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Employee Benefits Jobs
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Webcasts and Conferences
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Hand-picked links to the web's best news articles,
official guidance, jobs, webcasts and more.
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[Official Guidance]
PBGC Issues Moratorium on 4062(e) Enforcement
"During the moratorium, from July 8 to December 31, 2014, PBGC will cease enforcement efforts on open and new cases. Companies should continue to report new 4062(e) events, but PBGC will take no action on those events during the moratorium."
(Pension Benefit Guaranty Corporation [PBGC])
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[Guidance Overview]
New Treasury Rules Enable Longevity Annuity Purchases Through Qualified Plans and IRAs
"Rules governing required minimum distribution (RMD) at age 70-1/2 have been revised so that the value of a qualifying longevity annuity contract (QLAC) is not included in the determination of a minimum annual payment. Aggregate premium payments to the contract cannot exceed the lesser of $125,000 or 25% of the participant's account balance. In earlier proposed regulations, the Treasury set the limit at $100,000.... Section 403(b) plans may purchase QLACs under the same rules that apply to employer-sponsored tax qualified plans."
(J.P. Morgan Asset Management)
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A Retirement Annuity Strategy That Offers Peace of Mind
"[P]eople are far more comfortable with a retirement strategy of spending their income than spending their assets.... [but] ... the simple fact is a worried retiree is not a happy retiree.... [Prof. Robert Merton's] point is that people are far more comfortable living within a known income stream than they are spending down assets for an unknown period of time.... The annuity income can begin immediately or it can be deferred until a later age. It can pay an income for life, for a period of years or for the greater of life and a guaranteed period of years."
(Forbes)
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Why the New Qualifying Longevity Annuity Contract (QLAC) Regs Don't Mean Much for Retirement Income
"While the new Treasury Regulations may be a boon to annuity companies that wish to sell longevity annuities, ... it's unclear whether the new rules will real impact anytime soon, for the simple reason that longevity annuity purchases have been growing but still represent barely 1% of all annuity purchases ... in their IRAs or otherwise. In fact, given that most consumers are reluctant to buy immediate annuities where they surrender their lump sum liquidity to receive payments for life, it's unclear why they would feel better about a similar contract with payments that don't begin for decades!"
(Michael Kitces in Nerd's Eye View)
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Is 401(k) Revenue Sharing on Its Way Out?
"[A 2013 survey] found that revenue-sharing arrangements -- used to help offset, or in some cases, to pay for all plan-related expenses -- began to decline in 2010 and continued to do so in 2013. It found that 13 percent of plans had no form of revenue sharing whatsoever, a figure that most expect will only grow.... [C]oncerns about excessive revenue-sharing and transparency remain ... because, as things still stand, participants in most qualified plans pay the majority of plan costs through a combination of investment-related expenses and contract charges. These are typically netted from performance on a daily basis, but they are not expressed in dollars and cents."
(Treasury & Risk)
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Timeline for Terminated Vested Buyouts
"The process begins with a buyout analysis, its impact on the plan and company, and potential accounting charges. Lump sum calculations, operational considerations, and resources committed to administer the buyout window are also reviewed. A good rule of thumb is on average 50% of those offered a lump sum buyout will take a distribution. A strong marketing program directly correlates with maximizing that percentage."
(Findley Davies)
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Bankruptcy Judge May Rule Pensions Can Be Cut in Stockton
"U.S. Bankruptcy Judge Christopher Klein yesterday outlined an argument, a 'summary from 50,000 feet,' for treating CalPERS pensions like other debt, then invited CalPERS, Stockton and other parties to respond with written briefs. The judge said he wanted to share his 'preliminary thoughts' to give the lawyers in the case a chance to 'straighten me out before I make some dramatic boneheaded mistake' about a simple understanding of the law."
(Calpensions)
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Findley Davies Pension Indicator, June 2014 Update
"While bond rates were virtually unchanged from last month, the equity markets had an impressive month despite some less-than-stellar reports about the progress of the economy. Overall, it should be positive news for most plan sponsors when it comes to reporting those June 30 pension balance sheets. That is a rather remarkable feat given that most plan sponsors will be facing a lowering of discount rates of 50 basis points. To overcome that headwind speaks to the strength of the equity markets over the past 12 months."
(Findley Davies)
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Employee Engagement Is Challenge for Retirement Plan Sponsors in Healthcare Industry
"Retirement readiness measures are gradually supplanting participation rates as reliable indicators of plan performance.... Eighty-seven percent of surveyed plan sponsors indicated that their plan's default deferral rates were not high enough. The number of healthcare plan sponsors who offer automatic enrollment default deferral rates of three percent or less declined to 48 percent in 2014 from 70 percent in 2012, while the rate of those utilizing a default deferral rate of five percent or more nearly quadrupled during the same period."
(Transamerica Retirement Solutions)
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Making Saving Incentives More Equitable
"In one set of simulations, [the authors] found that reducing 401(k) contribution limits from the 2013 limit of $51,000 to the lesser of $20,000 or 20 percent of salary would only affect the lifetime taxes of 9 percent of households, and roughly two-thirds of affected households would be in top 40 percent of the income distribution."
(The Brookings Institution)
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Single-Employer Program Is Healthy But Multiemployer Insurance Program Deficit Threatens PBGC's Solvency
"The Projections Report makes it clear that there is absolutely no threat of a taxpayer bailout of the single-employer program. In fact, in the 5,000 scenarios simulated in PBGC's modeling, there were none in which PBGC ran out of money within the 10-year projection period. In contrast, despite the improving economy and strong asset returns in 2013, some already distressed multiemployer plans remain critically underfunded. Those plans could cause the agency's current multiemployer deficit of $8.3 billion to grow to $49.6 billion by 2023."
(Association for Financial Professionals [AFP])
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Multiple Employer DC Plans: Safety in Numbers?
"MEPs have attractive benefits for small plans, primarily bargaining clout gained by joining forces -- and participant numbers -- with other small plans.... Because a MEP is a single plan, if one of the adopting employers violates some qualification requirements, like the top heavy rules or the coverage rules, that would technically disqualify the entire plan.... One particular concern is that adopting employers may join an open MEP because the sponsor has promoted it as a way to avoid fiduciary responsibility by the adopting employer."
(Alliance Bernstein)
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Fundamentals of Liability-Driven Investing
"Because liability-driven investing (LDI) is based on managing risks and returns in a defined benefit plan, this approach can be appropriate for all traditional private DB plans. Although some believe that an LDI strategy requires a 100% bond commitment, it doesn't. That's because risk aversion varies with a plan's status and the sponsor's circumstances; as risk aversion increases, so should bond allocations and durations."
(Vanguard)
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[Opinion]
Understanding Public Pension Debt: A State-By-State Comparison (PDF)
"State government pension debt burdens labor markets and worsens the business climate. To get a clear picture of the extent of this effect around the nation, this paper amalgamates several estimates of states' pension debts and ranks them from best to worst.... [T]he new GASB standards do not go nearly far enough to end the dubious accounting practices that have exacerbated state pension underfunding by hiding its extent."
(Competitive Enterprise Institute)
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[Opinion]
CalPERS Victory in San Bernardino Is Warning to Uppity Cities
"Unlike the two other recently bankrupt northern California cities, Vallejo and Stockton, San Bernardino tried to treat CalPERS like any other creditor and stopped making its contributions to pay for its workers' pensions. CalPERS then used its formidable resources to challenge the bankruptcy in federal court ... San Bernardino officials relented and began last year making its payments to CalPERS, but resisted making missed payments. This deal reportedly provides a payment schedule for San Bernardino to make good on the $16.5 million it owes to CalPERS."
(The San Diego Union-Tribune)
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Benefits in General; Executive Compensation
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IRS Confirms No Acceleration of U.S. Tax for Certain Stock Plans of Foreign Employers
"The IRS has confirmed that stock-based plans of non-U.S. employers under which options and stock appreciation rights are settled in stock do not result in acceleration of income for US tax purposes. However, the ruling also confirmed that stock appreciation rights that may be settled in cash can result in acceleration of income for employees or independent contractors who are U.S. taxpayers."
(Squire Patton Boggs)
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Targeted IRS Examinations of Section 409A Compliance
"Section 409A [Information Document Requests] have been extremely detailed, effectively requiring the employer to take specific legal positions on Section 409A compliance to respond. In most cases the examination will involve interviews of employees involved in Section 409A compliance. These interviews should be approached strategically. Careful preparation of the witnesses based on experience with IRS interview procedures and content can be extremely beneficial."
(Bloomberg BNA)
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Press Releases
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