Supreme Court Rules DOMA Unconstitutional: Implications for Plan Sponsors
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Court, Legislative and Washington DC Supreme Court Rules DOMA Unconstitutional: Implications for Plan Sponsors Summary: By holding that Section 3 of DOMA is unconstitutional, the Court's decision means that the complexities associated with the differential treatment of opposite-sex and same-sex couples may come to an end, at least in those states that allow or recognize same-sex marriages. The Court's DOMA ruling may require extensive revision to, among other things, retirement plan documents, health plan documents, COBRA and FMLA policies, and an employer's income tax withholding and employment tax payroll practices. Source: Groom Law Group Top 10 Considerations for Employee Benefit Plans After Windsor Summary: As a result of the Windsor decision, the definition of "spouse" under any federal law governing employee benefits must now be interpreted to include same-sex spouses recognized under state marriage laws. This list highlights ten considerations for employee benefit plans following the Windsor decision. Source: Sutherland.com Now What? Employer Benefits Obligations Post-DOMA Summary: U.S. Supreme Court in United States v. Windsor found unconstitutional section 3 of the federal Defense of Marriage Act (DOMA), which had prohibited the federal government from acknowledging marriages between same-sex couples. For employers, this decision means that there is much work to do with regard to the employer's benefit plans, even for employers who do not operate in states that recognize same-sex marriage. Source: Society for Human Resource Management Supreme Court Strikes Down Defense of Marriage Act: What It Means for Qualified Retirement Plans Summary: The United States Supreme Court held this morning that the Defense of Marriage Act (DOMA) is unconstitutional. Accordingly, same-sex spouses will be afforded equal treatment with heterosexual spouses under qualified retirement programs. Source: MandMarblestone Group
General Items Seven Basic Investment Concepts Every 401k Participant Must Understand Summary: The evidence overwhelmingly indicates most employees have a problem saving. There are those few, however, who are well on their way to saving enough and who have the time, resources and interest to devote to learning the art of investing. With that in mind, this article identifies the most important investing concepts 401k participants should understand. Source: Fiduciarynews.com Board Resolutions: Back to Basics Summary: What is the potential downside when an IRS examiner does not find a board resolution supporting an employer's discretionary allocation? The employer may find itself at the mercy of the auditor. This could result in a referral to the IRS Closing Agreement Program and the imposition of significant penalties. Source: McKay Hochman
Compliance and Regulatory Related DOL Extends Comment Period on Lifetime Income Illustration Proposal Summary: The U.S. Department of Labor's Employee Benefits Security Administration today announced an extension of the comment period on its advance notice of proposed rulemaking focusing on lifetime income illustrations given to participants in defined contribution pension plans. Source: U.S. Department of Labor 401k Audit Nondiscrimination Testing - Part One Summary: In order for a plan to retain its qualified tax exempt status, the plan must conform to certain standards. Included in these standards are the operational compliance of a plan which is measured by required annual coverage and nondiscrimination testing. This is the first part of a series that covers definitions and the required testing that must be performed on an annual basis. Source: 5500audit.com
403(b) Plans 403(b) Pre-Approved Plan Program Summary: An employer that adopts a sponsor's 403(b) pre-approved plan generally has assurance that its plan document complies with IRC Section 403(b). This item from the IRS contains information on the 403(b) pre-approved plan program and the procedures to apply for opinion letters for 403(b) prototype plans, and advisory letters for 403(b) volume submitter plans. Source: IRS 403(b) Plans With Operational Failures Summary: You can correct most retirement plan operational failures under the Employee Plans Compliance Resolution System (EPCRS). For most plans, an operational failure is when a plan sponsor does not follow its plan's terms. Source: IRS IRS Phone Forum: 403(b) Pre-Approved Plan Program Summary: This is the handout from the June 25, 2013, IRS Phone Forum on "What You Need to Know About the 403(b) Pre-Approved Plan Program." Contains 58 slides. Source: Sparkinstitute.org
Fiduciary Material and Insight Improving DC Plan Investment Governance: A Call to Action Summary: Defined Contribution plans have grown to become the primary retirement benefit vehicle offered by employers. Passive reliance on automation, peer-based governance evaluation approaches, sub-optimal plan designs, inadequate attention to poor participant decision making, and inefficient investment option structures, in the opinion of the author, are not working well. This paper presents a call to action by plan sponsors. Source: Aon.com Plan Sponsors Should Be Aware of Fiduciary Responsibilities and Related Risks Summary: The responsibilities facing employers who sponsor qualified employee benefit plans, including 401k plans, defined benefit plans, employee stock ownership plans and 403(b) plans, are many and not to be taken lightly. To reduce their risk, plan sponsors should ensure they are providing proper oversight of sponsored plans and have an understanding of the related laws and regulations surrounding employee benefit plans. Source: Metrocorpcounsel.com Fiduciaries: It's Time to Take Responsibility for Valuing Your Plan's Investments Summary: Gone are the days when employee benefit plan investments consisted of only stocks, bonds and mutual funds. Plans now regularly invest in financial instruments such as hedge funds, private equity funds, real estate funds and partnerships. These types of investments are often referred to as alternative investments. Alternative investments are valued in a number of ways, and it's the fiduciaries' responsibility to ensure that these investments are properly valued. Source: Schneiderdowns.com
Insights: Studies, Research and White Papers Best Practices When Implementing Auto Features in DC Plans Summary: When it comes to designing automatic features for DC plans, employers should understand the importance of robust defaults for helping employees save for a secure retirement. A newly released DCIIA white paper explores how automatic features, such as auto enrollment and auto escalation, can be structured to help DC plan participants amass enough savings to reach an effective replacement ratio in retirement. Source: Defined Contribution Institutional Investment Association 14th Annual Transamerica Retirement Survey Summary: Transamerica Center for Retirement Studies just released this survey of more than 3,650 full- and part-time workers, which found that retirement confidence is on the rise in 2013 amid signs of economic recovery. Fifty-five percent of workers are "somewhat" or "very confident" about retirement, representing an increase from 51 percent reported in 2012. This is still, however, four points below the 2007 confidence level of 59 percent. Source: Transamerica Center for Retirement Studies Target-Date Series Research Paper - 2013 Survey Summary: Morningstar released its Target-Date Series Research Paper: 2013 Industry Survey. As the target-date industry continues to mature, it is displaying both predictable and surprising attributes. Predictably, its organic growth rate is slowing as target-date series have become established fixtures in defined-contribution plans. Fees in the series continue to fall as assets flow in, and post-2008 returns have been strong, reflecting broad market trends. Source: Morningstar.com Retirement Readiness Increasingly Linked to the Effectiveness of Workplace Savings Vehicles Summary: Bank of America Merrill Lynch announced findings from its 2013 Workplace Benefits Report, a study of the increasingly significant role financial benefit plans play in helping the American workforce achieve financial wellness. Based on a nationwide survey of more than 1,000 employees from companies of all sizes, this research offers new insights into the availability, utilization and evolution of these workplace benefits -- from 401k plans and health savings accounts to financial advice and education. Source: 401khelpcenter.com
Items of Special Interest to Advisors Building a 403(b) Business: Where the Opportunity Lies Summary: In the retirement plan world, change equals opportunity for financial professionals, and change has been a constant among 403(b) plans since the Internal Revenue Service (IRS) passed significant regulations in 2007. But the biggest opportunity for change right now lies in one key segment of the 403(b) market: private higher education. Source: Planadviser.com State-Run Plans Could Hurt Advisers Summary: Proponents say this idea would allow employees who do not have access to a retirement plan the chance to save for their future, but opponents say other savings avenues exist, and that state-run plans could damage the adviser's role in retirement plans. Source: Planadviser.com Oregon House Passes Bill to Examine Statewide Private-Sector Retirement Plan Summary: The Oregon House of Representatives voted along party lines to pass a bill creating a task force to look at a statewide retirement plan for private-sector workers. House Bill 3436 now heads to the Oregon Senate. Source: Oregonlive.com How Useful Are Form 5500s for Business Development? Five Tips and Insights Summary: Tom Clark, Chief Compliance Officer and Director of Fiduciary Oversight at FRA/PlanTools, has spent considerable time and energy delving into and analyzing the DOL's Form 5500 database for usable prospecting information. He shared some insights and tips in this article. Source: Fraplantools.com
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