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Employee Benefits Jobs
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Webcasts and Conferences
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[Official Guidance]
Text of IRS Notice 2015-39: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for May 2015 (PDF)
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I). The rates in this notice reflect the application of Section 430(h)(2)(C)(iv), which was added by [MAP-21] and amended by section 2003 of [HATFA]."
(Internal Revenue Service [IRS])
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[Guidance Overview]
Proposed Fiduciary Definition Would Impact Investment Adviser Practices
"The broader definition of investment advice fiduciaries, combined with the exclusion of communications to IRA owners from the carve-outs for seller transactions, platform providers and selection and monitoring assistance, would sweep more relationships with IRA owners into exposure to prohibited transaction excise taxes. The proposed amendments to current prohibited transaction exemptions would drive advisers to IRA owners toward reliance on the new proposed Best Interest Contract Exemption, which makes investment advisers agree to the same fiduciary standards as apply under ERISA and gives IRA owners enforceable rights ... Thus, under the proposed DOL scheme, what is not required by statute will be imposed by contract."
(Faegre Baker Daniels LLP)
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Accuracy of Mortality Projections in Social Security and Medicare Trustees Reports (PDF)
Actuarial Note No. 156, 12 pages. "This note presents a brief analysis of projected 'period' life expectancy at age 65 from the 1982 through 2014 Trustees Reports.... Because near-term projections of mortality for Trustees Reports are largely extrapolations of past trend using specific formulas, it is not surprising that near-term projections have been least accurate when the most recently available data precedes a turning point in the trend rate of mortality.... The future will almost certainly include alternating periods of slow and fast mortality improvement as in the past. As a result, near-term mortality projections will always be uncertain."
(Office of the Chief Actuary, U.S. Social Security Administration [SSA])
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A Brief Comparison of Basic Financial Projections Affecting Social Security Trust Funds Since 2000 (PDF)
Actuarial Note No. 157, 6 pages. "[The] recession [which began at the end of 2007] has greatly diminished revenue and has somewhat increased the cost of the [Disability Insurance program] on a temporary basis. These recession effects led to a change in the projected DI Trust Fund reserve depletion year from 2025 in the 2008 Trustees Report to 2016 currently.... [Two graphs] illustrate the degree to which GDP has fallen short of the projections released in 2001 and 2008 by the Trustees ..., CBO ..., and the President's Budgets ... Clearly, none of these entities (nor the vast majority of private forecasters) foresaw the coming recession either early in 2001 or even early in 2008."
(Office of the Chief Actuary, U.S. Social Security Administration [SSA])
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Cash Balance Contributions as a Business Expense: How to Allocate Costs Among Multiple Owners (PDF)
"How is the plan expense (contributions and administrative costs) handled from a business standpoint? ... [H]ow is the additional funding amount or the waiver to be applied among the business owners? The plan documents rarely address this. Neither do typical partnership or shareholder agreements. Some alternatives: [1] pro rata based on ownership; [2] pro rata based on the present value of each owner's accrued benefit; or [3] pro rata based on cumulative contributions on behalf of each owner. There is no right or wrong answer to this question."
(John Frisvold and Jeff Cairns, Esq., in Plan Consultant)
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What's the Difference Between 'Sole' Interest and 'Best' Interest?
"Strictly speaking, a sole interest standard forbids even mutually beneficial transactions or compensation for the advisor. Just the opportunity for impropriety is enough to violate this standard, even if no actual harm occurs.... A best interest standard ... allows for the fact that sometimes beneficiaries stand to gain the greatest benefit when the fiduciary can also benefit.... The upside of a best interest standard vs. a sole interest standard is that it incentivizes quality of services and allows for such benefits as economy of scale. The downside is that it is more open to interpretation and ripe for abuse if not carefully monitored."
(fi360)
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New CREF Fund Structure Could Trigger Significant Increase in Expense Ratios for Some Smaller Plans
"College Retirement Equities Fund (CREF) ... rolled out new multi-share class versions of their eight investment portfolios.... The new class designation is based on an institution's total assets in CREF Accounts across all plans. Smaller plans, with total CREF assets ... less than $20M, will bear the brunt of the expense change.... The average participant in a retirement plan that has less than $20M in CREF assets are now paying 50-60% more for the same CREF funds they owned before April 24th. TIAA, as the administrator of these 'smaller' plans, has also increased what they receive internally by 45%."
(Asset Strategy Advisors)
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This Is a Horrible Realization About Retirement
"Multiple surveys reveal that Americans are getting increasingly jaded about their prospects for enjoying a relaxing retirement, so much so that many are throwing in the towel and not even bothering to plan for it at all.... 84% of [respondents to one survey] characterize the idea of a retirement where they can do what they want as a 'fantasy.' A second study ... finds that one in five Americans thinks they'll have to keep punching the clock until they literally can't work anymore ... More than 80% of workers who have already hit the 60-year milestone expect to work past 65, already are or don't plan to retire at all.... About two-thirds of Gen X'ers and half of Baby Boomers ... think the amount they're expected to save will be impossible to reach."
(TIME)
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How to Develop an Investment Plan for Retirement
"Figure out how your investments will impact the lifestyle you desire.... Come up with a withdrawal strategy.... Consider the tax consequences.... Consider having a professional help you draft the plan.... Accept that your plan will change."
(U.S. News & World Report)
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House Passes Bill Exempting Some Federal Employees from Retirement Tax Penalty
"H.R. 2146 would reform the tax code so that federal law enforcement officers and firefighters, who are eligible to retire earlier than many other federal employees, aren't subject to the 10 percent tax penalty on TSP retirement funds and other 401(k)-type plans tapped before the age of 59-1/2. Civilians who access their retirement investments, such as a 401(k), prior to turning 55 if they are retired, or 59-1/2 if they are still working, incur the IRS fine."
(Government Executive)
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Moody's, Citing Pension Crisis, Downgrades Chicago's Debt to Junk Status
"Moody's Investor's Service on [May 12] dropped Chicago's bond rating two more notches -- to junk status ... The decision to drop the bond rating that determines city borrowing costs -- from Baa2 to Ba1 with a negative outlook -- comes just days after the state Supreme Court unanimously overturned state pension reforms and placed Emanuel's plan to save two of four city employee pension funds in similar jeopardy."
(Chicago Sun-Times)
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[Opinion]
36 Senate Republicans Urge DOL to Give Public More Time to Weigh in on Proposed Rule That Could Restrict Access to Retirement Advice
"[T]he senators request sufficient time for 'thorough consideration of all issues and interests to make sure working and middle-income Americans are not harmed' by changes to the proposed rule. 'The newly proposed rule and exemptions would significantly alter the retirement landscape for countless Americans with retirement plans and/or individual retirement accounts insofar as the rule and exemptions expand fiduciary duties owed by investment advisers,' the senators write."
(Committee on Health, Education, Labor and Pensions, U.S. Senate)
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Press Releases
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