ASPPA

Software Product Manager
iraLogix, LLC
in FL

DC Third-Party Administration Management
Touchstone Retirement Group
in NY

401(k) & Retirement Sales
Chadler Solutions
in NJ

Team Lead, Operations
Verisight
in CA

Compliance Specialist
Verisight
in IL

Retirement Plan Administrator
Trust Point Inc.
in MN

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Qualified Transportation Plans: Designing and Delivering Commuter Benefits
RECORDED
(Thomson Reuters / EBIA)

Big Data Breach: Lessons from Anthem
June 10, 2015 WEBCAST
(Employers Council on Flexible Compensation)

Ins and Outs of Plan Amendments
June 23, 2015 in FL
(ASPPA Benefits Council [ABC] of North Florida)

ACA Information Reporting: 1095-C and 1094-C Forms and Instructions
June 25, 2015 WEBCAST
(Thompson Information Services)

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[Guidance Overview]

Form 5500-SUP Alert for Practitioners: File Comments to OMB by Monday
"This is an IRS project that has been flying very fast and just slightly above the radar -- very little publicity, but a very large financial impact on clients (and ultimately plan participants) and a lot of extra make-work for practitioners! ... Follow this link to view a draft version of the 5500-SUP and you'll get an idea of the depth of data that they're mining. We're talking about information that's either never before been required or hasn't been required since 2004. In addition, listing preparer information (optional to provide on 2014 and previous years) will become mandatory. As proposed, your information as preparer will be available for public disclosure. Thus, your client list will become accessible to anyone interested in looking at it! ... Quick action is required -- comments must be received by OMB no later than [this coming Monday, June 8]." (Indiana Benefits, Inc.)  

[Advert.]

Looking to Connect with other EB Professionals? Start a New WEB Chapter!

Are you are a leader in employee benefits? Interested in developing qualifications of others in the field, while enhancing your own credentials? Contact us about joining a team of like-minded professionals to start a new WEB chapter in your geographic area.

[Guidance Overview]

A Little Refresher Course on QDROs and Governmental Plans
"[A] QDRO cannot be enforced against a governmental plan which contains an anti-alienation clause.... [A]lthough a so-called QDRO might be enforceable as an Income Deduction Order under Section 61.1301, Florida Statutes, if it is for collection of either alimony or child support, it cannot be used to force direct payment to another of a retiree's pension benefits in order to achieve an equitable distribution of the parties' marital assets.... In an extremely well reasoned opinion, the First District Court of Appeal discussed all of the above arguments and correctly rejected them, holding that a trial court lacked the power to order a governmental pension plan to pay to one former spouse a portion of the other former spouse's retirement pension benefits as part of a plan for equitable distribution of marital assets." (Cypen & Cypen)  

[Guidance Overview]

Missed Deferrals: New 401(k) Correction Procedures
"These new procedures require either no employer corrective contribution to make up the missed elective deferrals, or only a 25% contribution, depending upon how soon detection of errors and correction occurs. The new procedures are intended to address the 'windfall' that employees receive when they collect their full pay and also receive the current 50% make-up corrective contribution, and to encourage plan sponsors to adopt automatic contribution and escalation arrangements." (Orrick)  

No One Should Be Surprised by Supreme Court Ruling in Tibble v. Edison (PDF)
"Until revenue share is deemed illegal, controlling plan expenses in the sole interest of participants does not automatically mean the replacement of all funds with higher expense ratio which make revenue share distributions with institutional share class alternatives -- selecting the 'right' share class is a fiduciary act. A fiduciary should consider the investment management fee separately from the expense ratio of a fund since the expense ratio may contain revenue share payments that can be used to offset plan expenses or restore the participant's account in which the revenue has been derived.... If the plan document states that the plan sponsor is fully responsible for all recordkeeping expenses, then plan fiduciaries should not make a deviating decision to use revenue share paying funds to offset such expenses." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)] (Chao & Company, Ltd.)  

Stuck in the Mud or Road to Success? DC Plans and Fee Lawsuits (PDF)
"In this [article], Callan describes select DC fee lawsuits. [The authors] suggest best practices to help plan sponsors keep their plan on the path to success.... [O]nly about half of plan sponsors both calculate and benchmark plan fees. This indicates that many others are on a perilous path. Callan recommends calculating and benchmarking fees on an annual basis alongside other best practices." (Callan Associates)  

Multiemployer Pension Plan Mortality Study
"[M]ultiemployer plan liabilities and costs are likely to be lower than what would be expected using the recently released Society of Actuaries (SOA) RP-2014 Blue Collar Mortality Tables.... [M]ost industries experienced more deaths than anticipated by the RP-2014 Blue Collar tables. For example, with a ratio of 1.15, iron workers experienced 15 percent more deaths than predicted by the RP-2014 Blue Collar tables. One possible explanation is that the data used by the SOA to create the Blue Collar tables is based largely on information from single-employer plans in a limited set of blue-collar industries and includes virtually no input from multiemployer plans." (Segal Consulting)  

Are Managed Accounts a Better QDIA?
"By offering customized, holistic retirement advice and portfolio implementation, managed accounts provide an individualized service for participants who are tasked with directing their own investment accounts -- a service that is distinct from TDFs.... [T]he range of additional services offered in addition to asset allocation ... should have added costs associated with them. Still, [the authors] believe that the managed account industry needs to lower fees before [they] would expect meaningful adoption of managed accounts as a QDIA." (Towers Watson)  

Does Indexing Meet Investor Objectives?
"Many investors assume that the sole goal of active managers is to outperform their respective benchmarks over every single time period.... [B]efore simply accepting this assumption as fact ... two very important questions should be asked. Does every single active manager actually have an explicit goal of outperforming a market index at all points in time? Is generating index beating returns over a given quarter or calendar year a goal that active managers should have in the first place?" (Manning & Napier)  

Pension Finance Update as of May 31, 2015 (PDF)
"Pension sponsors enjoyed another strong month in May, due largely to higher interest rates reducing pension liabilities. Both model plans ... saw improvements in funded status last month and both are now 'in the black' for 2015, with Plan A ahead almost 5%, and Plan B up 2%, since 12/31/2014:" (October Three Consulting)  

Funded Status Improves by $31 Billion in May (PDF)
"The funded status of the 100 largest corporate defined benefit pension plans increased by $31 billion during May ... The funded status deficit fell to $280 billion at the end of May, primarily due to an increase in the benchmark corporate bond interest rates used to value pension liabilities. Flat investment performance partially offset the May liability decrease." (Milliman)  

Why Have Government Contributions to New York Pension Plans Soared Since 2010?
"Between 2002 and 2012, contributions by New York's state and local governments to public employee retirement plans rose more than 500 percent, squeezing budgets for municipalities across the state. This surge was driven primarily by investment losses as well as the plan's practice of adjusting government contributions to offset unexpected investment gains and losses. The plan benefit structure was not the culprit." (Urban Institute)  

Is a Cash Balance Plan the Right Choice for Louisiana State Employees?
"This brief ... shows how state and local government employees in Louisiana would likely fare in a cash balance retirement plan that was enacted by the state legislature but invalidated by the courts. Results show that a slight majority of state employees would do worse in the cash balance plan than the existing traditional defined benefit plan. However, about three-fourths would fare better under an alternative reform that extends Social Security to state employees and provides a smaller cash balance plan." (Urban Institute)  

Initiative Could Switch New Hires at California State and Local Governments to 401(k) Plans
"New [California] state and local government employees hired on or after Jan. 1, 2019, could receive a 401(k)-style retirement plan under a proposed initiative -- but giving them a pension would require the approval of voters.... A Public Policy Institute of California [PPIC] poll issued in January last year said 85 percent of likely voters say pension and retirement costs are 'at least somewhat of a problem' for state and local government budgets.... Previous PPIC polls also found strong support for switching government employees to 401(k)-style individual investment plans that have replaced pensions in most of the private sector." (Calpensions)  

Push to Change California Pensions Set to Roil CalPERS
"The California coalition hopes to ask voters next fall to approve an initiative giving governments the power to deny guaranteed retirement payouts to new workers and instead cycle employees into 401(k)-style plans starting in 2019. Future increases to the benefits of current pensioners would also be subject to a popular vote, among other changes." (The Wall Street Journal; subscription may be required)  

State Personal Income Taxes Related to Pensions and Retirement Income
"Seven states do not levy a personal income tax; 41 states and the District of Columbia levy a broad-based personal income tax. Among those with a broad-based income tax, 36 states offer exclusions for some or all specifically identified state and/or federal pension income, retirement income exclusion, or tax credit for the elderly. Of those with income taxes, 27 states and the District of Columbia provide a full exclusion for Social Security benefits. 10 states exclude all federal, state and local pension income from taxation, but some restrict the state and local exemption to pensions from within the state." (Gabriel Roeder Smith & Company)  

When It Comes to Claiming Social Security Benefits, Timing Is Everything
"[F]or a 65-year-old couple, there's a more than 60% chance that one of you will live to age 90. So delaying benefits for you and/or your spouse to have the potential to receive a higher benefit amount for a longer period of time is likely to be the better financial decision.... [E]very year you delay taking benefits beyond the earliest possible starting point will boost your annual payout by as much as 8%, and this figure is adjusted for inflation.... A guaranteed return of up to 8%, in real terms, is not easy to find in the current economic environment, especially on a risk-free basis." (Vanguard)  

A Pension Perspective on an Outsourced Chief Investment Officer: The Right Choice for Your Organization? (PDF)
12 pages. "[W]hen deciding whether to use an [outsourced chief investment officer], consider the breadth of pension expertise that's required. It's more than just the pursuit of better returns, or better risk management, or a better process. It's all of these, plus freeing up the time and talents of key decision-makers to focus on and fulfill their primary duties and responsibilities to the organization." (Vanguard)  

[Opinion]

EBSA's Fiduciary Solution: Many Ifs, Ands and Buts
"EBSA's proposed regulations make clear that compensation that may vary depending on the investments chosen ... can continue to be a part of the adviser or advising firm's compensation structure. But -- and it's an important 'but' -- the price for this freedom in compensation arrangements is the Best Interest Contract, or BIC ... 'Best interest' may be in the eye of the beholder. How much emphasis should be given to the lowest possible fees? Are higher fees justified by facts and circumstances, such as a more expensive fund whose manager has a track record for outperforming others? Would advice that looks questionable today be considered acceptable in the historical context of the time and options available when it was given?" (Todd Berghuis, for Ascensus)  

[Opinion]

ICI Statement on SIFMA's Proposed Best Interests of the Customer Standard
"ICI supports a best interest standard for intermediaries working with investors. The Department of Labor's proposal, however, falls short and is unworkable. We urge the [DOL] to work with the [SEC] and [FINRA] toward a harmonized and coordinated approach that serves all investors equally -- not just retirement savers." (Investment Company Institute [ICI])  

Text of SEC Memo: Potential Effect on Pay Ratio Disclosure of Exclusion of Different Percentages of Employees at a Range of Thresholds (PDF)
"Excluding some employees from the determination of median employee compensation, which some commenters suggested, can affect the calculation of that median and thus change the ratio of the annual total compensation of the principal executive officer (PEO) to the median of the annual total compensation of employees (pay ratio).... Projections ... are based on evidence obtained from other studies, aggregate statistics, and other assumptions that may result in over- or underestimating the magnitude of the effect." (Staff of the Division of Economic and Risk Analysis of the U.S. Securities and Exchange Commission [SEC])  

The SEC Becomes Front Page News! More New Rules Coming Soon
"[T]he SEC seems poised to release proposed rules on Compensation Clawbacks under Dodd-Frank Act Section 954 and re-proposed rules on Incentive Compensation Reporting and Prohibitions for Financial Institutions under Dodd-Frank Act Section 956 (which also feature compensation clawbacks, not coincidentally)." (Winston & Strawn LLP)  

US Labor Department Sues Gruber Systems and its CEO to Recover More than $2.6 Million in Losses to Employee Stock Ownership Plan
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Actuarial Standards Board to Hold Public Hearing Regarding Public Pension Issues
American Academy of Actuaries

New Fellows of the Society of Actuaries, June 2015
Society of Actuaries

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