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Retirement Plans Newsletter

August 20, 2010

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Enrollment is now open for ASPPA’s Live EA-2A review course in the Washington, DC area October 1-4, 2010. Instructor David B. Farber, MSPA, EA, ASA puts his more than 25 years of teaching experience to work in our well-reviewed EA preparatory and actuarial primer classes. Tuition includes practice problems and solutions, handy syllabi, suggested readings and other information regarding the EA exams. Early registration ends September 2, so don’t delay—enroll today!

For more information and to enroll, visit the ASPPA website.

Sponsored by ASPPA

[Guidance Overview]
DOL Clarification of Requirements for Service Provider Fee Disclosures (PDF)
7 pages.
(Kelly, Hannaford & Battles P.A.)

Retirement Fund Withdrawals Rise In Downturn, According to Fidelity
Excerpt: "Among the 11 million workers whose 401(k) plans are run by Fidelity, 11 percent took out a loan from their plan during the 12 months ended June 30, the company said, up from 9 percent at the same point a year earlier."
(Reuters via The New York Times; free registration required)

Pension Cuts Won't Cover U.S. Taxpayers' $3 Trillion Bill, Professor Says
Excerpt: "Taxpayers must cover at least a third of a $3 trillion bill for public employee pensions even if lawmakers eliminate cost-of-living increases and raise the retirement age, according to an academic study."
(Bloomberg L.P.)

Retirement Plans: Former Employees Can Be Current Problems
Excerpt: "Plan sponsors are obligated to maintain communication with ex-employee participants but run the risk of becoming disconnected, making it difficult to meet fiduciary obligations. In addition, it puts the organization at risk for problems with unclaimed property reporting."
(Society for Human Resource Management)

Behind Fraud Charges, New Jersey's Deep Public Pension Crisis
Excerpt: "Experts say that governors and legislators, Republicans and Democrats, have all contributed to the problem by refusing to put state money into the funds as they should have. And even if benefits are cut and taxes raised, they said, there is no obvious fix in sight."
(The New York Times; free registration required)

5500 Filed Timely but Processed Late
Excerpt: "Some preparers have filed a 5500 shortly before the deadline but because the filing was not processed by midnight or initially was not processed at all, the DOL considers the filing late. In discussing the matter with the DOL, the DOL has confirmed that it considers the filing late and that the government may generate an automatic penalty letter."
(SunGard Relius)

In Pennsylvania, Philadelphia City Council Members Weigh in on DROP
Excerpt: "DROP has become one of the most contentious political issues in the city. This month, a report commissioned by Mayor Nutter said the program had cost the city an extra $258 million in pension expenses over the last 10 years."
(The Philadelphia Inquirer)

CalPERS Committee Approves Policy Change to Lower Pension Costs
Excerpt: "A key committee of the California Public Employees' Retirement System [has approved a] recommendation that would change the pension fund's policies to immediately recognize benefit changes. A CalPERS news release said the shift in policy, requested by the employer and some unions, could save the State's General Fund budget up to $500 million this fiscal year if the Governor and Legislature enact higher contributions for existing members and new hires."

DC Plans Shouldn't Classify Participant Loans As Investments, According to FASB
Excerpt: "According to the proposal, 'If a participant were to default, the participant's account would be reduced by the unpaid balance of the loan, and there would be no effect on the plan's investment returns or any other participant's account balance.'"
(Pensions & Investments; registration may be required)

Colorado Pension Program on Way to Recovery After Landmark Legislation, According to Auditors
Excerpt: "Colorado's pension fund is back on track toward solvency after state lawmakers became the first in the nation to cut retiree benefits to prevent its pension system from going broke, auditors said Monday."
(Huffington Post, Inc.)

Social Security Cuts Weighed by Entitlement Commission
Excerpt: "In addition to raising the retirement age, which is now set to reach age 67 in 2027, specific cuts under consideration include lowering benefits for wealthier retires and trimming annual cost-of-living increases, perhaps only for wealthier retirees, people familiar with the talks said."
(The Wall Street Journal)

ASPPA and the CFFP have partnered to bring financial professionals even more opportunities to advance their education and further their careers. CFFP is offering two live instructor-led ASPPA courses (PFC-1 and PFC-2) for students to prepare for the respective QPFC exams. As an added benefit, all CRPS designees will automatically receive credit for the first two ASPPA QPFC required exams--Retirement Plan Fundamentals 1 and 2, the other exams needed to obtain the QPFC credential!

Classes begin September 7. Learn more and register today at!

Sponsored by ASPPA

Benefits in General; Executive Compensation

[Guidance Overview]
Accounting for Clawbacks in Stock Compensation Arrangements, Including Dodd-Frank Act Provision on Recovery of Erroneously Awarded Compensation
4 pages. Excerpt: "This Insight addresses the impact on accounting for share-based compensation awards that could be subject to the clawback provision of the Act, as well as other potential accounting implications associated with new types of clawback features companies have implemented recently."
(PricewaterhouseCoopers LLP)

Health Care Reform Act Provision Vastly Expands Information Reporting Requirements.
Excerpt: "Large businesses generally maintain so-called vendor or accounts payable ledgers, so they often already track such payments. For them, information reporting could simply involve transferring this information to a Form 1099. Depending on any relief granted, payments to employees as vendors for expense reimbursements could minimize the added burden of accumulating this data for the vendors used by each employee."
(American Institute of Certified Public Accountants)

ESOP Audits and Voluntary Compliance Programs
An employee stock ownership plan (ESOP), like other qualified retirement plans, must meet various legal requirements. It may be audited by the Internal Revenue Service (IRS) or the U.S. Department of Labor (DOL) to ensure its compliance with the law. Whether or not it is audited, there are voluntary corrective programs that allow the company to correct certain errors without disqualifying the plan. This new publication, written by leading attorneys, discusses all these issues in detail.
(National Center for Employee Ownership)

Press Releases

PBGC Takes Responsibility for the Irwin Financial Pension Plan
Pension Benefit Guaranty Corporation (PBGC)

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