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March 8, 2011 Health & Welfare Plans Newsletter  |  Advertise  |  Unsubscribe  |  Past Issues

[Guidance Overview]
IRS Maintains Favorable Position on IRA Owner's Payment of 'Wrap Fees' (PDF)
"[The ruling] does not cover issues such as (1) whether payment of the fee from the IRA would be taxed as a distribution to the owner (presumably not), or (2) whether the owner can reimburse the IRA for the wrap fee and get the same favorable 'non-contribution' outcome [presumably not] . . . " (Groom Law Group)

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[Guidance Overview]
Decline in Stock Price Did Not Establish Company Stock Fund As Imprudent Investment Option
"[A]bsent 'imminent financial collapse' of the company, the stock fund could not be treated as an imprudent option." (Wolters Kluwer)

[Guidance Overview]
Benefit Plans with Foreign Financial Accounts Must File FBAR Reports
"The FBAR regulations apply to every United States person who has a financial interest in, or signature authority over, any foreign financial accounts that have an aggregate value exceeding $10,000 at any time during a calendar year." (McGuireWoods LLP)

[Guidance Overview]
IRS Schedule SSA Replacement
"If a plan administrator happens to have submitted an actual Schedule SSA to the IRS for the 2009 and/or 2010 plan year, or submits one not later than April 20, 2011, that filing will be accepted, and another Form 8955-SSA need not be filed. However, beginning April 21, Schedule SSA filings will no longer satisfy the Section 6057(a) requirement." (Ford & Harrison LLP)

Maine's Governor Says Pension Cutbacks Aren't Easy
"Maine Governor Paul LePage says his recently unveiled package of public employee pension cutbacks will hurt government workers, but the move is necessary to get a handle of Maine's ballooning pension shortfall." (PLANSPONSOR.COM)

DOL Issues Proposed Regulation Updating the Definition of ERISA Fiduciary (advert.)

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Judge Approves Class in Tribune ESOP Suit
"The suit against the trustee of the Tribune Co. Employee Stock Ownership Plan during the company's takeover by billionaire Sam Zell has been certified a class action." (PLANSPONSOR.COM)

2011 Report on State Retirement Systems Shows Slight Uptick in Funded Status of Pension Systems
"Wilshire Consulting estimates that the ratio of pension assets-to-liabilities for all 126 state pension plans in its analysis was 69% in 2010, up from an estimated 65% in 2009 . . . ." (PLANSPONSOR.COM)

Trend Toward Plan Sponsors Adopting More Paternalistic Approach with Regard to Plan Distribution Policies
"Both plan sponsors and participants are likely to be well-served if plan assets are retained in the plan beyond retirement or separation from service. Participants benefit from fiduciary oversight of an ERISA plan and lower expenses. Plan sponsors looking to act in the collective best interests of participants should opt for portfolios with professional, independent oversight with fee transparency." (, LLC)

Best-Case Strategies for a Flexible Retirement: The MetLife Study of Thinking About Retirement in Uncertain Times (PDF)
"This study presents a number of 'types' in terms of thinking and responding to the unexpected both before and in retirement. The sheer range and complexity of types encountered is a reminder of the challenge that policy makers, program developers, product developers, and financial professionals face in facilitating effective preparation among individuals and families." (MetLife Inc.)

At ASPPA 401(k) Summit, IRON Financial's Friedman Addresses Fiduciary Risk Mitigation
"Friedman is referring to section 3(38) of [ERISA], which provides that a plan sponsor can delegate the responsibility and liability of the selection, monitoring and replacing investment options and functions to an ERISA describe[d] investment manager who then takes on the fiduciary responsibilities -- and therefore liabilities." (AdvisorOne)

Judge Has Given San Diego Leeway to Change DROP But Not Necessarily to End It
"An independent study that pegged the benefit's long-term costs to taxpayers at $149 mil.lion will likely result in a tug-of-war at City Hall over proposed changes to the Deferred Retirement Option Plan, commonly known as DROP . . . ." (The San Diego Union-Tribune)

IASB Nears Completion of Amended Standard on Accounting for Retirement Benefits
"By March 31, IASB plans to issue an amended standard on employers' accounting for pension, retiree medical, and other post-employment benefits, effective no earlier than Jan. 1, 2013." (Mercer LLC)

Pension/OPEB Accounting: Understanding Changes Expected from the IASB
"The IASB is nearing completion of various amendments to its standard on accounting for defined benefit pensions and other postretirement benefits (OPEB). The amendments are not the result of joint deliberations with the FASB. However, the objective of the IASB and FASB is to adopt a converged standard on this topic and both boards have stated their intent to make further changes to their respective standards to achieve this." (PricewaterhouseCoopers LLP)

IRS 401(k) Plan Questionnaire: Non-Responders Will Be Subject to Full-Scope Audit
"In the most recent issue of Retirement News for Employers [dated Feb. 23, 2011] the IRS announced it will be conducting full-scope examinations of plans whose sponsors did not return the 401(k) Questionnaire it sent them in May 2010 as part of an IRS initiative to better understand 401(k) plan compliance." (Deloitte via

Audio and Text: Raising the Retirement Age: Can It Balance Budgets?
"If Americans were to work longer, they would pay more in taxes, and at the same time reduce the cost of government pensions and Social Security benefits, according to [some] economists." (NPR)

A Smart Way for Retirees to Leave the Workforce
"[Focusing on the employment end of the retirement transition, a phased departure, in which you leave work in stages, could be one of your best bets." (Dow Jones & Company, Inc.)

IRS Explains Compliance Checks and Offers Tips for Employers Who Adopt Pre-Approved Plans
"While the 'Tips for Employers' article focused on pre-approved retirement plans, we note that much of its advice also applies to individually designed retirement plans and welfare plans." (Thomson Reuters/EBIA)

Getting a Handle on 403(b) Plans and Investments
"The 403(b) system is coming under increased scrutiny. The Los Angeles Times recently wrote an article about flaws in the public employee 403(b) programs in California." (Profit Sharing / 401k Council of America)

Time for 401k Plan Sponsors to Admit Target Date Funds Too Broke to Fix?
"The GAO provides a litany of TDF problems but a study by a Georgia State doctoral student may have uncovered the answer to the cause of the problems. [A 2010 research paper by Vallapuzha Sandhya of the J. Mack Robinson College of Business at the Georgia State University,] 'Agency Problems in Target-Date Funds' shows, while TDFs are while increasingly popular as a default option in 401k plans, they underperform balanced funds, a DOL sanctioned alternative default option." (Fiduciary News)

ERISA Metaphysics, Mysticism and Alchemy: Sales Compensation and Fiduciary Status
"Generally unnoticed in the DOL's proposed fiduciary reg was the implicit recognition that the commissioned based sales function is important to the operation of the market, and that you can 'sell' until the cows come home . . . or until you become a fiduciary." (Robert J. Toth, Jr.)

American Benefits Council Amicus Brief in State Street Stock Drop Case (PDF)
"Federal law strongly favors employee stock ownership. Unfortunately, plan investments in company stock are threatened by lawsuits that can be filed at any time that an employer's stock price declines or performs below expectations. These 'stock drop' lawsuits lead to expensive discovery and practical pressures to pay for settlements. They are having a severely detrimental effect on the voluntary employment-based retirement system and are undermining the public policy favoring investments in company stock." (American Benefits Council)

Trade Associations' Request for Extended Comment Time Regarding Fiduciary Definition Hearing (PDF)
"We understand that the comment period is scheduled to end 15 days after the end of the [March 1 and 2] hearings. We hope you will reconsider, and instead keep the comment record open for at least two weeks after the transcript is posted to facilitate comments . . . ." (American Benefits Council)

Benefits in General; Executive Compensation

[Guidance Overview]
Federal Agencies Propose Rules on Dodd-Frank Financial Institution Incentive Compensation Requirements (PDF)
"The provision and new proposed regulation are similar to the principles and rules issued by other national and international financial institution regulatory bodies in the last several years." (Groom Law Group)

SEC Proposes Ban on Incentives that Encourage Risk
"An SEC news release said the rule also requires the disclosure of the structure of firms' incentive-based compensation practices." (PLANSPONSOR.COM)

How Glass Lewis Weighs Say-on-Pay Proposals
"In assessing 2011 say-on-pay proposals, proxy adviser Glass, Lewis & Co. focuses on compensation structure and disclosure, pay-setting practices, and pay-for-performance policies. A recent briefing for Glass Lewis clients shed more light on how the company identifies poor compensation practices that present unnecessary risks and are not in shareholders' best interests." (Mercer LLC)

Are State and Local Government Employees Paid Too Much?
"It's not an easy question to answer for a number of reasons. Here's a primer on the issue." (The New York Times; free registration required)

Milliman's Monthly Benefit News and Developments, March 2011 (PDF)
The newsletter provides a summary of the previous month's legislative, regulatory, and judicial information on employee benefits and upcoming key dates. (Milliman, Inc.)

The Return of Incentive Travel
"Incentive trips -- all-expenses-paid excursions offered as a reward for outstanding performance -- almost disappeared after the American International Group was widely criticized for the lavish spending on one such trip . . . . But it now appears incentive travel is coming back." (The New York Times; free registration required)

Press Releases

Healthcare Organizations as Fiduciaries Rely More on Plan Providers For Plan Administration and Support, Says Diversified/AHA Survey
(Diversified Investment Advisors)

International Foundation to Lead a New Retirement Security Initiative
(International Foundation of Employee Benefit Plans)

Malone Honored with 401(k) Advisor Leadership Award
(American Society of Pension Professionals & Actuaries (ASPPA))

Nine in Ten Americans Say U.S. Retirement System Under Severe Stress
(National Institute on Retirement Security) Gets A Face-Lift

Reish & Reicher to Stop Practicing Law; Firm's Employee Benefits Attorneys to Join Drinker Biddle & Reath
(Reish and Reicher)

Aon Hewitt to Provide Fully Integrated Advisory Services to Defined Contribution Plan Participants
(Aon Corporation)

Tax Season Content At Offers Crucial Tax Return Guidance For People With Stock-Based Compensation
(, Inc)

Employee Benefits Jobs

Senior Team Manager, Document and Technical Services in OH for Charles Schwab

Sr. Compensation Manager in MA for Financial Engines

Group Health Account Manager in DC, MD for Corporate Synergies Group

Retirement Services Relationship Manager in NJ for ExpertPlan, Inc.

Retirement Plan Consultant in FL for AXA-Equitable Life Insurance Company

ERISA Consultant in MO for Pension-Consultants, Inc.

Accountant in CA for Transamerica Retirement Services Corporation

Compliance Manager, Compliance Testing and Analysis in PA for Vanguard

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Webcasts and Conferences

2011 Spring Back-to-Basics Series
Nationwide on March 31, 2011 presented by McKay Hochman Co., Inc.

AICPA National Conference on Employee Benefit Plans
in Nevada on May 2, 2011 presented by AICPA

Automatic Contribution Arrangements
Nationwide on April 14, 2011 presented by McKay Hochman Co., Inc.

Complex RMD Issues
Nationwide on March 17, 2011 presented by McKay Hochman Co., Inc.

Form 5500 Update
Nationwide on March 22, 2011 presented by McKay Hochman Co., Inc.

Qualified Default Investment Alternative
Nationwide on May 20, 2011 presented by McKay Hochman Co., Inc.

Schedule C (Form 5500): The Second Time Around
Nationwide on March 29, 2011 presented by McKay Hochman Co., Inc.

Tales from the Crypt: The One-Year Anniversary of the Patient Protection and Affordable Care Act
in California on March 17, 2011 presented by Western Pension & Benefits Conference - Orange County Chapter

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

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