Roll Over, Bobrow: Surprising Tax Court Decision on IRA Rollover Rules
"The court's holding ... conflicts with the commonly held view that the 12-month limit only applies to rollovers from the same IRA -- a position that is specifically endorsed in Publication 590. While IRS publications are not binding on and are generally not given meaningful weight by courts, the IRS does not usually take litigation positions in conflict with its published materials. It is not clear at this time whether the IRS will revise the publication or otherwise issue guidance articulating its position regarding the 12-month rule." [Bobrow v. Commissioner, T.C. Memo. 2014-21 (Jan. 28, 2014)]
(Sutherland)
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SEC Investor Bulletin: How Fees and Expenses Affect Your Investment Portfolio (PDF)
6 pages. Excerpt: "As with anything you buy, there are fees and costs associated with investment products and services. These fees may seem small, but over time they can have a major impact on your investment portfolio.... Along with the other factors you think about when choosing either a financial professional or a particular investment, be sure you understand and compare the fees you'll be charged. It could save you a lot of money in the long run."
(U.S. Securities and Exchange Commission)
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Social Security File-and-Suspend Strategies for Couples and Individuals
"[T]he file-and-suspend strategy is not just an effective planning tool for couples and families with minor children.... [E]ven single individuals may wish to routinely file-and-suspend if they intend to delay anyway, as a way to 'hedge' against a future change in circumstances.... [T]here are caveats of the file-and-suspend strategy that must be navigated as well, including the fact that suspending will result in a suspension of all benefits (which limits couples from criss-crossing spousal benefits by having each file and suspend), and the fact that filing and suspending still triggers the onset of Medicare Part A benefits, which can render someone who chooses to file and suspend to be ineligible to make any more contributions to a Health Savings Account (HSA)."
(Michael Kitces in Nerd's Eye View)
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CalPERS Rate Hike: Governor Wins, Cities Lose
"A divided CalPERS board yesterday approved a faster rate hike for the state urged by Gov. Brown, but opposed by unions. A proposal to give struggling cities the option of more time to phase in the rate hike, seven years instead of five, was rejected. The rate hike to cover the cost of retirees living longer is the third in the last two years, following a lower earnings forecast and a more conservative actuarial method. Many local government rates could increase roughly 50 percent by 2020."
(Calpensions)
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CalPERS Decides to Speed Up Rate Increases for State
"[T]he CalPERS board ... set the stage for a rate increase that will cost the state treasury around $400 million beginning July 1. The increase will be phased in over three years and will ultimately cost the state an extra $1.2 billion a year. That will bring the state's annual payout to CalPERS to around $5 billion. The CalPERS board also approved higher rates for school districts and local governments, but opted to start them later and phase them in more gradually. Driving the higher rates: new studies showing longer life expectancies for retirees."
(Sacramento Bee)
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Who Will Pursue myRA Contracts?
"[T]he bidding process will likely favor niche service providers that already specialize in low-balance individual retirement accounts (IRAs), such as those providing automatic rollover and cash out services for terminating pension plans, among others.... [L]arger service providers tend to have business models that rely on clients building larger and larger account balances to offset administration costs and provide more attractive profit margins."
(PLANADVISER.com)
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Information for IRS-Approved Continuing Education Providers (PDF)
8 pages; provided via IRS-sponsored conference call January 28-31, 2014. Excerpt: "The second Continuing Education (CE) provider renewal season is complete. Improvements implemented last year were successful, but we did encounter a few challenges. Tips and clarifications are listed[.]"
(Internal Revenue Service)
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Treasury Senior Advisor Mark Iwry Explains Early History of the 401(k) and Where We Might Be Heading
"The investment industry emerged in recent years as the dominant influence on and driver of 401(k)s. It was not always this way. In fact, self-directed investment -- putting the employee in charge of determining how to invest, choosing among a considerable number of investment funds or options -- is not an inherent attribute of the 401(k). The core feature of the 401(k) is the employee's ability to choose how much to contribute, not necessarily how to invest."
(Fiduciary News)
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A 1% in Retirement Plan Assets?
"By the end of the fourth quarter of 2013, approximately 500,000 active 401(k) plans had a collective $3.5 trillion in total assets. Nearly three-quarters of this pool, or $2.54 trillion, was controlled by the top 1%: just 5,000 companies.... Fewer than two-tenths of 1% of 401(k) plan sponsors are responsible for fully half of the nation's 401(k) retirement plan assets ... [O]nly 630 very large companies control $1.75 trillion in assets. This distribution of 401(k) retirement assets suggests shifts in the investment options for a small number of plans could have a ripple effect that will impact every aspect of the market."
(PLANADVISER.com)
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Employee Ownership Update for February 18, 2014
Topics include: [1] New research: ESOPs and other benefit plans; [2] Employee ownership and the best companies to work for; [3] SEC proposal would make it easier to create internal stock markets; [4] UPenn program for ESOP company executives; and [5] Veteran-owned company joins ranks of largest employee ownership companies.
(National Center for Employee Ownership [NCEO])
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Companies Detangle from Legacy DB Plans
"In the past few years, there have been zero defined benefit plans created in the United States. The trend, at least in the corporate world, has moved very quickly.... Even though [DB plans] are dying elephants, it's going to take a long time for those elephants to die ... Insurance companies are now back in the game of managing these assets, some of which we might see moving from the BlackRocks of the world to the Prudentials of the world."
(Harvard Business School Working Knowledge)
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The High Cost of Early Retirement
"Let's say you have a job at 55 and want to retire next year. Even if you don't have to worry about kids, what's it going to cost you? Here's an itemized bill: [1] There's the salary you'll never get.... [2] And the benefits you lose.... [3] You're responsible for your own health care.... [4] You sacrifice Social Security benefits.... [5] You rob your future."
(U.S.News & World Report)
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[Opinion]
Detroit Says Protecting Pensioners is Key to the City
"[S]everal national and regional foundations ... have stepped in to contribute a total of $370 million to soften the blow to the City of Detroit's pensions and safeguard the Detroit Institute of Art's collection.... Some say that these institutions will never contribute -- that it's wishful thinking on our part. But why shouldn't we ask banks and other financial institutions -- particularly those that were bailed out with TARP money -- to help keep pension promises to retirees?"
(Pension Rights Center)
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Benefits in General; Executive Compensation
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[Guidance Overview]
Deadline for Nasdaq Certification Requirement for Compensation Committee Independence and Change to Nasdaq Independence Rules
"Companies listed on the Nasdaq Stock Market must certify that they have complied with Nasdaq's listing standards regarding compensation committees by the earlier of 30 days after their 2014 annual meeting (if that meeting is held after January 15) or October 31, 2014.... [A recent change] removes the absolute ban on compensation committee directors receiving compensatory fees. Instead, it requires a listed company's board to 'consider all factors specifically relevant to determining whether a director has a relationship to the company which is material to that director's ability to be independent from management in connection with the duties of a compensation committee member. '"
(Wilson Sonsini Goodrich & Rosati)
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Now is the Time to Test and Report Your Pay and Performance Relationship (PDF)
"Assessing the relationship between pay and performance requires establishing methodologies for calculating pay and evaluating performance, as well as determining the time period to analyze. The most traditional view for reviewing the pay and performance relationship reflects actual compensation granted, which includes base salary, annual incentive paid and grant date value of long-term incentives. While this is consistent with proxy reported information, it does not reflect actual pay received nor a full picture of performance."
(Meridian Compensation Partners, LLC)
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A Response to: The Warped Math of Executive Compensation
"Time-based vesting gives the CEO stability and security. If the CEO is always worried that any misstep will be the end of his income, job and perhaps career they have little incentive to try anything new. Systems that depend only on more of the same are destined to create nothing new of true import. Time-based vesting provides the foundation on which our technology innovation was built. Correctly designed performance-based equity provides the reward if the risks payoff (for everyone)."
(Performensation)
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Press Releases
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