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"The final rules establish the conditions fiduciary advisers must follow to comply with the prohibited transaction exemption provided by PPA. Parties eligible to be 'fiduciary advisers' include banks, insurance companies, broker dealers, and registered investment advisers, as well as all of their affiliates, employees, representatives, and agents. In addition, a person who develops or markets the program used to provide advice is considered a 'fiduciary adviser.'" (The Prudential Insurance Company of America)
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"This guidance applies to participant-directed defined contribution plans (including 403(b) plans) that are subject to ERISA. This rule does not apply to governmental plans, church plans that do not elect to be covered by ERISA ('nonelecting church plans'), or non-ERISA 403(b) plans." (The Prudential Insurance Company of America)
"If tips of 20 dollars or more per month are excluded from a plan's definition of compensation, it may be deemed discriminatory because only nonhighly compensated employees routinely earn tip income. Further, a total exclusion of tips from plan compensation would likely fail the permitted 'de minimis' standards when performing compensation ratio testing on excluded forms of compensation." (McKay Hochman Co., Inc.)
"This guidance is in effect until the PBGC publishes a final rule amending the reportable events regulation." (Practical Law Company)
"The guidance confirms that certain disclosures can be made through a secure continuous access website and that investment-related information can be included in the pension benefit disclosure." (Practical Law Company)
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"The Notice includes a sample amendment which, if timely adopted without any prohibited changes, will satisfy the Code § 436 requirements, and it will not violate the Code § 411(d)(6) anti-cutback rule as long as the plan is operated in accordance with the amendment from its effective date." (Deloitte via BenefitsLink.com)
Derisking and Pension Expense: Not All Bad News
"This new Vanguard research paper shows that by increasing the funded status, sponsors can offset much of the expense impact while gaining the benefits of derisking." (The Vanguard Group, Inc.)
Do Low-Income Workers Benefit from 401(k) Plans?
"Economists frequently assume that employees 'pay for' employer-provided fringe benefits, such as contributions to retirement plans, in the form of reduced wages. This paper challenges these assumptions." (Urban Institute)
Plan Sponsors Face Soaring 2011 Contributions As Interest Rates Hit New Lows, Mercer Reports
"Mercer estimates that, among the private-sector plans it studied, more than two-thirds will see required contributions jump from last year by at least 50%, and at least one quarter will likely see contributions more than double." (Wolters Kluwer Law & Business / CCH)
Summary of the Small Business Pension Promotion Act, H.R. 3561 (PDF)
The target page is an overview chart of the changes made by the Small Business Pension Promotion Act of 2011. (American Benefits Council)
Qualified Retirement Plan Year-End Reminders
"Before year-end, sponsors of tax qualified pension, profit sharing, 401(k) or 403(b) plans should take time to ensure that each plan is compliant with a variety of statutory and regulatory requirements." (Schulte Roth & Zabel LLP)
Diligent Plan Sponsors Would Want to Be Prepared for an Audit
"A DOL 401(k) audit can be triggered by an employee complaint or even information you have submitted in your retirement plan's annual Form 5500 filing. Of course, it can be totally random as well. So what should you have available for inspection if the audit requests comes along?" (Fox Rothschild LLP)
Implementing Default Contribution Rates, QDIAs, and Investment Advice in 401(k) Plans: Conflict between Congress's Goals and Fiduciary Conduct (PDF)
"The bad news is that, in adopting auto-pilot and QDIA programs, all too many fiduciaries have inadvertently made themselves easy targets for 401(k) fiduciary lawsuits. However, it is easy for fiduciaries to correct their mistakes which include . . . ." (Investment Horizons, Inc.)
Joint Economic Committee/Republican Staff Commentary: States of Bankrup.tcy Part I: The Coming State Pensions Crisis
"While no large state public pension fund has yet to run dry and test what would happen in the absence of available pension assets that will soon change as a number of plans are projected to run out of money in just over five years based on private sector accounting standards." (U.S. Senate, Joint Economic Committee, Republican Staff)
Report on New Hampshire Retirement System Finds Switch to 401(k) May be Costly
"Currently the New Hampshire legislature is looking to eliminate the NHRS defined benefit plan to develop a defined contribution system. If NHRS eliminates its public pension program to develop the 401(k) type plan, it would add $237 mil.lion to a 3.7 bil.lion unfunded liability, the report says." (PLANSPONSOR.COM)
Retirees Want Guaranteed-Income Solutions
"A flurry of new income products have been introduced to the market over the past year or two, giving retirement plan participants the means to create a stream of income for themselves when they punch out for the last time. These products come in several forms." (Investment News; free registration required)
American Airlines Answers Pension Questions
"American Airlines filed for bankrup.tcy last month. Saturday, employees past and present were given peace of mind about their pensions, after a special meeting at the Spirit Bank Event Center. . . . American held a special meeting Saturday for those employees to discuss the effects, if any, that the filing could have on their pay checks." (WorldNow and KOTV)
How Some People Are Saving for Retirement and What Financial Advisers Think of Those Strategies
"The Game Plan takes a look at how individuals and families are saving for retirement — and then asks financial advisers to comment on those strategies." (The Wall Street Journal)
Kansas Panel Opts for Higher Cost State Retirement Plan
"A plan to help fix Kansas' multibillion pension fund shortfall could cost taxpayers millions more dollars a year than its closest alternative. The Kansas Public Employees Retirement System Study Commission failed to offer a formal plan to close what is at least an $8.3 bil.lion official funding gap needed to meet all of its projected payments promised to its members through 2033." (KansasReporter)
Pension Trustee Cautions on the Measure of Risk Behind Risk Parity
"'To invest based on risk parity, you must have an accurate measure of risk.' That is the advice championed by Damon Krytzer, a trustee at the San Jose Police and Fire Retirement Plan and managing director of Waverly Advisors." (Asset International, Inc.)
States Expand Lucrative Pensions to More Jobs
"Special retirement benefits once reserved for police, firefighters and others with dangerous jobs are now being given to tens of thousands of state workers employed as park rangers, foresters, dispatchers, coroners, even highway laborers, museum guards and lifeguards." (USA TODAY)
"Over the last six years, the Mayor and the Garcetti led City Council have not addressed the City's structural deficit nor have they even developed a long term operational and financial plan for the City and its core services. Rather, they have elected to 'kick the can down the road,' refusing to make the hard decisions that are necessary to preserve the City's economic viability. It is death by a thousand cuts." (CityWatch)
Benefits in General; Executive Compensation
"This notice is effective for (1) deductible transportation expenses paid or incurred on or after January 1, 2012, and (2) mileage allowances or reimbursements paid to an employee or to a charitable volunteer (a) on or after January 1, 2012, and (b) for transportation expenses the employee or charitable volunteer pays or incurs on or after January 1, 2012." (U.S. Internal Revenue Service via BenefitsLink.com)
New Jersey Mayors Endorse Governor's Plan to Alter Public Employees' Sick Leave and Vacation Benefits
"'As a lawyer, [the governor] ought to know that his proposal to eliminate existing local government liabilities for sick and vacation payments amounts to an unconstitutional taking,' [an] Assemblyman said. 'He also knows that local officials already have the power to negotiate caps on retirement payouts." (newjerseynewsroom.com)
American Airlines' Bankrup.tcy Unlikely to Transform the Industry Into a Profitable One
"Almost all the nation's big airlines have steered a course into Chapter 11 over the last decade. They all shared one main objective: getting out from under labor contracts they claimed they could not afford." (The New York Times; free registration required)
Nancy Dittmer on ESOP Diversification (Part Three)
NCEO board member and ESOP expert Nancy Dittmer continues her discussion of ESOP diversification in this installment of her column on NCEO's Web site. (National Center for Employee Ownership)
"On behalf of the Joint Committee on Retiree Health and Pension Accounting Committee of the American Academy of Actuaries', we appreciate the opportunity to provide comments to the National Association of Insurance Commissioners (NAIC) on the exposure drafts of Statements of Statutory Accounting Principles (SSAP) No. 92 and No. 102, which are intended to replace existing standards governing accounting for pension benefits and postretirement benefits other than pensions (OPEBs)." (American Academy of Actuaries)
Press Releases
ExpertPlan Completes Sterling Trust Conversion and Rolls out New Qualified Retirement Plan Program (ExpertPlan)
IRS Announces 2012 Standard Mileage Rates, Most Rates Are the Same as in July (Internal Revenue Service (IRS))
Towers Watson Recognized in Industry Report on Benefits Administration Outsourcing Market (Towers Watson)
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