[Guidance Overview]
What's the Impact of the 2016 IRS Retirement Plan Limits?
"A flat qualified compensation limit could have several consequences. These include: [1] More compensation counted towards SERP excess benefits ... [2] Lower-than-expected qualified pension plan accruals for participants whose pay is capped ... [3] [E]mployers may find that more of their employees become classified as HCEs.... [4] Plans may see marginally worse nondiscrimination testing results (including ADP results) if more employees with large deferrals or benefits become HCEs. It could make a big difference for plans that were previously close to failing the tests."
(Van Iwaarden Associates)
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[Guidance Overview]
DOL Reinstates 1994 Guidance on Economically Targeted Investments
"The new guidance (like the 1994 guidance on which it is based) lays out the basic fiduciary rules for selecting plan investments, including the DOL's position that the exclusive benefit rule prohibits fiduciaries from subordinating participants' and beneficiaries' interests in their retirement income to unrelated objectives."
(Thomson Reuters / EBIA)
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Congress Passes the Bipartisan Budget Act of 2015
"This legislation includes three provisions that impact defined benefit pension plans: [1] Congress further extended defined benefit pension plan funding stabilization provisions originally included in [MAP-21] in 2012 and extended in [HATFA]. [2] The act increases [PBGC insurance] premiums for pension plan sponsors and accelerates premium due dates for plan year 2025. [3] BBA 2015 will allow pension plan sponsors to apply to the Treasury Department to use custom mortality tables based on plan experience for the purposes of determining funding, PBGC premiums, and benefit restrictions."
(CAPTRUST Financial Advisors)
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2015 Report: Trends and Experience in DC Plans
"DC plans are changing in rapid ways as employers undertake rigorous reviews to promote more participation, encourage greater savings, and improve investment funds. Among the Highlights: [1] Automatic features are becoming more powerful; [2] Plan match formulas are changing; [3] Plan fees remain a focus; [4] Roth availability is growing; [5] Employers are enhancing their target-date funds; [6] Help tools are expanding; [7] Communication is more personalized than ever before."
(Aon Hewitt)
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Defined Contribution Execs Refine Tools to Reach Millennials
"[Y]ounger workers -- the millennials, who are between 18 and 34 -- respond to different strategies for education and communication than older workers. They do so not only because they are more tech savvy, but also because they have financial challenges that are more immediate than thinking about retirement decades in the future.... Fidelity compiled a list of millennial myths to share with clients. One of those myths: Social media is the preferred or trusted source for financial information."
(Pensions & Investments)
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DOL May Modify Proposed Rule to Treat Indexed Annuities the Same Way as Variables
"The Department of Labor (DOL) staff appears to be thinking that fixed index annuities should be treated more like variable annuities than fixed annuities under its new 'conflict of interest' " fiduciary rule, according to an insurance executive who met with top-level staffers.... During the meeting, the DOL officials asked the executives some 'pointed questions' about fixed index annuities (which the DOL calls equity index annuities)[.]"
(InsuranceNewsNet.com)
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LPL Financial CEO Floats Idea of Orphaning 3% of Its Brokerage Business in Prelude to DOL 'Travesty'
"LPL Financial ... aired out the possibility of orphaning a vast swath of its own clients and their billions-of-dollars of assets as a worst-case scenario unless the [DOL] backs off heightened fiduciary rules. The ... independent broker-dealer could cut loose brokerage retirement client accounts with $15,000 or fewer in assets, which could amount to about 3% of LPL's retirement brokerage assets."
(RIABiz)
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Intel Sued for Investing Employee 401(k) Funds in Hedge Funds, Private Equity
"The lawsuit ... alleges 401(k) and profit-sharing participants who were invested in Intel's custom target-date series and global diversified fund lost hundreds of millions of dollars on underlying hedge funds and private equity investments.... According to court documents, 'Beginning in 2011, the investment committee dramatically altered the asset allocation model for the Intel (target-date portfolios) by increasing Intel TDP investments in hedge funds from about $50 million to $680 million.... Similarly, the investment committee increased the diversified fund's exposure to hedge funds and private equity investments during 2009 through 2014. During this period, the diversified fund's investment in hedge funds increased from about $582 million to $1.665 billion; ... the fund's investment in private equity increased from about $83 million to $810 million.' "
(InvestmentNews)
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Popular Social Security Strategy on the Chopping Block
"[W]hile the new law shuts the door on file-and-suspend for couples who can't pull off the maneuver before the deadline, couples can still take advantage of other strategies for maximizing their Social Security benefits. [Morningstar and Reuters columnist Mark Miller] says it still usually makes sense for the higher-earning partner to delay filing past full retirement age, if possible. Not only does that boost the couple's income if the primary earner lives beyond his or her average life expectancy, it also boosts the surviving spouse's survivor's benefit."
(Morningstar)
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Private Firms Offer to Run California State-Sponsored Retirement Savings Plan
"A board working on a proposal to enroll most small business employees in a state-run retirement savings plan, unless they opt out, was told last week that small technology-focused financial firms could do the job. The founders of three firms that offer 401(k)s and other retirement plans to small businesses did not object to competition from the state. They offered their services, acknowledging that several small firms may be needed due to the size of the job."
(Calpensions)
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[Opinion]
California's S.B. 185, Thermal Coal, and the Fallacies of Social Investing
"[California Senate Bill no.] 185 requires public employee pension plans to divest their investments in publicly-traded companies that derive half or more of their revenue from 'the mining of thermal coal.' ... [T]he social investing mandated by S.B. 185 is a misguided way to pursue environmental or other worthwhile goals. Social investing by pensions is both wrong as a matter of law and ineffective as a matter of policy."
(Prof. Edward Zelinsky, OUPblog)
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[Opinion]
Sound and Fury Over Annuities
"[Y]ou'll read through the report and discover that [U.S. Senator Elizabeth Warren] is irate about the sales of 'annuities.' There is no distinction between variable annuities (highly questionable products), equity-indexed annuities (the financial equivalent of toxic waste), and immediate or deferred annuities (potentially beneficial retirement options). What a report this could have been if the perks that Warren is detailing are leading agents to switch their recommendations from one product or another! Or if Warren had looked at the differing compensation that agents can slip into their wallet if they steer a client from a lean product to one that happens to be offering double bonus commissions!"
(Bob Veres in Inside Information)
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[Opinion]
Budget Deal Raises DB Premiums Without Regard for Sound Policy
" 'PBGC's recent Fiscal Year 2014 Projections Report confirmed that the financial condition of the single-employer pension program has significantly improved and has ample assets to pay benefits well into the future. The irony is that by continually increasing premiums -- including on fully-funded plans -- Congress and the President are compelling more and more employers to exit the system which shrinks the premium base on which the PBGC relies,' [American Benefits Council President James A. Klein] noted."
(American Benefits Council)
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[Opinion]
Wall Street and Corporate Execs Turn the Screws on American Workers
"This is the new pension normal. CEO compensation which includes lavish pensions is soaring to obscene levels while companies are looking to slash pension costs, offloading them to insurers or employees, or if they go belly up, pensions become the problem of some cash-strapped government pension agency which backstops pensions and slashes benefits.... In the U.S., there's a dangerous shift in pension policy which will come back to haunt the country as social welfare costs skyrocket and pension poverty soars, placing more pressure on an ever growing debt problem."
(Pension Pulse)
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Benefits in General; Executive Compensation
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[Guidance Overview]
Congress Passes Budget Deal Affecting DB and Health Plans (PDF)
"Among the fiscal provisions are several changes to pension and healthcare benefits, which were largely included to generate an estimated $12.4 billion in revenue to help offset the cost of the legislation.... The President is expected to sign the legislation soon. [This article] briefly summarize[s] the current pension-related provisions[.]"
(Groom Law Group)
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[Guidance Overview]
Nonqualified Deferred Compensation Plan Update
"In June 2015, the [IRS] released updated audit guidelines for nonqualified deferred compensation plans.... [T]he guidelines identify the following issues: [1] Funding ... [2] Constructive receipt/cash equivalency ... [3] Timing of deductions ... [4] FICA/FUTA taxes ... [5] Rabbi trust funding ... [6] Impermissible coordination with 401(k) plans."
(Thompson Coburn)
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Press Releases
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