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Onsite Participant Counselor - Retirement Services
for Diversified in MI

Pension Plan Administrator
for Total Benefit Services, Inc. in CA

Business Systems Project Manager - IRC30934
for Lincoln Financial Group in ANY STATE

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for Bidwell Consulting Services, Inc. in ANY STATE, CA

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for Prudential in PA

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"Nothing Exceeds Like Excess: Correcting Excess Amounts" Web Seminar
Nationwide on May 15, 2012 presented by SunGard Relius

"SunGard Relius Form 5500 and 401(k) Plan Workshops" - Charlotte
in North Carolina on May 23, 2012 presented by SunGard Relius

"SunGard Relius Form 5500 and 401(k) Plan Workshops" - Cincinnati
in Ohio on May 23, 2012 presented by SunGard Relius

"SunGard Relius Form 5500 and 401(k) Plan Workshops" - Portland
in Oregon on May 23, 2012 presented by SunGard Relius

Self-Employed Taxpayer Reports Pension Contribution in Wrong Place on Income Tax Return But Avoids 20% Accuracy Penalty
"Self-employed taxpayers may deduct expenses associated with their trade or business when determining self-employment income. However, the [U.S. Tax Court] explained, a pension contribution is not an expense attributable to a self-employed taxpayer's trade or business.... [The] taxpayer mistakenly believed she was entitled to deduct it on Line 19 of her Schedule C, which was labeled 'Pension and profit-sharing plans.'" (Wolters Kluwer Law & Business / CCH)

Spring Credentialing Exams: Register by May 1!   [Advert.]

Register by May 1 for ASPPA’s TGPC-2, PFC-2, DC-1, DC-2, DC-3, DB, CPC and A-4 exams.

Another Question is Answered in the Who's the Employer Q&A Column
Three individuals are the owners of a medical company (LLC). Each owner has his own PLLC, which is an S-Corporation. The medical company has 4 employees. Can any one of the PLLCs sponsor a qualified plan that is not a prototype and that does not include the employees of the affiliated service group? (BenefitsLink.com)

Bipartisan Scrutiny of Income Tax Breaks for Retirement Plans Means Reason to Worry
"[During a recent hearing], Democrats and Republicans on the House Ways and Means Committee expressed support for provisions of the tax code that allow workers to put money into 401(k) and individual retirement accounts on a tax-deferred basis. But the special treatment is under pressure as Congress takes the first small steps toward tax reform. The bipartisan mantra for reform is to lower rates and broaden the base." (Investment News)

Video: House Ways and Means Hearing on Tax Reform and Tax-Favored Retirement Accounts (April 17, 2012)
Excerpt from Committee chairman Camp's opening statement: "Some [people] have questioned whether the large number of [types of tax-favored retirement plans] with different rules and eligibility criteria leads to confusion, reducing the effectiveness of the incentives in increasing retirement savings. In addition, many commentators have offered ideas for increasing participation in retirement plans and better targeting the incentives. These ideas range from simplification and consolidation of existing plans and accounts, to changing the default rules governing whether an employee participates, to additional incentives such as the Saver's Credit." (Committee on Ways and Means)

Federal Legislators Consider Cutbacks to Special Income Tax Treatment for Retirement Funds
"Capitol Hill politicians are assessing tax changes that could let the Internal Revenue Service lay claim to a portion of the $18 tril.lion sitting in 401(k) accounts and other tax breaks used by middle-class workers, including cutting the mortgage tax deduction. A commission looking for ways to close the deficit, and, noting the extent of 401(k) tax breaks, recommends an examination of the system as one way to prevent government bankrup.tcy." (New York Post)

FTI Consulting: ERISA Breakfast Series 2012   [Advert.]

Join leading industry and regulatory experts in lively discussions about the changing legal and financial landscape for ERISA fiduciaries, counsel and asset managers. For more information, visit our web site.

Congress Eyes Cutbacks to 401(k)s As It Looks for Ways to Raise Revenue
"As policy makers gear up for the tax-reform effort expected after the presidential election, they are asking: Can 401(k) plans, individual retirement accounts, and other tax-deferred vehicles be streamlined while getting more traction among people with lower incomes? ... At the very least, the increasing focus on retirement savings is a reminder that tax treatment of the accounts, once considered permanent, is anything but." (The Wall Street Journal)

Are Public Pension Obligations Debt, or Are They Values?
"'I don't think pension benefits are a debt,' said [Richard] Brodsky, a former New York State Assemblyman.... '[A distinction has to be made] between debt and social and legal obligations we have to fill.... Who are you going to hit and who's going to suffer?' ... New York City and others face soaring pension, Medicaid and retiree health care costs. Yonkers is teetering. Suffolk County just declared a fiscal emergency. Its Long Island neighbor, Nassau County, is under a fiscal control board." (The Bond Buyer)

Illinois Governor Wants Public Employees to Contribute More Toward Retirement and Work Longer
"[The governor] called for employees to pay 3 percent more and to work until 67 instead of 65 or even earlier in some cases. The governor also would reduce yearly cost-of-living increases for retirees to 3 percent or half of the consumer price index, whichever is less. Pension calculations would be based on simple interest rather than compound interest, the more costly method now in place. Cost-of-living adjustments also would start at either age 67 or five years after retirement, whichever is earlier." (Chicago Tribune)

Trends in the Expenses and Fees of Mutual Funds, 2011 (PDF)
"Over the past two decades, on an asset-weighted basis, average expenses paid by mutual fund investors have fallen significantly.... In 1990, investors on average paid 99 basis points, or 99 cents for every $100 in assets, to invest in equity funds. By contrast, expenses averaged 79 basis points for equity fund investors in 2011, a decline of over 20 percent from 1990." (Investment Company Institute)

Does Nation's Second-Largest Public Pension Plan Need Higher Contributions?
"Actuaries estimate that the total annual contribution to the [California State Teachers' Retirement System], 19.4 percent of payroll, would have to be increased by an additional 12.9 percent of pay (about $3.25 bil.lion) to fully fund pensions promised over the next three decades." (Calpensions)

Monitoring the Risks to the U.S. Economy of Weaknesses in State and Local Government Finance
"The Municipal Financial Monitoring Team [of the Federal Reserve Banks of Cleveland and Atlanta] has been looking at how shocks to the municipal bond market, continued problems with pension funding, and general fiscal stress could ripple into something much larger—either in the form of a (rather unlikely) threat to financial stability or perhaps as an aggravation of regional economic woes. To understand these issues, the Monitoring Team has been exploring a number of areas where risks may be building." (Federal Reserve Bank of Cleveland)

Navigating the Legal Landscape for Public Pension Reform
"In at least 27 states, pension members' past and future accruals are protected, but to different degrees ... [thereby complicating] the task of modifying current members' pension plans. These states treat public pension plans as contracts that must conform to constitutional, statutory, or common law (the last of these was developed through court decisions interpreting statutes or constitutions)." (Federal Reserve Bank of Cleveland)

Public Pension Funds Are Under Stress
"[I]t seems unlikely that any major pension fund will run out of cash in the next few years, barring a general worsening of economic and financial conditions ... [but many] funds will require significant reforms to reduce underfunding levels, with painful new contributions from employers and employees. Over the long term, a stronger, steadier economy would help a lot by supporting higher asset returns. Meanwhile, an imminent collapse of several large funds, accompanied by a shock to the financial system, remains improbable—though not impossible. Over the longer term, the current low-interest-rate environment may be cause for concern.... Another concern is that some states' legal protections may be too strong to give reforms enough time and flexibility to put plans on sustainable paths." (Federal Reserve Bank of Cleveland)

Los Angeles Mayor to Propose Going-Forward Reduction in Retirement Benefits of City Employees
"When he releases his annual budget, Villaraigosa is to propose an end to the practice of allowing city employees to receive as much as 100% of their salaries once they retire, and decrease overall benefits given to retiring workers." (Los Angeles Times)

ERISA Fiduciaries Can Be Liable for Misdeeds of Others
"Financial advisers and plan sponsors, beware: If you recommend a fiduciary to perform plan services, you may be held responsible if something goes wrong. That is the opinion of legal experts commenting on the case of high-profile 401(k) fiduciary Matthew D. Hutcheson, who was indicted April 11 on federal charges of diverting money from clients in multiple-employer plans for his own purposes." (Investment News)

How 401(k)s Are Failing Millions of Americans
"The financial crisis is partly to blame. It knocked $1.6 tril.lion, or about a third of the total value, off the nation's 401(k) accounts. But the larger truth is that most Americans do a poor job of anticipating the future and saving money. People don't seem to grasp that the pensions their parents' generation enjoyed have been almost entirely supplanted by 401(k)s, leaving them largely on their own to fund the final stage of their lives." (The Week)

Social Security and Medicare Annual Trustee Reports Expected Today (April 23, 2012)
"Experts said they expect the trustees' conclusions to be similar to their findings last year.... [when] the trustees projected Social Security could pay promised benefits in full through 2036, after which the program could only afford to pay 77% of them." (CNN Money)

Update on IRS Governmental Plans Definition Effort
"If a public plan fails to meet [the definition of 'governmental plan,' it becomes subject to] ERISA Titles I (Federal protection of employee benefit rights, administered by the DOL's Employee Benefits Security Administration) and IV (plan termination insur.ance, enforced by the PBGC) ... [T]he nondiscrimination and minimum participation rules of the Federal tax code would also apply, as would the minimum funding standards.... [I]ndividual [public pension] systems are strongly encouraged to consider filing comments [to the IRS by June 18, 2012] where it appears that specific issues will arise, providing examples and explaining the impact on the individual plan." (National Council on Teacher Retirement)

Cracks in the Piggy Bank: 401(k)s Are Inadequate for Many Americans
"The financial crisis is partly to blame. It knocked $1.6 tril.lion, or about a third of the total value, off the nation's 401(k) accounts. But the larger truth is that most Americans do a poor job of anticipating the future and saving money. People don't seem to grasp that the pensions their parents' generation enjoyed have been almost entirely supplanted by 401(k)s, leaving them largely on their own to fund the final stage of their lives." (The Week)

Employees Want a Say on the Boss's Pay
"Here and there this proxy season, executive pay is coming under attack from the people who actually own public companies, which is to say, stockholders.... One potentially powerful class of shareholders—employees—seems to be rousing, too. And, to the degree that employee-shareholders band together to have their say on the boss's pay, they can be a formidable force." (The New York Times; free registration required)

American Airlines to Make Its Case Against Union Contracts Before Bankrup.tcy Judge
"American wants to eliminate 13,000 union jobs—about one in every four union workers—freeze or terminate pension plans, curb health benefits, reduce time off, and impose many other cuts. The airline's unions say company leaders are unfairly blaming workers instead of doing something to make American grow and bring in more revenue." (The Sacramento Bee)