Retirement Plans Newsletter

November 26, 2014

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Employee Benefits Jobs

Compliance Analyst
The Newport Group
in FL, NC

Sr. Advisor, Retirement Plan Services
First National Bank
in NE

Vested Interest Relationship Manager
PNC
in OH

Loan and Distribution Associate
WLR & Associates, Inc.
in NC

Employer Compliance Analyst
Southern California Pipe Trades Administrative Corporation
in CA

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Webcasts and Conferences

SHOP Marketplace Series
December 2, 2014 WEBCAST
(Centers for Medicare & Medicaid Services [CMS])

Winter 2014 Seminar on Demand
December 9, 2014 in CA
(Western Pension & Benefits Council - San Diego Chapter)

SHOP Marketplace Series
December 9, 2014 WEBCAST
(Centers for Medicare & Medicaid Services [CMS])

View All Webcasts and Conferences



IRS Publication 1-EP: Understanding the Employee Plans Examination Process, Revised November 2014 (PDF)
3 pages. "The goal of Employee Plans Examinations is to promote voluntary compliance by reviewing the operation of retirement plans for consistency with plan terms and pension law.... There are several ways a retirement plan is selected for examination ... A specially-trained examiner will notify you by phone or letter that your plan has been selected for audit ... The audit may include a complete review of plan operations or it may focus on specific issue ... The most common areas of review include [followed by a list] ... Most plan failures can be corrected using EPCRS." (Internal Revenue Service [IRS])  


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Use 401(k) Match Structure to Improve Retirement Readiness
"[O]nce the level of available resources is known, [the authors] recommend focusing on the behavioral outcome desired from the participant. For example, let's say a company decides 3% of employee's income is an acceptable expense for their matching benefits program. How might that match be offered to have the greatest impact on participant behavior, keeping in mind that most employees save only the amount needed to receive the match?" (Pension Consultants Inc.)  

Employers May Be Deferring Adoption of New Mortality Tables (PDF)
"Of nearly 20 participants with fiscal year ends before 12/31/14, roughly 40% said they would be adopting new mortality tables for their upcoming reporting, while 60% said they would be deferring adoption of the new tables. Interestingly, for the 55 participants with calendar fiscal years, the majority also indicated they would not be adopting the new tables as of December 31, 2014. Even for the 45 participants with fiscal years ending after December 31, more than half indicated that they would not adopt the new tables in their current fiscal year." (Altman & Cronin, LLP)  

Don't Try to Take a Lump-Sum Distribution from a Qualified Plan After Thanksgiving
"Lump-sum distributions from a qualified retirement plan may be eligible for special tax breaks. The special tax breaks include net unrealized appreciation on company stock that's highly appreciated in value over the years it's been in your plan.... To qualify as a lump-sum distribution, the distribution must occur in one tax year and your account balance must be zero by the end of that year." (Slott Report)  

Who Are the 10-Percent Savers?
"[T]he average age of participants in an employer-sponsored defined contribution plan deferring 10% or more was 41.6 years.... The majority of 10% savers -- 58% -- had a household income of less than $100,000. In fact, 38% earned between $50,000 and $100,000. Many of those earning less than $50,000 were also able to set aside 10% -- about 20% of the group in this survey. At the high-income level of the spectrum, 30% of the 10%+ savers had a household income ranging from $100,000 to $175,000, and only 12% had an income higher than $175,000." (Putnam Investments)  

Broker-Dealers Sound Off as AIG Leads Off with First Annuity for 401(k)s
"Though AIG's American Pathway DIA has been around since last year, the carrier built an endorsement that would permit the contract to fit into the framework of QLACs. In that context, clients up to 83 can buy the contract and defer receipt of their income for anywhere between 12 months to 40 years.... But there are plenty of questions. For instance, can money that starts out in a qualified account and is then used to buy a QLAC be converted to a Roth IRA just before the income stream starts?" (InvestmentNews)  

New Jersey Pension System Funding Plummets Under New Rule
"Under new pension accounting standards, issued by [GASB], the New Jersey system's overall funded level stands at 44 percent for fiscal 2014, compared to the 63 percent previously determined by standard actuarial methods. Eighty percent or more is generally considered healthy." (Reuters)  

[Opinion]

U.S. Public Pensions on Solid Footing?
"[F]ar too many U.S. public pension funds are still holding on to the pension rate-of-return fantasy, believing fairy tales when it comes to discounting their future liabilities using rosy investment assumptions.... [T]here is a huge dispersion when it comes to the health of U.S. public pension plans.... Third, and most critically, the governance at U.S. public pension plans needs to be drastically improved." (Pension Pulse)  

[Opinion]

A Tale of Four Cities: Pension Reform in and Out of Bankruptcy
"Creating a workable cash-out option is an important pension reform worth considering because it has the potential to dramatically reduce the cycle-time required before a defined benefit plan can be permanently closed out. As the Vallejo experience illustrates, ignoring the unfunded pension liabilities is not a viable option." (Public Sector Inc.)  

Benefits in General; Executive Compensation

[Guidance Overview]

FASB Drops Extraordinary Item Reporting: Section 162(m) Impact
"Some performance-based compensation awards that are exempt from the Section 162(m) $1 million deduction limitation are calculated by excluding items of gain, loss or expense that are within the FASB definition of 'extraordinary events.' ... In October, FASB agreed to drop the segregation, separate reporting and strict definition of extraordinary items. Accordingly, except as provided through the effective date provision, companies will no longer need to segregate on the income statement those items that are currently defined as extraordinary." (Thompson Hine)  

GOP Leaders Urge SEC to Ditch Pay-Ratio Rule
"[In a letter to SEC Chair Mary Jo White], House Financial Services Committee Chairman Jeb Hensarling, Texas Republican, joined by fellow Republicans Reps. Scott Garrett and Bill Huizenga, disputed that the 'absence of a median pay ratio disclosure was a proximate cause of the financial crisis' and warned that the proposed rule would be unduly costly and detract from more important SEC priorities." (CFO)  

Compliance and Communication Needed In Compensation Disclosure
"[In] 2015 29 percent of companies surveyed plan to add a description of their engagement actions, over 35 percent of companies surveyed plan to do a better job of explaining how they arrived at their pay decisions by including some kind of alternative to the summary compensation table and 38 percent of companies surveyed plan to add graphical descriptions to enhance the understanding of their disclosures." (Bloomberg BNA)  

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