Retirement Plans Newsletter

August 6, 2015

BenefitsLink.com logo EmployeeBenefitsJobs.com logo LinkedIn logo Twitter logo Facebook logo
Get Health & Welfare News  |  Advertise  |  Previous Issues  |  Search

Employee Benefits Jobs

Pension Administrator
Retirement Strategies, Inc.
in GA

Director, Fringe Benefits Office
Operating Engineers Local 3 Trust Funds
in CA

Tax Manager - Employee Benefits
Postlethwaite & Netterville
in LA

Enrolled Actuary
ERP Actuaries & Consultants
in ANY STATE

ERISA Consultant
Great-West Financial
in MA

Post Your Job

View All Jobs

RSS feed for jobs RSS Feed: All Jobs


Webcasts and Conferences

ACA Reporting — What Happens When We Guess
RECORDED
(Dorsey ERISA)

Dodd-Frank Executive Compensation Update—Rounding the Final Turn?
August 13, 2015 WEBCAST
(Winston & Strawn)

Is Your Wellness Plan a Lawsuit Waiting to Happen?
August 26, 2015 WEBCAST
(Lorman Education Services)

Compensation Conundrums and Merger/Acquisition Perplexities
September 15, 2015 in MN
(ASPPA Benefits Council [ABC] of Greater Twin Cities)

2016 Retirement Income Summit
May 2, 2016 in IL
(InvestmentNews)

View All Webcasts and Conferences


Subscribe Now to This Newsletter (free)

We also publish the BenefitsLink Health & Welfare Plans Newsletter (free): Subscribe Now


[Guidance Overview]

403(b) Catch Up Contributions
"[A chart illustrates] four examples to demonstrate the mechanics of this very complex limitation.... Plan sponsors must make sure that they have the historical information necessary to compute the maximum available 403(b) catchup for each employee. If historical information is not available due to permissibly excluded contracts, then the plan sponsors should consider the wisdom of offering a plan provision that they cannot administer accurately[.]" (Belfint Lyons & Shuman, CPAs)  


[Advert.]

Feeling Left Out? It's Time to Get "Ahead of the Curve"

Sponsored by ASPPA

This October the nation's retirement industry elite will converge in our nation's capital to get "Ahead of the Curve" with insights from industry insiders, regulators, pundits and the nation's leading voices. It's ASPPA Annual. Join us.



[Guidance Overview]

IRS Announces Major Changes in Determination Letter Program
"These sweeping changes to the determination letter process for individually designed plans represent a dramatic shift in the IRS's approach to assuring plan qualification, and will likely begin an era where individually-designed plan drafting relies more heavily on model amendments and incorporation by reference.... While the pre-approved program may be an avenue for some plan sponsors, it is not available for other plan sponsors. For example, multiemployer plans and variable annuity plans cannot use the pre-approved program." (Cheiron)  

[Guidance Overview]

IRS Determination Letters No Longer Available After 2016 (PDF)
"Investment managers and other parties that provide services to, or enter into transactions with, Plans (Service Providers) typically require the Plan sponsor to represent that the Plan is qualified.... Service Providers will need to consider the type of evidence of qualification they will require to support the representations.... Purchasers doing diligence in connection with M&A transactions will also need to consider the evidence that they will require to verify the qualified status of the Plans involved in the transaction.... Plan auditors generally require Plan sponsors to provide a copy of a Plan's most recent determination letter. The New Program will require auditors to develop other representations and audit procedures." (Shearman & Sterling LLP)  

Top Three Fiduciary Priorities in 2015 (PDF)
"An annual Fiduciary Qualified Plan Review ... which assesses key compliance processes and satisfies a vital risk management need, is a standards-based retirement plan review that should utilize DOL guidelines and adhere to current fiduciary standards to ensure the authenticity of its results.... [T]raining can provide practical insights and proven strategies for fiduciary leadership, plan management, and regulatory compliance under ERISA.... Determining the 'reasonableness' of retirement plan fees can be difficult for plan sponsors, and fee benchmarking alone does not fulfill ERISA's requirements." (Roland|Criss via Journal of Compensation and Benefits)  

Fee Benchmarking for Defined Contribution Plans
"In the years you don't complete a full RFP, you should benchmark your plan's cost and services against 'active' quotes obtained from at least three vendors.... Prepare a customized request for administrative fees based on actual service provided. Solicit fee quotes from leading vendors that actively compete for business with the current vendor.... If current fees are above marketplace levels, negotiate to achieve a more favorable fee or service arrangement with the current vendor." (Buck Consultants)  

How ERISA Has Changed the Game for Nonprofits (PDF)
"Since coming under ERISA jurisdiction in 2008, 403(b) retirement plans -- predominantly present in the nonprofit sector -- are now subject to a litany of compliance checks and balances.... This article provides an overview of the biggest challenges ERISA has instigated for nonprofits, and how these organizations are reacting to managing their retirement plans effectively and efficiently in light of this shift." (Roland|Criss via Journal of Compensation and Benefits)  

Custom TDF Perspective: Can You See the Forest for the Trees?
"One reason often cited for using a custom TDF is the ability to access 'best in class' managers, with the expectation that this approach will lead to a better overall performance experience.... [M]aking the right manager selection decisions within each asset class is not as important as the asset allocation decisions themselves.... Focusing exclusively on accessing 'best in class' managers might lead a plan fiduciary to put excessive importance on short-term performance rather than long-term participant outcomes." (Manning & Napier)  

GAO Offers Thoughts on Lump-Sum Windows
"Earlier this year, ... [the GAO] issued a report ... that summarizes its study of 11 [lump sum windows (LSWs)] offered by plan sponsors in 2012 ... [The GAO's] primary concern was that the communications materials provided to potential LSW participants were deficient. The GAO identified a number of major points that it said those communications should cover ... and it found that most of the communications were missing at least one of those points." (Morgan Lewis via Lexology)  

Defined Contribution Plan Participants' Activities, First Quarter 2015 (PDF)
12 pages. "DC plan withdrawal activity in the first quarter of 2015 remained low and was similar to the first quarter in the prior year.... The commitment to contribution activity in 2015:Q1 continued at the high rate observed in 2014:Q1.... Most DC plan participants stayed the course with their asset allocations as stock values only edged up a bit during the first three months of the year.... DC plan participants' loan activity edged down in the first quarter of 2015, following a seasonal pattern observed over the past several years." (Investment Company Institute [ICI])  

S&P 1500 Pension Funded Status Drops in July
"The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies dropped by 1%, to 83% as of July 31st, 2015, as positive equity market performance was not enough to offset the increase in liabilities resulting from decreases in interest rates used to calculate corporate pension plan liabilities. The estimated aggregate deficit of $379 billion as of July 31st, 2015 increased by $33 billion from the end of June. Funded status is now up by $125 billion from the $504 billion deficit measured at the end of 2014[.]" (Mercer)  

Benefits in General; Executive Compensation

[Official Guidance]

Text of SEC Final Rule on CEO Pay Ratio Disclosure (PDF)
294 pages. "Registrants must comply with the final rule for the first fiscal year beginning on or after January 1, 2017.... [A]fter considering specific suggestions from commenters on alternatives that could help to mitigate compliance costs and practical difficulties associated with the proposed rule, we are adopting a number of revisions in the final rule.... [1] Non-U.S. Employee Exemptions and Additional Permitted Disclosure ... [2] Employees of Consolidated Subsidiaries ... [3] Employed on Any Date Within Three Months of the Last Completed Fiscal Year ... [4] Identifying the Median Employee Once Every Three Years ... [5] Initial Compliance Date ... [6] Transition Period for New Registrants ... [7] Additional Transition Periods." (U.S. Securities and Exchange Commission [SEC])  

[Guidance Overview]

SEC Fact Sheet on CEO Pay Ratio Disclosure Final Rule
"The rule addresses concerns about the costs of compliance by providing companies with flexibility in meeting the rule's requirements. For example, a company will be permitted to select its methodology for identifying its median employee and that employee's compensation, including through statistical sampling of its employee population or other reasonable methods. The rule also permits companies to make the median employee determination only once every three years and to choose a determination date within the last three months of a company's fiscal year. In addition, the rule allows companies to exclude non-U.S. employees from countries in which data privacy laws or regulations make companies unable to comply with the rule and provides a de minimis exemption for non-U.S. employees." (U.S. Securities and Exchange Commission [SEC])  

[Guidance Overview]

SEC Adopts Final Pay Ratio Rule: A Comprehensive Summary
"[T]he final rule requires disclosure of: [1] the median of the annual total compensation of all employees of the registrant (except the registrant's chief executive officer, which the rule refers to as the PEO) (A); [2] the annual total compensation of the registrant's PEO (B); and [3] the ratio of the amount in (B) to the amount in (A), presented as a ratio in which the amount in (A) equals one, or, alternatively, expressed narratively in terms of the multiple that the amount in (B) bears to the amount in (A).... [T]he final rule permits registrants to choose one of two options to express the ratio.' " (Dodd-Frank.com, a blog by Stinson Leonard Street)  

[Guidance Overview]

SEC Issues Final Rule on CEO Pay Ratio Disclosure
"[T]he rule will not require companies to report the pay ratio disclosure for any fiscal year beginning before January 1, 2017, which means, for most companies, reporting in the 2018 proxy statement.... The final rules [1] allow a company to select a date within the last three months of its last completed fiscal year on which to determine the employee population for purposes of identifying the median employee.... [2] only allow a company to exclude non-U.S. employees from the determination of its median employee in two circumstances ... [3] prohibit companies from full-time equivalent adjustments for part-time workers or annualizing adjustments for temporary and seasonal workers when calculating the required pay ratio." (Winston & Strawn LLP)  

[Guidance Overview]

How to Navigate the SEC's Proposed Mandate on Clawbacks
"As currently drafted, the Proposed Rules could require recovery of incentive-based compensation that an executive officer earned in his or her capacity as a non-executive officer.... A 'no-fault' clawback policy triggered only by accounting errors puts increased pressure on directors and officers who are responsible for reviewing company financials and the scope of any errors." (Latham & Watkins)  

Will a New SEC Rule Make the Pay Gap Between CEOs and Workers Any Smaller?
"Will the rule be effective in publicly shaming companies, as is the apparent intent? It could be, but public shaming has its limits. The U.S. has been requiring companies to reveal how much they pay their CEOs since the 1930s, and CEO pay continues to soar even with that transparency." (The Atlantic)  

CEO Pay Ratio Rule Rankles Many
"[The SEC] had found in two studies that pay ratios would not be significantly affected if a minority of employees were excluded. Even excluding 40% of employees would reduce the average pay ratio by only 11%, the SEC found. But the final rule allows companies to exclude only 5% of their overseas workers. Not only did that not satisfy companies, as such exclusion will scarcely reduce their burden and compliance costs at all, it also didn't satisfy the AFL-CIO, the trade union federation, which has been among the most vocal, high-profile supporters of increased CEO compensation disclosure." (CFO)  

Press Releases

Regina T. Jefferson Named to PBGC Advisory Committee
PBGC [Pension Benefit Guaranty Corporation]

CAPTRUST and MFP Strategies Merge
CAPTRUST Financial Advisors

Connect   LinkedIn logo   Twitter logo   Facebook logo

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!