[Guidance Overview]
DOL Publishes Final 408(b)(2) Fee Disclosure Regs; Treasury Publishes Regs on 'Lifetime Income' Options
"[T]he U.S. Departments of Labor and the Treasury today announced two executive actions designed to help enhance security for millions of Americans saving for retirement. The measures will expand transparency in the 401(k) plan marketplace and broaden the availability of retirement plan options so that Americans can maximize their ability to save responsibly and securely."
(U.S. Employee Benefits Security Administration)
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[Official Guidance]
DOL 'Fact Sheet' on Final Regs on Service Provider Disclosures Under ERISA Section 408(b)(2)
"The final rule reflects a number of technical and other changes . . . including the following: . . . Expansion of the information that must be disclosed concerning a [Covered Service Provider's] receipt of indirect compensation to include a description of the arrangement between the payer and the CSP pursuant to which indirect compensation will be paid; Conformance of investment-related disclosures for covered plans' designated investment alternatives to the requirements of the Department's participant-level disclosure regulation; and A separate provision for the disclosure of changes to investment-related information, which must be updated at least annually."
(U.S. Employee Benefits Security Administration)
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[Official Guidance]
Text of Final 408(b)(2) Regs on Fee Disclosures to Plan Fiduciaries by Covered Service Providers (PDF)
109 pages. 'This document contains a final regulation under the Employee Retirement Income Security Act of 1974 (ERISA or the Act) requiring that certain service providers to pension plans disclose information about the service providers' compensation and potential conflicts of interest. These disclosure requirements are established as part of a statutory exemption from ERISA's prohibited transaction provisions. This regulation will affect pension plan sponsors and fiduciaries and certain service providers to such plans."
(U.S. Employee Benefits Security Administration)
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[Official Guidance]
Treasury Fact Sheet: Helping American Families Achieve Retirement Security by Expanding Lifetime Income Choices (PDF)
"[T]he new package of proposed regulations and rulings makes it easier for pension plans to offer workers a wider range of choices as to how to receive their retirement benefits by [1] Making it easier to offer combination options that avoid an 'all-or-nothing' choice, such as the option to take a portion of an individual's plan benefit as a stream of regular monthly income payable for life, while perhaps taking the remainder in a single lump-sum cash payment; [2] Enabling employer plans and IRAs to offer an additional option in the form of 'longevity annuities' — which permit employees to use a limited portion of their account balance to provide lifelong retirement income beginning at age 80 or 85, protecting those who live beyond average life expectancy from running out of savings; [3] Making clear that employees receiving lump-sum cash payouts from their employer's 401(k) plan can transfer some or all of those amounts to the employer's defined benefit pension plan (if the employer has one and is willing to allow this) in order to receive an annuity from that plan (giving employees access to the defined benefit plans' relatively low-cost annuity purchase rates); and [4] Resolving uncertainty as to how the 401(k) plan spousal protection rules apply when employees choose deferred annuities (including longevity annuities) from their plans."
(U.S. Internal Revenue Service)
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[Official Guidance]
Proposed IRS Regs on Longevity Annuity Contracts
"This document contains proposed regulations relating to the purchase of longevity annuity contracts under tax-qualified defined contribution plans under section 401(a) of the Internal Revenue Code (Code), section 403(b) plans, individual retirement annuities and accounts (IRAs) under section 408, and eligible governmental section 457 plans. These regulations will provide the public with guidance necessary to comply with the required minimum distribution rules under section 401(a)(9). The regulations will affect individuals for whom a longevity annuity contract is purchased under these plans and IRAs (and their beneficiaries), sponsors and administrators of these plans, trustees and custodians of these IRAs, and insurance companies that issue longevity annuity contracts under these plans and IRAs."
(U.S. Internal Revenue Service)
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[Official Guidance]
Rev. Rul. 2012-2: Rollover from Qualified Defined Contribution Plan to Qualified Defined Benefit Plan to Obtain Additional Annuity (PDF)
"Issues: [1] Does a qualified defined benefit pension plan that accepts a direct rollover of an eligible rollover distribution from a qualified defined contribution plan maintained by the same employer satisfy sections 411 and 415 of the Internal Revenue Code in a case in which the defined benefit plan provides an annuity resulting from the direct rollover that is determined by converting the amount directly rolled over into an actuarially equivalent immediate annuity using the applicable interest rate and the applicable mortality table under section 417(e)? [2] How does the result vary if the defined benefit plan applies different conversion factors for purposes of calculating the annuity resulting from the amount directly rolled over?"
(U.S. Internal Revenue Service)
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An Introduction to International Retirement Plan Design (PDF)
"To attract and retain the right talent willing to move across borders, whether on a temporary or permanent basis, employers need to provide competitive compensation packages that include a retirement savings component. This paper details how to address retirement security for a mobile workforce."
(Buck Consultants)
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The Making of The 403(b) Model Disclosure Form
"These [403(b)] plan participants are not fiduciaries, and often do not have anyone to be able to collect and compare data on their behalf. They are sold investment products directly. So it really becomes a very simple issue for that school teacher or administrator: how much sales commissions is my investment generating; what services am I getting in return; is there a way for me to compare it all; and how can I reasonably access comparative data on the investments themselves?"
(Business of Benefits, Robert J. Toth Jr.)
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American Airlines Wants to Terminate All Four of Its Pension Plans
"If it does take over the plans, the PBGC will assume the responsibility for paying retirees' benefits — but not necessarily all of them. The agency caps the monthly benefit it pays at $4,500 a month for plans ended in 2010. It has said about $1 bil.lion in promised benefits to the highest-paid AMR retirees would not be paid."
(Star-Telegram.com)
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PBGC: American Airlines Must Show Why Pensions Have to End
"PBGC Director Josh Gotbaum had this to say: 'Before American takes such a drastic action as killing the pension plans of 130,000 employees and retirees, it needs to show there is no better alternative. Thus far, they have failed to provide even the most basic information to decide that.'"
(Pension Benefit Guaranty Corporation (PBGC))
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IMF Analysis of Pension Reforms in Advanced Economies
"[G]radually raising retirement ages could help countries contain increases in pension spending and boost economic growth. Further cuts in pension benefits, or raising payroll contributions, are also options countries could consider, although many countries will find many advantages in raising retirement ages. The challenge is to reform pension systems without hurting their ability to provide income security for the elderly and prevent old-age poverty."
(Huffington Post)
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Unraveling The Mystery of 401(k) Disclosures
"Sponsors will be required to present information about the investment options in the retirement plan in a chart that allows plan participants to compare fees and expenses . . . . Plan sponsors can use a model chart developed by the Labor Department or they can develop their own."
(MarketWatch)
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Interview With Prof. Ron Rhoades on Revenue Sharing
"I would advise plan sponsors to avoid any revenue-sharing arrangements, of any type, between the advisors and other vendors of the plan. This includes not only payment for shelf space, but also soft dollar compensation and other 'back-channel' payments. Establish the compensation of the investment adviser in advance — before any investment recommendations are made — either as a flat fee, hourly fee, or percentage of assets (or some combination thereof)."
(Fiduciary News)
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Retired Federal Workers Wait for System Fix
"[F]or the retirees who wait many months to get a full annuity, 'unacceptable' might be too mild. And Congress is increasingly anxious to see real improvement, not just plans to make things better, in a retirement program that does not treat federal employees with the respect they deserve."
(Washington Post)
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How to Calculate 401(k) 'Tax Expenditures'
"[The favorable treatment provided by the Internal Revenue Code for 401(k) plans] costs the Treasury money. The question is how much? The calculation involves comparing the present discounted value of taxes collected from saving within a 401(k) plan to how much would have been collected if the saving were done outside."
(SmartMoney)
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Benefits in General; Executive Compensation
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Washington Could Be Seventh State to Allow Same-s.ex Marriage
"A sufficient number of Senators for passage in that chamber have said they would vote for it if it reaches the Senate floor, and Gov. Chris Gregoire (D) said earlier in January that she would sign such a measure if it reaches her desk."
(Thompson Media)
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Washington State Senate Passes G.ay Marriage Bill
"The 28-21 vote in favor of the measure — three more votes than needed for passage — sent it on to [Washington] state's House of Representatives, where the bill is expected to win swift approval by a comfortable margin as early as next week."
(Reuters via Yahoo! News)
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Employee Ownership Update for February 1, 2012
NCEO Executive Director Loren Rodgers discusses employee ownership in the 2010 General Social Survey, the continuing importance of ESPPs, Principal's 10 Best Companies for Employee Financial Security, employee ownership and charity, the April Employee Ownership Conference, and a different way of owning 'stock."
(National Center for Employee Ownership)
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Press Releases
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