Retirement Plans Newsletter

February 9, 2015

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Employee Benefits Jobs

Defined Contribution Client Manager
Milliman
in CA

Daily Valuation Specialist
Howard Simon & Associates
in IL

Retirement Plan Consultant/Compliance Analyst
Alliance Benefit Group of Houston, Inc.
in TX

Sr. Counsel, Retirement Plans
American Council of Life Insurers
in DC

Part Time On Call Retirement Planning Consultant
Transamerica Retirement Solutions
in AR, CA, FL, GA, HI, IL, MI, MO, NJ, NY, TN, TX, UT

Employee Benefits Attorney
Hodgson Russ LLP
in NY

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Webcasts and Conferences

New ACA Recordkeeping Requirements Including 1094-C and 1095-C Forms
February 11, 2015 WEBCAST
(Triton Benefits)

401(k) Advisor Symposium in Oak Brook, IL on February 18th
February 18, 2015 in IL
(401k Rekon)

How Sarah Staggs Connects Benefits to Corporate Strategy
February 25, 2015 in IL
(Worldwide Employee Benefits Network [WEB] - Chicago Downtown Chapter)

ADA & FMLA Compliance Update
April 16, 2015 in IL
(National Employment Law Institute)

View All Webcasts and Conferences



IRS Releases 2014 Form 8955-SSA and Instructions with Electronic Filing Requirement for Certain Filers
"The 2014 Form 8955-SSA is unchanged from the 2013 version, but the instructions have been updated to reflect that certain filers must now file Form 8955-SSA electronically through the IRS Filing Information Returns Electronically (FIRE) system.... The IRS maintains a Form 8955-SSA Resources webpage with additional information, including instructions for using the FIRE system and a list of approved software vendors for preparing Form 8955-SSA for electronic filing." (Thomson Reuters / EBIA)  


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Most Americans Say Government Employees Should Contribute More to Their Own Retirement
"72 percent of Americans are concerned their state and local governments may not be able to afford the pensions that have been promised to government workers.... 82 percent favor requiring current public employees to contribute more towards their own future pensions and benefits.... 53 percent believe public employees should contribute at least 50 percent of the cost of their retirement benefits. Fifty-eight percent of Americans favor setting a cap on the maximum dollar amount of annual pension payments public workers can receive during retirement[.]" (Reason Foundation)  

U.S. Public Pensions Return 6.8% in 2014 for Six Years of Gains
"U.S. public pensions reported median returns of 6.8 percent last year, the sixth year in a row of gains after the financial crisis, according to Wilshire Associates. The gains, though, are less than the annual investment returns of 7.5 percent to 8 percent that many state and local governments count on to pay benefits for teachers, police and other employees. In the 10 years through Dec. 31, public pensions had a median return of 6.6 percent." (Bloomberg)  

Kentucky Pension Underfunding Complicates Divorce Settlements
"[O]ne of the things Bob earned over his years with the state was a promise from the state to pay a certain amount of benefits upon his retirement. The present value of that promise -- when it's certain -- can be calculated in today's dollars, and many divorces are resolved using this present value.... However, chronic underfunding has now rendered the value of those future benefits uncertain. Courts in other states have ruled that the value of a pension must be reduced to account for contingencies such as the insolvency or illiquidity of the plan." (heraldleader.com)  

Florida Legislature Considers Exempting Participant Loans from State's Stamp Tax
"Members of the Florida legislature recently proposed a change to the state's stamp tax law that would specifically exclude its application to participant loans from ERISA-covered retirement plans ... Among the consequences of the failure to comply with Florida's stamp tax is that the loan is unenforceable in Florida state courts. Therefore, the failure to pay the stamp tax on a participant loan may result in a prohibited transaction and/or tax qualification failure, as well as a deemed distribution due to the potential inability of the plan to enforce its rights in court in the event of a default, in violation of the enforceable agreement requirement articulated in applicable IRS regulations." (The Wagner Law Group)  


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A Look at Whether ETFs or Index Funds Offer Investors the Cheapest Price Tags
"It may be reasonable to expect ETFs to charge lower expense ratios than their index mutual fund counterparts. After all, ETF managers do not have to maintain accounts for individual investors like index mutual funds, which can help reduce their administrative expenses.... The difference in expenses between the two vehicles is small, at least on an asset-weighted basis. As measured on the basis of fees alone, one vehicle is not categorically better than the other." (Morningstar Advisor)  

Now Could Be a Great Time to Borrow from Your 401(k)
"The 401(k) loan is an often-overlooked source of funds for debt consolidation and interest rate reduction. However, to some financial advisors, the 401(k) plan is the third rail of debt management strategies -- a source of capital that should never be touched." (The Christian Science Monitor)  

GAO Criticizes Current Procedures for 'Forced' 401(k) Plan Rollovers
"This report is part of an increasing focus by policymakers on issues related to rollovers. That increase in focus is in part the result of increased baby-boom retirements and increasing workforce mobility.... GAO was critical of several aspects of current 'forced transfer' practice ... Dealing with missing participants remains, for sponsors, a chronic problem -- for the half of sponsors that do not force cash-outs and for balances over $5,000." (October Three Consulting)  

The Link Between Corporate Pensions and Financial Distress
"[The authors] find that firms with DB plans typically have little exposure to the stock prior to default; the degree of underfunding increases significantly as firms near default, but is not related to restructuring types (bankruptcies versus out of court restructurings). In contrast, large exposures to company stock in DC plans often are not reduced prior to default. High levels of own-company stock ownership are positively related to default and bankruptcy probabilities." (Ying Duan, Edith S. Hotchkiss and Yawen Jiao, via SSRN)  

[Opinion]

PBGC Report Highlights Importance of Pension Counseling
"We at the Pension Rights Center have long recognized the important role that U.S. Administration on Aging's Pension Counseling and Information Program (PCIP) plays in protecting the legal rights of retirees and their families. So we were gratified to see that sentiment echoed by Constance Donovan, the [PBGC's] Participant and Plan Sponsor Advocate, in her inaugural report." (Pension Rights Center)  

Benefits in General; Executive Compensation

[Official Guidance]

Text of SEC Proposed Rule for Disclosure of Hedging Policies for Officers, Directors and Employees (PDF)
"We are proposing amendments to our rules to implement Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires annual meeting proxy statement disclosure of whether employees or members of the board of directors are permitted to engage in transactions to hedge or offset any decrease in the market value of equity securities granted to the employee or board member as compensation, or held directly or indirectly by the employee or board member. The proposed disclosure would be required in a proxy statement or information statement relating to an election of directors, whether by vote of security holders at a meeting or an action authorized by written consent." (U.S. Securities and Exchange Commission [SEC])  

Employers Debate the Merits and Challenges of Changing Domestic Partner Benefits
"Considering that 36 states and the District of Columbia now allow same-sex marriage for gay and lesbian couples, should the rules change when it comes to organizations' domestic-partner coverage? Would companies be overreaching if they require LGBT employees and their partners who live in those states to get married if they want to retain partner benefits?" (Human Resource Executive Online)  

M&A Basics: Pension, Savings, and Welfare Plan Issues (PDF)
37 presentation slides. Topics: M&A 101 Review; Diligence; Acquisition Agreement Considerations; Defined Benefit Plan/Multiemployer Plan Considerations; Pre- and Post-Closing Actions and Considerations. (Morgan Lewis)  

Press Releases

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