Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
July 9th, 2014
Second Opinions
SECOND OPINIONS: Employer Shared Responsibility Rules
Do the final regulations on the ACA employer mandate requirements provide special measuring rules for an employee returning after a leave of absence? Are there safe harbors for determining whether the health coverage provided by an employer is affordable?
Benefit Briefs
Communications About HSAs Need Improvement
Consumers, including those who currently have health savings accounts (HSAs), do not fully understand them, a survey indicates. Only 30% of current HSA account holders passed a basic HSA proficiency quiz. The Alegeus Technologies 2014 Consumer and Employer Healthcare Benefits Survey, found that particularly for HSAs, a lack of understanding of the full account value proposition may be hindering adoption—as more than 40% still view HSAs as spending accounts, exhibiting a lack of understanding of the ability to save beyond the plan year, or invest HSA funds. Survey findings revealed most employers offer limited benefit support.
Keep Money in Motion from Causing a Breach
Rolling assets out of a plan is a broad area that affects plan advisers, consultants, participants and fiduciaries in 401(k) plans, says Jerry Schlichter. Service providers, advisers and broker/dealers have many different ways to intersect with 401(k) plan participants, Schlichter says, and participants can get bumped about in ways that don’t benefit them—and could open the plan sponsor to some fiduciary liability. “The plan sponsor has no obligation to advise participants on how they might roll over their 401(k) assets, or whether they should roll them over,” Schlichter says. But, like the good Samaritan, he says, if the plan sponsor does enter the fray, it should be in a responsible way. If a large mutual fund company or recordkeeper is coming in to offer rollover options, the plan sponsor will need to perform additional work to check the quality of the offerings.
Buyer's Market
Evanston Capital Management has released its Evanston Alternative Opportunities Fund. The fund is a closed-end, non-exchange listed investment registered under Investment Company Act of 1940. Shares of the fund, however, are registered under the Securities Act of 1933. The fund is available to U.S. accredited investors, including Employee Retirement Income Security Act (ERISA) accounts, and has an initial minimum investment of $50,000.
The companies of OneAmerica have launched OneCheck, a set of retirement plan health monitoring tools and reports for participants and sponsors. One component of the new tool set is the OneCheck Plan Report, which provides a plan-level analysis of an employee group’s average income replacement ratio.
American National Bank of Texas (ANB) has teamed up with several firms to offer a retirement plan services solution known as the Select Open Architecture Retirement (SOAR) program. ANB, a provider of fiduciary and trust services, has partnered with United Retirement Plan Consultants, Aspire Financial Services, IRON Financial, RJ20 and Financial Wellness4Life, with the aim of providing fiduciary protection for plan sponsors and enhanced retirement outcomes for their participants via the SOAR program. The program acts as a simple turnkey platform with low fees, according to ANB.
The 2014 PLANSPONSOR Recordkeeping Survey includes comparative client profile, market share and product data for 75 providers of defined contribution recordkeeping services.
Market Mirror
Tuesday, the Dow closed 117.59 points (0.69%) lower at 16,906.62, the NASDAQ fell 60.07 points (1.35%) to 4,391.46, and the S&P 500 decreased 13.94 points (0.70%) to 1,963.71. The Russell 2000 lost 14.59 points (1.23%) to finish at 1,172.15, and the Wilshire 5000 was down 170.67 points (0.81%) at 20,808.69. On the NYSE, 3.2 billion shares changed hands, with 1.5 declining issues for every advancing issue. On the NASDAQ, 2.7 billion shares traded, with decliners outnumbering advancers nearly 4 to 1. The price of the 10-year Treasury note was up 16/32, bringing its yield down to 2.558%. The price of the 30-year Treasury bond increased 1 4/32, decreasing its yield to 3.375%.
Rules & Regulators
PBGC Puts Hold on Shutdown Enforcement
The Pension Benefit Guaranty Corporation announced a moratorium, until the end of 2014, on the enforcement of 4062(e) cases. In November 2012, the agency implemented a pilot program under which it generally took no action to enforce section 4062(e) liability against creditworthy companies or small plans, and targeted its 4062(e) enforcement efforts to companies where the risk remained substantial. However, industry groups expressed concern that the pilot program affected business transactions weaker companies needed to recover.
Maintaining Non-ERISA 403(b) Status
Internal Revenue Service (IRS) regulations requiring more oversight for 403(b) plans make it harder for those plan sponsors that want to maintain non-ERISA status to do so. Certain 403(b) plan types will never be considered governed by the Employee Retirement Income Security Act (ERISA)—public K-12, college and university schools, charter schools treated as public schools under state law, and church plans for which the sponsor has not elected to be governed by ERISA. However, other 403(b) plan types must adhere to certain rules to qualify for the ERISA exemption. In order for 501(c)(3) nonprofit organizations to be considered non-ERISA, the Department of Labor (DOL has provided safe harbor criteria listing what employers may and may not engage in as part of the day-to-day administration of the plan. Barbara J. Webb, director of technical services at the Horsham, Pennsylvania-based PenServ Plan Services, Inc., reminded attendees of the National Tax-deferred Savings Association’s (NTSA) 2014 403(b) Summit what the criteria are.
Financial Sense
The Towers Watson Pension Index shows a 1.2% increase in the funded status of defined benefit (DB) plans during June, resulting in an index score of 75.1 as of June 30. Strong equity returns and a slight increase in bond yields were factors in moving the index up in June, says Towers Watson. While the June increase reverses a three-month decline in funded status, the index remains down 4% for 2014.
The funding for defined benefit (DB) retirement plans sponsored by S&P 1500 companies showed a slight improvement during June, according to a recent analysis from Mercer. The consulting firm finds that the estimated aggregate funding level for these DB plans increased by 1% in the month of June, ending the second quarter of 2014 with a funded ratio of 85%.
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Small Talk
Americans Lack Confidence About Personal Finances
A majority of Americans lack confidence in their ability to manage personal financial issues, with more than one-quarter (26%) wishing they didn’t have to deal with finance at all. Consumers may be hesitant to reach out for help due to misconceptions about financial counseling, the poll results suggest.
ON THIS DATE:  In 1777, New York elected Brigadier General George Clinton as the first governor of the independent state of New York. Clinton would go on to become New York’s longest-serving governor, as well as the longest-serving governor in the United States, holding the post until 1795, and again from 1801 to 1804. In 1850, Zachary Taylor, the 12th president of the United States, died suddenly from an attack of cholera morbus. In 1868, the 14th Amendment to the U.S. Constitution was ratified. The amendment was designed to grant citizenship to and protect the civil liberties of recently freed slaves. It did this by prohibiting states from denying or abridging the privileges or immunities of citizens of the United States, depriving any person of his life, liberty, or property without due process of law, or denying to any person within their jurisdiction the equal protection of the laws. In 1872, the doughnut cutter was patented by John F. Blondel. In 1877, Alexander Graham Bell, Gardiner Greene Hubbard, Thomas Sanders and Thomas Watson formed the Bell Telephone Company. In 1877, the All England Croquet and Lawn Tennis Club began its first lawn tennis tournament at Wimbledon, then an outer-suburb of London. In 1878, the corncob pipe was patented by Henry Tibbe. In 1947, in a ceremony held at the Pentagon in Arlington, Virginia, General Dwight D. Eisenhower appointed Florence Blanchfield to be a lieutenant colonel in the U.S. Army, making her the first woman in U.S. history to hold permanent military rank.   WEDNESDAY WISDOM: “I have not failed. I’ve just found 10,000 ways that won’t work.”—Thomas A. Edison
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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