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[Guidance Overview]
IRS Employee Plans News 2014-21, December 3, 2014 (PDF)
"New procedural guidelines for IRS employees improve the determination letter process for PEP plans.... We've recently improved our processing of determination letter applications for pension equity plans by training a specialized cadre in EP Determinations and issuing these procedural guidelines for IRS employees: [1] PEP Determinations Worksheet [2] Explanation of PEP Plan Issues (corresponds to the Worksheet) [3] Memorandum to the EP Determinations PEP Cadre on the PEP accrued benefit (PEP Memorandum)"
(Internal Revenue Service [IRS])
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[Guidance Overview]
IRS Releases Guidance on After-Tax Rollovers -- Part 2: New Rules
"The new rules are effective for distributions after December 31, 2014. A plan can choose to operate under the new rules (or the old rules) for periods prior to that date, but the new rules cannot apply to distributions from a designated Roth account prior to September 18, 2014. The IRS has issued a proposed regulation to delete from the Roth 401(k) regulations the sentence requiring separate distribution treatment, and will later issue revised special tax notices. Seldom, if ever, would there be a need for a plan amendment to implement the new rules."
(SunGard Relius)
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Another Year, Another 403(b) Plan Compliance Calendar
"[This] 403(b) Plan Compliance Calendar for 2015 [lists] all of the critical compliance deadline dates for 403(b) plans. Note that some of the deadlines only apply to particular plan types (such as ERISA plans) and are noted accordingly.... [T]his year's calendar is not significantly different from the 2014 calendar, which should be good news for all of those who work with 403(b) plans."
(National Tax-Deferred Savings Association [NTSA])
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Defined Benefit Plan Participants Have Standing to Pursue Fiduciary Breach Claims
"A federal district court in Minnesota found that participants in a defined benefit pension plan had standing to assert claims that defendants breached their fiduciary duties by, among other things, shifting to an equities-only investment strategy that resulted in the plan becoming significantly underfunded and thereby increasing the risk of default." [Adedipe v. U.S. Bank, No. 13-2687 (D. Minn. Nov. 21, 2014)]
(Proskauer's ERISA Practice Center)
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Roadmap to a Successful Tiered Investment Menu Design and Communication Program (PDF)
"[A] tiered approach to menu design, with each tier targeting a different type of participant demographic, can help plan fiduciaries create a prudently structured investment menu. Equally important is a strong education program, which effectively communicates each tier and how each works, to help participants create an effective asset allocation. Finally, incorporating an appropriate QDIA for participants who fail to make an investment election will provide a safe harbor and help in managing the liability of plan fiduciaries."
(Manning & Napier)
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The Beauty of the Bundle: Combining Longevity Annuities and Bonds to Raise Retirement Income
9 pages. "DC participants want the most for their money when choosing a retirement income strategy. While annuities can offer higher income, that value is partially reduced by expenses and the loss of control and liquidity. [The authors] quantify these drawbacks and find that the most efficient way to fund retirement spending may be to combine a longevity annuity (e.g., QLAC) with a bond portfolio."
(NISA Investment Advisors; free registration required)
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Still a Better Bang for the Buck: An Update on the Economic Efficiencies of Defined Benefit Pensions (PDF)
30 pages. "In this updated comparison of DB and DC plan costs, [the authors] take into account key developments in the retirement benefits landscape with regard to fees, investment strategies, and annuities, while building an 'apples to apples' comparison through a uniform set of demographic and economic assumptions.... A typical DB plan provides equivalent retirement benefits at about half the cost of a DC plan, and 29 percent lower cost than an 'ideal ' DC plan modeled with generous assumptions."
(National Institute on Retirement Security [NIRS])
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Is Your Social Security Advice a Fiduciary Risk?
"[T]oo many advisors fail to effectively plan for Social Security benefits, and fewer still coordinate them with the overall retirement portfolio.... [As] an advisor, you cannot claim to be a fiduciary and not properly account for your clients' Social Security.... 52% of married couples and 74% of unmarried people receive half or more of their income from Social Security. Even more shocking, 22% of married couples and about 47% of unmarried people rely on it for 90% or more of their income."
(Financial Planning)
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Congress Could Soon Allow Multiemployer Pension Plans to Cut Benefits for Current Retirees
"In recent weeks, negotiations over the proposal have heated up on Capitol Hill. Still, some key elements are unresolved, including a way to satisfy objections from United Parcel Service, which withdrew from one of the most distressed plans in 2007 but would be on the hook to make up for any pension cuts affecting its retirees. If those details can be ironed out, congressional aides said an agreement is possible before the current session of Congress ends this month."
(The Washington Post; subscription may be required)
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[Opinion]
Public Pensions Need Gamblers Anonymous
"New accounting rules promulgated by [GASB] and taking effect this year will push plans to amortize unfunded liabilities over roughly 15 years. Even without these rules, volatile pension investments translate into volatile contribution requirements that can and have destabilized government budgets. Yet public-plan managers may see little option other than to double down on risk."
(Andrew G. Biggs, in The Wall Street Journal; subscription may be required)
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[Opinion]
Pension Rights Center Letter to Members of Congress Urging Opposition to Proposed Multiemployer Plan Changes (PDF)
"While the Pension Rights Center believes that action should be taken to help these plans continue, there is ample time for Congress to develop solutions that are sensible and fair. In the waning days of the 113rd Congress, we urge you not to rush to support the ill-conceived proposal put forth by the National Coordinating Committee for Multiemployer Plans, which would allow trustees to cut retirees' benefits.... It is unfair to allow multiemployer plans to balance their books on the backs of those who have everything to lose and nothing to gain from this proposal.
(Pension Rights Center)
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Benefits in General; Executive Compensation
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Eleventh Circuit: Limitations Period Begins When Benefit Payments Stop
"The Court said that, as in this case, in the absence of a final or formal denial, an ERISA cause of action accrues -- and the limitations period begins to run -- when the claimant has reason to know that the claim administrator has clearly repudiated the claim or amount sought. MetLife's conduct -- failing to provide benefits on or after May 1, 1997 -- demonstrated a clear and continuing repudiation of Witt's rights, and therefore caused the six year statute of limitations to start running ... Further, MetLife's subsequent courtesy review in 2011 did not restart the statutory clock." [Witt v. Metropolitan Life Ins. Co., No. 14-11349 (11th Cir. Nov. 25, 2014)]
(Cary Kane ERISA Lawyer Blog)
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The Importance of Hiring a Quality Auditor to Perform Your Employee Benefit Plan Audit (PDF)
24 pages. "This advisory describes why a financial statement audit is important; risks to plan sponsors if a quality audit is not performed; evaluating auditor qualifications; the proposal process, including the request for proposal, proposal evaluation and auditor selection; and documenting the agreement."
(American Institute of Certified Public Accountants [AICPA])
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Resolve Deferred Compensation Errors Before Year's End
"[IRS Notice 2008-113] provides relief from Internal Revenue Code Section 409A penalties for operational errors that occurred earlier this year and in 2013. It also addresses 2012 operational errors and confirms that December 31, 2014, is the deadline for obtaining relief for 2012 errors. The Notice, however, does not provide relief for errors left uncorrected more than two years after they occurred. [This article's] road map highlights the available correction options for certain early and missed nonqualified plan payments that occurred during 2012, 2013 and 2014."
(Society for Human Resource Management [SHRM])
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Press Releases
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