Headlines about "Distributions - misc"

Gathered from the web by the editors at BenefitsLink.com.
Report of Council of Economic Advisers: 'Supporting Retirement for American Families' (PDF)
Feb. 2, 2012. 'While economic studies have established the benefits of annuitization for retirees -- including both immediate and longevity annuities -- many workers have only limited access to these products. The administrative guidance issued by the Treasury today, easing and simplifying certain regulatory requirements for retirement plans and IRAs, takes an important first step towards a more complete private market offering more attractive lifetime income options." (Council of Economic Advisers, Executive Office of the President)

Is My American Airlines Pension Guaranteed? Yes, But...
"Who gets the haircut? The PBGC has a sliding scale of maximum benefits, depending on age. The most it will pay people who retire at age 65 is $55,841. If your benefit is less than that you have only the long-term health of the PBGC to worry about." (TIME.com)

New Treasury Rules Ease Purchase of Annuity With 401(k)
"J. Mark Iwry, an official at the Treasury department, said the department hoped in particular to foster a workplace market for 'longevity insurance,' something much discussed in policy circles but that employers rarely make available to workers when they retire." (New York Times; free registration required)

Treasury Eases Rules on Annuities in Retirement Plans
"Employers have been reluctant to adopt annuities in retirement plans they sponsor because of concern that fees are too high and that they would be held liable for their choice of insurers. Americans have resisted buying the insurance because they don't want to lock up their assets." (Bloomberg)

New 401(k) Policies Are a Mixed Bag
"Most workers won't see their companies offering annuities anytime soon, concedes David Wray of the Plan Sponsor Council of America, an employer group. He said employers would be concerned about choosing solid insurance companies and reasonably priced annuities for their workers." (Reuters)

[Official Guidance] Rev. Rul. 2012-3: Application of Survivor Annuity Requirements to Deferred Annuity Contracts Under a Defined Contribution Plan (PDF)
"Issue: How do the qualified joint and survivor annuity ('QJSA') and the qualified preretirement survivor annuity ('QPSA') rules, described in ?? 401(a)(11) and 417 of the Internal Revenue Code, apply when a deferred annuity contract is purchased under a profit-sharing plan in the situations described below?" (U.S. Internal Revenue Service)

[Official Guidance] Rev. Rul. 2012-2: Rollover from Qualified Defined Contribution Plan to Qualified Defined Benefit Plan to Obtain Additional Annuity (PDF)
"Issues: [1] Does a qualified defined benefit pension plan that accepts a direct rollover of an eligible rollover distribution from a qualified defined contribution plan maintained by the same employer satisfy ?? 411 and 415 of the Internal Revenue Code in a case in which the defined benefit plan provides an annuity resulting from the direct rollover that is determined by converting the amount directly rolled over into an actuarially equivalent immediate annuity using the applicable interest rate and the applicable mortality table under ? 417(e)? [2] How does the result vary if the defined benefit plan applies different conversion factors for purposes of calculating the annuity resulting from the amount directly rolled over?" (U.S. Internal Revenue Service)

[Official Guidance] Proposed IRS Regs on Longevity Annuity Contracts
"This document contains proposed regulations relating to the purchase of longevity annuity contracts under tax-qualified defined contribution plans under section 401(a) of the Internal Revenue Code (Code), section 403(b) plans, individual retirement annuities and accounts (IRAs) under section 408, and eligible governmental section 457 plans. These regulations will provide the public with guidance necessary to comply with the required minimum distribution rules under section 401(a)(9). The regulations will affect individuals for whom a longevity annuity contract is purchased under these plans and IRAs (and their beneficiaries), sponsors and administrators of these plans, trustees and custodians of these IRAs, and insurance companies that issue longevity annuity contracts under these plans and IRAs." (U.S. Internal Revenue Service)

[Official Guidance] Treasury Fact Sheet: Helping American Families Achieve Retirement Security by Expanding Lifetime Income Choices (PDF)
"[T]he new package of proposed regulations and rulings makes it easier for pension plans to offer workers a wider range of choices as to how to receive their retirement benefits by [1] Making it easier to offer combination options that avoid an 'all-or-nothing' choice, such as the option to take a portion of an individual's plan benefit as a stream of regular monthly income payable for life, while perhaps taking the remainder in a single lump-sum cash payment; [2] Enabling employer plans and IRAs to offer an additional option in the form of 'longevity annuities' -- which permit employees to use a limited portion of their account balance to provide lifelong retirement income beginning at age 80 or 85, protecting those who live beyond average life expectancy from running out of savings; [3] Making clear that employees receiving lump-sum cash payouts from their employer's 401(k) plan can transfer some or all of those amounts to the employer's defined benefit pension plan (if the employer has one and is willing to allow this) in order to receive an annuity from that plan (giving employees access to the defined benefit plans' relatively low-cost annuity purchase rates); and [4] Resolving uncertainty as to how the 401(k) plan spousal protection rules apply when employees choose deferred annuities (including longevity annuities) from their plans." (U.S. Internal Revenue Service)

[Official Guidance] Proposed IRS Regs on Modifications to Minimum Present Value Requirements for Partial Annuity Distribution Options under Defined Benefit Pension Plans
"These proposed regulations would change the regulations regarding the minimum present value requirements for defined benefit plan distributions to permit plans to simplify the treatment of certain optional forms of benefit that are paid partly in the form of an annuity and partly in a more accelerated form. These regulations would affect sponsors, administrators, participants, and beneficiaries of defined benefit pension plans." (U.S. Internal Revenue Service)

[Guidance Overview] DOL Publishes Final 408(b)(2) Fee Disclosure Regs; Treasury Publishes Regs on 'Lifetime Income' Options
"[T]he U.S. Departments of Labor and the Treasury today announced two executive actions designed to help enhance security for millions of Americans saving for retirement. The measures will expand transparency in the 401(k) plan marketplace and broaden the availability of retirement plan options so that Americans can maximize their ability to save responsibly and securely." (U.S. Employee Benefits Security Administration)

Retirement Income in DC Plans: What Our Experience with DB Plans Tells Us (PDF)
"The potential for improvement in DC plans' ability to provide a steady stream of income has caught the eye of the financial services industry. While the marketplace races to deliver an array of possible solutions, employers and regulators are grappling with how these products fit within qualified retirement plans." (Institutional Retirement Income Council)

[Guidance Overview] D.C. Requires Employers to Withhold D.C. Tax on Retirement Plan and IRA Distributions to D.C. Residents (PDF)
"Unlike withholding in some other jurisdictions, the D.C. legislation requires withholding from distributions from IRAs, as well as pension, profit sharing and tax sheltered annuities (403(b) plans); withholding is mandatory, not voluntary." (Saul Ewing LLP)

ERISA Claim Based on Wal-Mart Gender Discrimination Dismissed
"A federal court dismissed a claim that Wal-Mart Stores breached its fiduciary duties in underpaying retirement plan contributions based on wages that were discriminatory against women." (PLANSPONSOR.COM)

PBGC Financial Assistance Payments to Multiemployer Plans, 2005-2012
PBGC updated the data set containing information on multiemployer plan financial assistance payments from 20005 through the first quarter of the 2012 fiscal year. (Pension Benefit Guaranty Corporation)

To Maximize Social Security Retirement Benefits, Know the Rules
"Social Security offers another important incentive to forestall filing until at least 66. Benefits are reduced permanently for every year that is filed before the FRA, and increased for every year that is waited to file beyond it, up till the age of 70." (Thomson Reuters via Employee Benefit News)

The Replacement 'Window' in Retirement Planning
"[T]he replacement rate approach represents, at best, an indirect approach to evaluating whether retired workers can maintain their standard of living in retirement -- because what matters is not how much you have to spend, but how much you need to spend." (Employee Benefit Research Institute)

Federal Retirees Face Confusion, Possibly Payment Delay
"'With OPM's current backlog and the expected significant rise in retirement processing workload, the time frame for OPM to place an annuitant in interim pay may increase to 6-8 weeks after their retirement date,' according to the Army." (The Washington Post; free registration required)

[Opinion] Early Retirement Provisions of West Virginia Local Government Pension Plans Warrant a Review
"To see why, consider the pension plans for Huntington's police officers and firefighters. An analysis by [a Herald-Dispatch reporter] found that at least one-sixth, or $1.21 million, of the $7.3 million total payout to the city's police and fire retirees this year will go to people who are still collecting a paycheck -- and sometimes a second pension -- for other jobs in city, county, state or federal governments." (Herald-Dispatch.com)

Tools for Plan Sponsors to Meet the Retirement Income Challenge
"Around age 50 -- the time they become eligible for catch-up contributions -- participants should be introduced to core income products and strategies. They'll need to prepare for critical decisions, including when to take Social Security, how much they can prudently spend from their savings, and how much they value lifetime income guarantees. The sooner participants know where to find the right resources, the better." (The Vanguard Group, Inc.)

The New Retirement Rulebook
"[One retirement industry worker] advocates an approach that takes into account an 'individualized inflation rate' based upon standard of living. A laddered annuity approach can cover baseline expenses to 'give peace of mind for lifetime income that they can never outlive.' 'In theory, they can spend the rest of their money and never run out of income,' he says." (Forbes.com LLC)

Is the 4 Percent Retirement-Withdrawal Rule Viable?
"'Market valuations' -- the relative health of markets at the moment you enter retirement -- are now an important part of calculating withdrawal rates. The thinking: Markets move in cycles (bull markets follow bear markets, and so on), and we can measure (to some extent) whether we're on the cusp of the former or the latter. Why is that important? If you happen to retire at the start of a bear market and withdraw too much too soon, your nest egg might expire before you do." (Dow Jones & Company, Inc.)

[Guidance Overview] Profit-Sharing Plan Must Restore Misplaced Assets Although Not Recovered
"A federal appellate court has found that a profit sharing plan must pay back over $1 million in assets wrongly transferred from a participant's account even thought it has not recovered the misplaced funds." (PLANSPONSOR.COM)

Double-Dipping Common for Public-Sector 'Retirees' Who Take on Additional Work
"Proponents of such contracts argue that taxpayers are getting a good deal. 'Retired' public servants provide expertise and leadership, and their terms of employment can be cheaper for local governments because their compensation often doesn't involve health care or other benefits." (San Jose Mercury News)

[Guidance Overview] Anti-Alienation Rule Did Not Prevent Participant from Enforcing Judgment Against Plan
"The award of funds that were erroneously removed from a participant's 401(k) account and credited to his former spouse incident to a marital dissolution would not violate ERISA's anti-alienation rule, even if the plan has not yet recovered the funds from the spouse, according to the U.S. Court of Appeals in New York . . . . The anti-alienation rule, the court advised, does not prevent plan funds from being used to satisfy a judgment against the plan." (Wolters Kluwer Law & Business / CCH)

At Chicago Transit Agency, Overtime Included in Calculations to Determine Pension Amounts
"The agency estimates that such added pension payments to all union workers cost $9 million a year and about $90 million over the life of the benefits. Among all the public agencies in Illinois, only at the CTA can employees boost their pensions with overtime -- a practice that has been in place since at least 1965, according to CTA officials." (Chicago Tribune)

GM Could Launch Retiree Pension 'Buyout'
"General Motors may launch a program to 'buy out' the pensions of some of its retirees -- in an effort to reduce its unfunded liabilities, an industry analyst said Wednesday." (The Detroit News)

Federal Agencies Tighten Belts with Buyouts and Early Retirements
"OPM uses two tools to help agencies reduce their staffing levels without resorting to pink slips and firings. One is the Voluntary Separation Incentive Payments (VSIP) program, which is government-speak for buyouts. Employees can get up to $25,000 to quit. The other is the Voluntary Early Retirement Authority (VERA), which allows workers to get annuities years earlier than usual." (The Washington Post; free registration required)

[Guidance Overview] Participant's Estoppel Claim Rejected for Failure to Show Pension Calculation Error Was Intentional
"The court also rejected the participant's claim that he'd relied to his detriment on the mistaken calculations when he signed the severance agreement. He undermined this argument by his own admission that he has no current wish to rescind his agreement and renegotiate the terms." (Wolters Kluwer Law & Business / CCH)

[Opinion] ASPPA/ACOPA Comments on Proposed Rule Relating to Benefit Determinations and Plan Valuations for Statutory Hybrid Plans
"ASPPA and ACOPA recommend that proposed regulations regarding ?4022 be temporary, effective only for plan terminations occurring before the effective date of final Treasury regulations regarding market rate of return. PBGC should re-propose these rules in a manner that is consistent with the final Treasury regulations after the final market rate of return regulations are issued." (American Society of Pension Professionals & Actuaries/ASPPA College of Pension Actuaries)

Ohio Public Employee 'Double-Dipping' Debate Resumes in Legislature
"The bill would prevent someone from collecting a pension check and a salary at the same time. So if a retiree returned to a public job, his or her pension payments would be set aside in a separate account. The employee would get those deferred payments when he or she leaves government employment for good." (The Columbus Dispatch)

[Opinion] Pension Padding by Connecticut Public Employees
"Armed with data from the comptroller's office, a recent published report focused on the recent retirement of 172 'hazardous-duty employees' (mostly corrections officer) who by contract may begin collecting their pension and lifetime health benefits at any age after only 20 years of service. That allows them to become pensioners in their 40s." (American-Republican Inc.)

Minneapolis Pension Plans Go to State, Legal Battle Ends
"Minneapolis' closed police and firefighters' pension funds have merged into the statewide public safety pension plan. A judge's signature on a pension lawsuit settlement resolved the last snarl between the city of Minneapolis and the pension funds which have been closed to new members for 31 years. For the first time in more than five years of fighting the city's legal claim that they were overpaid, pensioners don't have to worry about refunding part of their past pensions and know they'll get a major increase in benefits, according to the Minneapolis Star Tribune." (PLANSPONSOR.COM)

[Guidance Overview] Sham 'Early Retirements' Could Disqualify Pension Plan, IRS Cautions
"Employees under age 62 who 'retire' with the explicit understanding that they will immediately return to service with the same employer do not qualify for early retirement benefits, according to a recently released IRS private letter ruling." (Mercer LLC)

Retirees Accept Pension Cuts in Rhode Island Town's Bankruptcy
"In a landmark agreement, retired police and firefighters in Central Falls, Rhode Island, have accepted pension cuts as part of the town's historic bankruptcy filing. If the bankruptcy trustee accepts the proposed deal, Central Falls' public employees would represent the first workers to ever accept pension cuts during a municipal bankruptcy, according to a recent report from the New York Times." (TotalBankruptcy, LLC)

Oregon Public Employees Retirement System Allowed to Recoup $156 Million in Overpayments
"The court stood by its earlier decision in the Robinson case, which upheld PERS' right to recoup an estimated $156 million in overpayments from 28,042 people who retired from public service between April 2000 and April 2004. In a second opinion released Friday, the court also ruled that PERS did not violate its members' rights by entering into the settlement agreement that resulted in the move to recoup the overpayments." (www.statesmanjournal.com)

[Guidance Overview] A Participant Lawsuit Against Employer Crosses State Lines
"An employee sued her former employer, alleging it had failed to pay her for unvested shares earned through the company's profit sharing plan." (PLANSPONSOR.COM)

401(k) Loan Defaults: Who Is at Risk and Why?
"Based on a large dataset from Vanguard, this study is the first of its kind to quantify how many people take out loans and, of those, how many default. It proposes changes in retirement policy to reduce the financial risk posed by these loans, particularly for vulnerable groups." (RAND)

State Taxation of Former Residents' Retirement Income (PDF)
"Recently, the New York State Department of Taxation and Finance issued an Advisory Opinion . . . regarding whether New York State may impose income tax on distributions from a nonqualified deferred compensation plan made to a former resident. The opinion, consistent with federal law, concluded that New York State may not impose income tax on these retirement payments. Similar reasoning should apply to other states. Plan sponsors and former New York State residents that participate in nonqualified deferred compensation plans should be aware of the tax implications of this law." (Bryan Cave LLP)

States Try to Fix Their Miscalculations Over 'Air Time'
"[States] are finding that air time can be costly even when they set a price that is expected to cover the higher pension benefits. That's because when workers . . . buy 'air time' -- credit for work they never did -- states make an educated guess about how much to charge. The guess is based on projections about when a worker will retire and die, what her pension will be and how successfully a retirement fund will invest its money. Any of those can turn out wrong." (USA TODAY)

New Jersey Governor's Issue with Public Workers Cashing in Unused Sick Days for Lump-Sum Payments
"[T]he issue is not as black-and-white as Christie makes it sound, and the dollar figures he drops to make his case are based on estimates, worst-case scenarios, and old data." (The Philadelphia Inquirer)

Overtime Inflation Pervades Connecticut's State Pension System
"Counting overtime in the pension formula has added tens of millions of dollars to the obligations of the state's grossly underfunded pension system. It is perhaps the biggest labor-management issue on which the Malloy administration, despite dispensing various prescriptions for fiscal woes, has accomplished the least." (Hartford Courant)

Connecticut State Pensions, Part 2: Recent Retirees Raking in Bigger Pensions
"Records of more than 1,000 recent state-employee retirements tell a story taxpayers might not want to hear -- but here it is anyway: Those retirees' final-year salaries and starting pensions are up markedly from previously known levels." (Hartford Courant)

[Guidance Overview] PBGC Updates: Expected Retirement Age and Reportable Events in 2012
"The PBGC announced that the expected retirement table for plans undergoing a distress or involuntary termination will be updated for valuation dates occurring in 2012, while the existing guidance on reportable events will continue." (Deloitte via BenefitsLink.com)

[Opinion] California Pension Reform Hindered by Limits of Contract Protections
"Note: Benefits already earned for past labor are protected, as they should be. The issue is the future rate of accrual. Smart business people know that when they are in a financial hole, they should stop digging. The California public-sector rules are different. Once employees start working, they usually are guaranteed that initial multiplier their entire careers, many lawyers say. If, for example, that 2 percent per year is increased to 3 percent, it cannot be subsequently reduced." (San Jose Mercury News)

Double Dipping Retirees Eyed by Governor of California
"[R]eformers say public employee retirement systems can't afford years of pension payouts to those who stay on a government payroll, and that reforms would save money in an era of steep budget cuts." (The Fresno Bee)

San Diego City Retirees Get Extra, 13th Check, Payment Again
"The payments -- known as the 13th check -- are made without regard to the system's $2.1 billion deficit, which remains a taxpayer burden and has led to an ongoing budget crisis at City Hall." (The San Diego Union-Tribune, LLC)

Trends in Pension Plan Management: The Annuity Dilemma
"A January 2011 survey by the Society of Actuaries found only 20% of Americans aged 45 to 70 plan to purchase annuities to protect their retirement assets, despite worries about outliving their assets. Mercer's Craig Rosenthal looks at what's behind this fear of annuitizing and how plan sponsors can address it.' (9-minute webcast.) (Mercer Select)

Financial Engines Offers New Advice Program for Pre-Retirees: Annuitization
"[T]he general model it starts from is as follows: You live on the income from your portfolio through age 85, and using another portion of your savings, you can buy an immediate annuity at any point up to age 85 that will allow you to collect that same level of income for the rest of your life." (New York Times; free registration required)

401(k) Plan Asset Allocation, Account Balances, and Loan Activity In 2010 (PDF)
"On average, at year-end 2010, 62 percent of 401(k) participants' assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. Thirty-three percent were in fixed-income securities such as stable value investments and bond and money funds." (Employee Benefit Research Institute / Investment Company Institute)

[Guidance Overview] IRS Extension of Year-End Deadline for Pension Plan Amendments under Code Section 436
"Code Section 436 was added by the Pension Protection Act of 2006 (PPA) and contains limitations on benefit payments and accruals for defined benefit plans that do not meet the funding targets required by the PPA." (McDermott Will & Emery)

Age-55 Exception to Early Withdrawal Tax Applies to Date that Employee Separated from Service
"Code Sec. 72(t)(2)(A)(v) states that an individual is not liable for the additional 10% tax if the distribution from the qualified plan is 'made to an employee after separation from service after attainment of age 55.' Although the individual was only 53 when she separated from service from her employer, she was 55 when she took the distributions from the plan; therefore, she argued that she fell within this exception." (Wolters Kluwer Law & Business / CCH)

Enrolled Actuaries Report, Winter 2011 (PDF)
Articles include: Research Projects Private Pension Funding Costs; Is 411(d)(6) Dead? and, Recent Developments for Hybrid Plans. (American Academy of Actuaries)

[Guidance Overview] Owner Trustee May be Held Liable for Denial of Benefits to Ex-Spouse of Employee
"The Stockwell Construction Co., Inc. Profit Sharing Plan states Stockwell, Jr., as trustee, had the duty to invest plan assets, so he is clearly a plan fiduciary. The fact Stockwell, Jr. did not have discretion over the payment of the benefits of Smith's deceased ex-husband's account does not shield him from liability, the court said." (PLANSPONSOR.COM)

How to Make Your Nest Egg Last Longer
"You probably know the conventional wisdom: When spending retirement savings, drain taxable accounts first, to give the money in tax-deferred 401(k)s and individual retirement accounts more time to grow, and leave tax-free Roth IRAs for last. But with many nest eggs today smaller than they should be, a better approach, some financial advisers say, is to tap these accounts simultaneously in order to minimize taxes over time." (The Wall Street Journal)

IRS Highlights Plan Distributions, Examination Priorities, FAQs for Form 8955-SSA, and More
"The IRS's quarterly newsletters provide a helpful overview of recent IRS and DOL developments, a compliance calendar, and links to more detailed information. We note that a common theme in recent articles has been the practices and procedures needed to maintain plan compliance." (Thomson Reuters/EBIA)

GAO Report: Delphi Pension Plans: GM Agreements with Unions Give Rise to Unique Differences in Participant Benefits
"GAO was asked to answer the following questions: (1) What precipitated PBGC's decision to terminate Delphi's plans and what was Treasury's role, if any? (2) What actions did PBGC take to secure Delphi domestic and foreign assets as part of its recovery process? (3) Why will certain Delphi employees receive reduced pension benefits and others will not? (4) What information was communicated to employees about the termination of their plans?" (U.S. Government Accountability Office)

[Official Guidance] Text of PBGC Final Rule: Allocation of Assets in Single-Employer Plans; Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Valuing and Paying Benefits (PDF)
"The interest assumptions are used for valuing and paying benefits under terminating single-employer plans covered by the pension insurance system administered by PBGC." (Pension Benefit Guaranty Corporation)

De-Risking Pensions: Emerging Opportunity Through Lump Sum Cash-Outs Under PPA (PDF)
"Under PPA, pension plan sponsors have been provided an attractive risk transfer opportunity, specifically the: Ability to amend plans to allow full lump sum distributions on a favorable interest rate basis; Use of high?quality corporate bonds as the interest rate basis instead of the more conservative U.S. Treasury rates used before PPA (higher allowable interest rates result in lower lump sum cash?outs); Allowance to use the new basis on all past service benefits as well as future accruals (i.e., no protection of the old lump sum basis for past accruals unless the plan sponsor chooses to provide such protections as a plan subsidy)[.]" (The Prudential Insurance Company of America)

[Guidance Overview] PBGC Guidance on Funding-Related Determinations for Reportable Events and Missed Quarterly Contributions for 2012 Plan Years
"This guidance is in effect until the PBGC publishes a final rule amending the reportable events regulation." (Practical Law Company)

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