ASPPA

Defined Contribution Implementation Specialist
Milliman
in TX

Participant Services Representative
Directors Guild of America - Producer Pension and Health Plans
in CA

Retirement Plan Administrator
Prime Pensions, Inc.
in NJ

Senior Retirement Plan Administrator
magii pension services, llc
in NY

Daily Valuation Processor
Retirement Planners
in VA

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401(k) Plans: Beyond the Basics - Kansas City
January 15, 2015 in KS
(SunGard Relius)

401(k) Plans: Beyond the Basics - Atlanta
January 20, 2015 in GA
(SunGard Relius)

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[Guidance Overview]

IRS FAQs Clarify Earlier Guidance on Tax Treatment of Simultaneous Distributions to Multiple Destinations
"The [December 24 FAQs] do not alter the substance of Notice 2014-54, but they offer useful clarification. The Notice does not allow distributions to avoid the tax allocation rules entirely; the 'single distribution' that is deemed to occur at the time of simultaneous distributions remains subject to the usual allocation rules. The Notice merely offers more flexibility to determine where the pre-tax and after-tax amounts will go." (Thomson Reuters / EBIA)  

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[Guidance Overview]

'CRomnibus Act' Brings Many Changes to Multiemployer and Single-Employer DB Plans
"Changes for multiemployer pension plans are most sweeping, including: [1] Authorization to suspend benefits for active and retired participants where multiemployer plans in 'critical and declining status' meet detailed requirements. [2] Doubling of PBGC premiums for multiemployer plans. [3] Repeal of the 'sunset' provisions of the Pension Protection Act (PPA) multiemployer funding rules. [4] Disregard of PPA surcharges and certain other contributions when calculating withdrawal liability. [5] Expansion of PBGC authority to approve plan partitions and facilitate plan mergers." (McGuireWoods LLP)  

Text of Seventh Circuit Opinion: 17% Aggregate Reduction in Work Force Did Not Constitute Partial Termination of Retirement Plan (PDF)
"The Internal Revenue Service has adopted our suggested 20 percent presumption, Rev. Rul. 2007-43, but has not specified a percentage (such as our 10 percent) below which there would be a conclusive presumption that no partial termination had occurred.... The district judge had thus to decide whether the series of reductions in the number of plan participants should be considered a single partial termination. Examining the documentation that the plaintiff contends amounted to a restructuring plan that tied all the subsequent terminations together, the judge determined that there had been no such plan -- that the decisions to sell particular subsidiaries had been made sequentially, on the basis of economic conditions in the particular market in which each subsidiary operated, and that these conditions had varied from market to market." (United States Court of Appeals for the Seventh Circuit)  

Don't Forget the EGTRRA Tax Credit When Setting Up a Retirement Plan
"The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) added a tax credit of up to 50% of the first $1,000 in retirement plan start up expenses for the first three years of a plan. An employer is an eligible employer if, during the preceding year, there were 100 or fewer employees who received at least $5,000 of compensation.... The employer must not have established or maintained any employer plan during the three tax-year period immediately preceding the first tax year in which the new plan is effective.... Eligible expenses include those incurred to establish the plan, administrative fees and costs incurred to educate employees about the plan." (The Retirement Plan Blog)  

That Solid Pension Benefit? Subject to Change
"[B]enefits for a 70-year-old worker with 20 years of service and a $3,000 monthly pension could be cut to $787 a month. Someone who worked 15 years and earned a $1000 monthly benefit could get only $590 per month... [W]orkers and retirees ... in an insolvent [single-employer] plan that gets taken over by the agency ... receive a maximum annual benefit of $59,320 if they retire at 65. The most a worker covered by a multiemployer plan with 30 years of service will get through the PBGC if their plan is insolvent is $12,870 per year." (Pittsburgh Post-Gazette)  

DC Participants Seek Certainty (PDF)
"[Neither plan sponsors nor participants] are fully grasping the trade-offs between the expectation for performance/return and the probability of success. Plan sponsors should select their qualified default investment alternative (QDIA) based on the likelihood of reaching the plan's objective in the sole interest of participants. If a target-date fund series is used, [the author] suggests identifying the strategic (not just the equity) glide path that is most likely to meet the plan sponsor's conscious trade-off between return and outcome certainty and then use this strategic glide path for performance benchmarking." (PIMCO)  

Retirees, This Is Not Your Father's Retirement Plan: Constructing The 2015 Fill-The-Gap Portfolio
"Approximately 10,000 boomers are retiring daily for the next 20 years. Social Security will provide an average of $1200 per month per person.... For most of us, without a defined benefit pension plan, that leaves us with an annual gap of $21,200 that needs to be filled.... This portfolio construction focuses on the annual dividend income produced. If this entire portfolio was purchased today, it would immediately close the gap and produce the total income the average retired couple requires right now." (Seeking Alpha; free registration may be required)  

Best Strategy for Portfolio Withdrawals?
"[W]hen such bucketing or decision-rules strategies are paired with simple rebalancing, ... the outcome is no better than merely managing the portfolio on a total-return basis alone.... [S]imple rebalancing already has an astonishingly powerful effect in helping to avoid unfavorable liquidations, as the process systematically ensures that the investments that are up (the most) are sold, and the ones that are down (the most) are held and, in fact, bought instead. This means advisors may not be giving rebalancing alone nearly the credit it deserves to accomplish similar -- or even better -- results than setting aside buckets and creating decision rules." (Michael Kitces, in On Wall Street)  

Study Sought on Privatizing Kansas Public Pensions
"Budget Director Shawn Sullivan and Secretary of Administration Jim Clark told a joint legislative committee on pensions that 'reform options' for bolstering the public pension system's long-term health should be examined. Their list included converting pension benefits into annuities managed by a private insurer.... [T]hey want additional study of proposals to move toward a 401(k)-style plan for new workers... The 2012 law included a plan for new employees that moved away from traditional benefits based on a worker's salary and years of service but wasn't a true 401(k)-style plan." (Sedgwick County Post)  

Elected Judges Sue CalPERS Over Pensions
"Six judges elected to California superior courts in 2012 were lumped in with newer judges and a newer, stingier pension plan, the judges claim in court. Lead plaintiff Matthew McGlynn, of Tehama County, claims the Public Employees Pension Reform Act was unfairly and retroactively applied to him and others who were elected to the bench before the enactment of the law in 2013." (Courthouse News Service)  

Defense Offered for Illinois Pension Reforms
"Article VIII provides that the state budget shall be balanced and appropriations for any fiscal year shall be no greater than the estimate of funds available and that the appropriations for a fiscal year shall not exceed the funds estimated by the General Assembly to be available for that year. 'These provisions of the constitution cannot be ignored in favor of the Pension Clause. The terms of the constitution must be interpreted to give meaning to each provision,' [said municipal restructuring expert James Spiotto]." (The Bond Buyer)  

[Opinion]

Staying Ahead of the Curve: Anticipating Changes in the Target Date Fund Marketplace, Part 2
"Asset managers without annuity products have come up with the interesting alternative of incorporating indices into target-date funds that theoretically replicate an annuity. With these products, the employee will be able to calculate a desired income and purchase the appropriate allocation that will allow them to convert the assets into an annuity upon retirement. The idea is intriguing but, currently, academic and unproven." (Money Management Intelligence)  

Center for Due Diligence Shuts Down; Phil Chiricotti Retires
401khelpcenter.com, LLC

US Labor Department Files Complaint Seeking Restoration of Pension Funds to the Bar-K 401(k) Plan in Lafayette, California
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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