Retirement Plans Newsletter

September 16, 2015

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Webcasts and Conferences

Employee or Independent Contractor?
RECORDED
(IRS [Internal Revenue Service])

HRA Compliance Drilldown: Health Care Reform, Code, and Other Rules
October 14, 2015 WEBCAST
(Thomson Reuters / EBIA)

Introduction to ERISA: An Overview
October 15, 2015 WEBCAST
(American Bar Association [ABA])

ERISA Workshop
October 15, 2015 in MN
(SunGard Relius)

Advanced Plan Design Workshop
October 16, 2015 in MN
(SunGard Relius)

IRA Contributions
November 3, 2015 WEBCAST
(Ascensus)

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[Official Guidance]

Text of PBGC Final Regs: Electronic Filing Requirements for Multiemployer Plans
"This final rule requires the following notices to be filed electronically with PBGC: notices of termination under part 4041A, notices of insolvency and of insolvency benefit level under parts 4245 and 4281, and applications for financial assistance under part 4281. This final rule does not involve any conforming amendments reflecting the Multiemployer Pension Reform Act of 2014 (MPRA). The rule affects only notices to PBGC (not notices to participants or other parties)." (Pension Benefit Guaranty Corporation [PBGC])  


[Advert.]

New Course! Understanding Social Security

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Social Security is a complex and far-reaching topic that affects employers and its staff. This self-paced interactive course is designed make sense of all the requirements and introduce you to strategies to maximize benefits. Learn More!



[Guidance Overview]

PBGC Issues Final Reportable Events Regs That Provide Additional Reporting Waivers
"[T]he PBGC believes that the new safe harbors are simpler, more flexible and easier to comply with than those provided in the proposed regulations. The PBGC anticipates that approximately 94% of plans and sponsors will be exempt from many reporting requirements under the final regulations. With the addition of the safe harbors and the shift in emphasis to a plan's risk of default, the final regulations provide pension plan sponsors with more waivers from the reporting requirements and are expected to result in a net reduction in reporting." (Practical Law)  

The Federal Thrift Savings Plan: Can It Be Duplicated in the Private Sector? (PDF)
"The federal Thrift Savings Plan (TSP) is a 401(k)-like plan for federal workers. It is often portrayed as a standard for all participant-directed retirement plans. But as testimony by the [GAO] makes clear, the TSP is a unique arrangement that cannot be compared with or duplicated by 401(k) plans. While the TSP works similarly to a 401(k) plan, fees charged to TSP participants are considerably lower than the average fees charged to participants in private-sector 401(k) plans. This cost differential reflects the unique economics of the TSP, which bear little resemblance to those of its private-sector counterparts." (Investment Company Institute [ICI])  

Improving Retirement Preparedness for the Next Generation (PDF)
"An inheritance or a life insurance death benefit can make a meaningful difference in closing the gap between being unprepared and being prepared for retirement. The median shortfall for lower income households at risk today is $56,986 and is projected to be $131,283 (in today's dollars) when the head of the household turns age 65. For middle income households, the median shortfall is $87,489 today and is projected to be $197,385 (in today's dollars) when the head of the household turns age 65. Closing all or even a portion of those gaps through the death benefit from life insurance may be an economically feasible option for many families." (Prudential)  

IRS Hearing on Multiemployer Plan Benefit Suspensions Features Impassioned Voices (PDF)
"Generating particular interest was how the vote will be conducted, with many ... advocating that the IRS and Treasury reconsider the ban on paper ballots.... [One witness] said that many of the people who are served by multi-employer plans aren't computer literate and many may even still have rotary phones. He suggested that the agencies consider evaluating the need for paper ballots based on the industry, as some may be more suited for electronic voting than others." (Bloomberg BNA Pension & Benefits Reporter, via Pension Rights Center)  


[Advert.]

Webconference Series For Retirement Plan Committee Presenters

Sponsored by EACH enterprise

This initiative helps client relationship managers, account managers, and plan investment advisors effectively lead plan committee meetings to promote effectiveness, client engagement, and innovation.



Asset Purchasers Face Escalating ERISA Liability Exposure
"Citing 7th Circuit ERISA precedent, the 9th Circuit recently expanded that successor principle ... The risk of potential successor withdrawal liability is particularly significant in cases where the asset purchaser essentially 'picks up business' where the predecessor left off.... The court noted that five of eight union employees worked in the same business location for the predecessor and successor companies, with the hiatus of some not being dispositive." [Resilient Floor Covering Pension Tr. Bd. of Trustees v. Michael's Floor Covering, Inc. (9th Cir. Sept. 11, 2015)] (Paul Hastings LLP)  

Do Retirement Plan Advisers Have a Duty to 'Rat?'
"With more advisers taking on a fiduciary role, they should know when to speak up, or walk away, before a retirement plan sponsor gets them in trouble." (planadviser)  

Capturing the Benefits of Illiquidity (PDF)
64 presentation slides."A strong case can be made for including illiquid assets in default portfolio designs: Alternative asset classes can be additive to portfolio design ... Valuation and trading issues are manageable ... Risks are related primarily to inflexibility during a severe downturn." (Defined Contribution Institutional Investment Association [DCIIA])  

Examining the Results: Lower-Cost Active Management
"[T]he performance gap between the cheapest and average-priced funds is just as wide with passive funds as it is with active funds. The lowest-cost passive funds bolt back into the lead. As those tend to be the largest and most popular of passive funds, that is a significant victory for passive funds -- even against the attractively priced active funds." (Morningstar Advisor)  

1000-Participant Plans Pay Twice the Fees of the Largest Plans
"For very large plans -- those with more than 100,000 participants -- the average expense ratio among funds was just 0.27 percent. But for very small plans with fewer than 100 participants, the average expense ratio for the funds offered was more than three times as high at 0.87 percent. Even funds in slightly larger plans, with 100 to 1,000 participants, had an average expense ratio of 0.70 percent." (CNBC)  

How to Deal with Market Losses in Retirement (Part 1 of 2)
"With the wild ride the market has been on the last few weeks, many retirees are wondering if it's time to get off the roller coaster.... What NOT to do during a downturn: [1] Don't panic.... [2] Don't try to time the market.... [3] Don't ignore your financial advisor." (Pension Consultants, Inc.)  

Tax-Efficient 'Bucket' Retirement Portfolios for Fidelity Investors
"[M]any retirees hold additional assets in taxable accounts, and prioritizing tax efficiency there can help plump their take-home returns.... Because reliably tax-efficient investments are few and far between, these portfolios are more compact than the previous Fidelity bucket portfolios." (Morningstar)  

When Affluent Consumers Engage in Retirement Planning, Trust in Their Advisors Increases
"60 percent of affluent consumers believe that their advisors achieve better results than what they could on their own.... Three in four affluent consumers expressed high satisfaction with their advisors. Satisfaction measures included the ability to reach the advisor when needed most, as well as, transparency and clear communication -- especially when discussing the cost and value of a service. Nearly half said they would like to work with their current advisor for life." (LIMRA)  

[Opinion]

A Great (and Impossible) Plan to Fix Retirement
"[Theresa Ghilarducci estimates] the average worker has to save 17 percent to 20 percent of their salary each year to maintain their standard of living in retirement. Subtract the 12.4 percent saved through Social Security, and you're left with a hole of at least 5 percent. To fill it, Ghilarducci would require people to save an extra 5 percent of their income in government-run Guaranteed Retirement Accounts. Half the money would come out of workers' paychecks (offset by a refundable $600 tax credit), and the other half from employers, just like Social Security.... [W]hat she's advocating illustrates the depressing difficulty of fixing retirement policy: For all the obstacles her plan presents, it's hard to think of anything better." (Bloomberg View)  

Benefits in General; Executive Compensation

[Guidance Overview]

Form 5500 and Tax Return Filing Deadlines Changed by Highway Bill
"[T]he revised tax return deadlines do not apply to C corporations with fiscal years ending on June 30 until taxable years beginning after December 31, 2025 (however, the revised Form 5500 extension deadline does apply effective in 2016 to plans and corporations with June 30 year ends).... [A] calendar year C corporation that extends the due date of its corporate return (Form 1120) will receive an automatic extension of time to file the Form 5500 until October 15th. At a minimum, the automatic extension can help a plan sponsor or TPA that fails to timely file a Form 5558 extension request." (SunGard Relius)  

Should Student Debt Management Be Included in Benefit Packages?
"According to [a recent] study, 55% of respondents would rather use the money they are paying for health care to pay down their student loan balance, and 49% would prefer student loan contributions from employers to 401(k) contributions. To put that into perspective, if this survey is truly indicative of what people with student debt think -- approximately 40 million Americans -- that means that those who prefer student debt repayment over health care and retirement savings are approximately 22 and 19 million people, respectively." (Money Management Intelligence)  

Employees Want Custom Benefits Communication
"Those employees just starting their careers and those nearing retirement have distinct financial needs. Early entrants -- those in the first five years of their working lives -- want more choice and education delivered via the workplace. In contrast, near-retirees -- within five years of retirement -- value their benefits and worry about losing them in retirement." (PLANSPONSOR)  

2015 JCEB Q&As Offer Nonbinding IRS Responses on Employee Benefits and Executive Compensation Issues
"Topics addressed include ... [1] Tax-qualified retirement plans; [2] Employer mandate issues under the [ACA]; [3] Sections 162(m) and 409A of the Internal Revenue Code[.]" (Practical Law Company)  

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