration discounts, and industry networking. Register by January 6 and save $150.



How to Evaluate Fiduciary Insurance for Advisors
"Since ERISA claims and DOL investigations often relate to activities many years in the past, it's essential to make sure that you have some form of policy -- whether an old-fashioned 'occurrence' policy, a 'claims made' policy with 'tail' coverage, or a current 'claims made' policy covering prior acts -- that covers prior years." (Groom Law Group)  

New Rules for Pension Risk Transfers?
"According to a Towers Watson survey of executives at 180 companies, 75% say they have a journey plan -- a program for de-risking the pension plan that includes triggers for making future changes -- or are planning one. And half of the executives surveyed said their company's journey plan includes unloading some of its pension obligations." (Treasury & Risk)  

End-of-Year Roth Conversions and Capital Gains Harvesting
"In the past, a minimize-and-defer-income approach has been rather effective. But in today's tax environment ... just pushing income indefinitely into the future is not necessarily the best strategy anymore. Instead, deferring too much income into the future may simply mean that when it's finally time to liquidate ... income at the time can rise so high that tax rates skyrocket! ... [It] may be far more effective to consider strategies like Roth conversions or capital gains harvesting that aim to accelerate income into the current year, rather than defer it into the future." (Michael Kitces in Nerd's Eye View)  

Budget Deal Includes $12 Billion in Pension Changes for Federal Employees
"New civilian employees hired after Jan. 1 would have to pay more toward their federal pensions, under a two-year budget deal ... that also would trim benefits for some military retirees.... The proposed changes include an increase of 1.3 percentage points in retirement contributions for civilian employees hired starting in 2014. It also would decrease annual cost-of-living adjustments for military retirees still of working age." (The Wall Street Journal; subscription may be required)  


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It May Be Possible to Reach DB Plan Objectives Regardless of Interest Rates
"This paper puts three fixed income strategies to the test in three different interest rate scenarios (rising, falling and staying the same) over a 10-year period. The strategies are evaluated both on their impact to funded status and total accounting cost. The findings are surprising. They show that an approach using a combination of core and longer-duration bonds to match the plan's liability duration, comes out on top in a significant percentage of potential scenarios." (Principal Financial Group)  

Dietrich Pension Risk Transfer Index, December 1, 2013 (PDF)
"The monthly Index value increased 0.02 points due to increases in plan funded status and annuity discount rates. The annuity discount rate proxy embedded within the Index increased to 3.26%." (Dietrich & Associates)  

Variable Annuity Designs: Promise and Pitfalls
"On their face, these [variable annuity plans (VAPs)] look like traditional defined benefit plans, which define an annuity benefit payable at normal retirement age. The VAP wrinkle is that formula benefits are adjusted annually based on the return on plan assets compared to a 'hurdle rate', which can't be lower than 5%.... However, there are significant employer risks associated with this design, particularly when combined with a lump sum payment provision." (October Three Consulting)  

Imperiled Illinois Public Pensions Get Sweeping Reforms
"The new law has five main components: a change to the cost-of-living adjustment for retirees, a percentage point decrease for employee contributions, an increase in the retirement age for certain employees, the creation of a defined contribution option and a strict schedule for the state to pay down the pension deficit. By sticking with these reforms, lawmakers estimate that Illinois' pension plans will be fully funded by 2044. The law also includes a provision that would prohibit most collective bargaining on pension matters. Within hours of the law's passage, labor groups voiced their objections." (Institutional Investor)  


[Advert.]

Available January 2, 2014!

Business owners are responsible for the day to day as well as running a successful business, which means that at times those important business related tasks are placed on hold. www.TPAresources.com was built specifically keeping that in mind. Subscriptions available 1/2/14!



[Opinion]

Be an Advocate for Retirement Plans that Work
"While defined contribution plans have helped millions of Americans amass trillions of dollars, we know more needs to be done. More Americans need to participate in worksite plans and those who do need to save at higher levels. We also know that some have made poor investment choices and never made changes, thanks to inertia.... [K]ey design features do move the needle on participation and savings." (The Principal Blog)  

[Opinion]

John Bogle: Apply Fiduciary Duty to Anyone 'Touching Other People's Money'
"'There has to be at some point a great willingness of the government -- particularly the SEC and also the Labor Department -- to take responsibility for making sure that if you're touching other people's money, you are a fiduciary,' [John Bogle, founder of The Vanguard Group Inc., said] ... He acknowledged that some accommodations would have to be made in fiduciary duty rules that allow brokers who are strictly sales representatives to continue to do their jobs." ... But instead of focusing on safe harbors for certain kinds of brokerage activities, the agencies should keep the big picture in mind, he said." (InvestmentNews)  

[Opinion]

Letter from American Benefits Council to Budget Conference Committee Regarding PBGC Premiums and Other Benefit Tax Incentives (PDF)
"Imposing further premium increases simply to offset other federal spending contributes to an environment in which employer plan sponsors committed to remaining in the system must expect to see their costs increased regardless of their plans' ability to pay promised benefits. Sponsors of these plans rightfully view these premiums as a tax that simply raises the cost of maintaining the plan.... [A]ny purported short-term revenue gain derived from restricting retirement savings is largely illusory because lower current savings results in smaller distributions -- and less tax revenue collected -- when workers retire." (American Benefits Council)  

[Opinion]

Straightforward Math: The PBGC's Financial Troubles are a Myth (PDF)
"Based on current figures and assuming a mere 3% cumulative rate of return on assets, PBGC will be able to permanently pay claims out of income, without ever using any existing assets. Of course, it is possible that PBGC could have large losses in the future that could force PBGC to possibly have to temporarily dip into principal to pay benefits. But this much is clear: based on its current finances, PBGC's single-employer program is one of the most financially stable entities in the government." (American Benefits Council)  

Benefits in General; Executive Compensation

25 Employee Benefit Trends for 2014, Part 2
"Know and Learn what the new benefits strategy lingo means.... Open and proactive employee communication.... Personalized employee retirement guidance and advice.... Satisfy same-sex marriage compliance.... Very important look-back measurement periods." (Employee Benefit News)  

A Sea Change for ERISA Litigation: The End of Class Actions? (PDF)
"Twenty years from now there may no longer be [ERISA] class actions.... A series of recent U.S. Supreme Court decisions ... indicate that ERISA plan sponsors who adopt mandatory arbitration provisions with class action waivers for employee benefit plan disputes may be able to eliminate all future ERISA class actions. Accordingly, every employer should assess whether the protections afforded by arbitration agreements coupled with class and collective action waivers outweigh the potential disadvantages." (Baker & McKenzie)  

A Look at the Year Ahead in Executive Compensation: Key Themes and Issues for 2014
"[A] recent analysis of the S&P 1500 ... showed that almost half of the CEOs in large U.S. companies received no salary increase last year, and a third haven't received one over the past three years.... Despite all of this, the continuing perspective outside those of us who work in this space seems to be that the executive pay model in the U.S. is still broken and, in particular, that absolute pay levels are too high and performance expectations too low. And this isn't just some populist, media-driven perspective. Many corporate directors and investors share these views. This suggests to us that while the underpinnings of the current U.S. executive pay model are relatively solid, pay practices continue to call for careful calibration heading into 2014." (Towers Watson)  

Employer Costs for Employee Compensation (PDF)
"Employer costs for employee compensation averaged $31.16 per hour worked in September 2013 ... Wages and salaries averaged $21.54 per hour worked and accounted for 69.1 percent of these costs, while benefits averaged $9.61 and accounted for the remaining 30.9 percent. Total employer compensation costs for private industry workers averaged $29.23 per hour worked in September 2013." (U.S. Bureau of Labor Statistics)  

IRS Issues 'Additional Medicare Tax' Final Rules
"In order to correct an overpayment of income tax or Additional Medicare Tax, an employer may make an interest-free adjustment on the appropriate corrected return, but only if the employer repays or reimburses the employee before the end of the calendar year in which the compensation was paid. In the same vein, in the event of an underpayment of income tax or Additional Medicare Tax, an employer may make an interest-free adjustment on the appropriate corrected return, but only to the extent the error is discovered within the calendar year in which the compensation was paid." (Benefits Bryan Cave)  

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