Part Time On Call Participant Counselor
for Diversified in AR, CA, DC, GA, HI, MI, NC, NY, OH, UT

Consultant
for Associated Pension Consultants in CA

Compliance Team Leader
for Freedom One Financial Group in MI

Financial Analyst
for Evercore Trust Company, N.A. in DC

Benefits Consultant, Large Groups
for Northwestern Benefit Corporation of Georgia in GA

Senior Relationship Manager
for T. Rowe Price in MD

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Text of DOL Advisory Opinion 2012-02A on 403(b) Plan Safe Harbor Exclusion from ERISA Coverage
"[A] program for the purchase of annuity contracts or custodial accounts in accordance with provisions set forth in section 403(b) of the Code and funded solely through salary reduction agreements, or agreements to forego an increase in salary, [is] not 'established or maintained' by an employer under section 3(2) of the Act, and, therefore, [is not an] employee pension benefit plans subject to Title I, provided that certain conditions are met.... A 403(b) plan does not fail to comply with [this] 'safe harbor' merely because the employer maintains a separate plan qualified under Code section 401(a). Nor does compliance with the safe harbor preclude an employer from taking employee participation in the 403(b) plan (including salary reduction contributions) into account in ensuring that employer contributions to the other plan meet tax qualification requirements in the Code. It is the view of the Department, however, that conditioning employer contributions to the separate pension plan on the employee making salary reduction contributions to the 403(b) plan would be inconsistent with the limited employer involvement permitted by section 2510.3-2(f)(3) of the safe harbor, and would also conflict with the requirement in section 2510.3-2(f)(1) that employee participation in the 403(b) plan be 'completely voluntary.'" (Employee Benefits Security Administration)

The ERISA Outline Book 2012 Edition. Get Your Copy Today!   [Advert.]

The ERISA Outline Book is both a reference book and a study guide on qualified plans, and it is the recommended study resource for IRS Enrolled Retirement Plan Agent (ERPA) Program. Get your copy today!

Do You Really Want to Do That? IRAs and the Prohibited Transaction Provisions (PDF)
"The impact of the Code's prohibited transaction provisions on IRAs has been most recently highlighted in DOL guidance stating that cross-collateralization and indemnification provisions in brokerage and other account agreements related to IRAs result in non-exempt prohibited transactions. In addition, the DOL's proposed regulations to change the definition of 'fiduciary' appear to have raised awareness that providing services to IRAs presents prohibited transaction issues." (Alston & Bird)

Another Question is Answered in the Who's the Employer Q&A Column
What do we know about multiple employer plans, now that the DOL has issued Advisory Opinion 2012-04A, that we didn't know before? (BenefitsLink.com)

Lack of Financial Damages to 401(k) Plan Participant's Account Deals Death Blow to KeyCorp Stock Holdings Case (PDF)
"[The plaintiff, a participant in a self-directed 401(k) plan sponsored by her employer, KeyCorp,] sold over 80% of her KeyCorp holdings at a time she claims the stock was artificially inflated. Accordingly, if the allegations in the complaint are true, [she] sold the majority of her KeyCorp holdings for more money than it was worth, thereby benefiting from defendants' alleged breach of fiduciary duty.... When a plaintiff alleges that the withholding of information affected share prices, 'the appropriate measure of damages [is] the difference between the investment as taken and the investment as it would have been if not tainted by withheld information.' [Citation omitted.] ... For the foregoing reasons, we affirm the district court's order dismissing [the] complaint for lack of subject-matter jurisdiction." (Taylor v. KeyCorp, Nos. 10-4163/4198/4199, 6th. Cir. May 25, 2012) (U.S. Court of Appeals for the Sixth Circuit)

Investment Provider Information for Multivendor 403(b) Plan Participant Disclosure (PDF)
"As service providers prepare to comply with the 404a-5 participant disclosure regulations for multivendor 403(b) plans it may be necessary to contact and coordinate with other investment providers. The SPARK Institute has developed this short Investment Provider Information Form in order to help record keepers and investment providers locate the appropriate contacts at other companies. The information form also includes some basic information about the investment provider's compliance approach and timing. The SPARK Institute will collect the information forms and provide them to record keepers and investment providers upon request. We request that 403(b) plan investment providers complete the form with respect to their disclosure efforts prior to receiving the other investment providers' forms." (The SPARK Institute)

DOL in Fee Disclosure Guidance on Brokerage Windows Is 'Surprising', Experts Say
"Question 30 asks whether an investment platform offered by a retirement plan is considered a designated investment alternative when the platform includes many registered mutual funds of multiple fund families to which participants and beneficiaries may direct the investment of assets held in or contributed to their individual accounts. It adds that although the plan fiduciary selected the platform provider, the fiduciary did not designate any of the funds on the platform as 'designated investment alternatives' under the plan. The DOL responded by saying that although the regulation does not specifically require a plan to have a particular number of designated investment alternatives, the failure to designate a manageable number of investment alternatives raises questions as to whether the plan fiduciary has satisfied its obligations under section 404 of [ERISA]." (planadviser)

Pension Battle Begins in Springfield, Illinois
"Illinois' pension deficit comes in at either the worst or the second-worst in the country, and Gov. Pat Quinn calls it a major issue that can't wait any longer to fix." (NBC Chicago)

San Jose Pension Fight Could Have Nationwide Implications
"The eyes of the nation are on San Jose as a landmark June 5 measure to trim soaring pension costs puts residents of the 10th largest U.S. city at the center of a $1 mil.lion-plus battle for their votes.... [It] would limit retirement benefits for future hires and require them to pay half the cost of a pension. Current employees would keep the pensions already earned but have to choose either a more modest and affordable plan for their remaining years on the job or pay up to 16 percent more of their salary to continue with the existing benefit." (San Jose Mercury News)

$100 Mil.lion a Year to Dead Federal Government Retirees?
"You might think that Brandon Doherty, a GOP candidate for Congress in Rhode Island, was engaging in a bit of hyperbole when he claimed that the federal government had spent more than $600 mil.lion in the past five years in improper annuity payments to federal retirees who are not among the living. But PolitiFact Rhode Island reports that Doherty is right." (Government Executive)

DOL Reopens Comment Period on Proposed Regulations for Target Date Fund Disclosures
"To avoid the potential cost and confusion that could result if the DOL and SEC were to establish inconsistent TDF disclosure requirements, commenters in the initial DOL comment period encouraged coordination with the SEC's separate regulatory proposal regarding TDF disclosures. This announcement seems to be a step in heeding that advice." (Thomson Reuters/EBIA)

Sticker Shock Becoming Less Likely Under GASB Pension Accounting Rules
"New public pension accounting rules scheduled to be issued next month, once expected by some to reveal massive hidden debt, now seem less likely to trigger a shake-up and are even getting applause from pension officials. Pension systems can continue to use earnings forecasts critics say are too optimistic, now 7.5 percent for the three state funds, to offset or 'discount' estimates of the cost of pensions promised current workers in the decades ahead. But if the assets (employer-employee contributions and investment earnings) are projected to run out before all of the pension obligations are covered, the pension system must 'crossover' to a lower bond-based forecast to calculate the remaining debt." (Calpensions)

With the DOL Wolf at the Door, Brokers Are Paying RIAs Protection Money Relating to 401(k) Assets
"RIAs were already winning in the marketplace in two important ways—by poaching assets directly from brokers and by hiring brokers as employees (with assets coming in tow). Now there's a third way that they're getting business from brokers: The brokers are simply paying RIAs de facto protection money to stay cool with DOL regs relating to 401(k) assets. Pick your cliche? But the thinking of many brokers is that half a loaf is better than none so they're giving up a portion of their revenue stream in exchange for an agreement that their assets don't get fully poached." (RIABiz)

Retirement Myths: I Can Start Saving For Retirement When I'm 40
"Waiting to start to save until you are 40 is a big financial mistake. You have already let the key years for saving pass you by. If you start at forty and plan to retire at age 67 you have 27 years of savings and investing. But if you start at age twenty you have 47 years." (CBS Boston)

Annuity Buyers Finding Guaran.teed Lifetime Benefits Attractive
"Indexed annuities ... rose by 14% in the first quarter ... Guaran.teed-lifetime-withdrawal benefits ('GLWB') helped move the product among customers. Two of three people who bought fixed indexed annuities decided to buy a GLWB rider, which lets customers get lifetime income without annuitizing their contracts." (Investment News; free registration required)

Enhancing Retirement Readiness: Consensus on a Course of Action (PDF)
"[R]etirement readiness measured as an income replacement ratio is driven largely by contribution levels and the number of saving years. For many, target income replacement ratios should be higher than the 70-75% ratio conventionally accepted as a rule of thumb to reflect the projected cost of health care in retirement, traditional financial planning concerns and individual circumstances such as personal health, children education funding needs, and the cost of caring for elderly parents factor into the equation. Regardless of the target income ratio, the six panelists call for consistent contributions equal to 10% to 16% of pay over a 30-year or 40-year career." (Retirement Advisor Council)

Encourage Employees to Defer Adequate Pay to Their 401(k)
"When defined contribution plan sponsors and financial advisers start talking about saving for retirement, they often throw out numbers like 15 percent to 20 percent of pay as a way of measuring an appropriate level of annual contributions. However, such numbers might not tell the whole story. It is an unfortunate fact that many are not saving enough, or anything, for their retirement. An April 2012 survey by LIMRA Research found that 49 percent of U.S. adults are not contributing to any retirement plan and that individuals ages 18 to 34 are most likely (56 percent) to be among those not saving." (Society for Human Resource Management)

Congrats, Grads! Get Ready to Retire
"No matter how conservative or aggressive the hypothetical portfolio, projected median portfolio balances at age 65 are significantly higher for investors who started saving at an early age than for investors who began saving at older ages.... [A recent study found that] the amount of money someone ended up with at retirement was more influenced by how much money was saved than by how that money was invested." (The Wall Street Journal)

Many Retirees Unwittingly Make Decisions That Result in Major, Self-Inflicted Damage to Their Nest Eggs
"[A]ny kind of significant financial decision needs to be viewed in the context of a financial plan aimed to play out over two or three decades. For most people, retirement planning requires discipline and careful balance when it comes to saving and spending. And especially early in retirement, that balance can easily be thrown off kilter." (The Wall Street Journal)

Public Pensions Faulted for Bets on Rosy Returns
"Ailing pension systems have been among the factors that have recently driven struggling cities into Chapter 9 bankrup.tcy. Such bankruptcies are rare, but economists warn that more are likely in the coming years. Faulty assumptions can mask problems, and municipal pension funds are often so big that if they run into a crisis their home cities cannot afford to bail them out." (The New York Times; free registration required)

Though Plan Sponsors Are Strapped for Cash, Advisers' First Duty Is to Participants
"Employees owe allegiance to their employer, but when they serve as fiduciaries to their company's pension plan, they are obligated to serve the exclusive best interests of plan participants and beneficiaries. This means they must make decisions that will serve to assure that promised benefits can and will be paid when due. Unfortunately, what's best for plan participants often isn't in the best interests of the company." (Investment News; free registration required)

Preparing for Retirement Plan Audits
"The Labor Department ... is in the middle of hiring 1,000 new employees, including 670 investigators, as part of its increased focus on noncompliance issues.... The results have been eye-popping: 70% of retirement plans audited by the Labor Department were fined, received penalties or had to make reimbursements for errors in 2009 and 2010, according to the latest figures available. Plan sponsors coughed up more than $1 bil.lion in corrections, reinstatements and fines, for an average assessment of $450,000, the department reported." (Investment News; free registration required)

Are 401(k)s Too Complex?
"[The] GAO found that the plans' often convoluted fee arrangements are so complicated that even many employer sponsors don't understand them well enough to provide guidance to their employees.... [Firms] that administer the plans sometimes get paid by the funds that they offer as 401(k) investment choices. This is not considered a bribe, for reasons that escape me. Instead, it's an accepted part of the business. And the fees have been opaque to investors, even though they wind up paying them." (U.S. News & World Report)

CalPERS Just Keeps Kicking That Old Can on Down The Road
"When CalPERS builds up a debt, it spreads out repayment over as much as 30 years rather than requiring prompt repayment. We're not talking about debt for a structure like a school building that has value to future generations; we're talking about unfunded liabilities for the cost of past labor. We would never dream of deferring payment of salaries for 30 years; we shouldn't postpone pension contributions, either.' (Contra Costa Times)

The 'Bad Actor' Challenge: Comments on the Recent DOL Advisory Opinions on Multiple Employer Plans
"[A]rrangements which safely increase small employer coverage; promote fiduciary compliance and accountability by such employers; [and] control costs for employers while providing plan participants a wide selection of reasonably priced investments [are] critical to promoting retirement security. Unfortunately, there will always be 'bad actors' which abuse the system. Working together with regulatory agencies, we can address the 'bad actor' challenge while further enhancing the structure for a sound, secure and cost effective platform for the small employer sponsored retirement plan." (Business of Benefits)

Text of Proposed IRS Regs: Property Transferred in Connection with Performance of Services under Section 83
"The proposed regulations clarify that a substantial risk of forfeiture may be established only through a service condition or a condition related to the purpose of the transfer.... Similarly, confusion has arisen as to whether, in determining whether a substantial risk of forfeiture exists, the likelihood that a condition related to the purpose of the transfer will occur must be considered. ... A conclusion that such likelihood need not be considered would lead to anomalies not intended by the statute.... Finally, the proposed regulations would clarify that, except as specifically provided ..., transfer restrictions do not create a substantial risk of forfeiture, including transfer restrictions which carry the potential for forfeiture or disgorgement of some or all of the property, or other penalties, if the restriction is violated." (Internal Revenue Service)

Dewey Files for Chapter 11 in Record Law Firm Collapse
"Dewey's management promised millions in packages to about 100 partners, according to the court filing, leaving it strapped for cash when revenues fell during the recession." (The New York Times; free registration required)