ASPPA

401(k) Pension Administrator
Nicholas Pension Consultants
in CA

ERISA Attorney - Chief Compliance Officer / Health Plan Compliance / ACA / HIPAA
United Benefit Advisors (UBA)
in IL, IN

Retirement Plan Account Manager
Alerus Financial
in MI

Health Benefits Analyst
The Segal Group
in DC

401(k) Daily Record-Keeping Specialist / Administrator
Primark Benefits
in CA

Pension Administrator/Operations Liaison
Associated Pension Consultants
in CA

Manager of Compliance
General Board of Pension and Health Benefits
in IL

Loan & Withdrawal Specialist
Kravitz, Inc.
in CA

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Qualified Plan Terminations – What you need to know!
December 11, 2014 WEBCAST
(ASC Institute)

Compliance Testing is Simpler, Less Stressful with ASC
December 15, 2014 WEBCAST
(ASC)

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[Official Guidance]

Text of DOL Submission for OMB Approval: Proposed Focus Groups for Evaluating the Effectiveness of ERISA Section 408(b)(2) Disclosure Requirements
"[This information collection request (ICR) seeks] authority for focus groups to be used for evaluating the effectiveness of [ERISA] section 408(b)(2) disclosure requirements.... This ICR is designed to explore current practices and effects of a final regulation published in the Federal Register on February 3, 2012, to implement section 408(b)(2) and to gather information about the need for a guide, summary, or similar tool to help a responsible plan fiduciary navigate through and understand the disclosures. The EBSA intends to use information collected from the focus groups: [1] To assess responsible plan fiduciaries' experience in receiving the disclosures the 408(b)(2) regulations require; [2] to assess the effectiveness of the disclosures in helping plan fiduciaries make decisions; [3] to determine how well plan fiduciaries understand the disclosures, especially in the small plan marketplace (100 participants or less); and [4] to evaluate whether, and how, a guide, summary, or similar tool would help a fiduciary understand the disclosures. The focus group results will be used to inform and support a notice of final rulemaking for the guide requirement." [Updated Supporting Statements, Supplementary Documents, and previously filed Comment Letters are also available.] (Employee Benefits Security Administration [EBSA], U.S. Department of Labor)  

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[Guidance Overview]

IRS Releases Guidance on After-tax Rollovers -- Part 3: After-tax Sources and Testing
"Two months ago, the IRS released important guidance, Notice 2014-54, on the treatment of after-tax money distributed or rolled over from retirement plans. The guidance has ignited a firestorm of interest in using after-tax contributions, particularly in owner-only plans.... This update addresses sources and testing of after-tax funds." (SunGard Relius)  

[Guidance Overview]

IRS Highlights Draft Form 5500-SUP for Gathering Code-Specific Information on Form 5500 Filings
"The new paper-only Form 5500-SUP will be an optional method for providing the Code-specific information for Form 5500 or 5500-SF filers that are not required to file electronically under new IRS mandatory electronic filing requirements.... Form 5500-SUP may be filed by a plan administrator or plan sponsor that is required to file Form 5500 or 5500-SF (using EFAST2 under DOL rules) but is not required to file electronically under the new IRS rules and chooses not to answer the IRS compliance questions electronically as part of its filing on the EFAST2 system. Form 5500-EZ filers will not be required to use Form 5500-SUP because the Code-specific items will be added to the paper-only Form 5500-EZ beginning in 2015." (Thomson Reuters / EBIA)  

IRS Releases Guidance on After-tax Rollovers -- Part 4: Planning Opportunity
"The planning device under consideration involves using employee contributions to bring a participant up to the 415 limit who otherwise would not be able to reach that limit because of the deduction and deferral limitations.... Can an employer use this technique if the plan covers other employees, including NHCEs? ... Are the employee contributions subject to the 25% deduction limit or the penalty for nondeductible contributions? ... Are the employee contributions subject to the 415 limit? ... Is there a reason to roll the after-tax contributions to a Roth IRA rather than making an in-plan Roth rollover? ... What plan amendments are needed to implement this strategy? What is the deadline for those amendments?" (SunGard Relius)  

Defined Contribution Plan Profile: A Close Look at 401(k) Plans (PDF) (PDF)
"In 2012, the average 401(k) plan offered 25 investment options, of which about 13 were equity funds, three were bond funds, and six were target date funds.... [A]bout 70 percent of plans offered a suite of target date funds.... [T]he percentage of participants that were offered target date funds increased from 39.5 percent of participants to 69.8 percent between 2006 and 2012, and the percentage of assets invested in target date funds increased from 3.0 percent to 13.4 percent.... Forty percent of 401(k) plans had a simple match formula in 2012 ... Seventeen percent of plans had no employer contributions." (BrightScope and Investment Company Institute [ICI])  

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With No Presumption of Prudence, RadioShack Faces New Lawsuit
"The suit alleges fiduciaries of RadioShack's 401(k) plans violated ERISA by failing to disclose the company's true financial and operating condition to participants and beneficiaries of the plans ... In a previous attempt to sue RadioShack over its handling of company stock in the plans, the U.S. District Court for the Northern District of Texas [had] used the presumption of prudence that the Supreme Court struck down [in Dudenhoeffer] to dismiss claims, saying participants had not put forth a strong enough case to overcome the legal presumption that it was prudent to include RadioShack stock as a 401(k) investment." [Singh v. Radio Shack, No. 4:14-cv-00959-O (N.D. Tex., filed Nov. 25, 2014)] (planadviser)  

The New Way to Measure Your 401(k)
"[I]nvestors could get a clearer picture of whether they are nearing their retirement-savings goals by focusing less on the dollar amounts they've accumulated and more on how much income that money can generate in the future. A lump-sum figure, the thinking goes, doesn't tell you much more than how well your portfolio has fared and how much you have saved. The new approach -- known as projected income -- would show instead what your current balance would pay out as income beginning at a certain age." (The Wall Street Journal; subscription may be required)  

Pension Crisis Hits Central States, Chicago-Area Union Funds
"The problem for all multiemployer plans across the country is that a Central States insolvency will swamp PBGC, causing it to go bankrupt, too.... Even with $17.77 billion in assets, Central States largely is unsustainable because deregulation of the trucking industry in 1980 has wiped out all but two of the 50 biggest contributors to the plan. Today it's paying out $4 for each dollar it collects from employers[.]" (Crain's Chicago Business)  

Benchmarking: It's All About That Fee
"For the results to be reliable, the plan must be benchmarked against other plans that are similar in size by plan assets and participant count. The more similar, the more accurate the benchmarking results.... Taking short cuts in the collection and evaluation of pertinent data, subjects benchmarking results to criticism the process was imprudent." (FRA PlanTools)  

Money Market Reform and Workplace Savings Plans: A Plan Sponsor Guide to What's Ahead (PDF)
8 pages. "U.S. Treasury and government money market mutual funds are exempt from the structural aspects of the 2014 money market regulatory changes. All prime (and municipal) money market mutual funds will be subject to redemption restrictions that could hinder distributions, exchanges, rebalancing, loans, and a number of other retirement plan recordkeeping functions. Additionally, prime funds categorized as institutional will have a floating net asset value." (Fidelity Investments)  

Your RMD Must Come Out of Employer Plan Before Moving Funds to an IRA
"An RMD amount cannot be rolled out of a plan and go to an IRA.... [W]hen the plan sends the entire plan balance to you or to an IRA account without sending you a check for the RMD, what you end up with is an excess contribution in the IRA. You can't fix this by just taking out the RMD amount. You must tell your IRA custodian that you are removing an excess contribution. In order to remove an excess contribution, you must also remove the earnings attributable to the excess contribution." (Slott Report)  

Pension Plan Funded Status Decreases Slightly Due to Decline in Assets in Q3 2014 (PDF)
"During the third quarter of 2014 (Q3 2014), the funded status of the model pension plan ... decreased by 2 percentage points: from 93 percent to 91 percent. This decrease was driven by a negative asset return of 2 percent and liabilities that remained flat." (Sibson Consulting and Segal Rogerscasey)  

The Latest Trend for Pension Funds: Private Equity Investment
"[A] State Street Corp. study published in November shows that an exodus from hedge funds has yet to materialize. Only 3 percent of pension fund managers surveyed said they were planning to reduce allocations.... Large institutional players are heavily favoring private equity as the alternative-investment strategy of choice." (Institutional Investor)  

California State-Run Retirement Plans for Private-Sector Employees Being Copied Elsewhere
"Although the California plan is still in the formative stage, [recently] the Illinois legislature approved a plan based on the California model, even using the same name, 'Secure Choice.' Legislation for similar programs named 'Secure Choice' has been introduced in three other states: Maryland, Minnesota and Ohio. A variety of plans to aid workers without retirement plans has been introduced in 17 state legislatures." (Calpensions)  

Can California Teacher Pensions Be Distributed More Fairly?
"Only 35 percent of new hires will receive pensions worth more than the value of their required plan contributions. Most new hires would have better financial outcomes if they could opt out of the mandatory retirement plan and invest their contributions elsewhere. Additional plan reforms should focus on changing the benefit formula to distribute pensions more equitably across the workforce." (Urban Institute)  

New Jersey's Pension System Debt Hits $170 Billion
"[T]he reported unfunded pension liability of $51 billion in 2013 expanded to a $103 billion shortfall when the new guidelines from [GASB] took effect this June. 'This is just a financial reporting change and does not materially impact New Jersey's fiscal position,' said Treasury spokesman Christopher Santarelli." (Watchdog.org)  

[Opinion]

Is a Core Fund Menu Required?
"The DOL seems to think that an employer-fiduciary has a minimum affirmative duty to construct a core fund menu that is superior to what is available in the market. Too many choices are 'unmanageable.' This approach creates an either-or of problems. [A small plan sponsor] is (obviously) not a sophisticated investor. So he will either [1] unwisely rely on the advice of someone with obvious conflicts or [2] unwisely choose the core fund menu without that advice. Or, he just won't set up a plan ... Because adequately living up to his DOL-imposed fiduciary obligation simply costs too much." (Michal Barry, via PLANSPONSOR)  

[Opinion]

The Lame-Duck Congress Plots to Undermine Retiree Pensions
"Members of the House Education and the Workforce Committee are trying to slip the measure into an omnibus spending bill to be passed before Dec. 11, when Congress leaves Washington for its vacation recess. Pension advocates are up in arms, not least because the measure's actual language hasn't been made public.... [The] proposal [would] to allow plan trustees to cut retirees' pensions now, many years in advance of any looming insolvency. The benefit cut could be no lower than 110% of the PBGC guarantee, or about $14,150 for that 30-year worker this year. This would mean gutting the fundamental principle underlying the federal ERISA law governing private sector pensions." (Los Angeles Times)  

Useful Information on How Institutional Investors Review Proxies
"Institutional investors reported that pay for performance alignment was the most important factor for making voting decisions. However, many investors indicated that pay-for-performance and performance measures disclosure often is hard to understand (and sometimes seems designed to obfuscate). Resist the urge to make your disclosures overly complicated." (Winston & Strawn LLP)  

Letter from House Committee on Financial Services to SEC Chair Mary Jo White Urging Delay of Action on Pay Ratio Rule (PDF)
"[T]he pay ratio rule should not be at the top of the SEC's agenda.... [B]ecause [the] pay ratio disclosures do not provide useful information about a company's operations, performance, or pay practices, such disclosures will be immaterial and, at worst, confusing to investors ... The SEC cannot ignore the very real and permanent compliance costs that the pay ratio rule will impose on all public companies.... Because the SEC has chosen to expend limited resources on the pay ratio rule, it is now significantly more difficult for the SEC to ... complete [other] mandatory rulemakings[.]" (Committee on Financial Services, U.S. House of Representatives)  

Roland C. Salmi, MBA Joins Westminster Consulting as an Associate Analyst
Westminster Consulting

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