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February 9, 2009

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.


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[Guidance Overview]
DoL Provides Guidance for Madoff-Maimed Plans

Excerpt: "With an expanding list of retirement plans snared by investments tied to Bernard L. Madoff, the Labor Department has published some guidance for plan sponsors." (PLANSPONSOR.com; free registration required)


[Guidance Overview]
Towers Perrin Monthly Retirement Regulatory Round-Up, January 2009 (PDF)

5 pages. Excerpt: "The Monthly Regulatory Round-Up is a high-level summary of legal and regulatory developments that occurred during January 2009 that may be relevant to large employers. Developments are sorted according to federal legislative developments, federal regulatory guidance, other developments (e.g., significant litigation, studies, select state law developments)." (Towers Perrin)


[Guidance Overview]
The Worker, Retiree, and Employer Recovery Act of 2008: An Overview (PDF)

13 pages. Excerpt: "In December of 2008, Congress unanimously enacted the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA) (P.L. 110-455), which makes several technical corrections to the Pension Protection Act of 2006 (P.L. 109-280) and contains provisions designed to help pension plans and plan participants weather the current economic downturn. This report highlights the provisions of WRERA relating to the economic crisis, such as the temporary waiver of required minimum distributions and provisions that temporarily relax certain pension plan funding requirements. This report also discusses certain technical corrections to the Pension Protection Act made by WRERA, and certain other notable provisions of the Act affecting retirement plans and benefits." (Congressional Research Service)


[Guidance Overview]
Mid-year Safe Harbor 401(k) Plan Changes

Excerpt: "As the economy continues to struggle, practitioners have been besieged with questions regarding how employers can reduce or eliminate retirement plan contributions. [W]e address how an employer can eliminate or freeze fixed contributions under a safe harbor 401(k) plan." (SunGard)


[Guidance Overview]
Plan Sponsors Must Notify PBGC of Crippling Madoff Losses

Excerpt: "In light of the widespread pension investment losses linked to the Bernard Madoff Ponzi scheme, the nation's private-sector pension insurer has reminded single-employer defined benefit sponsors of their responsibility to formally notify the agency if any such losses render them unable to pay their accrued benefits." (PLANSPONSOR.com; free registration required)


[Guidance Overview]
Court Imposes Personal Liability and Attorney Fees on Plan Fiduciary for Breach

Excerpt: "Derived from these components, the Sixth Circuit has held that an ERISA fiduciary has a duty to 'give complete and accurate information in response to participants' questions.' Drennan v. Gen. Motors Corp., 977 F.2d 246, 251 (6th Cir. 1992). Furthermore, 'misleading communications to plan participants regarding plan administration . . . will support a claim for breach of fiduciary duty' because 'a fiduciary may not materially mislead those to whom the duties of loyalty and prudence described in 29 U.S.C. § 1104 are owed.' Berlin, 858 F.2d at 1163." (Health Plan Law)


Retirement Plan Participation: Survey of Income and Program Participation Data, 2006 (PDF)
Pages 2-12 of 16 pages. Excerpt: "This article presents results from the latest data from the U.S. Census Bureau's Survey of Income and Program Participation (SIPP) on retirement plan participation. While SIPP data have the advantage of providing relatively detailed information on the retirement plans that workers participate in, they also have the drawback of being fielded only once every three to five years. By comparison, the Census Bureau's Current Population Survey provides overall participation levels of workers on an annual basis, but does not provide information on the plan types in which the workers are participating." (Employee Benefit Research Institute)


America Saves Week 2009
Excerpt: "The third annual America Saves Week is scheduled for February 22-March 1, 2009, and early reports indicate that the Week will have more participation and a broader reach than ever before." (America Saves)


401(k) Fiduciary Responsibilities: Conventional Wisdom Is No Longer Conventional or Wisdom (PDF)
11 pages. Excerpt: "Given the anger that exists over executive bonuses and the fact that ERISA is ambiguous as to the definitions of the duties of 'loyalty' and 'prudence', blindly accepting conventional wisdom while waiting for the courts to decide how far fiduciaries have to go in helping employees achieve a financially secure retirement will likely prove to be a costly and painful mistake. Investment Horizons' Plan Utilization Analysis, including its Retirement Readiness Assessment, is the tool that makes it relatively easy for fiduciaries to reevaluate how effectively they and their providers have tackled this task." (Richard D. Glass)


Trustee's List Shows Unions and Pension Plans Hurt in Financier's Scheme
Excerpt: "At least a half-dozen construction unions, including locals of the International Brotherhood of Electrical Workers and the Plumbers & Steamfitters union, had entrusted pension funds and health care money to Mr. Madoff . . . . A handful of public pension funds are also shown as having accounts with Mr. Madoff, although confirmation of those accounts could not be obtained Thursday evening. According to Plan Sponsor, a financial information service for institutional investors, these include the Louisiana State Police Retirement System, the New Orleans City Employees Retirement System, the Missouri State Employees Retirement System, the Fort Worth Retirement Fund and the Baltimore Police and Fire Employees pension fund." (The New York Times; free registration required)


Feuer on the Supreme Court's Approach to Death Benefits
Excerpt: "[Albert] Feuer's article, 'Will the Supreme Court Reinforce or Undermine Basic ERISA Principles When it Decides a Death Benefit Dispute,' will soon be published in the Charleston Law Review (Vol 3, p. 289, 2009). The article is now on SSRN." (Workplace Prof Blog)


Outlook for Retirement Plan Investments
Excerpt: "Last year was a brutal one for the retirement industry. Globally, the equity markets declined 42 percent during the year, and the broad U.S. averages fell a whopping 38 percent from their October 2007 peaks. . . . In this economic environment, here are some strategies for various types of public sector retirement investors. To help you jump to those that interest you most, I have bulleted them sequentially as they appear [in the article]: Revisit asset allocations, investment strategy and expected market returns; 457 plans; OPEB sustainability audits; Pension obligation bonds; OPEB plan investment strategy; TIPs and inflation; Real estate: When?; Annuitizing employee savings (air time conversions); Think globally; Position for agility!" (Governing.com)


Aon Freezes Defined Benefit Pension Plan
Excerpt: "Benefits consultant and insurance broker Aon Corp. is freezing its defined benefit pension plan as of April 1. In addition, as of January 1, the Chicago-based consultant stopped making contributions to a defined contribution plan it set up in 2004 when it also closed its DB plan to new participants. A spokesman for Aon, which has about 37,000 employees worldwide, said the pension and savings plan changes were made to reduce costs and to base employees' compensation more on performance, according to Business Insurance." (PLANSPONSOR.com; free registration required)


What You Need to Know About Hybrid 401(k) Plans
Excerpt: "[The] new products -- call them hybrid 401(k)s -- combine guaranteed income in retirement with an investment portfolio. There's no simple way to do that, and the products vary greatly in their structures, features, and costs. We spoke with retirement and insurance experts about what they think are the best features for these pension-like 401(k)s to include, as well as potential pitfalls in their construction. Here's their thinking on six key criteria." (BusinessWeek)


Tax Issues Can Complicate the Decisions of Retirees, Financial Planners Say
Excerpt: "'Little moves they make now can make a big difference later on,' said Gary Schatsky, a fee-only financial planner in New York. The following advice from retirement planning experts is geared toward current retirees, though some of it will be useful for investors of all ages." (The New York Times; free registration required)


State Senate President To Introduce Teacher Pensions Reform Bill
Excerpt: "State Senate President Thomas V. Mike Miller says he'll introduce legislation Monday that would require county governments to assume a greater share of teacher pension costs. Miller says the state can no longer afford to pay the entire cost of teacher pensions." (CBS Corporation)


[Opinion]
American Benefits Council Request for Guidance on Minimum Required Distribution Waivers (PDF)

6 pages. Excerpt: "The provision . . . was signed into law on December 23, 2008 and the extremely short time frame before the legislation's January 1, 2009 effective date has raised issues that could interfere with the legislative purpose underlying the relief. In this regard, many MRD payments were scheduled for early 2009 and there simply has not been enough lead time for plans to offer participants an opportunity to defer distributions. Moreover, there are a number of technical issues that arise which may have the unintended consequence of making it difficult for participants to exercise self-help remedies by rolling a plan distribution to an IRA or other eligible retirement plan. For these reasons, the Council is writing to request that the U.S. Treasury Department and the Internal Revenue Service (hereinafter collectively 'Treasury/Service') facilitate the purpose behind the legislation by addressing these issues in published guidance." (American Benefits Council)



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Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
ERISA Reporting And Disclosure: Eight Common Mistakes To Avoid

Excerpt: "One: Failure to file notice of a blackout period. Retirement plans must provide a notice to plan participants if the participants' ability to direct their investments in the will be limited for three or more business days. The plan's failure to provide such a notice may result in the plan fiduciaries being responsible for any potential investment losses for the period of 'blackout.'" (Chang, Ruthenberg & Long PC)


Senator Dodd Proposes Retroactive Executive Pay Limit
Excerpt: "Legislation proposed in the U.S. Senate on Wednesday differs from President Obama's proposal for limiting executive pay for bailout recipients in that its rules are retroactive. Senator Christopher Dodd (D-Connecticut), chairman of the Senate Banking Committee, said his proposal would affect all recipients of money from the Troubled Asset Relief Program (TARP), both past and future, according to Reuters. Dodd's legislation would restrict pay at all TARP recipients and give the government the power to 'claw back' any bonus already paid to an executive based on false information." (PLANSPONSOR.com; free registration required)


Protective Steps to Follow When Cutting Your Workforce
Excerpt: "As the economy declines, your business may be working to find new efficiencies in your operations. One mechanism to consider is a reduction in force or RIF; however, the financial benefits of a RIF can be eaten up quickly if the RIF results in a lawsuit or several lawsuits. RIFs require terminating multiple employees, bringing not only the risks of allegations of discrimination, retaliation and breach of contract as any other termination but also unique legal challenges, such as obligations to provide particular notice to employees." (The Fort Worth Business Press)


Cincinnati Bell Will Freeze Pension and Phase Out Retiree Health
Excerpt: "Cincinnati Bell said last week that it would freeze pension benefits for some management employees, as well as management salaries. According to the Business Courier, the telecommunications company said it was freezing pension credits, effective March 28, for salaried employees under the age of 50. Employees over 50, who haven't accepted an early retirement option, will continue earning pension credits through 2018, when they will end. Cincinnati Bell, which ended its pension plan for new salaried workers a couple of years ago, also said it will phase out the retiree health-care plan for management employees and certain other employees over a 10-year period . . . ." (PLANSPONSOR.com; free registration required)


[Opinion]
Wrongs That Can't Be Remedied: ERISA Preemption and Limited Statutory Remedies

Excerpt: "Paul Secunda, the law professor formerly known as the workplace prof, has a new law review article out on the 'wrong without a remedy' aspect of ERISA litigation, which is the fact that the broad scope of preemption can combine with the limited range of remedies available under ERISA in a way that makes some alleged wrongs involving employee benefit plans simply not redressable. Notice that unlike many commentators, including Paul in his article, I call it an aspect of ERISA litigation, rather than a problem, as, contrary to Paul's article, I am not convinced this isn't the logical outcome, rather than the problematic distortion, of the original statutory structure. Either way, there is certainly room to argue over whether, and if so what, should be done about this aspect, and Paul provides his own version of changes that could be enacted legislatively or by judicial development to eliminate the 'wrong without a remedy' scenario." (Stephen Rosenberg of The McCormack Firm, LLC)




Newly Posted Press Releases

Notice To Defined Benefit Plans Concerning Funds Invested With Bernard L. Madoff Investment Securities LLC
Pension Benefit Guaranty Corporation (PBGC)

ERIC Urges Balance on Health Information Technology and Privacy
ERIC (ERISA Industry Committee)

First-of-Its-Kind Program Aims to Reduce Primary Barrier to Breastfeeding for Hourly and Lower-Wage Working Mothers
Corporate Voices for Working Families



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