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December 13, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Retirement Planning Consultant
Transamerica Retirement Solutions
in WI

Actuary/Defined Benefit Administrator
Pension Benefits Unlimited, Inc. (PBU)
in CA

Defined Contribution Retirement Consultant
Capital Group
in TX

Regulatory Services Analyst
OneAmerica Financial Partners
in IN

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Webcasts and Conferences

Voluntary Insurance Products in the Workplace: Compliance Issues and Changing Legal Requirements
December 12, 2013 WEBCAST
(Thomson Reuters / EBIA)

Optimizing Your HSA Program After Open Enrollment
December 17, 2013 WEBCAST
(Tango Health)

Health Care Reform 101
January 16, 2014 WEBCAST
(Society of Actuaries)

View All Webcasts and Conferences

  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 2014-5: Temporary Nondiscrimination Relief for Closed Defined Benefit Plans, and Request for Comments (PDF)
"[This notice] provides a temporary additional eligibility criterion that permits a DB/DC plan to demonstrate satisfaction of the nondiscrimination in amount requirement of Reg. 1.401(a)(4)-1(b)(2) on the basis of equivalent benefits even if the DB/DC plan does not meet any of the existing eligibility conditions for testing on that basis under Reg. 1.401(a)(4)-9(b)(2)(v). Under this alternative, the DB/DC plan may nonetheless make that demonstration on the basis of equivalent benefits for a plan year that begins before January 1, 2016, if it includes a DB plan providing ongoing accruals that was amended, by an amendment adopted before December 13, 2013, to provide that only employees who participated in the DB plan on a specified date continue to accrue benefits under the plan, and if each of the DB plans in the DB/DC plan satisfies one of [two specified] conditions ... The Treasury Department and the IRS are considering whether the regulations under Section 401(a)(4) should be amended to provide additional alternatives that would allow a DB/DC plan to demonstrate satisfaction of the nondiscrimination in amount requirement of Reg. 1.401(a)(4)-1(b)(2) on the basis of equivalent benefits. This [notice] describes possible alternatives that would allow for such combined testing on the basis of equivalent benefits. Comments are requested on whether or not any of these additional alternatives should be made available, and whether there are any other alternatives that should be considered." (Internal Revenue Service)  


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[Official Guidance]

Text of PBGC Monthly Interest Rate Update, December 12, 2013
"The first quarter 2014 interest assumptions under the allocation regulation will be 3.35 percent for the first 20 years following the valuation date and 3.50 percent thereafter. In comparison with the interest assumptions in effect for the fourth quarter of 2013, these interest assumptions represent no change in the select period[,] ... an increase of 0.35 percent in the select rate, and an increase of 0.19 percent in the ultimate rate (the final rate). The January 2014 interest assumptions under the benefit payments regulation will be 1.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for December 2013, these interest assumptions are unchanged." (Pension Benefit Guaranty Corporation)  

[Guidance Overview]

Upcoming Compliance Deadlines for Retirement Plans
"There is one required amendment for defined benefit (DB) plans by the end of the 2013 plan year ... Other amendments might be required for plans that have made discretionary changes, that have recently received determination letters or that made Hurricane Sandy-related loans or hardship distributions before the plan documents permitted them.... Employers also are reminded about certain determination letter filing deadlines." (Sibson Consulting)  

More Participants Saving -- Not Spending -- Their Retirement Plan Distributions (PDF)
"[T]he percentage of lump-sum recipients who used the entire amount of their most recent distribution either for another employment-based plan or an IRA has increased sharply since 1993: well over 4 in 10 (45.2 percent) of those who received their most recent distribution through 2012 did so, compared with 19.3 percent of those who received their most recent distribution through 1993." (Employee Benefit Research Institute [EBRI])  

Los Angeles Says Unions Missed Deadline to Challenge Pension Rollback
"Hearing Officer Luella Nelson recommended that the Employee Relations Board, a five-member panel that decides labor disputes at City Hall, dismiss a challenge to the City Council's decision to cut pension pay for employees hired after July 1. Council members voted to scale back pension benefits and increase the retirement age in October 2012. That initiative, which applied only to new hires, was touted as a way to save the city up to $4.3 billion over 30 years." (Los Angeles Times)  

Hardship Distributions: Summary of IRS Tips and Guidance (PDF)
"The popularity of arranging for a hardship distribution electronically is growing. As part of the process, a participant may self-certify that he or she has met the plan's hardship distribution criteria. However, the fact that the distribution application was processed electronically does not relieve a plan sponsor of the need to gather documentation as proof of the validity of the applicant's immediate and heavy financial need.... The IRS indicated that agents will look for documentation that supports the participant's request and proves that the plan sponsor's hardship distribution process is in compliance." (United Retirement Plan Consultants)  

Pension Funds at the Dawn of 2014: Catch the Rebound! (PDF)
"In 2013, plan sponsors experienced the largest yearly funded status increase in more than a quarter of a century. In contrast to the previous five years, each of which had been worse than the last, the aggregate funded status of the Russell 3000 finally improved -- by more than 17% from year-end 2012 through November 2013, to 94%. We estimate that, barring extreme market moves, funded status will rise to 96% by the end of December 2013." (J.P. Morgan)  

Did MAP-21 Decrease Pension Contributions? (PDF)
"[A] majority of [individual employer plan] sponsors elected to pay in excess of the MAP-21 [minimum required contribution (MRC)]. 42% of plan sponsors elected to contribute above the 'pre-MAP-21' MRC. 23% paid well beyond their reported MAP-21 MRC (at least 20% more than the reported MAP-21 MRC). The remaining 35% paid in line with their MAP-21 MRC, or paid no contribution.... 31% of plans had no MRC for 2012 -- and of those, 60% chose to fund anyway." (Russell Investments)  


Why the Latest PBGC Premium Increases May Well Speed the DB System to Its Death Bed
"Together, MAP-21 and [the Bipartisan Budget Agreement] are going to make PBGC premiums one of the largest -- possibly the largest -- costs of running a DB plan.... The concept of insurance via a government agency only really worked as long as the cost of insurance was small enough to be a marginal consideration in plan decisions. At the new levels, it'll be anything but marginal. It will be a material consideration in a number of sponsor decisions." (Russell Investments)  


Why the Denial About the Retirement Crisis?
"While the stock market has performed relatively well over the past few years there is no way that account balances for any age group would have more than tripled by 2013. What's more, given that the formula for adequacy is accumulating at least 10 times your salary at retirement, a $360,000 nest egg is only around half of what's needed, given that the median wage for those in their 60s is $65,000." (The Huffington Post)  


Canada's Public Pension Problem?
"Too many people just don't understand the benefits of defined benefit (DB) plans. First, a DB plan pools investment risk so your ability to retire in dignity and security doesn't depend on the accident of your birthday. Second, a DB plan pools assets, significantly lowering costs of the plan. Third, a DB plan creates jobs and provides retirees with a predictable income so they can spend and enjoy their golden years. This in turn means less reliance on a government assistance and more jobs and taxes, which helps boost economic activity and reduce debt over the long-run." (Pension Pulse)  

Benefits in General; Executive Compensation

Top Hat Plan Testing Review
"Courts will uphold the vesting schedule and forfeiture provisions of an employer's non-qualified deferred compensation plan, but only as long as that plan is exempt from ERISA as a 'top-hat' plan. To be exempt as a top-hat plan, the non-qualified deferred compensation plan must limit eligibility to 'a select group of management or highly compensated employees.' [This post includes an] informal list of key factors for determining whether the plan limits coverage to a select group, ... collected over the years, based on existing case law, DOL views, and experience with clients[.]" (Winston & Strawn LLP)  

HR Spends More Time Educating About Benefits
"Despite competing priorities, one-third of HR professionals in the U.S. (32 percent) have increased the time they spend educating employees about workplace benefits ... Over the past two years, HR practitioners have spent significantly more time on activities related to their health care plans (61 percent of respondents), their company's 401(k) plan (38 percent), recruitment and layoffs (32 percent), and other compensation and employee-benefit-related issues (22 percent). The larger the company, the more likely it was that the HR professional put more time into these areas." (Society for Human Resource Management)  

Three Tips for Assessing Employee Stock and Options
"[1] Get a firm grip on exactly what you have been given.... [T]he most important implications to understand ... are the tax implications.... [2] Understand the factors that affect the company's growth so you can adjust your expectations and potential action accordingly.... [3] Most importantly, don't overestimate the blind spots you have precisely because you are an employee." (U.S.News & World Report)  

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