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February 3, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

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401(k) Sales Consultant
for Diversified Financial Service Firm in NJ, NY

Senior Benefits Administration & Technology Consultant
for The Segal Company in CA

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Webcasts and Conferences

"Cash Balance Plans for 401(k) Practitioners" A 3-part Web Seminar
Nationwide on February 7, 2012 presented by SunGard Relius

Lifetime Income Options for Retirement Plans: Where Do We Go from Here?
Nationwide on March 1, 2012 presented by ABA Joint Committee on Employee Benefits

Money Market Mutual Funds: Implications of the European Debt Crisis
in Missouri on February 16, 2012 presented by Pension Consultants, Inc.

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[Guidance Overview]
Finally, the Final 408(b)(2) Regulation
"[T]he most important changes are the following: [1] The extension of the compliance date from April 1, 2012 to July 1, 2012; [2] The fact that service providers are not required to provide a summary of the disclosures, though the DOL provided a sample 'guide' that is not mandatory; [3] The addition of the requirement to describe the arrangement between the service provider and the payer of indirect compensation; [4] Limited relief for disclosures for brokerage accounts and similar arrangements; [5] Clarification that electronic disclosure of the disclosures is permitted; [6] Relief from the disclosure requirements for 'frozen' 403(b) contracts; [and] [7] The requirement that plan sponsors terminate the relationship with a service provider who fails or refuses to provide information on request." (DrinkerBiddle)

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Proposals, Testing, Valuation, IRS/DOL/PBGC Forms, Plan Documents
Includes Graded, 412(e)(3), Cash Balance, Combo Plans

[Guidance Overview]
Final ERISA Section 408(b)(2) Regulations Include Significant Differences from Interim Rules
"These regulations make several significant changes . . . including: [1] Excluding certain frozen IRC Section 403(b) plans issued before January 1, 2009 from coverage under the regulations; [2] Enhancing the information relating to 'indirect compensation' required to be disclosed; [3] Adding certain investment-related disclosures to facilitate compliance with DOL regulations under ERISA Section 404(a); [4] Extending the effective date to July 1, 2012. This has the effect of delaying the effective date of most participant-level disclosures under ERISA Section 404(a) to August 30, 2012." (Practical Law Company)

[Guidance Overview]
DOL Finalizes, Delays 401(k) Fee Disclosure Rules
"The final regulations 'strongly encourage' service providers to offer plan fiduciaries a 'guide' or summary of their disclosures. The DOL included a sample guide as an appendix to the final rule. Debate about whether to require such a summary disclosure is rumored to have delayed the release of the final rules. For now, the summary is voluntary, but the DOL strongly hinted that it may make the summary mandatory in future regulations." (Benefits in Brief)

[Guidance Overview]
Final Fee Disclosure Regs Contain Important Relief for 403(b) Plans
"As with everything 403(b), there are going to be complications, as it is not a totally carte blanche of pre-2009 'frozen' contracts. There will be odd circumstances, like where vendors who insist on employer approval on loans and distributions from those contracts (but the price of that insistence will be 408(b)(2) disclosure)." (Business of Benefits, Robert J. Toth Jr.)

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[Guidance Overview]
District Court Permitted to Look Beyond Charged Conduct to Calculate Restitution Amount for Theft from Plan
"A district court did not err when, to calculate a restitution amount, it considered losses stemming from an individual's nine-year pattern of theft from her employees' retirement accounts, instead of focusing solely on losses incurred in the year that encompassed the charged criminal conduct, the U.S. Court of Appeals in San Francisco (CA-9) has ruled." (Wolters Kluwer Law & Business / CCH)

[Guidance Overview]
Common Questions About the Next Restatement Cycle for Defined Contribution Plans
"Pre-approved defined contribution plans will need to be restated in a two year window. This window will likely open in early 2014 and close in early 2016. If a plan is currently on an EGTRRA pre-approved document, there is generally no need to restate the plan until this two year window opens. Q: So I don't need to do anything with my plans until 2014? A: That's probably not correct. . . ." (Wolters Kluwer Law & Business /

New Treasury Rules Ease Purchase of Annuity With 401(k)
"J. Mark Iwry, an official at the Treasury department, said the department hoped in particular to foster a workplace market for 'longevity insurance,' something much discussed in policy circles but that employers rarely make available to workers when they retire." (New York Times; free registration required)

Treasury Eases Rules on Annuities in Retirement Plans
"Employers have been reluctant to adopt annuities in retirement plans they sponsor because of concern that fees are too high and that they would be held liable for their choice of insurers. Americans have resisted buying the insurance because they don't want to lock up their assets." (Bloomberg)

New 401(k) Policies Are a Mixed Bag
"Most workers won't see their companies offering annuities anytime soon, concedes David Wray of the Plan Sponsor Council of America, an employer group. He said employers would be concerned about choosing solid insurance companies and reasonably priced annuities for their workers." (Reuters)

Report of Council of Economic Advisers: 'Supporting Retirement for American Families' (PDF)
Feb. 2, 2012. "While economic studies have established the benefits of annuitization for retirees — including both immediate and longevity annuities — many workers have only limited access to these products. The administrative guidance issued by the Treasury today, easing and simplifying certain regulatory requirements for retirement plans and IRAs, takes an important first step towards a more complete private market offering more attractive lifetime income options." (Council of Economic Advisers, Executive Office of the President)

Managing Volatility in Defined Benefit Plans
12 pages. "[The paper explains why] (1) interest rates directly impact plan funding levels/contribution volatility, and (2) a declining-rate/low-rate environment can quickly lead to funding level shortfalls for plans utilizing a traditional total-return investment strategy; and [discusses] how liability-driven investing (LDI) works and why, for many DB plans, it may be a better approach than a total-return strategy." (Principal Financial Group)

Multiple Employer Plans Offer Retirement Security Advantages
"Some of those advantages are: 1. Cost reductions through plan aggregation, creating volume discounting. 2. Fiduciary risk transfer to the MEP sponsor and its named fiduciary. 3. Elimination of document maintenance by adopting employers. 4. Elimination of Form 5500 filings by adopting employers. 5. For larger adopting employers, elimination of expensive individual ERISA audits." (Employee Benefit News)

Social Security Bulletin (February 2012)
Articles include The Impact of Changes in Couples' Earnings on Married Women's Social Security Benefits, The Retirement Prospects of Divorced Women, This Is Not Your Parents' Retirement: Comparing Retirement Income Across Generations; and The Increasing Labor Force Participation of Older Workers and its Effect on the Income of the Aged. (Vol. 72, No. 1.) (U.S. Social Security Administration)

PBGC Director Explains Retirement Security Challenges, Pension Agency Finances Before House Panel
"Josh Gotbaum, director of the Pension Benefit Guaranty Corporation (PBGC), told a House subcommittee today that the combination of living longer, the economy, and changes in pension plans was threatening many people's retirement security. He also detailed the agency's financial challenges, and outlined an administration proposal to redress them by reforming how PBGC sets premiums." (Pension Benefit Guaranty Corporation)

Webcast and Written Testimony: Hearing Entitled 'Examining the Challenges Facing PBGC and Defined Benefit Pension Plans'
February 2, 2012. (Subcommittee on Health, Employment, Labor, and Pensions; Education and the Workforce Committee; U.S. House of Representatives)

401(k) Plan Sponsors Less Confident That Employees Will Be Financially Prepared for Retirement (PDF)
"84 percent of polled executives responsible for [401(k)] plans say only some or very few employees will be financially prepared for retirement, a new Deloitte survey reveals. . . . To encourage plan participants to make better use of their 401(k), nearly half of plan sponsors (49 percent) are offering features that automatically increase participants' contribution levels. However, nearly two-thirds (64 percent) of plan sponsors report that fewer than 10 percent of participants take advantage of this opportunity." (Deloitte; International Foundation of Employee Benefit Plans; International Society of Certified Employee Benefit Specialists)

Deloitte's 2011 401(k) Benchmarking Survey (PDF)
68 pages. "While plan sponsors and fiduciaries are generally aware of the fees charged for the administration of their plans, the possibility exists that many will be surprised by the sum total of costs." (Deloitte)

Association of Public Pension Plans Launches Web Site Promoting Extension of Coverage to Private-Sector Employees
"Retirement security for all Americans -- whether they work in the public or private sector -- must become a national priority. The Secure Choice Pension (SCP) plan would allow private companies and individuals to participate in a state-sponsored pension plan for the private sector. . . . The SCP benefits include having more taxpaying, productive retirees rather than senior citizens becoming wards of the state who rely upon public assistance." (National Conference on Public Employee Retirement Systems (NCPERS))

Baltimore Mayor Takes Stand in Pension Trial
"The Fraternal Order of Police and the firefighters union contend that the administration's plan, which delayed retirement for some and abolished a fluctuating cost-of-living increase, among other changes, violates their contracts with the city." (

Is My American Airlines Pension Guaranteed? Yes, But...
"Who gets the haircut? The PBGC has a sliding scale of maximum benefits, depending on age. The most it will pay people who retire at age 65 is $55,841. If your benefit is less than that you have only the long-term health of the PBGC to worry about." (

California Governor Jerry Brown Delivers Pension Reform Language to Legislators
"The governor's plan won't go forward without two-thirds of the Legislature voting to put the constitutional changes on the Nov. 6 ballot, which would then need voter approval from a majority." (Sacramento Bee)

Unions Howl at Details of Jerry Brown's Pension Overhaul Proposal
"The details delivered to the Legislature on Thursday generally tracked with an outline he unveiled in October. Representatives of a union coalition hoped to negotiate what they consider a less severe package. On Thursday, they said they felt blindsided." (Sacramento Bee)

California Teachers' Pension Trims Investment Forecast to 7.5%
"The change means the plan will need larger contributions from taxpayers, teachers, school districts, or a combination of all three, to cover pension costs." (Businessweek)

Some Top Military Brass Making More in Pension Than Pay
"Previously, the maximum annual pension was based on an officer's pay at 26 years of service. Now, a four-star officer retiring in 2011 with 38 years' experience would get a yearly pension of about $219,600, a jump of $84,000, or 63% beyond what was once allowed." (

Who's on The Hook for Decisions Made in Your 401(k)?
"If you are a business owner, on the Board of Directors or serve on the Plan Investment Committee, follow the line of questions from a 'hypothetical deposition' directed to you and picture how you would answer the questions." (Forbes)

Judge Rejects Law Seeking to Reform New Hampshire State Pensions
"A major component of the reform law was hiking the amount that all public employees contribute from their salary to support the state's retirement pension account. [The plaintiff] argued that it was against the law to increase the contributions for all employees who had worked for at least a year. Judge McNamara agreed." (New Hampshire Union Leader)

Underfunded Pensions: The Looming Crisis Facing Investors
"It's no secret that the financial crisis and resulting malaise has taken its toll on bank stocks, commodities and Treasury yields. But it may be have triggered another ripple — one that has gone somewhat unnoticed. Pension funds have become seriously underfunded." (CNBC)

ERIC to Congress: Fix Pension Funding Rules to Strengthen Pensions and Improve Economic Growth
"Gretchen R. Haggerty, Executive Vice President and Chief Financial Officer for the United States Steel Corporation testified today on behalf of The ERISA Industry Committee (ERIC) . . . called on Congress to enact permanent reforms to the pension funding rules enacted under the Pension Protection Act of 2006 (PPA), contending that the current rules are severely burdening companies, undermining the future of defined benefit plans and potentially threatening the country's larger national economic recovery." (The ERISA Industry Committee)

A Closer Look at the Braden v. Wal-Mart Case: How Not to Run a 401(k) Plan
"The Wal-Mart case is the poster child for the way in which a 401(k) plan should not be run: plan investment options bearing excessive and entirely unnecessary costs, undisclosed conflicts of interest, lack of meaningful disclosure of costs to plan participants (which was actually part of the agreement between plan fiduciaries), and, I'd argue, an apparent absence of any serious fiduciary mindset on the part of the plan sponsor fiduciary and the trustee fiduciary." (Morningstar Advisor)

Benefits in General; Executive Compensation

[Guidance Overview]
Estoppel in ERISA: Simple Mistakes Can Lead to Costly Litigation
"Even if the participant ultimately fails in proving the elements of estoppel, defending against such claims is costly and time-consuming. Accordingly, employers and plan administrators should take the following steps to protect themselves from these types of claims: . . . ." (Employee Benefits Law Report)

SEC Reporting Trap and Setting Performance Goals
"In a series of correspondence with Verizon, the SEC took a surprising position on the Summary Compensation Table disclosure of performance-based equity awards in situations where the Compensation Committee retained authority to adjust performance-based equity awards based on non-objective criteria." (Winston & Strawn LLP)

For 11 States and Puerto Rico, Cost of Employee Benefits Is One of Three Top Fiscal Issues for 2012 (PDF)
"Dealing with unfunded liabilities, increasing employee contributions and making significant reforms lie in the year ahead for state lawmakers." (National Conference of State Legislatures)

Annual Statistical Supplement, 2011, Published by the U.S. Social Security Administration
"The Supplement is a major resource for data on our nation's social insurance and welfare programs. The majority of the statistical tables present information about programs administered by the Social Security Administration -- the Old-Age, Survivors, and Disability Insurance program, known collectively as Social Security, and the Supplemental Security Income program. In addition, data are presented on the major health care programs -- Medicare and Medicaid -- and social insurance programs, including workers' compensation, unemployment insurance, temporary disability insurance, Black Lung benefits, and veterans' benefits. The Supplement also includes program summaries and legislative histories that help users of the data understand these programs." (U.S. Social Security Administration)

Providence, R.I., Mayor Proposes Benefit Cuts to Avert Bankrup.tcy
"Mayor Angel Taveras, a Democrat, outlined plans to reduce pensions for retired municipal workers and vowed to appeal a recent state court ruling preventing the city from forcing its retirees to switch to the federal Medicare health insurance program when they turned 65." (New York Times; free registration required)

Providence Is Now on 'the Brink of Bankrup.tcy,' Mayor Taveras Warns
"Taveras said the city's retirees must accept reduced pension and health care benefits to save the city from financial ruin. A decree signed in 1991 by Mayor Buddy Cianci pushed the city's pension liability 'into the stratosphere' by giving annual cost-of-living increases of 5% and 6% to more than 600 retirees, he said." (

Mayor Says Pensions and Benefits for Uniformed Workers Will Cost New York City More Than Their Actual Salaries
"Pensions and fringe benefits for uniformed workers are going to cost the city more next year than their actual salaries, Mayor Bloomberg revealed [on Thursday, Feb. 2] as he made another strong pitch for Albany to enact pension reforms." (

Where the CBO Report on Federal Pay Went Wrong
"[The federal] employees that the report claims may be overcompensated are hardly those whom people would think of as 'government bureaucrats in Washington.' No, these 'bureaucrats' are among the lowest-paid federal employees, doing unglamorous but critical work around the country." (Washington Post)

Press Releases, 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
Lois Baker, J.D., President
Holly Horton, Business Manager

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