Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 27th, 2015
Benefits & Administration
Employees Leaving Wellness Incentives on the Table
Many employees aren’t taking full advantage of incentive-based health improvement programs and earning all of their incentives. Fewer than half (47%) of employees earned their full incentive amount in 2014, while 26% earned a partial amount, according to the latest survey about wellness programs from Fidelity Investments and the National Business Group on Health (NBGH). “The next challenge for companies is to continue to find ways to increase participation in these programs and encourage employees to earn the full incentive amount available to them, which will contribute to their financial well-being as well as their physical health,” says Robert Kennedy, Health and Welfare practice leader with Fidelity’s Benefits Consulting business in Boston. “It starts with design and using data to be sure programs are relevant and match the needs of employees,” Kennedy tells PLANSPONSOR.Read more >
Products, Deals & People
In an effort to combat the uncertainty of income in retirement, Principal Financial is launching a program to build confidence and reduce stress among participants as they make the transition to and through retirement.Read more >
Sponsored message from Wells Fargo
Build a stronger plan lineup
Order Three Pillars to Plan Construction today.Read more >
Industry Voices
Industry Voices: Addressing Post-Retirement Risk
In recent years a number of investment products have become available that can help provide some element of security for participants in the post-retirement withdrawal process. Products have been introduced that offer far more flexibility than conventional life annuity contracts.  For example, some permit the participant to make an emergency withdrawal of more than the annual amount of income otherwise available, and some also provide a death benefit equivalent to the remaining asset base in the product. The products typically offer a lifetime withdrawal guaranty feature with an element of guaranteed return on the undistributed withdrawal base. Although the market is in a state of constant evolution and refinement, existing products have reached a sufficient level of sophistication to deserve careful consideration by a defined contribution plan sponsor wishing to offer a valuable option to assist participants in the draw-down phase.Read more >
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Economic Events

In the week ending March 21, the advance figure for seasonally adjusted initial claims for unemployment insurance was 282,000, a decrease of 9,000 from the previous week’s unrevised level of 291,000, the Labor Department reported. The four-week moving average was 297,000, a decrease of 7,750 from the previous week’s unrevised average of 304,750.

The average interest rate for a 30-year fixed-rate mortgage is 3.69%, down from 3.78% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 2.97%, down from 3.06%.

Market Mirror

Thursday, the Dow closed 40.31 points (0.23%) lower at 17,678.23, the NASDAQ lost 13.16 points (0.27%) to finish at 4,863.36, and the S&P 500 slipped 4.90 points (0.24%) to 2,056.15. The Russell 2000 decreased by 1.87 (0.15%) to 1,231.99, and the Wilshire 5000 was down 49.26 points (0.23%) at 21,782.91.

On the NYSE, 3.2 billion shares traded, with 1.5 declining issues for every advancing issue. On the NASDAQ, 2.8 billion shares changed hands, with a 1.2 to 1 ratio of decliners to advancers.

The price of the 10-year Treasury note decreased 18/32, bringing its yield up to 1.994%. The price of the 30-year Treasury bond fell 1 16/32, increasing its yield to 2.584%.

Compliance
IRS Extends Closed DB Nondiscrimination Relief
The Internal Revenue Service (IRS) has extended temporary nondiscrimination relief for defined benefit (DB) plans that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date. In December 2013, the IRS released Notice 2014-5, which permitted certain employers that sponsor closed DB plans and also sponsor a defined contribution (DC) plan to demonstrate the aggregated plans comply with the nondiscrimination requirements of Internal Revenue Code Section 401(a)(4) on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for individual testing on that basis. In the recently released Notice 2015-28, the IRS extends the relief for an additional year.Read more >
Ameriprise Financial Settles ERISA Fee Litigation
Ameriprise Financial has agreed to settle a closely watched Employee Retirement Income Security Act (ERISA) suit, Krueger v. Ameriprise Financial, for $27.5 million in plan reimbursements and remedies. The settlement also includes non-monetary benefits for 401(k) plan employees, according to plaintiffs’ attorney Jerry Schlichter, managing partner of the St. Louis-based firm Schlichter Bogard and Denton. He says the non-monetary relief obtained, in addition to the financial terms, “not only significantly benefits Ameriprise’s employees and retirees but also sets a standard for best practices for plan sponsors.” In a statement to PLANSPONSOR, Ameriprise said: “We have a strong 401(k) plan that is administered for the sole interests of participants. The settlement does not require any changes to our plan, which will maintain the existing broad and competitive selection of investment options and features.”Read more >
Court Dismisses Fidelity Float Income Suit
A federal district court has ruled float income is not a retirement plan asset belonging to participants. The United States District Court for the District of Massachusetts dismissed an Employee Retirement Income Security Act (ERISA) complaint filed by participants in retirement plans administered by Fidelity Investments who claimed Fidelity improperly used float income generated by the plan. Plaintiffs brought the complaint on behalf of the retirement plans in which they have been participants or administrators and alleged that defendants violated ERISA by keeping or improperly using “float income” generated by the plan through certain overnight and transition investments of plan assets.Read more >
Small Talk

ON THIS DATE: In 1794, Congress authorized the creation of the U.S. Navy. In 1866, President Andrew Johnson vetoed the civil rights bill, which later became the 14th amendment. In 1917, the Seattle Metropolitans, of the Pacific Coast League of Canada, defeated the Montreal Canadiens and became the first U.S. hockey team to win the Stanley Cup.  In 1939, the University of Oregon defeated Ohio State University 46–33 to win the first-ever NCAA men’s basketball tournament. In 1973, the actor Marlon Brando declined the Academy Award for Best Actor for his career-reviving performance in “The Godfather.” The Native American actress Sacheen Littlefeather attended the ceremony in Brando’s place, stating that the actor “very regretfully” could not accept the award, as he was protesting Hollywood’s portrayal of Native Americans in film. In 1985, Billy Dee Williams received a star on the Hollywood Walk of Fame.

 

And now it’s time for FRIDAY FILES!

Not the optimal way to do it, but he finally got the cat out of the tree.Read more >
Snoop Dogg and others are encouraging folks to push their 401(k)s to divest from g.un investments.Read more >

In Baton Rouge, Louisiana, a father and his 18-year-old son began arguing about the lack of orange juice at their home. Reuters reports that the argument escalated to where the son damaged the home and broke a porcelain vase. The father grabbed a handgun and chased his son out the front door. He fired several shots, striking the teenager once in his but.tocks. The son was taken to a hospital with injuries that did not appear to be life-threatening. The father has been charged with attempted mans.laughter and ill.egal use of a weap.on.

In Fort Worth, Texas, Elizabeth Sullivan recently celebrated her 104th birthday, and received a gift basket from Larry Young, the CEO of the Dr. Pepper/Snapple Group. WSB-TV in Atlanta reports that Sullivan became a Dr. Pepper aficionado while in her 60s and drinks three of the soft drinks per day. “Every doctor that sees me says they’ll kill you, but they die and I don’t. So there must be a mistake somewhere,” Sullivan said.

In Putumayo, Colombia, an image of Jesus is believed by some to have appeared following a landslide.Read more >

In Akron, Ohio, a 50-year-old man was impersonating a police officer when he shined a spotlight into a motorist’s car and swerved in front of it to pull the motorist over. However, the motorist was actually a detective, so the man was arrested for impersonating an officer. Contents of the man’s vehicle included a g.un and law enforcement parap.hernalia. The man was also charged with mishandling a fire.arm and obstructing official business.

In West Sunbury, Pennsylvania, a man decided to steal some gasoline from a “friend’s” garage for another friend’s car. However, as he jimmied open the door to the garage, the homeowner heard the noise and came to investigate. The Associated Press reports that the man ran, but left behind his personal credit card he was using to open the door, making it easy for police to find and arrest him.

In Tallahassee, Florida, a 46-year-old man took a taxi to a bank, and when he got out of the cab, he told the driver he would take care of him when he got out of the bank. Once inside the bank, the man approached the branch manager and demanded $100,000, telling the manager he had a g.un and exp.losives. Tellers at the bank alerted police, who were told by the cab driver that the man was dr.unk and had not paid his $25.50 fare. According to the Tallahassee Democrat, police reported that the man was sitting in the manager’s office appearing “very into.xicated and spaced out.” The man did not cooperate with officers and was tased before being arrested for robbery. The cab driver said he wanted to press charged for the unpaid fare, so they added a charge of petty theft.

Have a wonderful weekend, everyone!
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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