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February 10, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Director, Actuary - Retirement Plan Strategy
for Prudential in CT

DC/DB Document and Government Form Specialist
for Malcolm Thompson & Associates in

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Webcasts and Conferences

The Year of Disclosure: New Regulations and Legislation Impacting 401(k) and 403(b) Plans Seminar
in Massachusetts on March 9, 2012 presented by New England Employee Benefits Council

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[Official Guidance]
Text of Proposed Regs Adding Roth Feature to Thrift Savings Plan for Federal Employees (PDF)
"The Thrift Savings Plan Enhancement Act of 2009 . . . authorized the [Federal Retirement Thrift Investment Board] to implement a qualified Roth contribution program described in section 402A of the Internal Revenue Code. This feature will allow participants to make TSP contributions on an after-tax basis and receive tax-free earnings upon distribution if (1) five years have passed since January 1 of the year in which they made their first Roth contribution, and (2) a qualifying event has occurred (i.e., attainment of age 591.2, permanent disability, or death). The TSP Roth feature is similar to a designated Roth account maintained by a 401(k) plan." (Federal Retirement Thrift Investment Board)

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[Guidance Overview]
PBGC Provides Temporary Relief for Defined Benefit Plans That Have Not Paid Premiums
"[The PBGC will] waive premium penalties for past-due premiums (and related information penalties for failure to timely file premium information [but not interest owed on past-due premiums]) if the plan administrator or a representative: [1] Contacts the PBGC by July 31, 2012 to discuss how to comply with the premium filing requirements. [and] [2] Pays past due premiums and files required premium information by August 31, 2012, or a later date specified by the PBGC." (Practical Law Company)

[Guidance Overview]
IRS Proposes Rule to Encourage Partial Annuity Distribution Options in Pension Plans
"Plan sponsors that already permit the selection of combination forms of distribution may find the proposed rule helpful. Those that do not currently offer bifurcated optional forms may wish to consider whether doing so would be appropriate. In contemplating this opportunity, plan sponsors should consider administrative and other issues, and may want to submit formal comments to the IRS. For example, the proposed rule does not address the effect on plans that are subject to tax code section 436 benefit restrictions on optional lump sums." (Retirement Town Hall)

[Guidance Overview]
IRS Begins Auditing 403(b) Plans and Provides Interim Procedure for Correcting Plan Document Failures
"We recommend, as we have previously, that a 403(b) plan sponsor that discovers a problem with their plan document or who has not yet adopted a plan document correct the failure immediately and not wait for IRS' update of the EPCRS program as IRS will consider 'good faith' efforts to comply in determining whether to assess penalties during an audit and in negotiating a correction under EPCRS once that program is open." (EisnerAmper)

[Guidance Overview]
Guidance Issued on Retirement Plan Lifetime Income Options
"Although the guidance [released by the Treasury Department last week] removes certain regulatory barriers and clarifies uncertainties in the law, it fails to address certain important legal and administrative issues that need to be considered before implementing these options." (Proskauer Rose LLP)

[Guidance Overview]
Are Participant Contributions Being Contributed to Your Plan on a Timely Basis?
"Besides violating ERISA, failing to make the deposits on a timely basis creates two problems: [1] Participants in the 401(k) plan miss out on the interest or other income that would have been earned had such amounts been timely contributed to the plan. [2] The employer receives a direct or indirect 'benefit' from the use of the same 'plan assets' during the period that such assets should have been held in the 401(k) plan." (McDonald Hopkins)

[Guidance Overview]
Proposed Regulations on Longevity Annuity Contracts (PDF)
"The account balance is reduced by the value of the [Qualified Longevity Annuity Contract] to arrive at the amount to use for the [required minimum distribution] calculation. This, in essence, eliminates the potential need to begin taking distributions from the QLAC earlier than anticipated, which would increase the cost of the annuity and reduce the account balance faster than may be necessary." (Ascensus)

Bill Would Allow Federal Workers to Invest Annual Leave in Retirement Savings
"Federal employees typically may carry over up to 30 days of unused annual leave from one year to the next . . . . If the proposed change becomes law, the combined investment of annual leave and payroll withholding would have to remain within the maximum that participants can contribute toward their retirement savings in a year, currently $17,000 . . . ." (The Washington Post; free registration required)

Low U.S. Saving Rate Coming Home to Roost
"For decades, the low rate of saving has had surprisingly benign effects on both American consumers and the U.S. government, but that all may be in the process of changing, and quickly . . . [T]he magnitude of the fiscal deficit is likely to require scaling back of transfers to the elderly in the future, making them more dependent on their own financial resources." (Brookings)

DOL Files Lawsuit Against Company for Alleged 401(k) Fraud Scheme
"According to the suit, [the company and owner] had more than $775,000 from the 401(k) plan invested in a fraudulent scheme in 2006, in violation of [ERISA]. This amount represents nearly all of the assets in the accounts of the 19 plan participants as of the end of 2005." (

Kansas Teachers Upset about Retirement Proposal
"Teachers say they have paid into the fund under the expectations that they will have a fixed income when they retire and say the state needs to keep its promise to fund it and pay them." (Fox 4 News)

California Governor Jerry Brown's Plan for Comprehensive Pension Reform
"Regardless of one's personal politics, you've got to admire or at least respect California Gov. Jerry Brown for his recent — and tenacious — pension reform efforts. Last week he sent the state Legislature comprehensive language that put meat on the bones of his 12-point pension reform proposal . . . ." (Governing)

Virginia House, Senate Taking Different Routes on Pensions
"State government employees won't have to pay an additional 1 percent of their salaries toward retirement, but local government employees and teachers would contribute 5 percent of their pay under proposals advancing through the General Assembly." (Richmond Times-Dispatch)

How to Prioritize Saving in a 401(k) and Roth IRA
"It's almost always a good idea to take advantage of employer matching funds using your 401(k) plan. After that, you need to decide whether it's better to do additional saving in your 401(k) or switch to a traditional or Roth IRA. Here's how to prioritize saving in a 401(k) and IRA." (U.S. News & World Report)

Arizona Public Pension Changes Found Unconstitutional under Contracts Clause
"On February 1st, a trial court in Arizona found unconstitutional under the federal and state constitution contracts clause an Arizona law which sought to increase employee pension contributions under the state retirement system for public employees. In Barnes v. Arizona State Ret. Sys., . . . the Arizona court said that an Arizona law that altered [the] proportionate share of state employer/employee retirement contributions was unconstitutional, at least as applied to those workers who were already paying into the system." (Workplace Prof Blog)

Funded Status of U.S. Pensions Rises to 74.1 Percent in January
"Rising equity markets in the U.S. and around the world contributed to a 1.7 percentage point increase in January in the funded status of the typical U.S. corporate pension plan . . . [T]he strong start to the year from stocks drove the funded status of the typical plan to 74.1 percent." (BNY Mellon)

Controlling Pension Funding Volatility Is Top Priority for Third Year in a Row
"For the third consecutive year, an SEI Quick Poll found that pension plan sponsors view controlling funded status volatility as the top priority for their organizations. Not far behind, plan sponsors identified the need to improve the funded status of their pension plans as the second most important priority this year." (SEI)

Younger Investors Reluctant to Make New IRA Contributions
"According to research from T. Rowe Price, 55% of young investors said they do not plan to fund an IRA or are unsure whether they will do so this tax filing season. By comparison, 71% of these investors made an IRA contribution for the 2010 tax year." (

Cultural Differences in Retirement Investment Behaviors
"New . . . study offers important insights about how cultural differences in various financial and retirement investment behaviors, confidence, situations and attitudes." (ING)

More U.S. Workers Put 401(k) Investments on Autopilot
"More U.S. workers with 401(k) plans are selecting or defaulting to simple target-date mutual funds, an investment strategy that took its lumps during the credit crisis, but have emerged with greater popularity." (Reuters)

Mayor Offers St. Louis Firefighters a Pension Plan with Major Cuts for New Hires
"[T]wo bills championed by Mayor Francis Slay and to be introduced Friday to the Board of Aldermen . . . would essentially close the current Firemen's Retirement System of St. Louis, which is partly controlled by state law, and start a new, city-governed fire pension plan. (

Average 401(k) Account Balance Dips in 2011
"The average 401(k) account balance was $69,100 at year-end 2011, down from $69,400 a year earlier, according to [Fidelity Investments]." (Business Insurance)

IRS 'Employee Plans News' Newsletter Highlights Leased Employee Compliance Project, Electronic Signatures, More
"The newsletter also includes a discussion of current priorities of the IRS Employee Plans Examinations office, including the 401(k) Compliance Check Questionnaire Project. And there is a summary of recent changes to Form 5300, including a requirement to provide information on pending IRS or DOL Voluntary Correction Program applications." (Thomson Reuters/EBIA)

Did the DOL Just Kill Revenue Sharing?
"By sticking to its guns and not backing down to industry demands, the DOL's new Fee Disclosure Guidelines will reveal . . . [to] both plan sponsors and plan participants . . . the true cost of their retirement plan. Some may accept the level of these fees. Others may suffer sticker shock when they realize their 'free' plan isn't free or their 'low-cost' plan isn't truly low cost." (BenefitsPro)

401(k)s Aren't a Retirement Plan to Bank On
"The point of 401(k) plans was to supplement pensions, not replace them. Using a 401(k) in place of a defined benefit pension would undercut the financial security that our workers deserve." (Albany TimesUnion)

Benefits in General; Executive Compensation

Post-Modern Pay: Developing Unique Compensation Strategies in the Era of Universal Solutions (PDF)
"Compensation committees that subjectively evaluate their compensation plans (while making the design process less mechanical overall) will become increasingly relevant in the talent market. For many, this will require viewing executive compensation through a more strategic lens and seeking alternatives to conventional design features that were formerly considered implicit." (Aon Hewitt)

Contrary to 'Entitlement Society' Rhetoric, Over Nine-Tenths of Entitlement Benefits Go to Elderly, Disabled, or Working Households
"Moreover, the vast bulk of [the remaining benefit] goes for medical care, unemployment insurance benefits (which individuals must have a significant work history to receive), Social Security survivor benefits for the children and spouses of deceased workers, and Social Security benefits for retirees between ages 62 and 64. Seven out of the 9 percentage points go for one of these four purposes." (Center on Budget and Policy Priorities)

The ERISA Litigation Newsletter, February 2012
Covers "the Fourth Circuit's decision [which] held that ERISA's duties of prudence and diversification require more than a showing of a failure to investigate or diversify to equate to causation of loss and therefore liability . . . several court decisions . . . which suggest that, in some jurisdictions, courts have seemingly abandoned the policy and purpose behind the exhaustion doctrine's creation: namely, to keep the courts from acting as surrogate plan administrators." (Proskauer Rose LLP)

Do Public School Teachers Really Receive Lavish Benefits?
"According to Richwine and Biggs, this makes teachers' total compensation 52 percent higher than fair-market levels and amounts to $120 bil.lion 'overcharged' to taxpayers each year. This finding, and previous research by the same authors . . . are at odds with a large body of research showing that public school teachers and other government workers have total compensation that is lower — or at least no higher — than that of comparable private-sector workers . . . ." (Economic Policy Institute)

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Holly Horton, Business Manager

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