More key retirement-related regulatory news for plan sponsors, including links to detailed information.
DOL responds to requests for public dialogue on brokerage window arrangements in 401(k)s
The Employee Benefits Security Administration of the U.S. Department of Labor (DOL) issued Field Assistance Bulletin No. 2012-02R, which supersedes Field Assistance Bulletin No. 2012-02 (issued May 7, 2012) by modifying and replacing Q&A 30 with a new Q&A 39.
On May 7, 2012, the DOL issued Field Assistance Bulletin No. 2012-02, which provides guidance to its field enforcement personnel in question and answer format on the obligations of plan administrators under a final regulation to improve transparency of fees and expenses to workers with 401(k)–type retirement plans. The regulation requires plan administrators to give workers improved disclosures regarding administrative and investment fees and expenses in their 401(k)-type plans. While plan sponsors and service providers generally found the bulletin helpful, some have asked questions about statements in Question 30 regarding brokerage windows and other arrangements that enable plan participants and beneficiaries to select investments beyond those designated by the plan.
The DOL, therefore, decided to issue Field Assistance Bulletin No. 2012-02R to further clarify its position and to give interested parties more time to engage in discussions with the DOL on practical and cost-effective ways to ensure participants and beneficiaries receive all the fiduciary protections afforded to them under ERISA when they use brokerage windows and other similar arrangements, including, if appropriate, through amendment of relevant regulatory provisions.
Field Assistance Bulletin No. 2012-02R is available here.
Advisory opinion allows contribution of single property to plans
The DOL has issued Advisory Opinion 2012-05A stating that a single parcel of real property can be contributed to or sold by a defined benefit plan without violating the geographic dispersal requirement for property under ERISA.
Read the entire Advisory Opinion here.
SSA: Income replacement ratios in Health and Retirement Study
This article describes the income replacement ratio as a measure of retirement income adequacy and identifies several issues analysts must consider when calculating a replacement ratio. The article presents the income replacement ratios experienced by participants in the original sample cohort of the Health and Retirement Study (HRS), who were born between 1931 and 1941. Replacement ratios are shown by the respondent’s birth cohort, age when first classified as retired in the HRS, and preretirement income quartile. Median replacement ratios fall as the retirement period grows longer.
Read the Health and Retirement Study at the Social Security Administration (SSA) website.
GASB issues Statements 67 and 68
The Governmental Accounting Standards Board (GASB) has issued Statement Nos. 67 and 68.
• Statement No. 67
Financial Reporting for Pension Plans, an amendment of GASB Statement No. 25
Effective Date: The provisions of Statement No. 67 are effective for financial statements for fiscal years beginning after June 15, 2013. Earlier application is encouraged.
Access the entire statement here.
• Statement No. 68
Accounting and Financial Reporting for Pensions, an amendment of GASB Statement No. 27
Effective Date: The provisions of Statement No. 68 are effective for fiscal years beginning after June 15, 2014. Earlier application is encouraged.
Access the entire statement here.
Charts: Employee benefits in private industry and state and local government, March 2012
In March 2012, among workers in private industry, medical care benefits were offered to 41% of workers in service occupations and 87% of workers in management, professional, and related occupations.
In private industry, medical care benefits were offered to 24% of part-time workers and 86% of full-time workers. In terms of access to paid sick leave, 23% of part-time workers enjoy this benefit whereas 75% of full-time workers do.
For workers in service occupations, access rates were higher in state and local government than in private industry. For example, 83% of state and local government workers were offered retirement benefits, compared with 40% of private industry workers.
Among workers in state and local government, retirement and medical benefits were offered to 99% of full-time workers and paid sick leave to 98%.
This information is available here.