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BenefitsLink Retirement Plans Newsletter
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[Guidance Overview]
Proposed IRS Regs on Partial Lump Sum Pensions Require Comparison with Plans' Benefit Calculation Methods
"Under some defined benefit plans, participants receive a portion of the benefit as an annuity and a portion as a lump sum. Sponsors of such plans should review the method used for calculating these benefits, particularly annuity benefits, to determine whether the combined value of both portions meets the minimum present value requirements for lump sums. Recent proposed IRS regulations include an interpretation of current law that may differ from the way some plans have been administered."
(McDermott Will & Emery)
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[Guidance Overview]
Newly Required Disclosures by Plan Service Providers Could Translate to Headaches for CFOs
"Under the regulations, now slated to take effect on July 1, service providers must make the new disclosures in order to qualify for an important statutory exemption under ERISA Section 408(b)(2). The exemption allows them to avoid having a contract or other arrangement with a plan sponsor characterized as a prohibited transaction that would make the provider subject to excise taxes. More notably, from an employer's viewpoint, the exemption also enables plan sponsors to avoid potential breach of fiduciary liability resulting in litigation."
(CFO)
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[Guidance Overview]
FBAR Deadline for Some Registered Investment Advisers Delayed to June 2013
"Investment advisors facing a June 30 deadline for filing a Report of Foreign Bank and Financial Accounts (FBAR) have been granted a one-year extension to June 30, 2013, under new Treasury guidance. FinCEN Notice 2012-1 — which expands the relief given in Notice 2011-2 — applies to filings for 2011 and earlier years by officers and employees of SEC-registered investment advisers with signature authority over (but no financial interest in) certain foreign financial accounts."
(Mercer)
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'Sense of Congress' Seeks to Preserve Tax Incentives for Retirement Savings
"The resolution introduced by Reps. Jim Gerlach, R-Pa., and Richard Neal, D-Mass., was likely in anticipation that a new Congress and newly-elected president next year will try to craft a comprehensive overhaul of current tax laws in order to simplify the laws, reduce loopholes and cut tax rates."
(LifeHealthPro.com via ProducersWEB.com)
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Feds Fret Over Underfunded Corporate Pensions
"The cost of rescuing these plans has saddled the federal Pension Benefit Guaranty Corp. with a $26 bil.lion deficit, the highest in its 37-year history. The situation will likely worsen as more companies decide they can no longer afford their pension commitments and stick the government with the bill."
(Politico)
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Padding Pensions with Per Diems Targeted in Iowa
"Under House Study Bill 645, the 'per diem' or expense allowance to lawmakers — which ranges from $100 to $134 per day, and average more than $10,000 a year on top of their salaries — would not be included when calculating their pension benefits under the Iowa Public Employees' Retirement System."
(Omaha.com)
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Penalty-Free Ways to Raid a 401(k)
"For example, if you leave a company in the year in which you turn 55 or older, you can take penalty-free withdrawals from a 401(k) plan. (The distribution would be taxable, of course, but the 10% penalty would not apply.)"
(SmartMoney)
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Judge Denies Challenge to San Diego 401(k) Initiative
"A Superior Court judge has denied a request by a state panel to stop a San Diego initiative -- which would replace guaranteed pensions with a 401(k)-style plan for most new city hires -- from appearing on the June 5 ballot."
(U-T San Diego)
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401k Plan Sponsors and the Risk of Fiduciary Liability
"[A]ccording to a Fact Sheet released by the DOL in February of 2011, nearly four out of five [investigations] resulted 'in monetary results for plans or other corrective action' totaling in excess of $1 bil.lion dollars in fines. If all this weren't bad enough, the DOL now says it will hold 401k plan sponsors liable even if it is their service providers who fail to comply ... Life just got a lot harder for 401k plan sponsors."
(Fiduciary News)
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Mark-to-Market Pensions Show Brutal Year
"[United] Parcel Service announced recently that it has adopted the mark-to-market method of pension accounting. It joins such other companies as Honeywell International, AT&T, IBM, and Reynolds American."
(CFO)
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PBGC Premium Hike Out of Payroll Tax Deal; Pension Funding Changes in Highway Bill
"PBGC premium increases were left out of the final House-Senate agreement on extending the payroll tax cut through 2012 but will remain in play, so plan sponsors will continue to urge against the idea. They will also continue their push for pension funding reforms to stabilize contributions. A new Senate Finance Committee proposal to change discount rates is an important first step, but as drafted -- with a shorter averaging period and wider corridor than industry groups are pushing for -- actually offers little relief or stability."
(Mercer)
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[Opinion]
Retirement Prospects in America: Ready or Not?
"There's something to be said for using fear as a motivating force, especially given the difficulties most of us have in planning for long-term goals such as retirement. Yet, in the end, this constant stream of worry does lead us to have an unreasonably pessimistic view of ourselves and our financial prospects as we approach retirement."
(Vanguard)
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Benefits in General; Executive Compensation
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[Guidance Overview]
SEC Clarifies How to Describe Say-On-Pay Vote in Proxies
"As companies prepare their 2012 proxy statements, the SEC has clarified how they should describe the advisory vote to approve executive compensation on their proxy cards and voting instruction forms. In a Feb. 13, 2012, Compliance and Disclosure Interpretation, the SEC staff provides examples of acceptable and unacceptable disclosures. The interpretation supplements the guidance on compliant resolutions in the SEC's final say-on-pay rules."
(Mercer)
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[Guidance Overview]
No-Hire Policy After Corporate Spin-Off Doesn't Violate ERISA, 7th Circuit Rules
"A two-year no-hire policy between parties to a corporate spinoff was created to promote workforce stability, not to interfere with benefits, the 7th Circuit has ruled. Though the policy prevented employees from collecting a pension and then joining the new company, the court rejected claims under ERISA Section 510, which bars actions that interfere with plan rights."
(Mercer)
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Press Releases
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