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[Official Guidance]
Text of IRS 2015 General Instructions for Certain Information Returns (PDF)
28 pages; covers Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G. "What's New: FATCA filing requirements of certain foreign financial institutions (FFIs).... Truncating taxpayer identifying numbers on payee statements.... New Form 1098-Q, Qualifying Longevity Annuity Contract Information."
(Internal Revenue Service [IRS])
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[Guidance Overview]
IRS: LLCs Now Allowed to Adopt ESOPs
"The IRS recently issued Private Letter Ruling 2015 38021, which allows an LLC to adopt an ESOP under the following circumstances: [1] The LLC has elected to be taxed as a corporation; [2] The LLC issues ownership interests to its members in the form of 'unit shares'; [3] The unit shares have identical liquidation and voting rights; [4] The unit shares have the greatest voting and dividend rights of any class of unit shares issued by the LLC; [5] Distributions (i.e., dividends) on the unit shares are paid in proportion to the outstanding unit shares; [6] The profits and losses are allocated in proportion to the number of unit shares held by each unit shareholder."
(Morgan Lewis)
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401(k) Suit Targeting Vanguard Fees Could Support Case for Active Funds
"An overriding theme of lawsuits attacking 401(k) plan fees is that they generally view the cheapest investment as being the most prudent investment choice fiduciaries can make for plan participants ... It's this extreme that leads [Jason Roberts of the Pension Resource Institute] to believe active management could be looked upon more favorably in light of the Anthem suit, by raising the discussion around the importance of value rather than simply looking at fees in a vacuum."
(InvestmentNews)
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Pension Fight: Private Equity Aims for Defined Contribution Market
"After enjoying success with traditional defined benefit pensions, private equity firms face growing pains as they seek to cater to the defined contribution market. Alternative investments such as hedge funds and real assets have folded easily into these newer plans, bolstered by a boomlet in liquid alternative products. But for private equity, it's been harder to make the shift."
(Institutional Investor)
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DOL's Audit Quality Initiative Is Your Business Opportunity: Part 1
"There couldn't be a clearer directive as to what DOL expects plan sponsors to do and what it will be expecting to see should they decide open an audit file or investigation. As a committed EBP auditor, you can use this guidance to your advantage by proactively communicating with clients and prospects using these criteria to demonstrate your qualifications and expertise. [This article has a] six point Employee Benefit Plan Auditor Capabilities Outline that you can complete by adding information about your firm's experience, qualifications and capabilities."
(Fiduciary Plan Governance, LLC)
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GASB Issues Statement No. 78 Regarding Pensions for Certain Multiemployer DB Plans
"GASB Statement No. 78 establishes: [1] The criteria for identifying the applicable pension plans; [2] Recognition of pension expense equal to the employer's required contributions to the pension plan for the reporting period, and a payable equal to the unpaid required contributions at the end of the reporting period; [3] Note disclosures providing descriptive information about the plan, benefit terms and contribution terms; and [4] Required supplementary information[.]"
(Gabriel Roeder Smith & Company)
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Pension Funding Index: 2015 Ends with Modest Funded Status Improvement Over 2014 Based on Rising Interest Rates
"Milliman 100 PFI funded ratio ends at 82.7% in 2015 compared to 81.5% at end of 2014. Discount rate settles at 4.22%, up 38 basis points during 2015.... Based on a review of interest rate activity over the last six years ending with 2014, an increase in the net interest rate for the year has occurred just once. The year 2015, like 2013, changes the history to two years in the last seven years in which interest rates increased, resulting in lower pension liabilities. The Milliman 100 discount rate climbed 38 basis points to 4.22% at the end of 2015, from 3.84% at the end of 2014."
(Milliman)
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Three Rules for Retirement Savers During Falling Markets
"[Financial author Roger Wohlner] ... suggests investors breathe, reflect, review, and go shopping.... Advice regarding falling markets ranges dramatically based on age of the investor and time horizons.... [1] Don't panic, don't sell, and, above all, don't try to time the market ... [2] Falling markets present buying opportunities: ... [3] Stay the course."
(Fiduciary News)
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How Big Your Retirement Fund Should Be at Every Age
"[Y]ou may have heard at one time or another that it's smart to save one times your salary by age 35.... But now, Fidelity ... is recommending that people save one times their salary by their 30th birthday. By the time they're 35, savings should add up to double their annual pay. By 40, a retirement account should hold three times a person's salary. The numbers keep growing, all the way to age 67, by which retirement savings should add up to 10 times a person's pay."
(The Washington Post; subscription may be required)
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Catch-Up Contributions Put Retirees Way Ahead
"The additional 401(k) savings could amount to an additional $1,000 per month once a worker enters retirement ... According to new data from Fidelity, just 8% of its clients who are 50 and over make use of the catch-up program. Vanguard found ... that 16% contribute.... Among those 50+ who make more than $100,000 per year, the participation rate was 42%."
(Money)
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[Opinion]
The 2016 Retirement Landscape: Five Predictions
"An end to biased advice ... Inflation makes a comeback ... Rate increases will benefit retirees ... No Social Security reform, just blather ... A clampdown on the backdoor Roth."
(Morningstar)
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[Opinion]
Why Investment Realities Will Compel Pension Reform
"For the first time in history, America's public employee pension funds, managing well over $4.0 trillion in assets, are becoming net sellers, not buyers. And as any attentive student of economics will tell you, when there are more sellers than buyers, prices drop. Behind this mega economic trend is a mega demographic trend -- across the developed world, certainly including the United States, a relentlessly increasing percentage of the population is retired. The result? An increasing proportion of people who are retired and slowly liquidating their lifetime savings -- also driving down asset values and investment returns."
(UnionWatch)
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[Opinion]
Fiduciary Rule Could Make 2016 Good for Investors
"If you doubt that we need this regulation, consider the case of JPMorgan Chase & Co.... [T]he largest bank in the United States agreed to pay $307 million to settle accusations by the [SEC] that brokers and advisers in several JPMorgan divisions steered clients into its own, more expensive investment products over other choices without making the required disclosures to clients about conflicts of interest.... The bank admitted to wrongdoing, but no restitution will be made to customers.... If the [DOL] rules were already in place, they would have governed any dealings by the bank affecting client retirement accounts, including rollovers from 401(k)s into IRAs[.]"
(Reuters)
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BenefitsLink.com, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, Inc. All materials
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