November 19, 2014
Today, Altman & Cronin Benefit Consultants, LLC, in conjunction with the accounting firm Moss Adams LLP, conducted a webinar on the implementation of the RP-2014 mortality tables (with MP-2014 projection scale) for plan sponsors use at their upcoming fiscal year ends. Of the approximately 150 participants on the call, three-quarters were in-house finance and accounting personnel, 15% were other in-house personnel (HR, legal, etc.) and 10% were external consultants.
The group was surveyed about when they would adopt the new mortality tables for their financial reporting. Of the nearly 20% of participants with fiscal year ends before 12/31/14, roughly 40% said they would be adopting new mortality tables for their upcoming reporting, while 60% said they would be deferring adoption of the new tables. Interestingly, for the nearly half of the participants with calendar fiscal years, the majority also indicated they would not be adopting the new tables as of December 31, 2014. Even for the third of the participants with fiscal years ending after December 31, more than half indicated that they would not adopt the new tables in their current fiscal year. This result, indicating that only a minority of plan sponsors intend to adopt the new mortality tables for their upcoming fiscal year end reporting, will be surprising for many pension professionals.
After a discussion about how the tables are intended to be customized by plan sponsors (especially large sponsors), the group was surveyed on whether they expect to adopt the “recommended” tables and scale, or they will customize the adopted tables. About 70% of the group expected to adopt the recommended tables, while 30% indicated intent to customize the adopted tables.
Finally, after a discussion on life expectancy trends, the group was asked if they believe that people will all die by a specific age (currently assumed to be age 120), if they thought life expectancies would continue to increase over time, or if eventually people will live forever. The group was roughly split evenly between those who think there is a fixed ultimate lifetime, and those who expect continued increase in life expectancies into the future. Only two people indicated that they expect that humans will eventually live forever.
Altman & Cronin Benefit Consultants, LLC is a boutique actuarial and consulting firm headquartered in San Francisco, CA. They specialize in advising clients about the design, funding and administration of qualified and non-qualified retirement plans. Inquiries can be addressed to: (415) 395-9300 or firstname.lastname@example.org.
Governor Brown Announces Appointments
SACRAMENTO – Governor Edmund G. Brown Jr. today announced the following appointments.
Ian Altman, 54, of Tiburon, has been appointed to the California Actuarial Advisory Panel. Altman has been a managing partner at Altman and Cronin Benefit Consultants LLC since 1996. He held multiple positions at William M. Mercer Inc. from 1980 to 1996, including principal, associate and consultant. Altman is a fellow at the Society of Actuaries and a member of the American Society of Pension Professionals and Actuaries and the Western Pension and Benefits Council.
On August 29th, the IRS issued a ruling granting broad recognition of same-sex marriages for purposes of Federal tax law. The US Treasury Department and the IRS stated that same-sex couples legally married in any state, US territory or foreign country will be recognized for tax purposes, even if the state of the couple’s residence does not recognize the marriage. This ruling follows the recent US Supreme Court decision that invalidated the provision of Federal law that prohibited the recognition of such marriages under Federal law. (Yesterday’s pronouncement is Revenue Ruling 2013-17.) (The recognition of a same-sex spouse for Federal tax purposes does NOT extend to registered domestic partners or those in a civil union.).
For years beginning on or after January 1, 2009, Form 5500 for benefit plans must be filed electronically. Plan
sponsors have two options for electronic filing. The first is through IFILE, which is available to file a Form 5500
through the DOL website. The second option is to use an approved, third-party vendor software program.1 Altman
& Cronin will use approved third-party vendor software, which will minimize complications for our clients.
All plan sponsors must use their Federal Employer ID number on the Form 5500. No social security numbers should
be included anywhere in the Form 5500 filing. Additionally, Schedule SSA, which historically was used to report
terminated deferred vested participants, is no longer included with the Form 5500 filing. Instead, this information
will be filed separately with the IRS. (The IRS expects to introduce a new form to replace the Schedule SSA soon.)
The Form 5500 filings will be made public so sponsors should be careful to avoid disclosing social security numbers
and other sensitive information.
The Department of Labor (DOL) is among those that have recently focused on the fees paid by 401(k) plans and
plan participants. Plaintiff’s attorneys and Congress are also interested in this topic. The concerns about fees
include whether total fees paid under many 401(k) plans are unreasonable, a suspicion that plan fiduciaries and
participants do not know the total fees nor understand how fees affect long-term investment returns, and a concern
that fees paid to third parties may improperly influence advice from service providers to plan sponsors.
The DOL has recently introduced a revised Schedule C as part of the 2009 Form 5500, which requires new disclosures about fees paid to service providers of a plan. The schedule applies to all plans governed by ERISA, but the impact will be perhaps most visible for 401(k) plans, given the variety of ways that services to such plans are paid for with plan assets. The DOL considers this disclosure of fees as part of a fiduciary’s ongoing responsibility to know, understand and monitor fees paid under a plan.