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Defined Benefit Coordinator
The Retirement Plan Company, LLC
in ANY STATE, OH, SC, TN

Conversions Specialist
Verisight, Inc.
in CA

Marketing Coordinator for Pension Software
DATAIR Employee Benefit Systems, Inc.
in ANY STATE, IL

Plan Review Specialist
Fifth Third Bank
in OH

Defined Benefit Testing Consultant
Transamerica Retirement Solutions
in MA

Retirement Plan Manager
SS&G, Inc
in OH

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Fundamentals of 401(k) and Other Qualified Plans 2014
July 30, 2014 in TX
(SunGard Relius)

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[Official Guidance]

Text of IRS Final Regs: Longevity Annuity Contracts
49 pages. Excerpt: "These final regulations modify the required minimum distribution rules in order to facilitate the purchase of deferred annuities that begin at an advanced age. These regulations apply to contracts that satisfy certain requirements, including the requirement that distributions commence not later than age 85. Prior to annuitization, the value of these contracts, referred to as 'qualifying longevity annuity contracts' (QLACs), is excluded from the account balance used to determine required minimum distributions." (Internal Revenue Service [IRS])  

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[Official Guidance]

Text of PBGC FY 2013 Projections Report (PDF)
"For many years, single-employer plans were the focus of attention because their total underfunding was much greater, PBGC's single-employer program net deficit was greater, and some very large plans had been terminated, whereas only a few multiemployer plans had failed.... While the single-employer program is still likely to remain in net deficit over the 10-year projection period, some improvement is likely due to improved economic conditions and other factors. In contrast, some multiemployer plans are deteriorating and PBGC's multiemployer program is more likely than not to run out of money within the next eight years." (Pension Benefit Guaranty Corporation [PBGC])  

[Guidance Overview]

Treasury Announces Final Regs Regarding Longevity Annuities
"The rules are largely consistent with the proposed regulations, but respond to public comments by expanding the permitted longevity annuities in several respects, including: Increasing the maximum permitted investment ... Allowing 'return of premium' death benefit ... Protecting individuals against accidental payment of longevity annuity premiums exceeding the limits ... Providing more flexibility in issuing longevity annuities." (Internal Revenue Service [IRS])  

Longevity Insurance Joins the Menu of Retirement Plan Options
"Longevity insurance is actually a deferred-income annuity, in which a person pays a lump sum premium to an insurer in exchange for a guaranteed lifetime income stream that begins several years later -- perhaps well into the person's 70s or 80s. Until now, these annuities could not be widely used in 401(k) retirement plans and individual retirement accounts because those plans require account holders to begin withdrawals ... at age 70-1/2. But on Tuesday the Treasury Department announced that workers can now satisfy those rules if they use a portion of their retirement money to buy the annuities and begin collecting the income by age 85. The move is part of the Obama administration's broader effort to develop ways to provide Americans with more security in retirement." (The New York Times; subscription may be required)  

PBGC Issues Dire Warning on Multiemployer Plans
"More than a million people risk losing their federally insured pensions in just a few years ... [Multiemployer] pensions were long considered exceptionally safe, but the [PBGC] reported that some plans are now in their death throes and could not recover.... Bailing out those plans seems highly unlikely. But if they are simply left to die, the collapse of the federal insurance program is all but inevitable... The agency does such a projection every year, but this year's version was unusually late and unusually dire." (The New York Times; subscription may be required)  

Supreme Court Rejects Presumption of Prudence for Fiduciaries Investing in Employer Stock (PDF)
"[P]lan fiduciaries must now identify an approach to monitoring the plan's investment in company stock designed to fulfill ERISA's prudence requirement while recognizing that ERISA's diversification requirement does not apply.... [T]he opinion counsels that fiduciaries could have a process in place for evaluating whether to freeze investment in employer stock or to publicly disclose material, non-public information. Importantly, such a process may be aimed at determining whether no prudent fiduciary could conclude that doing so would cause more harm to the plan than good." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)] (Groom Law Group)  

Supreme Court Rejects Special Presumption of Prudence for ESOP Fiduciaries
"Some employers with stand-alone ESOPs or 401(k) plans with an ESOP component rely on independent fiduciaries to make certain decisions relating to investments in company stock. Depending on how the Sixth Circuit ultimately decides, employers may want to consider the option of an outside independent fiduciary who will evaluate the company stock, monitor its continued performance, and make recommendations to the plan's trustee or investment committee." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)] (Quarles & Brady LLP)  

SEC Investor Advocate Calls on Congress to Fund More Examinations of Investment Advisers
"The agency is seeking $1.7 billion for fiscal 2015, an approximately $350 million increase from its current funding level. It has said it would use part of that money to hire 316 additional examiners for the Office of Compliance Inspections and Examinations. Of the new hires, about 240 would be for investment advisers." (InvestmentNews)  

401(k) and Retirement Advisers Shocked By, Sympathetic to and Cynical of Bogle Comments
"The article cited Bogle as being in favor of 'a federal body to approve products' offered to the retirement industry.... There is a general agreement that things aren't perfect. The nut is figuring out a way to fix it.... The concept of anything involving the government elicits the most cynical of responses.... It is the fixation on fees, specifically, mutual fund expense ratios, that raises the most questions." (Fiduciary News)  

Change in Average 401(k) Account Balances from January 1, 2013 Through July 1, 2014 (Infographic) (PDF)
This report shows change in average account balances grouped by age and tenure, from January 1, 2013 through July 1, 2014, for 'consistent' participants (those who had an account balance as of December 31, 2012). (Employee Benefit Research Institute [EBRI])  

Playing the Game of Pension Risk
"[F]or a large swath of mature companies who dumped their defined benefit plans years ago and replaced them with 401(k) plans, they would do well to review whether, in retrospect, the pension risks they accepted align with its appetite and tolerance for risk on an enterprise level.... While this is inevitably an exercise in squeezing the risk balloon, it's better that management use a firm hand to align the balloon's proportions with its global risk portfolio, than allow them to fall prey to agendas arising within a retirement plan information silo." (ERISA Fiduciary Administrators LLC)  

Unraveling Common Retirement Myths
"Behind every myth, there is a truth. This video series aims to unravel common myths about retirement -- from participant behavior to plan design -- and spotlight solutions to plan sponsors' biggest challenges." (Vanguard)  

The Most Important Person: Elements of Custom Target Date Fund Administration
"[T]he importance, complexity, and cost of the functionality has been underestimated. Unbundling the TDF does not just involve designing the glide path and asset allocation. It also involves stitching the pieces back together and implementing the solution. Without considering these components, the whole exercise is just theoretical. How does this all happen? What is necessary to actually implement and operate?" (Vanguard)  

Using Automatic Enrollment in Local Government Retirement Plans to Increase Savings
"The study found four main reasons local governments been slow to adopt automatic enrollment practices: ...[1] In a few places, an exemption to anti-garnishment laws has been written into statute for a particular retirement system or plan. [2] Government leaders worry that automatic enrollment in a supplemental savings plan might overburden their employees, especially those who earn modest wages. [3] There is debate in the labor community about whether or not automatic enrollment should be supported. [4] Administrative challenges, such as multiple record keepers." (Center for State & Local Government Excellence)  

Roth IRAs Most Often Created by Contributions, Not Rollovers
"In 2012, more than seven in 10 new Roth IRAs were opened exclusively with contributions -- in sharp contrast to traditional IRAs, which largely are created through rollovers from employer-sponsored retirement plans." (Investment Company Institute [ICI])  

Roth IRA Investor Activity, 2007-2012 (PDF)
"[F]orty-three percent of consistent Roth IRA investors contributed to their Roth IRAs between tax year 2008 and tax year 2012, and more than three-quarters of them contributed in multiple years.... Withdrawal rates rose slightly between 2008 and 2012, but still only a very small fraction of Roth IRA investors took money out of their Roth IRAs.... On average, in recent years, nearly $20 billion of contributions flowed into Roth IRAs per year. In tax year 2012, 30.3 percent of Roth IRA investors aged 18 or older contributed to their Roth IRAs, and more than four in 10 of these contributors did so at the legal limit." (Investment Company Institute [ICI])  

Effects of Flattening Tax Incentives for Retirement Saving
"[R]educing 401(k) contribution limits increases taxes for high-income taxpayers; expanding the saver's credit raises saving incentives and lower taxes for low- and middle-income taxpayers; and replacing the exclusion for retirement saving contributions with a 25 percent refundable credit benefits primarily low- and middle-income taxpayers, and raises taxes and reduces retirement assets for high-income taxpayers." (Urban Institute)  

A Statistical Profile of Employee Ownership
"[A]pproximately 28 million Americans own employer stock through [ESOPs], options, stock purchase plans, and 401(k) plans.... [As] of 2010, 17.4% of all employees working in the private sector reported owning stock or stock options in their companies, while 8.7% specifically held stock options." (National Center for Employee Ownership [NCEO])  

FINRA Official Says Variable Annuity Sales Raising Concern
"Carlo di Florio, chief risk officer and head of strategy at [FINRA], said variable annuities are taking on features that resemble complex structured products. For instance, they have caps that limit how high returns can go during market rallies and buffers that put a floor on how far they can fall during market slumps. The broker-dealer self-regulator wants to ensure investors understand what they're getting into when they buy these vehicles." (InvestmentNews)  

2014 National Cash Balance Research Report (PDF)
"The Cash Balance Plan market surged 22% versus a 1% increase in the number of 401(k) plans ... Cash Balance Plans now make up 25% of all defined benefit plans, up from 2.9% in 2001 ... The average employer contribution to staff retirement accounts is 6.3% of pay in companies with both Cash Balance and 401(k) plans, compared with 2.6% of pay in firms with 401(k) alone." (Kravitz)  

Hedge Fund Managers and Investors Re-Evaluate Manager Compensation After Rev. Rul. 2014-18
"In Revenue Ruling 2014-18, the IRS confirmed that certain nonstatutory stock options (NSOs) and stock-settled stock appreciation rights (SARs) granted to a service provider by a foreign corporation are not 'nonqualified deferred compensation plans' subject to taxation under Internal Revenue Code Sec. 457A.... While modification of the current compensation model may generate significantly different economic results than those derived from the annual fees and/or incentive allocations that have typically been utilized, the opportunity for greater flexibility in approach may be very positive for both fund managers and investors." (EisnerAmper)  

Associated Pension Consultants Celebrates 40 years of Excellence in the Retirement Plan Industry
Associated Pension Consultants

IRI Commends the Treasury Department on Longevity Annuity Regulation
Insured Retirement Institute [IRI]

New PBGC Projections Confirm Health of Single-employer Pension Guarantee Program
American Benefits Council

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