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Employee Benefits Jobs
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Webcasts and Conferences
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[Guidance Overview]
Final Regs Issued for Annual Funding Notice (PDF)
"One somewhat controversial issue raised by the proposed rule had been whether the requirement to disclose information about changes in the 'current year' if they occur more than 120 days before the due date for furnishing the AFN. Some practitioners had questioned whether 'current year' refers to the year being reported by the AFN or the year in which it is provided. DOL stuck with its view of reporting on changes in the year in which the AFN is reported. However, the definition of 'taking effect' was modified to mean the date the event takes effect for funding purposes. As a result, the need for reporting will need to consider factors such as the election in the funding rules to accelerate recognition of an amendment."
(Buck Consultants at Xerox)
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[Guidance Overview]
IRS Issues Transition Relief for Charter Schools in Public Plans (PDF)
"[T]he IRS and Treasury Department also issued as a part of the notice important transition relief indicating they anticipate that the final regulations ... will provide that a State or local retirement system that covers employees of a public charter school that meets the requirements of the guidance under consideration ... for periods starting on and after the effective date of the final regulations will not fail to be a governmental plan ... even if the plan covered those employees for periods before the effective date of the final regulations when the public charter school did not meet the requirements of the guidance ... In other words, charter schools will have until the effective date of the final regulations to make any changes needed to meet the requirements of the final regulations[.]"
(Groom Law Group)
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IRS Now Accepting 'Cycle E' Determination Letter Applications
"In addition to the actual application, a determination-letter filing now requires a complete restatement of the plan document. At a minimum, all amendments adopted since the plan's prior restatement must be incorporated into the plan document, which must then be formally approved, signed, and dated ... In addition, this restatement must reflect all of the relevant changes listed on the '2014 Cumulative List of Changes in Plan Qualification Requirements,' as set forth in IRS Notice 2014-77."
(Spencer Fane)
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Calculation of Earned Income for Self-Employed Individuals
"The calculation begins with net Schedule C income, net Schedule F income, or, for partnerships, Schedule K-1 Line 14 (Code A) income, which often needs to be reduced for certain expense items, such as the Section 179 deduction. This is a preliminary determination. Plan compensation for self-employed individuals is also reduced for retirement plan contributions so plan compensation will change depending on the level of contribution calculated for the individual."
(Retirement Management Services)
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Is Your Company Making Timely 401(k) Contributions?
"If a plan has fewer than 100 participants, the deposit deadline is the seventh business day after the amounts are withheld from paychecks.... The safe harbor rule does not apply to large plans.... In many cases, the employer will be required to make its deposits within just a day or two after the amounts are withheld from paychecks.... Enforcement of this rule continues to be a DOL priority, and failing to identify and correct late deposits may result in penalties and excise taxes."
(Poyner Spruill LLP)
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Chart of 401(k) Fee Litigation, January 2015
"Nearly forty lawsuits have been commenced relating to 401(k) plan fees.... The focus of the lawsuits against the plan sponsors [has] evolved over time to include ... the selection of actively managed mutual funds as plan investment options, the use of retail share classes, the investment and transaction drag associated with unitized stock funds, the use of a bundled service provider and the fiduciaries' purported failure to capture additional revenue streams for the benefit of the plan.... [L]awsuits ... against 401(k) plan service providers ... typically are based on allegations that the service providers are 'functional fiduciaries' under ERISA."
(Groom Law Group)
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An Overview of ERISA Issues Related to 'In-House' Plan Use of Proprietary Products and Services
"[This article provides] an overview of the principal ERISA issues that arise in connection with the use of proprietary products and services ... highlight[s] the prohibited transaction exemptions that may be utilized to avoid violations of ERISA's prohibited transaction rules ... address[es] the major themes in the litigation related to proprietary products and services ... [and describes] strategies and approaches for complying with ERISA and mitigating litigation risk when using proprietary products and services.... [An accompanying] chart identifies the lawsuits that have been filed to date, describes the claims that have been asserted in the lawsuits, and summarizes the substantive court rulings and
the procedural status of the cases."
(Groom Law Group)
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Investing vs. Saving: Why the 401(k) Fiduciary Must Emphasize Only One
"Very often, too much emphasis is placed on the investment options/fees within a 401(k) plan and not on establishing a sound education and savings strategy. If someone needs to be saving 12% and is only saving 3%, investment performance is not going to make a difference.... While 401k plan sponsors can't ignore investment due diligence, they are beginning to recognize that educating employees on the importance of saving is more important than teaching the latest in investment techniques."
(Fiduciary News)
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The Impact of 'Leakage' from 401(k)s and IRAs
"About 1.5 percent of assets leak out of the 401(k)/IRA system each year. Of the different forms of leakages, in-service withdrawals and cashouts appear to represent the most significant source of leakages, while loans created a measurable but relatively small leakage.... [A]ggregate 401(k) and IRA retirement wealth is at least 20 percent lower than it would have been without current leakage rules. The policy implications of the findings are: [1] Hardship withdrawals could be limited to serious, unpredictable hardships and the amounts distributed not subject to the 10-percent penalty. [2] The age for non-penalized withdrawals from both 401(k) and IRAs could be raised to at least Social Security's Earliest Eligibility Age, which is currently 62. [3] The cash-out mechanism could be closed down entirely, by changing the law to prohibit lump-sum distributions upon
termination."
(Center for Retirement Research at Boston College)
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Americans Want Monthly Retirement Income But Don't Know How to Get It (PDF)
"84 percent of Americans say having a guarantee of monthly income for the rest of their life is important to them. Nearly half (48 percent, up from 34 percent in 2014) say that having guaranteed income to cover living costs should be the primary goal for their retirement plan.... But ... only 14 percent have actually purchased an annuity, which is the only way to ensure income that retirees can't outlive. Furthermore, many Americans (44 percent) are unsure if their current retirement plan even offers them the option of receiving a monthly paycheck in retirement."
(TIAA-CREF)
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Lifetime Retirement Income in DC Plans: What's In It for Plan Sponsors? (PDF)
"In recognition of the government's significant investment in defined contribution plans (through tax benefits for employers and employees), these plans must deliver on their promise to successfully convert accumulated savings to retirement income.... Adoption of a retirement income solution is a fiduciary decision. But so is the decision NOT to adopt. Plan sponsors who want to maintain a cost-effective retirement program, manage their workforce, provide a competitive benefit, and reduce the risk of government mandates will want to give serious consideration to providing their employees with a retirement income solution."
(Institutional Retirement Income Council)
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GASB Standards and What They Mean for Public Pensions
"Pension debt numbers could look bigger due to two main changes in the financial reporting: [1] Instead of being 'smoothed' over time, assets will now be valued at a specific date in time. [2] The net pension liability will be calculated using a lower discount rate."
(National Public Pension Coalition)
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ESOPs: The Ultimate Succession Solution
"Baby Boomer entrepreneurs are well advised to put ESOPs on their succession planning short list. ESOPs are flexible, require no negotiation or post transaction dealings with adversarial buyers, and they offer unique tax advantages that subsidize both the cost of borrowing and the selling shareholder's net return."
(Golan & Christie LLP)
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DOL Places 150 Union Pension Funds in 'Critical' Status
"Another 85 funds are listed as being 'endangered,' meaning they lack the assets to meet at least 80 percent of their future obligations. 'These are lists of plans whose own funding [levels] puts the plan at risk,' said Norman Stein, senior policy adviser to the Pension Rights Center ... That status gives the trustees the option of cutting some benefits as part of a rehabilitation plan to get the program back to health."
(Washington Examiner)
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Plan Sponsors Finish 2014 on Positive Note
"For the 12 months ended December 31, 2014, Corporate ERISA plans generally performed best among all plan types with a median return of 8.5 percent. Public Funds had a median return of 6.8 percent for the year ... Following slightly negative returns in the third quarter, all plan types at the median had a positive fourth quarter. Corporate ERISA plans gained 2.4 percent at the median in the fourth quarter, while Public Funds gained 1.3 percent."
(Northern Trust)
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Administration's FY 2016 Budget Proposal Includes More Retirement Plan Access, Cap on Tax Savings
"The retirement-related proposals would give employers new or larger tax credits for either offering retirement savings plans at work or automatically enrolling workers in them for the first time, including part-time workers. The budget also proposes giving the Department of Labor $6.5 million to support states and waiver authority to enable states to implement their own defined contribution programs, to address concerns over conflicting laws as states consider new approaches to help private-sector workers have access to retirement accounts."
(Pensions & Investments)
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[Opinion]
President's Budget Proposals Would Harm Retirement Savings
"ICI opposes further limits on the amount Americans can save for retirement and reductions in retirement tax incentives. Policy changes of this kind are simply wrongheaded.... ICI supports building on the successes of the voluntary private retirement system with additional voluntary measures, such as those making it easier for small employers to offer retirement plans. We oppose mandates on employers, including any in the Administration's 'auto-IRA' proposal."
(Investment Company Institute [ICI])
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[Opinion]
ERIC Statement on Retirement Proposals in President Obama's FY 2016 Budget
"The President's proposal to cap the amount of accrued benefits in tax-favored retirement plans and IRAs misses the mark and should be rejected.... Likewise, ERIC opposes the President's proposal to provide the [PBGC] with authority to set risk-based premiums based on its determination of the credit worthiness of a plan sponsor.... Putting the PBGC in charge of determining not only the amount of the premium that individual employers pay, but also the means by which they are set -- with no effective oversight from Congress or another neutral party -- would create a direct conflict of interest."
(The ERISA Industry Committee [ERIC])
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Benefits in General; Executive Compensation
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Six Cash-Saving Tips for Deferred Compensation Plans
"A discretionary contribution to a DCP account balance can meet a variety of corporate objectives by using vesting. An employer contribution can vest over time, be based on meeting employer objectives, be structured as discretionary contributions, or a combination of those. Flexibility, creativity and discrimination are your friends here."
(CFO)
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[Opinion]
Why the President's Proposal for Social Security Disability Insurance Makes Sense
"The budget calls for a five-year reallocation of payroll taxes from the Old-Age and Survivors Insurance (OASI) trust fund to the disability fund (DI), starting in January 2016 and ending in December 2020. The plan would increase the payroll tax allocated to DI by 0.9 percentage point, with a corresponding decrease in funds received by OASI. The change would have no overall effect on the longevity of the combined trust funds, which are expected to be exhausted in 2033."
(Mark Miller, via Reuters)
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Press Releases
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