Retirement Plans Newsletter

November 4, 2014

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Employee Benefits Jobs

Regional Sales Manager
Aspire Financial Services LLC
in IA, IL, IN, MN, MO, WI

Pension Actuarial Assistant
White Plains Law Firm
in CT, NJ, NY

401(k) Specialist
Confidential
in SC

Sr. Retirement Plan Analyst
Financial Engines
in AZ

Employee Benefits and Executive Compensation Associate
Day Pitney LLP
in NJ

Conversion Manager
Verisight, Inc.
in CA

Senior Analyst, Institute on Innovation in Workforce Well-being
National Business Group on Health
in DC

Client Executive - Employee Benefits Division
RCM&D
in VA

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Webcasts and Conferences

2014 Ethics Case Studies Two
November 12, 2014 WEBCAST
(McKay Hochman Co., Inc.)

Retirement Plan Update - Rich Hochman
November 13, 2014 in CA
(NIPA - San Francisco Bay Area Chapter)

Protection of IRA & Qualified Plan Assets after Clark v. Rameker
December 12, 2014 WEBCAST
(American Bar Association [ABA])

ERISA Audits: What We All Knew but Forgot
December 17, 2014 WEBCAST
(Lorman Education Services)

Governmental Pension Reporting — The New Standards
December 19, 2014 WEBCAST
(Accounting Continuing Professional Education Network [ACPEN])

View All Webcasts and Conferences



[Guidance Overview]

Deferred Annuities in Target Date Funds Approved by IRS, DOL
"The annuity investment depends on the annuity carrier's long-term solvency, so there is, in effect, a long-term tail to the fiduciary risk with respect to the selection of an annuity carrier. If the carrier goes insolvent 20 years in the future, the plan fiduciary may conceivably be held liable.... The second issue, which has gotten very little attention, is that inside-the-plan annuities, like the ones used in the TDF annuity program considered in the Notice, must use unisex annuity tables. Outside-the-plan annuities use [gender-based] tables." (October Three Consulting)  


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Year-End Compliance Issues for Single-Employer Retirement Plans (PDF)
"By year-end 2014, sponsors of calendar-year single-employer retirement plans must act on necessary and discretionary amendments and perform a range of administrative procedures to ensure compliance with statutory and regulatory requirements.... All single-employer retirement plan sponsors should check their ERISA plan document files and ensure that the definition of spouse and marriage comply with federal law. Operational procedures and plan changes also should be assessed for compliance, as well as for properly drafted, adopted, and executed amendments. In addition, the need for participant notices should be determined and, if necessary, distributed as soon as possible." (Milliman)  

Baltimore County Can't Challenge Ruling That Its Retirement Plan Contribution Requirements Mistreated Older Workers
"The U.S. Supreme Court announced that it won't hear a case asking whether Baltimore County, Md., violated federal law by requiring older workers to pay higher retirement contributions than younger workers who enrolled in the county retirement plan at the same time. In March, the U.S. Court of Appeals for the Fourth Circuit found that the county's practice of mandating higher contributions from older workers violated the Age Discrimination in Employment Act." (Bloomberg BNA)  

Schwab Challenges Robos with 'No-Fee' Service
"With Schwab's recent announcement of a no-fee, ETF-based robo-advisor of their own, the race is on among a horde of robo-advisors, some very well-funded, and the 'old guard' of online brokerage services. While Fidelity is partnering with Betterment, Schwab is distinguishing their offering because they custody the assets. TD has an open architecture approach to robos." (National Association of Plan Advisors [NAPA])  

California Controller Adds Pension System Assets and Liabilities to Open Data Website
"State Controller John Chiang [has] added to his open data website more than one million fields of financial data for California's 130 defined benefit and defined contribution public pension systems.... [A] trend chart of the unfunded actuarial accrued liability of the state's pension systems -- or the present value of benefits earned to date that are not covered by current plan assets -- shows it has steadily risen from $6.33 billion in 2003 to $198.16 billion in 2013." (California State Controller)  


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Conference of Consulting Actuaries Solicits Questions for IRS, PBGC, and DOL
"Released at the annual Enrolled Actuaries Meeting, the Gray Book, Blue Book, and Green Book are essential compendiums of questions and answers between actuaries and the IRS/Treasury, PBGC, and DOL respectively. The Gray Book Committee is accepting questions in preparation for their meetings ... covering such areas as funding, nondiscrimination, benefit restrictions, qualification issues, PBGC-related issues, and other areas that are of interest to enrolled actuaries. Please submit any questions [to the Gray Book Committee] by Monday, December 1st." (Conference of Consulting Actuaries)  

CNA Offers to Pay 11,000 Ex-Employees to Exit Pension Plan
"CNA joins Hartford Financial Services Group Inc. in seeking to limit the risk of swelling pension liabilities, which can climb as life expectancies increase and bond yields are lower than average. Hartford, based in the Connecticut city of the same name, last week said it offered voluntary payments to about 13,500 workers who had left the company." (Bloomberg)  

GASB's New OPEB Exposure Drafts (PDF)
16 pages. "GASB's new Exposure Drafts related to 'other post-employment benefits' (OPEB) will likely make significant changes in the way OPEB is accounted for and reported in state and local government annual financial reports. This [article] provides a detailed explanation of how the proposed changes apply to OPEB plans and to employers (and certain nonemployers) who sponsor OPEB. In addition, the issue concisely summarizes key changes in four tables[.]" (Gabriel Roeder Smith & Company)  

Puerto Rico Retirement Plans Tax Prepayment Window to be Extended Prepayment Window (PDF)
"[A] technical corrections bill to the Puerto Rico Tax System Adjustment Act (Act 77-2014) is expected ... [which] would extend until December 31, 2014, the current window period for the pre-payment of income taxes ... on balances and benefits in qualified and non-qualified retirement plans (the 'Prepayment Window'). In addition, the Puerto Rico Treasury Department ... recently issued Circular Letter of Tax Policy No. 14-02 (CLTP 14-02) ... Originally, the position of the PR Treasury was not to require plans or providers to keep track of Prepayments. However, CLTP 14-02 changed that and now plans or plan providers are required to maintain tracking of the Prepayment. Notwithstanding, employers and plan sponsors are not required to notify Participants about the Prepayment Window." (Groom Law Group)  


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Puerto Rico Treasury Department Expected to Issue Guidance on Retirement Plan Limits for 2015 (PDF)
"For plans qualified only in Puerto Rico (PR-Only Plans), the limits on annual contributions and plan compensation, and the highly compensated employee threshold all will increase, but the limits on elective deferrals, after-tax and catch-up contributions, and annual benefits all will remain unchanged for 2015. For plans qualified both in Puerto Rico and the U.S. (Dual-Qualified Plans), the limits on elective deferrals, plan compensation, and annual contributions, and the highly compensated employee threshold all will increase, but the limits on catch-up and after-tax contributions, and annual benefits all remain unchanged." (Groom Law Group)  

Pension Finance Update as of October 31, 2014 (PDF)
"October was a scary month for pensions, but, in the end, everything turned out all right.... By month-end, stocks had reached all-time highs, but the gain was neutralized by lower interest rates, producing a wash for pension finances on the month. Through October, plans remain modestly underwater for the year -- our traditional 'Plan A' has seen its funded ratio decline by more than 5%, while the more conservative 'Plan B' is down 2%." (October Three Consulting)  

How 401(k) Plans Have Fueled Inequality in America
"A 401(k) world means more Americans own stock. In some ways that's a positive trend, because it means more own a piece of the country's rising wealth. But the danger is since wages haven't increased and many lack other sources of savings, Americans turn to their 401(k)s when times get hard, which incurs both immediate penalties and long-term consequences. A tried-and-true rule of investing is to never invest your emergency fund in risky assets; when people turned their 401(k)s into emergency savings, they got hammered by the market." (Bloomberg Businessweek)  

[Opinion]

California's Unfunded Liabilities for Current and Future Pensions Exploded from $6.3 Billion in 2003 to $198.2 Billion in 2013
"California's public pension promises are totally out of control and will bankrupt the state quickly if municipalities are not able to renegotiate those fanciful promises in bankruptcy proceedings." (Benefit Revolution)  

[Opinion]

Retirement Saving: How Responsible is the 401(k) Fiduciary?
"[T]here are active discussions as to exactly how aggressive the government should be in forcing citizens to save for their retirement. The same question is being asked of plan sponsors: How much should the responsibility for individual employee savings [lie] with the companies that offer retirement benefits? ... The government provides the blueprints; the 401k fiduciary provides the materials; but building a secure retirement is best left to the individual. And that's money in the bank." (Fiduciary News)  

Benefits in General; Executive Compensation

Fewer Execs Compensated with Pensions or SERPs
"Nearly three-quarters of newly hired corporate executives are now treated like their rank-and-file when it comes to retirement benefits, with few being offered the traditional 'top-hat' defined benefit plan that used to be as common as a company car and stock options for senior managers.... Most of the Fortune 100 companies that closed or froze their qualified DB plans now provide DC-style retirement benefits to executives in the form of 'restoration plans,' which are nonqualified plans that restore benefits lost under qualified plan limitations imposed by the federal tax Code such as annual compensation and contribution caps." (Thompson SmartHR Manager)  

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