Retirement Plans Newsletter

February 1, 2010

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Enroll in NIPA’s Certificate and Designation Programs Today!

Enroll in NIPA’s Certificate and Designation Programs Today!

Maintaining your professional skills and knowledge in the dynamic retirement plan industry requires year-round continuing education. The National Institute of Pension Administrators (NIPA) provides various avenues for staying up-to-date on the latest information, legislation and trends in the industry including its prestigious designation programs – APA and APR – and its series of certification programs – distributions, loans, IRAs and the fundamentals of qualified plans. Upon successful completion, you can earn NIPA and ERPA continuing education credits. For more information, visit

National Institute of Pension Administrators

[Guidance Overview]
What Expenses Does Schedule C Report?
Excerpt: "Use Schedule C to report payments to persons who rendered services to or who had transactions with the plan during the year. However, Schedule C reports a person only if the person received, directly or indirectly, $5,000 or more in reportable compensation in connection with services rendered or their position with the plan. As used in the 5500 instructions, and these Technical Updates, the term 'person' includes individuals and organizations, such as partnerships and corporations." (SunGard Relius)

[Guidance Overview]
Federal Court Rules Participants not Due Additional Benefits Based on Defective Summary Plan Description
Excerpt: "The court pointed out that the SPD included a caveat that it was only a summary and that participants should refer to the master plan document for more information. In addition, Northrop held Town Hall meetings in which the benefits calculations, including the offset, were discussed, and participants had received a summary of material modifications which described benefits calculations, including the offset." (

[Guidance Overview]
Court Allows Annuity Contracts' Beneficiary Switch
Excerpt: "A federal judge in Pennsylvania has ruled that a participant in TIAA-CREF annuity contracts met the requirements to change his beneficiary from his ex-wife to his long-time friend." (

[Guidance Overview]
DOL Advisory Opinion 2009-04A in Response to Request Effectively Challenging Scope of ERISA's Mutual Fund Exemption
Excerpt: "Bottom line: under current law ERISA does not generally apply to the decisions of the managers of a mutual fund target date fund. In response to the DOL's letter, Senator Herb Kohl (D-WI) released a statement 'announc[ing] his intent to introduce legislation that will require target date fund managers to take on a fiduciary responsibility in order for such funds to be eligible for the designation of Qualified Default Investment Alternative (QDIA).'" (J.P. Morgan Compensation and Benefit Strategies)

Special Report on Pension & Retirement Benefits: Playing Catch-Up
Excerpt: [H]ere's the problem: To avoid workers lingering longer in their jobs just to beef up their retirement accounts, employers need to be better problem solvers and get workers to save enough money to be self-sustaining through retirement. That has been the core issue ever since defined-contribution plans became the No. 1 way employees save for retirement." (Workforce Management; free registration required)

PBGC Aids Insolvent Multiemployer Pension Plans
Excerpt: "The insurance program for multiemployer plans differs from its single-employer program. The PBGC actually takes over failed single-employer plans but does not take over insolvent multiemployer plans. Instead, it sends financial assistance to the plan to ensure that guaranteed benefits are paid." (Workforce Management; free registration required)

Ten New Year's Resolutions Defined Contribution Plan Sponsors Should Make Now
Excerpt: "Mercer has published a '10 for 2010' checklist of New Year's resolutions defined contribution (DC) plan sponsors should make now to address investment and plan-design concerns, fulfill fiduciary responsibilities and help participants meet their retirement objectives." (Mercer LLC)

Alaskan Public Employees/Retirees Whose Personal Data Was Placed at Risk Will Get Credit Protection As a Result
Excerpt: "Last week Attorney General Dan Sullivan announced that the State of Alaska has reached a settlement with PricewaterhouseCoopers LLP to provide credit protection for about 77,000 former and current public employees whose names and confidential information were misplaced by the professional services firm. The lost personal information is for the public employees and retirees who were participants in the Public Employees Retirement System and the Teachers Retirement System in 2003-2004 . . . ." (

Professional Help in Defined Contribution Plans: Is it Working and for Whom?
Excerpt: "Hewitt Associates and Financial Engines examine the topic of employer-sponsored professional help in 401(k) plans. It focuses on three of the most prevalent and fastest-growing types of professional investment help in employer-sponsored 401(k) plans today: target-date funds, managed accounts, and online advice." (Hewitt Associates)

401(k)s for Solo Businesses
Excerpt: "Their biggest benefit is they often allow for higher retirement-savings contributions than other plans. They also have less-complicated contribution rules than a Keogh, which offers high contribution potential but may require the expense of an actuary and extra paperwork." (The Wall Street Journal)

San Diego, California, Needs Millions for City Pensions
Excerpt: "The city will have to contribute $231.7 million to the retirement fund in the fiscal year that starts in July. That's up $19 million from the forecast used when the last budget gap was closed in December." (The San Diego Union-Tribune, LLC)

California State Teachers' Retirement System (calstrs) Records a $42.6 Billion Shortfall for 2008-09
Excerpt: "To fully fund the Defined Benefit Program in 30 years after the 2008-09 losses would require a contribution rate increase of about 14 percent, Calstrs said. In December, Moody's said it sees a worsening trend in expected funding shortfalls of both the California Public Employees' Retirement System, or Calpers, and the California State Teachers' Retirement System." (Thomson Reuters)

Labor Department Appoints Five to ERISA Advisory Council
Excerpt: "The new members include Jack Towarnicky, [representing] employers . . . . Anna Rappaport, [representing the actuarial consulting industry]; Mildeen Worrell, [representing the general public]; Michael Sasso, [representing the investment consulting industry]; and Denise Clark, [representing employees]." (Business Insurance)

New Jersey Insiders Use Board Seats for Pension Qualification
Excerpt: "New state employees have to earn at least $7,500 a year to stay in the pension system, and that is way too low. Part-timers should be excluded. Political hangers-on from times past can stay in for as little as $1,500 a year. When they raised the minimum to $7,500, the ones already at the public trough were grandfathered in." (

Michigan's State Budget Director's Letter to State Employees Describing Changes to State Workers' Retirement Options
Excerpt: "State employees who are members of the defined benefit (DB) plan will experience the following changes effective October 1, 2010: [A] 3 percent employee contribution will be reinstated. Earned service credit capped at 30 years. Employees continuing in state service beyond 30 years will be moved to a defined contribution (DC) plan for any additional years of service accrued after September 30, 2010, excluding what is purchased by the employee." (

Vermont Teacher Retirement Deal Would Save $15M a Year
Excerpt: "Teachers would pay more toward their pensions and have to work longer before retiring but would receive increased benefits under a plan legislative leaders unveiled Friday, saying it will save the state $15 million a year. The state's largest teachers union and state Treasurer Jeb Spaulding worked together to forge the compromise that lawmakers said will help solve a shortfall in the pension fund." (The Burlington Free Press)

Beware Factual Conclusions That, However Reasonable, Aren't Supported by the Facts
Excerpt: "[Recently, Urban Institute research] drew a not-unreasonable conclusion -- that automatic enrollment could lead to situations where employers reduced their matching contributions. . . . However, there's a problem: Last week, the Employee Benefit Research Institute (EBRI) put out a report that claimed exactly the opposite; that, in fact, automatic enrollment has led to a HIGHER rate of match, at least among large plan sponsors." (

Knowing How Much Your Current Savings Level Might Actually Produce in Retirement Income Dollars Is Critically Important
Excerpt: "[A]s a general rule, I'm leery about government-mandated disclosures, which tend to cost more and inform less than their erstwhile sponsors surely intend . . . . But this could well be an exception. The sponsors of the Lifetime Income Disclosure Act have directed the Department of Labor to issue tables that employers may use in calculating an annuity equivalent, as well as a model disclosure -- and they have provided that employers and service providers who rely on those materials would be insulated from liability arising from those disclosures." (

Cadillac Retirement Plans Are Killing New York City
Excerpt: "[T]axpayers have footed ever-increasing bills for pension and health benefits that are far more lavish than in the private sector. Consider these facts: From 2001 to 2010, the city's pension contributions climbed 466%, from $1.2 billion to $6.8 billion. Had those expenses tracked inflation - which rose 21% - the city would be looking at a $5 billion budget surplus. More than enough to beef up service while handsomely reducing taxes." (

Early Bird Registration Discount has been extended to Feb. 5!

Early Bird Registration Discount has been extended to Feb. 5!

The ASPPA 401(k) Summit | March 14 – 16, 2010 | Orlando World Center Marriott Resort

The ASPPA 401(k) SUMMIT is bigger and better than ever in 2010! Expect 140 exciting exhibits in the hall, dozens of top-notch workshop sessions like "Plan Designs for the Age of Obama," and the presentation of the prestigious Morningstar-ASPPA 401(k) Advisor Leadership Award. The SUMMIT offers 14 hours of ASPPA Continuing Education (CE) credit and is designed to comply with various CE programs, including ERPA CPE.
For more information and to register, click here: The ASPPA 401(k) SUMMIT.


Executive Compensation; Benefits in General

[Official Guidance]
List of Expiring Federal Tax Provisions 2009-2020
48 pages. The Provisions Expiring in 2010 are on pages 14-26. (The Joint Committee on Taxation)

[Guidance Overview]
Time for Employers to Review Their Severance Agreements
Excerpt: "The United States Equal Employment Opportunity Commission (the 'EEOC') recently issued guidance in question and answer format entitled 'Understanding Waivers of Discrimination Claims in Employee Severance Agreements' . . . . While the Severance Agreement Guidance does not break much new ground, it provides a useful summary of the requirements for a legally enforceable severance agreement and the potential pitfalls into which an employer may stumble." (The Metropolitan Corporate Counsel, Inc.)

[Guidance Overview]
Guidance for Implementing Provisions of the HEART Act
Excerpt: "The HEART Act provides that in the case where an employer pays differential wage payments to a participant on QMS, these amounts are treated as compensation for purposes of qualified retirement plans, Section 403(b) contracts, and Section 457(b) plans. The Notice clarifies that employers are not required to treat differential wage payments as compensation in determining a participant's benefit under a Plan." (McGuireWoods LLP)

[Guidance Overview]
Supreme Court Continues to Wrestle with Questions on Benefits
Excerpt: "Two Supreme Court decisions in 2008 (Metropolitan Life Ins. Co. v. Glenn, 128 S.Ct. 2343 and LaRue v. DeWolff, Boberg & Assocs., Inc., 128 S.Ct. 1020) were intended to provide final answers to questions that had vexed benefits professionals for years. Unfortunately, to one degree or another, the decisions raised as many questions as they answered and have actually spawned new litigation." (Employee Benefit Adviser; free registration required)

[Guidance Overview]
New Rules for ESPPs and Reporting ISO and ESPP Share Transactions
Excerpt: "In response to comments, the final regulations include an exception to the reporting and return requirements for certain nonresident aliens. Neither an information report nor a return is required for employees for whom the employer is not required to file a Form W-2 for certain specified periods." (McGuireWoods LLP)

[Guidance Overview]
Guidance Providing Relief for Certain Plan Document Failures Under Code Section 409A
Excerpt: "A full description of all the guidance and associated relief provided by this notice is well beyond the scope of this article. Instead, we will summarize generally eligibility for relief under the notice, the areas within the scope of the notice, discuss underlying themes and consider how employers might use this guidance to their advantage." (J.P. Morgan Compensation and Benefit Strategies)

SEC Issues Rules on Disclosure of Executive Compensation
Excerpt: "The rules will require public companies to make new or revised disclosures concerning compensation policies and practices that present material risks to the company, stock and option awards of executives and directors, director and nominee qualifications, the leadership structure of the board of directors, the board's role in risk oversight, and potential conflicts of interest of compensation consultants that advise companies and their boards." (Wolters Kluwer)

Press Releases

US Secretary of Labor Hilda L. Solis Announces New Appointments and Leadership to 2010 ERISA Advisory Council
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

U.S. Labor Department Sues Fiduciary of ERISA-covered Plan Sponsored by Columbus, Indiana-based Company
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

U.S. Labor Department Obtains Default Judgment and Appointment of Independent Fiduciary for 401(k) Plan Abandoned by Buffalo, New York, Employer
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

City of Baltimore Chooses Great-West Retirement Services® as its Deferred Compensation Provider
Great-West Retirement Services

ACLI Statement On Information Request On Annuitization By Treasury And DOL
American Council of Life Insurers

WisdomTree to Close 10 ETFs
WisdomTree Investments, Inc.

ING Launches New Practice Management Program to Help Retirement Professionals Grow Their Business
ING Retirement Services

Ask These 15 Key Questions In 2010 About Your Employee Benefits
Rhodes-Joseph & Tobiason Advisors, LLC

FCRC Apps, LLC Announces the Release of - Version 2.0

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