Retirement Plans Newsletter

April 1, 2015

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Employee Benefits Jobs

Defined Contribution Consultant
Pavilion Advisory Group, Inc.
in IL

Defined Contribution Plan Administrator
San Diego Pension Consultants
in CA

Conversion Specialist
The Newport Group
in NC

Executive Director
Taft-Hartley Benefit Funds
in NY

Retirement Plan Account Manager
Johnson & Dugan
in CA

Implementation Partner
Lincoln Financial Group
in ANY STATE

Employee Benefits and Executive Compensation Attorney
Baker & Hostetler LLP
in OH

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Webcasts and Conferences

Employer Mandate Implementation: Measurement Method Administration and Coverage Requirements
RECORDED
(Hill, Chesson & Woody)

Filings, Audits, and Late Deposits, Oh My!
April 14, 2015 in MN
(ASPPA Benefits Council [ABC] of Greater Twin Cities)

Fundamentals Series 10: Top-heavy Testing 2015
April 27, 2015 WEBCAST
(SunGard Relius)

Protecting Your ESOP Fiduciary
May 5, 2015 WEBCAST
(National Center for Employee Ownership)

Opt-Out Incentives and Other Cost Cutting Measures for Health Plans
May 28, 2015 WEBCAST
(Lorman Education Services)

Developing Practices in Contemporary Executive Compensation
May 28, 2015 in DC
(HR Policy Association)

Cafeteria Plans
October 6, 2015 in WA
(Thomson Reuters / EBIA)

View All Webcasts and Conferences



[Guidance Overview]

IRS Modifies EPCRS Guidelines, Requests Comments on Overpayment Correction
"[T]he IRS modified EPCRS to provide plan sponsors the 'flexibility' to forgo seeking repayment from participants and beneficiaries. For example, the IRS explained that instead of demanding the return of overpayments, plan sponsors could simply make the plan whole by making a contribution to the plan.... The IRS also described an alternative correction method under which a plan sponsor could simply adopt a retroactive amendment allowing for the overpayment. However, this option may be of limited utility because the Self-Correction Program only allows retroactive amendments in very limited situations." (Proskauer's ERISA Practice Center)  


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[Guidance Overview]

Updated IRS Correction Procedures Under EPCRS Released
"The Revenue Procedure modifies the correction rules regarding overpayments from retirement plans under EPCRS.... Although, this change allows an employer to contribute the correction payment in some cases without going through a potentially lengthy and futile collection process, employers may be concerned that loosening the language on recoupment from a participant weakens their argument when demanding such repayment." (Quarles & Brady LLP)  

No ERISA Cause of Action for Violating Standards of Actuarial Performance
"Enrolled actuaries under ERISA are held to a set of performance standards in 20 C.F.R. 901.20. A federal district court has now ruled that these standards do not create a private right of action under ERISA against an actuary who is alleged to have violated the standards." [Forgione v. Gaglio, No. 13 Civ. 9061(KPF) (S.D.N.Y. Feb. 13, 2015)] (Reinhart Boerner Van Deuren s.c.)  

Maximizing the Match in DC Plans
"In calendar year 2012, 27% of participants in voluntary enrollment plans were contributing below the match level, compared with 55% of participants in automatic enrollment plans enrolled by default ... The difference is attributable to the low default contribution rates set under automatic enrollment by employers. Across both plan types, about one-third of participants were contributing below the match level." (Vanguard)  

Understanding the Role of Mortality Credits: Why Immediate Annuities Beat Bond Ladders for Retirement Income
"[T]he potential for mortality credits means that, for any given maximum potential life span, annuities can actually pay out significantly more than what any individual could enjoy on his/her own, as the contribution of principal and interest and mortality credits will always be greater than the underlying principal and interest alone! Conversely, though, the benefit of mortality credits exists only by virtue of the fact that the other annuitants -- and not the annuity owner's heirs -- will benefit from any unused funds that are left over; in fact, trying to protect against an annuity loss in the event of early death, and protect heirs, actually eliminates much of the benefit that annuities are meant to provide in the first place!" (Michael Kitces in Nerd's Eye View)  


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Spending More or Less Than Your Spending Budget in Retirement
"[A recent article] hypothesized that a significant portion of older Americans may be fasting and binging with their retirement assets on purpose rather than spending these assets in a systematic manner. The term used in the article for over-spending is spending in 'chunks' ... While the Actuarial Approach can help retirees deal with spending in 'chunks', it is important to note that the over-arching rule for spending in retirement is you can spend it now or you (or your heirs) can spend it later." (Ken Steiner, FSA Retired)  

It's Supposed to Go to Whom? Beneficiary Designation in Governmental Defined Contribution Plans
"In most private industry plans, federal law requires that the spouse be the automatic death benefit beneficiary of the participant's interest under the plan or that the spouse consent to any beneficiary designation that doesn't name them as the sole primary beneficiary. Not always so in governmental plans.... [In] many cases, local governments are using generic plan documents that don't even recognize the fact that the respective interests of the participant and the spouse may be governed by state community property laws." (Chang Ruthenberg & Long PC)  

Overcoming Unique Retirement Challenges in the Non-Profit Sector
"For most non-profits, it is key to benchmark your benefits package. Specifically, consider the following: [1] Match or employer contribution structure ... [2] Match eligibility & vesting ... [3] Communicating your employer contributions to employees ... While all plan structures (such as 401(k), 403(b), pension, etc.) pose certain fees and costs which are unavoidable, educating yourself on what these fees mean or having a consultant you trust walk you through the process can make a huge difference on the bottom line." (AFS 401k Retirement Services)  

Change in Average 401(k) Account Balances from January 1, 2014 Through April 1, 2015 (PDF)
This report shows change in average account balances grouped by age and tenure, from January 1, 2014 through April 1, 2015, for participants who had an account balance at the end of 2013. (Employee Benefit Research Institute [EBRI])  

ESOPs Have Outperformed S&P 500
"Private employee stock ownership retirement plans (here limited to S corporation ESOPs) outperformed the S&P 500 total return index in terms of total return per participant by 62% from 2002 to 2012 ... [T]he total return for an average S corporation ESOP participant over the decade was $99,000, implying an 11.5% compound annual growth." (PLANSPONSOR)  

Pension Finance Update as of March 31, 2015 (PDF)
"March was a modestly negative month for pension sponsors, capping a modestly negative first quarter of 2015. Stocks slipped and interest rates edged downward last month, eroding pension funding ratios by less than 1% for both model plans ... For the year, Plan A is down almost 2%, while the more conservative Plan B is off 1%." (October Three Consulting)  

New Jersey Governor Appeals Pension Payment Ruling, Requests State Supreme Court Review
"Gov. Chris Christie's administration filed an appeal Tuesday over a state Superior Court ruling that it must pay another $1.6 billion in New Jersey's public worker pension fund.... At the same time, Christie's lawyers filed a motion asking the state Supreme Court to take up the case, which would trump the appellate court proceedings.... Attorneys for Christie have argued that contract was invalid from the start and the governor can't be forced to restore the payment. The appeal revives that argument, saying the trial court 'fabricated a constitutional right to pension funding' that crimps powers belonging to the Legislature, governor and residents." (NJ.com)  

$1.5 Trillion Pension System Failing as Aussies Tick Bucket List
"More than two decades after Australia set up a compulsory retirement savings scheme, known as superannuation, to wean people off of state pensions, over-generous means testing has resulted in four out of five retirees still being eligible for such welfare. The nation's A$40 billion ($30 billion USD) annual pension bill accounts for 10 percent of government spending and is destined to grow in a country with one of the world's highest life expectancies." (Bloomberg)  

Benefits in General; Executive Compensation

[Guidance Overview]

Qualified Performance-Based Compensation Rules Are Finalized
"In response to comments to the proposed regulations, the final version of Regs. Sec. 1.162-27(e)(2)(vi)(A) provides that a plan satisfies the per-employee limitation requirement if the plan specifies an aggregate maximum number of shares with respect to which stock options, stock appreciation rights, restricted stock, restricted stock units (RSU), and other equity-based awards can be granted to any individual employee during a specified period under a plan the shareholders approved as required by Regs. Sec. 1.162-27(e)(4). In the proposed regulations, this rule mentioned only stock options and stock appreciation rights." (Journal of Accountancy)  

Press Releases

Fiduciaries to Restore $485K to Bridgeport, Connecticut, Retirement Plan
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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