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February 15, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

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[Official Guidance]
Transcript of Phone Forum on Self Correction Program and Closing Agreement Program, November 30, 2011 (PDF)
The phone forum covered current EPCRS issues, procedures and CAP sanctions. (U.S. Internal Revenue Service)

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[Official Guidance]
Final Rule on Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Paying Benefits (PDF)
"The interest assumptions are intended to reflect current conditions in the financial and annuity markets. Assumptions under the benefit payments regulation are updated monthly. This final rule updates the benefit payments interest assumptions for March 2012." (Pension Benefit Guaranty Corporation)

[Guidance Overview]
The Final 408(b)(2) Regulation: Impact on Registered Investment Advisers (PDF)
"The definition of designated investment alternatives (DIAs) under the Final Regulation may result in asset allocation models being classified as such. This would require that the RIA offering such models disclose expense information and could result in shifting to the RIA the responsibility for assembling the participant-level (404a-5) disclosure information for such models." (Drinker Biddle)

[Guidance Overview]
Employer Breached ERISA by Failing to Make Rollover Distribution
"The [court] found that under the J&R Equipment, [Inc.] 401(k) Plan and Trust, [a former employee] was entitled to have his vested balance in the plan rolled over as of December 31, 2005. [He asked the] owner of J&R and sole trustee of the plan, to roll over his plan assets when he resigned in January 2005. Under the terms of the plan, [he] would be entitled to distribution on the next anniversary date — December 31, 2005." (

[Guidance Overview]
Treasury Proposes New Rules for Annuity Options in Retirement Plans
"The proposed rulings give clarification on the rules that apply when employees are given the option to use a single-sum 401(k) payout to obtain a low-cost annuity from their employer's defined benefit pension plan. A second ruling clarifies that employers can offer their employees the option to use 401(k) savings to purchase deferred annuities and still satisfy spousal protection rules with minimal administrative burdens." (AccountingWEB)

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Text of White House's Budget Proposal Cutting Back on Income Tax Benefit of Retirement Plan Contributions for High-Earners (PDF)
"The proposal would limit the tax value of specified deductions or exclusions from [Adjusted Gross Income] and all itemized deductions. This limitation would reduce the value to 28 percent of the specified exclusions and deductions that would otherwise reduce taxable income in the 36-percent or 39.6-percent tax brackets.... The income exclusions and deductions limited by this provision would include any ... employee contributions to defined contribution retirement plans and individual retirement arrangements[.]" (White House)

What's the Tax Advantage of 401(k)s?
"The discussion proceeds as follows. The first section provides a brief overview of the role of taxes in the evolution of employer-sponsored retirement plans. The second section describes the tax advantage associated with 401(k) plans. The third section discusses the magnitude of the 401(k) tax expenditure. The fourth section highlights how the size of the tax expenditure depends on the tax treatment of capital income outside of 401(k)s. The fifth section discusses the potential impact of proposals to cut back on the 401(k) tax expenditure. The final section concludes that while some reform proposals may make the 401(k) tax expenditure more equitable, policymakers should proceed with caution because the employer-based retirement system is the main savings vehicle for American workers." (Center for Retirement Research at Boston College)

State and Local Government Spending on Public Employee Retirement Systems (PDF)
"Based on the most recent information provided by the U.S. Census Bureau, approximately three percent of all state and local government spending issued to fund pension benefits for employees of state and local government. [P]ension costs since 1980 have been reliably stable, declining from around four percent to nearly three percent in 2009." (National Association of State Retirement Administrators)

More U.S. Workers Put 401(k) Investments on Autopilot
"Boston-based Fidelity Investments . . . said last week about one in four, or 26% of its participants had 100% of their 401(k) assets in target-date funds at the end of 2011. That's up from 21.4% during the same time in 2010 and 17.4% in 2009." (Employee Benefit News)

Should Employees Own More Company Stock or Less?
"In the Society for Human Resource Management's Employee Benefits Survey, for instance, only 10% of companies report having stock-purchase plans (which give staffers the opportunity to buy equity in the firm, usually at a significant discount like 15%). That's down almost half from 2008, when 19% of companies did so. And according to human resource consulting firm Aon Hewitt, 36% of employers offer company stock on the investment menu of their retirement plans, down from 47% just two years ago." (Employee Benefit News)

Three of DOL's New 401(k) Rules Represent Big Land Mines for Financial Advisors and Plan Sponsors
"Industry leaders are torn on how advisors should disclose indirect compensation. Under the new rules, indirect compensation includes any compensation received from any source other than the plan sponsor, an affiliate or a subcontractor. The disclosure must include both identification of the payer and a description of the arrangement between the payer and the advisor." (RIABiz)

IRA Perk Buried in Obama's Budget
"President Barack Obama's budget proposal for fiscal year 2013 may be calling for new taxes on the wealthy, but it includes a perk for older people with relatively small IRAs. Deep in the budget is a provision that would eliminate required minimum distributions for people who are at least 70½ years old whose tax-deferred retirement-plan balances do not exceed $75,000." (The Wall Street Journal)

Research Firm Lists Top 401(k) Tips Funds
"San Diego-based research firm BrightScope today released a top 20 list Treasury Inflation Protected Securities (TIPS) funds in the 401(k) and defined contribution industry. TIPS funds represent roughly $15 bil.lion of the $3.2 tril.lion in 401(k), 403(b), and 457 assets tracked, according to BrightScope." (Financial Advisor)

Can Congress Ever Restore Payroll Taxes to Their Usual Levels?
"House Republicans have already signaled that they will allow an extension through the end of the year. They were badly burned at the end of 2011, when the tax cut was originally set to expire and GOP members of Congress found themselves accused of wanting to raise taxes on working Americans. That raises the question of when it's ever going to be OK to restore payroll tax rates to their usual levels — and what that will mean for Social Security's financing over the long haul." (NPR)

Michigan Workers Sue Over Pension Law
"State employee unions in Michigan said . . . they are contesting a law requiring them to opt out of a 'guaranteed' pension plan or start contributing to it." (

IRS and Treasury to Hold Town Hall/ Consultation Listening Meetings on Possible Approaches to Governmental Plan Guidance
"The issue is important to Federal, State, Local and Indian Tribal Governments, as well as their employees, because the statutory rules that apply to governmental plans are different from those that apply to nongovernmental plans. In addition, the Pension Protection Act of 2006 contained statutory changes related to plans maintained by Indian Tribal Governments. The IRS and Treasury are soliciting comments on proposed drafts issued in November 2011 of possible approaches to guidance in this area. Comments must be received by June 18, 2012. Input from the general public is also sought from discussions at town hall and consultation listening meetings." (U.S. Internal Revenue Service)

FinCEN Further Extends FBAR Filing Deadline for Certain Financial Professionals
"Recognizing the need for further study of related questions and concerns, FinCEN today issued FinCEN Notice 2012-1 which further extends the Report of Foreign Bank and Financial Accounts (FBAR) filing deadline for a small subset of individuals with only signature authority over certain foreign financial accounts. The filing deadline for those individuals previously identified in Notice 2011-1 and Notice 2011-2 has been extended from June 30, 2012 to June 30, 2013." (FinCEN)

Loophole Puts Pension Plans at Risk: Jewish Groups Use Exemptions for Churches to Skirt Rules
"Jewish organizations, including federations and hospitals, have filed for the special 'church status' that strips workers and retirees of legal protections and allows groups to drop insurance that would cover shortfalls in their pension plans." (The Jewish Daily Forward)

The Trouble with Being 'Governmental' — Falling on the Wrong Side of This Definition Could Hurt
"[W]e know that the IRS has had difficulty in the past in deciding whether some of the following types of entities would qualify as governmental plan sponsors: A joint powers authority consisting of both governmental subdivisions and public nonprofit organizations; Certain charter schools; and Certain auxiliary organizations connected with State and community colleges and universities." (Focus on Public Benefits)

Let's End Social Security As We Know It
"The program is America's number one Ponzi scheme. It was created as a pay-as-you-go system but sold as social insurance with a special tax and a trust fund. President Franklin Delano Roosevelt created the illusion for political effect: 'We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions.' As a result, he said, 'no damn politician can ever scrap my Social Security program.'" (Forbes via Cato Institute)

Press Releases

NIPA Expands TPA Business Owner Services to Include 401(k) Sales Champion Workshopİ
(National Institute of Pension Administrators)

Kemper Corporation Initiates Rebranding with Total Compensation Statements from Benefit Software Inc.
(Benefit Software Inc.)

Benchmarking Survey to Identify 403(b) Plan Trends and Best Practices
(Principal Financial Group)

Prudential Investments Expands Defined Contribution Mutual Fund Business; Names New Director of Sales
(Prudential Financial, Inc.)

Saint Luke's Health System Recognized by IBI and NBCH for Health & Productivity Leadership in Transforming Benefits Program
(Integrated Benefits Institute and National Business Coalition on Health)

Flexible Benefit Service Corporation Introduces Health Advocate to Help Clients Navigate Health Insurance Landscape
(Flexible Benefit Service Corporation (Flex)), Inc.
1298 Minnesota Avenue, Suite H
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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