Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
December 3rd, 2014
Second Opinions
Questions About ACA ‘Cadillac Tax’: Part II
Internal Revenue Code section 4980I, as enacted by the Patient Protection and Affordable Care Act (ACA), imposes a 40%, nondeductible excise tax on employers, health insurance issuers, and/or other entities administering health plan benefits if the aggregate value of applicable employer-sponsored coverage exceeds a specified annual dollar limit.  The tax is referred to by some as the “Cadillac Tax.”  Experts from Groom Law Group answer additional questions regarding the excise tax.Read more >
Sponsored message from The Newport Group
Newport #1 in “Best in Class” Awards in 2014 PLANSPONSOR DC Survey
The Newport Group, a national provider of retirement and executive benefit plans, is #1 in “Best in Class” awards in PLANSPONSOR magazine’s 2014 Defined Contribution Survey. Newport earned a record 72 awards-more than any other provider in the retirement industry.Read more >
Benefits & Administration
Governments Report Efforts to Tame Health Benefit Costs
Disease management programs, on-site clinics, dependent eligibility audits, and regular review and rebidding of health care vendor contracts have achieved significant health benefit cost savings for local governments, according to a nationwide survey by the Center for State and Local Government Excellence. The top drivers of local government health care cost increases cited by survey respondents were increased claim costs (64%), prescription drugs (57%), an aging workforce (46%), insurance company price increases (45%) and federal health care policy (45%).Read more >
The aggregate funded ratio for U.S. corporate pension plans was unchanged at 84.8% for the month of November, according to Wilshire Consulting. “We estimate that overall, the asset and liability values increased by about the same percentage. The asset result is due to positive returns for most asset classes, while the liability value increased due to falling corporate bond yields,” states Jeff Leonard, managing director, Wilshire Associates, and head of the Actuarial Services Group of Wilshire Consulting.Read more >
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TRIVIAL PURSUITS: What do the M’s stand for in M&Ms?
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2020 Recordkeeping Survey
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Is Census Bureau Data Shorting Retirement Wealth?
A recent issue brief from the Center for Retirement Research at Boston College (CRR) asks if retirement income flow data captured by the Census Bureau’s Current Population Survey (CPS) understates retirees’ actual wealth. The analysis compares income figures in the CPS with those reported to the Internal Revenue Service and the U.S. Federal Reserve, looking closely at households with retired heads age 65 to 84. According to CRR researchers, all the comparisons confirm that the CPS dramatically underreports total retirement wealth, especially when it comes to expected income from 401(k)s and individual retirement accounts (IRAs) for those at higher income levels.Read more >
From the Magazine
Summaries of the latest from Washington and the courts—what’s coming, what’s contemplated and what’s critical to plan sponsors.Read more >
Products, Deals & People
Legal & General Investment Management America (LGIMA), a Chicago-based investment adviser, introduced the new U.S. index fund management business to build on capabilities and management strategies provided to U.S. pension and institutional market clients. The firm has also expanded its core fixed-income and liability-driven investing offerings as part of the move.Read more >
Economic Events
The U.S. Census Bureau of the Department of Commerce announced that construction spending during October was estimated at a seasonally adjusted annual rate of $971.0 billion, 1.1% above the revised September estimate of $960.3 billion. The October figure is 3.3% above the October 2013 estimate of $939.9 billion.
Market Mirror

Tuesday, the Dow was up 102.75 points (0.58%) at 17,879.55, the NASDAQ increased 28.46 points (0.60%) to 4,755.81, and the S&P 500 closed 13.11 points (0.64%) higher at 2,066.55. The Russell 2000 climbed 14.40 points (1.25%) to 1,168.45, and the Wilshire 5000 gained 142.22 points (0.66%) to finish at 21,665.19.

On the NYSE, 3.2 billion shares traded, with a near 2 to 1 lead for advancers. On the NASDAQ, 2.8 billion shares changed hands, with advancing issues outnumbering declining issue more than 2 to 1.

The price of the 10-year Treasury note was down 16/32, with its yield up to 2.292%. The price of the 30-year Treasury bond decreased 31/32, increasing its yield to 3.013%.

Compliance
IRS Updates Information About Plan Examinations
Two updated publications from the Internal Revenue Service (IRS) discuss the employee plans examination process and appeal procedures. The IRS has updated Publication 1-EP, “Understanding the Employee Plans Examination Process,” and Publication 1020, “Appeal Procedures Employee Plans Examinations.” In “Understanding the Employee Plans Examination Process,” the agency discusses how retirement plans may be selected for examination and what areas may be reviewed.Read more >
Ask the Experts
Ask the Experts – Deferring 100% of Paycheck
“I work at a museum, and one of our C-Suite employees realized she had not made salary deferrals to either our 403(b) plan or our 457(b) plan. Thus, she wishes to defer all of her pay to both plans so she will reach the annual limit for each plan. After mandatory deductions, she does earn enough to reach the deferral limits in both plans. Can she indeed defer 100% of pay less mandatory deductions as she desires to do?”Read more >
Small Talk
Thirty-four percent of individuals older than 50 polled by the deVere Group cited not putting enough aside for retirement as their biggest financial mistake. In the survey, which asked, “What is the most impactful financial mistake that you have made?” the second most-frequent response (cited by 27%), was believing they could successfully manage their financial affairs without professional advice.Read more >

ON THIS DATE: In 1818, Illinois became the 21st state. In 1828, Andrew Jackson was elected president of the United States. In 1931, Alka Seltzer was sold for the first time. In 1947, “A Streetcar Named Desire” opened on Broadway. In 1950, Paul Harvey began his national radio broadcast. In 1967, 53-year-old Lewis Washkansky received the first human heart transplant at Groote Schuur Hospital in Cape Town, South Africa. In 1979, the last Pacer rolled off the assembly line at the American Motors Corporation (AMC) factory in Kenosha, Wisconsin. In 1997, Pierce Brosnan received a star on the Hollywood Walk of Fame.

 

WEDNESDAY WISDOM: “Not admitting a mistake is a bigger mistake.”—Robert Half, founder of employment agency Robert Half International

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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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