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Employee Benefits Jobs
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Hand-picked links to the web's best news articles,
official guidance, jobs, webcasts and more.
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[Guidance Overview]
Announcement Clarifies Inconsistency Between IRS and Tax Court Interpretations of 1-Per-Year Rollover Limitation
"This effort [in IRS Announcement 2014-15] to clarify how the 1-rollover-per-year limitation applies may, however, create new uncertainties. Among them is whether the limitation will prevent a taxpayer from taking more than one distribution from any IRA during a calendar year, or only from taking more than one distribution from any single type of IRA. How the IRS resolves this issue will be critical, for example, to taxpayers with access to both traditional and Roth IRAs. Will the IRS interpret the limitation to prevent them from taking one distribution from a traditional IRA, and another distribution from a separate Roth IRA, during a single 12-month period?"
(Bloomberg BNA)
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More Employers Adding Roth Features to Expand Savings Options
"[H]alf of all companies now offer a Roth account, nearly five times the percentage that did so in 2007 (11 percent).... [An analysis of] more than 3.5 million eligible participants in over 125 defined contribution plans ... found that employee participation in these Roth accounts is also steadily increasing. In 2013, 11 percent of workers saved to a Roth account when it was available in the plan, up from 8 percent in 2011.... Where Roth 401(k) accounts are available, 15 percent of workers in their 20s contributed to a Roth, compared to fewer than 8 percent of workers in their 50s."
(Aon Hewitt)
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Are There Two Five-Year Roth Clocks?
"Plans that allow for designated Roth contributions and in-plan Roth conversions must track the five-year Roth clock for purposes of determining if the Roth distribution is a 'qualified distribution' and must also track a separate five-year Roth clock for purposes of determining whether in-plan Roth rollover amounts withdrawn from the plan are subject to a recapture tax. Separate five-year clocks must be tracked for each year in which a participant makes an in-plan Roth conversion."
(McKay Hochman)
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Roth 401(k): Does Switching to One Make Sense?
"Choose to pay your taxes whenever your tax rate will be lower.... If you're early in your career and upbeat about your potential to grow your wealth, your 10% or 15% tax bracket now is almost certainly more appealing than your future. If you're in your peak earnings years and your tax bracket is 33%+, the odds are more likely than your tax rates will be lower in retirement once those wages are no longer part of the picture. In the middle -- the 25% and 28% tax brackets -- you'll have to consider whether you'll be able to accumulate enough ... such that at the margin, your tax rate really will be higher in the future."
(The Wall Street Journal; subscription may be required)
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Alternative Investments: A Checklist for Fiduciaries
"The investment adviser's duties of conducting routine due diligence on alternatives should include a quarterly checklist to aid board members and key employees at the organization in carrying out their fiduciary duties. Here's a roadmap of some key areas that should be reviewed periodically by both the investment adviser and a key employee at the company sponsoring the retirement plan. In addition to helping fiduciaries, an alternative investment checklist may assist an institution with its annual audit. [These criteria] can be applied to all types of alternative investments."
(Employee Benefit News)
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Tussey vs. ABB: When Does a Plan Asset Cease to Be a Plan Asset?
"[T]he District Court concluded that participants' contributions became plan assets as soon as they were segregated from ABB's general assets. The Eighth Circuit did not dispute this notion, but nonetheless concluded that the contributions lost their status once the Plan surrendered them for benefits of investment option ownership. The critical aspect of the Eighth Circuit's holding is that Fidelity's disputed dealings with float income did not occur until after this surrender. This temporal perspective of the definition of plan assets could obfuscate future duty of loyalty litigation." [Tussey v. ABB, Inc., No. 12-2056 (8th Cir. Mar. 19, 2014)]
(Bloomberg BNA)
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Get Your Advisory Clients to Take Ownership of Retirement
"The days of signing up for a pension, putting in years of service -- often with the same employer -- and collecting a monthly check in old age are relics. Instead, individuals will have to generate a larger share of their own income during retirement, a difficult task that will only grow more so as life spans continue to lengthen, traditional pensions fall by the wayside, and health and long-term-care costs rise."
(InvestmentNews)
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Pension Bonus Payments Not Just a Detroit Issue
"Two state of Michigan pension funds -- one for retired state employees and one for retired teachers -- distributed nearly $900 million through 13th checks between 1982 and 2002, records show. About $641.4 million was paid from the Michigan Public School Employees Retirement System and about $238.5 million from the Michigan State Employees Retirement System. State laws that provide for -- and in certain circumstances require -- payment of the 13th check remain on the books."
(Livingston Daily.com)
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What's in a Rate? April 2014 Interest Rate Update
"How do interest rates affect group annuity pricing? ... What is the difference between Net and Gross rates?... How do carriers determine their rate? ... What is a tickler rate?... Can one intermediary offer better interest rates than the other? ... How do I go about getting historical rates?"
(Dietrich & Associates)
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Principal CEO Scoffs at Private Equity in 401(k)s
"Private equity funds are probably too complicated for the average investor's retirement account, according to Principal Financial Group Inc., which provides the plans to 3.8 million people. 'When people start talking about ETFs and liquid alts and private equity and all of that stuff, I too chuckle a little bit,' Principal Chief Executive Officer Larry Zimpleman said ... in response to a question about including exchange-traded funds and other options in 401(k) plans. 'It's really hard to see how that is something that can be easily explained.'"
(InvestmentNews)
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[Opinion]
Are We Under-Saving for Retirement?
"A realistic replacement rate, though hard to measure, is well below 80 percent. As important, the concept's usefulness is limited. Matching pre-retirement living standards can be desirable, but it's not a proper public-policy goal. How well people live in retirement depends mostly on how productively and prudently they lived before retirement. It's a matter of personal responsibility. Public policy should aim more modestly at protecting against hardship.... Studies aside, there's little real-world evidence of pervasive under-saving."
(Robert J. Samuelson in The Washington Post; subscription may be required)
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[Opinion]
Connecticut Must Consider a Public Retirement Plan
"The guaranteed annual return reduces the investment risk faced by plan participants. Because the plan is pre-funded (benefits are paid out from participants' contributions, plus investment returns), it does not face the solvency risks common to traditional pensions. The accounts could not be cashed out on leaving an employer, ensuring that the assets will be there when the employee does retire. The default annuity (although participants would have the option to take a lump-sum distribution) ensures that retirees will not outlive their savings."
(CTMirror)
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[Opinion]
North Carolina Pension's Secretive Alternative Investment Gamble: A Sole Fiduciary's Failed 'Experiment'
"The unchecked ability to steer tens of billions in workers' retirement savings into hundreds of the highest-cost hedge, private equity, venture and real estate funds ever devised by Wall Street, in exchange for political contributions to her campaign and to the campaigns of other influential politicians, makes the [North Carolina State] Treasurer today arguably the state's most powerful elected official. The profound lack of transparency related to these risky so-called 'alternative' investments provides investment managers ample opportunities to charge excessive fees, carry out transactions on behalf of the pension on unfavorable terms, misuse assets, or even steal them outright."
(Forbes)
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Benefits in General; Executive Compensation
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[Guidance Overview]
Employee Benefits in Post-DOMA Minnesota
"Until recently, the State of Minnesota recognized marriage only between individuals of opposite sexes and did not officially recognize any sort of 'civil union' or 'domestic partnership' between same-sex partners. Legislation legalizing same-sex marriage ... took effect August 1, 2013.... The changes in the law require Minnesota employers to offer spousal benefits under both state and federal law to spouses in same-sex marriages, regardless of the state in which the marriage occurred."
(Moss & Barnett)
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Employer Must Prove Physical Presence in Workplace is Essential Function, Sixth Circuit Rules
"Likely making it easier for employees to telecommute from home as an accommodation under the Americans with Disabilities Act, the [Sixth Circuit] has determined that 'attendance' is no longer synonymous with physical presence in the workplace.... Employers should be prepared to identify the job requirements that cannot be performed remotely. Further, employers who must accommodate an employee should plan for the related employment issues that go along with working from home, including tracking hours for non-exempt employees, monitoring employee productivity and performance remotely, and maintaining data privacy and security of sensitive company and client information when this information is accessed remotely or maintained at an employee's residence." [EEOC v. Ford Motor Company, No. 12-2484 (6th Cir. Apr. 22, 2014)]
(Jackson Lewis LLP)
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Sixth Circuit Affirms Claim Denial and Penalty for Failure to Provide Plan Documents
"With this decision, the Sixth Circuit joins several other appellate courts in adopting the 'clear notice' standard and provides a reminder to review document requests carefully and interpret them broadly. Documents may need to be furnished even if the request does not identify them by name, and per-day penalties can add up quickly. In addition, among other best practices, the SPD should clearly identify the address to which written document requests should be delivered, in order to avoid delays caused by misdirected requests." [Cultrona v. Nationwide Life Ins. Co., Nos. 13-3558/3585 (6th Cir. Apr. 9, 2014)]
(Thomson Reuters / EBIA)
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Considerations for Transitioning Out of a Professional Employer Organization
"While PEOs can provide a good employee benefits solution for a small company in the early stages of development, they will not necessarily be a cost-effective way to provide benefits once the company has grown. After crossing the 25-employee threshold, it becomes critical to consider other options for providing competitive employee benefit programs. Employers must be cognizant of the many cost, transitional and investment control issues that come with using a PEO."
(William Gallagher Associates)
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Press Releases
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