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Employee Benefits Jobs
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Webcasts and Conferences
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[Guidance Overview]
IRS Updates Safe Harbor Explanations for Eligible Rollover Distributions (PDF)
"Notice 2014-74 amends the safe harbor explanations that must be provided to plan participants receiving eligible rollover distributions to add new language about in-plan rollovers, clarify certain provisions, and remove redundant and out-of-date language. The guidance is divided into two sections, with Part A amending the explanation for payments not from a designated Roth account and Part B amending payments from a designated Roth account. A sample notice incorporating all the changes is included in the guidance."
(Buck Consultants at Xerox)
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[Guidance Overview]
Deferred Annuities in Target Date Funds (PDF)
8 pages. "[IRS Notice 2014-66] attempted to clarify a technical consideration for sponsors offering deferred annuities to participants in a target date fund series. The Notice provides a special rule allowing plan sponsors to satisfy qualified plans' nondiscrimination requirements if certain criteria are met. This paper will focus on how deferred annuities with target date funds work, the considerations regarding nondiscrimination rules, and other plan sponsor implications."
(Aon Hewitt)
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Amicus Briefs Filed in Church Plan Appeal; Organizations Debate Use of Exemption (PDF)
"The first challenge to the exemption of a religiously affiliated health-care organization's pension plan from federal regulation to reach the federal appellate courts has drawn the attention of a nonprofit consumer organization, two religious organizations and a nonprofit law firm dedicated to free expression of religion, all of which have filed amicus briefs with the U.S. Court of Appeals for the Sixth Circuit.... The source of the main disagreement among the amicus briefs in the case revolves around the intent of Congress when it amended provisions of ERISA and the tax code in 1980[.]" [Overall v. Ascension et al., No. 13-11396 (E.D. Mich. May 9, 2014; on appeal to 6th Cir.)]
(Bloomberg BNA Pension & Benefits Reporter)
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As Fiduciary Rule Stalls, DOL Advances Amicus Brief Program, Targets Service Providers
"The DOL's stance on whether retirement plan service providers qualify as ERISA fiduciaries has evolved under the Obama administration. This evolution toward a more expansive fiduciary definition can be traced through the department's amicus brief program. Although the department hasn't disavowed its 2008 pronouncement that merely creating a list of plan investment options for a plan sponsor's consideration doesn't make a provider an ERISA fiduciary, it has consistently chipped away at this position in seeking to impose fiduciary status on service providers whose activities or authority go beyond the mere creation of an investment menu."
(Bloomberg BNA)
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Bundled Services: The Provider Independence Shell Game
"The growing body of 401(k) plan excessive fee (fiduciary breach) case law exposes dysfunctional patterns of interaction between 401(k) plan fiduciaries and large bundled service providers. These patterns can be traced to the provider's published job descriptions.... The fit between a provider's internal business model and the plan's fiduciary governance structure is at risk unless this process is designed to discover independence issues in the form of potential conflicts or hidden agendas."
(ERISA Fiduciary Administrators LLC)
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Longevity Increases in the United Kingdom: Consequences for Pension Plan Design and Operation (PDF)
40 pages. "[A] 65 year old man retiring in 1951 in the UK could expect around 12 further years of life. By 2014 this was expected to have nearly doubled to 22 years and by 2056 to have increased by a further 4 years to 26 years. These improvements should be celebrated. Yet our industry is one of those for which the incredible advances in medicine and lifestyle that benefit our personal lives also create complexity and cost in our professional lives. For defined benefit pension schemes, accounting for trends in longevity represents a significant challenge."
(National Association of Pension Funds)
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American Airlines Asks for Further Deferral of Pension Contributions
"Five years ahead of its own bankruptcy in 2011, [American Airlines] ... had not yet frozen its workers' pension benefits. As a result, it was allowed to defer some of its contributions to its pensions ... The law allowed American's accountants to assume a faster rate of growth for assets in its pension funds, a move that meant it was required to set aside even less cash each year to be in good standing with its pension obligations.... Now the airline is seeking to amend the deal it struck in 2006 to extend that deadline by an additional seven years.... It wants Congress to make the change while allowing it to still use the more aggressive rate-of-growth assumptions that have helped reduce what it must contribute to the funds each year."
(The Dallas Morning News)
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Vallejo First to Test No Pension Cut in Bankruptcy
"What happens when a bankrupt city does not cut its largest debt, pensions, is getting its first test in Vallejo, which has higher average pensions and higher CalPERS rates than the two larger cities still in bankruptcy, Stockton and San Bernardino.... If growing pension and retiree health care costs continue to eat up more of government budgets, diverting money as public safety services and other key programs erode, is there a point at which leaders and the public demand change?"
(Calpensions)
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[Opinion]
EBSA Secretary Borzi Seems to Think Everybody's Wrong But Her
"On September 9, 2014, Phyllis Borzi, Assistant Secretary of the DOL Employee Benefits Security Administration (EBSA), spoke at a symposium on ERISA@40. Reporting on the speech is sketchy ... [but] Assistant Secretary Borzi seems to have suggested that there are no longer enough 'people of good will' in Congress capable of passing legislation necessary to make needed improvements to, among other things, ERISA's fiduciary rules.... In this context, Borzi thinks that legislation-by-regulation is the perfect solution."
(money vs. time)
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[Opinion]
401(k) Brokerage Windows Are All About the 'Nudge'
"The plan sponsor is expected to take care of those who do nothing. But it's a lot easier to do that if the main investment choices do not need to also take care of those at the other end of the spectrum, the squeaky wheels who want direct control over their retirement savings and the ability to invest it wherever they like. That's where the brokerage window comes in: let the participant who wants to opt out of the paternalistic framework do so. So the paternalistic part of the plan can be cleaner and more focused if there is a libertarian choice available to those who want it."
(Russell Investments)
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[Opinion]
The PBGC's Mission Impossible: A Federal Guarantee Is Sure to Go Broke
"[T]he U.S. government is the owner of a deeply insolvent insurance company. A private insurance company with this financial condition would have been closed down long ago. Is the taxpayer on the hook for the $62 billion deficit? The PBGC's annual report earnestly assures that 'the U.S. Government is not liable for any obligation or liability incurred by PBGC.' Of course not! Just like it wasn't for mortgage-finance giants Fannie Mae and Freddie Mac."
(Alex J. Pollock, in The Wall Street Journal; subscription may be required)
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Benefits in General; Executive Compensation
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2014 Year-End Employee Benefit Plans Compliance Advisory
"The 2014 end-of-year rush seems somewhat less frantic than in years past. Nevertheless, with a month left in the year many employers may find themselves scrambling to meet plan amendment and notice deadlines, and planning for 2015 may still be in process for some. This summary discusses a few key developments regarding employee benefit plans -- especially group health plans -- for employers to consider as they finish 2014 and move into 2015."
(Verrill Dana LLP)
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Using Consumer Behavior to Create a More Effective Benefits Enrollment (PDF)
16 pages. "The value of choice in benefits selection becomes a factor when examining the differences between age cohorts and other demographics currently comprising the workforce. Although one size does not fit all even within a generation, benefits choices that acknowledge the different needs and desires of employees across ages and cultures are more likely to produce the range of options and benefits education channels that appeal to most workers. However, increased personalization brings with it increased complexity."
(Colonial Life)
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Press Releases
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