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Retirement Plans Newsletter

September 10, 2010

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ASPPA's Qualified 401(k) Administrator (QKA) credential is offered for retirement plan professionals who work primarily with 401(k) plans. Applicants come from various professional disciplines, typically assisting employers and consultants with the recordkeeping, non-discrimination testing and the administrative aspects of 401(k) and related defined contribution plans.

ASPPA members save on all exams, but everyone saves when they register before September 27. Visit now!

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[Guidance Overview]
FASB's Proposed New Disclosures About Employers' Participation in Multiemployer Plans
Excerpt: "Information about plan funded status, contribution trends, potential withdrawal liability, 'warning zone' status and funding improvement or rehabilitation plans is intended to help financial statement users assess the risks the employer faces."
(Mercer LLC)

New Mexico State Pension Plan Will Run Out of Money in 13 Years, According to Study
Excerpt: "Economists Joshua Rauh of the Kellogg School of Management at Northwestern University and Robert Novy-Marx of the University of Chicago Booth School of Business have developed a model of state pension fund payments across the US and identified 31 states they predict will run out of state pension fund money within the next 16 years."
(Franklin Center for Government & Public Integrity)

91 Percent of Employers Cited Employee Financial Literacy As Being Important
Excerpt: "While 88 percent of the respondents provide the required investment/retirement education associated with retirement plans, only 28 percent provide basic workplace financial education, defined as including budgeting, debt reduction and credit management."

Ford Settles Retirement Fund Suit
Excerpt: "The proposed settlement, which must be approved by U.S. District Judge Stephen J. Murphy III in Detroit, will provide free financial advice for four years to hourly and salaried retirees and employees who invested in Ford stock since April 2000."

Presidential Advisory Group Discusses Tax Reform Options for Qualified Retirement Plan Tax
Excerpt: "Simplifying regulation of retirement plans, consolidating rules for different types of individual-account plans, and improving savings incentives are among the proposals outlined in a new presidential advisory board report."
(Mercer LLC)

Rethinking the Pension Freeze: The Case for Retaining a Restructured Defined Benefit Plan (PDF)
5 pages. Excerpt: "Today, many defined benefit . . . retirement plans have been frozen or even eliminated altogether and replaced by defined contribution plans. However, for some organizations, an alternative DB plan may still be the best way to provide pension value for employees while ensuring reduced cost and volatility for the plan sponsor."

Conversion Rules Apply to 401(k) Funds Too
Excerpt: "Any amount converted from a 401(k) or a non-Roth IRA to a Roth IRA is treated as a distribution from the 401(k) or non-Roth IRA and converted to the Roth IRA, said Sonzogni. The conversion from a traditional 401(k) or individual retirement plan to a Roth IRA is included in gross income to the extent of the value of the converted assets is in excess of after-tax contributions. The same holds true for conversions from 403(b) or 457 plans."
(New Jersey On-Line LLC)

Widespread Automatic Enrollment Feature Takeup, According to Poll
Excerpt: "Some 72% of employers in a recent poll have adopted auto plan features, with 51% using auto enrollment and 71% deferring participants into a target-date fund."

The Evolving Standards of Fiduciary Care
Excerpt: "At issue is a regulatory environment that has lagged the changes in the marketplace. The current defining fiduciary standard was developed by [DOL] in 1975 shortly after the passage of [ERISA]. Since then, the retirement plan landscape and the needs of plan sponsors have changed dramatically."
(Finance Behavior)

Finding Safe Harbor from Pension Fraud under GASB's Pension Disclosures
Excerpt: "For both pensions and OPEB . . . plans, GASB simply needs to require that the employers and the pension funds create a three-column RSI schedule with 15-year multi-year projections of: 1. The annual accounting costs per GASB's standards; 2. The pension system's annual actuarially required contributions . . . if different from GASB's accounting cost; 3. The employer's (or employers' collective) current funding practices, if different, and; 4. The 15-year projection of the remaining unfunded liability under each column."

Good Option for New Public Employees Is 'Half & Half' Defined-Benefit and Defined-Contribution Plan
Excerpt: "The half-and-half approach has been adopted for federal employees nationwide, and by Washington State. The Federal Employee Retirement System pays a fixed pension of 1 percent times years of service, and then matches employee contributions up to 5 percent of pay in a defined contribution plan with a limited menu of indexed investment options."

Work Until You're Dead? That May Be the Only Option for Many Americans
Excerpt: "Here's the raw deal in a nutshell: Unless you've got Chief and Executive in your job title -- including 'Ousted Disgraced CEO' -- you are probably pension-poor, even if you earn a six-figure salary. That's because only 11% of the private sector population is covered by a regular pension."
(, Inc.)

Advice to President Obama's Deficit Commission: Tax Social Security Payments
Excerpt: "[L]et me suggest one particular reform on the tax front: After Social Security recipients have recovered an amount equal to the cumulative FICA and self-employment taxes they have paid while working, their Social Security payments should be fully subject to federal income taxation. This change would make the Internal Revenue Code fairer and simpler while increasing federal revenues."
(Oxford University Press, Inc.)

Pension Benefit Information introduces a New Platinum Web-based Death Audit Service that features Continuous Monitoring of your plan population to Eliminate Pension Overpayments & Decease Funding Liabilities. This service provides 24/7 access to our Proprietary Death Information, the ability to add records at No Additional Charge, and tools to manage workflow from the time a death is reported until Payment is Stopped!

For more information, please contact 415-482-9611 or

Benefits in General; Executive Compensation

[Guidance Overview]
Corporate Governance and Executive Compensation Provisions of the Dodd-Frank Reform Act
Excerpt: "This alert highlights, in succinct chart form, the major areas of reform in the areas of corporate governance and executive compensation."
(Hodgson Russ LLP)

[Guidance Overview]
IRS Representatives' Unofficial 409A Views on Severance Pay and Other NQDC Features
Excerpt: "Separation pay arrangements continue to cause confusion, as practitioners struggle to understand when payments are subject to 409A and how standard conditions, such as a release of claims, interact with 409A rules. Other issues addressed by the unofficial guidance include small benefit cashouts, document errors in expiring agreements and NQDC plan terminations."
(Mercer LLC)

[Guidance Overview]
Year-End Roundup for Employee Benefit Plans: What Needs to Be Done Now?
Excerpt: "The [target page] is an overview of the top benefits issues that employers should consider."
(Proskauer Rose LLP)

[Guidance Overview]
Court Clarifies ERISA Benefits Disputes Discovery Rules
Excerpt: "A federal appellate court has ruled that parties in [ERISA] benefit plan suits have limits on their pre-trial discovery rights about plan administrators with conflicts of interest. The 10th U.S. Circuit Court of Appeals asserted that ERISA litigants are barred from such fact-finding when the issue is a plaintiff's benefits claims, but that plaintiffs can do limited fact-finding when it comes to the actions of plan officials who are both insurer and administrator."

Health Care Reform Could Impact Your Employment and Severance Agreements
Excerpt: "Many employment and severance/separation agreements provide that the company will pay all or a portion of health care premiums (including COBRA premiums) for a former or current executive that is more favorable than the level provided to other employees. If your agreements make this promise, this could be dangerous."
(McKenna Long & Aldridge LLP)

Press Releases

PenServ Announces New General Counsel
PenServ Plan Services, Inc.

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