Headlines about "Distributions - misc"
Gathered from the web by the editors at BenefitsLink.com.
Can Ford's Lump-Sum Buyout Technique Work for Other Pension Plan Sponsors?
"Ford is offering to make a one-time, voluntary lump-sum payment to nearly all of its salaried retirees by the end of 2013. It appears to be the first such program to specifically target retirees without being part of a broader plan termination, experts say. According to those same experts, the impact on HR departments could be substantial, especially in areas of due diligence, communications and education, if this becomes a trend." (Human Resource Executive Online)
[Guidance Overview] A Bridge Too Far: Early Retirement Exception from 10% Tax Was Available from Participant's 401(k), But Not After IRA Rollover
"The court held that the taxpayer would not have been subject to the 10% tax if he had taken the distribution directly from the 401(k) plan upon termination because of the exception in section 72(t)(2)(A)(v) of the Internal Revenue Code for post-separation distributions to an employee who has attained age 55, but because he chose to roll over his balance, the exception no longer applied to a distribution from an IRA." (Haynes and Boone)
Commenters Say Qualified Longevity Annuity Contract Rules Should Allow More Options (PDF)
"A Treasury Department proposal to expand retirement income options is on the right track, but it requires some revisions to achieve the objectives outlined in the proposed regulation ..., a variety of interest groups said in public comment letters.... In drafting a final regulation, Treasury should strike a better balance between keeping QLACs simple to maximize monthly income and offering features that would make them more attractive to more people[.]" (Bloomberg BNA)
Ex-Government Officials Refuse to Cooperate with Delphi Pension Probe
"The special inspector general overseeing the $700 billion Troubled Asset Relief Program [SIGTARP] -- the fund used to bail out banks, insurance companies and automakers -- told Congress that former auto czar Ron Bloom will not answer questions about the Obama administration's role in the treatment of hourly and salaried pensions. Two other key auto task force advisers -- Harry Wilson and Matthew Feldman -- also won't cooperate.... The three 'have refused to meet with SIGTARP and provide information and answers to questions concerning the role they played. ... SIGTARP believes the Auto Task Force played a role in the pension decision and these individuals' failure to speak to SIGTARP on this issue poses a significant obstacle to SIGTARP's ability to complete its audit[.]'" (The Detroit News)
401(k)s Making Lifetime Monthly Payments Might Be Future of Retirement Design
"Big employers have begun exploring efficient ways for workers to shift 401(k) assets into an investment option that guarantees income for life -- making the 401(k) more like a traditional pension. One option, which has been around for a long time, is an insurance product known as an annuity, where you pay maybe 30% of your 401(k) balance in return for a lifetime income stream. But more sophisticated products are in the mix, too, seeking to offer more generous income streams for similar amounts of money and risk." (TIME)
Some Ford Retirees Facing Major Pension Decision: Take or Reject Buy-Out Offer
"Ford Motor Company is making tens of thousands of white-collar retirees decide whether they want to keep getting their pension in monthly installments, or get a lump sum payout. Ford sees the unprecedented move as a way to reduce the company's liabilities." (NPR)
IRS Proposals for Encouraging Longevity Annuities Might Not Impress 401(k) Sponsors
"[T]here are potential liability issues. For example, while many insurance companies offer such products (including several launched within the past year), each insurer offers only its own solution. That undermines a plan sponsor�s fiduciary duty to prudently select investment options.... The plan sponsor also has a duty to pick an insurer that will be able to make annuity payments long into the future. 'You�ve got to pick a provider that�s going to be around for 50 or more years,' says Robyn Credico, director of defined-contribution consulting at Towers Watson." (CFO)
PBGC to Request Comments on Information Collection for Locating and Paying Participants
"The collection consists of information participants and beneficiaries are asked to provide in connection with an application for benefits. In addition, in some instances, as part of an effort to identify participants and beneficiaries who may be entitled to benefits, the PBGC requests individuals to provide identifying information that the individual would provide as part of an initial contact with the PBGC. All requested information is needed to enable the PBGC to determine benefit entitlements and to make appropriate payments." (Wolters Kluwer Law & Business / CCH)
Young Workers Want Guaranteed Income Option in 401(k) Plans
"Fully 95% of workers under 30 who don't have access to a guaranteed income option at work said that they'd like to be able to do so, according to a poll ... by The Hartford Financial Services Group Inc. Those numbers remained high for individuals in their 30s and 40s, too. About nine of 10 individuals in both age cohorts said that they would like to turn some portion of their retirement savings into guaranteed income[.]" (Investment News)
Examining Income Replacement During Retirement in a DC Plan System (PDF)
"The Council is examining the topic of income replacement in a predominantly DC plan retirement system. The examination will focus on: A. What are the challenges participants face in making their account balances in DC plans last for the length of their retirement years, including improved longevity? B. What are some of the alternative options available to participants that would be helpful in their efforts to make their accumulated savings last over their retirement lives or the lives of their spouses? C. What are the considerations and challenges plan sponsors encounter when making some alternative options available to plan participants? D. What are the considerations and challenges faced by plan sponsors in providing education outreach for participants regarding the available income replacement options?" (2012 ERISA Advisory Council)
10 Sources of Income in Retirement
"In retirement, you're ... likely to have a variety of sources of income, including Social Security, a 401(k) or IRA, and other savings or investments. Here are 10 of the most common ways to pay for retirement[.]" (U.S. News & World Report)
[Official Guidance] Text of Final PBGC Regs on Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Paying Benefits (PDF)
"The interest assumptions are intended to reflect current conditions in the financial and annuity markets. Assumptions under the benefit payments regulation are updated monthly. This final rule updates the benefit payments interest assumptions for June 2012." (Pension Benefit Guaranty Corporation)
Are Variable Annuities a Good Investment?
"Critics say these annuities are too costly. The relatively high fees annuity investors pay can eat up a significant amount of money over the long term, they say, and investors also can get more-favorable tax treatment with some other investments. Proponents say the cost of annuities is worth it for the security they offer. No other investment, they say, can protect investors as well and still give them the chance to earn something more than a nominal return on their investment." (The Wall Street Journal)
Should You Choose a Lifetime Annuity at Retirement?
"The lifetime income annuity, what many insurance companies call a SPIA (Single Premium Immediate Annuity) is one tool that can help cover your expenses. Quite simply, in exchange for one, upfront, lump-sum payment, the insurance company provides you with a guaranteed monthly paycheck. The payments can be for a specific time period (e.g., five years) or for life. Essentially, the lifetime payment option allows you to create your own pension from your savings." (Fox Business)
[Guidance Overview] Despite Husband's Beneficiary Designation, Second Wife Not Entitled to Annuity When Husband Never Divorced First Wife
"If the participant never divorced his first wife, then she would be his surviving spouse under the plan. As such, her status as the participant's surviving spouse would take precedence over the participant's express election of the second wife as his spouse and beneficiary. This is because the first wife never waived her rights to receive spousal benefits as required by ERISA Section 205." (Wolters Kluwer Law & Business / CCH)
Income Tax Strategies as You Get Older: Retirement Tax Tips at Ages 59-1/2, 69-1/2 and Beyond
By prominent attorney Natalie Choate. "Many tax moves regarding retirement benefits are dictated by age. The 'big years' are age 59-1/2 (everybody knows that) and also, surprisingly, age 69-1/2. Here's a review of age-based tips ... If you inherited a traditional retirement plan from your spouse, don't roll it over to your own IRA until you are over 59-1/2. Leave it in your deceased spouse's plan and withdraw funds from it penalty-free if you need money." (Morningstar)
ERISA Advisory Council to Examine Disability Coverage, Retirement Income and Beneficiary Designations (PDF)
"[The Advisory Council on Employee Welfare and Pension Benefit Plans (also known as the ERISA Advisory Council) [meeting] will be held on June 12-14, 2012 [in] Washington, DC].... The Advisory Council will study the following issues: (1) Managing Disability Risks in an Environment of Individual Responsibility; (2) Current Issues Regarding Income Replacement During Retirement Years; and (3) Current Challenges and Best Practices Concerning Beneficiary Designations in Retirement and Life Insurance Plans." (Employee Benefits Security Administration)
Reviewing Your 401(k) Plan's Hardship Distribution Procedures
"Once the plan document sufficiently provides for hardship distributions, the main traps for the unwary administrator are the failure to follow the terms of the plan and the failure to adequately document the decision to grant (or deny) the request for a distribution. Your documentation of each decision should include: The participant's application with the participant's written representations as to the hardship involved and whether other resources have been exhausted; and Your determinations regarding (i) whether the participant has an immediate and heavy financial need, (ii) whether the need can be met by other resources reasonably available to the participant, (iii) whether the amount to be distributed is not in excess of the amount needed, and (iv) the source of the distribution." (Chang, Ruthenberg & Long PC)
Factors to Use When Considering a Defined Pension Benefit Buyout Offer from Your Employer (PDF)
The information sheet provides a basic understanding of a buyout offer and the things that an individual needs to consider when making the decision on whether or not to accept the lump sum buyout. It is not exhaustive but provides important considerations to think about before accepting a lump sum offer. (National Retiree Legislative Network)
Buyout Offer is Risky Gamble for Ford's Pension Plan
"[One attorney says], 'I think this will come back to bite Ford. Plan assets gain when people die 'on time' or earlier than the actuarial projection, thereby leaving money in the plan. If you take all the unhealthy ones out of the picture, you may have a larger potential liability in the end because you have to put more money into the system in order to fund the benefits for longer-lived retirees.'" (CFO)
N.Y. State Pension Comptroller Continues Criticism of 401(k) Option for Public Employees
"[The Comptroller] repeated his criticism of 'anti-pension advocates' who try to blame public pension plans for damaging state and local budgets and for handing out allegedly inflated payments. 'Another well-worn line of attack on public pension funds -- an argument that particularly disturbs me -- is that they are bloated with retirees making six-figure pensions,' he said. 'The vast majority of retirees in our system are receiving modest benefits.'" (Pensions & Investments)
[Opinion] Text of Comments by Committee of Annuity Insurers on Proposed Qualifying Longevity Annuity Contract Regs (PDF)
"First, [the Committee suggests] certain modifications to the regulations that would increase flexibility in QLAC designs.... Second, [the Committee offers] suggestions for modifying the limits that the proposed regulations place on QLAC premiums.... Third, [the Committee asks] for several technical clarifications to the regulations in anticipation of questions that may arise in the future as taxpayers and the government implement the final rules. Finally, [the Committee asks] that the [IRS] coordinate with [DOL] on certain reporting and recordkeeping issues." (Committee of Annuity Insurers)
[Opinion] Text of Comments by Investment Company Institute on Proposed Required Minimum Distribution Exception for Longevity Annuity Contracts (PDF)
"[ICI does] not believe it would be appropriate to expand the exclusion beyond strict longevity insurance, within the parameters outlined in the proposal. [The ICI's] comments also include some general concerns relating to incentivizing the use of annuities." (Investment Company Institute)
[Opinion] Text of Comments by ASPPA on Proposed Changes to IRS Regs on Purchase of Qualifying Longevity Annuity Contracts Under DC Plans
"While [ASPPA appreciates] the desire to be consistent with the intent of Code Section 401(a)(9) and not to permit greater deferral of distributions than would otherwise be permitted under the required minimum distribution rules, ASPPA believes that increasing the percentage limitation would provide greater flexibility and encouragement for participants to utilize longevity annuity options. As proposed, only participants with account balances of $400,000 or larger would be able to pay premiums up to the full dollar limit for a QLAC. The result may be that those participants with smaller account balances, who may be the people most in need of income security in the later years, will not have the ability to secure a significant income stream through a QLAC and may not take advantage of this opportunity." (ASPPA)
[Official Guidance] Text of IRS Rev. Rul. 2012-13 for Federal Rates; Adjusted Federal Rates; Adjusted Federal Long-Term Rate and the Long-Term Exempt Rate
"This revenue ruling provides various prescribed rates for federal income tax purposes for May 2012 (the current month). [Table] 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520." (Internal Revenue Service)
Another Reason for Offering Annuity-Type Distributions From 401(k) Plans: Cognitive Impairment of Older Participants
"The battle to get annuities into 401(k) plans has been hard-fought, and it's not over yet. Insurance companies see a need to get 'lifetime income products' into retirement plans, and have had some success making the case that most plan participants aren't prepared to create an income plan on their own.... But [one economist] pointed to an as-yet-unheard argument for including them in D.C. plans: the decline in cognitive ability as we get older." (insurancenewsnet.com)
When Should Workers Take a Pension Buyout?
"In deciding whether a lump sum is a good deal, [a retirement expert] advises retirees to consider three key factors: Mortality.... Interest rates.... The amount you're getting." (Reuters)
Road Trip: Traversing the Country in a Yellow VW Bus to Advocate 401(k) Reform
"On April 16, [Chad Parks, CEO and founder of The Online 401(k),] and his team set out for six weeks in an orange 1970s VW bus, on a mission to shoot a documentary about Americans' soured retirement dreams and 401(k) miscues, [to be entitled] 'Broken Eggs: The Looming Retirement Crisis in America.' They'll also be hunting for solutions to the crisis -- ideas for how we can successfully navigate our way to a comfortable retirement." (Daily Finance)
[Opinion] Text of Comments by Eight Women's Organizations and the Pension Rights Center on Proposed IRS Regs for Lifetime Retirement Income Options (PDF)
"The joint comments addressed the groups' concerns about protecting women, who generally live longer than men, who tend to accumulate less retirement income during their working years, who can be more dependent on a spouse's pension, and who face gender bias in the annuities market." (Pension Rights Center)
[Opinion] ERIC Offers Recommendations to Improve Treasury Lifetime Income Guidance
"[ERIC] submitted to [Treasury and IRS] a series of three comment letters in response to their February 2012 package of proposed regulations and revenue rulings regarding lifetime-income options for participants and beneficiaries in retirement plans.... ERIC's three comment letters offer recommendations addressing the longevity annuity contract regulations, the partial annuity regulations, and the revenue ruling concerning rollovers from defined contribution [plans to defined benefit] plans[.]" (The ERISA Industry Committee)
[Opinion] Text of Comments by American Benefits Council to IRS on Proposed Regs on Longevity Annuity Contracts (PDF)
"The Council respectfully suggests that Treasury and the Service could provide clarification and additional guidance on a few related issues that the Council believes would encourage more plan sponsors to consider adding longevity insurance to their plans. These related issues include (1) the need for a correction program, (2) clarification of potential forfeiture or cutback issues, (3) clarification that these rules also apply to IRA annuity rollovers and (4) interaction of the Qualified Longevity Annuity Contract (QLAC) rules with the qualified joint and survivor annuity (QJSA) rules." (American Benefits Council)
[Opinion] Text of Comments by American Benefits Council to IRS on Proposed Regs on Modifications to Minimum Present Value Requirements for Partial Annuity Distribution Options under DB Plans (PDF)
"Clarifying that the regulations permit a plan to treat both portions of a partial annuity distribution option as two separate forms of benefit for purposes of applying the requirements of section 417(e)(3) is a significant step in assuring that more participants have the opportunity to elect to receive benefits in this manner." (American Benefits Council)
[Opinion] Ford's Retiree Cashout: A Trap for the Unwary
"If enough retirees accept the cashout offer, Ford will reap significant financial benefits. First, it would reduce the volatility on the company's financial statements that results from its pension obligations. Second, Ford wouldn't need to pay premiums to [PBGC], ... on behalf of any retirees who accepted the lump-sum deal. Ford also would likely be able to extinguish its pension liability at below-market rates for retirees who accept the offer." (CBS money watch)
[Guidance Overview] Terminated Employees of Successor Employer Not Entitled to Separation Benefits under Prior Employer's Pension Plan
"ERISA Section 204(g) does not protect from cutback an early retirement benefit for a plan participant who has not satisfied and can never satisfy the conditions for receiving the benefits that are subject to the cutback. The legacy employees would never be eligible for the PJS benefit because they had been offered continued employment by the successor." (Wolters Kluwer Law & Business / CCH)
[Opinion] Text of Comments by Insured Retirement Institute on Proposed Regs on Longevity Annuity Contracts (PDF)
"First, it is [the Institute's] understanding that, under the regulation, the failure to comply with the 25% or $100,000 limits would void the entire contact as a QLAC. [The Institute suggests] that a system could be developed that would allow for a correction to a mistake in calculations. The amount that would be over the limits would be applied to the participant's required minimum distribution calculation. However, the remainder of the QLAC would remain intact and would still ensure longevity protection for the participant." (Insured Retirement Institute)
Benefits and Challenges of Offering Retirement Income Strategies in Your DC Plan
"[A panel of industry experts share] their insights and perspectives on what's going on in the retirement industry to address the retirement income needs of participants." (Invesco)
[Opinion] Text of Comments by ASPPA on Proposed Modifications to Minimum Present Value Regs for Partial Annuity Distribution Options under DB Plans
"ASPPA COPA applauds the addition of specific rules for dealing with bifurcated benefit distributions. However, final regulations should acknowledge that plan sponsors and plan administrators have had to develop plan language and administrative procedures to address bifurcated benefits in light of the minimum present value requirements ever since those specific requirements were added to the Code in 1984, and the absence of specific formal guidance has led to divergent practices." (ASPPA)
Ford Aims to Trim Pension Risk by Buying Out Salaried Retirees and Former Employees
"'This involves retirees in a plan that's not terminating,' [and Towers Watson is] unaware of any other large plan that has done this.' Other organizations have offered lump sums to former employees who are vested in the pension plan but not yet retired[.]" (Treasury & Risk)
How Social Trends in Marriage Duration Affect Women's Eligibility for Social Security Wife and Widow Benefits (PDF)
"[A]nalysis reveals substantial changes in women's marital patterns among baby boomers and generation Xers [from 1990 through 2009]. Those changes have prompted a decline in qualifying marital histories for Social Security spouse and widow benefits. The findings also reveal substantial variation by race/ethnicity." (Social Security Administration)
Text of U.S. Census Bureau Summary Report on State and Locally Administered Pensions, 2010 (PDF)
"This survey covers the following retirement system activities: revenues by state (earnings on investments, employee contributions, government contributions); expenditures by state (benefits, withdrawals, other payments); cash and investment holdings by state (governmental securities, corporate stocks and bonds, foreign and international securities, etc.); and membership information by state (number of retirement systems, total members, beneficiaries receiving periodic payments)." (U.S. Census Bureau)
Ford's Lump-Sum Buy-Out Offer Is a First for a U.S. Pension Plan
"The Ford executives didn't explain the timing, but observers said they believe Ford is making the offer now because it will cost less than in the past. Under a provision of the Pension Protection Act, new corporate bond rates were recently phased in, replacing 30-year Treasuries.... 'I'm not aware of anyone who has done this without terminating or annuitizing their plan,' said Jeremy Gold, president of Jeremy Gold Pensions, New York, an actuarial consulting firm. 'All your lump summing for employees is part of that (kind of) event, but ... I'm not aware of this being done on an optional basis[.]'" (Pensions & Investments)
Pensions for Elected State Officials: Target for Reform?
"It's the latest quirk in the hodge-podge of laws and practices, drawing the attention of a [California] legislative committee, that gives some elected officials pensions, prohibits pensions for other elected officials and allows some to choose no pension. Elected official pensions are 'under consideration' and 'may be included' in the proposal made by a two-house legislative committee on pension reform[.]" (Calpensions)
Ford Offers Retirees a Lump Sum Pension Buy-Out
"Ford announced [April 27, 2012, that it is offering] a lump sum to its 90,000 salaried retirees as well as U.S. salaried former employees' due pensions to get them to voluntarily give up all rights to monthly payments. The company called its program a first of its type and scope by a major U.S. company." (USA TODAY)
Retirement Plan Sponsor, Union and Plan Administrator Sued by Hundreds of Former Employees; Fraud is Alleged
"Alleged violations of [ERISA] provisions involved a lawsuit with 225 plaintiffs, all current or former workers at an Ohio steel mill and members of the United Steelworkers of America ... They sued the union, their employer and the plan administrator.... The current and former employees filed suit in 2009, alleging eight counts: breach of ERISA fiduciary duty, equitable relief, equitable estoppel, failure to furnish requested plan documents, and four state-law charges asserting similar claims." (Human Resources Journal)
[Guidance Overview] Post-Distribution Enforcement of Waiver of Benefits Does Not Violate ERISA
"A participant's estate may bring suit against a former spouse to enforce a waiver of benefits and recover the benefits following distribution by the plan, the Court of Appeals ... has ruled. Allowing the enforcement of a waiver after the distribution of benefits, the court explained, would not undermine ERISA's objective of assuring certainty in the final distribution of benefits." (Wolters Kluwer Law & Business / CCH)
'Can't We All Just Get Along?' -- Combining DB and DC Retirement Plans to Minimize Longevity Risk (PDF)
"Based on average life expectancy statistics, [half] of the population will survive beyond its life expectancy and half of the population will not. This creates challenging circumstances for people to manage withdrawals from their retirement accounts. In addition, there is the added challenge of managing investments. This article is not meant to compare the advantages and disadvantages of DC and DB plans; rather, it is meant to promote a new retirement paradigm where both types of plans can coexist and complement one another. This paper offers this new retirement model as a solution to the longevity risk problem." (Milliman)
Palm Beach Lowers Employee Retirement Benefits
"Each employee's pension payments are computed based on his or her final pay, length of employment and a multiplier that sets the benefit level. The town was able to drive down its costs largely by lowering the multiplier, freezing employee pay for three years and reducing average pay increases going forward. Overtime and special duty pay will no longer be counted when calculating final average pay. Automatic survivor benefits and cost-of-living increases have been eliminated. Public safety employees, who have been able to draw their pensions upon retirement (after as few as 20 years of employment) will have to wait until age 65 to collect them." (Palm Beach Daily News)
Teachers' Union-Supported Proposal to Ohio Legislature Would Raise Employee Contributions, Lower Benefits
"Under the new plan, unanimously OK'd last week by the board of the 470,000-member State Teachers Retirement System, teachers could retire at any age until mid-2015 and get a full benefit if they have worked 30 years. The years-of-service requirement would gradually rise, though, so that after mid-2026, teachers could not stop working and receive a full benefit until they are 60 and have 35 years in." (The Columbus Dispatch)
Senate Votes Down Forced Retirement for Postal Service Employees
"A measure that would have required eligible postal service employees to retire without buyout incentives failed in the Senate.... The amendment ... would have reduced the cash-strapped agency's expenses by reducing its large percentage of retirement-eligible workers. It failed in a 33-65 vote." (Government Executive)
Operational Changes in Defined Benefit Plans for Plan Sponsors to Consider in 2012: Making Lump Sum Payments
"This year, 2012, marks the first year that the 417(e) interest rate required to calculate the minimum present value of a DB pension is equal to the interest rate used to calculate its liability for [PPA] minimum funding purposes (ignoring the 24-month averaging). In the past, the lump sum was based in part on 30-year Treasury rates, which often resulted in the payout of lump-sum amounts greater than the corresponding liability funded for in the plan's funding target. With this no longer the case, the settlement of lump sums might be an attractive way to eliminate longevity risk from DB plans." (Milliman)
Official Summary of the 2012 Annual Reports of the Social Security and Medicare Boards of Trustees
"The long-run actuarial deficits of the Social Security and Medicare programs worsened in 2012, though in each case for different reasons. The actuarial deficit in the Medicare Hospital Insurance program increased primarily because the Trustees incorporated recommendations of the 2010-11 Medicare Technical Panel that long-run health cost growth rate assumptions be somewhat increased. The actuarial deficit in Social Security increased largely because of the incorporation of updated economic data and assumptions. Both Medicare and Social Security cannot sustain projected long-run program costs under currently scheduled financing, and legislative modifications are necessary to avoid disruptive consequences for beneficiaries and taxpayers." (Social Security Administration)
Are Public Pension Obligations Debt, or Are They Values?
"'I don't think pension benefits are a debt,' said [Richard] Brodsky, a former New York State Assemblyman.... '[A distinction has to be made] between debt and social and legal obligations we have to fill.... Who are you going to hit and who�s going to suffer?' [but a stark reality is that] New York City and others face soaring pension, Medicaid and retiree health care costs. Yonkers is teetering. Suffolk County just declared a fiscal emergency. Its Long Island neighbor, Nassau County, is under a fiscal control board." (The Bond Buyer)
[Guidance Overview] Federal Agencies Work Hard to Provide New Lifetime-Income Options for Qualified Plans
"This past February, the Treasury and the IRS released two proposed regulations, and the IRS issued two revenue rulings, that provide different strategies for achieving [a balance between lump-sum cash distributions (which provide liquidity) and lifetime-income options (which provide a steady stream of income over the participant's lifetime and protect against financial risk)].... The agencies have emphasized that this guidance is a first step, and encourage further comments and innovations from plan sponsors, providers of investment and financial products, participants and other stakeholders." (McGuireWoods LLP)
Financial Impact on Governments and Institutions of People Living Longer (PDF)
"Threats to financial stability from longevity risk derive from at least two major sources. One is the threats to fiscal sustainability as a result of large longevity exposures of governments, which, if realized, could push up debt-to-GDP ratios more than 50 percentage points in some countries. A second factor is possible threats to the solvency of private financial and corporate institutions exposed to longevity risk; for example, corporate pension plans in the United States could see their liabilities rise by some 9 percent, a shortfall that would require many multiples of typical yearly contributions to address." (International Monetary Fund)
[Guidance Overview] Some Non-U.S. Retirement Plans Exempted from FATCA by Proposed IRS Regulatios (PDF)
"During 2012, non-US retirement plans should review the availability of the applicable exemptions under FATCA with US employee benefits counsel and, if an exemption applies, begin to prepare the supporting documentation and statements necessary to avoid withholding. Where an exemption does not clearly apply, the plan should consider its alternatives. Among other options, it may be possible to seek further changes or other relief from the Treasury, including by submitting comments (by April 30) or by requesting to testify (on May 15) at the hearing in Washington, DC." (Groom Law Group)
[Guidance Overview] Fiduciaries Can Consider Impact on Whole Plan When Responding to One Participant's Demand for Benefits
"In Wakamatsu v. Oliver [in the federal Northern District of California], ... a former employee of a dental practice sued the plan administrator of the practice's profit sharing plan ... asserting that her benefit should have been determined based upon a December 31, 2007 valuation ... rather than upon a later valuation that reflected the impact of the economic downturn on overall plan assets (resulting in approximately $60,000 less)." (Seyfarth Shaw LLP)
Reasons Why Employees Can Benefit from Using IRAs and 401(k) Contributions to Defer Income Until Retirement
"You likely won't have a huge amount of income when you retire, which means a portion of your IRA withdrawals may be taxed at low rates, even if you consider income from Social Security. Part of your traditional IRA and 401(k) withdrawals may be taxed at 0 percent, some at the next tax bracket, and only some will be taxed at your marginal tax rate.... [Further, those] who live in a state with a high income tax can potentially save money if they defer income tax on their retirement savings and then move to a state with no income tax when they start withdrawing their retirement funds." (U.S. News & World Report)
Investment Costs Hit Retirees with Double Whammy
"As [a table and chart show, at age 65, a high-expense portfolio] generates a withdrawal amount that's 8.3% lower than the amount for the low-expense portfolio[.] After 15 years, the gap grows to over 20%[.] This is a major reduction in spending power over time, and these numbers belie the seemingly innocuous single-digit-percentage point differences in expense ratios." (Vanguard)
[Official Guidance] Text of IRS Notice 2012-29: Proposed Guidance on In-Service Distributions from Governmental Retirement Plans (PDF)
"This notice ... invites public comment [on potential IRS guidance that] (a) would clarify that governmental plans that do not provide for in-service distributions before age 62 do not need to have a definition of normal retirement age and (b) would modify the age-50 safe harbor rule for qualified public safety employees. The notice also provides that the IRS and Treasury Department intend to extend the effective date of the regulations relating to distributions from a pension plan upon attainment of normal retirement age for governmental plans." (Internal Revenue Service)
Illinois House Panel Wants to Make It Harder for State, Local Plans to Juice Up Pensions
"[The] plan would require a three-fifths vote of the General Assembly to approve any bill that enhances pension benefits for workers covered by the five state-funded pension systems. The supermajority requirement also would apply when local governments consider bonuses or other financial benefits that would enhance employees' pension benefits." (SJ-R.com)
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