Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 16th, 2014
Buyer's Market
Eagle Asset Management has initiated distribution of collective investment trusts (CITs). Through its affiliate, San Diego, California-based ClariVest Asset Management LLC, Eagle joins a number of defined contribution investment only (DCIO) fund distributors in the fast-growing CIT market. “If you are going to look for a lower-cost vehicle, collective trust funds make a lot of sense,” says Ran Gimeno, senior vice president and head of DCIO Sales at Eagle.
Ascensus Launches Ascensus Consulting
Retirement and college savings plan administration services provider Ascensus launched Ascensus Consulting. Ascensus Consulting is a national third‐party administrator (TPA) that services more than 3,000 retirement plans in four locations and connects with clients locally. It offers clients access to platform‐neutral services through associates who are experts in defined contribution, defined benefit, cash balance, and specialty product administration.
The retirement solutions business of Voya Financial (formerly ING U.S.) announced two additions to its Large Corporate Market team. Peter Southard began his new position as a senior account executive, National Accounts, on May 12. He will collaborate with new and existing clients to provide solutions that address the complex needs for the nation’s largest retirement plans. Ben Moy will join Voya as a client solutions lead, effective May 19. He will be responsible for facilitating a streamlined customer experience for existing and prospective clients.
Invesco Slices Stable Value for Easy Comparison
The SVAnalyzer was created to evaluate 10 critical factors that can make it difficult to compare one stable value investment with another. Stable value investments have a few characteristics in common, and quite a few that vary, depending on the provider and the underlying investments, says Jeff Hemker, national sales director of retirement for Invesco. “Stable value really is the man behind the curtain,” Hemker tells PLANSPONSOR. The investment gives you a book rate of return, a stable rate of return, but it’s not at all that simple behind the scenes.
Economic Events
On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3% in April after rising 0.2% in March, according to the Bureau of Labor Statistics. The index for all items less food and energy rose 0.2% in April, the same increase as in March. Real average hourly earnings fell 0.3% in April, seasonally adjusted. Average hourly earnings was unchanged and the CPI-U rose 0.3%. Real average weekly earnings fell 0.3% over the month. In the week ending May 10, the advance figure for seasonally adjusted initial claims for unemployment insurance was 297,000, a decrease of 24,000 from the previous week’s revised level, the Labor Department reported. This is the lowest level for initial claims since May 12, 2007 when they were 297,000. The previous week’s level was revised up by 2,000 from 319,000 to 321, 000. The four-week moving average was 323,250, a decrease of 2,000 from the previous week’s revised average. The previous week’s average was revised up by 500 from 324,750 to 325,250. The average interest rate for a 30-year fixed-rate mortgage is 4.20%, down from 4.21% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.29%, down from 3.32%.
Market Mirror
Major U.S. stock indices suffered losses again Thursday, with the Dow finishing 167.16 points (1.01%) lower at 16,446.81. The NASDAQ decreased 31.33 points (0.76%) to 4,069.29, and the S&P 500 fell 17.68 points (0.94%) to 1,870.85. The Russell 2000 was down 7.15 points (0.65%) at 1,095.99, and the Wilshire 5000 lost 177.53 points (0.89%) to close at 19,789.38. On the NYSE, 3.2 billion shares traded, with 2.3 declining issues for every advancing issue. On the NASDAQ, 2.7 billion shares changed hands, with a 2 to 1 lead for decliners. The price of the 10-year Treasury note was up 13/32, decreasing its yield to 2.497%. The price of the 30-year Treasury bond increased 26/32, bringing its yield down to 3.333%.
Rules & Regulators
Warning to NQDC Plan Sponsors: The IRS May Be Coming
The Internal Revenue Service (IRS) has launched an audit initiative aimed at compliance with the rules for nonqualified deferred compensation plans under Code Section 409A. According to a Benefits Brief from Groom Law Group, based in Washington, D.C., a series of audits of a “limited scope” are underway. The IRS will assess what further steps, if any, to take after the results of those audits are in.  To prepare for a potential audit on Section 409A issues, the firm lists some key areas for nonqualified deferred compensation plan sponsors to review.
The Governmental Accounting Standards Board (GASB) issued a proposed Statement about accounting and financial reporting issues related to fair value measurements. The Exposure Draft, Fair Value Measurement and Application, describes how fair value should be defined and measured, what assets and liabilities should be measured at fair value, and what information about fair value should be disclosed in the notes to the financial statements. “The proposed changes to the GASB’s fair value standards are intended to increase clarity, consistency, and comparability in governments’ fair value measurements and their related disclosures,” says GASB Chairman David A. Vaudt. “The Board believes that fair value measurements enhance the relevance of reported financial information, particularly when accompanied by robust disclosures.”
Defendants in One Church Plan Case Get a Victory
The defendants in one of the church plan court cases have had their status confirmed by a federal court. U.S. District Judge Avern Cohn of the U.S. District Court for the Eastern District of Michigan found the retirement plans of Ascension Health Alliance entities qualify for “church plan” status under the Employee Retirement Income Security Act (ERISA). In contrast to two other rulings handed down so far among six cases, Cohn held a plan need not be established by a church in order to qualify as a church plan. Cohn addressed recent court rulings contrary to his.
The Internal Revenue Service (IRS) will hold a free webinar about the Patient Centered Outcomes Research Institute (PCORI) fee certain health care plan sponsors must pay. The webinar will cover what the Patient Center Outcomes Research Institute (PCORI) fee is, who is responsible for the fee, and how to calculate, pay and report the fee.
Study Suggests New Fiduciary Rule Will Hurt Plan Access
The expansion of the fiduciary definition proposed by the Department of Labor (DOL) could potentially impede the ability of small businesses to offer employees retirement plans, says a new study. The authors of the study say, “The DOL regulation is generally expected to prohibit retirement plan providers and the advisers who sell retirement plans from assisting employers in the selection and monitoring of funds in the retirement plan. Instead, employers could either perform the functions themselves or hire an independent expert to do it.”
Small Talk
ON THIS DATE:  In 1849, the New York City Board of Health established a hospital to deal with a cholera epidemic that, before it ended, killed more than 5,000 people. In 1868, the U.S. Senate voted against impeaching President Andrew Johnson and acquitted him of committing “high crimes and misdemeanors.” The main issue in Johnson’s trial was his staunch resistance to implementing Congress’ Civil War Reconstruction policies. In 1918, the United States Congress passed the Sedition Act, a piece of legislation designed to protect America’s participation in World War I. The Sedition Act imposed harsh penalties on anyone found guilty of making false statements that interfered with the prosecution of the war; insulting or abusing the U.S. government, the flag, the Constitution or the military; agitating against the production of necessary war materials; or advocating, teaching or defending any of these acts. In 1929, the Academy of Motion Picture Arts and Sciences handed out its first awards, at a dinner party for around 250 people held in the Blossom Room of the Roosevelt Hotel in Hollywood, California. In 1964, Mary Wells gave Motown its first No. 1 hit when “My Guy” reached the top of the Billboard pop chart. NOTE: Yesterday’s ON THIS DATE said “In 1942, gasoline rationing began in 17 Eastern states as an attempt to help the American war effort during World War II. By the end of the year, President Franklin D. Roosevelt had ensured that mandatory gasoline rationing was in effect in all 50 states.” The section should have said “…in all states,” since there were not 50 states in 1942. We apologize for the oversight.   And now it’s time for FRIDAY FILES!
Artist Wes Namam wraps people’s heads in Scotch tape and takes pictures of them.
In Frankfort, Kentucky, a man’s lost phone was found! However, the individual who found it wrapped it in a paper towel and left it on the cruiser of a School Resource Deputy. Unfortunate, because the background picture on the phone was of the owner with about 20 to 25 pounds of mari.juana. Police tracked down the phone’s owner at his home. “The individual gave consent to search the residence, and there was 18 pounds of mari.juana we were able to seize because of that,” Franklin County Sheriff Pat Melton told ABC News. The phone’s owner was arrested. In Salt Lake City, Utah, while testifying against dairy farmers who claim currents from the Delta power plant harm cattle, an expert witness said 1.5 volts couldn’t be felt by a person. The Salt Lake Tribune reports the attorney representing dairy farmers gave a child’s gag pen to the witness, told him it contained a 1.5-volt AAA battery and challenged him to push it. The witness received a strong electric shock, but the judge in the case says it was because the pen also contained a transformer that boosted the battery up to 750 volts. The attorney was fined $3,000 for battery of a witness.
In North Royalton, Ohio, a teenager caught a three-foot carp on a flooded street.
In Wroclaw, Poland, a 104-year-old man has set a European record for the 100m, becoming the oldest person to complete it. Stanisław Kowalski is eight years older than the previous record holder and ran the distance more than a second faster, crossing the line in 32.79 seconds. He claims he is in such good condition because he never went to see the doctor and has done anything that pleased him, the Metro reports. In Greenville, South Carolina, a 26-year-old man found an old supposedly bullet-proof vest, put it on and asked an 18-year-old friend to shoot him. The 18-year-old fired a single round from a small-caliber handg.un with what can best be described as a “predictable result.”
Trivia you may not know about social media sites (warning: one slide has a curse word on it).
In Broome County, Pennsylvania, a woman arrived at the jail and told officers she was there to pick up a friend being released from jail. But, corrections officers detected signs she was into.xicated, police said. Minutes later, a deputy found the woman in the parking lot, and she failed sobriety tests. Her driver’s license was also suspended, police said. She was charged with aggravated unlicensed operation, driving while into.xicated, and refusal to take a breath test, and was booked into the very jail from which her friend was released. In Treorchy, Wales, a man went to a Barclays Bank branch and gave a teller his change of address. Thirty minutes later, he came back wearing a jacket with his hood up, socks over his shoes and sunglasses, rushed up to the glass partition and demanded money. A teller said she could see he was holding a bread knife across his body as he demanded all the cash. According to Wales Online she raised the alarm by pressing the panic button as she tried to keep the situation calm, and when the man heard they planned to lock the doors, he left. The news report said he left empty handed, despite the fact an elderly customer standing next him offered him £20 to leave. He was easily found since he had just been in the branch telling the teller his name and new address. The man told police he had been inspired to carry out the robbery after seeing the tills full of money on his earlier visit.   Have a wonderful weekend!
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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