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Retirement Plans Newsletter

April 5, 2010

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National Employee Benefits Day acknowledges employee benefits professionals for the quality benefits you provide and for the important role you have in your colleagues’ well being.
This year Benefits Day has a special focus on Workplace Wellness. We encourage you to evaluate your wellness offerings and to reach out to your employees with suggestions on living a healthier lifestyle.

Visit for free resources to help you celebrate!

[Guidance Overview]
Court Denies Class Certification, Rejects Arguments that Principal Was a Fiduciary in 401(k) Rollover Lawsuit
Excerpt: "A federal district court recently denied class certification in a lawsuit relating to the rollover of funds from 401(k) plans nationwide for which Principal Life Insurance Company provided retirement services. Walsh v. Principal Life Ins. Co., -- F.Supp.2d. --, 2010 WL 1063738 (S.D. Iowa Mar. 24, 2010). In denying class certification, the court rejected many of the arguments that the plaintiff made in support of her claims that Principal Life and its affiliate, Princor Financial Services Corporation, were acting as ERISA fiduciaries in communicating with plan participants about the rollover of their 401(k) plan account balances into Principal Individual Retirement Accounts ('IRAs')."
(Groom Law Group)

[Guidance Overview]
Second Wife of Deceased Participant Not Entitled to Annuity Given Participant's Informed Choice of Straight-Life Option
Excerpt: "A deceased participant's second wife was not entitled to claim pension plan benefits as a contingent annuitant when evidence demonstrated that the plan made all required disclosures to her husband before he made the election to receive his pension distribution as a straight life annuity, the U.S. Court of Appeals in New York City (CA-2) has ruled in Hall v. Kodak Retirement Income Plan."
(Wolters Kluwer)

[Guidance Overview]
DOL's New Proposed Regulations on Participant Investment Advice (PDF)
5 pages. Excerpt: "The DOL has now issued proposed regulations, which are largely similar to the January 2009 regulations. However, significantly, they no longer include the class exemption."
(Buck Consultants)

[Guidance Overview]
Elimination of Income Ceiling for Roth IRA Conversions
Excerpt: "Discussed . . . is an overview of Roth IRAs and the factors to consider for converting a traditional IRA or qualified plan account to a Roth IRA."
(Tax Management Estates, Gifts and Trusts Journal via Buchanan Ingersoll & Rooney PC)

[Guidance Overview]
Pension Plan's Denial of Service Credit for Reacquired Employees Upheld by Appeals Court
Excerpt: "A pension plan sponsor that transferred employees in a corporate spinoff, then reacquired them five years later, did not have to count the intervening years in computing pension amounts, the US Sixth Circuit Court of Appeals has ruled in an unpublished decision (Ensley v. Ford Motor Co.). Participants claimed the sponsor interfered with their benefit rights, violating ERISA Section 510, by classifying them as 'rehired,' not 'reinstated.' Citing a company directive divesting transferred employees of reinstatement rights, the court ruled employees had no legitimate expectation of service credit."
(Mercer LLC)

[Guidance Overview]
Frequently Asked Questions About 403(b) Programs, in Spanish
Preguntas frecuentes.

Governance of Public Employee Post-Retirement Benefits Systems (PDF)
Excerpt: "The Government Finance Officers Association (GFOA) recommends that the state or local government or other designated governing entity establish rules of governance for its post-retirement benefit systems that define the key elements necessary for trustees and other fiduciaries to fulfill their responsibilities, in accordance with fiduciary standards."
(Government Finance Officers Association)

Preparing an Effective Summary Plan Description for State and Local Retirement Systems (PDF)
2 pages. Excerpt: "The Government Finance Officers Association (GFOA) recommends that all state and local government pension plans prepare an SPD that completely, accurately, and clearly describes the significant components of the pension plan for participants."
(Government Finance Officers Association)

New Jersey Officials Investigate If Labor Union Officials on Leave from State Jobs Are Breaking Federal Pension Laws
Excerpt: "The state is looking into whether public union officials on leave from government jobs are breaking federal tax regulations by staying in the pension system too long or having an additional private retirement account alongside their public ones. The Division of Pension and Benefits sent letters in the past two days to 18 people in two state pension funds -- including New Jersey Education Association president Barbara Keshishian -- to ask for a range of information to 'maintain compliance with the Internal Revenue Code.'"

Derivatives Exemption Sought for Defined Benefit Plans
Excerpt: "Pension lobbyists are urging Congress to exempt defined benefit plans that use swaps and other derivatives from being required to set aside cash for margin requirements and to settle some swaps trades through central clearinghouses. The House approved a financial industry regulatory reform bill in December that included these proposals. Similar provisions are in a separate bill passed late last month by the Senate Banking Committee."

Kravitz National Cash Balance Research Report 2010 (PDF)
7 pages. Excerpt: From a press release: 'There were 4,797 Cash Balance Plans active in 2007 (the most recent year for which IRS pension plan data is available), up from 1,337 in 2001. That represents a 359% increase. . . . 80% of Cash Balance Plans are in place at firms with less than 100 employees. . . . 79% of Cash Balance Plans are combined with a Profit Sharing or 401(k) plan, and more than half of those plans use New Comparability."
(Kravitz, Inc.)

Nationwide, Public Officials Scramble to Change Pension Benefit Formulas for New-Hires
Excerpt: "In most states, the benefits formulas for active employees are untouchable. The only way to chip away at pension-funding problems is to fiddle with formulas for new employees, partly because unions are more willing to give way on benefits for new hires. Newbies don't vote on today's contract and don't pay dues yet--and union leaders may figure they'll get the benefits restored when the economy improves. For most public officials, there is great confusion about what would be a fair benefits formula for new employees. Here are some pension math basics . . . ."

Pension Funds Still Waiting for Big Payoff from Private Equity
Excerpt: "Private equity deal-makers, those kings of corporate buyouts, made billions for themselves when times were good. But some of their biggest investors, public pension funds, are still waiting for the hefty rewards they were promised. The nation's 10 largest public pension funds have paid private equity firms more than $17 billion in fees since 2000, according to a new analysis conducted for The New York Times, as the funds flocked to these so-called alternative investments in hopes of reaping market-beating returns."
(The New York Times; free registration required)

Norman Stein Posts Some Musings on Funding Relief
Excerpt: "1. The shape that funding relief takes should bear some relationship for the justification for the relief. So what is the justification for the relief? At least three ideas have been advanced by plan sponsors . . . ."
(Pension & Benefits Blog)

American Academy of Actuaries' Comments on Proposed Revision of Actuarial Standard of Practice No. 41 (PDF)
4 pages. Excerpt: "The Pension Committee of the American Academy of Actuaries /1/ appreciates the opportunity to provide comment on the Actuarial Standards Board's proposed revision of ASOP No. 41, Actuarial Communications."
(American Academy of Actuaries)

American Academy of Actuaries' Comments on Proposed Revision of Actuarial Standard of Practice (ASOP) No. 35 (PDF)
Excerpt: "The Pension Committee of the American Academy of Actuaries appreciates the opportunity to provide comment on the Actuarial Standards Board's (ASB) revision of ASOP No. 35, Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligations."
(American Academy of Actuaries)

All Fiduciaries Are Not The Same
Excerpt: "[Scott Pritchard attempts to shed light] on an issue that is receiving an increasing amount of attention in the 401(k) marketplace: The roles of ERISA section 3(21) fiduciary investment advisors and section 3(38) fiduciary investment managers. The growing awareness of these roles seems to be driven by two key factors: Numerous 401(k) lawsuits over the past few years have made plan sponsors increasingly aware of their fiduciary responsibility and liability, which they are now keenly interested in limiting. The investment industry is aware of this growing concern and is seeking to capitalize on the 'fiduciary' business opportunity."
(Capital Directions, LLC)

Are Stable Value Funds the Answer for Retirement Plan Investment Security? (PDF)
3 pages. Excerpt: "According to information obtained on the Stable Value Investment Association's (SVIA) Website, stable value funds are 'capital preservation options available in 401(k) and other types of savings plans. They are invested in high-quality, diversified fixed-income portfolios that are protected against interest-rate volatility by contracts from banks and insurance companies.'"
(Lord Abbett Distributor LLC.)

Time for a New Look at Target-Date Funds
Excerpt: "Target-date funds have enjoyed remarkable acceptance by 401(k) fiduciaries, and why not? They 'solve' the problem of lack of investment knowledge of many participants -- and they are eligible for the QDIA fiduciary safe harbor for defaulted participants. However, that acceptance may have been too fast. The bear market of 2008 taught us that many target-date funds can suffer staggering losses."

Similarities Between the Health Care Debate and the Retirement Income Debate
Excerpt: "Given the national preoccupation with health-care reform, I thought it might be interesting to consider some not insignificant parallels between that issue and retirement income. First -- public versus private. . . . Second -- free riders. . . . Third -- 'rich' versus 'poor.'"

The American Society of Pension Professionals & Actuaries (ASPPA) and the College for Financial Planning (the College) have joined forces to offer advanced qualified retirement plan education to financial professionals. Beginning April 19, the College will offer instructor-led courses online that lead to ASPPA’s Qualified Plan Financial Consultant (QPFC) credential. Students will be able to sit for the QPFC exams and upon successful completion, apply for the QPFC credential with ASPPA!

"If you're a financial advisor engaged in the increasingly complex world of qualified plans, this partnership represents a significant opportunity to advance your career." ~Sheldon H. Smith, Esq, APM, President, ASPPA

For more information and to register, visit

Sponsored by ASPPA

Executive Compensation; Benefits in General

Obamas Tout Benefits of a Flexible Workplace
Excerpt: "Obama was speaking at a White House forum on workplace flexibility Wednesday and used the days that snow forced federal offices in Washington to close as an example of why the public and private sectors should adopt some alternative arrangements, such as telework, for their employees. The president said the government is committed to 'practicing what we preach' with budget proposals that would increase funding for child care and provide grants to states to promote flexible work programs."
(The Washington Post; free registration required)

New Book: Don't Do That
The new book Don't Do That illustrates common mistakes in implementing and operating an employee stock ownership plan (ESOP) and what to do about them by using a variety of real-life stories contributed by prominent members of the ESOP community.
(National Center for Employee Ownership)

Webcasts and Conferences

Doing More With Less in Employee Benefits
Nationwide on April 15, 2010
presented by TRI-AD

Worker Misclassifications: Ouch!! That's Gonna Leave a Mark Webinar
Nationwide on April 29, 2010
presented by Seyfarth Shaw LLP

Press Releases

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Newly Posted Employee Benefits Jobs

Retirement Plan Administrator
for Bates & Company, P.A.
in FL

OmniPay Lead Business Analyst
for JPMorgan, Benefits Payment Services group
in OH

Pension Administrator
for Growing Retirement Planning Company
in NJ

Mid-Level Associate in Plan Design/Taxation and Executive Compensation Groups
for Employee Benefits Law Firm in Washington, DC
in DC

DC Implementation Analyst
for Milliman
in TX

Director, Pension Plans
for The Motion Picture Industry Pension Plan (MPIPP)
in CA

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