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May 3, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Retirement Planning Operations Manager
for The LBA Group in FL

Plan Administrator
for Valley Forge Asset Management, a subsidiary of Susquehanna Bancshares, Inc. in DE

Client Service & Relationship Director
for Envoy Financial in CO

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Webcasts and Conferences

Benefits 360 - The Role of Employer Sponsored Benefits in Personal Financial Planning
in New York on May 9, 2012 presented by International Society of Certified Employee Benefit Specialists - NY Metro Chapter

401(k) Rekon Advisor Symposium - Houston
in Texas on May 31, 2012 presented by 401(k) Rekon

Live FutureOffice Network Smartcast-Creating a Culture of Well-Being: RESTORE
Nationwide on May 9, 2012 presented by Davidson Marketing Group—FutureOffice Network

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[Official Guidance]
Did Your DB Plan Miss the April 30, 2012 EGTRRA Amendment Deadline? IRS Web Site Describes Correction Needed
"Generally, if you have a pre-approved defined benefit pension plan document and you did not sign an EGTRRA plan document by April 30, 2012, your plan does not comply with the tax laws and may be ineligible for tax benefits.... When completing Schedule 2, Part 1 [in the IRS Voluntary Correction Program Submission Kit], go to the "Other" box at the end of the list of law names. Check this box and type in the following failure description: The changes required by the 2006 Cumulative List (Notice 2007-3, 2007-1 C.B. 255) for an employer using a pre-approved defined benefit plan who failed to adopt the pre-approved plan by 4/30/2012, as required by Announcement 2010-20[.]" (Internal Revenue Service)

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[Guidance Overview]
Terminated Employees of Successor Employer Not Entitled to Separation Benefits under Prior Employer's Pension Plan
"ERISA Section 204(g) does not protect from cutback an early retirement benefit for a plan participant who has not satisfied and can never satisfy the conditions for receiving the benefits that are subject to the cutback. The legacy employees would never be eligible for the PJS benefit because they had been offered continued employment by the successor." (Wolters Kluwer Law & Business / CCH)

[Guidance Overview]
Another Question is Answered in the Who's the Employer Q&A Column
"My wife (age 70, born September 1, 1931) and I both work for a small company (C corp) that had an SEP IRA but has recently switched to a calendar year 401(k) plan. My wife would like to roll over funds from the SEP IRA into the 401(k) plan. She would also like to roll other 'regular' IRA funds into the plan, as well as some 403(b) funds saved while working for a former employer. The goal is to avoid required minimum distributions. Can we? She is the President of the C corp and owns 4.96%. I am the CEO and own 4.5%." (

[Guidance Overview]
Electronic Delivery of Disclosures under the Participant Fee Disclosure Regulation (PDF)
"The interim e-delivery guidance under Technical Release 2011-03R provides more liberal and user friendly options for e-delivery of plan-related information than for investment-related information. To provide all required disclosures using the same e-delivery option one of the two general e-delivery options described ... must be used, however both are complex and challenging to administer." (ING)

Study Looks at Financial Habits and Retirement Planning for Women Who Are Moms (PDF)
"Clearly the 'sacrifices' of child care responsibilities may have long-term effects on retirement preparedness. Lower contribution levels, for example, can have a snowball effect over time and the effect can be magnified further for women raising children, who seem to have the lowest retirement contribution levels, and balances, of all." (ING)

PSCA's Eastern Regional Conference – Take Advantage of Discount Pricing   [Advert.]

Sponsored by PSCA (Plan Sponsor Council of America)

PSCA’s 2012 Eastern Regional Conference will be the most comprehensive retirement-focused, one-day meeting on the east coast. It's being held at the Westin Peachtree Plaza in Atlanta, Georgia on Wednesday, May 9. To register please click here.

Benefits and Challenges of Offering Retirement Income Strategies in Your DC Plan
"[A panel of industry experts share] their insights and perspectives on what's going on in the retirement industry to address the retirement income needs of participants." (Invesco)

Louisiana Legislators Decide Switch from DB to 401(k) for State Employees Might Be More Expensive Overall
"The [Louisiana House of Representatives] dealt a significant setback to a plan to enroll new state employees in a 401(k)-style plan [recently,] with members requiring that those placed in the new system also be put into Social Security. House Bill 61 would replace the pensions for most new employees with one based mainly on market returns as has been pitched as a way of keeping retirement costs in check for state government. But requiring that state employees, who are not now part of the Social Security system, enroll in the program could more than double the costs the state pays for each employee." (

Pension Plan Underfunding Rises Slightly During April
"The decrease in funded status in April [and commensurate increase in the level of underfunding] was attributable to an increase in liabilities due to declining interest rates. Interest rates on high quality corporate bonds, which are used to measure the pension liability, fell 22-32 basis points during the month, as measured by the Mercer Pension Discount Yield Curve. Assets were relatively flat during the month as US equity markets were down about 0.6 percent for the month, offset by positive returns for fixed income investments." (Mercer)

Ford Aims to Trim Pension Risk by Buying Out Salaried Retirees and Former Employees
"'This involves retirees in a plan that's not terminating,' [and Towers Watson is] unaware of any other large plan that has done this.' Other organizations have offered lump sums to former employees who are vested in the pension plan but not yet retired[.]" (Treasury & Risk)

Managing the Volatility of Defined Benefit Plan Funded Ratios and Contributions
"[I]t requires an in-depth analysis of asset allocation and the role it plays in creating risk within a plan. A first step to a finance team's managing against unexpected volatility is understanding the unique circumstances of the plan by identifying several key characteristics: current asset allocation, liability profile, funded ratio, contribution policy, status of the plan, the plan's 'end game,' and, most importantly, the plan sponsor's risk tolerance." (CFO)

Final IRS Regs on Cash Balance Plans to be 'Meaningfully' Altered from 2010 Proposal (PDF)
"The Treasury Department will soon release final rules on cash balance and pension equity plans that will be significantly different from the proposed rules.... [IRS official Mark Iwry] said the Obama administration is open to creating hybrid plans that mix characteristics and features of defined benefit plans and defined contribution plans in innovative ways. For example ... collective investments and professional investment management could be used in plans that have characteristics of defined contribution plans. Similarly, defined contribution plan investing could be done with institutional shares, not retail shares[.]" (Bloomberg BNA)

Retirement Issues Particular to Women: Patterns of Saving, Spending and Effectiveness of Incentives (PDF)
"This paper explores how women save and invest for retirement, what motivates them and how they feel about their own situations, where they look for information and how they save and spend. These insights can help employers, financial professionals, and financial providers offer solutions that might help address the risk women currently face in being prepared to care for themselves in retirement." (ING Retirement Research Institute)

Risks and Rewards of Opening a Lump-Sum Distribution Option to Already-Terminated Pension Plan Participants
"Before 2012, a lump-sum window generally would have carried with it considerable incremental cost due to the legally required basis for calculating lump-sum payments, which included Treasury bond rates as well as corporate bond rates. Beginning with the 2012 plan year, however, the amount of a lump-sum payment is based solely on corporate bond rates.. . . This [article] discusses the role that a lump-sum window could play in DB plan de-risking by making the financial footprint of the plan smaller." (Sibson Consulting)

A Survey of Current Recordkeeping Practices for 'ERISA Budget Accounts' (PDF)
At page 6 of this 20-page document. "More recently, the broader marketplace began forcing recordkeepers to offer access to non-proprietary investments. These funds enter agreements with recordkeepers to share revenue in the form of sub-transfer agent (Sub-TA) fees, and as part of that process, recordkeepers began agreeing to cap their annual fee on plans at a certain level. As revenue was received, either all, or a portion of the amount in excess of the cap was in turn set aside in what many call an 'ERISA Budget Account.'" (CAPTRUST)

IBM Phased Retirement Program Offers Benefits and Employment through 2013 in Exchange for Reduction in Hours
"IBM is offering employees who are nearing retirement—and may be worried about a layoff—a one-time voluntary program that would ensure their employment through Dec. 31, 2013. The program, called 'Transition to Retirement,' would cut a workers schedule and pay, but continue providing full benefits until the job guaran.tee's expiration date. The program, described in a letter addressed to IBM managers, 'offers participants 70% of their pay for working 60% of their schedule.'" (Computer World)

Would Raising Social Security Covered Compensation Cap Be Harmful or Helpful to System in the Long Run? (PDF)
"Analysts have proposed raising the maximum level of earnings subject to the Social Security payroll tax ... to improve long-term Social Security Trust Fund solvency. This article investigates how raising the tax max leads to the 'leakage' of portions of the additional revenue into higher benefit payments." (Social Security Administration)

Text of Investment Company Institute's Recommendations for the 2012-2013 IRS Guidance Priority List (PDF)
The comments largely address certain regulatory issues that remain unsettled for 403(b) retirement plans. (Investment Company Institute)

Text of Comments by Insured Retirement Institute on Proposed Regs on Longevity Annuity Contracts (PDF)
"First, it is [the Institute's] understanding that, under the regulation, the failure to comply with the 25% or $100,000 limits would void the entire contact as a QLAC. [The Institute suggests] that a system could be developed that would allow for a correction to a mistake in calculations. The amount that would be over the limits would be applied to the participant's required minimum distribution calculation. However, the remainder of the QLAC would remain intact and would still ensure longevity protection for the participant." (Insured Retirement Institute)

Text of Comments by ASPPA on Proposed Modifications to Minimum Present Value Regs for Partial Annuity Distribution Options under DB Plans
"ASPPA COPA applauds the addition of specific rules for dealing with bifurcated benefit distributions. However, final regulations should acknowledge that plan sponsors and plan administrators have had to develop plan language and administrative procedures to address bifurcated benefits in light of the minimum present value requirements ever since those specific requirements were added to the Code in 1984, and the absence of specific formal guidance has led to divergent practices." (ASPPA)

Revenue Sharing on Trial: Complex, Inefficient and Unnecessarily Expensive
"The basic problem with revenue-sharing is that it is an inefficient and opaque way to compensate service providers. Its needless complexity leaves many plan sponsors unable to line up costs with the value of services so that they can prudently fulfill their fiduciary duty to determine the reasonableness of costs. In this way, revenue-sharing is like any other third-party payer system. In cases such as Tussey, revenue-sharing costs incurred by plan participants went unnoticed by the plan sponsor and therefore remained unknown, harming plan participants while generating [what a court called] 'unreasonable' profit for Fidelity." (Morningstar)

Benefits in General; Executive Compensation

[Guidance Overview]
Failure to Offer Comparable Severance Package Can Be Prohibited Gender Discrimination under Title VII
"The [Fourth Circuit Court of Appeals] reversed and remanded a district court's dismissal of a claim by a former employee that she was not offered the same severance benefits as other similarly situated ma.le counterparts when they were terminated from employment. In this case, the employee was offered three months of continued pay and health benefits when her employment ... was terminated. The employee claimed that males in similar positions were customarily offered six months of pay and benefits, or were transferred to positions with less responsibility while continuing their pay and benefits." (Haynes and Boone)

Take Steps to Ensure Effectiveness of Stock-Based Pay
"Is it time for employers to rethink stock-based compensation for broad groups of employees? The answer depends on what the company wants to accomplish and whether stock-based pay is the best way to spur the employee performance to achieve those goals." (Society for Human Resource Management)

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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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