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The Newport Group
in CA, FL, TX, VA

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The Standard
in FL

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Cuna Mutual Group
in WI

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The Air Line Pilots Association, International
in TN

Benefit Specialist
Resource Benefits Administrators
in TX

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National Rural Electric Cooperative Association
in NE, VA

Senior Pension Consultant
PenServ, Inc.
in NY

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Lincoln Financial Group
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Spring 15 Retirement, Annuity, and Life Insurance Benefit Planning
May 29, 2015 in NY
(New York State Bar Association)

2015 Vermont Employee Ownership Conference
June 2, 2015 in VT
(Vermont Employee Ownership Center)

401(k) Plan Workshop 2015 - Bloomington
June 3, 2015 in IL
(SunGard Relius)

Form 5500 Workshop 2015 - Bloomington
June 4, 2015 in IL
(SunGard Relius)

Supreme Court: The Decisions Affecting ERISA Plans, Participants and Providers
July 9, 2015 WEBCAST
(ABA Joint Committee on Employee Benefits)

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[Guidance Overview]

The DOL's Re-proposed Redefinition of Fiduciary (PDF)
26 pages. "The 250-page 'Regulatory Impact Analysis' that accompanies the proposal argues that the current definition of 'fiduciary,' promulgated in 1975, has left the door open to pervasive conflicts of interest that cost plans, plan participants and IRA owners billions of dollars a year, as a result of excessive fees and unsuitable investment choices. This [article] will discuss ... exactly what the proposal says and what it may mean to broker-dealers, insurance companies and other parties that market investments to ERISA-covered retirement plans, welfare plans and individual retirement accounts ... [and] the new proposed prohibited transaction class exemptions and the proposed amendments to existing class exemptions." (Steptoe & Johnson LLP)  

[Advert.]

Join the elite group of ERPAs who represent their clients before the IRS.

An Enrolled Retirement Plan Agent (ERPA) has demonstrated competence in qualified retirement plan matters, allowing that individual to represent taxpayers before the Internal Revenue Service (IRS). Become an ERPA, increase your employability.

Pension Funds Can Only Guess at Private Equity's Cost
"South Carolina pension fund's costs are ... difficult to assess [because] it relies more heavily than the typical pension fund on complex investments in hedge funds, real estate and private equity.... While not a complete assessment, costs identified by the state last year were $468 million, or 1.56 percent of assets. The median pension fund paid 0.57 percent of assets, by comparison. South Carolina is far ahead of most other states, however, in trying to determine every nickel in fees that it's incurring in its private equity holdings.... J. J. Jelincic, a member of the California Public Employees' Retirement System board since 2010 ... [said] that being in the dark on fees created problems for the overseers of the $300 billion pension fund. 'You don't think to negotiate on fees that you're not aware you're being charged,' he said." (The New York Times; subscription may be required)  

DOL Files Excessive Fee Lawsuit
" 'This case is significant because we have a financial institution reaping excessive profits from the plan that its employees participate in,' said Crisanta Johnson, Los Angeles regional director for the EBSA. 'All of this could have been avoided if the fiduciaries had simply reimbursed themselves in accordance with the law. Instead, they created a payment scheme that drained plan assets.' " (National Association of Plan Advisors [NAPA])  

The Do-It-Yourself Thrift Savings Plan
"[I]nvestors who are attracted to the simplicity and low costs of the Thrift Savings Plan for U.S. government workers -- but who don't happen to work for the U.S. government -- can get pretty close to putting together a TSP-like plan on their own ... [T]he TSP funds are almost all index-based portfolios that are easily replicated in traditional mutual fund or exchange-traded fund format. While retail investors won't be able to match the TSP offerings' ultralow expense ratios of just 0.029%, competition among index-fund and ETF providers means they can get pretty close." (Morningstar)  

Your 401(k) Plan May Be Selling You Short
"When companies with 401(k) retirement savings plans enroll new hires automatically, many set a default contribution rate of 3 percent of salary.... Are companies saying you can afford to retire if you save just 3 percent of your salary a year? Hardly.... If your plan has an auto-escalation policy, it will raise your salary deferral rate into the plan automatically every year, usually by 1 percent. Plans tend to stop those 1 percent increases when workers hit 6 percent. But ... some companies have realized they may be sending the wrong message in suggesting that 6 percent of salary is enough to save for retirement. More companies are letting the cap rise to 10 percent or even 15 percent." (Bloomberg)  

The Other Enemy of 401(k) Plans (and Your Retirement)
"[T]he 1983 reform of Social Security ... put in place a little-noted provision for the taxation of benefits.... It affected only about 3 percent of all retirees, the ones with the most income.... It is one of the few provisions in our tax code that are not indexed to inflation. As a consequence, an obscure tax that hit a handful of affluent retirees in 1984 today hits 30 percent of all retirees. And since the law still isn't indexed, it will hit even more of the next generation." (Daily Herald)  

Look to the North for a Better Approach to Financing Social Security
"Actuarial valuations prepared by Social Security actuaries have shown that the System has been out of actuarial balance for a long time, and the long-range actuarial deficits have been generally increasing from year to year.... Fortunately for us there exists a reasonable precedent for solving Social Security's financial problem using an actuarial approach. The actions taken for the Canada Pension Plan serve as an excellent blueprint for the changes currently needed for Social Security." (Ken Steiner, FSA, in Contingencies, published by the American Academy of Actuaries)  

ESOP Fables: Reviewing the Myths and Facts About Employee Stock Ownership Plans [infographic]
"[B]usiness owners will see that selling to an ESOP might be the best alternative and should be at least considered as an exit strategy. This is especially true in cases where the owner wants to reward his or her employees for their hard work in contributing to the company's success." (Valuation Research Corporation)  

Rep. Mica: Privatize FAA to Bring It Into 21st Century
"Rep. John Mica (R-Fla.) ... introduced the Air Traffic Controller Reform and Employee Stock Ownership Act of 2015, which would split the FAA into two parts. One part would remain a federal agency, which would still have authority over certification, oversight and accountability. The other would become a private company known as the Employee Stock Ownership Corporation. FAA employees, airlines and others could hold stock ownership in the company, which would oversee air traffic control functions." (Federal News Radio)  

California 'Automatic IRA' Study Part of Big Trend
"Last month the state approved a $500,000 consultant contract, financed by donors, that the Secure Choice board ... will use to recommend a state-run retirement savings plan for approval by the Legislature. The goal is an 'automatic IRA,' a payroll deduction of about 3 percent that goes into a tax-deferred savings plan, unless the worker opts out.... In California, more than half of private-sector workers, about 6.3 million, have a job that offers no retirement plan. Social Security alone often is inadequate, and now more retirement income is needed as life spans increase and health care costs grow." (Calpensions)  

[Opinion]

SPARK and American Benefits Council Recommendations to IRS on Hardship Distributions and Loans (PDF)
"We are very concerned that the Service appears to have released a new position in a 'newsletter' -- which cannot be relied upon by plans and their service providers as authoritative, but results in confusion about compliance with the hardship distribution rules. This is not the proper process to resolve a longstanding and significant plan qualification issue.... The same newsletter has raised a series of concerns and questions regarding loans, particularly principal residence loans." (The SPARK Institute and American Benefits Council)  

[Opinion]

How a Loophole Could Gut the DOL's Proposed Fiduciary Rule
"Disclosure of this conflict of interest, and after-the-fact rationalization that the advice was nevertheless in the best interest of plan participants, will engender endless litigation. The securities industry has the resources to stoutly defend its position, likely leaving plan participants no better off than they were before enactment of the fiduciary rule. A true fiduciary would be prohibited from having its integrity compromised by receiving payments from anyone other than the plan sponsor (who could delegate all or a portion of these expenses to the plan participants)." (U.S. News & World Report)  

[Opinion]

DC Plans Are Institutional Programs -- Start Treating Them That Way
"[B]uilding a plan that is simple to use, from the participant perspective, is not the same thing as just offering simple investment solutions.... [We] owe it to them to incorporate best practices from the institutional investing world within these default options. This includes good asset-class diversification, a smart mix of active and passive, and open architecture, multi-manager investing -- with a focus on the best managers available," (Russell Investments)  

[Guidance Overview]

Pay-for-Performance Proxy Disclosure Rule Could Become Effective as Early as 2016
"[C]ompanies may be relieved that gathering the numerical disclosures that would be required under the rules proposed by the SEC will, for the most part, involve adapting and repurposing information that is already being gathered and used for other reporting purposes. However ... it may be challenging to provide useful and informative descriptive disclosure about the relationship between compensation 'actually paid' and 'financial performance' (as each is computed under the methodologies prescribed by the proposed rules), as well as the comparison of the company's [total shareholder return] to that of its peer group." (Nixon Peabody LLP)  

[Guidance Overview]

SEC Proposes Pay-for-Performance Disclosure Rules (PDF)
5 pages. "The proposal would generally mandate that a company disclose in its proxy or information statement: the 'actual pay' of its principal executive officer, average 'actual pay' for its other named executive officers, the company's total shareholder return (TSR) and TSR for the company's peers ... each on an annual basis, over the five most recently completed fiscal years, subject to a phase-in period.... Supplemental disclosure is permitted, but not required." (Frederic W. Cook & Co., Inc.)  

Executive Compensation: A Modern Primer
"This article studies traditional and modern theories of executive compensation, bringing them together under a unifying framework. [The authors] analyze assignment models of the level of pay, and static and dynamic moral hazard models of incentives, and compare their predictions to empirical findings.... [T]raditional optimal contracting theories find it difficult to explain the data, suggesting that compensation results from 'rent extraction' by CEOs. In contrast, more modern theories that arguably better capture the CEO setting do deliver predictions consistent with observed practices, suggesting that these practices need not be inefficient." (National Bureau of Economic Research [NBER])  

Delaware Court of Chancery: Director Equity Grants Subject to 'Entire Fairness' Review
"The court found that the grants were a conflicted decision because all three members of the compensation committee that approved the grants also received the RSU awards. Citing Delaware Supreme Court precedent, the court noted director self-compensation decisions are conflicted transactions that 'lie outside the business judgment rule's presumptive protection, so that, where properly challenged, the receipt of self-determined benefits is subject to an affirmative showing that the compensation arrangements are fair to the corporation.' " [Valma v. Templeton et al., C.A.&ns9579-CB (Del. Ch. Apr. 30, 2015)] (Dodd-Frank.com, a blog by Stinson Leonard Street)  

Cindy Turcot Elected Chair of The ESOP Association
ESOP Association

Mark R. Lomele Elected Chair of the Employee Ownership Foundation
Employee Ownership Foundation

IRS Seeks Applications for the Internal Revenue Service Advisory Council
IRS [Internal Revenue Service]

Mercer Launches Tools to Help Employers Navigate the Complex Value-Based Care Landscape
Mercer

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