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BenefitsLink Retirement Plans Newsletter
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[Official Guidance]
Text of Massachusetts Bill Approved by Both House and Senate Allowing Nonprofit Employers to Adopt State-Run Defined Contribution Plan
"The treasurer and receiver general, on behalf of the commonwealth, may sponsor a qualified defined contribution plan within the meaning of section 414(i) of the Internal Revenue Code ... that may be adopted by not-for-profit employers for their employees in accordance with section 401(a) of the Code ... The treasurer may contract with practitioners, administrators, investment managers and other entities, including the Pension Reserves Investment Management Board, in order to design, administer and provide investment options under the plan."
(187th General Court of The Commonwealth of Massachusetts)
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[Official Guidance]
ERISA Section 4044 Corrections
"PBGC published two Federal Register documents that slightly revise its interest assumptions under ERISA section 4044, applicable to valuation dates during the second half of 2011. These minor changes will have little impact on calculations."
(PBGC)
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[Guidance Overview]
Sixth Circuit Rules ERISA Section 404(c) Protection Not Applicable to Fiduciary's Investment Selection
"Although there has been disagreement among the federal circuits as to whether ERISA section 404(c) applies to the selection of investment alternatives,... a recent amendment to the ... regulations ... specifically states that ERISA section 404(c) "does not serve to relieve a fiduciary from its duty to prudently select and monitor any service provider or designated investment alternative offered under the plan." In any case, fiduciaries must be mindful of the importance of prudence in selecting and monitoring plan investments, and of documenting the related decisionmaking process."
(Thomson Reuters/EBIA)
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DC Plans in Uncertain Times: Matching Contributions and Target-Date Funds
"[S]ome companies are determined to be creative about their matching policies in an effort to generate real change in participants' habits that will spell retirement adequacy. For example, a strong incentive for higher savings might be to offer a variable percentage match for employee contributions that begin at 6% and go high as 10% (with maximum matching at the 10% level)."
(Pensions & Investments)
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Web Based Plan Design System. Simple and Affordable. [Advert.]
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The 401(k) Plan Is in So-So Shape at Too Many Companies, Critics Say
"The plans weren't originally designed to be the nation's primary retirement lifeline — they started as a minor tax perk for senior executives — but they've grown inexorably, as ever more big companies have used them as a cheaper alternative to traditional pensions.... And yet, as many economists and money pros know and as more employees are beginning to realize, the plans are riddled with problems capable of tripping up even the most diligent investors."
(The Wall Street Journal)
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How Much Are You Paying for Your 401(k)?
"The package of information you will receive quarterly likely will be about 20 pages thick and divided into two sections.... The cost for providing all of this data to you online and on paper, an option the Department of Labor mandates, is about $4. And your employer is allowed to subtract it from your 401(k) quarterly[.]"
(Yahoo!7Finance)
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Three Simple Steps to the Perfect IRA
"Choosing the most efficient tax-favored retirement savings strategy can be challenging.... This simple question and answer process should make your tax-favored savings strategy clear."
(Time)
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Facts You Might Not Know About Social Security
"California-based Financial Engines provides 401(k) advice to workers, including how they can make their money last in retirement. In some cases, the company recommends that retirees accelerate 401(k) withdrawals in the early years of retirement if that's what it takes to postpone drawing on Social Security."
(The Olympian)
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New Retirement Plan for Small Businesses Would OK Asset Pools
"Sen. Mike Enzi, R-Wyo., and Sen. Herb Kohl, D-Wis., are drafting a bill that would allow companies with fewer than 100 workers to pool their employees' retirement assets into a combined plan.... The multiple employer plans would allow firms to hire third-party financial experts for the administrative and fiduciary duties that many small business owners say keep them from offering employees a 401(k) plan or other retirement savings vehicle."
(Investment News)
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Advisers Think New Fee Rules Will Lead to a Heightened Awareness of 401(k) Costs Overall
"Labor Secretary Hilda Solis said that she hopes that when plan sponsors and plan participants get better information on fees and expenses, they will be able to shop around and make informed decisions that will lead to cost savings and a larger nest egg at retirement for workers. [The head of retirement services for J.P. Morgan Asset Management] worries that it might have the opposite effect, and that some workers will use the newly disclosed fees as yet another excuse not to save for retirement."
(Investment News)
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Pension Funding Relief Measure with Lawmakers
"Congressional negotiators are trying to hammer out an agreement that would temporarily allow employers to use higher interest rates in valuing pension liabilities, cutting employers' plan contributions by billions of dollars over the next few years.... A key factor motivating congressional interest in the issue is revenue. If employers are able to reduce the amount of their pension plan contributions, which are tax-deductible, they would have higher taxable income."
(Business Insurance; free registration required)
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Ford to Derisk Pension Plans
"Ford Motor Co. ... will sharply turn its $39.4 bil.lion U.S. pension plans' allocation to lower risk, shifting to 80% fixed income and 20% growth-seeking equity and alternatives assets over the next few years[.]"
(Pensions & Investments)
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[Opinion]
Don't Let Corporations Slash Pension Payments
"Big employers want Congress to give them a break on pension funding. Business lobbies such as the U.S. Chamber of Commerce and the National Association of Manufacturers have managed to get a pension sweetener attached to a Senate highway bill that, potentially, would reduce required contributions by billions of dollars. This is the same sort of short-term thinking that got companies such as United Airlines, Bethlehem Steel Corp. ... and Delphi — or, to be more exact, their workers — in trouble."
(Bloomberg)
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Benefits in General; Executive Compensation
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Know Your Role: Am I a "Settlor" or a "Fiduciary"?
"When making decisions about benefit plans, plan sponsors should at least take some time to consider what role they are playing.... [O]ften times the decisions can be a mix of both settlor and fiduciary functions and it is important to know which hat you are wearing for each decision."
(Fox Rothschild LLP)
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Deficits Push N.Y. Cities and Counties to Desperation
"Even as there are glimmers of a national economic recovery, cities and counties increasingly find themselves in the middle of a financial crisis. The problems are spreading as municipalities face a toxic mix of stresses that has been brewing for years, including soaring pension, Medicaid and retiree health care costs."
(The New York Times; free registration required)
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Press Releases
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