Retirement Plans Newsletter

January 2, 2015

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Pension Administrator
GF Pension Corp.
in PA

Defined Contribution Administrator
Actuarial Consulting Services
in NJ

DC Retirement Plan Administrator
Pension Plan Administration, LLC
in AR

401(k) Plan Administrator
MVP Plan Administrators, Inc.
in NC

Coordinator - Benefits Programs & Strategy
University of California Office of the President
in CA

Employee Benefits Attorney
Tuggle Duggins P.A.
in NC

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[Official Guidance]

Text of IRS 2015 Draft Instructions for Forms 1099-R and 5498: Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., and IRA Contribution Information (PDF)
24 pages. "What's New: FATCA filing requirements of certain foreign financial institutions (FFIs). Beginning in 2014, an FFI with a chapter 4 requirement to report a cash value insurance contract or annuity contract that is a U.S. account held by a specified U.S. person with the FFI may satisfy this requirement by electing to report the account in a manner similar to that required under section 6047(d). Form 1099-R is to be used for such reporting. See Regulations section 1.1471-4(d)(5)(i)(B) for this election. Also see Regulations section 1.1471-4(d)(2)(iii)(A) for how a U.S. payor may satisfy its chapter 4 reporting requirements by reporting on Form(s) 1099." (Internal Revenue Service [IRS])  


[Advert.]

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First Annual Report of the Participant and Plan Sponsor Advocate of the Pension Benefit Guaranty Corporation (PDF)
39 pages. "PBGC staff are widely considered a dedicated group of professionals who conduct themselves with integrity and a passion for their work.... [F]our areas where improvement is needed. The first is communication ... Second, is process, or rather a lack of process for handling those participant and plan sponsor issues that don't nicely fit into routine transactions that PBGC performs quite well, like the actual payment of benefits ... Thirdly, there is lack of coordination among and between PBGC departments which has profound effects on servicing plan sponsors and participant ... Fourth and perhaps most importantly, is the observation by plan sponsors and participants and their advocates that relates to a growing adversarial and over-reaching approach by PBGC which can in the long-term affect the retirement security of millions of Americans." (Pension Benefit Guaranty Corporation [PBGC])  

The Ball Dropped on 2015 -- Now Here's A 'Top Ten' List for Fiduciaries
"[1] It's all About The Fees, about the Fees ... [2] The DOL Ice Bucket Challenge -- I challenge you, within 24 hours -- to get your payroll remittances in.... [3] 'Game of Thrones' is our new 'Sopranos', 'Orange Is the New Black' and 'IPS is the new Plan Document'.... [4] It's not just for Actors at the Oscars, Take a 'Group Selfie' when your committee next meets ... [5] I'm so fancy, You already know... I've reviewed my plan docs, and I'm good to go.... [6] 'How I Met Your Mother' ends, but fee litigation continues." (Benefits Bryan Cave)  

Dynamic Asset Allocation as a Pension Plan 'De-Risking' Strategy: The Devil Is in the Details (PDF)
"[E]ven after a plan sponsor agrees, in theory, that an asset allocation that responds to funded status is appropriate, there are a number of elements to a dynamic asset allocation that require thoughtful consideration on the part of the plan sponsor.... What liability to use to measure the plan's funded status.... How often to measure the plan's funded status.... Setting the desired glide path." (Sibson Consulting)  

How Much Can I Afford to Spend in Retirement? Time to Determine Your Spending Budget for 2015
"[T]his post will illustrate the Actuarial Approach for Richard Retiree, the hypothetical retiree we last looked in our post of December 27, 2013 when we developed a spending budget for him for 2014.... In addition to receiving $20,000 of Social Security benefits and $15,000 of annuity payments during 2014, Richard's accumulated savings earned $61,944. He spent $60,000 during 2014 ($5,766 less than his budget), so his total accumulated savings at the end of 2014 are $921,853 ... He is now age 67.... While investment in equities during the last two years has resulted in significant gains to him, he worries that he might not be able to cover his essential expenses if the markets suffer significant losses." (Ken Steiner, FSA Retired)  

The State of Young Adults' Balance Sheets: Evidence from the Survey of Consumer Finances (PDF)
26 pages. "Compared with young adults in 1989, young adults in 2013 were more likely to own homes, stocks, and retirement accounts. Moreover, young adults in 2013 were less likely to have high debt payment burdens than older adults, young adults in 1989, and young adults in 2001." (Federal Reserve Bank of St. Louis)  

[Opinion]

Shortfall in Retirement Savings a Serious Concern
"It may not be the most pressing concern facing Gov.-elect Larry Hogan, but it was disappointing to learn that he is pulling the plug on the state task force pondering how to get middle-class Marylanders to save more for retirement. Whether the incoming governor likes it or not, the loss of defined-benefit pension plans in the private sector and the failure of workers to invest sufficiently in alternative defined-contribution savings plans -- if they are even made available by their employers -- is a serious concern. What makes Mr. Hogan's decision notable is that the 14-member task force created by Gov. Martin O'Malley less than one year ago only began what was supposed to be a two-year study this past summer." (The Baltimore Sun)  

Benefits in General; Executive Compensation

Employee Stock Plans: Year-End International Reporting Requirements
"This Commentary highlights some of the principal calendar and year-end reporting requirements for employee stock plans that U.S. companies most commonly encounter when offering these programs to their employees in selected jurisdictions worldwide.... A chart summarizing these items [is included]." (Jones Day)  

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