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Principles of Defined Contribution Plans
April 9, 2014 WEBCAST
(McKay Hochman Co., Inc.)

New Health Care Reform Developments: What People Aren't Talking About
April 16, 2014 WEBCAST
(Thompson Interactive)

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[Official Guidance]

Text of IRS FAQs Regarding the Application of the Windsor Decision and Post-Windsor Published Guidance to Qualified Retirement Plans
6 Q&As cover operational questions for qualified plans, including: "If a plan's terms designate a particular state's laws as applying to the plan, and that state does not recognize same-sex marriage for purposes of applying state law, is it permissible for the plan to be operated in a manner that does not recognize a participant's same-sex spouse with respect to the 401(a) qualification requirements? In general, no.... May a qualified plan be amended in light of the Windsor decision to provide new rights or benefits with respect to participants with same-sex spouses? Yes.... Do the Windsor decision, Rev. Rul. 2013-17, and Notice 2014-19 apply to 403(b) plans? The rules of Rev. Rul. 2013-17 apply for all Federal tax purposes, including for purposes of the Federal tax rules that apply to Section 403(b) plans." (Internal Revenue Service [IRS])  

[Advert.]

SunGard's Relius Presents Retirement Plan Workshops April-June

Staying current on IRS and DOL changes is a constant challenge for busy pension professionals and practitioners. Relius Workshops help prepare you and your staff to meet the challenge. Multi‑program and early discounts are available. Register now.

[Guidance Overview]

The Wait Is Over -- IRS Guidance on Amendments Really Was Imminent
"[A] plan may (permissively) be amended to reflect the outcome of Windsor for some or all purposes as of a date prior to June 26, 2013, if the amendment complies with the applicable qualification requirements ... For example, a plan could apply only the QJSA and QPSA requirements to same sex spouses before June 26, 2013 solely with respect to participants with annuity starting dates or dates of death on or after a specified date. However, as the IRS warns, amending a plan retroactively to a date prior to June 26, 2013 may trigger requirements that are difficult to implement retroactively (such as the ownership attribution rules) and may create unintended consequences." (Benefits Bryan Cave)  

[Guidance Overview]

IRS Employee Plans News, April 4, 2014 (PDF)
Issue no. 2014-6. Topics include: [1] Treatment of Marriages of Same-Sex Couples for Retirement Plan Purposes: Notice 2014-19; and [2] Plan terminations: EP phone forum on May 6 at 2 p.m. EDT. (Internal Revenue Service [IRS])  

[Guidance Overview]

PBGC Proposed Regs Encourage Rollovers from DC Plans to DB Plans
"The PBGC wants to increase the retirement plan options available to employees who are participating in defined contribution plans. The proposed regulations promote this goal by providing guarantees to defined contribution plan participants who roll over their plan benefits to a pension plan that is later terminated by the PBGC." (Practical Law Company)  

Supreme Court ERISA 'Stock Drop' Argument Features Debate Over Fiduciary Duties
"The justices surprised most observers by focusing much of the hour-long argument on what an ERISA fiduciary must do if it has inside information that employer stock held by an ESOP is overvalued. Except for a few brief references, the justices did not discuss the question presented of whether a presumption of reasonableness applies at the pleadings stage of a stock-drop lawsuit.... Some justices appear to appreciate the limited options that an ESOP fiduciary has in these circumstances and may understand why seven courts of appeal have adopted the presumption of prudence. However, the justices do not appear interested in providing ESOP fiduciaries with a lesser standard of diligence." [Fifth Third Bancorp v. Dudenhoeffer, petition for certiorari filed Dec. 2012] (McGuire Woods LLP)  

[Advert.]

Learn, Network and Sell at the SPARK National Conference

Join senior executives from leading retirement services firms for unequaled networking, educational and sales opportunities. Gain insights into the latest market trends, business strategies, regulatory and legislative issues, and product developments. June 15-17. Register now.

Eighth Circuit Upholds Fiduciary Liability for Excessive Recordkeeping Fees but Not for Investment Mapping
"This decision serves as a reminder that fiduciaries overseeing plans with revenue sharing arrangements must understand these arrangements and determine whether their service providers are receiving more than 'reasonable' compensation for their services. Recordkeepers subject to the service provider disclosures are required to provide plan fiduciaries with a separate disclosure of recordkeeping costs. Plan fiduciaries will want to carefully review these disclosures and seek clarification if the disclosures fail to provide the information they need to independently determine whether a plan's recordkeeping costs are reasonable." [Tussey v. ABB, Inc., No. 12-2056 (8th Cir. Mar. 19, 2014)] (Thomson Reuters / EBIA)  

SEC Reconsiders Target-Date Fund Glide Path Illustrations
"The rule amendments would ... require marketing materials for TDFs to include a table, chart or graph depicting the fund's asset allocation over time ... SEC officials hope the reopened comment period will generate additional input on the question of whether such illustrations would be helpful to new and inexperienced investors and how difficult they would be to deliver for service providers. SEC officials also hope to test the industry's response to a new question coming out of a 2013 proposal from the SEC's Investor Advisory Committee, which urges the full SEC to take the additional and more challenging step of requiring a standardized glide path illustration that factors in important risk considerations -- not just asset allocation over time." (planadviser)  

EBSA's New Fee Disclosure Guidance: Questions as Much as Answers
"When would this separate guide be needed, and how detailed must it be? It is on these questions that the difficulty of complying will turn.... Such as, what is 'quick?' What is 'easy?' What is 'lengthy?' And a big one: 'who will decide?' There is legitimate concern that if a guide must have specificity down to the page number, or to the paragraph, it could be extremely costly for a [covered service provider] to create custom guides for the many plans it may serve." (Todd Berghuis, for Ascensus)  

Fiduciary Handbook for Understanding and Selecting Target Date Funds (PDF)
51 pages. Excerpt: "Target date funds are a good idea that could become a great idea. It wouldn't take much more to do what is best for beneficiaries. This handbook is normative. It explains what should be provided by target date funds. Each Chapter has 3 sections : Statement of facts ... Legal guidance... Ethical Perspective." (John Lohr, Mark Mensack and Ron Surz, for Target Date Solutions)  

Investing for Retirement:The Defined Contribution Challenge
13 pages. Excerpt: "Target date funds are rapidly becoming the workhorse for DC plans.... While this satisfies the common-sense intuition that, all things being equal, weight in stocks should go down as a person ages, there are a number of problems with this approach.... First, the standard solution is inflexible: all things are rarely equal.... Second, the standard solutions do not recognize that expected returns vary over time." (GMO LLC)  

Boomer Expectations for Retirement 2014
"The number of Boomers who are confident in their efforts to prepare financially for retirement has dropped nine percentage points, from 44% in 2011 to 35% in 2014. The percentage of Boomers who are confident they will enough money to live comfortably throughout their retirement years has dropped from 37% in 2011 to 33% in 2014.... Boomers are beginning to show tempered optimism regarding their longer-term financial futures, with 42% expecting their financial outlook to improve in five years." (Insured Retirement Institute [IRI])  

CalSTRS Members Get $300 Million from Surplus
"On a split vote, the CalSTRS board last week gave members in two unusual retirement accounts, which have a guaranteed minimum return, a $300 million credit from a surplus. To some board members it looked like bad timing and a policy out of step with the times. CalSTRS is seeking a multi-billion dollar rate increase for the main under-funded pension system.... Others said they wanted to keep the promise made to members when the board adopted the policy, which gives members a credit when surpluses above the amount needed for the guaranteed return reach a certain level." (Calpensions)  

IRA Custodian Creates 60-Day Rollover Problems
"The end result of all of this was that IRS let Tony put some funds back into an IRA, but not the full amount of his original SEP IRA balance. Both of Tony's IRA custodians made mistakes here. The SEP custodian did not timely release Tony's IRA funds. The Roth custodian apparently did not tell Tony that his funds went into non-qualified accounts, despite his instructions to the contrary. But Tony made mistakes too. He did not follow the most basic of the IRA and Roth IRA rules. He was only spared the consequences of his actions by the mistakes of his custodians." [Private Letter Ruling 1412020, Dec. 23, 2013; published online Mar. 21, 2014.] (The Slott Report)  

Reforming Public Pensions
"[P]ension reform raises new constitutional questions that are challenging courts to arrive at an acceptable conceptual framework for consistent interpretation and application. With ... financial, political, and legal considerations in mind, [the authors] suggest a comprehensive set of reform measures along with a managerial paradigm for political action.... [They] conclude that a comprehensive response to the public pension crisis is necessary to avert disaster and maintain plan solvency both now and in the future." (T. Leigh Anenson, Alex Slabaugh, Karen Eilers Lahey, in Yale Law & Policy Review, via SSRN)  

A Possible Alternative to the Moench-ies
"The approach has been to look for a presumption that emerges from the overall statutory scheme -- a la Moensch. Looking at the oral argument, it's not impossible to discern possible hostility on the part of the Court to a presumption that isn't expressly in the statutory language.... [T]he Moench presumption, which requires the uncovering of a presumption that is not expressly legislated, may not be the only way to get to a result that may indeed be the right one under ERISA." [Fifth Third Bancorp v. Dudenhoeffer, argued Apr. 2, 2014] (Andrew L. Oringer in Pension and Benefits Blog, by Bloomberg BNA)  

Employer-Sponsored Benefits Extended to Domestic Partners: Beyond the Numbers
"In March 2013, 72 percent of civilian workers had access to employment-based health benefits, and nearly all had such benefits extended to married spouses and children.... 32 percent of workers had access to health benefits that could be extended to unmarried same-sex partners and 26 percent had access that could be extended to opposite-sex partners.... In March 2013, 28 percent of civilian workers had access to a defined-benefit pension plan. All of these workers could extend survivor benefits to a spouse. In contrast, 15 percent of workers had access to a defined-benefit plan that allowed the employee to designate a same-sex domestic partner as the beneficiary of survivor benefits. Similarly, 14 percent of workers had access to a plan that provided survivor benefits to opposite-sex unmarried employees." (U.S. Bureau of Labor Statistics)  

CEO Pay Up 7% for Early Filers
"CEO total compensation among 100 early proxy filers grew 7% in 2013 to a median $6.7 million.... Median base salary was $988,000, up 3%. Bonus payouts, a barometer of annual performance, increased 4% to a median $1.4 million. Long-term incentive awards increased 5% to a median $3.9 million." (Steven Hall & Partners)  

Definition of 'Substantial Risk of Forfeiture' Gets Murky?
"Compensatory agreements often include a definition of Cause that will result in forfeiture in some or all of a benefit. Moreover, the Internal Revenue Code uses the same phrase ('substantial risk of forfeiture') in several different Code sections, albeit with different definitions. It is too early to overreact either way to the Austin decision, but there are a number of issues worth considering: [1] Are we applying tax on restricted stock too early and should we be using Section 83(b) elections more often? [2] Are we including FICA taxes and compensation expense on deferred compensation on RSUs too early? [3] Does the Austin decision have any effect on Section 409A, where the notion of SRFs plays an essential role in many important respects?" [Austin v. Comm., Nos. 8966-10, 8967-10 (T.C. Dec. 16, 2013)] (Winston & Strawn LLP)  

PSCA Invites Participation in its 57th Annual Survey
Plan Sponsor Council of America (PSCA)

BenefitsLink.com Launches New App for iPad, iPhone and iPod Touch
BenefitsLink.com, Inc.

Giuliana Rivers Joins Mercer’s Houston Office in its Defined Contribution Advisors Practice
Mercer

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