Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 9th, 2014
Benefit Briefs
Small Firms Say 401(k)s Work, but Express Concerns
Sponsors of qualified retirement plans in the small-plan market—particularly those that work with an adviser—express widespread satisfaction with their offering, according to a survey by the Guardian Insurance and Annuity Company. The report, “The Small Plan 401(k) RetireWell Study: What’s Working and Not Working for Small Businesses,” says nine plan sponsors in 10 think of their 401(k) plan as a useful recruiting and retention tool. Approximately nine in ten say their 401(k) is successful in terms of making retirement savings easier, providing planning tools, encouraging systematic savings and helping employees fund a secure retirement. However, the underlying fees and expenses, including the potential cost of a match, are cited as major concerns when offering retirement savings plans at the workplace.
What Can a Financial Wellness Program Accomplish?
The Meredith Corporation is probably best known for its expansive media and entertainment enterprises, but one human resources staffer says it’s the company’s retirement plan that is truly distinctive. Tim O’Neil, employee health and financial wellness manager for Meredith, says the company’s defined contribution (DC) retirement benefits offering features the next level of comprehensive financial wellness education and personalized retirement readiness scoring. The program supplies each participant with a robust annual retirement readiness assessment, he explains, as well as access to frequent onsite and online financial planning workshops with skilled adviser resources.
DIY Retirement Plan Investors Not Acting Optimally
Do-it-yourself (DIY) retirement plan investors are falling behind their peers in meeting certain objectives, suggests a study. The second annual “Guardian Workplace Benefits Study” reveals four in 10 employees identify themselves as DIYers (do-it-yourselfers) when it comes to making financial decisions; men are more likely than women to identify themselves as a DIYer. DIYers were found to underperform overall on key financial objectives compared with the one-quarter of employees queried for the study who identify themselves as DIFMs (do-it-for-me). For example, when asked how well they are doing with having financial security if a wage earner can no longer work due to a disability or serious illness, 64% of DIFMs answered positively compared to 51% of DIYers.
Economic Events
In the week ending May 3, the advance figure for seasonally adjusted initial claims for unemployment insurance was 319,000, a decrease of 26,000 from the previous week’s revised level, the Labor Department reported. The previous week’s level was revised up by 1,000 from 344,000 to 345,000. The four-week moving average was 324,750, an increase of 4,500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 320,000 to 320,250. The average interest rate for a 30-year fixed-rate mortgage is 4.21%, down from 4.29% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.32%, down from 3.38%.
Market Mirror
Thursday, the Dow was up 32.43 points (0.20%) at 16,550.97, the NASDAQ fell 16.18 points (0.40%) to 4,051.50, and the S&P 500 was down 2.58 points (0.14%) at 1,875.63. The Russell 2000 decreased 11.12 points (1.00%) to 1,097.43, and the Wilshire 5000 closed 60.42 points (0.30%) lower at 19,823.81. On the NYSE, 3.2 billion shares traded, with nearly 1.7 declining issues for every advancing issue. On the NASDAQ, 2.7 billion shares changed hands, with a more than 2 to 1 lead for decliners. The yield for the 10-year Treasury note was 2.618%, and the yield for the 30-year Treasury bond was 3.436%. 
Rules & Regulators
IRS to Discuss Related Employer Issues
The Internal Revenue Service (IRS) will hold a free phone forum this month about related employers. It will cover issues affecting related employers such as controlled and affiliated service groups, how the IRS reviews and evaluates these groups, and how applicants can receive reliance on a determination letter.
Delta Air Lines Wins Stock Drop Suit Appeal
The 11th U.S. Circuit Court of Appeals used its own case history to dismiss a lawsuit brought by participants in Delta Air Lines employee stock ownership plan (ESOP). The appellate court said the highly deferential abuse of discretion standard as set forth in Lanfear v. Home Depot applied to the allegations set forth in the complaint against Delta. According to the court opinion, lead plaintiff Dennis Smith contends that with the benefit of hindsight, defendants should have known Delta’s turnaround efforts would fail. But, the court said that was not at all obvious at the time, as underscored by market movements during the class period.
Financial Sense
The funded status of the largest U.S. defined benefit (DB) pension plans decreased in April, shows data from consulting and actuarial firm Milliman, Inc. The firm’s Pension Funding Index (PFI), which consists of 100 of the largest DB plans in the United States (i.e., the Milliman 100), shows these plans experienced a $21 billion increase in pension liabilities and a $6 billion increase in asset value during the month of April, which resulted in a $15 billion increase in the DB plan funded status deficit to a total of $258 billion.
The Towers Watson Pension Index dropped 1.2% for the month of April to 74.3, showing a decrease in the financing of pension plans. Towers Watson says bond yields continued to decrease, while equity returns were mildly positive in April. Liability values also increased more than assets.
Small Talk
ON THIS DATE:  In 1887, Buffalo Bill’s Wild West show opened in London. In 1914, President Woodrow Wilson issued a presidential proclamation that officially established the first national Mother’s Day holiday to celebrate America’s mothers. In 1950, Lafayette Ronald Hubbard (1911-1986) published “Dianetics: The Modern Science of Mental Health,” launching a branch of self-help psychology called Dianetics, which morphed into a belief system called Scientology. In 1960, the Food and Drug Administration (FDA) approved the world’s first commercially produced birth-control pill—Enovid-10, made by the G.D. Searle Company of Chicago, Illinois. In 1964, Louis Armstrong broke the Beatles’ three-and-a-half-month hold on the Billboard Hot 100 with the No. 1 hit “Hello Dolly.” In 1971, the last original episode of the sitcom “The Honeymooners,” starring Jackie Gleason as Brooklyn bus driver Ralph Kramden, aired.   And now it’s time for FRIDAY FILES!
“10 Things Mom Teaches Us”
In New Smyrna Beach, Florida, a teen drove erratically down State Road 44 crashing into several cars and sending several people to the hospital. Police caught up with him because he had filmed himself and posted the video to YouTube—with the tag “Me driving like an idiot.”  The teen was charged with two counts of leaving the scene of a crash with injuries, reckless driving and driving without a license. In Dunwoody, Georgia, a police officer pursued and stopped a vehicle that hit his patrol car on I-285. The man was “heavily intoxicated” and “totally unaware that he had collided with the officer’s patrol car,” another officer said, according to the Atlanta Journal-Constitution. When asked for his license, the man handed a beer to the officer. He was arrested on eight misdemeanor charges, including DUI and reckless driving. It is his third DUI arrest.
How to make a slushie using the bottled drink of your choice.
In New Lenox, Illinois, an employer called police to report a former employee was trying to steal property. The former employee succeeded, but police were quickly able to catch up with him on a suburban road, where he was driving the stolen forklift. The employer said the employee was fired two weeks prior. The Chicago Sun-Times reports the former employee was intoxicated when he broke in and stole the forklift—and an added bonus… it was his birthday. In Masterton, New Zealand, a man had a party at his home and one party goer left the property with the keys to her car, which was blocking the driveway. The man got behind the steering wheel as two other young men pushed the car out of the way—about two to three meters. Police saw this and gave the man a citation for drun.ken driving. “The keys were not in the vehicle … it is a question of whether he was driving or not,” his defense attorney said in court, according to the Wairarapa Times-Age. But, police prosecutor Sergeant Nick Newbery said the keys were irrelevant. “He was exercising control over the vehicle. He was steering it.” The man pled guilty, was fined and disqualified from driving for three months.
Time lapse footage of rain showers is pretty cool.
In Vero Beach, Florida, a Sheriff’s deputy stopped a 1987 Mazda pick-up truck, the registration of which expired seven years ago, a sheriff’s report states, according to tcpalm.com. The deputy pulled the driver over for failing to stop at a stop sign. Asked for his license, registration and insurance, the driver said he didn’t have it. He gave the deputy permission to search the truck and also his person, and the deputy found a pipe in his back pocket. “That’s my little we.ed pipe,” the driver is quoted as saying. He also told the deputy he got a D.UI a few years earlier and hadn’t had a license since. When asked about some meat sitting in the front passenger seat of the truck, the man replied that he stole the meat from Publix, saying “he grabbed the meat and tucked it under his arm like a baby and walked out of the store,” the report says. The deputy then asked the driver how he got the truck, and he said he jumped a fence and “hot wired” it. And now for something completely different… In New York, New York, Elsie Kovner and Harvey Liff of Queens swept each other off their feet in the Big Apple in the late 1950s, after relatives from both families egged the two to go on a date. The Daily News reports the two got off to a rocky start when Elsie, who worked as a bookkeeper, didn’t hear from Harvey for days after their first date at the Mayfair Theatre in Times Square. “I told my mom he’s the same as all the jerks,” said Elsie, later learning that Harvey had been hit by a car and was recovering. “The next date, he came with a bouquet of flowers.” Elsie said she always wanted to get married, but he never asked, and they just kept going on dates. But, the 93-year-old, who is homebound, finally had the nuptial of her dreams when her groom Harvey Liff walked down the aisle with a Queens judge to marry her in her apartment recently. Valentine’s Day this year, Harvey chose a romantic dinner at home to pop the question. “I said, ‘You gonna be my wife?’ ” he recalled. “She said ‘OK.’” The 92-year-old explained: “I couldn’t make up my mind, and she never asked me to marry her. But really, I figured it was time already.”   Have a great weekend, everyone, and Happy Mother’s Day to all the moms—and dads who serve that role!
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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