Retirement Plans Newsletter

October 6, 2014

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Employee Benefits Jobs

Defined Benefit Administration Team Leader
Milliman, Inc.
in NJ

Regional Sales Manager
Aspire Financial Services LLC
in NJ, OH, PA

Pensions Field Service Manager
Nationwide Financial
in CO, TX

TPA Development Manager
Transamerica
in CA

401(k) Pension Administrator
Nicholas Pension Consultants
in CA

Client Relationship Manager
Goldleaf Partners
in CO, MN, NC, OH, SC

Of Counsel, Qualified Plans
Groom Law Group, Chartered
in DC

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Webcasts and Conferences

5th Annual Executive Compensation Summit
October 16, 2014 in CA
(Forum for Corporate Directors)

National Conference 412(e)3 Plans
October 24, 2014 in UT
(National Pension Partners)

View All Webcasts and Conferences



[Guidance Overview]

IRS Finalizes Regs Requiring Electronic Filing for Certain Retirement Plan Reporting
"These rules relate to retirement plan reporting requirements under the Code that are not satisfied by filing Form 5500 with the DOL -- for 401(k) plans, Form 8955-SSA (reporting vested benefits of terminated participants) and Form 5500-EZ (reporting one-participant and certain foreign plans), as applicable, must be filed with the IRS. The final rules apply to any plan administrator or employer required to file at least 250 returns of any type -- including income tax returns, information returns such as Form W-2 and Form 1099, and employment tax returns.... Notably, the preamble reiterated that Code-specific items may be added to the Form 5500 (as was indicated when the regulations were proposed), but provided no details." (Thomson Reuters / EBIA)  


[Advert.]

CE Webcast: The Rehires Rules Every TPA Needs to Know

Sponsored by ASC

In less than 2 hours learn the rules for Rehired Employees you need to know to avoid common difficulties in administering qualified plans. Plus earn 2 hours of CE credit. Join Charles Lockwood, J.D., LL.M., Oct. 7th. Click here.



[Guidance Overview]

Final and Proposed Regulations on Hybrid Pension Plans
"The original proposed regulations provided, and the final regulations continue to provide, that the actuarial equivalent ... of the then-current balance of the hypothetical account or other accumulated benefit can be used to determine annuity forms of distribution as of a distribution date prior to normal retirement. The final regulations also clarify that this rule applies to a subsidized optional form of benefit, including any early retirement subsidy or a subsidized survivor portion of a qualified joint and survivor annuity, but not to an optional form of benefit that is less than the actuarial equivalent of the cash balance account or PEP accumulation." (Morgan Lewis)  

Why 401(k) Plan Fee Disclosures Matter to Plan Sponsors
"Kristen Zarenko, Senior Law Specialist of EBSA's Office of Regulations and Interpretations ... noted that EBSA enforcement actions will continue to require plan sponsors to provide copies of annual fee disclosures from covered service providers. Zarenko also observed that a surprisingly large number of plan sponsors have not been able produce the required documents during the first two years of enforcement." (ThinkHR)  

DC Plan Sponsors Raising the Bar on Investment Structures
"Survey findings reveal that a more sophisticated approach to DC plan investment structures is necessary. Plan sponsors see value in custom target-date funds (TDFs), and TDF selection is driven by investment metrics over outcomes. DC plans require more attention, and delegated investment options are of more interest." (Towers Watson)  

Social Security Cost-of-Living Adjustments Projected to Increase Slightly in 2015
"Social Security benefits are likely to increase by 1.7% in 2015, slightly more than this year's 1.5% increase but still well below average increases over the past few decades, according to an unofficial projection by the Senior Citizens League.... Based on the latest consumer price index data through August, the advocacy group's projection of a 1.7% increase in Social Security benefits for 2015 'would make the sixth consecutive year of record-low COLAs,' Ed Cates, chairman of the Senior Citizens League, said ... 'That's unprecedented since the COLA first became automatic in 1975.'" (InvestmentNews)  

Corporate Pension Plan Funding Ratios End Q3 on the Decline
"It is a different story from the first eight months of the year when funding ratios often dropped despite a gain in assets, which have been outpaced by liability increases. Overall, year-to-date through Sept. 30, the drop last month brings the total decrease in the aggregate funding ratio to 4.8 percentage points from the end of 2013, when the funding ratio was 89.8%." (Pensions & Investments)  

Bankruptcy Judge: Trump Entertainment Can't Stop Funding Union Pension Plan
"Eliminating just the pension from the collective bargaining agreement would violate the bankruptcy code, which requires a contract to be considered as a whole, [U.S. Bankruptcy Court Judge Kevin Gross] said. 'The court does not have authority to reject a portion of a CBA,' Mr. Gross said.... The company ... said in court filings that the union contract costs about $15 million a year in health, welfare and other benefits and $5 million in pension payments." (Pensions & Investments)  

If You Really Have to Touch Your Retirement Stash, Here's How to Do It Right
"Gone are the days when it was considered taboo, or even unusual, to consider touching one's 401(k) before retirement.... Here are five questions to ask yourself before deciding whether -- or how -- to start raiding your 401(k). [1] What's the tax hit on a 401(k) loan compared with a withdrawal? ... [2] If I choose a withdrawal, can I avoid some of the tax penalties? ... [3] Am I feeling solid in my job? ... [4] Will I mind my account in a slow lane for six months or more? ... [5] Do I have an IRA alternative?" (The Wall Street Journal; subscription may be required)  

[Opinion]

Text of Group Letter to Congress: 40 Facts About ERISA and Retirement Plans (PDF)
"The employer-provided retirement system has been overwhelmingly successful in providing retirement income. In 2011, private-sector employers contributed over $255 billion into their retirement plans and paid out over $470 billion in retirement benefits. [The authors] support the current system and encourage Congress to maintain the flexibility that allows employers to provide benefits tailored to their workforce." (American Benefits Council and 22 other Employer and Professional Organizations)  

[Opinion]

What's the Pension Burden on State Budgets: $4 Trillion? $10 Trillion?
"Most financial economists think that the discount rate used in official valuations of government pension liabilities is too high, or too optimistic. When [the Center for Retirement Research] used a lower discount rate of 4 percent instead of the average official rate of 7.7 percent, the value of unfunded state and local pension liabilities skyrocketed to $3.8 trillion.... [One commentator] argues even that is too conservative as it only includes currently accrued pension costs. He estimates that the funding gap for accrued benefits plus future accruals under today's generous pension rules is about $10 trillion." (Cato Institute)  

[Opinion]

Bankruptcy Judge Lights Fuse with Stockton Pension Ruling
"If [Bankruptcy Court Judge Christopher Klein's] theory stands, local government unions could no longer refuse to negotiate on pension reduction as a way of avoiding bankruptcy, and CalPERS and other pension systems would have to drop their pay-us-or-else arrogance." (Dan Walters in The Sacramento Bee)  

Benefits in General; Executive Compensation

ISS Issues 2014-2015 Policy Survey Results
"ISS highlighted the responses to several survey questions that dealt with [pay-for-performance (P4P)]. ISS indicates that investors liked the idea of having CEO pay limits relative to company performance (27% of investors supported, while only 12% of issuers agreed). The magnitude of CEO pay was considered when evaluating pay practices by 24% of investors and 50% of issuers. Based on these responses, and the additional follow-up questions, ISS may propose a refinement to its P4P policy that does more to evaluate the CEO pay versus both absolute and relative measures." (EdwardHauder.com)  

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