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November 1, 2011 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

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Webcasts and Conferences

Rekon Road Show - King of Prussia
in Pennsylvania on November 30, 2011 presented by 401(k) Rekon

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[Guidance Overview]
DOL Updates ERISA PTE Procedures (PDF)
"On October 27, 2011, the Department of Labor (DOL) published updated procedures for filing and processing ERISA prohibited transaction exemption (PTE) applications, applicable to all applications filed on or after December 27, 2011." (Sutherland Asbill & Brennan LLP)

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[Guidance Overview]
Kraft Suit Plaintiffs Denied Class Status on Remaining Claim
"In George v. Kraft Foods, the plaintiffs' sole remaining claim is that Kraft Foods defendants breached their fiduciary duty by retaining two actively managed funds, the Growth Equity Fund and Balanced Fund, in their defined contribution plan following their decision to eliminate all actively managed investments in their defined benefit plans in 1999." (PLANSPONSOR.COM)

[Guidance Overview]
Table Outlines Annual Notices to DC Plan Participants (PDF)
"This advisory serves as a reminder of the multiple year-end notices that defined contribution plans must issue to participants. These notices must be distributed within a reasonable period of time, typically 30 days, prior to the start of the plan year." (Alston & Bird LLP)

[Guidance Overview]
PBGC Changes Method for Determining Benefits When Hybrid Plan Terminates
"These changes, except for the present value requirements, are effective for years beginning after December 31, 2007 unless the plan sponsor chooses earlier application of the requirements for any period after June 29, 2005. The present value requirements are effective for distributions made after August 17, 2006." (Practical Law Company)

[Guidance Overview]
EBSA Statutory Exemption Reg for Fiduciary Advisors Offering Eligible Investment Advice Arrangements
"The regulations will go into effect and will be applicable to all transactions occurring on or after December 27, 2011." (Practical Law Company)

New! 403(b) Best Practices Manual, 2nd Edition   [Advert.]

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[Guidance Overview]
Citigroup Decision Endorses Presumption of Prudence and Upholds Dismissal of Disclosure Claims
"In a much-anticipated decision, the U.S. Court of Appeals for the Second Circuit joined five other circuits in ruling that employer stock in a 401(k) plan is subject to a 'presumption of prudence' that a plaintiff alleging fiduciary breach can overcome only upon a showing that the employer was facing a 'dire situation' that was objectively unforeseeable by the plan sponsor." (Morgan, Lewis & Bockius LLP)

[Guidance Overview]
DOL's New Electronic Delivery Policy for Participant Fee Disclosures (PDF)
This article concludes with a 'Summary of Electronic Delivery Rules for ERISA Retirement Plans' in chart form with links to official guidance. (Kelly, Hannaford & Battles P.A.)

Well-Done Request for Proposal Worthwhile Whether Looking for New Service Provider or New Services (PDF)
"The RFP process can be time-consuming and inconvenient. Some trustees may have developed a personal relationship with their service providers, which can make the RFP process awkward. Nonetheless, the obligation to use due care in selecting the plan's service providers can create potential liability for a breach of fiduciary duty if not properly done." (International Foundation of Employee Benefit Plans via ISCEBS)

Creating a Retirement Income Culture (PDF)
"While fiduciary concerns may delay some plan sponsors from offering more income-driven DC plan options until additional regulatory guidance is issued, an opportunity exists to create a culture focused on retirement income through the communication and educational materials provided to employees." (International Foundation of Employee Benefit Plans via ISCEBS)

Who Gets Retirement Plans and Why, 2010 (PDF)
"[E]mployer-sponsored retirement plans should not be analyzed in a vacuum; the U.S. retirement system includes both tax incentives to encourage employers to offer pension benefits and a social safety net of programs to help the elderly." (Investment Company Institute)

Why Overdiversification Matters to the ERISA Fiduciary
"[A] 401k plan sponsor cannot merely delegate investment decisions to a third party. Plan sponsors must continually update their education on matters pertaining to investments in order to assess the prudence of bother the vendor's recommendations as well as the prudence of selecting that particular vendor." (Fiduciary News)

Two 'Prudent Experts' Offer Advice on Searching For and Selecting a 401(k) Plan Vendor
"Every few years, they say, 401(k) plan sponsors should put their plan out to bid." (Employee Benefit News)

Keep 401(k) Clients Calm in Turbulent Times
"You've likely fielded your umpteenth query from distressed clients seeking advice regarding their 401(k) investments. Here, then, is a '401(k) 101' that you can share with them . . . ." (Investment News; free registration required)

$142 Mil.lion of Retiree Benefits Left Rhode Island in 2010
"In total, $142,159,475 of $826,053,112 in pension payouts went to people now living out-of-state. After Rhode Island, Florida, Massachusetts, Connecticut, New Hampshire and South Carolina are the next most popular destinations for Rhode Islanders collecting a pension, according to 2010 data." (GoLocalProv)

Hybrid Pension Plan on Drawing Board for California
"The proposal would create a pension plan with elements of defined benefit and defined contribution plans and would also raise the retirement age for new state and local government employees to 67." (Workplace Management: free registration required)

Pensions Improve Quality of U.S. Public Education and Reduce Turnover Costs, According to Study
"[The new study, Three Rs of Teacher Pension Plans: Recruitment, Retention, and Retirement, finds that:] DB pension plans help to recruit high quality teachers, and to retain highly productive teachers longer, as compared with [DC] individual retirement accounts." (National Institute on Retirement Security)

Who Needs to Carry Fiduciary Liability Insurance?
"Businesses that offer employee benefits and retirement accounts are charged with being sure employee premiums and investments, as well as funding promised by the employer, are dutifully handled and invested. They owe a fiduciary duty to handle those funds properly, with the best interest of the employee in mind. But does that make these employers fiduciaries in the strictest sense?" (PropertyCasualty360)

Behind New York's Pension Changes, a Quest for Higher Returns
"The city's five plans averaged returns of 2.7 percent over the last 10 years, according to the comptroller's office, about average for state and city pension plans nationwide. [This is much lower than Yale's endowment, which had] an annualized return of 10.1 percent over the last decade while Harvard's averaged 9.4 percent." (The New York Times; free registration required)

Savings Rate Is Dropping; Experts Are Puzzled
"In September, the nation's savings rate dropped for the third consecutive month, the Commerce Department said Friday. It is now at 3.6 percent of personal disposable income, its lowest level since the month the recession began." (The New York Times; free registration required)

Optimal Discrete Ratchet Consumption for Retirees
"Philip Dybvig (1995) found optimal spending and investment strategies for endowments with zero tolerance for spending declines. His spending rule is a ratchet - spending never decreases, but has a substantial chance of increasing. Many retirees find this strategy appealing, and in this paper, we find an optimal consumption rule for them." (Social Science Research Network)

Adverse Selection and Incentives in an Early Retirement Program
"We evaluate potential determinants of enrollment in an early retirement incentive program for non-tenure-track employees at a large university. . . . [W]e find no evidence that on average the 'most productive' employees took the incentive." (Social Science Research Network)

Requests for Proposal for 401(k) Plans
"In a prior blog, we discussed the Kraft case and implications of that case. We have heard some [suggest] that after this case, RFPs must be conducted every three years. However, this was merely an allegation of the plaintiffs and their expert, not a holding of the court. ERISA and the underlying regulations do not require that RFPs be done, much less that they be done on a particular time frame." (Porter Wright Morris & Arthur LLP)

New Concerns for Retirement Plan Providers
"A recent bulletin from leading ERISA attorney Fred Reish of Drinker Biddle & Reath LLP indicated that the Labor Department is ramping up efforts to detect improper or undisclosed compensation by service providers under the DOL's Consultant/Adviser Project." (Investment News; free registration required)

AT&T and Verizon Pension Funding Issues to Hurt Bottom Lines
"The unfunded pension obligations of telecommunications giants AT&T Inc. and Verizon Communications Inc. could almost double by the end of 2011, potentially dropping the defined benefit plans below the mandated funded ratio of 80% and requiring large cash contributions in 2012." (Pensions & Investments; free registration required)

Misguided Presumption in Citigroup and Mcgraw Hill Rulings, Says Pensions & Investments
"The cases underscore a conflict between a plan sponsor's fiduciary duty under [ERISA] to protect participants' retirement savings, and a company's goal of encouraging employee ownership of company stock. But defined contribution plan fiduciaries should have only one objective under ERISA: to act solely in the interest of participants." (Pensions & Investments; free registration required)

Benefits in General; Executive Compensation

[Guidance Overview]
Recent Compensation Trends in Mergers and Acquisitions and Section 409A (PDF)
"This article discusses the traps for the unwary created by Section 409A of the [IRC] with respect to current trends in change-in-control compensation for public company executives and the structure of private company acquisitions." (Orrick, Herrington & Sutcliffe LLP)

Non-Employee Director Compensation across Industries and Size (PDF)
"Our findings confirm a general 'rule of thumb' in assessing director compensation programs: compensation levels vary primarily based on company size, while the structure of compensation is influenced by both company size and industry." (Frederic W. Cook & Co., Inc.)

Appeals Court Clarifies USERRA Reinstatement Requirements
"Reinstating a financial adviser returning from military leave to a position with the same pay structure but less desirable client accounts and fewer opportunities to earn commission than his preservice job violates [USERRA], the 2nd US Circuit of Appeals recently held." (Mercer LLC)

New Edition of The Decision-Maker's Guide to Equity Compensation
The revised and expanded second edition of this popular book updates the existing chapters and adds new ones on performance awards and on equity compensation in LLCs. (National Center for Employee Ownership)

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