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BenefitsLink Retirement Plans Newsletter

June 8, 2011 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

[Official Guidance]
Transcript for Employee Plans Technical Guidance March 4, 2011, Phone Forum (PDF)
The phone forum covered recent published guidance and updates on current IRS initiatives. (U.S. Internal Revenue Service)

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[Official Guidance]
Text of Notice 2011-49: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
"Updates for the corporate bond weighted average interest rate for plan years beginning in June 2011; the 24-month average segment rates; the funding transitional segment rates applicable for June 2011; and the minimum present value transitional rates for May 2011." (U.S. Internal Revenue Service)

[Guidance Overview]
Peabody v. Davis Exposes Potential Risks for Fiduciaries of Eligible Individual Account Plans
"The Court acknowledged that EIAP's are exempt from the duty to diversify, but nevertheless concluded that the fiduciaries had a duty to reduce exposure to company stock in an orderly way, as company profitability abruptly and openly dropped. Although the facts of the case are unique, the ruling may expose potential risks for the fiduciaries of EIAPs.' (Proskauer Rose LLP)

[Guidance Overview]
CIGNA Corp. v. Amara: Changing the Landscape of ERISA Litigation
"The opinion provides useful guidance with respect to the content of plan documents, but the eventual impact of this decision on the scope of available ERISA equitable remedies remains uncertain." (Proskauer Rose LLP)

[Guidance Overview]
Supreme Court Weighs in on ERISA Cases Premised on Erroneous or Misleading Plan Communications
"For years there has been uncertainty as to how a court should analyze a benefits claim brought by a participant premised on a summary plan communication which differed in some material respect from the plan document. This decision resolves that ambiguity . . . ." (Nixon Peabody LLP)

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[Guidance Overview]
DOL Clarification of Effective Dates for Fee Disclosure Rules
"It appears unlikely that the DOL will extend these effective dates any further. Consequently, covered service providers, plan fiduciaries and plan administrators should take active steps to familiarize themselves with these rules and be prepared to meet the newly announced compliance deadlines." (McGuireWoods LLP)

Retirement Plan Sponsors Value their Advisers, Study Finds
"Plan sponsors say that they 'find comfort' in their advisers and the services they deliver, according to preliminary results from a comprehensive study to research the benefits that plan sponsors gain from working with professional retirement plan advisers." (Insurance Networking News and SourceMedia, Inc.)

Future Social Security Beneficiaries Face 19% Cut as Result of 1983 Legislation (PDF)
"Those benefit cuts are only beginning to be felt. People reaching age 65 in 2025 will get retirement benefits for the rest of their lives that are about 19 percent lower than they would have been without the 1983 reductions." (National Academy of Social Insurance)

Fiduciaries and the Attorney-Client Privilege
"Courts have carved out a very broad exception to the attorney-client privilege in the context of fiduciary litigation. When an attorney advises a fiduciary about the administration of a benefit plan, courts have found that the attorney's client is actually the beneficiaries of the plan and not the fiduciary personally." (Employee Benefit News; free registration required)

Equity Indexed Annuity Alert
"One reason for the widespread interest in equity indexed annuities is that these products are often touted as a vehicle for investors to realize stock-market-like gains without the risk, a 'best of both worlds' marketing strategy that has proven appealing to risk-averse seniors. However, the expectation of a return that mirrors that of a stock market index is unrealistic with equity indexed annuities." (Florida Department of Financial Services)

How to Effectively Educate Baby Boomers to Prepare for Retirement
"Educating Baby Boomers is a process, not an event. There are emotional issues-such as learned helplessness and defeatism that require multiple interactions to overcome. There are also plenty of Baby Boomers that don't have a solid financial foundation and can't begin to increase their retirement savings or even think about more effective retirement planning strategies until they take care of more pressing problems." (Liz Davidson via

Philadelphia's Public Officials Have Devised New Ways to Take Advantage of the City's Already-Depleted Pension Fund
"[N]ow the city has a separate class of 102 beneficiaries who don't plan to retire for another five to ten years. With the Council pressing ahead with plans to reform DROP and a mayor who says he wants to kill the program, that number is sure to grow as panic spreads among city workers. (Since Feb. 1, 2010, 1,520 employees have enrolled in DROP, at a cost of $247 mil.lion in future bonuses.)" (Philadelphia Media Network Inc.)

Opponents of New PBGC Premium Authority Take It to Congress
"In a letter to all congressional members . . ., the U.S. Chamber of Congress, the ERISA Industry Committee and other employer groups argue that allowing the Pension Benefit Guaranty Corp. to raise premiums 'amounts to a tax on employers that have voluntarily decided to maintain defined benefit plans.'" (Pensions & Investments; free registration required)

Court Grants Class Certification in First Horizon 401(k) Suit
"The suit seeks to recover monies that were lost by employees of First Horizon National Corporation due to their investing in First Horizon stock and/or the First Funds, a family of First Horizon mutual funds, when it was no longer prudent to do so." (PLANSPONSOR.COM)

PBGC Fighting Harry & David Holdings Inc. Move to Terminate Pensions
"In its filing for bankrup.tcy, the gift basket retailer asked for court approval to shed its pension plans . . . . However, PBGC said its financial analysis shows that the company will be able to emerge from bankrup.tcy without cutting off its workers' pensions." (PLANSPONSOR.COM)

Loans from 401(k)s Are on the Rise As Investors Tap Their Inner Banker
"In 2010, about one in seven workers borrowed from a 401(k) plan, according to new data from human-resources consulting group AON Hewitt. Companies that run the plans report double-digit increases in borrowing from 2009: up 14% in Vanguard Group Inc.-run plans; up 11% in plans run by T. Rowe Price Group Inc. Today, almost 30% of 401(k) savers have a loan outstanding, the highest in recent history." (The Wall Street Journal)

Pension Plan Terminations: Minimizing Cost and Risk
"This paper discusses the financial preparation and strategies that need to be considered as part of terminating a pension plan. Most sponsors with fully frozen plans should begin thinking about these issues as soon as possible, even if terminating the plan is not imminent." (The Vanguard Group, Inc.)

New Hampshire Negotiators Agree on Pension Reform Bill
"Negotiators settled the last two issues holding up the compromise that lawmakers could vote on Wednesday. One would limit part-time workers to 32 hours a week before they would have to contribute to the pension system. An exception was made for retired police officers hired by communities seasonally for events such as motorcycle week in Laconia." (Bloomberg LLP)

N.J. Senate Committee Unanimously Approves New Bill Preventing Public Officials from Double-Dipping
"The bills would only affect elected officials who have not yet taken advantage of the loophole, which has been broadened since its inception in 1985." (

A Response to Eugene Scalia's Letter to DOL Regarding the Proposed Change to ERISA's 'Fiduciary' Definition
"(T)he Department has attempted to pound a square peg into a round hole by using over 1,100 words to redefine the meaning of the phrase 'investment advice'—as used within the statute—to significantly broaden the definition of a plan 'fiduciary.'" (Phil Troyer via Business of Benefits published by Robert J. Toth, Jr.)

All Americans Need 401(k) Loan Insurance
"Many of these millions of borrowers are unaware that in the event of death or disability, the loan is considered to be in default if not repaid within 60 days. This might seem a negligible risk, but the Social Security Administration reports three in 10 workers will eventually suffer such a setback." (Elaine Chao via CQ-Roll Call, Inc.)

PSCA Comments on Request for Information Regarding Electronic Disclosure by Employee Benefit Plans
"We wholeheartedly agree with the [DOL's] finding that 'electronic disclosure can be as effective as paper based communications, and that it can lower costs and administrative burdens and increase timeliness and accuracy for all involved.'" (Profit Sharing / 401k Council of America)

Benefits in General; Executive Compensation

The Treatment of Stock Options in the Context of a Merger or Acquisition Transaction
"A principal issue in merger and acquisition transactions is whether, and to what extent, outstanding options will survive the completion of the transaction and whether and when the vesting of options will be accelerated." (Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.)

U.S. Funding for Future Obligations Lags by Trillions
"The government added $5.3 tril.lion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 tril.lion the total of financial promises not paid for." (USA TODAY)

Legislation to Amend Commuter Benefits Introduced
"Four recently introduced bills would affect employer-provided commuter and parking benefits." (Towers Watson)

Milliman's Monthly Benefit News and Developments, June 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.)

Press Releases

US Labor Department Obtains $10.45 Million in Restitution for Participants of DirecTECH Holding Retirement Plan
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))

IRS Names 10 New Members to the Advisory Committee on Tax Exempt and Government Entities
(Internal Revenue Service (IRS))

TIAA-CREF Partners with Center for Due Diligence to Create a Network of Independent Registered Investment Advisors to Provide Participant Level Services

New Survey Examines Employer Reactions to Health Care Reform One Year Later
(International Foundation of Employee Benefit Plans)

Joseph Ricciuti Joins Buck Consultants as Managing Director for Canada
(Buck Consultants)

Iron Financial Is Certified For Fiduciary Excellence
(Centre for Fiduciary Excellence (CEFEX))

US Pension Plans Experience Funded Status Setback in May

Aon Hewitt Wins the Most Top Employee Benefit Consultant Awards
(Aon Corporation)

College Tuition Funding With Company Stock Grants & Nonqualified Deferred Compensation
(, Inc)

Nyhart Continues Expansion, Merges with Atlanta Public Pension Actuarial Company

Qualified Plan Consultants Executive Appointed to Serve on Council of Top Retirement Plan Provider
(Qualified Plan Consultants, LLC)

SC Johnson's Commitment to Its Workforce Raises Company to Top of Global Great Place to Work Lists
(SC Johnson)

Employee Benefits Jobs

Education Consultant
for AXA Equitable in CA, TX

Account Manager
for Advanced Pension Solutions, Inc. in OH

Account Manager
for Nova 401(k) Associates in TX

Benefits and Reconciliations Coordinator
for Veterans Medical Research Foundation in CA

Recordkeeping Specialist
for AKT Retirement Plan Services in OR

Third Party Administrator
for Eugene Based Professional Services Firm in OR

Investment Analyst/Solutions Associate
for Prudential in CT

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Webcasts and Conferences

Corporate Benefits Summit 2011
in Florida on June 15, 2011 presented by marcus evans

Fiduciary and Filing Compliance Workshop
in Utah on June 15, 2011 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Health Care Reform Update: What Should Employers Do Now
in Illinois on June 23, 2011 presented by WEB - Chicago West

Mid-Market Corporate Benefits Summit 2011
in Florida on June 15, 2011 presented by marcus evans

Voluntary Fiduciary Correction Program Workshop
in Utah on June 16, 2011 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

We also publish the BenefitsLink Health & Welfare Plans Newsletter (free): Subscribe, Inc.
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Winter Park, Florida 32789
Phone (407) 644-4146
Fax (407) 644-2151

Jeanette Hull, News Editor
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
Copyright 2011, Inc., but feel free to forward this newsletter in its entirety.

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