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Benefits in the News > By Subject >Ret plans - design |
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Employee Benefits Coming Under the Knife at More Employers Excerpt: "For every employee who makes $75,000, a company typically spends $30,000 more in benefits. So for employees who still have jobs after cost-cutting layoffs, the potential for more pain lies ahead." (TIME) [Guidance Overview] 2008 Year-End Plan Sponsor 'To Do' Lists (PDF) 22 pages; at pages 1-14; bravo! Excerpt: "Attached are seven 'to do' lists that may require you to take action before the end of 2008 or in early 2009. Many of the action items are a result of the Pension Protection Act of 2006 (the 'PPA'). For your convenience we have broken the 'to do' lists into the following seven categories: All Qualified Plans; Section 401(k) Plans; Defined Contribution Plans (other than Section 401(k) Plans); Defined Benefit Plans; Section 403(b) and Section 457(b) Plans; Health and Welfare Plans; [and] Executive Compensation." (Snell & Wilmer) The Business Case for 401(k) Automatic Enrollment Excerpt: "[T]here are at least three sound business reasons for using automatic enrollment: Improving 401(k) nondiscrimination results; Recruiting and retaining valued employees; Mitigating [and] the loss of defined benefit ('DB') pensions." (Retirement Made Simpler) San Diego City Pension Board to Be Asked to Lower Guaranteed Rate of Return for DROP Participants Excerpt: "The program allows employees with five or fewer years left until retirement to keep working and collect a monthly pension payment based on their salary and years of service at the time they enter the program. The pension money is deposited into an account controlled by the pension system, which pays an 8 percent return no matter what is happening in the financial markets. When the employee does retire, he or she can roll the entire balance of their DROP account into an individual retirement account or annuity." (Voice of San Diego) [Guidance Overview] Recent Developments Affect Puerto Rico Retirement Plans (PDF) 3 pages. Excerpt: "Puerto Rico has enacted legislation that increases the pre-tax contribution limits to qualified savings plans under Section 1165(e) of the Puerto Rico Internal Revenue Code. Recent guidance provides that distributions from Puerto Rico profit sharing plans are not taxable in Puerto Rico upon company shutdowns. Also, the IRS issued a revenue ruling establishing that a transfer of assets from a U.S. qualified plan to a plan qualified only and exclusively under Section 1165 of the Puerto Rico Internal Revenue Code is a distribution to a participant whose account is included in the transfer, but the ruling is subject to important transition relief." (Buck Consultants) [Opinion] Our Spendthrift States Don't Need a Bailout; Grants of New Unfunded Benefits Were Irresponsible Excerpt: "[One reason states incur budget deficits] is their failure to deal with huge and growing employee pension and benefits liabilities. . . . A study three years ago by the Employee Benefit Research Institute estimated that the average public sector worker earns 46% more in total compensation than his counterpart in the private sector, largely because government employers spend 60% more per worker on benefits than counterparts in the private sector." (Steve Malanga in the Wall Street Journal) [Opinion] Why Isn't Anyone Talking Later Retirement for Government Workers? Excerpt: "As states try to figure out how to cut costs and services to current taxpayers, it seems no one is talking about is rolling back the retirement age for government workers to help ease at least one part of the budget problem: massive pension burdens." (Brian Sullivan) Kentucky Group Will Not Recommend Switch to Defined Contribution Plan Excerpt: "A working group appointed by the Governor of Kentucky to study the state's public pension system has declined to recommend moving new state workers into a 401(k)-type retirement plan. . . . While 48 states, including Kentucky, offer a defined benefit plan as the primary source of employee retirement income, private companies have been dumping them . . . ." (Cypen & Cypen) Employers Must Focus on Older Employees to Retain Competitive Edge, Especially in Current Economic Crunch Excerpt: "[D]isgruntled older workers could resort to litigation or work sabotage over their lack of retirement savings, experts say. . . . These scenarios mean that it is more important than ever for companies to have effective performance management systems, thorough financial education programs and processes in place to engage older workers and keep them productive . . . ." (Workforce Management) [Guidance Overview] 2008 Year-End Checkup for Pension and Welfare Benefit Plans (PDF) 17 pages. Excerpt: "This Alert will help identify general year-end administrative and planning issues that could lead to compliance or employee relations problems if not addressed before, or early in, 2009. In addition, we have highlighted recent legislative or regulatory developments that may require plan design or documentation changes." (Aon) California State Appellate Court Dismisses San Diego City Attorney Michael Aguirre's Attempt to Repeal Certain Pension Benefits Excerpt: "Aguirre has been fighting to repeal approximately $900 million in benefits he claims were illegally granted in 1996 and 2002. According to the Daily Transcript, Aguirre says he will seek an expedited trial date for the newly remanded case." (PLANSPONSOR.com; free registration required) [Guidance Overview] Rediscovering Defined Contribution Plans ? Design Basics Excerpt: "[W]e explore how employers can use old-fashioned defined contribution plans to provide additional retirement benefits in conjunction with 401(k) plans. In this article, we review what plan design issues employers must consider when adopting these plans." (JPMorgan Chase & Co.) [Guidance Overview] New Rule Could Change Pension Payouts for Some New Retirees Excerpt: "A growing number of defined-benefit pension plans, especially small- to-mid-sized plans, could be in trouble this year because of the struggling stock market combined with a little-known provision in the Pension Protection Act of 2006. Under PPA, firms with defined-benefit plans have to use something called the Adjusted Funding Target Attainment Percentage, or AFTAP, when calculating pension distributions for newly retiring workers." (MarketWatch) Too Many 401(k) Choices Can Lead to More Risky Investments, According to Study Excerpt: "A Rutgers School of Business, University of Texas-Austin, and University of Pittsburgh study found that many employees without extensive investment knowledge will choose a heavier concentration of stocks in their portfolio when confronted with more fund options. A large fund assortment more than doubled investment in stocks among those less knowledgeable, from 29 percent to 60 percent of the portfolio, and decreased bond fund investments from 46 percent to 26 percent. But more investment options had no significant affect on people who said they had investing knowledge." (U.S. News & World Report) [Opinion] What You Need To Know About Corporate Pension Plans Excerpt: "The problem with Lockheed Martin and several other companies is that the potential for big pension shortfalls is craftily understated in the discount rates they use in their projections. Lockheed has been using a discount rate of 7.5% for its pension plan returns. Is that reasonable? No way! Nor should you accept a rate like that in an annuity or life insurance plan's projections. First of all, a pension plan should be conservative. It should hold bonds along with blue-chip stocks, and bonds do not pay anything near 7.5% unless they are of poor credit quality and highly risky." (Contrarian Stock Market Investing News) Retirement Plan Experts Argue for Reforming the 401(k) System Rather Than Getting Rid of It Excerpt: "The tax-advantaged accounts deserve a tough review in the wake of the stock market collapse that has crushed account values and evidence that 401(k)s tend to benefit wealthier workers, said attendees of the annual West Coast Defined Contribution Conference in San Francisco late last month. But by and large, officials with retirement plan sponsors as well as industry officials conveyed a 'mend, don't end' attitude about the 401(k) system." (Workforce Management; free registration required) [Opinion] It's Time to Rethink Our Retirement Plans Excerpt: "It's not that 401(k)s are bad, it's just that they were conceived as supplementary retirement vehicles, not as a holistic retirement system. A new approach, combining the best of traditional pensions and new savings vehicles, is needed." (The Wall Street Journal) The Ongoing Development of Pan-European Pension Plans Excerpt: "Companies are attracted to the benefits provided via these arrangements but few have actually implemented a pan-European pension plan due to the complexities involved in executing such a plan across the member states. However, the fact that we do not see many pan-European pension arrangements in place does not mean that we won't in the future. Although there are still issues to resolve, there has been a concerted effort to move forward in the pan-European pension arena and the impediments are being addressed." (Faegre & Benson) Retirement Industry Reps Optimistic about Future Trends, According to Study Excerpt: "Despite volatile investment markets, the freezing and terminating of defined benefit plans, and limited formation of new plans, industry representatives consulted by Diversified Investment Advisors say they are upbeat about the industry's future over the next five years. A Diversified news release said its Prescience 2013: Expert Opinions on the Future of Retirement Plans study attributed this positive outlook in part to the cultural shift from a voluntary benefits approach to automation. Another contributing factor: market growth spurred by employees' realization that they need to save more money for retirement than originally planned in light of market instability and inflation." (PLANSPONSOR.com; free registration required) [Opinion] Plan Loans - Dispelling the Myths Excerpt: "The argument regarding the depletion of retirement savings is that by taking out a loan, a participant loses the benefit of investing the loan principal in the plan. The recent financial crisis might be proof enough as to why this argument lacks merit. Many people reading this article probably wish they had taken a plan loan out several months ago. As I sometimes tell people, a plan loan may be the best performing asset one has right now." (Robert M. Richter via SunGard) [Guidance Overview] Video: Rules for IRA Rollovers and Transfers 5 minutes. (Wolters Kluwer) GM Doesn't Foresee Required Pension Contributions Excerpt: "General Motors Corp. does not expect to have to make any pension contributions to meet minimum funding requirements in the next three to four years, even though its funded status declined in the first nine months of 2008 because of negative investment returns and recent employee-related cutbacks, according to its third-quarter financial report Friday, November 7." (Workforce Management; free registration required) Some Small Firms Suspend Their 401(k) Match Excerpt: "As the economy worsens, a growing number of small businesses are suspending their 401(k) match, and, in some instances, closing the retirement plans altogether. While only about 15% to 20% of small businesses offer a 401(k) plan, many added them in recent years to attract and retain workers and to help business owners save for retirement. But the economic downturn and higher health-insurance costs are forcing companies to cut back on retirement benefits." (The Wall Street Journal) [Opinion] The Past, Present, and Future of Private Pensions (PDF) 6 pages. Excerpt: "A look back in time shows that the rise and fall of private pensions has been determined by the interests of management, the power of unions, and pressure from government. While history doesn't necessarily predict the future, it does indicate that changes in one or more of these three areas are necessary to restore retirement security. It seems there are three possible ways for defined benefit pensions to grow again . . . ." (Contingencies) Tax Policy Related to Compensation and Benefits in the New World Excerpt: "[T]he current economic climate will make tax increases and spending cuts in the near term more difficult and, perhaps, less advisable. The new administration and Congress will hesitate in taking any action that can be seen as further suppressing economic activity. In addition, they may wish to undertake new spending to stimulate the economy and will find that safety-net spending by the federal government for unemployment and other benefits rises automatically as the economy weakens." (Deloitte via BenefitsLink.com) FICA Applies to 403(b) Contributions Made As Condition of Employment, Seventh Circuit Rules Excerpt: "Salary reduction 403(b) plan contributions are subject to FICA taxes even if made as a condition of employment, the US Court of Appeals for the Seventh Circuit has ruled (Univ. of Chicago v. US). Congress intended the FICA wage base to include annuity purchases funded by salary reduction agreement, whether voluntary or mandatory, the court found." (Mercer LLC) New Web Site: Institutional Retirement Income Research Council Excerpt: "The purpose of this group is to advance the interests of retirement savings plan participants, plan sponsors, and plan advisers and consultants by: Introducing innovative approaches to in-plan retirement income solutions; Creating acceptable best practices and evaluation tools to supplement the RFP process; Discussing and identifying regulatory, legislative and fiduciary issues pertinent to institutional income solutions; and Producing and publishing relevant findings through various media outlets." (Institutional Retirement Income Research Council) [Guidance Overview] Your Defined Benefit Pension Plan's Liability May Be Overstated (PDF) 2 pages. Excerpt: "If you have a defined benefit pension plan, its net liability on the balance sheet is probably overstated by between 3% and 10%, assuming it is 80% to 95% funded. Its annual cost reflected on your bottom line is probably overstated by 1% to 2%. In total, pension liabilities in the United States are probably overstated on balance sheets by roughly $25B. Essentially, most actuaries have used a good answer to the wrong question, but this actuary proposes asking a better question." (Findley Davies, Inc.) R.H. Donnelley to Freeze Pension Plans - Replacing Retirement Coverage with Enhanced 401(k) Excerpt: "According to R.H. Donnelley's annual report for 2007, the company had expected to contribute $15.8 million to its pension plans in 2008. . . . Essentially, R.H. Donnelley's pension freeze means that workers' benefits will no longer accrue. When they retire, workers will get what they were entitled to as of Jan. 1, 2009, but no more. As part of its pension freeze, however, Donnelley will enhance its current 401(k) retirement programs." (Triangle Business Journal via bizjournals.com; free registration required) [Opinion] Group Letter Requesting Extension for 403(b) Plan Deadline (PDF) 3 pages. On October 27, 2008, ASPPA signed onto a group letter to the IRS urging an extension of the January 1, 2009 deadline for 403(b) plan document requirements and compliance with the final 403(b) regulations. (American Society of Pension Professionals & Actuaries) State-by-State Participation in 401(k)-Type Plans (PDF) Excerpt: "How many wage and salary workers in each state participate in 401(k)-type plans? What does that translate into on a percentage basis? This Fast Facts from EBRI, published by the nonpartisan Employee Benefit Research Institute (EBRI), provides answers to those questions. The data below are EBRI estimates from the U.S. Census Bureau's 2001 Panel of the Survey of Income and Program Participation, which contains data for 2003, the latest available with individual state-by-state data on this topic." (Employee Benefit Research Institute) [Guidance Overview] Video: IRS Technical Presentation on 403(b) Final Regulations - Parts 1-10 Each part is less than 10 minutes long. (National Association of Government Defined Contribution Administrators, Inc. via YouTube, LLC) Nationwide Institutes 401(k) Auto-Enrollment, Auto-Escalation - Plan Participation Hits 95% Excerpt: "To keep the forward momentum, the company will increase its auto-deferral rate for new hires and existing employees from 3% to 4% in April 2009; 5% in 2010; and 6% in 2011. Nationwide also in 2009 will raise the auto-escalation cap to 12%." (Employee Benefit News; free registration required) Hearing Produces Mixed Results in San Diego Public Pension Case Excerpt: "A federal judge has indicated that some allegations filed by the Securities and Exchange Commission (SEC) against five former San Diego officials in connection with the city's pension crisis might have to be refiled. According to the San Diego Union-Tribune, U.S. District Judge Dana Sabraw also indicated that pleas by defense lawyers to dismiss several other civil-fraud allegations probably will be turned aside. The judge said that it is either too soon to raise those issues or that more evidence must be developed before he can make a final ruling, according to the report." (PLANSPONSOR.com; free registration required) Some Companies Cut or Suspend 401(k) Matches Excerpt: "Matching contributions average about 11 percent of a company's profit, according to a recent survey of more than 1,000 companies by the Profit Sharing/401k Council of America. Now, with the economy driving profit down, some companies are forced to cut costs and look to their 401(k) contribution as a way to eliminate millions of dollars in spending." (AP via San Francisco Chronicle) [Guidance Overview] Coming in 2009: The Perfect Storm of Pension Plan Funding (PDF) 6 pages. Excerpt: "The global bear market, combined with the stringent new pension plan funding rules enacted by the Pension Protection Act of 2006 (PPA), has raised the specter of significantly increased funding obligations in 2009 for single-employer plans, as well as restrictions on the operation of underfunded plans and the funding of nonqualified plans. These restrictions may include: Restrictions on the payment of lump sum distributions, which will particularly affect cash balance and pension equity plans; Restrictions on any benefit increases, even pre-negotiated increases in collectively bargained plans; A prohibition on the funding of nonqualified deferred compensation plans while qualified plans are underfunded; and In extreme cases, a mandatory freeze on future benefit accruals and payment of plant closing and similar benefits." (Seyfarth Shaw LLP) [Opinion] The Need for Funding Legislation: Questions and Answers (PDF) 4 pages. Excerpt: "What funding changes are needed? There are four key changes that are needed, each of which is explained further below.Consistent with Congressional intent in the PPA, asset smoothing needs to be permitted. For 2009 and 2010, asset smoothing needs to be permitted without the applicable restrictions, as a mean of easing the transition to the PPA funding rules. For 2009 and 2010, companies need the ability to choose a funding method without being compelled to continue using that method. . . . The transition to the 100% funding target needs to apply to companies both above and below the phased-in funding target. And the phase-in level for 2008 needs to apply again in 2009." (American Benefits Council) [Opinion] Defined Benefit Plan Funding: The Effect on Plans, Plan Participants and Jobs (PDF) Excerpt: "The unforeseen and nearly unprecedented decline in the market has affected almost all plans. This decline is exacerbated by Treasury's interpretation of the Pension Protection Act as effectively requiring plan assets to be marked to market for funding purposes. Thus, in general, every dollar of asset loss must be immediately taken into account. This dire situation could have devastating effects on jobs and the economic recovery. This document provides (1) aggregate funding data, (2) examples of shocking increases in funding obligations, (3) the effects of this situation on jobs and retirement security, (4) a solution, and (5) an explanation of why our solution needs to be enacted now." (American Benefits Council) Responses to Survey on Changes in Employer Matching Contribution Excerpt: "This week, [PLANSPONSOR] asked readers if they had any changes in mind for their retirement plan match. The good news - most - 58% - had no changes in mind (as one reader noted, 'We have a very generous match program that our leadership believes in and does not want to change'), and another 16% - though they caveated their response by saying 'not yet' were also in that status (that's roughly three-quarters of the respondents, in total)." (PLANSPONSOR.com; free registration required) Obama Proposals Include Retirement Plan Changes Excerpt: "[Some] reforms Obama has supported include: Eliminating income taxes for seniors making less than $50,000 a year. . . . Creating automatic work place pensions by requiring employers who do not currently offer a retirement plan to enroll workers in a direct-deposit IRA account that is compatible with existing direct-deposit payroll systems. . . . Matching 50 percent of the first $1,000 of savings for families that earn less than $75,000 a year. . . . Regulating pensions more strictly by ensuring that bankruptcy courts cannot use pension funds to pay creditors ahead of some other company assets, prohibiting companies from giving executive bonuses while cutting worker pensions, and limiting the circumstances under which retiree benefits can be reduced." (AP via MSN.Money) Public Fund Survey Summary of Findings for FY 2007 (PDF) 15 pages. Excerpt: "The Public Fund Survey is an online compendium of key characteristics of most of the nation's largest public retirement systems. . . . Beginning with fiscal year 2001, the Survey contains data on public retirement systems that provide pension and other benefits for 13.2 million active (working) members and 6.5 million annuitants (those receiving a regular benefit, including retirees, disabilitants and beneficiaries). Based on the latest information published in annual financial reports, systems in the Survey hold in trust $2.79 trillion." (National Association of State Retirement Administrators) 401(k) Plans Face Disparity Issue Excerpt: "As cash-strapped workers curb their 401(k) contributions, more employers could be forced to limit or refund the retirement-plan contributions of higher earners to meet federal nondiscrimination rules.Federal rules require that 401(k) plans not favor highly compensated employees, those earning more than $105,000 in 2008. While some companies routinely confront this issue, more businesses are expected to encounter the problem as layoffs and higher living expenses reduce what rank-and-file workers can afford to save in their 401(k) plans." (The Wall Street Journal) Delaware Company Cleared of Cash Balance Conversion Miscue Excerpt: "A Newark, Delaware, power company did not have to tell workers when it converted its defined benefit pension plan to a cash balance program because the change was not expected to cut employees' benefits, a federal appellate court ruled. The 3rd U.S. Circuit Court of Appeals asserted in a decision involving a cash balance challenge against Pepco Holdings and its subsidiary, Conectiv, that the conversion did not violate the Employee Retirement Income Security Act (ERISA). The appellate panel decided that because the plan change was not 'reasonably expected to significantly reduce' employees' future benefits, ERISA Section 204(h) did not mandate an employee notice the conversion was taking place." (PLANSPONSOR.com; free registration required) Most UK Pension Sponsors Still not Keen on Pension Buyouts Excerpt: "Only one-in-five (20%) large UK corporate pension plan sponsors are giving serious thought to selling off their final salary pension obligations in whole or in part, according to the results of Greenwich Associates' 2008 United Kingdom Pension Fund Study." (PLANSPONSOR.com; free registration required) [Official Guidance] Text of IRS Employee Plan News; Discussions of Filing Cycle for Governmental Plans, Rollovers as Business Startups (PDF) Excerpt: "This Special Edition discusses the IRS modifying the filing cycle for governmental plans under the staggered remedial amendment program. In addition, this edition talks about the initial guidelines released on Rollovers as Business Startups (ROBS). Some other items of interest included in this edition are 2009 Retirement Plans Limits Announced; List of Recent Guidance that May Require Interim or Discretionary Amendments; and 403(b) Phone Forum [on] December 4, 2008." (Internal Revenue Service) GM-Chrysler Union Would Create Pension Goliath Excerpt: "A General Motors Corp. acquisition of Chrysler LLC would solidify GM's ranking as the world's largest corporate employee benefit fund, giving it total assets estimated at $170 billion. The deal also would unite companies that, despite their financial challenges, both have overfunded defined benefit plans." (Pensions & Investments) Orange County, CA Voters Overwhelmingly Support Effort to Block Public Pension Spikes Excerpt: "Voters overwhelmingly endorsed limiting the power of county supervisors to sweeten pension payouts for public employees. In early returns, Measure J was supported by a whopping 78 percent of the vote, among the absentee and early voting results being reporting as of 9:30 p.m. last night. The measure is a public rebuke of the stewardship that county supervisors have given the pension system, which is now only 73 percent funded and runs a $3 billion unfunded liability." (Orange County Register) [Guidance Overview] Employment Law Risks in the Current Financial Crisis Excerpt: "The current economic crisis may lead employers to consider reductions in force. Employers that are considering reductions in force and providing severance payments to laid-off employees may wish to consider establishing a severance plan governed by the Employee Retirement Income Security Act (ERISA). One advantage in having an ERISA-governed severance plan is that it provides many protections to employers who are sued by employees in connection with severance benefits." (Littler Mendelson P.C.) Pension Plan May Offer Time-Limited Lump Sum, Appeals Court Rules Excerpt: "A pension plan that offers employees the opportunity to elect a lump sum payment on termination of employment, but not at any later date, does not impose a 'significant detriment' that invalidates the employees' consent to an immediate distribution, according to the Seventh Circuit (McCarter v. Ret. Plan for the Dist. Managers of Am. Family Ins. Group). The decision, along with recent informal IRS guidance, might give employers more confidence about offering time-limited payment options." (Mercer LLC) The Financial Crisis and Private Defined Benefit Plans Excerpt: "Between October 9, 2007 and October 9, 2008, the value of equities in retirement plans dropped by about $4 trillion, with the decline divided equally between defined benefit and 401(k)/Individual Retirement Accounts (IRAs). The decline in the defined benefit arena was in turn divided equally between private sector plans and those sponsored by state and local governments. This brief explores what a loss of roughly $1 trillion of private sector defined benefit equities means for the individual participants and for the firms that sponsor those plans." (Center for Retirement Research at Boston College) [Guidance Overview] IRS Fact Sheet Explains How to Avoid Incorrect Self-Employed Retirement Plan Deductions Excerpt: "The IRS has released a fact sheet covering retirement plans established by self-employed business owners for themselves and their employees. In particular, the fact sheet explains how self-employed individuals can avoid IRS examinations and additional assessments by preventing incorrect deductions for contributions to retirement plans." (CCH INCORPORATED) Recession May Jeopardize 401(k) Contributions Excerpt: "Frontier Airlines suspended its 401(k) match on June 1 as part of a wider effort to cut costs as it works its way through Chapter 11 bankruptcy protection. The airline's plan matched 50 percent of employee contributions, up to 10 percent of salaries. The company reported that the match cost it $4.2 million in 2006. 'This is a recession-type of response. These employers are really up against it and they have to decide to cut somewhere and this seems like the least bad place for them to cut,' said Alicia H. Munnell, director of the Center for Retirement Research at Boston College." (The Associated Press via Google) [Guidance Overview] Implications of the Current Market Conditions for DB Plans and Possible Options for Dealing with the Challenges they Present (PDF) 3 pages. (The Segal Group, Inc.) Schwab Finds Employer Match, Employee Savings Link Excerpt: "In a new report, Charles Schwab reveals its finding that there is a strong connection between a plan sponsor's company match contribution formula and participant savings rates." (PLANSPONSOR.com; free registration required) New Savings Plan Could Help Millions Excerpt: "Here's how [the Automatic IRA] would work: Companies with more than 10 employees that have no retirement plan and have been in business for more than two years would be mandated to offer a payroll-deduction saving option -- similar to the way employers deduct for taxes. Employees would be enrolled automatically when they are hired, unless they choose to opt out." (The Columbus Dispatch) [Guidance Overview] IRS Implements Enrolled Retirement Plan Agent Program Excerpt: "EBIA Comment: When the IRS revised Circular 230 to authorize ERPAs to practice before the IRS, it recognized the increasing role that TPAs, benefits consultants, and similar service providers who are not attorneys, CPAs, enrolled actuaries, or enrolled agents have come to play in drafting and administering tax-qualified retirement plans. But note that, although ERPAs are now authorized to practice before the IRS, the scope of their practice is limited." (Employee Benefits Institute of America) [Guidance Overview] Plan Can Offset Loan Balance Despite Violation of DOL Limit on Use of Plan Benefits to Secure Loans Excerpt: "EBIA Comment: We felt this case was worthy of note because of the questionable plan loan program practices involved and the sheer audacity of the employee's claim that he should be allowed to collect the same benefit twice. While the claim arose in the context of a loan from a defined benefit pension plan (a less common occurrence than loans from 401(k) and other defined contribution plans)." (Employee Benefits Institute of America) Retirees Seek Quick Relief from Mandatory Withdrawals Excerpt: "The reason behind the MRD law is that it allows the IRS to collect taxes that were deferred when the money was put into savings. But thanks to the decline in the market, older Americans will have to take withdrawals that were calculated based on last year's higher values. For example, a 75-year-old who has to withdraw $4,366.81 from an IRA that was worth $100,000 on Dec. 31, 2007, now has to take that same amount from an account possibly worth only $60,000 -- or face a high tax penalty." (AARP) U.K. Government Tax Raid on Every Private Pension As Value of Cushy Public Sector Schemes Soars to £1trillion Excerpt: "Gordon Brown's tax raid on pension funds has snatched £17,000 from every worker's retirement pot, research says today. Yet the value of public sector schemes - funded by taxpayers - has soared to an astonishing £1trillion. Opposition MPs, business chiefs and campaigners demanded an investigation into the growing 'pensions apartheid'." (Daily Mail) [Guidance Overview] New York State Pension Reforms Signed Into Law by Governor Paterson Excerpt: "On October 10, 2008, Governor Paterson signed into law legislation designed to drastically reform the state pension system in light of numerous widely published reports of abuses within school districts and other municipal entities. The impetus for the legislation stems from the discovery of attorneys who were being paid as both an employee and independent contractor of school districts and other municipal entities as well as abuses of the pension system by recent retirees who received waivers which allowed them to work and get paid a salary for essentially the same positions for which they were simultaneously collecting pensions." (Bond, Schoeneck & King, PLLC) |
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