Retirement Plans Newsletter

December 14, 2016 logo logo
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2017 Reporting and Disclosure Calendar for Single-Employer Qualified Retirement Plans
"[This chart] summarizes compliance requirements for qualified, single-employer benefit plans. [It includes] a list of requirements, ... a brief description of each, as well as the plan(s) affected, filing requirements and due dates."
Sibson Consulting


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When to Let Employees Join Your 401(k) Plan
"Companies with high employee turnover that want to keep transient employees off their plan choose longer service requirements. Companies that want to minimize the number of part-time or seasonal employees in their plan define a year of service using the counting hours method Companies that want their 401k plan to help recruit top employee talent choose shorter service requirements. Companies that want their 401k plan to help employees save as early as possible for retirement choose no service requirements at all."
Employee Fiduciary

The Next Evolution in De-Risking Your Pension Plan: Spin-Off Termination
"A spin-off termination allows the plan sponsor to terminate the most cost-effective portion of the plan by splitting a single plan into two separate plans. One plan will continue as an ongoing pension plan, while the other will undergo a plan termination. The terminating plan can be structured to include a specific portion of the original plan (e.g. participants with smaller benefits), and thus the termination can be accomplished for a fraction of the cost."
P-Solve LLC

Supreme Court Set to Rule on Church Plan Status
"Many of the class-action lawsuits filed in recent years involve plan sponsors that followed ERISA for years but later received private letter rulings from the IRS exempting them from the law as church plans.... Part of the reason behind the flurry of class-action lawsuits in recent years is that until September 2011, plan sponsors did not have to tell participants the IRS had allowed them to leave ERISA protection, and many participants found out the hard way, after plans reduced benefits or ran out of money."
Pensions & Investments

How the Supreme Court's New Church Plan Cases Might Affect ERISA Litigation Generally
"The Court's Church Plan decision may intersect with its recent decision in Spokeo Inc. v. Robbins ... [which] said that a plaintiff must allege a 'concrete injury' to bring suit ... To be sure, some [of the church plan] plaintiffs also allege a clearly concrete injury -- for example, an actual loss of benefits due to the plan's vesting schedule that fails to meet ERISA minimums. But under Spokeo, it is unclear if alleged funding, fiduciary and reporting and disclosure 'injuries,' in the absence of a specific, personal harm, or non-speculative risk of harm, would pass muster as sufficiently concrete[.]"
Seyfarth Shaw LLP


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Why Pensions Are Important
"This fact sheet explains the role pensions play in the overall retirement security of American workers, retirees, and their families. Pensions are important to retirement security ... Most retirees have little in personal savings.... Retirees with pensions have greater income security.... Pensions are important to the economy."
Pension Rights Center

Even a 20,000 Dow Won't Wipe Away Pension Problems
"Even with November's gains, corporate pensions were left with a $414 billion funding deficit, $10 billion larger than it was at the end of last year ... The largest corporate-pension funds lost more than $300 billion during the 2008 downturn ... and that loss wiped out the previous five years of gains.... Companies in the S&P 1500 have contributed $550 billion into their pension plans between 2008 and Nov. 30 of this year ... Even with those contributions, their funded status was 81.3% as of Nov. 30."
The Wall Street Journal; subscription may be required

These States Leave the Most Pension Money on the Table
"The states with the most unclaimed private pensions (not counting public pensions for teachers, police, etc.) are New York, Illinois, Pennsylvania and Texas. Georgia, Ohio and Virginia also rank up there. Here's a snapshot of unclaimed pensions, by state total, for the entire country[.]"

Illustrative Social Security Benefits for Retired Workers, Disabled Workers, and Survivors Scheduled Under Current Law (PDF)
"For a group of example workers with a range of full-lifetime average earnings levels at various ages in 2016, this note displays their current earnings at various ages in 2015, their full-lifetime average earnings, and the amounts they would expect to receive at benefit entitlement."
Office of the Chief Actuary, U.S. Social Security Administration [SSA]

DOL Fiduciary Rule's Effects on Wealth Managers Will Vary
"There will be varying advantages and disadvantages for wealth managers depending on whether they pursue a fee-only or commissions model in response to the DOL rule.... A fee-based structure could also mean less opportunity for brokers to overtrade client accounts, thus reducing potential legal liability from the introduction of the fiduciary standard. However, these financial institutions could risk losing brokers or smaller clients who do not benefit directly from the introduction of fees."
Fitch Ratings

Xerox Must Pay $4.9M in Attorney Fees, Costs in Pension Benefits Case
"Judge David G. Larimer granted Dec. 12 the workers' request for attorneys' fees but reduced by almost half the $7.9 million they initially requested. In doing so, Larimer allowed the use of 'out-of-district' billing rates for the workers' counsel but declined to use contemporary billing rates because they were 'unreasonably high.' Instead, he opted for more 'reasonable and adequate' 2011 rates." [Frommert v. Conkright, No. 00-6311 (W.D.N.Y. Dec. 12, 2016]
Bloomberg BNA


Mum on DOL Rule, DOL Appointee Andy Puzder's 'Check-The-Box' 401(k) Plan at CKE Restaurants Speaks Volumes
"[Andy Puzder, CEO of CKE Restaurants Inc.,] generally dislikes anything that'll trouble an employer.... [T]hat attitude may extend to managing 401(k) plans more to the benefit of employers than employees.... CKE has no matching contributions for its 401(k) nor does it have profit sharing.... The plan, managed by Marsh & McLennan Companies arm Mercer Investment Management, has high fees, and company generosity is rated 'poor,' as is the participation rate -- about 10%, which amounts to 2,400 of the company's 20,200 employees."


The Pension Protection Act Decreased Retirement Security
"Using a 'market value' approach, rather than an actuarial value, involves a stricter funding requirement (100% instead of 90%) and a shorter period of time to get to full funding (2 years instead of 4-5 years). Additionally, if a company experiences a steep loss in the value of its assets or if it achieves an unusually high investment return, it has a shorter period of time over which to 'smooth' the value of its assets. Unfortunately, this significantly increases the volatility of the cost of the pension plan."
National Public Pension Coalition

Benefits in General

2017 Reporting and Disclosure Calendar for Multiemployer Health and Retirement Plans
"[This chart] summarizes compliance requirements for multiemployer health and retirement plans.... [It includes] a list of requirements ... a brief description of each, as well as the plan(s) affected, filing requirements and due dates."
Segal Consulting

Executive Compensation and Nonqualified Plans

Portlandia: A Surcharge on CEO Pay Imposed by Local Jurisdiction
"[T]he city council in Portland, Ore., voted last week to impose a surtax on companies whose chief executives earn more than 100 times the median pay of their rank-and-file workers beginning next year.... As companies look to address the mechanics of the [Dodd-Frank] pay-ratio rules and prepare early disclosure models ... it's important to understand that the SEC has given companies broad leeway in calculating these ratios. If Portland or other jurisdictions decide they are going to impose a penalty based on ratios, we can expect that companies will take a hard look at the available alternatives and likely will become more aggressive with their method of calculation."
HRE Daily

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016, Inc. 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, 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.

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