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March 17, 2014          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Retirement Plan Administrator
Producing TPA
in MO

Experienced Benefits Law Attorney
Bricker & Eckler LLP
in OH

Evening Pricing Specialist - Full-time or Part-time
New York Life Retirement Plan Services
in MA

Retirement Consulting Manager
JPMorgan Chase
in KS

Plan Administrator
Howard Simon & Associates
in IL

Batch Analyst
IUPAT Industry Pension Fund
in MD

Group Health/Ancillary Benefits Producer
Stalker & Associates
in PA

President and Chief Executive Officer
The ERISA Industry Committee (ERIC)
in DC

401K Client Service Representative
Ascensus
in PA

401K Account Manager
Ascensus
in PA

Plan Specialist
Transamerica Retirement Solutions
in NY

Plan Consultant
401(k) Advisors
in TX

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Webcasts and Conferences

2014 Webinar - Conversions and Recharacterizations
April 3, 2014 WEBCAST
(Ascensus)

Information Reporting Under Health Care Reform: Final Rules for Code §§ 6055 and 6056 Returns and Statements
April 16, 2014 WEBCAST
(Thomson Reuters / EBIA)

Aetna’s Obesity Drug Pilot: Strategies to Improve Health Status and Lower Costs
April 17, 2014 WEBCAST
(Atlantic Information Services, Inc)

ERISA Pension Plans: Mitigating Liability Risks for Hedge and Private Equity Fund Alternative Investments
April 17, 2014 WEBCAST
(Strafford)

2014 Webinar - IRA Investments and Investment Issues
April 17, 2014 WEBCAST
(Ascensus)

2014 IRA Online Institute
May 19, 2014 WEBCAST
(Ascensus)

2014 IRA Institute
June 9, 2014 in MN
(Ascensus)

2014 IRA Institute
October 6, 2014 in AZ
(Ascensus)

2014 Fall Forum
October 20, 2014 in LA
(Ascensus)

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 PBGC Monthly Interest Rate Update for April 2014
"The immediate interest rate for valuing lump sum payments for the month of April 2014 is 1.50% and the deferred interest rate I1 is 4.00%, I2 is 4.00%, and I3 is 4.00%. (The immediate interest rate for March 2014 was 1.50% for lump sum payments; the deferred interest rate I1 was 4.00%, I2 was 4.00%, and I3 was 4.00%). The spot first, second, and third segment rates for determining the variable rate premium amount for premium payment years commencing in March 2014 are, respectively, 1.17%, 4.29%, and 5.36%." (Pension Benefit Guaranty Corporation [PBGC])  


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[Official Guidance]

Text of IRS Notice 2014-16: March 2014 Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
"This notice provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), ... the 24-month average segment rates[,] ... the interest rate on 30-year Treasury securities ... as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate ... and the minimum present value segment rates ... as in effect for plan years beginning after 2007. These rates reflect certain changes implemented by [MAP-21]." [Also see Excel spreadsheet for corporate bond monthly yield rates.] (Internal Revenue Service [IRS])  

[Guidance Overview]

DOL Proposal Would Require New 'Roadmap' Guide for 408(b)(2) Fee Disclosures
"The Guide requirement may require a substantial re-engineering of the ERISA 408(b)(2) disclosure process for affected firms. Even though the effective date is presumably many months away, the time and expense necessary to reconfigure a firm's disclosure process and to make the necessary technology changes may be significant, especially for larger firms with multiple offices and investment products. A decision will need to be made in the relatively near future as to whether Fee Disclosures as modified by the proposed Guide requirement should be handled through internal staffing and resources, or outsourced to a third party provider that is capable of preparing the required Fee Disclosures for a fee ." (The Wagner Law Group)  

[Guidance Overview]

Navigating Fee Disclosures: DOL Proposes Service Providers Furnish Guide
"The guide requirement would be effective 12 months after final rules are published. However, EBSA did not explicitly indicate whether the guide requirement will apply to both existing and future plan service contracts or arrangements, or only those that are entered into or renewed after the effective date of the final regulations." (Quarles & Brady LLP)  

Protecting Private Wealth: Recent Bankruptcy Cases Involving Tuition Payments and Profit Sharing Plans
"Although the IRS had previously audited the debtor's tax returns and did not disqualify the profit sharing plan or assess additional taxes, the First Circuit rejected the debtor's argument that the IRS's favorable determination following the audit created a presumption that the debtor's interest in the profit sharing plan was exempt from his bankruptcy estate. The First Circuit also upheld the bankruptcy court's ruling that the debtor's individual retirement accounts were not exempt because the debtor intentionally concealed or failed to fully disclose those assets in a number of court filings." [In re Daniels, No. 12-2376 (1st Cir. 2013)] (BakerHostetler)  


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U.S. Solicitor General Says There Is No Presumption of Prudence Under ERISA
"In the Solicitor General's view, the presumption of prudence arose out of courts' misunderstanding of the exemption from the duty to diversify plan assets that ERISA grants to ESOP fiduciaries. According to the Solicitor General, the 'diversification exemption merely absolves ESOP fiduciaries from the ordinary obligation to reduce risk by spreading plan assets among multiple prudent investments. It does not permit them to concentrate plan assets in an imprudent investment, such as employer securities the fiduciary knows or should know are materially overvalued.' In short, the Solicitor General concludes, ERISA 'obligates the fiduciary of a plan that includes an ESOP option to depart from the plan's requirements if the initial investment options are no longer prudent.'" (Schnader Harrison Segal & Lewis LLP)  

Are ESOPs Too Risky to Be Good Retirement Plans?
"Based on [DOL] filings, companies on average contribute 50% to 100% more to ESOPs than non-ESOP companies do to 401(k) plans. Most of the money in a 401(k) plan comes from the employee. With few exceptions, all the assets in an ESOP come from the company.... [ESOP companies] lay people off less often than non-ESOP companies. ESOPs cover more employees, especially younger and lower income employees, than 401(k) plans. ESOP companies are somewhat more likely to offer secondary retirement plans than conventional companies are to offer any plan." (National Center for Employee Ownership [NCEO])  

Checklist for Determining Whether an ERISA 403(b) Plan Needs a Financial Statement Audit
"Each step on [this checklist] results from specific legislation regarding the correct way for a 403(b) to count its participants as of the beginning of the year. An accurate participant count is an important first step in determining whether an ERISA plan needs to attach audited financial statements to their Form 5500. Large ERISA plans must engage an independent qualified public accountant (IQPA) to audit the plan's financial statements. Most small plans are not required to have audited financial statements." (Belfint Lyons Shuman)  

Multiple Employer Plans Grabbing More Attention
"Some MEPs are several decades old, with the concept well established among professional organizations and associations as well as large corporations with numerous subsidiaries. It has not, however, taken off with small and midsize firms. That's because there has been a lack of guidance or sometimes conflicting guidance from the [IRS and the DOL]... Now, with four legislative proposals making the rounds on Capitol Hill to help clear up the confusion and make it easier to form multiple plans, 'it's going to help conquer what I consider the last frontier,' said Edward Ferrigno, vice president for Washington affairs for the Plan Sponsor Council of America." (Pensions & Investments)  

A Warning on Multiple IRA Rollovers
"Although possibly representing a significant departure from previous advice, in light of the court's decision in Bobrow, it would be prudent to instruct clients to avoid making any more than one 60-day IRA-to-IRA rollover per year. If clients want to move money more frequently, they can still use trustee-to-trustee transfers, which can be made at any time, without regard to the once-per-year rollover rule. Direct transfers (trustee-to-trustee transfers) are still the preferred method to steer clear of this kind of tax trouble." (InvestmentNews)  

Pension Funds Still Living with Financial Crisis
"Overall assets among 2,400 pension funds, foundations, endowments and Taft-Hartley plans jumped to $9.13 trillion in 2013, up 11% from the previous year, according to Greenwich's 2013 U.S. Institutional Investor study. Despite the strong returns, many plan executives are continuing to revamp portfolios in reaction to the financial crisis." (Pensions & Investments)  

The Paradox of 403(b) Vesting Schedules (PDF)
"[E]mployers with 403(b) plans are considering the feasibility of making contributions subject to a vesting schedule. But first, the plan sponsor and fiduciaries need to be comfortable with a paradox: the plan established under a law requiring nonforfeitable accounts also has a provision permitting forfeitable accounts. This article describes why 403(b) vesting schedules are problematic and how nonvested contribution provisions are feasible." (Journal of Pension Planning & Compliance, via Fidelity Investments)  

Explaining 401(k) Nondiscrimination Test Refunds to HCEs
"In many cases, the HCEs receiving the refunds are not in a position to influence the corrective method selected by the employers. In cases when refunds of excess contributions are processed, plan officials have to be prepared to explain why contributing as much as possible is encouraged by the media, but the maximum limits can be lower than expected if the plan does not pass the non-discrimination tests." (Belfint Lyons & Shuman, CPAs)  

California Pension Reform Measure Abandoned After Court Ruling
"Backers of a ballot measure to cut California's public pensions, which was seen as a model for other states, abandoned their campaign to win voter support ... after Sacramento Superior Court Judge Allen Sumner rejected a lawsuit filed by [San Jose mayor Chuck] Reed and other measure proponents against Kamala Harris, California's Democratic attorney general, for what they said was biased, union-friendly language for the voter initiative." (Reuters)  

The State of U.S. Retirement Security: Can the Middle Class Afford to Retire?
"In theory, the shift from defined-benefit pensions to defined-contribution plans could have broadened access by making it easier for employers to offer retirement benefits. However, participation in employer-based plans, which peaked at just over half (52 percent) of prime-age wage and salary workers in 2000, fell to 44 percent in 2012. This occurred even though the baby boomers were entering their 50s and early 60s, when participation rates tend to be high[.]" (Monique Morrissey, for Economic Policy Institute)  

Enrolled Actuaries Report, Spring 2014 (PDF)
Articles include: [1] Congress presses for pension accounting changes; [2] Benefits of delaying Social Security; [3] Essential elements: raising Social Security retirement age; and [4] Nondiscrimination relief. (American Academy of Actuaries)  

Benefits in General; Executive Compensation

Second Circuit Clarifies Standards for Awarding Attorney Fees in ERISA Case
"The Second Circuit emphasized that courts do not have 'unbridled discretion' when deciding requests for attorneys' fees. According to the Second Circuit, the district court in Donachie misapplied the Chambless factors by: [1] Treating the insurer's absence of bad faith as the sole basis for denying the participant attorneys' fees. [2] Failing to consider the insurer's culpability. [3] Inadequately addressing the 'relative merits' of the parties' positions." [Donachie v. Liberty Life Assurance Company of Boston, No. 12-2996-lv (2d Cir. Mar. 11, 2014)] (Practical Law Company)  

Risk, Ambiguity, and the Exercise of Employee Stock Options
"[The authors] investigate the importance of ambiguity, or Knightian uncertainty, in executives' decisions about when to exercise stock options. [They] develop an empirical estimate of ambiguity and include it in regression models alongside the more traditional measure of risk, equity volatility.... [E]ach variable has a statistically significant effect on the timing of option exercises, with volatility causing executives to hold their options longer in order to preserve remaining option value, and ambiguity increasing the tendency for executives to exercise early in response to risk aversion." (National Bureau of Economic Research [NBER])  

Stop the Presses! Politician Makes Positive Comments on Executive Compensation
"New York State Comptroller Thomas DiNapoli issued a press release Wednesday titled, 'Wall Street Bonuses Went Up In 2013, Bonuses Were Boosted by Deferred Compensation' ... As explained by the Comptroller, this is good news.... [M]uch of the increase was attributable to deferred compensation, payable in later years and subject to forfeiture or clawback if current financial results turn out to be not as good as they first appeared. This is exactly what Dodd-Frank Act Section 956 and the 2010 Interagency Guidance on Sound Incentive Compensation Polices sought to achieve." (Winston & Strawn LLP)  

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