Retirement Plans Newsletter

October 16, 2015

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Account Manager
National Retirement Services, Inc.
in NC

401(k) Pension Administrator
Nicholas Pension Consultants
in CA

Retirement Plan Services Plan Compliance Specialist
Bankers Trust
in IA

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Webcasts and Conferences

Employee Plans Programs - Summer 2015 Updates
RECORDED
(IRS [Internal Revenue Service])

Benefits Forum
October 28, 2015 in NC
(ASPPA Benefits Council [ABC] of Carolinas)

IRS/EPCRS Voluntary Compliance Programs
October 28, 2015 in OH
(ASPPA Benefits Council [ABC] of Cleveland)

All-Day Seminar With Adam Pozek
November 4, 2015 in IN
(ASPPA Benefits Council [ABC] of Northern Indiana)

ACA Reporting Requirements: Deciphering the 1094C and 1095C Forms
November 5, 2015 in MD
(Worldwide Employee Benefits Network [WEB] - Baltimore Chapter)

EBSA Office of Enforcement: Priorities and Initiatives
December 8, 2015 WEBCAST
(ABA Joint Committee on Employee Benefits)

View All Webcasts and Conferences


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[Official Guidance]

Central States Pension Plan Application for Benefit Suspension
"The Central States, Southeast and Southwest Areas Pension Plan application proposing benefit suspensions ... is organized by the items specified in Rev. Proc. 2015-34.... The application includes, among other items, the Description of Benefit Suspension and the Certification to Avoid Insolvency.... [The] application is currently being reviewed and the review is expected to take several months.... Treasury will consider comments on the application that are timely received from interested parties, including contributing employers, employee organizations, and participants and beneficiaries of Central States. Click here to submit a comment on the application." [Page includes links to 50 individual documents comprising the application.] (U.S. Department of the Treasury)  


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[Official Guidance]

Treasury Requests Comments on Central States Pension Plan Application for Benefit Reduction
"We're committed to ensuring an open and fair process.... We understand that any reductions in benefits resulting from this application under the Kline-Miller law will have a real impact on people's lives. We're focused on ensuring that the voices of those affected are heard. We encourage plan participants to provide feedback on this application, as we review it to determine whether it meets the requirements set by Congress." (U.S. Department of the Treasury)  

[Guidance Overview]

Deadlines for Calendar Year 401(k) Plan Participant Notices Is December 1
"Three of the most common year-end notices are Section 401(k) plan safe harbor notices, Qualified Default Investment Alternative (QDIA) notices, and automatic contribution notices. These notices must be provided no more than 90 days (and not less than 30 days) prior to the new plan year. Accordingly, for calendar year plans, December 1, 2015 is the notice distribution deadline." (Morgan Lewis)  

DOL Final Rule Likely to Include Big BICE Changes
"The financial services industry strongly objects to the BICE requirement that potential clients sign a contract before any financial topics are discussed. Many of the 330,000 comments the DOL has received pertained to the onerous nature the BICE would place on their attempts to serve retirement savers. 'Right now, it's largely unworkable as it's currently written, so I think they're going to have to make some significant changes,' [said Fred Reish, of Drinker, Biddle & Reath]. 'I think the DOL has been persuaded that (the contract stipulation) is unrealistic.' " (InsuranceNewsNet.com)  

Capitalizing on 'Unintended Consequences' of DOL Changes
"The largest RIA in the nation has quietly entered the 401(k) arena by leaping through a de facto loophole that gives fiduciary advisors a pass on using an open architecture when it comes to manager selection ... Ken Fisher, who manages $60 billion in assets with Fisher Investments, has jumped into the game by creative use of proprietary funds that he believes will keep investors and regulators happy." (RIABiz)  


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The Recession Hurt Americans' Retirement Accounts More Than Anybody Knew
"Although the average retirement-account balance increased by about 7 percent, about 45 percent of the workers we studied saw their balances decrease by thousands of dollars between the spring 2009 and the fall of 2011. These losses can be even more troublesome than they initially seem: If someone had $10,000 in 2008 and lost 25 percent of it, they'd need a gain of 33 percent just to stay even. In fact, we found that the average gain was far smaller than what would have been needed to recover from the steep losses in 2008." (Teresa Ghilarducci, in The Atlantic)  

Four Reasons Why Plan Sponsors Should Care About Outcomes
"You want your employees to appreciate your benefit plan(s).... You don't want your employees worrying about their finances at work.... You want your employees to retire on time.... You want your plan to 'work.' " (Nevin Adams, National Association of Plan Advisors [NAPA])  

Retirement Plan Asset Sharing in a Divorce: Mistakes Can Be Costly (PDF)
"Do people involved in the review of DROs expose themselves or their firm to the proposed DOL fiduciary rule? Although the likelihood is 'no,' there may be 'experts' who say 'maybe.' ... Other concerns for reviewers: ... One or more outstanding plan loans, the repayment of which could be addressed in the DRO.... [The] language sets forth the sharing in a defined benefit plan, described as if the Alternate Payee will have a separate account in the plan, and the plan only allows sharing via a sharing of the participant's stream of payments ... The plan is sponsored by an employer in a community property state." (Howard M. Phillips, in Plan Consultant)  

IRS Issues Private Letter Ruling on ESOPs in LLCs
"[IRS PLR 201538021] allows limited liability companies to adopt an ESOP under certain circumstances. The PLR clarifies that unit shares of an limited liability company that is classified as an association and that has elected to be taxed as a corporation, are employer securities as defined in in tax code, provided that the unit shares otherwise meet the requirements that they have the highest dividend and voting rights." (National Center for Employee Ownership [NCEO])  

Public Pension Funding Ratios Still Well Below Pre-Recession Levels
"The median funded status for U.S. public pension funds was 71.5% at the end of fiscal year 2014, relatively unchanged from 2013, and only slightly above its 2012 post-recession low of 68.9% ... However, states' contribution practices are improving ... In fiscal year 2014, 53% of major statewide retirement systems received at least 100% of their actuarially calculated contribution, up from 42% from post-recessionary fiscal year 2011[.]" (Pensions & Investments)  

Comparison of Colorado's Hybrid DB Plan to Alternative Plan Designs (PDF)
102 pages. "This study found that the current [Colorado Public Employees' Retirement Association (PERA) Hybrid Defined Benefit Plan] is more efficient and uses dollars more effectively than the other types of plans in use today. Thus, costs may not be the greatest consideration either for or against a change in the Plan. The decision to change from the PERA Hybrid Plan to another type of plan would be due to a change in the State's compensation policy, not because the same benefits could be achieved at a lower cost." (Gabriel Roeder Smith & Company)  

New Website Offers Insights on Unfunded Public Pension Liabilities in California
"California residents and the media may find the information on PensionTracker.org highly useful in seeking to understand the pension situation throughout the state... Website users can filter by county, city and special district. The site contains roughly 2 million data points, using actuarial, budgetary, demographic and other financial information from a number of sources[.]" (Stanford University)  

The Right Way to Take IRA Withdrawals
"There is no tax advantage to taking your required minimum distribution (RMD) in one lump sum annually vs. installments throughout the year. But the timing of your distribution is important[.]" (Money)  

Benefits in General; Executive Compensation

Bad News for Retirees: No Social Security Cost-of-Living Increase, Higher Medical Costs for Many
"Most Americans have their outpatient care premiums for Medicare Part B deducted directly from their Social Security checks, and the annual cost-of-living increase usually covers any increase to premiums. When it doesn't, a longstanding 'hold harmless' law protects about 70 percent of seniors from having their Social Security payments reduced. But that leaves about 30 percent of Americans on Medicare to cover a hike to premiums that otherwise would be spread across everyone. That group includes people new to Medicare, federal retirees who don't receive Social Security payments and about 3.1 million people with higher incomes, that is, those making more than $85,000." (The Washington Post; subscription may be required)  

As Job Market Tightens, Touting Benefits Can Close the Deal
"Forty percent of respondents said one of the ways they are hoping to tempt top talent is with their benefits programs, a statistically significant increase from 2013 (30 percent).... About 66 percent of respondents believed health care benefits would become a more important part of their efforts to recruit employees at all levels in the next three to five years; more than half indicated the same for retirement savings and planning (59 percent); financial and compensation benefits such as financial advice, bonus plans, subsidies and educational assistance (53 percent); and flexible working benefits (52 percent)." (Society for Human Resource Management [SHRM])  

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David Rhett Baker, J.D., Editor and Publisher
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