|
|
Employee Benefits Jobs
|
|
Webcasts and Conferences
|
|
|
|
[Guidance Overview]
IRS Employee Plans News 2015-6, June 10, 2015
Topics include: [1] Pre-approved plan program expanded to include cash balance plans and ESOPs; [2] Sample plan language (listings of required modifications) for ESOPs, cash balance and 403(b) plans; [3] Guidance for permanent program for late 5500EZ filers; [4] IRS Nationwide Tax Forums begin in July; [5] Changes to Forms 5500 for 2014; [6] IRS names seven new members to ACT advisory panel; and [7] Updated Voluntary Correction Program fee chart.
(Internal Revenue Service [IRS])
|
[Advert.]
401(k) Plan Structure Training for Employers
![Sponsored by International Foundation of Employee Benefit Plans [IFEBP]](https://benefitslink.com/bnrs/2014/IFEBP_401ktraining_top.jpg "Sponsored by International Foundation of Employee Benefit Plans [IFEBP]")
Retirement plans can be designed in many different ways—does your plan best meet the needs of your organization? The new e-learning course, 401(k) Plan Structure, examines the many aspects to consider when structuring a 401(k) plan. Enroll Now!
|
[Guidance Overview]
IRS Explanation, Worksheet (Alert Guidelines), and Deficiency Checksheet: Joint and Survivor Determination of Qualification (Rev. 4-2015) (PDF)
15 pages; this single PDF document contains three items: Publication 6391, Form 5625, and Form 6042. (Similar documents addressing other qualification issues are online.) Excerpt: "The purpose of Worksheet Number 3 (Form 5625) and this explanation is to identify major problems regarding joint and survivor annuity requirements under Internal Revenue Code sections 401(a)(11) and 417.... The joint and survivor annuity requirements of sections 401(a)(11) and 417 apply to plans to which section 411 applies, except those mentioned in section 411(e) (such as governmental plans)."
(Internal Revenue Service [IRS])
|
|
|
[Guidance Overview]
IRS Explanation, Worksheet (Alert Guidelines), and Deficiency Checksheet: Minimum Participation Standards (Rev. 4-2015) (PDF)
11 pages; this single PDF document contains three items: Publication 6388, Form 5622, and Form 6040. (Similar documents addressing other qualification issues are online.) Excerpt: "The purpose of the Worksheet Number 1 (Form 5622) and this explanation is to identify any major problems an employee benefit plan might have in satisfying the minimum participation standards of Internal Revenue Code section 410(a).... The worksheet concerns plans to which Code section 410 applies, except those mentioned in section 410(c) (such as governmental plans) and plans that cover participants who are employed in maritime or seasonal industries."
(Internal Revenue Service [IRS])
|
[Guidance Overview]
IRS Provides Permanent Relief for Late 5500-EZ Filing
"The new program changes some of the procedural requirements, and carries a modest filing fee.... [F]ile Form 5500-EZ on paper with the IRS (not Form 5500-SF with the DOL).... The filing fee is $500 per return, up to a maximum of $1,500 per plan.... The employer files all returns for a single plan together, but has separate mailings for different plans."
(SunGard Relius)
|
[Official Guidance]
SSA ERISA Barcode Standards, Version 1.7, June 9, 2015 (PDF)
45 pages. "This document covers only the 2D barcode on ERISA Form 8955-SSA -- valid for Plan Years 2009-2011. The 2D barcode is intended to represent the information on the paper form. Barcodes for this form are generated from two sources: [1] The IRS Form 8955-SSA Fillable PDF produces a barcode after printing the form in Adobe. [2] The approved software vendors for Form 8955-SSA produce a barcode when printing their forms from their software packages."
(Internal Revenue Service [IRS])
|
Are You Sure Those Retirement Benefits Are Vested? A Cautionary Tale for Labor Negotiators
"In County of San Luis Obispo (2015) PERB Decision No. 2427-M, two unions argued that they did not have to negotiate employee pension contributions because employees had vested rights to those contributions. The Public Employment Relations Board (PERB) disagreed and held that the unions unlawfully refused to bargain because of their incorrect belief that their employees had vested rights.... Specifically, PERB stated that 'the governing terms of the Plan do not clearly demonstrate a legislative intent to bind the County with respect to the amounts or distribution of employee contributions towards future retirement benefits.' "
(Liebert Cassidy Whitmore)
|
A Plan Sponsor's Guide to Assessing the Qualifications of Retirement Plan Auditors
"The first important question to ask is how many retirement plan audits the audit team members have performed, not just at the partner level, but also the other members of the team. Firms who take retirement audit plan audits seriously have a dedicated team.... More training leads to better qualifications.... Turnover within the firm can affect audit quality, even in a large firm that performs many retirement plan audits.... Using the same firm that performs other audit, accounting, or tax work for the employer is not necessary. Plan sponsors evaluating auditors should do their due diligence[.]"
(Belfint Lyons & Shuman, CPAs)
|
Not Your Father's Internal Controls: A Checklist for Your Company's Retirement Plan
"[H]ere are some of the important operational issues that should be part of the internal practices and procedures for your plan: ... Always know and follow the terms of the plan.... Who is in the plan? When? ... Contributions ... Forfeitures ... Compensation ... Vesting service and crediting: errors frequently occur.... Distributions ... Classification of contingent workers ... Rollover contributions ... Participant loans ... Hardship withdrawals ... Special controls needed when acquisitions or mergers of entities or plans occur ... Participant communications ... Records retention ... Fee and expense disclosures and monitoring ... Form 5500 annual report ... Self-audits ... Who are the responsible parties? ... Obtain expert advice when needed."
(Warner Norcross & Judd LLP)
|
How America Saves for Retirement: 2014 DC Plan Data (PDF)
110 pages. "As we look to the future, the main concerns affecting retirement savings plans remain largely the same-- improving plan participation and contribution rates and enhancing portfolio diversification -- although increasingly these changes are occurring through plan and investment menu design decisions made by sponsors, rather than by participants' own decisions.... The plan participation rate was 77% in 2014. The average deferral rate was 6.9% and the median was unchanged at 6.0%. However, average deferral rates have declined slightly from their peak of 7.3% in 2007.... The adoption of automatic enrollment has grown by 50% since year-end 2009."
(Vanguard)
|
Government Policy on Distribution Methods for Assets in Individual Accounts for Retirees
"Federal government policy, which has regulated defined benefit plans heavily and mandated plan designs for distributions, has tread more lightly on defined contribution plans because of their historical secondary nature. Questions are now arising about whether this stance needs to change and, if so, how. At the same time, discussions have heated up in state governments about replacing underfunded pension plans for government workers with defined contribution plans and about providing uncovered private-sector workers with individual account plans. Hence, the policy and design issue of how most retired households can get orderly lifetime distributions from their current or potential future accounts must be faced soon and squarely. This paper examines the two basic methods put forth in professional literature and practice as opposing solutions to this problem facing retired households."
(Mercatus Center, George Mason University)
|
Fourth Circuit Revives Participant Suit Challenging Bank of America 401(k) Asset Transfer
"According to the Fourth Circuit, the workers' requested relief -- the difference between the money Bank of America made off their plan investments and the amount of money they were actually credited with -- qualified as 'the hornbook definition of an accounting for profits,' which the court found to be a permissible equitable remedy under ERISA.... The Fourth Circuit also disagreed with the district court's conclusion that Bank of America's subsequent corrective measures rendered the workers' claims moot.... Unless and until Bank of America showed that it retained no profits, the workers' claims were live and viable, the Fourth Circuit concluded." [Pender v. Bank of America Corp., No. 14-1011 (4th Cir.
June 8, 2015)]
(Bloomberg BNA)
|
Locked Out of Retirement: The Threat to Small Business Retirement Savings (PDF)
13 pages. "Small business owners, through SEP and SIMPLE-type IRA plans, provide roughly $472 billion in retirement savings for over 9 million U.S. households.... The DOL is proposing broad new regulations that would impose significant new compliance costs and legal liabilities on advisors to SEP and SIMPLE IRAs, costs that will be passed on to these small business plans and employees. Many small businesses cannot offer 401(k) or similar 'traditional' retirement plans because of administrative complexity, costs, or eligibility requirements, and instead offer simplified, basic retirement plans built around IRAs."
(U.S. Chamber of Commerce)
|
How'd an Innocent Fiduciary Like You End Up Asset Allocating?
"It took nearly two decades for asset allocation to go from a 'well, OK' endorsement from the DOL to the nearly de facto industry standard. Rather than a gradual movement, the use of asset allocation accelerated like a rocket following the [misinterpretation] of a famous research paper.... There's a greater issue with [that study], one which calls into question its (accurately stated) conclusion."
(Fiduciary News)
|
How Retirement Advisors Really Add Value to 401(k) Plans (PDF)
"The value of the retirement advisor is far greater than marginal investment returns.... The answer lies in how different the 401(k) industry would look if there were no retirement advisors: [1] There would be far fewer plans. Of the over 600,000 plans, 90% to 95% would not exist without the efforts of advisors. [2] Participation rates would be lower. Instead of 87% participation, the no-advisor world would have fewer that 25% of eligible employees participating. [3] Diversified investments would be the exception. Stable value and fixed income investments would dominate. These estimates are not mere speculations but were the facts in the 401(k) marketplace before retirement advisors were active."
(Dalbar, Inc.)
|
First-Quarter 2015 Annuity Sales Report
"Fixed annuity sales totaled $20.9 billion in the first quarter of 2015 ... This was a 9.5 percent drop from $23 billion during the previous quarter and a 7.5 percent drop from $22.6 billion in the first quarter of 2014.... [V]ariable annuity total sales in the first quarter of 2015 were $31.8 billion ... This was a 5.1 percent drop from $33.6 billion in the fourth quarter of 2014 and a 5 percent decline from $33.5 billion in the first quarter of 2014."
(Insured Retirement Institute [IRI])
|
Participation in 401(k) Plans Rises as More Companies Automatically Enroll
"The data show increasing participation rates among younger employees, new hires and lower-earning workers over the past four years. Participation in [401(k) plans] among millennials has reached 55% compared to 45% in 2011. For newly hired eligible employees (meaning those who have reached the one year mark of employment), participation has increased from 36% four years ago to 48% in 2015. In addition, employees in a pay range of $20,000 to $40,000 in salary are participating at a rate of 59% versus 47% four years ago."
(Wells Fargo)
|
Rhode Island Judge Approves Settlement on Pension Overhaul
"Superior Court Judge Sarah Taft-Carter overruled objections to the settlement, putting an end to nearly all the lawsuits by public-sector unions and retirees against the state over the 2011 reform, which was designed to save the state $4 billion over 20 years. The deal would preserve about 90 percent of the savings.... Lawmakers must also approve the settlement."
(Associated Press)
|
New Jersey's Top Court Sides with Governor Christie on Pensions
"The state Supreme Court overturned a lower-court judge's order that told the Republican governor and the Democrat-controlled Legislature to work out a way to increase pension contributions for the current fiscal year, which ends June 30.... In a 5-2 ruling, the court said that state constitutional provisions calling for an annual budget process trump a 2011 law requiring high pension contributions from the state." [Burgos v. State of New Jersey, No. A-55-14 (N.J. June 9, 2015)]
(The Washington Post; subscription may be required)
|
[Opinion]
Chamber of Commerce Study Fatally Flawed
"The study painted a picture of the retirement plan marketplace which is incomplete and incorrect. As a lobbying tool for the brokerage industry, this study will likely be cited often. As an educational piece to help small business owners understand the implications of the proposed regulations, it can be disregarded.... Small businessmen, I have some news for you. Your existing brokerage firm partner in your retirement plan has not been a good friend. Aside from the sad fact that they aren't fiduciaries already, and have lobbied hard for years not to be, they appear arrogant enough to assume that you don't have other, better solutions available in the marketplace. You do."
(Lawton Retirement Plan Consultants)
|
|
Benefits in General; Executive Compensation
|
SEC Proposes Pay Versus Performance Disclosures (PDF)
"Currently companies are not required to disclose the value of options or stock appreciation rights (SARs) as of the vesting date, but they do have to disclose the value of stock awards (including restricted stock) as of the vesting date in the proxy statement's ... While stock award values will not require additional calculations, companies will now be required to compute the value of vested but unexercised options on a fair value basis for this disclosure."
(Buck Consultants at Xerox)
|
FASB Proposes to Simplify Accounting for Share-Based Payments
"The proposed amendments are aimed at reducing the cost and complexity of accounting for share-based payments. However, they may result in significant changes to net income and earnings per share, including the effect of the exclusion of windfall tax benefits from the hypothetical proceeds used to repurchase shares under the treasury stock method. Additionally, there may be administrative and other challenges (such as systems, processes, and controls) to implement the proposed standard for companies with significant share-based payment activities."
(PricewaterhouseCoopers)
|
|
Press Releases
|
|
|
|
|
|
|
|
|
Additional useful links:
BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
Phone (407) 644-4146
Fax (407) 644-2151
Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
Copyright 2015
BenefitsLink.com, Inc. — but feel free to forward this
newsletter without further permission from us, if you do not
modify the newsletter in any way (including this lower
portion).
All materials contained in this newsletter are
protected by United States copyright law and may not be
reproduced, distributed, transmitted, displayed,
published or broadcast without the prior written
permission of BenefitsLink.com, Inc., or in the case of
third party materials, the owner of that content. You
may not alter or remove any trademark, copyright or
other notice from copies of the content.
Links to websites other than those owned by
BenefitsLink.com, Inc. are offered as a service to
readers. The editorial staff of BenefitsLink.com, Inc.
was not involved in their production and is not
responsible for their content.
We are proud of our
Privacy Policy.
Thanks for reading this newsletter!
|
