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January 18, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Senior Stock Plan Administrator
for BTHR Solutions in MA

Senior Plan Administrator
for IRON Financial in IL

Quality Assurance Analyst
for Tegrit Administrators in SC

Operations & Withdrawal Processing Associate
for IRON Financial in IL

Senior Plan Administrator
for Mercer Advisors in AZ

401(k) DB/DC Administrator
for Nicholas Pension Consultants in CA

Management and Program Analyst
for Federal Retirement Thrift Investment Board in DC

VP, Strategy and Risk Management
for Prudential in CT, NJ

Senior Retirement Specialist
for Brooks Brothers in CT

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Webcasts and Conferences

401(k) Rekon Advisor Symposium- Portland
in Oregon on February 14, 2012 presented by 401(k) Rekon

401(k) Rekon Advisor Symposium- Schaumburg
in Illinois on February 16, 2012 presented by 401(k) Rekon

NY CLE Program: Ethical Dilemmas in Executive Compensation and Benefits
in New York on February 16, 2012 presented by WEB (Worldwide Employee Benefits Network ), New York Chapter

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[Official Guidance]
IRS Notice 2012-10: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
IRS-updated figures for pension plan administration as prescribed by Code sections 412, 417, 430 and 431. (U.S. Internal Revenue Service)

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[Guidance Overview]
2011 Earned Income and Self-Employment Tax Affect on Pension Calculations
"For years, Code § 164(f) has allowed a self-employed individual to deduct from adjusted gross income one-half of the self-employment taxes (SE Tax) the individual pays. This is designed to put an unincorporated business on an even footing with a corporation. Corporations can deduct the company's share of FICA, which is one-half of the total FICA paid. The 164(f) deduction allows the individual to have the benefit of a similar deduction." (SunGard Relius)

[Guidance Overview]
Gearing Up for Another Significant ERISA Decision from the Fourth Circuit
"On December 21, 2011, in David v. Alphin, . . . plaintiffs, participants of Bank of America's 401(k) Plan and Pension Plan, appealed to the Fourth Circuit after the district court partially dismissed and later entered summary judgment for the defendants on their claims that the defendants engaged in imprudence and self-dealing by offering Bank of America-affiliated mutual funds as plan investments." (Seyfarth Shaw LLP)

[Guidance Overview]
Changes and Clarifications to the Determination Letter Program
"These changes, which are effective Feb. 1, 2012 (May 1, 2012, for terminating and pre-approved plans), are designed, among other things, to eliminate features of the program that the IRS believes will improve efficiency by reducing the processing time for determination letter applications." (Drinker Biddle & Reath LLP)

[Guidance Overview]
Profit-Sharing Plan Must Restore Misplaced Assets Although Not Recovered
"A federal appellate court has found that a profit sharing plan must pay back over $1 mil.lion in assets wrongly transferred from a participant's account even thought it has not recovered the misplaced funds." (PLANSPONSOR.COM)

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[Guidance Overview]
Controlled Group May Retain Qualified Replacement Plan after Sale of Plan Sponsor
"In a recently issued private letter ruling, the IRS examined the requirements of Code § 4980 as they apply to the sale of a subsidiary that sponsors a 'qualified replacement plan' where the parent proposes to sell the subsidiary and retain the plan within the seller's controlled group." (Deloitte via

From Fees to Fund Lineups: Top Five Fiduciary Issues of 2011
"Some of these fiduciary issues require plan sponsor compliance; others are simply topics that are important to sponsors seeking to maintain their status as employers of choice." (The Vanguard Group, Inc.)

New York Governor Proposes Radical Pension Overhaul for Future City and State Workers
"[He] said the plan would save New York City $30 bil.lion in pension costs over 30 years, while saving $83 bil.lion for the state and local governments outside the city over the same period." (NYP Holdings, Inc.)

Large Governmental Employee Union Pension Plan Files 21 Shareholder Proposals with Companies in Which Plan is Invested
"The plan proposals are designed to protect and enhance the economic value of its long-term investments. They would require greater director accountability, independent corporate board leadership and greater transparency in the companies in which the plan invests." (PLANSPONSOR.COM)

401(k) Averages Book Reveals Wide Range of 401(k) Plan Fees
"The average total plan cost for a small 401(k) plan (100 participants) is 1.30%. According to the 12th Edition . . ., the average total plan cost for a large retirement plan (1,000 participants) is 1.08%. The study shows the small plan average investment expense is 1.24%, while the large plan average investment expense is 1.05%." (PLANSPONSOR.COM)

Hawaii Pension System Proposes New Overtime Rules
"The Hawaii Employees' Retirement System wants a cap on how much overtime can count toward pensions and wants the state and counties be on the hook for costs tied to employees who spike their retirement benefits." (Peer News LLC)

The New Retirement Rulebook
"[One retirement industry worker] advocates an approach that takes into account an 'individualized inflation rate' based upon standard of living. A laddered annuity approach can cover baseline expenses to 'give peace of mind for lifetime income that they can never outlive.' 'In theory, they can spend the rest of their money and never run out of income,' he says." ( LLC)

Options for 401(k) Plans Get More Affordable
"As employers prepare for new federal rules requiring them to explain how fees affect 401(k) returns, industry providers are rolling out better, lower-cost plans." (USA TODAY)

Is the 4 Percent Retirement-Withdrawal Rule Viable?
"'Market valuations' — the relative health of markets at the moment you enter retirement -- are now an important part of calculating withdrawal rates. The thinking: Markets move in cycles (bull markets follow bear markets, and so on), and we can measure (to some extent) whether we're on the cusp of the former or the latter. Why is that important? If you happen to retire at the start of a bear market and withdraw too much too soon, your nest egg might expire before you do." (Dow Jones & Company, Inc.)

Capping 401(k) Plan Deferral Limit Wouldn't Do Much to Fix Budget Deficit
"Researchers with the National Tax Association estimated the long-term effect on tax expenditures of limiting the maximum total deferrals to 401(k)-type plans to $10,000, and found that even at high rates of return, doing so would only decrease the cost of the tax expenditure by at most $33 bil.lion or 2% of the current $1.5 tril.lion deficit." (PLANSPONSOR.COM)

Treasury's Thrift Savings Plan Maneuver Aims to Keep Government under Debt Cap
"The federal government resorted to a favorite accounting maneuver Tuesday to stay under its debt limit, suspending the issuance of securities in a retirement savings program for federal and postal employees." (The Washington Post; free registration required)

The Impact of 408(b)(2) Disclosure Regulations on TPAs
"TPAs typically receive compensation for administrative services, often including a base fee and a per-participant fee, as well as fees for processing transactions (e.g., loans, QDROs, and distributions). Many TPAs also provide consulting services, for which they typically receive hourly fees. If the TPA doesn't receive any other compensation (such as revenue sharing or payments from other service providers), they may not have to do any additional disclosure in order to comply." (BenefitsPro)

Benefits in General; Executive Compensation

[Guidance Overview]
Tax Reporting Deadline Rapidly Approaching for Incentive Stock Options and Employee Stock Purchase Rights
"While these filings are required only once per year, please note that each Form 3921/3922 may report only one transaction. As a result, employers may need to prepare multiple forms for a single employee." (Jones Day)

[Guidance Overview]
IRS Hikes 2012 Vehicle Values
"Employers with fleets of vehicles will be glad to know that the IRS has made it possible for them to determine the value of making them available for use in 2012. The IRS on Jan. 17 released the maximum vehicle values for use with the special valuation rules for employer-provided cars, trucks and vans in 2012." (Thompson Publishing Group)

[Guidance Overview]
Employer's Deduction for Flight Crew Meals Limited because De Minimis Rule Did Not Apply
"This [Chief Counsel Advice memorandum] illustrates how fringe benefit exclusions can sometimes overlap. When exclusions are provided under Code § 132 and another section of the Code, a priority rule typically makes the Code § 132 exclusion unavailable. But there are a few exceptions, including one that preserves the Code § 132(e) de minimis fringe exclusion despite the availability of other Code exclusions. While in this instance it mattered little to employees which exclusion applied, it made a substantial difference to the employer." (Thomson Reuters/EBIA)

[Guidance Overview]
IRS Mileage Rate Remains Unchanged
"Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be 55.5 cents per mile for business miles driven. The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011." (Barker Olmsted & Barnier)

Estimates of Federal Tax Expenditures for Fiscal Years 2011-2015
"The Joint Committee staff has made its estimates . . . based on the provisions in Federal tax law as enacted through January 10, 2011. Expired or repealed provisions are not listed unless they have continuing revenue effects that are associated with ongoing taxpayer activity. Proposed extensions or modifications of expiring provisions are not included until they have been enacted into law." (The Joint Committee on Taxation)

Employee Ownership Update for January 17, 2012
NCEO Executive Director Loren Rodgers discusses Iowa's ESOP initiative, research finding that shared capitalism companies are among the best to work for, Mitt Romney and the ESOP at Bain, employee ownership in the UK, the DOL's plans to re-propose its fiduciary regulations, and the NCEO board election. (National Center for Employee Ownership)

Employment Rate Among Older Workers Reduced, Not Increasing
"By the time the recent recession began, in 2008, Americans were already well into a reversal of the 20th-century trend toward earlier and earlier retirement. The employment rate for older women started rising in the mid-1980s, and for older men soon afterward. The effects were most pronounced among people 65 and older, but were noticeable for those in their early 60s as well. In 1994, 43 percent of people ages 60 to 64 were employed; by 2006, 51 percent were." (Bloomberg L.P.)

Explaining Plan Changes: Lessons from the Supreme Court in CIGNA v. Amara (PDF)
The lessons go beyond cash balance plan conversions and may apply to changes plan sponsors make in reaction to the health reform law. (Employee Relations Law Journal via Steptoe & Johnson LLP)

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Jeanette Hull, News Editor
David Rhett Baker, J.D., Editor and Publisher
Lois Baker, J.D., President
Holly Horton, Business Manager

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