Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
November 5th, 2014
Benefits & Administration
SOA Pledges Faster Mortality Table Updates
More than a decade passed between the two most recent mortality table updates from the Society of Actuaries (SOA), but retirement plan fiduciaries should expect another update long before 2024. In a recent interview with PLANSPONSOR, Dale Hall, managing director of research for the Society of Actuaries, says one of the society’s goals is to significantly increase the frequency of mortality table updates. Hall also says the SOA predicts between 4% and 8% liability growth for a typical pension plan upon adoption of the new tables.  Read more >
The Internal Revenue Service (IRS) has issued a reminder that employees can plan now to get the benefit of the saver’s credit for retirement savings. The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to individual retirement accounts (IRAs) and 401(k) or similar workplace retirement savings programs. Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2014 tax return, the IRS said.  Read more >
When Must Fee Disclosures Be Sent?
“Now that the 5500 and Form-SSA filing has been completed, I am turning my attention to the Summary Annual Report and the participant fee disclosures. However, when I looked at the participant fee disclosure guidance from the Department of Labor (DOL), I was a bit confused as to the deadline. My recordkeeper is telling me that the distribution deadline is 12/31, but I don’t believe that is correct. What is the correct date?”  Read more >
All too often, a firm conducting a merger or acquisition (M&A) fails to weigh the options for each organization’s retirement plan. Human resources (HR), the chief financial officer (CFO) and an Employee Retirement Income Security Act (ERISA) attorney need to assess the costs and benefits of the respective retirement plans of both the buyer and the seller to determine if the plans should remain separate, be combined or if one of the plans should be terminated. Failure to do so until after the M&A deal closes results in very few options, and typically forces the seller to foot the bill for both plans.  Read more >
Enforcing Plan Limits for 403(b)s Not So Simple
There are unique rules for 403(b) plans that make enforcing contribution and benefit limits less than straightforward. For one thing, according to Susan Diehl, president of PenServ Plan Services, participants are also allowed a special catch-up contribution in addition to the age-50 catch-up: the 15-years-of-service catch-up.  Read more >
Employees provided with financial education programs are less stressed, more prepared for retirement and have a better understanding of their finances, according to a report from the International Foundation of Employee Benefit Plans. Of the 397 organizations surveyed for the foundation’s new report, “A Closer Look: What’s Working in Workplace Financial Education,” 270 say they offer financial education programs to employees. Of those offering financial education, one-third report their work force is somewhat or very highly stressed about financial issues, compared with 43% of those that do not offer financial education.  Read more >
Industry Voices
Industry Voice: Exploring a TDF ‘Glide Range’
Since no single target-date fund (TDF) glide path can meet participant needs in all environments, plan fiduciaries would be better served to use a “glide range,” with flexibility to manage risk along the different points of participants’ lives as market environments change.  Read more >
Economic Events
New orders for manufactured goods in September, down two consecutive months, decreased $2.8 billion or 0.6% to $499.4 billion, the U.S. Census Bureau reported. This followed a 10.0% August decrease. Excluding transportation, new orders decreased slightly. Shipments, up three of the last four months, increased $0.7 billion or 0.1% to $503.4 billion. 
Market Mirror
Tuesday, the Dow ticked up 17.60 points (0.10%) to 17,383.84, the NASDAQ was down 15.27 points (0.33%) at 4,623.64, and the S&P 500 closed 5.71 points (0.28%) lower at 2,012.10. The Russell 2000 lost 4.79 points (0.41%) to finish at 1,165.42, and the Wilshire 5000 decreased 83.91 points (0.39%) to 21,176.35.   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 a 1.3 to 1 ratio of decliners to advancers.   The price of the 10-year Treasury note was up 3/32, bringing its yield down to 2.336%. The price of the 30-year Treasury bond increased 9/32, decreasing its yield to 3.051%.
MassMutual Agrees to Settle Revenue Sharing Suit
MassMutual has agreed to pay $9,475,000 to 401(a) and 401(k) plan clients it serviced via group annuity contracts to settle charges that it violated the Employee Retirement Income Security Act (ERISA) when it received revenue-sharing payments from mutual funds and investment advisers. Plaintiff Golden Star Inc. alleged these payments were essentially “kickbacks” that constituted prohibited transactions under ERISA. MassMutual had previously moved for summary judgment on the case, saying it was not an ERISA fiduciary. However, U.S. District Judge Patti B. Saris, of the U.S. District Court for the District of Massachusetts, found MassMutual is a “functional fiduciary.”  Read more >
The Department of Labor (DOL) filed a lawsuit to restore $7 million to participants in two Wheeling, West Virginia-based retirement plans, following alleged misconduct by plan fiduciaries. The department seeks to correct fiduciary breaches by the plans’ investment manager and plan administrator. An investigation conducted by the department’s Employee Benefits Security Administration (EBSA) found that from November 3, 2008, through May 19, 2009, the plans’ assets were imprudently invested by the plans’ fiduciaries.  Read more >
Small Talk
America’s workers have either had some sitcom-worthy misadventures this year, or they have gotten more creative with their sick day excuses. A CareerBuilder survey found that over the past year, 28% of employees have called in to work sick when they were feeling well, down from 32% last year. When asked for a reason, 30% said they just didn’t feel like going in to work, and 29% said they wanted the day to relax. One worker told an employer he or she woke up in a good mood and didn’t want to ruin it.  Read more >
ON THIS DATE: In 1895, George B. Selden received the first U.S. patent for an automobile. He sold the rights for $200,000 four years later. In 1912, Democrat Woodrow Wilson was elected the 28th president of the United States. In 1930, Sinclair Lewis was awarded the Nobel Prize in Literature “for his vigorous and graphic art of description and his ability to create, with wit and humor, new types of characters.” Lewis was the first American to win the distinguished award. In 1935, the game “Monopoly” was introduced by Parker Brothers Company. In 1940, Franklin Delano Roosevelt was re-elected for an unprecedented third term as president of the United States. In 1968, Richard Nixon was elected president of the United States. In 1994, George Foreman, at age 45, became boxing’s oldest heavyweight champion when he defeated 26-year-old Michael Moorer in the 10th round of their WBA fight in Las Vegas. In 2007, members of the Writers Guild of America, East, and Writers Guild of America, West—labor organizations representing television, film and radio writers—went on strike in Los Angeles and New York after negotiations broke down with the Alliance of Motion Picture and Television Producers (AMPTP). The strike caused production to shut down on more than 60 TV shows.
WEDNESDAY WISDOM: “Time is what we want most, but what we use worst.” —William Penn, founder of Pennsylvania
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Humana Inc. Defeats Class Action Claims of Excessive 401(k) Fees
Rhode Island Becomes 20th State to Pass Retirement Savings Program
Wells Fargo Targeted in New 401(k) Forfeiture Lawsuit

Editorial: Alison Cooke Mintzer


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