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May 18, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

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Strategic Communications Consultant
for New York Life Retirement Plan Services in CA, MA

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Webcasts and Conferences

Designated Roth Accounts and Roth Conversions
Nationwide on May 24, 2012 presented by McKay Hochman Co., Inc.

The Complex World of ADP/ACP Testing
Nationwide on May 31, 2012 presented by McKay Hochman Co., Inc.

401(k) Safe Harbor and SIMPLE Plans
Nationwide on June 5, 2012 presented by McKay Hochman Co., Inc.

Automatic Contribution Arrangements
Nationwide on June 15, 2012 presented by McKay Hochman Co., Inc.

Qualified Default Investment Alternative
Nationwide on June 27, 2012 presented by McKay Hochman Co., Inc.

Hardship, In-service and Elective Deferral Distributions
Nationwide on July 3, 2012 presented by McKay Hochman Co., Inc.

Participant Loans
Nationwide on July 11, 2012 presented by McKay Hochman Co., Inc.

ERISA Disclosure Under 404(a)(5) and 408(b)(2)
Nationwide on July 20, 2012 presented by McKay Hochman Co., Inc.

Overview of Cross-Testing
Nationwide on July 26, 2012 presented by McKay Hochman Co., Inc.

401(k) Rekon Advisor Symposium - Sacramento
in California on June 13, 2012 presented by 401(k) Rekon

"Practical Guide to Plan Fees: June 2012 Update" - A 3-part Web Seminar
Nationwide on June 18, 2012 presented by SunGard Relius

Live FutureOffice Network Smartcast - FLSA Compliance
Nationwide on May 22, 2012 presented by Davidson Marketing Group—FutureOffice Network

2012 Third Quarter Update
Nationwide on August 14, 2012 presented by McKay Hochman Co., Inc.


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[Official Guidance]
June 12 IRS Phone Forum to Address 403(b) Written Plan Requirement and Frequent Issues
Begins at 2 PM; see the linked web page for registration information. The IRS is inviting requests for coverage of a specific issue; let them know via e-mail at ep.phoneforum@irs.gov on or before June 1, 2012. (Internal Revenue Service)


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[Guidance Overview]
EBSA Makes Small Clarifying Correction to FAB 2012-02 FAQs on Participant-Level Fee Disclosure
From an EBSA email distributed on May 17: "The Department of Labor's Employee Benefits Security Administration made a technical correction to recently released Field Assistance Bulletin No. 2012-02, which contains frequently asked questions and answers about the Department's participant-level fee disclosure regulation (29 CFR section 2550.404a-5). It has come to the Department's attention that, as initially released on May 7, 2012, a sentence in the answer to Question 19 concerning quarterly Web site updates to 'average annual total return' information inadvertently referred to the most recently completed calendar 'year' rather than the most recently completed calendar 'quarter.' The Department corrected this error on May 17, 2012 in order to accurately restate the requirements of the regulation. The word 'calendar' also was removed from the phrase '... 10-calendar year periods ...' in the same sentence. See Q-19, n.2." (Employee Benefits Security Administration)

[Guidance Overview]
Another Question is Answered in the Who's the Employer Q&A Column
I heard the DOL has sought a temporary restraining order against Matthew Hutcheson in connection with the open MEP he dealt with. Does it clarify the approach the DOL is taking in dealing with open MEPs? [Answer:] Yes, it does. (BenefitsLink.com)

[Guidance Overview]
A Bridge Too Far: Early Retirement Exception from 10% Tax Was Available from Participant's 401(k), But Not After IRA Rollover
"The court held that the taxpayer would not have been subject to the 10% tax if he had taken the distribution directly from the 401(k) plan upon termination because of the exception in section 72(t)(2)(A)(v) of the Internal Revenue Code for post-separation distributions to an employee who has attained age 55, but because he chose to roll over his balance, the exception no longer applied to a distribution from an IRA." (Haynes and Boone)

American Workers Shifting Their Plans and Expectations for Retirement (PDF)
"[The] majority of workers plan to work past age 65 (56 percent) and the majority (54 percent) plan to continue working after they retire. Despite workers' demonstrated commitment to saving, just 39 percent believe they are building a sufficient nest egg[.]" (Transamerica Center for Retirement Studies)

Kansas House and Senate Agree on Changes to State Employees Pension Plan
Rather than a 401(k)-type plan, a defined contribution account will be established for newly hired employees to which the state will credit 5.25% in guaran.teed earnings on both employee and employer contributions, with additional credits possible if the existing KPERS plan has an investment return of more than 8%. (WSLS)

Many 401(k) Participants Show High Aversion to Risk
"Schwab's survey found that 35 percent of Americans consider protecting retirement assets more important than growing those assets, while only eight percent consider growing retirement assets more important than protecting them.... The 2008 downturn may have had a particular impact on younger Americans [because the] survey found 29 percent of those age 18-34 plan to pull money out of the market, with only 11 percent of older Americans indicating they would take this action." (Charles Schwab)

ERISA Fee Benchmarking Rules and Practices Can Be Useful Even to ERISA-Exempt Public Plans
"Although public plans are not subject to ERISA, many times the guidelines are used as a best practice. ERISA section 404(a) requires that fiduciaries elicit information necessary to assess not only the reasonableness of the fees to be paid for services, but also the qualifications of the service provider and the quality of the services that will be provided. Benchmarking allows plan sponsors to do a fee to services comparison of other plans in their benchmarking group. Among other things, this will help determine if the plan is receiving the right amount of fiduciary support from the current service providers." (National Association of Governmental Defined Contribution Administrators)

Florida Agency Says Legislators Should Consider Increase in Required Employee Contributions to Pension Fund
"The staff of the [State Board of Administration], which manages investments for the $121.6 bil.lion [Florida Retirement System (FRS)] fund, advised the House and Senate leadership of potential problems this week. In a required annual review of the FRS actuarial valuation, the financial analysts also said the state could consider cutting the fund's 7.75 percent expected earnings target by a half-percent." (The Florida Current)

Can Ford's Lump-Sum Buyout Technique Work for Other Pension Plan Sponsors?
"Ford is offering to make a one-time, voluntary lump-sum payment to nearly all of its salaried retirees by the end of 2013. It appears to be the first such program to specifically target retirees without being part of a broader plan termination, experts say. According to those same experts, the impact on HR departments could be substantial, especially in areas of due diligence, communications and education, if this becomes a trend." (Human Resource Executive Online)

Houston Sues Firefighters Pension Board to Open Its Books
"The Legislature created Houston's firefighters pension system and gives it the authority to unilaterally establish what taxpayers owe the system each year. Fund representatives are not even obligated to meet with city officials to discuss possible changes to the system." (The Houston Chronicle)

Ohio Senate Passes Public Pension Reform; Ohio House to Act This Summer
"Supporters say without action from lawmakers the pension funds will fall short of meeting their 30-year solvency requirement. The teachers' pension fund alone would need 38 years to do so. One of the largest funds, the Ohio Public Employees Retirement System, estimates that delaying reform costs their fund nearly $1 mil.lion a day. That same daily impact is nearly $2 mil.lion for the Ohio Police and Fire fund. And the State Employees Retirement System is losing $27 mil.lion in savings annually." (WIOT.com)

Auditor Says San Diego Pension Initiative Overstates Savings
"[T]he measure aims to hold steady city workers' pensionable salaries over the next five years to save on pension costs. But voters can't mandate city employee salaries at the ballot box so the measure provides a strong recommendation for City Council to impose the freeze. The pensionable pay freeze is so essential to the initiative's savings that with it supporters can claim the measure saves $1 bil.lion over 30 years and without it opponents can claim it saves $0." (Voice of San Diego)

Considerations in Preparing Disclosure in Official Statements on a Government Bond Issuer's Pension Funding Obligations (PDF)
"The overall point of the disclosure of pension funding obligations is to indicate whether the state or local government will likely struggle in meeting such obligations without making difficult financial decisions. One of those decisions may be related to the payment of debt service on bonds. Thus, in circumstances where there is expected to be financial strain caused by an issuer's pension funding obligations, being clear and plain about this point to investors is very important." (Pension Disclosure Task Force, National Association of Bond Lawyers)

Employers Can Have a Meaningful Impact on Employee Retirement Readiness
According to a recent analysis of Fidelity's 11.8 mil.lion accounts, the number of participants taking advantage of annual increase programs (AIP) increased nearly nine-fold over the past five years. Also, 20 percent more participants attended workplace workshops and 45 percent more used online webinars in 2011, compared to 2010. (Wolters Kluwer Law & Business / CCH)

Is Stock Market Recovery Providing Light at the End of the Tunnel for State and Local Pensions?
"The stock market's rebound from its depths in the recession has lifted pension assets substantially over the past two and half years ... The effects of the recovering market haven't yet shown up in most state pension funds' financial reports, but they will over the next few years. When most funds estimate their available assets, they phase in the impact of investment gains and losses over several years in order to minimize year-to-year changes in the amount of money that the state must deposit in the fund." (Center on Budget and Policy Priorities)

DOL FAQs Address Participant Fee Disclosure Rules as Applied to Brokerage Windows, Calculation of Total Annual Operating Expense Ratio
"While brokerage windows, self-directed brokerage accounts and other similar plan arrangements (for simplicity, referred to here after as 'brokerage windows') are not considered designated investment alternatives and are therefore excluded from the annual investment disclosures, brokerage windows must still make certain annual plan-related disclosures to each participant eligible to use the window, whether or not he or she chooses to use the window. A plan administrator offering a brokerage window must furnish a general description of the brokerage window and any fees or expenses that may be charged against an individual participant's account. The quarterly disclosure must reflect the dollar amount of fees and expenses that were charged against that individual participant's account over the preceding quarter[.]" (SunGard Relius)

Getting Young Workers to Save: Selling Confidence in the Future
"One popularly expressed motive, 'live for today, because who knows what tomorrow will bring?' puts thoughts of retirement a very, very long way into the future.... We live in a world that causes [young people] to question their safety, security, and especially the future. In fact, they are constantly provided with excuses not to save. If we want more young workers to choose to save, we have to sell the benefits of paying themselves first and getting the free employer money." (Plan Sponsor Council of America)

Personal Fiduciary Liability Under ERISA: Your Obligations Can Follow You Into Bankrup.tcy (PDF)
"In the past, bankrup.tcy allowed fiduciaries to essentially abandon their plan administration duties. The Bankrup.tcy Abuse Prevention and Consumer Protection Act (BAPCPA) ... explicitly imposed plan administration duties on panel trustees and put an end to the abandonment of retirement plans by bankrupt employers.... BAPCPA [also] allowed the [DOL] to change its role in bankrup.tcy from retirement plan 'caretaker' to retirement plan 'collector.' In bankruptcies in which employee contributions are missing due to defalcation, the DOL is now using its resources very effectively to recover those missing monies." (Lockton)

Big Investments in Employer Stock Can Mean Big Losses for Retirement Plans
"A massive 38 percent of [Chesapeake Energy's] main 401(k) retirement plan's assets were in company stock, despite only 5 percent of those assets still being tied up in a vesting period. It is no wonder that employees jumped at a generous offer to match, dollar-for-dollar, the first 15 percent of their salary with shares of stock. What makes a heck of a lot less sense is why they held on to them after they were free to diversify. While this has been a bit of a disaster for employees, as Chesapeake shares have fallen by nearly half, [the author says] holding more than 5 percent of your financial assets in your employer's stock is bad policy whatever the returns and no matter how well run the company." (Reuters)

[Opinion]
Wall Street Journal and Credit Suisse 'Union Pension Bomb' Is Long on Drama, Short on Insight (PDF)
"The May 15, 2012 Wall Street Journal editorial entitled 'The Union Pension Bomb' and the Credit Suisse report to which it refers may provide an eye-catching headline, but it contains numerous factual inaccuracies and misleading statements regarding multiemployer plans.... Rather than acknowledging the long-term nature of pension obligations and the market fluctuations that will produce periodic and transitory periods of over- or underfunding, [the editorial] chose to capitalize on the anomalies produced by artificially low interest rates, overly influenced by monetary policies intended to stimulate low-cost borrowing, at the expense of those institutions and individuals whose long-term financial survival is dependent on savings and historically dependable fixed income instruments. The sensationalism of these conclusions may play well to those whose interests are served by eliminating any sense of corporate responsibility to the workers whose efforts are as much a contributing factor to the companies' success as those who provide the capital, but no one should be fooled by this shameless and opportunistic characterization of the current rates as market driven 'risk-free' rates, appropriate for such conclusions." (National Coordinating Committee for Multiemployer Plans)

[Opinion]
Ohio Public Retirement Systems Need Overhaul, Not More Tweaks
"$72 bil.lion. That's the collective unfunded liabilities of Ohio's five defined-benefit public-pension plans. That's more than Ohio's biennial budget. Under current law, three out of the five plans never will be able to pay off those liabilities. Those are the stakes." (Columbus Dispatch)

[Opinion]
What If 'Say on Pay' Rule Applied to Public Pension Consultants and Managers?
"Say on Pay gives shareholders [of large private corporations] a vote on executive compensation at least every three years. Paradoxically, the financial performance of many public pension funds in the past decade has been downright dismal and deserves equal attention from stakeholders. If these were private companies, their stock market prices would be running a course similar to what happened to many of the banks and Wall Street brokerage houses in recent years." (Governing)

Benefits in General; Executive Compensation

Highly-Paid Boston Public Employees Enjoying Free Commutes in Taxpayer-Funded Cars
"In all, 122 of the 199 city workers with take-home vehicles make more than $100,000 a year, including nine who earned over $200,000. At least 36 employees with take-home cars live outside the city, including officials who reside in Duxbury, Marshfield, Hingham, Norwell and Framingham, among other suburban towns." (BostonHerald.com)

Press Releases



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