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[Guidance Overview]
The Inconvenient Truth About Target Date Funds
Excerpt: "[P]rudently selecting a target date fund is actually more complicated for employers than selecting most other types of 401(k) investment options. Plan fiduciaries face difficult issues in evaluating glide paths, benchmarking performance, controlling fees, and, ultimately, judging the appropriateness for plan participants of a target date fund's overall strategy." (McGuireWoods LLP)


[Guidance Overview]
ERISA Considerations in Litigation Settlements Involving Employer Securities and Mutual Funds (PDF)
21 pages. Excerpt: "The Department of Labor (DOL) has issued two significant pieces of guidance to assist plan fiduciaries in dealing with settlements: Prohibited Transaction Exemption 2003-39 ('PTE 2003-39') covering litigation settlements generally and Field Assistance Bulletin 2006-1 ('FAB 2006-1') dealing with distribution of settlements resulting from the mutual fund scandals. In addition, the DOL has proposed an amendment to PTE 2003-39 to modify some of the existing conditions and clarify others." (Fiduciary Counselors Inc.)


[Guidance Overview]
Another Question is Answered in the 401(k) Plans Q&A Column
The regulations for hardship distributions of 401(k) elective deferrals provide that in certain cases, an employee need not take "counterproductive actions," i.e., actions that would increase the amount of the hardship need. The placement of the counterproductive actions paragraph within the hardship distribution regulations seems to indicate that if we draft our plan to use the "deemed" or safe harbor hardship standard for the "necessary to satisfy the immediate and heavy financial need" requirement, then our participants would be required to take counterproductive measures. Is this correct? (BenefitsLink.com)


[Guidance Overview]
Trustee-To-Trustee Transfer of Portion of IRA to New IRA After Substantially Equal Periodic Payments Had Begun Was Modification of Substantially Equal Periodic Payments
Excerpt: "A trustee-to-trustee transfer of a portion of an individual's account balance in her IRA to another IRA at a different financial institution after she had begun receiving a series of substantially equal periodic payments was a modification to the series of substantially equal periodic payments that triggers the 10% additional tax on early distributions, according to an IRS letter ruling." (Wolters Kluwer)


[Guidance Overview]
Timing Issues for Implementation and Administration of Automatic Enrollment Plans: Part II
Excerpt: "The February 2009 final regulations relating to eligible automatic contribution arrangements ('EACAs') and qualified automatic contribution arrangements ('QACAs') provide specific timing rules for implementing automatic deferral elections, and in some cases, participant elections. This is the second of a two-part Technical Update explaining the rules a plan must follow in administering a EACA or a QACA. Part I (Q&As 1-6) discussed when the plan must provide notice of the arrangement to a participant, when the plan may implement a participant's default deferrals, and the latest date the plan may implement a participant's default deferrals. This Part II (Q&As 7-9) will discuss the timing rules relative to a EACA permissible withdrawal election." (SunGard)


[Guidance Overview]
With Retirement Plan Containing Company Stock, Some Relatively Simple Steps Can Significantly Reduce the Taxes on Withdrawals
Excerpt: "The strategy, known as net unrealized appreciation, or NUA, is one that any person leaving a job or retiring should consider before moving assets from a company savings plan into an individual retirement account. Too often, though, this tax-code rule gets overlooked. People who contribute to tax-deferred retirement accounts, such as 401(k)s, have to pay income tax on withdrawals. But under the NUA rules, 401(k) account owners don't have to pay ordinary income tax on all of their company-stock holdings. Instead, they can pay a combination of ordinary income tax and the lower capital-gains tax rate." (The Wall Street Journal)


What's Next for Target Date Funds?
Excerpt: "A joint hearing held by the Securities and Exchange Commission (SEC) and Department of Labor (DOL) in mid June explored what sorts of changes target date funds may need to undergo. Anne Lester, portfolio manager for J.P. Morgan SmartRetirement Funds, says that during the hearing, the DOL and SEC 'put their finger on what we think is the absolute most critical factor when talking about target date funds, which is what happens at the end' of the fund's glide path. That is, does the glide path go 'to' retirement or 'through' retirement?" (Investment Advisor)


Corporate Plan Sponsors Lighten Up on Equities As They Shy Away from Risk in General
Excerpt: "The magnitude of last year's sell-off in the financial markets has set in motion normally slow-moving corporate pension plans. Plan sponsors are starting to reshape the way plan assets are allocated and making changes to other longstanding practices, such as securities lending, a recent survey shows. 'When you've lost a lot of money, there's clearly an incentive to de-risk and ensure you have more stability,' says Goran Hagegard, a principal at financial services consultancy Greenwich Associates." (Treasury & Risk)


American Benefits Council Cites 'Room for Improvement' in Retirement Plan Disclosures
Excerpt: "Testifying at a July 23 meeting of the ERISA Advisory Council, Jan M. Jacobson, senior counsel of retirement policy for the American Benefits Council, asserted, 'Streamlining existing and future disclosure requirements and implementing rules that make better use of modern technology -- and leaves room for future technological developments -- will go a long way toward improving employees' understanding of their retirement plans and promoting retirement literacy and retirement security.'" (Wolters Kluwer)


Some States Ponder Offering Voluntary Retirement Accounts for Individuals
Excerpt: "With half of workers lacking access to workplace retirement plans, several states are leading the charge to create their own Individual Retirement Accounts. So-called Universal Voluntary Retirement Accounts would be a low-cost option to an IRA combining a state's existing retirement system with professional fund management. The buying power and influence wielded by a state would help reduce costs and complexities that prevent many small businesses and non-profits from starting retirement plans." (TheStreet.com)


Small 401(k) Plans Often Pay Big Fees
Excerpt: "[Small-business 401(k) savers] labor under an additional burden: They pay substantially higher retirement-plan fees on average, which reduces their investment returns. Moreover, many small-business workers and employers are unaware of the magnitude of those charges. That could be changing: Momentum is building in Congress to require expanded 401(k) disclosures that could be of particular benefit to small-business owners and their employees. Under legislation approved by the House Education and Labor Committee in June, employees in 401(k) plans would get a more specific breakdown about how much they pay in fees on their quarterly statements. Other changes could assist employers when they are choosing among retirement-plan providers. The bill would require 401(k) plan providers or administrators to thoroughly disclose, before a contract is signed, the investment-management, administrative, transaction and various other fees that employers and employees would pay in estimated total dollar amounts. The legislation would also require providers to reveal any financial relationships they have with investment advisers and others who market the plans to business owners." (The Wall Street Journal)


Pension Repayment Plan Could Throw Los Angeles Budget Into Disarray
Excerpt: "A high-level Los Angeles pension official has recommended that the city pay off the cost of an employee early retirement package 10 years sooner than previously planned -- a move that threatens to throw the city's budget into disarray. Hoping to slash payroll costs and eliminate a $530-million budget shortfall, the City Council gave tentative approval last month to a deal that provides early retirement to 2,400 workers who belong to the Coalition of L.A. City Unions. That agreement called for the city's pension fund to be reimbursed over 15 years for the cost of giving retirement benefits ahead of schedule. The money was expected to come largely from higher retirement contributions from the remaining workforce." (Los Angeles Times)


Lawmakers Propose PBGC Restructuring
Excerpt: "The nation's private-sector pension insurer would be restructured under legislation introduced in the U.S. Senate. The legislation would stagger terms for members of the Pension Benefit Guaranty Corporation's board, expand it to seven members from three, and require it to meet four times a year, Bloomberg reports. The bill also seeks to ensure that those who oversee the PBGC have full access to the board, and would require the agency's director to recuse himself from potential conflicts of interest." (PLANSPONSOR.com; free registration required)


Tough Times for Pension Funds
Excerpt: "Last year's stock market plunge ravaged pension finances precisely when other changes in pension accounting and design were taking effect. That means a broad swath of corporate America will be digging out of this pension mess for years. Whether you work for one of these firms or just invest in them in your 401(k) and other accounts, here are a few things you need to know . . . ." (Chicago Tribune)


[Opinion]
It's Time to Restore Balance to the Funding of Pension Plans
Excerpt: "State and local government revenues are unlikely to return to previous robust levels anytime soon. Employers' costs of retirement plans, however, will increase by 40 to 50 percent in the coming five years. Pension plans and retiree health benefits must eventually require full actuarial payments. In many cases, the increased costs of retirement plans will consume all new revenue and leave virtually nothing for salary increases or restoration of public services. We're like a house-poor family that owns a trophy home with a big mortgage and can't afford groceries. The obvious solution to this financial dilemma is to shift the focus of collective bargaining from the benefits formula, which is mostly untouchable, to the contributions side of the ledger. Public managers and elected officials must ask public employees to pay their fair share of the retirement benefits they now expect." (Governing.com)


[Opinion]
Groom Law Group Comments on FBAR Filing Requirement for Plans (PDF)
3 pages. Excerpt: "Groom Law Group submitted [this] letter to the Internal Revenue Service (IRS) to request a temporary suspension of the Report of Foreign Bank and Financial Accounts form (FBAR) filing requirement for pension plans beyond the current September 23, 2009 deadline." (Groom Law Group)


[Opinion]
Why Social Security Needs Some Major Repairs
Excerpt: "I've been writing about Social Security's problems for more than a decade, arguing that having the government borrow several trillion dollars to bail out the program so it can pay its promised benefits would impose an intolerable burden on our public finances. But I've changed my mind about what 'intolerable' means. With the government spending untold trillions to bail out incompetent banks and the auto industry, it should damn well bail out Social Security recipients, too. But in a smart way." (The Washington Post; free registration required)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
FTC Confirmation That Red Flag Rules Will Not Apply to Certain 401(k) Plans and Health FSAs, but Review of Identity Theft Prevention Measures Is Still Advisable (PDF)
2 pages. Excerpt: "Regardless of the FTC's determinations, it is important to remember that plan fiduciaries have a general duty under ERISA to protect participant information. The identity theft program required under the Red Flag Rules can serve as a helpful starting point for plan sponsors in developing or updating procedures for protecting participants from identity theft. The FTC has developed an online tool to help covered entities design an identity theft program to meet their specific needs (http://www.ftc. gov/bcp/edu/microsites/redflagsrule/get-started.shtm)." (Venable LLP)


[Guidance Overview]
EEOC's New Guidance on Severance Agreements
Excerpt: "This policy document is not an EEOC regulation or even an enforcement guidance, but it summarizes, from the EEOC's perspective, existing legal requirements for severance agreements under the Americans with Disabilities Act (ADA), Title VII, the Equal Pay Act (EPA), and, in particular, the Age Discrimination in Employment Act (ADEA). The publication does not appear to be intended to change existing regulations, but employers should anticipate that the EEOC will refer to the document when investigating charges or pursuing lawsuits that involve releases." (Littler Mendelson P.C.)


[Guidance Overview]
Second Circuit Warns Plan Administrators Making Disability Determinations
Excerpt: "Disability determinations can occur in all types of benefit plans, including qualified retirement plans, and therefore the significance of the case should be analyzed for its impact on other types of ERISA plans as well." (ERISA Fiduciary Guidebook)


[Guidance Overview]
FTC Delay of Enforcement of Red Flags Rule Until November and FAQs Addressing Employee Benefit Plans
Excerpt: "EBIA Comment: The enforcement delay is welcome news and the FAQs provide some helpful clarification for health FSAs and 401(k) plans. Unfortunately, some issues for employee benefit plans remain unanswered. For example, for those offering health FSA debit cards, it is unclear who is responsible for implementing the Rule -- the plan sponsor, the TPA, or another entity involved in the card program. Further clarification would also be helpful about the Rule's application to other benefits, such as DCAPs, HRAs, and HSAs." (Employee Benefits Institute of America)


Full House of Representatives Passes Barney Frank's Bill on Executive Compensation
Excerpt: "The only amendment would strike language in Section 2(b) which would have prohibited the government from clawing backs executive compensation that had been approved by shareholders. In its place, the final bill passed by the House inserts language that would prohibit rules from allowing financial regulators to require recovery of incentive-based pay under arrangements in effect on the date of enactment." (Michael Melbinger via Winston & Strawn LLP)


Making the Best of Your Severance Package
Excerpt: "The intricacies linked with parting packages vary from the financially significant (CEOs have sued former firms for hefty unpaid bonuses) to the more common (laid-off friends and family berate themselves for not asking for more money, a reference -- or even that e-mail contact list -- before signing off on a termination agreement). Like estate planning, severance is a topic few want to think about. But layoffs and buyouts abound these days, so it's vitally important to devise severance-talk tactics." (USA Today)

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Webcasts and Conferences

Atlanta Wellness Fair
in Georgia on August 20, 2009
presented by WEB (Worldwide Employee Benefit Network) Atlanta Chapter

Retiree Healthcare Congress
in Florida on October 29, 2009
presented by Global Media Dynamics

SPARK Accredited Retirement Plan Consultant (ARPC) Training and Designation Program
in California on October 8, 2009
presented by SPARK -- Society of Professional Asset-Managers and Record Keepers

( Click to post your webcast or conference )

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Press Releases

U.S. Department of Labor Obtains Agreement with Former Fiduciary of SCT Yarns to Restore Assets to Pension Plans
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

NCQA Annual Report Highlights Workplace Wellness and Health Promotion
National Committee for Quality Assurance (NCQA)

WellPoint, BCBSA, Blue Cross Blue Shield of Florida and HCSC Collaborate to Expand Access to Health Care Cost Information
Blue Cross and Blue Shield Association

( Click to post your press release )

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Employee Benefits Jobs

Pension Administrator
for Qualified Pension Services, Inc.
in MO

Employee Benefits Program Manager
for Blue Cross and Blue Shield of North Carolina
in NC

Retirement Plan Specialist
for New York Life Retirement Plan Services
in MA

( Click to post your job opening | View all jobs | RSS feed of all jobs )

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EmployeeBenefitsJobs.com (Sponsor)

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Handy Links:

• View Today's Active Message Threads
• Using the Web for Employee Benefits Research (hypertext article)
• Employee Benefits Library

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