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BenefitsLink Retirement Plans Newsletter

July 8, 2014          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs


Webcasts and Conferences

Current Events in Washington and How ASPPA is Responding
July 15, 2014 in GA
(ASPPA Benefits Council [ABC] of Atlanta)

Washington Update
July 16, 2014 in TX
(ASPPA Benefits Council [ABC] of Texas Gulf Coast)

PBGC Premiums for 2014 and Later Years
July 16, 2014 WEBCAST
(ASPPA [American Society of Pension Professionals & Actuaries])

Working with Safe Harbor 401(k) Plans
July 16, 2014 WEBCAST
(ASPPA [American Society of Pension Professionals & Actuaries])

Reducing Pension Cost and Risk Using a Lump Sum Buyout Strategy
July 23, 2014 WEBCAST
(PricewaterhouseCoopers LLP)

Washington Update and ASPPA Bylaw Changes
July 23, 2014 in MI
(ASPPA Benefits Council [ABC] of Detroit)

Healthcare Reform - What's Your Plan for 2015?
July 29, 2014 in TX
(Worldwide Employee Benefits Network [WEB] - Dallas Chapter)

Fundamentals of 401(k) and Other Qualified Plans 2014
August 6, 2014 in KS
(SunGard Relius)

Early Retirement Incentives: Navigating the Legal Issues
August 7, 2014 WEBCAST
(Lorman Education Services)

View All Webcasts and Conferences


  LinkedIn   Twitter   Facebook Hand-picked links to the web's best news articles,
official guidance, jobs, webcasts and more.
[Guidance Overview]

Rule Eases Longevity Annuities into 401(k) Plans
"The final rule is largely consistent with earlier proposed regulations on longevity annuities that the Treasury Department issued in 2012 ... But it responds to public comments in several respects, including: Increasing the maximum permitted investment.... Providing an exemption from RMDs.... Allowing 'return of premium' death benefit.... Protecting individuals against accidental payment of longevity annuity premiums exceeding the limits." (Society for Human Resource Management [SHRM])  


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Early Retirement Incentives: Navigating the Legal Issues

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August 7 live webinar. This live webinar will discuss ways of structuring early retirement incentives so that they will not only have the desired effect on the financial bottom line, but also stay on the right side of the law. BenefitsLink discount.



District Court Kills Most Class Action Claims Against Cash Balance Plan, but Allows Fiduciary Breach Claim to Continue
"The court [refused] summary judgment on the claim that the administrator breached its fiduciary duties to act solely in the interest of the plan participants by concealing potential violations of tax code Section 417(e) when calculating lump-sum payments to participants.... The court's decision significantly narrows the scope of a class action filed on behalf the participants in the Meriter Health Services Employee Retirement Plan, which had previously been certified as to 11 separate subclasses depending on employment status, receipt of plan benefits and age at retirement.... The main act that spurred the claims was an attempt by Meriter in 2003 to amend the plan to follow a cash-balance model and to follow the lump-sum calculation requirements of the tax code." (Bloomberg BNA)  

D.C. Circuit Rules That Exhaustion of Administrative Remedies Is Not Required for Violations of ERISA's Statutory Guarantees
"Besides the practical lesson ... regarding the application of the regulatory standard for any 'reasonable delay' in calculation and payment of a retirement plan's lump sum benefits, this case points out the limits of the judicially-made 'exhaustion of administrative remedies' doctrine. Generally, all ERISA claims will require some reference to a plan document, but [the case] underscores the importance of identifying the ultimate source of the claimant's right to relief." [Stephens v. PBGC, No. 13-5129 (D.C. Cir. June 24, 2014)] (Williams Mullen)  

Rescheduled IRS Phone Forum: Retirement Plans After Windsor, July 17, 2014
This program will discuss the impact of the Supreme Court's decision in United States vs. Windsor, Rev. Rul. 2013-17 and Notice 2014-19 on qualified retirement plans. The program will also address the Frequently Asked Questions that are posted on www.irs.gov that relate to the Windsor decision and qualified retirement plans. (Internal Revenue Service [IRS])  

Maintaining Non-ERISA 403(b) Status
"[The DOL] defines non-ERISA plans as those that only include employee elective deferral contributions, not employer contributions, and for which the employer has no involvement except for the selection of vendors/investments. Non-ERISA 403(b) plan sponsors cannot assist in calculating available loans, hardship distributions, or in any other administrative duties under the plan ... This makes maintaining non-ERISA status difficult as the IRS regulations require 403(b) plans to adhere to statutory limits." (PLANSPONSOR)  


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The Target Date Fund Industry in Five Charts
"[1] What a Difference a Year Makes.... [2] Veteran Managers Have Delivered Results.... [3] Pay Attention to What's Under the Hood.... [4] Volatility Takes Off Some of the Shine.... [5] Target-Date Managers Fall Woefully Short on Ownership of Their Funds." (Morningstar)  

Supreme Court Axes Presumption of Prudence in ESOP Stock-Drop Cases
"Based on the decision, ESOP fiduciary committees may want to rethink whether their members should possess non-public information concerning the company's finances. Perhaps the result of the decision will be to give a permanent 'pass' to C-level executives serving on these committees.... ESOP fiduciaries of privately held companies ... are more likely to be vulnerable to challenges without a clear (and, ideally, independently determined) valuation." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)] (Littler)  

ERISA Budget Accounts: Top Six Action Items
"In the most-common of these accounts [sometimes called Revenue Credit Accounts or ERISA expense accounts], the plan's record keeper agrees to provide credits to a suspense account (separate from the forfeiture account) relating to certain revenue sharing payments it receives. Plan fiduciaries can direct the service provider to apply the funds to a variety of use ... [P]lan sponsor and/or fiduciaries should adopt a written policy setting forth how such funds will be used.... If the plan sponsor will use the ERISA budget to pay for Plan expenses, it will need to assure that ERISA allows the payment ... There should be a designated individual to ensure that any use of the funds is permitted by the plan document and to the extent plan expenses are paid, they are reasonable." (Paul Hastings LLP)  

Can a Pension Plan Correct Overpayments Made to Retirees?
"The court refused to reform the plan to require it to provide the pension, because there was no mistake in the plan document.... In effect, the court rejected the retiree's efforts to use CIGNA v. Amara in an action that was not to the benefit of the trust.... [By] the time a participant applies for a pension, as the participant in this case did, every plan needs to do a final careful check of eligibility and every element relevant to the pension calculation to avoid this type of litigation and the need to make retroactive corrections. The plan might also want to notify new retirees that it still retains the right to correct mistakes." [Gabriel v. Alaska Electrical Pension Fund, No. 12-354581 (9th Cir. June 6, 2014)] (Osler, Hoskin & Harcourt LLP)  

Pension Finance Watch, June 2014
"Strong equity returns and a slight uptick in bond yields combined to move the pension index upward in June. The Towers Watson Pension Index increased 1.2% in June to 75.1, following three months of decline. Despite the June increase, the index remains down 4% for the year." (Towers Watson)  

S&P 1500 Pension Deficit Shows Modest Improvement in June
"The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies rose one percent in the month of June to end the second quarter with a funded ratio of 85%.... While the collective estimated deficit of $330 billion as of June 30, 2014, was down $13 billion from the estimated deficit of $343 billion as of May 31, 2014, it has increased by $94 billion from the deficit of $236 billion seen at the beginning of the year[.]" (Mercer)  

Designing a 'Best Practices' Participant-Directed Retirement Plan Investment Menu
"[P]lan sponsors [need to] consider the propensity for participant 'home bias' (the natural desire to invest in things close to home) and to engage in 'naive diversification' (the random spreading of investments over a broad array of choices offered) when constructing an investment menu. The driving force behind this forward-looking approach is to build an investment line-up that will increase the chances of financial success for your organization's employees. And as a retirement plan fiduciary, understanding how to best deal with the realities of participant behavior is both necessary and likely to lead to better outcomes." (Francis Investment Counsel LLC)  

Top Ten Reasons for Choosing an ESOP-Qualified TPA
"[10] Custom Technology.... [9] Flexible.... [8] Separate from Legal... [7] ESOP Experience Matters.... [6] Consulting Value.... [5] Completely Electronic Distribution Processing.... [4] On-line Plan Governance Tools.... [3] Flexible and Open 401(k) platforms available.... [2] ASPPA/CEFEX Certified.... [1] Personalized Service." (Tom Roback of Blue Ridge ESOP Associates)  

Text of GAO Report on Pension Advance Transactions: Questionable Business Practices Identified
"GAO identified questionable elements of pension advance transactions related to the disclosure of rates or fees, and certain unfavorable terms of agreements. The Bureau of Consumer Financial Protection and Federal Trade Commission have oversight responsibility over certain acts and practices that may harm consumers.... Six other federal agencies have oversight over pensions and provide related education. These agencies provided limited consumer education regarding pension advance transactions, but almost all agreed that it would be beneficial. Consumers who are vulnerable to financial exploitation may lack the information needed to make sound decisions." [Published on June 4, 2014; publicly released on July 7, 2014.] (U.S. Government Accountability Office [GAO])  

Text of GAO Report: Targeted Revisions Could Improve Usefulness of Form 5500 Information
"Plan asset categories break out plan assets differently from the investment industry, and provide little insight into plan investments, their structure, or the level of associated risk.... The form lacks detailed information on plan investments because there is no structured, data-searchable format for attachments to the form and the filing requirements on plan investments is limited for small plans, which have less than 100 participants.... Naming conventions and identification numbers may be inconsistent, making it difficult to collect and accurately match records." [Published on June 5, 2014; publicly released on July 7, 2014.] (U.S. Government Accountability Office [GAO])  

From Red Hot Chili Peppers to Rush to the Rolling Stones: Three Generations Prepare for the Future (PDF)
"Each generation has a distinct outlook on its future, including retirement. This article describes three different generational groups, their trials and triumphs when it comes to preparing for their future, and how employers should respond. The key is to acknowledge these differences and address them through the three levers employers have to pull -- plan design, the support offered to employees and the ways retirement readiness is promoted." (Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS])  

Secrecy in Pension Investments Triggers Legislative Brawl in North Carolina
"A legislative fight between North Carolina Treasurer Janet Cowell and a state employee association is signaling growing tension over disclosure practices as public pensions seek to improve returns with alternative investments.... North Carolina has about $18.7 billion of alternative investments, or 21.5 percent of its assets.... The pension lagged behind both of its benchmarks for private equity and hedge funds for the past 10 years ... [T]he state paid $416.2 million to firms hired to manage pension money last fiscal year, according to its annual report. A footnote says that it didn't disclose all fees[.]" (Newsmax)  

Benefits in General; Executive Compensation

[Guidance Overview]

SEC Staff Releases Guidance on Proxy Voting Responsibilities of Investment Advisers and Proxy Advisory Firms
"[SEC Staff Legal Bulletin No. 20 (IM/CF)] sets forth specific things that an investment adviser should ascertain when considering whether to retain or continue retaining any particular proxy advisory firm to provide proxy voting recommendations.... If a proxy advisory firm only distributes reports containing recommendations, it will be able to rely on the exemption from the information and filing requirements of the federal proxy rules in Rule 14a-2(b)(1)[.]" (Winston & Strawn LLP)  

2013 Q&As: SEC Meeting with ABA Joint Committee on Employee Benefits, May 8, 2013 (PDF)
Published online July 7, 2014. Topics pertaining to proxy rules and executive compensation disclosure include: [1] Grant Date Reporting vs. Service Inception Date Reporting; [2] Reporting of Stock Award Premium; [3] Option Exercises and Stock Vested Table; [4] Reporting of Retention Bonus; [5] Reporting of Long-Term Incentive Award Payable in Both Cash and Equity; and [6] Outstanding Equity Awards at Fiscal Year-End Table. Pertaining to Form S-8 is a Q&A on Transfer of Filing Fees. Pertaining to Exchange Act Rule 10C-1 is a Q&A on Assessing the Independence of Compensation Consultants and Other Advisors to the Compensation Committee. Pertaining to multiemployer pension plans is a question about the applicability of Securities Act Rule 180, but the SEC did not provide an answer. (Joint Committee on Employee Benefits [JCEB], American Bar Association)  

Developments Newsletter, June 2014 (PDF)
Article titles include: [1] Plan Sponsors' Views on Fiduciary Responsibility; [2] ESOP 101: The Repurchase Obligation; [3] The Future of Mini Meds; and [4] The BPS&M Pension Liability Index. (Bryan, Pendleton, Swats & McAllister)  

Press Releases

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