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March 2, 2011 Health & Welfare Plans Newsletter  |  Advertise  |  Unsubscribe  |  Past Issues

[Guidance Overview]
Seventh Circuit Clarifies Availability of Class Claims Alleging 401(k) Improprieties
"In so doing, the Seventh Circuit consolidated two cases that it described as 'nearly identical' in terms of the claims made and the underlying facts - Spano v. Boeing . . . and Beesley v. International Paper Co. . . . ." (Littler Mendelson P.C.)


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[Guidance Overview]
DOL Change to Effective Date, but Not Substance, of Service Provider Fee Disclosure Regulations
"Regarding possible changes in the regulations, the DOL has mentioned the concept of requiring service providers to provide a summary disclosure statement as part of the regulatory disclosures." (SunGard Relius)

[Guidance Overview]
IRS Rules on 403(b) Plan Terminations (PDF)
"Rev. Rul. 2011-7 considers the application of these rules to four fact situations . . . . The differences in the four situations relate to (i) the type of § 403(b) product used to fund the plan, and (ii) the applicability of the ERISA qualified joint and survivor and preretirement survivor annuity (QJSA/QPSA) rules (in Situation 4 only)." (Sutherland Asbill & Brennan LLP)

[Guidance Overview]
Guidance on Reporting Loans to Participants by Defined Contribution Plans (PDF)
"A recent Accounting Standards Update . . . will now require that participant loans be classified as notes receivable for Generally Accepted Accounting Principles . . . purposes and should be measured at the unpaid principal balance plus any accrued but not yet paid interest." (WithumSmith+Brown, PC)

[Guidance Overview]
Testing ERISA 404(c) Safe Harbor Protections (PDF)
"In Howell v. Motorola, Inc., . . . the Seventh circuit recently tested the safe harbor protections of ERISA section 404(c) afforded to fiduciaries of plans with participant-directed investments. The Court issued its opinion in a stock-drop case where the plaintiffs participate in the Motorola's Code Sec. 401(k) plan, an ERISA 404(c) plan." (Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.)


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[Guidance Overview]
Final FBAR Reporting Rules Provide Relief, But No Exemption, for Pension Plans Investing in Foreign Accounts
"The final regulations amend the Bank Secrecy Act regulations regarding Reporting on Foreign Financial Accounts (FBAR) and will be effective for the 2010 FBAR filing due by June 30, 2011, and for prior years for which the FBAR filing was deferred . . . ." (Pillsbury Winthrop Shaw Pittman LLP)

[Guidance Overview]
IRS Issues Guidance on Section 403(b) Plan Termination Process
"On February 22, 2011, the IRS issued Revenue Ruling 2011-7, which clarifies the procedure that the sponsor of a Code Section 403(b) plan must follow to terminate the 403(b) plan in accordance with the final regulations that apply to those plans." (McGuireWoods LLP)

[Guidance Overview]
New Reporting Rules for Benefit Plans with Foreign Accounts
"US pension and benefit trusts with foreign accounts may be subject to new foreign bank account reporting (FBAR) rules." (Mercer LLC)

A Uniform Fiduciary Standard May Reduce Investment Choices
"Clues of possible effects came in February as Wells Fargo's head of brokerage operations said the fiduciary standard would limit the number of investment products available to clients." (On Wall Street and SourceMedia, Inc.)

Auto Company's Pension Plans' Funding Level Improves
"The funded levels of General Motors Co.'s U.S. pension plans improved significantly in 2010, aided by strong investment returns and a $4 bil.lion cash contribution." (Workplace Management: free registration required)

Video: Statement by EBSA Assistant Secretary on Retirement Plan Options for Small Businesses
February 23, 2011. Phyllis Borzi is DOL's EBSA Assistant Secretary. (U.S. Department of Labor)

California Teachers' Supplemental Pension Plan Is Flawed, Study Finds
"The retirement system that public school teachers can use to augment their traditional pensions has a baffling array of investment options, high fees and a chronic lack of oversight, the TIAA-CREF Institute says." (Los Angeles Times)

Fiduciary Links: What Upcoming DOL and SEC Regulation Means for Advisors
The target page provides a compilation of links to articles from the past week with updates and speculation on the progress of a uniform fiduciary standard for advisors and brokers, as well as some good stuff on target date funds. (fi360 Blog)

Video: ASPPA on the Definition of Fiduciary
"What constitutes investment advice under ERISA (Employee Retirement Income Security Act)? The U.S. Department of Labor is revisiting the 35 year old regulation that regulates how that advice is given -- and what protections plan participants receive based on who is giving that advice. ASPPA's Executive Director Brian Graff explains how these changes will dramatically impact retirement plans across the nation and why clarification on the issue is key for both plan sponsors and participants." (401khelpcenter.com, LLC)

Public Plans Database: Defined Benefit Plans Plus Additional Data on State Defined Contribution Plans
"The [Database] contains comprehensive financial, governance, and plan design information for 126 state and local defined benefit plans." (Center for State and Local Government Excellence)

Investment Strategies for Cash Balance Plans: More Risk Than You Thought
"The liability for a traditional defined benefit plan is easily matched by bond investments, making risk-reduction cheap and easy. This isn't the case for most cash balance plans." (The Vanguard Group, Inc.)

Principal Reports 401(k) Participants Using Online Tool Defer More
"Retirement plan participants who have completed My Principal Edge Milestones, an interactive tool available on The Principal's Web site, are saving an average of 39% more for retirement than those who have not used the tool . . . ." (PLANSPONSOR.COM)

2011 Industry Report on 403(b) Plans Reveals Areas in Which the Plans Shine
"PLANSPONSOR's 2010 DC Survey found that compared to the overall defined contribution market, 403(b)s have a relatively high incidence of use of a written Investment Policy Statement (IPS), use of certain investment products, and use of advisers." (PLANSPONSOR.COM)

2009 Risks and Process of Retirement Survey Report: Process of Planning and Personal Risk Management (PDF)
"The [survey] asked respondents about a number of risks relating to retirement. Their preponderant concerns related to keeping the value of investments up with inflation, income varying due to changes in interest rates, the affordability of health care and long-term care, outliving assets, and maintaining a reasonable standard of living." (Society of Actuaries)

How Can Customized Information Change Financial Plans?
"This brief explores how respondents reacted once they received information tailored to their specific situation." (Center for Retirement Research at Boston College)

GAO Slams 401(k) Plans for Conflicts of Interest
"Those conflicts of interest involve undisclosed 'revenue sharing,' in which firms administering 401(k) programs receive fees from fund managers, record keepers, custodians and others, who pay to be included [in the plans]." (Forbes.com LLC)

Brokerages Prepare Strategies for New Retirement Plan Investment Rules
"Proposed rules being discussed this week would subject many current activities of brokers and investment consultants to a fiduciary standard of care, as defined under [ERISA]." (Reuters)

Swaps Rule Changes Sought by Plan Sponsor and Financial Industry Groups
"Without changes to proposed Dodd-Frank rules implementing swaps restrictions, swaps will be much less available to retirement plans as a tool to mitigate risk, plan sponsor and financial industry groups warned in joint comments to regulators." (Mercer LLC)

University of Michigan Retirement Payments Dwarf Private-Sector Plans
"The University of Michigan contributed $217.9 mil.lion to its employees' retirement plans in 2010. The school's retirement plan matches up to 10 percent of employee pay." (Mackinac Center for Public Policy)

[Opinion]
Testimony of ICI at Hearing on Fiduciary Definition Proposal
"[T]he rule should create fiduciary duties only when the adviser provides advice or recommendations individualized to the plan or participant. Unfortunately, the proposal does not require that an investment recommendation be specific to the plan or its participants." (Investment Company Institute)

[Opinion]
Public Pension Liabilities: Is Your State Sitting on a Powder Keg?
"We [urge other retirement plan professionals to] take a look at the public retirement plans in your own state to determine if they are in need of additional professional guidance." (Phil Troyer as published by Robert J. Toth, Jr.)

[Opinion]
American Benefits Council/CEIBA Letter to CFTC Regarding Confirmation, Portfolio Reconciliation and Portfolio Compression Requirements for Swap Dealers and Major Swap Participants (PDF)
"Consistent with ERISA, we are sure the Commission will want to avoid any possibility that the reporting of swaps, directly or indirectly, would adversely affect an ERISA fiduciary's ability to obtain the best possible swap terms for plan participants." (American Benefits Council)

[Opinion]
Testimony of Profit Sharing / 401k Council of America at DOL Hearing on Proposed Rule on Definition of Term 'Fiduciary'
"PSCA supports the Department's initiative, with some reservations that are discussed later in this testimony." (Profit Sharing / 401k Council of America)

[Opinion]
Testimony from Great-West Retirement Services at the Hearing on the Definition of Fiduciary Investment Advice
"[The president of Great-West Retirement Services] said he supported certain provisions in the proposed rule but found many more ambiguous. He said he is concerned that others will be harmful to the retirement plan community by: Dramatically increasing costs to 401(k) participants and plan sponsors, Eliminating advancements that provide defined contribution plans with greater efficiencies and cost-savings though open architecture investment platforms, and, Substantially curtailing plan distribution communication, education and counseling, reducing the availability of information participants need to make informed decisions about their distribution options." (Great-West Retirement Services)

[Opinion]
SPARK Institute Testimony at DOL Hearing on Definition of Fiduciary (PDF)
"The SPARK Institute supports EBSA's efforts to safeguard the interests of participants and beneficiaries in connection with plan distributions, and encourages it to develop further guidance, but not in connection with the current effort to redefine who is a fiduciary." (The SPARK Institute)

Benefits in General; Executive Compensation

[Guidance Overview]
A Review of Recent Developments in Employee Benefits and Executive Compensation
The review covers the following: liabilities to ERISA pension and welfare plans when planning and executing an acquisition of a company; Lactation Supplies as Medical Expenses; Determination Letter Five-Year Cycle; Guidance Regarding Termination of 403(b) Plans; and, Illinois Civil Union Law Impact on Employee Benefit Plans. (Blank Rome LLP)

7th Circuit Says Courts Owe Deference to Top-Hat Plan Administrator's Interpretation
"Executive retirement plan administrators didn't act arbitrarily or capriciously in deciding that discretionary stock-linked payments are a 'bonus' excluded from compensation recognized in the benefit formula . . . ." (Mercer LLC)

Employee Ownership Update for March 1, 2011
Corey Rosen discusses the following: Employee participation in ESPPs is rising. At a Rutgers symposium, researchers presented more than 28 papers. The IRS has put into regulations the long-held assumption that companies are considered privately held unless their stock is readily tradable on an established security market. A district court held that, unless fiduciary decisions actually caused investment losses in employer stock, fiduciaries could not be held accountable for them. (National Center for Employee Ownership (NCEO))

Press Releases

Society of Actuaries' Risk Report Highlights Impact of Inflation on Retirement Planning
(Society of Actuaries)

Great-West Retirement Services Testimony at DOL Hearing on Definition of a Fiduciary
(Great-West Retirement Services)

The SPARK Institute Requests Guidance, Flexibility And Adequate Time For Compliance At Hearing On Definition Of Fiduciary
(SPARK Institute)

New Report Urges Employers, Researchers and Policy Makers to Rethink How They Measure Health Care Results
(Integrated Benefits Institute)

New Guide from CHOICE Administrators Makes Health Savings Accounts Easy to Understand
(CHOICE Administrators)

New Report Urges Employers, Researchers and Policy Makers to Rethink How They Measure Health Care Results
(National Pharmaceutical Council)

Investment Advisor Is Certified For Fiduciary Excellence
(Centre for Fiduciary Excellence (CEFEX))

New Research Brief Finds Private Sector Pensions Regulated To Death
(National Institute on Retirement Security)

Weight Loss and Stress Reduction Top the List of Employee Wellness Concerns for 2011, According to ComPsych Survey
(ComPsych)

Whirlpool Corporation Recognized by IBI and NBCH for Health & Productivity Leadership in Transforming Benefits Program
(Integrated Benefits Institute and National Business Coalition on Health)

Highmark Study Shows Worksite Wellness Programs Slowed Health Care Cost Growth
(Highmark Inc.)

FreeWave Technologies Continues to Reward Employees as Company Continues Path of Growth and Success
(FreeWave Technologies)

International Forum for Investor Education Elects New Officers
(International Forum for Investor Education)

National Federation of Independent Business Names EMPLOYERS Provider of Choice for its Members
(Employers Holdings, Inc.)


Employee Benefits Jobs

Regional VP/External Wholesaler – Northern New Jersey in ANY STATE, NJ for Transamerica

Benefits Consultant in CA for Full Service Employee Benefit Solutions Provider to Global Clients

Stock Administrator in MO for DST Systems, Inc.

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Webcasts and Conferences

2011 Fiduciary Changes for Employer-Sponsors of 401k Retirement Plans
in Michigan on April 12, 2011 presented by Warner Norcross & Judd LLP

401(k) Rekon Advisor Symposium- Tyson's Corner
in District of Columbia on March 31, 2011 presented by 401(k) Rekon


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Jeanette Hull, News Editor
David Rhett Baker, J.D., Editor and Publisher
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