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August 13, 2014          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Part-time Retirement Planning Consultant
Transamerica Retirement Solutions
in MI

Defined Contribution Plan Administrator
Carroll Consultants, Ltd.
in PA

Plan Administrator II
Verisight, Inc.
in IL

Administrator, Experienced Defined Contribution 401(k)
Niles Lankford Group
in IN, OH

Retirement Planning Consultant
Transamerica Retirement Solutions
in AL

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Webcasts and Conferences

Top Tips for ASC's Defined Benefit System
August 19, 2014 WEBCAST
(ASC [Actuarial Systems Corporation])

Communication:How to Look and Sound Like a Leader
August 21, 2014 in GA
(Worldwide Employee Benefits Network [WEB] - Atlanta Chapter)

Road to a Lawsuit is Paved with Good Intentions: Avoiding Legal Trouble with Wellness Programs
August 26, 2014 in TX
(Worldwide Employee Benefits Network [WEB] - Dallas Chapter)

Solving the Benefits Time/Cost Crunch of Managing Employee Benefits
August 27, 2014 in NJ
(Corporate Synergies)

Get Prepared to Make Timely Decisions for Your Retirement
September 9, 2014 WEBCAST
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

ERISA Turns 40: The Past, Current and Future State of Pension Plans
September 9, 2014 WEBCAST
(ABA Joint Committee on Employee Benefits)

Employee Benefit Plans of Tax-Exempt and Governmental Employers
September 11, 2014 in DC
(ALI-ABA [American Law Institute-American Bar Association])

Characteristics of an Emerging Leader
September 11, 2014 in MA
(Women in Pensions Network)

DOL Corrections and Investigations
September 18, 2014 in TX
(ASPPA Benefits Council [ABC] of Dallas/Fort Worth)

How Will 2015 HIX Open Enrollment Play Out?
September 24, 2014 WEBCAST
(Deloitte)

View All Webcasts and Conferences


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

Text of IRS Notice 2014-48: August 2014 Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
"This notice provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), ... the 24-month average segment rates[,] ... the interest rate on 30-year Treasury securities ... as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate ... and the minimum present value segment rates ... as in effect for plan years beginning after 2007. These rates reflect certain changes implemented by [MAP-21]." (Internal Revenue Service [IRS])  


[Advert.]

Advanced Pension Conference in Chicago – Save $150 by 8/18

Sponsored by SunGard's Relius Education

Get 19 CE hours! Topics: PPA restatements, same gender marriage rulings, disclosures and notices, practitioner liability, outsourcing fiduciary functions, and much more. Register by 8/18, save $150. Special room rate also available until 8/18.



[Guidance Overview]

Pension Funding Relief Extension Requires Action for Many Plans Before September 15
"HATFA changes the corridor range for plan years beginning in 2013. For many calendar year plans, sponsors are preparing to make final 2013 plan year contributions by the September 15, 2014 deadline. Depending on the sponsor's funding policy this could have immediate ramifications in what they end up contributing.... [G]uidance could come after September 15th. This means that plan sponsors will need to decide on the potential implications for their contribution strategy without necessarily knowing all of the details." (P-Solve LLC)  

Five 401(k) Enhancements Employees Should Watch For
"[1] Better service models.... [2] More investment flexibility.... [3] Roth 401(k).... [4] Self-directed brokerage accounts... [5] ETFs... The common theme in 401(k) plan developments has been to empower participants with the tools and knowledge necessary to make strong investment decisions." (U.S. News & World Report)  

Correcting Hardship Distribution Errors
"[It] is possible that there may not be adequate practices and procedures in place for processing hardship distributions accurately. If controls are not in place, the Self-Correction Program (SCP) is not available to the employer, and a Voluntary Compliance Program (VCP) application should be submitted." (Belfint Lyons & Shuman, CPAs)  

Fiduciaries in Stock Drop Cases: Now More Vulnerable? Or Now Bulletproof? (PDF)
"ESOP fiduciaries should adhere to the mantra that a proper process is the best defense against potential claims, and abide by the following prescription for minimizing or avoiding liability: Periodically review the performance of the company's stock ... Meet when the stock price drops significantly or when the fiduciaries become aware of negative news that could affect the stock's value... When considering the viability of the stock as an investment option, obtain the advice of professional investment advisors ... Discuss these independent judgments ... Document all meetings and all decisions taken[.]" (Debevoise & Plimpton LLP)  


[Advert.]

Register for P&I's 2014 Custom Target-Date Strategies Summit

Sponsored by Pensions & Investments

Via a case-study format, plan sponsors share their unique experiences and provide advice on design, implementation and evaluation to help their peers determine if a customized solution will meet their company's specific needs.



Supreme Court Decision Means More Work for ESOP Fiduciaries
"Previously, under the presumption of prudence, ESOP fiduciaries were granted additional protections so long as the governing plan documents gave them the right to invest in employer stock and they invested consistent with the plan documents. Now their job is harder, in that they need to make sure that the decisions are actually prudent. The plan documents cannot waive this obligation. The value of [the Dudenhoeffer decision], especially for national companies that might be subject to such lawsuits in multiple jurisdictions, is that it provides clarity by resolving a previous circuit split." (Wilson Elser)  

Accessing Your Retirement Income: Sooner or Later
"Successful business owners are more able to retire early than most employees. They have equity in their businesses, substantial control over their compensation and tax structures, and there is no upside limit to their earning ability.... There are a number of ways business owners can access retirement capital without having to necessarily sell their business. Consider these three popular approaches. [Beginning a series of substantially equal period payments before age 59-1/2] ... Life Insurance ... Recapitalization." (Forbes)  

Accelerating the Rising Equity Glidepath, with Treasury Bills as Portfolio Ballast?
"[R]ecent research has suggested that the optimal approach might actually be ... to start with less equity exposure early in retirement when the portfolio is largest and most exposed to a significant market decline, and then 'glide' the equity exposure slightly higher each year throughout retirement.... [T]he better rising equity glidepath approach is to just increase equities in the first half of retirement until it reaches the target threshold, and then level off.... [A]ccelerating the glidepath also reduces the amount of time that the portfolio is 'bond-heavy' ... [It] may be even more effective to simply take interest rate risk off the table by owning short-term bonds instead[.]" (Michael Kitces in Nerd's Eye View)  

As Correlations Diverge, Time to Reconsider Active Management
"Recently correlations in U.S. equities have begun to diverge. In other words, the markets are returning to what most would consider to be normal. In normal markets, actively managed investment options tend to outperform." (Lawton Retirement Plan Consultants)  

Reasons to Hold Off on Your Employer's Pension Buyout Offer
"If you work for a company with a pension plan, don't be surprised if you get an offer soon for a lump sum buyout ... The price tag for these offers is especially attractive right now, from the plan sponsor's perspective. But workers might do better by holding out for a better deal, or by rejecting the buyout altogether.... A key factor is how healthy you think you are in relation to the rest of the population. If you think you'll beat the averages, a lifetime of pension income will always beat the lump sum." (Money)  

More Large Employers Adopting De-Risking Strategies for Pension Plans
"This year alone has seen defense contractor Lockheed Martin, aircraft giant Boeing, Major League Baseball and publisher News Corp. freeze their pensions. And food processor Heinz, telecommunications equipment maker Alcatel-Lucent and computer hardware/software company NCR Corp. all announced lump sum pension buyouts to certain employees or retirees.... Of companies that offer defined benefit plans ... roughly one in four surveyed ... said they play to freeze the plan, close it off to new hires, or reduce benefits this year." (Democrat and Chronicle)  

How Much is a Proper Beneficiary Designation Worth?
"Aside from their primary residence, the largest asset on most peoples' balance sheet is represented by their retirement accounts.... How do you name a beneficiary? ... What happens if a beneficiary is not named? ... Who should I name as beneficiary? ... What options will my beneficiaries have when they inherit the funds? ... What happens if my beneficiary predeceases me? ... Should I name my trust as beneficiary?" (Cleary Gull)  

Many Employees Prefer a Higher 401(k) Match, Even If It Means Lower Pay
"More than four out of 10 workers surveyed (43 percent) indicated that, if offered, they would prefer to have lower compensation in return for a higher employer contribution to their 401(k).... [W]orkers were more likely to accept a position that had a company match as part of its overall compensation package -- only 13 percent indicated they would take a job with no company match, even if it came with a higher pay level." (Fidelity)  

Study Finds Global Retirement Systems Must Be Reformed
"There is a general acceptance among industry experts, policymakers and governments that global retirement systems must be reformed, said EY's global pension report ... The report, which draws from more than 80 interviews with retirement-related professionals both on the defined benefit and defined contribution side, found that robust pension and retirement systems revolve around five tenets -- financial adequacy, financial stability, performance, efficiency and effectiveness, and political aspects -- and highlights opportunities for reform. In the future, there needs to be an increased focus on the operational excellence of global pension and retirement systems, the report says." (Pensions & Investments)  

Private Sector Multiemployer Pension Plans: Current Issues
"Multiemployer plans have been hurt by an expansion of benefits during the 1990s and the twin financial crises since 2000. Most are recovering, but a substantial minority faces serious funding problems. These problems are exacerbated by unique structural challenges: the cyclical nature of the construction industry, which covers the most plan participants; a low ratio of active to total participants that increases the burden on underfunded plans; and insufficient penalties for employers who withdraw from the plans." (Center for Retirement Research at Boston College)  

Defined Contribution Plan Participants' Activities, First Quarter 2014 (PDF)
"In 2014:Q1, 1.3 percent of DC plan participants took withdrawals, the same share as in 2013:Q1.... Only 0.5 percent of DC plan participants took hardship withdrawals during 2014:Q1, compared with 0.4 percent during 2013:Q1.... Only 1.0 percent of DC plan participants stopped contributing in 2014:Q1, the same pace as in 2013:Q1.... At the end of March 2014, 17.7 percent of DC plan participants had loans outstanding, compared with 18.2 percent at year-end 2013, and 15.3 percent at year-end 2008." (Investment Company Institute [ICI])  

U.K. Accounting Changes Could Slash Pension Surplus on Balance Sheets
"Currently, U.K. companies declare a pension fund surplus on their balance sheets ... since there is a theoretical point where the company will be refunded that surplus, once the last member of a defined benefit plan is paid. However, under changes that have been proposed by the IFRIC14 -- a subcommittee of a branch of the [IASB] -- this surplus would no longer be recognized unless there is a realistic expectation that the company would have access to that surplus in the future. Companies would therefore have to take into account the expected behavior of plan trustees, such as derisking plans, which could reduce the calculated accounting surplus." (Pensions & Investments)  

[Opinion]

Pension Smoothing: The New Normal?
"[L]abor unions are all for it. In fact, as the article states, the AFL-CIO approves of pension smoothing. Do you want to know why? Because it allows them to keep the contribution rates of workers low. They too are smoking hopium when it comes to pension deficits. Both labor and managers of America's largest corporations are embracing the pension rate-of-return fantasy, ignoring the very real possibility that their 8% (or 7% or 6%) projection might turn out to be 0%." (Pension Pulse)  

Benefits in General; Executive Compensation

[Official Guidance]

Text of National Stock Exchange (NSX) Proposed Rule Change for Issuers' Compensation Committees (PDF)
"The Exchange adopted rules to align with the requirements of Section 10C of the Exchange Act, as added by Section 952 of the Dodd-Frank Act and Rule 10C-1 thereunder in October 2012. The proposed amendments ... operate to provide further clarity and precision and correct certain citations, and align with the rules of other exchanges, with respect to the provisions of Rule 15.5(d)(5) that govern a listed issuer's Compensation Committee. The rule proposal also adds new text to the 'Interpretations and Policies' of Rule 15.5(d)(5)." (National Stock Exchange)  

Eighth Annual Study of Employee Benefits Today and Beyond: Delivering the Benefits Message (PDF)
"Overall, usage of both traditional and emerging communications methods has increased.... Employers are thinking about additional ways carriers can communicate with their employees outside of the annual enrollment period.... Employees' preference for digital communications is strong but not exclusive.... Brokers' use of mobile devices has increased significantly across all activities" (Prudential)  

Fifth Circuit Finds Executive Compensation Plan Was Governed by ERISA
"The court agreed that the express purpose of the plan was not to provide retirement income, but found ... the statement of purpose refers to the [Wealth Accumulation Plan (WAP)] as a 'deferred compensation plan' and explains that, by design, employees have the option 'to defer receipt of a portion of their compensation to be earned with respect to the upcoming Plan Year.' ... The court also found the express terms of the WAP contemplate employees deferring income 'to the termination of covered employment or beyond.'" [Tolbert v. RBC Capital Markets Corp., No. 13-20213 (5th Cir. July 14, 2014)] (planadviser)  

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