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Federal District Court Dismisses 401(k) Excessive Fee Litigation
Excerpt: "In dismissing the claims, the court held that the service provider defendants were not relevant ERISA fiduciaries of the plan because they did not possess relevant fiduciary authority such that they could be liable under ERISA for any alleged breaches of duty. Specifically, the court held that the service providers did not have discretionary authority with respect to administration of the plan where the plan sponsor retained sole authority to determine what investment options were offered to the plan."
(Goodwin Procter LLP)
Employer Not Required to Do Hardship Withdrawal Disclosure
Excerpt: "The Bank of America Corp. (BofA) was under no obligation to provide detailed disclosures about its 401(k) plan hardship withdrawals. U.S. District Judge Rebecca R. Pallmeyer of the U.S. District Court for the Northern District of Illinois said Section 102 of the Employee Retirement Income Security Act (ERISA) carries no mandate for plans to explicitly set out the conditions under which participants can take a hardship withdrawal."
Is It Game-Over for the Fiduciary Standard This Year? Advocates Say, Maybe Not
Excerpt: "The financial reform bill passed on a 60-40 vote late in the day on May 20th. The Menendez-Akaka amendment, which would have made broker-dealers and insurance agents who provide investment advice act in the best interests of their customers, never came up for a vote. . . . What was included in the bill . . . was an amendment that calls for the [SEC] to study the all-in-one fiduciary standard issue and propose to Congress changes in the law designed to address any gaps or overlaps in the way broker-dealers and advisors are regulated, and to determine if those gaps are harmful to investors."
The Social Security Fix-It Book (PDF)
28 pages. Excerpt: "A review of the program, its financing problem, and the leading proposals for eliminating the shortfall. Everything the earnest but overburdened citizen needs to know. Cheerfully narrated and handsomely presented in 28 pages.'
(Center for Retirement Research at Boston College)
1,200 Sponsors of 401(k) Plans Will Receive Compliance Questionnaires from the IRS
Excerpt: "For those fortunate employers that do not receive a questionnaire package, this is an opportunity to use the questionnaire to review their 401(k) plans and to determine their level of compliance with the issues that the IRS deems to be important. The agency invariably will issue interim and/or final reports summarizing the responses to the questionnaire, and sponsors will be able to compare those findings to their own plans."
IRS's Final Regs on Diversification Requirements for Company Stock
Excerpt: "The IRS said the regulations will affect administrators of, employers maintaining, participants in, and beneficiaries of defined contribution plans that are invested in employer securities, and will be effective May 19, when the regulations are published in the Federal Register. The regulations apply for plan years beginning on or after January 1, 2011."
Is a $1 Trillion Bailout Ahead for State Pension Funds?
Excerpt: "[I]n a new paper, Northwestern University economist Joshua Rauh says at least seven states are heading toward crushing crises -- of the magnitude that would require U.S. bailouts in the next decade -- from one cause: state pension liabilities."
(The Wall Street Journal)
Pension Funding Relief in Compromise Bill
Excerpt: "According to a summary of the bill included in a news release issued Thursday, the funding relief provisions would allow defined benefit plans to stretch out amortization periods for investment losses for two of the years between 2008 and 2011 and over a period of either 15 years or nine years, at the plan sponsor's discretion."
(Pensions & Investments)
Putnam to Disclose 401(k) Fees
Excerpt: "Putnam Investments will reveal all of the fees in the defined contribution plans it manages through a new sponsor Web site that launches next month."
(Employee Benefit News; free registration required)
Padded Pensions Add to New York City Fiscal Woes
Excerpt: "Despite a pension investigation by the New York attorney general, an audit concluding that some police officers in the city broke overtime rules to increase their payouts and the mayor's statements that future pensions should be based on regular pay, not overtime, these practices persist in Yonkers."
(The New York Times; free registration required)
Americans Not Prepared for Retirement, According to Study
Excerpt: "The newly released 'MetLife Retirement Readiness Index: Are Americans Prepared for the Transition?' indicates that pre-retirees haven't taken necessary steps to prepare for retirement. The study revealed that 52% of respondents are behind in their savings goals; 25% say they are significantly behind. Only 28% are confident they are on track or have reached their goals."
Pension Rights Center Letter Expressing Strong Support for Provisions in H.R. 4213 That Require Better Disclosure of 401(k) Fees (PDF)
1 page. Excerpt: "The bill's 401(k) fee disclosure provisions also ensure that employers, who are responsible for choosing service providers and monitoring ongoing investments in the plan, get detailed information about fees so they can compare and contrast different options offered to them on an apples-to-apples basis. The bill takes important first steps toward 'unbundling' so that employers can review separate charges for record-keeping, transaction-based charges, and investment management fees."
(Pension Rights Center)
Different Critters: the Suitability Standard and the Fiduciary Standard
Excerpt: "The majority of the public does not understand the two different rules under which financial advisors operate. . . . More specifically, broker dealers, insurance salespersons or any other financial company representative operate under the 'Suitability Standard,' . . . . Registered Investment Advisors (RIA) or an ERISA appointed Fiduciary must operate under the 'Fiduciary Standard,' . . . ."
Valued by every practitioner and recommended for every ERPA candidate, The ERISA Outline Book, 2010 Edition by Sal L. Tripodi, J.D., L.L.M. offers six volumes of vital information on everything you need to know. Highlights include: IRS guidance on the waiver of 2009 required minimum distribution; automatic enrollment guidance from the IRS and Treasury; guidance on discontinuing safe harbor nonelective contributions; EFAST2 electronic filing system and DOL guidance; reporting guidance for 403(b) plans, guidance on deferrals from paid time off plans, court cases on scrivener's errors, and over 100 new rulings, guidances and regulations affecting retirement plans.
Order your copy of The ERISA Outline Book, 2010 Edition today! Visit www.asppa.org/eob now!
Executive Compensation; Benefits in General
Federal Domestic Partner Benefits Could Cost $300M+
Excerpt: "That was the bottom line of a new Congressional Budget Office (CBO) study of the issue, according to govexec.com. In addition to $310 million in direct costs between 2010 and 2020, CBO calculates the 2009 Domestic Partnership Benefits and Obligations Act (SB 1102) would increase benefits-related discretionary spending by $394 million over the same period."
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