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Retirement Plans Newsletter

November 2, 2010

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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, including over 100 new rulings, guidances and regulations affecting retirement plans. Subscribe to the online version and access new updates the moment they are available!

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Sponsored by ASPPA

[Guidance Overview]
Labor Department's Final Regulations on Fee Disclosures for Participant-Directed Plans (PDF)
6 pages. Pillsbury also links to a Model Comparative Chart at"
(Pillsbury Winthrop Shaw Pittman LLP)

[Guidance Overview]
Labor Department's Proposed Regulations on ERISA 'Fiduciary' Definition
Excerpt: "In terms of fees, the proposed regulation states that a person receives a fee for rendering investment advice if 'any fee or compensation for the advice' is received by the person (or by an affiliate of the person) 'from any source' as well as 'any fee or compensation incident to the transaction.' These fees would include, for example, brokerage, mutual fund sales, and insurance sales commissions."
(Deloitte via

[Guidance Overview]
DOL Clarification of Form 5500 Schedule C Reporting of Expense Reimbursements
Excerpt: "Expense reimbursements paid from ERISA plan assets to trustees and certain plan employees are 'reportable compensation' for Form 5500 purposes . . . ."
(Mercer LLC)

[Guidance Overview]
PBGC's Table for Pension Plans Subject to Partial Accelerated Distribution Restrictions in 2011
Excerpt: "The PBGC has published a table that defined benefit pension plans need for administering partial restrictions on 2011 lump sums and other accelerated distributions."
(Mercer LLC)

[Guidance Overview]
New York's Highest Court Declines to Expand Liability of Third-Party Professionals
Excerpt: "Teachers' Retirement is a derivative action brought on behalf of American International Group . . . against AIG's auditors, PricewaterhouseCoopers . . ., for allegedly failing to detect that AIG's senior officers were also fraudulently inflating that company's financials."
(Pillsbury Winthrop Shaw Pittman LLP)

[Guidance Overview]
2011 Retirement Plan Dollar Limits and Thresholds Are Largely Unchanged from 2010
Excerpt: " Here are the 2011 limits and thresholds most relevant to 401(k) plans . . . ."
(Employee Benefits Institute of America)

[Guidance Overview]
DOL Proposed Regulations Would Broaden Investment Advice Portion of ERISA's Definition of Fiduciary
Excerpt: "EBIA Comment: The proposed regulations would turn many consultants, advisors, and appraisers into ERISA fiduciaries. Those persons, in particular, will want to be familiar with the expanded definition of 'fiduciary' under the proposed regulations and to consider how fiduciary status (and the resulting applicability of certain prohibited transaction rules) will affect their operations."
(Employee Benefits Institute of America)

Annuities, Financial Literacy and Information Overload
Excerpt: "This chapter investigates how financial literacy and information overload influence the decision to purchase an annuity and how they relate to subsequent confidence and satisfaction."
(The Pension Research Council; registration required to download papers)

Financial Counseling, Financial Literacy, and Household Decision Making
Excerpt: "In this chapter, we survey the current literature on financial literacy. We evaluate the evidence on the effectiveness of education programs in improving participants' financial choices and outcomes."
(The Pension Research Council; registration required to download papers)

Time Perception and Retirement Saving: Lessons from Behavioral Decision Research
Excerpt: "This chapter provides a behavioral decision perspective on the implications of intertemporal choice research for retirement savings. In particular, we focus on two cognitive mechanisms explaining how and why future monetary outcomes are discounted . . . ."
(The Pension Research Council; registration required to download papers)

Top 10 Reasons 401k Plan Sponsors Are Uncomfortable with ETFs
Excerpt: "9. Thomas Heck, Chief Investment Officer, Ball State University Foundation says a 401k plan sponsor can already get index-based mutual funds, so why bother with ETFs, which are essentially index products."
(Fiduciary News)

Four Risks for Every 401(k)
Excerpt: "Outside of the fortunate few who can count on pension plan income in their golden years, the overwhelming majority of American investors are reliant on 401(k) plans or similarly structured defined contribution programs, and will therefore usually not have any guaranteed amount of retirement income beyond social security. With this in mind, here are four risks that each individual with a 401(k) plan should be aware of . . . ."
(U.S. News & World Report)

Risk Management and Public Retirement Systems: Prepared by Public Plans Practices Task Force of American Academy of Actuaries (PDF)
56 pages. Excerpt: "Ultimately, the task force, through this report, recommends initiatives to strengthen the management of public pension and post retirement health plans through incorporating an actuarial application of emerging risk management techniques. A continuous risk management practice is an essential component for a sound public employee retirement system."
(American Academy of Actuaries)

Ford to Provide Financial Advice Under Settlement of Federal Lawsuit
Excerpt: "Ford employees had filed a class-action lawsuit against the company for keeping Ford stock as an investment option even as the shares fell below $2 a share in 2009. As part of the settlement, Ford will send a notice about the importance of diversifying investments to retirement plan participants once Ford stock reaches 20 percent or more of their retirement plan holdings."
(Bloomberg Businessweek)

Restoring Retirement Readiness
Excerpt: "With shriveled 401(k) balances, shrunken housing wealth, and a precarious job market, millions of Americans truly continue to struggle in the aftermath of the economic downturn. For many, retirement dreams have all but evaporated."
(Registered Rep)

The Growth in Social Security Benefits Among the Retirement Age Population from Increases in the Cap on Covered Earnings
Excerpt: "This paper investigates how increases in the level of maximum earnings subject to the Social Security payroll tax have affected Social Security benefits and taxes."
(University of Michigan Retirement Research Center)

The Effect of the Risk of Out-of-Pocket Spending for Health Care on Economic Preparation for Retirement
Excerpt: "We find that the risk of out-of-pocket health care spending reduces economic preparation for retirement from about 72% of persons in the age range 65-69 to about 63%. However, this relatively modest reduction is quite unequally distributed: about 57% of single persons are adequately prepared when health care spending is not stochastic, but just 44% when it is."
(University of Michigan Retirement Research Center)

New Help for Figuring Retirement Savings
Excerpt: "The AARP recently released a new retirement calculator aimed at making it easier to figure out how much people need to save for retirement, whether they are on track to retire when they want, what they can do to ensure a better retirement lifestyle or if they can retire earlier."
(The New York Times; free registration required)

American Academy of Actuaries' Comments to FASB on Disclosure for Multiemployer Pension Plans (PDF)
8 pages. The Multiemployer Pension Plans Subcommittee submitted comments to the Financial Accounting Standards Board regarding proposed updates to disclosures required for employers that participate in multiemployer plans.
(American Academy of Actuaries)

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!

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Benefits in General; Executive Compensation

[Guidance Overview]
In 2010 Employers Should Respond to New Developments for Existing and Future Separation Arrangements
Excerpt: "Among the many tax issues implicated by separation arrangements are two relatively new developments that may require special attention when drafting offer letters, severance plans, release agreements, change in control arrangements and similar separation arrangements. Employers should review their separation arrangements by year-end to address these new developments."
(Perkins Coie LLP)

[Guidance Overview]
USERRA Coverage May Be Triggered Prior to Formal Military Orders
Excerpt: "[T]he 1st U.S. Circuit Court of Appeals recently held that an employee's announcement to his employer that he intended to return to active duty after remaining inactive for multiple years was sufficient to trigger protection under the USERRA."
(Ogletree, Deakins, Nash, Smoak & Stewart PC)

12-Month Private Industry Compensation Costs Increase 2.0 Percent
Excerpt: "Among occupational groups, compensation cost increases for private industry workers for the 12-month period ending September 2010 ranged from 1.4 percent for service occupations to 2.5 percent for production, transportation, and material moving occupations."
(U.S. Bureau of Labor Statistics)

Employee Ownership Update for November 1, 2010
The DOL has proposed defining ESOP appraisers as fiduciaries, which could cause appraisal fees to skyrocket and in turn cause the number of ESOPs to decrease. Five of the ESOP companies named as winners of the Winning Workplaces award are featured in a video compilation. There is no obligation for unvested restricted stock to have voting or dividend rights. The EBRI has a great retirement planning Web site. The NCEO's issue brief 'Wellness Programs and Employee Ownership' is a best-seller.
(National Center for Employee Ownership)

A Hostile Work Environment: Discrimination and the Work Family 'Balance'
Excerpt: "What [women are] rejecting is the system that punishes them for trying to hold on to a little piece of each [- work and family]. "
(The Huffington Post)

Webcasts and Conferences

2011 Business Management Conference (2011BMC)
in Arizona on January 15, 2011
presented by National Institute of Pension Administrators

Are Your HIPAA Security Measures Keeping You Up at Night?
Nationwide on November 18, 2010
presented by International Foundation of Employee Benefit Plans

Defined Contribution Hot Topics and Trends
in New York on November 16, 2010
presented by International Society of Certified Employee Benefits Specialists - NY Metro Chapter

Legal Update 2010
in Michigan on November 17, 2010
presented by International Society of CEBS - West Michigan Chapter

409A Strategies: The Basics and Beyond
Nationwide on November 4, 2010
presented by BNA Tax & Accounting

Press Releases

PBGC's Deneen Announces Retirement
Pension Benefit Guaranty Corporation (PBGC)

Newly Posted Employee Benefits Jobs

Defined Contribution Retirement Plan Administrator
for Loren D. Stark Company, Inc..
in TX

Account Manager
for Lincoln Financial Group
in IL, IN

Attorney - Insurance and Securities
for Transamerica Life Insurance Company
in CA

Retirement Plan Representative
for First Savings
in PA

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