Headlines about "Ret plans - design"
Gathered from the web by the editors at BenefitsLink.com.
Considering a Conversion? Roth, That Is
Excerpt: "The issues aren't quite the same as those one faces when considering the deepest aspects of personal faith and religious doctrine, but a 'Roth conversion' can pose some difficult issues for investors nonetheless. And we're going to hear much more about this going forward because of a scheduled change in the law: Unless something unexpected happens in D.C., come 2010 there will no longer be income limits on Roth IRA conversions. There will be a lot written on the issue of whether one should convert or not, as well as endless articles describing all kinds of 'strategies' to potentially leverage the change (some legitimate and others more questionable). For me, three things are important in considering this kind of 'conversion' . . . ." (The Vanguard Group, Inc.)
[Guidance Overview] USERRA Benefits Under Title IV of ERISA (PDF)
1 page. Excerpt: "According to the final rule, so long as the participant is reemployed within the time limits prescribed by USERRA, even if the reemployment occurs after the plan's termination date (bankruptcy filing date, in the case of the bankruptcy of a covered plan sponsor filed on and after September 16, 2006), the PBGC will treat the participant as having satisfied the reemployment conditions as of the plan's termination date.Thus, the participant's benefits would be guaranteed for periods up to the plan's termination date. This final rule is effective December 17, 2009 and will apply to reemployments covered under USERRA initiated on or after December 12, 1994 (the effective date of USERRA). This is great news for affected participants. Starting December 17, 2009, the PBGC will start adjusting final benefit determinations of affected participants and make back payments with interest. The PBGC emphasizes that the scope of this final rule is very narrow. It only applies to the unique circumstances affording special protection to participants serving in the uniformed services entitled to benefits under USERRA." (Transamerica Center for Retirement Studies)
Pension Funding and Individual Accounts in Economies with Life-Cyclers and Myopes
Excerpt: "The present paper studies the growth and efficiency consequences of pension funding with individual retirement accounts in a general equilibrium overlapping generations model with idiosyncratic lifespan and labor income uncertainty. We distinguish between economies with rational and hyperbolic consumers and compare the consequences of voluntary and mandatory retirement plans. Three major findings are derived in our study: First, we quantify the commitment effect of social security for myopic individuals by roughly 1 percent of aggregate resources. It is possible to recapture this commitment technology in IRAs, if those are annuitized. Second, despite the fact that our consumers have an operative bequest motive, the welfare gain from the (implicit) longevity insurance of the pension system is significant and amounts to roughly 0.5 percent of aggregate resources. However, mandatory annuitization reduces unintended bequests so that future generations are significantly hurt. Finally, our results highlight the importance of liquidity effects for social security analysis. These efficiency gains are only attainable if accounts are voluntary and not mandatory." (Social Science Research Network)
Trends and Experience in 401(k) Plans, 2009 (PDF)
8 pages. Excerpt: "A new survey by Hewitt Associates . . . shows employers continue to design their 401(k) plans in a way that encourages positive saving and investing behaviors and helps employees meet their increasing retirement income needs. These efforts include significant increases in the adoption of automated features and target date funds, better investment education tools and an increased focus on lowering plan expenses." (Hewitt Associates via Retirement Made Simpler)
[Guidance Overview] Oral Alteration of Plan Terms Not Enough to Support Fiduciary Duty Claim
Excerpt: "Former pension plan participants may not claim a breach of fiduciary duty solely on the basis of alleged oral misrepresentations that purported to alter plan terms, according to the U.S. Court of Appeals in New York City (CA-2) in Ladouceur v. Credit Lyonnais. Oral promises cannot vary the terms of an ERISA plan." (Wolters Kluwer)
Private Pensions: Sponsors of 10 Underfunded Plans Paid Executives Approximately $350 Million in Compensation Shortly Before Plan Termination
Excerpt: "To identify case study examples GAO analyzed a listing of the 1,246 underfunded plans that were terminated from 1999 to 2008 and selected public companies with large unfunded liabilities, large unfunded liabilities per participant, and a large number of plan participants. GAO reviewed documents provided by companies and executives, and interviewed PBGC and company officials. GAO also reviewed Securities and Exchange Commission (SEC) filings and PBGC documents disclosing plan underfunding at the time of termination and missed contributions. Executive compensation figures may be understated because some company executives could not be located, did not respond to document requests, declined interviews, and did not give GAO access to their tax records." (U.S. Government Accountability Office)
[Guidance Overview] IRS Guidance Regarding Unused Paid Time Off and an Employer's Qualified Retirement Plan (PDF)
3 pages. Excerpt: "This guidance affects sponsors of and participants in qualified defined contribution plans, including 401(k) plans and multiemployer plans. It does not directly address 403(b) plans or governmental 457(b) plans, and IRS spokesmen have provided mixed unofficial messages regarding its applicability to these plans. As a result, sponsors of these types of plans should not take any action without the advice of legal counsel." (Prudential Retirement)
Journal of Pension Economics and Finance enters New Phase
Excerpt: "The Journal of Pension Economics and Finance (JPEF), the only academic journal focusing on the economics and finance of pensions and retirement income programs, announces a new editorial structure and a broadening of its mission effective January 2010. Since 2002, the JPEF has provided an invaluable and influential forum for original research and international policy debate in the pensions area. Demographic aging and tumultuous capital markets are challenging the future of retirement around the globe. The JPEF will lead the way in exploring what these factors imply for retirement security and pension sustainability, and in demonstrating which new models will ensure resiliency in retirement systems. JPEF publishes original research papers; it also offers an Issues & Policy section with reviews of the state of debate on pension policies around the world. In addition, the journal includes reviews on publications of key interest to its readers. JPEF is co-sponsored by the International Organization of Pension Supervisors (IOPS) and the OECD." (Pension Research Council; registration required to download fulltext of paper)
Federally Funded Defined Benefit Plan: Options for the Future
Excerpt: "Milliman's client had a crisis with its pension plan. This nonprofit organization was unusual, in that its defined benefit pension plan was funded by the federal Medicare program. The plan provided a modest formula of 1% of final earnings, multiplied by credited service. Funding was fixed several years ago at a very low percentage of total compensation. The amount was sufficient to cover the cost for the annual accrual; until recently, the assets and liabilities were approximately equal. Then the recession hit, and in 2008 the plan lost around 28% of its assets. Taking into account the new requirements under the Pension Protection Act of 2006 (PPA), Milliman came up with a preliminary ten-year funding projection: the plan sponsor was required to make up the asset losses over a seven-year period." (Milliman)
[Guidance Overview] Timing Requirements for Qualified Retirement Plan Amendments
Excerpt: "There is no one-size-fits-all checklist that identifies each interim plan amendment that must be adopted -- required amendments depend in large part on the provisions in a particular plan document -- but there is guidance. Notice 2008-108 provides the IRS's most recent cumulative list of statutory and regulatory changes as of October 1, 2008, that may require plan amendments. An updated list is expected later this month or in early December." (Miller & Chevalier Chartered)
As Pensions Were Abandoned, Four Firms Paid Top Executives $49.5M in Benefits
Excerpt: "Top executives at four companies that jettisoned their employee pension plans received $49.5 million in retirement and severance benefits in the years before the companies filed for bankruptcy, while retirees saw their benefits cut by as much as two thirds, congressional investigators conclude in a report to be released today. The Government Accountability Office (GAO) reports that pensions at the companies, United Airlines, US Airways, Polaroid and Reliance Insurance, were underfunded by more than $11 billion when the companies turned them over to a government-backed insurance fund. The report says executives at those four companies and six others that abandoned their pension plans took in a total of $350 million in pay and perks in the years leading up to the bankruptcies." (USA TODAY)
[Guidance Overview] What You Need to Know About Average Contribution Percentage Testing for 403(b) Plans
Excerpt: "The arrival of the final 403(b) regulations has transformed many compliance issues; however, the regulations are just as noteworthy for what has not been altered. For example, 403(b)s that provide for employer matching or employee after-tax contributions have always been required to perform the Average Contribution Percentage (ACP) test. However, plan sponsors of new 403(b) plans or plan sponsors who have modified their plans to add employer matching or after-tax contributions as a result of the changing 403(b) landscape may be facing ACP testing for the first time this year." (PLANSPONSOR.com; free registration required)
Pension Plan Moves Forward in West Virginia Legislature
Excerpt: "Police and fire pension plans across the state are suffering from funding shortfalls. The pending bill would allow municipalities to close such plans to new hires, freezing those unfunded liabilities. Among the ailing municipalities, officials have said Huntington is hurting the worst. More than 20 percent, or $8.8 million, of Huntington's $42 million budget is going to pension costs this year. Under the current funding method, those costs will rise to $12.4 million a year by 2015 and will not reach their ceiling until they hit approximately $20 million a year between 2020 and 2022, according to the city's finance department." (Herald-Dispatch.com)
Teachers Who Move Between States Suffer Pension Hit
Excerpt: "A 30-year veteran public school teacher who moves and splits employment between two state retirement systems is at risk for losing well over one-half of his or her pension wealth, according to new study. A news release said the research was from economists Robert M. Costrell of the University of Arkansas and Michael Podgursky of the University of Missouri-Columbia. Costrell and Podgursky examined pension funds in six states and found that compared to a neutral cash balance system, the type of defined benefit pension system which covers almost all public school teachers redistributes about half the pension wealth of an entering cohort of teachers who subsequently retire in their mid-50s from those who leave the system earlier." (PLANSPONSOR.com; free registration required)
PBGC Implements USERRA Final Rule
Excerpt: "The nation's private-sector pension insurer on Monday unveiled a final rule making it easier for returning service members to receive pension and other benefit credits for time spent in the military. A news release from the Pension Benefit Guaranty Corporation (PBGC) said the rule implements provisions of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). That law provides that an individual who leaves a job to serve in the uniformed services is generally entitled to reemployment by the previous employer and, after being rehired, to receive credit for benefits, including employee pension plan benefits, that would have accrued but for the employee's absence due to the military service." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Florida Retirement System Classification As 'Special Risk' Not Necessary to Invoke Heart/Lung Presumption, According to District Court
Excerpt: "On October 8, 2009 the Florida First District Court of Appeal issued an opinion holding that Florida Retirement System classification as 'special risk' is not necessary to invoke the heart/lung presumption in Section 112.18(1), Florida Statutes. However, almost immediately thereafter the Court ordered the opinion withdrawn (see C&C Newsletter for October 15, 2009, Item 2). Now, the Court has released its opinion, correcting some apparent factual inaccuracies, but coming to the same conclusion. An analysis of the more recent opinion follows. Crystal sought review of an order from the State Retirement Commission, which oversees the Florida Retirement System, denying his claim for disability retirement. He claimed that his total and permanent disability due to hypertension was presumed to be by accident suffered in-line-of-duty under Section 112.18(1), Florida Statutes." (Cypen & Cypen)
Florida State Senator Wants to Get State Government Out of the Pension Business
Excerpt: "The Republican state senator from New Port Richey has re-filed his bill that would rename the Public Employee Optional Retirement Program the 'Retirement Investment Program' for public workers. The name change signals a new pension philosophy -- leaving the safe, relatively low-paying assurance of a 'defined benefit' pension for the market-driven, possibly more profitable 'defined contribution' retirement system. Under Fasano's 91-page bill (SB 660), all new employees would have to join the defined contribution plan after Jan. 1, 2011. All current Florida Retirement System members, whether they work for the state or one of the hundreds of school boards and local governmental units whose pension funds are invested by the State Board of Administration, would still be guaranteed their regular pension benefits. The PEOPR allows employees to manage their own retirement money in 20 investment options -- including safe money market and bond funds or riskier stocks." (Tallahassee Democrat)
New law may revive workers' pension plans
Excerpt: "[C]hanges in pension laws that go into effect in January could revive so-called defined benefit pension plans in a new form. If your employer has 500 or fewer employees, you may see a new plan called a DB(k). As the name suggests, it combines features of a defined benefit pension and a 401(k) account. The plan comes in two parts: a defined benefit funded entirely by the employer and a contributory retirement account with investment options like a traditional 401(k). Participating employers must establish a pension that will pay up to 20% of an employee's average annual pay over the last few years at work." (NYDailyNews.com)
Utah's Public Employee Retirement System Must Change, Says Lawmaker
Excerpt: "Change appears to be in the cards for Utah's retirement system, perhaps including one revolutionary option of doing away with the nearly century-old pension system altogether for new hires and replacing it with individual 401(k)s. 'Something has to be done in my opinion. How does it look? What should we do?' are questions that remain, said Sen. Dan Liljenquist, R-Bountiful, chairman of the legislative committee that oversees retirement. But the push for change was met with a unanimous chorus of opposition from public employee unions that urged lawmakers Thursday to go slow and give the current pension system a chance to recover from its battering by the economic downturn." (The Salt Lake Tribune)
[Guidance Overview] 2009 End of Year Retirement Plan Sponsor 'To Do' Lists
Excerpt: "In this issue we provide seven 'to do' lists that may require you to take action before the end of 2009 or in early 2010. Many of the action items are a result of the Pension Protection Act of 2006 (the 'PPA') and may require plan amendments." (Snell & Wilmer LLP)
Federal Employees' Retirement System: Legislation Enacted in the 111th Congress
10 pages. (U.S. Congressional Research Service via opencrs)
[Opinion] American Benefits Council/ACLI Comments on Special Rules Governing Eligible Combined (DB(k)) Plans (PDF)
4 pages. Excerpt: "This letter, which is submitted by the American Council of Life Insurers . . . and the American Benefits Council . . ., provides comments in response to Notice 2009-71 regarding guidance relating to eligible combined plans under 414(x) of the Internal Revenue Code . . . . It would be helpful if the Service would provide sample plan language in the form of listings of required modifications (LRMs) for eligible combined plans. Alternatively, we would appreciate guidance on which provisions must be included in the single plan document for the eligible combined plan." (American Benefits Council)
Retirement-Product Developments Accompany Reform Drive
Excerpt: "Financial services firms are urging Congress to adopt retirement savings reforms in the next few years and are readying products that could profit from them. Several executives are recommending that lawmakers make changes that would ensure income from savings lasts through retirement. Robert L. Reynolds, the president and chief executive officer of Putnam Investments, said defined contribution plans, specifically 401(k)s, need to be improved so that their income stream does not run out too early. People should be able to put a portion of their 401(k) assets in annuities to ensure lifetime income, he said. 'The industry has done a good job of helping people accumulate money,' Reynolds said. 'Now we need to do a better job of helping people manage their 401(k) plans when they reach retirement.'" (Bank Investment Consultant and SourceMedia, Inc.)
[Guidance Overview] 403(b) Plan Compliance Checklist
2 pages. Excerpt: "Plan compliance is a key to managing a successful retirement program for the benefit of your organization and its employees. Complete this checklist to help determine if your ERISA-covered 403(b) plan is in compliance, and where your exposure may lie in the event of an audit." (Diversified Investment Advisors, Inc.)
Hybrid Retirement Plan in the Works: DB(k) Alongside 401(k) Would Provide Security, Guaranteed Pension
Excerpt: "The vulnerabilities of the 401(k) plan have cast doubt on whether a voluntary savings plan is the best way for workers to prepare for retirement. There are possible alternatives coming, however, that might catch on. One that may become available in January offers a guaranteed pension-like retirement benefit alongside a 401(k). It's called the DB(k), and it was created in the tax code in 2006. The law allows companies with fewer than 500 workers to start the hybrid plan after Jan. 1, 2010, and some proponents would like to see it available to all workers. As it is now, barely 40 percent of all workers even participate in a retirement plan at work." (The Washington Post; free registration required)
Sunoco Will Freeze Defined Benefit Pension Plans for Most Workers and Phase Out Medical Benefits for Most Retirees
Excerpt: "Sunoco spokesman Thomas P. Golembeski told the Philadelphia Inquirer the DB cutback would be accompanied by unspecified 401(k) enhancements. The company made the announcement as it reported its third-quarter financial results showing a $312-million loss, according to a Sunoco news release. Golembeski said Sunoco deliberately delayed the benefit changes for eight months to allow employees enough time for proper planning including 'individual decisions regarding retirement.'" (PLANSPONSOR.com; free registration required)
Black & Decker Reinstates 401(k) Match
Excerpt: "Black & Decker Corp. is restoring pay cuts and the firm's 401(k) match, according to published reports. The Baltimore Sun said that the moves come as the power toolmaker's financial outlook starts to improve, citing a regulatory filing. The Towson, Maryland-based firm made the salary reductions in April, one of several cost-cutting moves it has made throughout the year. The disclosure came just a week after Black & Decker announced it was merging with Connecticut-based Stanley Works in a $4.5 billion all-stock deal. However, according to the Sun report, a spokesman for Black & Decker said the salary reinstatements were planned and weren't connected to the merger." (PLANSPONSOR.com; free registration required)
Washington Times Suspends 401(k) Match
Excerpt: "The Washington Times has told staff that it is suspending its 401(k) match. According to MediaBistro, Times VP of Human Resources Sonya Jenkins on Friday sent a memo to employees informing them that 'effective November 13, 2009 (today), the matching contributions under The Washington Times 401(k) Savings Plan and Supplemental Survivor & Retirement Plan (SSRS) will be suspended.'" (PLANSPONSOR.com; free registration required)
Employee Benefits 2009 Year-End Checklist, Year in Review, and Planning Ahead for 2010 (PDF)
9 pages. Excerpt: "In addition to the items on the legislative agenda, both the Department of Labor and the Internal Revenue Service have important guidance projects still awaiting release, some or all of which may be issued in 2010. Employers should stay tuned for news about the following items in particular: Pending Department of Labor guidance requiring enhanced disclosure to plan participants about benefit plan administrative costs and investment expenses, and enhanced disclosureobligations from plan service providers to plan fiduciaries. Department of Labor regulations governing the provision of investment advice to retirement plan participants. Congress is also considering legislation in this regard. IRS regulations governing cafeteria plans and flexible spending accounts, particularly with respect to compliance with non-discrimination rules." (Harter Secrest & Emery LLP)
[Guidance Overview] IRS Further Extension of Effective Date of Normal Retirement Age Regulations for Governmental Plans (PDF)
1 page. Excerpt: "The IRS recently published Notice 2009-86, which further delays the effective date for governmental plans to plan years beginning on or after January 1, 2013. This extension will provide the IRS with additional time to consider comments received with respect to the effect of the normal retirement regulations on governmental plans. . . . Plan sponsors should review their plan documents to determine if their plan's current definition of normal retirement age complies with the new IRS regulations. If a plan amendment is required and Prudential Retirement provides document services for your plan, we will work with you to ensure that your plan complies with the extended amendment deadline." (Prudential Retirement)
[Guidance Overview] Final PPA Funding Rules
Excerpt: "For those who have been following the evolution of PPA funding rules, most of the [target date article] is review. Probably the biggest outstanding issue at this point is whether and how Congress will temporarily change these rules to provide additional breathing room for plan sponsors struggling in the wake of the 2008 financial crisis." (J.P. Morgan Compensation and Benefit Strategies)
[Guidance Overview] Seventh Circuit Holds That a Plan Amendment Does Not Violate ERISA's Anti-Cutback Rule
Excerpt: "In Wetzler v. Illinois CPA Society & Foundation Retirement Income Plan, No. 08-2923 (7th Cir. 2009), the plaintiff, Thomas Wetzler, wanted a lump-sum payment of his entire retirement benefit from the Illinois CPA Society & Foundation Retirement Income Plan (the 'Plan'). The Plan is a tax-qualified defined benefit pension plan. The plaintiff was a highly compensated employee. The Plan had always allowed lump-sum payments. However, prior to the plaintiff's retirement, the Plan had been amended to reflect certain provisions of the Internal Revenue Code (the 'Code') and the underlying Treasury regulations, under which the Plan could not make a lump- sum payment to certain highly compensated employees, such as the plaintiff, when the Plan is not sufficiently funded (the 'Amendment'). At the time of the plaintiff's request for a lump-sum payment, there were not enough assets in the Plan to cover this payment." (ERISA Lawyer Blog)
Escalating Pension Benefit Costs: Another Threat to Nonprofit Survival? (PDF)
Excerpt: "[A]re spiraling pension costs putting nonprofits across the country at risk of shutting down? How prevalent are pension and other retirement benefits at nonprofit organizations? What types of pressuresare nonprofit executives experiencing relating to retirement benefit programs, and how are they responding? Given the dearth of data on nonprofit retirement programs, the Johns Hopkins Nonprofit Listening Post Project undertook a Sounding, or survey, of its nationwide sample of nonprofit human service, community development, and cultural organizationson this important topic. The Sounding specifically focused on the two most common types of retirement benefit plans: defined benefit plans, i.e., plans in which employers maintain control over the investment of assetsand that provide a set level of benefits to employees at retirement; and defined contribution plans such as 401(k) or 403(b) plans in which the employer contributes to the cost but the employees maintain control over the investments, and benefit levels are not guaranteed." (Johns Hopkins University)
Lawmaker Says Utah's Retirement System Must Change
Excerpt: "Change appears to be in the cards for Utah's retirement system, perhaps including one revolutionary option of doing away with the nearly century-old pension system altogether for new hires and replacing it with individual 401(k)s. 'Something has to be done in my opinion. How does it look? What should we do?' are questions that remain, said Sen. Dan Liljenquist, R-Bountiful, chairman of the legislative committee that oversees retirement. But the push for change was met with a unanimous chorus of opposition from public employee unions that urged lawmakers Thursday to go slow and give the current pension system a chance to recover from its battering by the economic downturn." (The Salt Lake Tribune)
The New York Times is Freezing Pension Plan
Excerpt: "The New York Times Company has amended The New York Times Companies Pension Plan, a defined benefit pension plan for non-union employees, to discontinue future benefit accruals and freeze existing accrued benefits effective December 31, 2009. In a filing with the Securities and Exchange Commission, the Times said it is increasing contributions under The New York Times Companies Supplemental Retirement and Investment Plan (SRIP), its 401(k) plan, such that participants will receive a cash contribution of 3% of pay, up to applicable limits, effective January 1, 2010." (The New York Times; free registration required)
Vanguard's Perspective on Defined Benefit Plans
Excerpt: "Many employers have reacted to the challenging environment for defined benefit (DB) plans by closing or freezing their plans. But Vanguard believes DB plans can be an effective part of an overall retirement plan strategy, especially when thoughtfully combined with a defined contribution (DC) plan. In a new white paper, Vanguard provides insight into creating sustainable DB plans and integrating them into retirement programs that can meet the needs of both employers and employees." (The Vanguard Group, Inc.)
[Guidance Overview] Contributions of the Value of Unused Leave Time to Retirement Plans
Excerpt: "Even those employers with no interest in adopting a leave time contribution strategy should nevertheless take this opportunity to review the compensation definitions used by their retirement plans to ensure that they are consistent with current law. For example, permitting elective deferrals from severance amounts paid after the termination of employment is no longer permitted under current regulations. Employers should also periodically verify that their payroll systems are correctly capturing the amounts required by each of the compensation definitions included in their retirement plans. In addition, employers should take this opportunity to confirm that their leave policies are compliant with applicable state law." (Pillsbury Winthrop Shaw Pittman LLP)
Practice Note on Current and Emerging Practices in Selection and Documentation of Mortality Assumptions for Pensions (PDF)
Excerpt: "Measurements of defined benefit pension plan obligations include calculations that assign plan costs to time periods, actuarial present value calculations, and estimates of the magnitude of future plan obligations. This practice note does not apply to individual benefit calculations or individual benefit statement estimates. The application of the information contained herein is intended to cover qualified and non-qualified plans, and governmental and non-governmental plans where the actuary is subject to ASOP No 35. This note may be used when setting assumptions, or providing advice on setting assumptions, for funding (where permitted by law) and for financial accounting." (American Academy of Actuaries)
Double Dippers May Cost Utah Public Retirement System $900 Million in Coming Decade
Excerpt: "A state audit recommends the Legislature do away with double dipping by public employees, a practice in which retired workers go back to work and collect their salary and pension. Auditors reported Wednesday that the practice would cost the pension fund covering public employees nearly $900 million over the coming decade. 'It seems the Legislature has opened these doors,' said House Speaker David Clark, R-Santa Clara. 'I don't know that we should be surprised when we create that significant financial incentive that people are taking advantage of it. ...There needs to be and should be significant changes.' Auditors recommended legislators change Utah's law to suspend the pension of any retiree who returns to work for the state or municipal work force until the employee ultimately retires. But it's unclear if the state can change the rules for those who already have retired and been rehired into the system." (The Salt Lake Tribune)
[Guidance Overview] Massachusetts High Court Rules That ERISA Preempts a Claim Based on Unjust Enrichment
Excerpt: "The Court noted [two reasons] for concluding that Hitachi's claim is preempted by ERISA. [The second is that in] enacting ERISA, Congress intended to provide a comprehensive remedial scheme that would serve as the exclusive enforcement mechanism for ERISA disputes. This scheme provides strong evidence that Congress did not intend to authorize the remedies that it simply did not incorporate in the statute. A remedy based on a claim of unjust enrichment-as opposed to certain claims for restitution- is not one of the remedies included in the statute. Having concluded that ERISA preempts Hitachi's claims for two reasons, the Court affirmed the lower court's dismissal of the case." (ERISA Lawyer Blog)
Performance-Based SERPs: An Alternative Approach to Executive Benefits
Excerpt: "Simply stated, a performance-based SERP places one or more performance conditions on an executive's accrual of benefits. SERPs are extremely flexible; there are many ways to design such a plan and various performance conditions that can be appropriate. Described [in the target document] are some plan design features that an employer may wish to consider for a performance-based SERP." (Hay Group)
Colorado Public Employees' Retirement Association Officials Disclose Plan to Fix Pension Fund
Excerpt: "Employees, employers and retirees of the Colorado Public Employees' Retirement Association will be required to make financial concessions as part of a plan being recommended to the lawmakers as a way to help fix the ailing pension program. . . . The recommendation, approved by the PERA board in October, will require a gradual increase in employee and employer contributions over a four-year period. It also will put a cap on the cost-of-living adjustment for all retirees, members and inactive members. The plan, being dubbed '2/2/2 Plus' will be presented to the Legislature for its consideration during the upcoming session." (The Pueblo Chieftain)
[Guidance Overview] President Obama's Retirement and Savings Initiative
Excerpt: "As part of the Obama administration's retirement and savings initiative, the IRS recently issued guidance designed to encourage retirement savings. This new Regulatory Brief provides a summary of that guidance. The new guidance covers: Paid time off contributions to qualified plans. Timing of automatic savings increases in plans using automatic contribution arrangements. Adding automatic enrollment to 401(k) plans. A safe harbor explanation for eligible rollover distributions. Rollover distributions to Roth IRAs." (The Vanguard Group, Inc.)
[Guidance Overview] The Approaching 403(b) Plan Document Deadline
Excerpt: "Employers that allow employees to contribute to 403(b) plans and arrangements need to adopt a plan document by December 31, 2009 if they have not already done so. In adopting a plan document, employers that have a voluntary 403(b) plan which the employer intends to be exempt from ERISA should review the plan document and their practices to confirm the 403(b) plan is not subject to ERISA." (Dorsey & Whitney LLP)
Roth IRA Conversions: The Basics of the 2010 Rule
Excerpt: "Still your tax bill can be hard to predict. To have some control over how much you pay the government each year, you should have both taxable and non-taxable accounts from which to draw your retirement income. Imagine it this way. Perhaps early in retirement you choose to continue to work part time and supplement your income from retirement savings accounts. The combined income may put you into a higher tax bracket. However, if you take some money from a Roth IRA that year, because withdrawals are nontaxable, it could help keep you in the lower bracket." (Investment News; free registration required)
[Guidance Overview] California Supreme Court Hears Pension Trustees' Case
Excerpt: "The California Supreme Court last week heard a case that may be of great significance for trustees on pension boards in California. The case, Lexin v. Superior Court, arose out of a decision by the San Diego Employees' Retirement System (SDCERS) board of administration to approve an increase in pension benefits for city employees and at the same time allow the pension fund to be underfunded. The San Diego County district attorney brought criminal proceedings against certain members of the board, alleging a violation of Government Code section 1090. The questions to be decided in the case is whether the petitioners' service on the Board of the San Diego Retirement System, as it related to an increase in pension benefits for members of the system, violate the conflict of interest provisions of Government Code section 1090, and subject them to criminal prosecution, or did the non-interest exemption of Government Code section 1091.5?" (National Conference on Public Employee Retirement Systems)
Largest Iowa Public Workers' Union to Vote on Unpaid Days
Excerpt: "Iowa's largest public employee union will vote this month on whether to take five unpaid days off and sacrifice about $75 a month in retirement contributions in exchange for an agreement that none of its members will be laid off for seven months. A 'yes' vote by the American Federation of State County and Municipal Employees would save $26.4 million and 479 jobs, some held by workers who are not dues-paying AFSCME members. Those jobs are spread across many state departments, including human services, revenue, public safety and corrections." (The Des Moines Register)
J.P. Morgan Chase to Reinstate 401(k) Company Match
Excerpt: "J.P. Morgan Chase will reinstate its 401(k) company match for its U.S. employees and provide an extra award for lower-paid employees, according to a memo by the bank's human resources director, John Donnelly, obtained by P&I Daily. The match was suspended earlier this year. According to the memo, after a recent review, 'we have decided to provide a full 2009 401(k) match,' as well as a 'special award' of $500 early next year to employees globally with total annual cash compensation of less than $60,000." (Pensions & Investments; free registration required)
[Guidance Overview] IRS Retirement Plan Limitations on Benefits and Contributions for Tax Year 2010 (PDF)
Excerpt: "On October 15, the Internal Revenue Service (IRS) announced in a news release (IR-2009-094) the cost-of-living adjustments to be applicable to dollar limitations for defined benefit pension and defined contribution plans and other items for tax year 2010. Most limits remained unchanged from last year due to the fact that cost-of-living index for the quarter ended September 30, 2009 was less than the cost-of-living index for the quarter ended September 30, 2008. By way of example, the Code Section 402(g)(1) limit on the exclusion for elective deferrals remained unchanged at $16,500. This limitation affects elective deferrals to Section 401(k) plans and to the federal government's Thrift Savings Plan, among other plans." (Morgan, Lewis & Bockius LLP)
[Official Guidance] DOL Advisory Opinion 2009-03A on Certain Transactions or Arrangements Involving an Individual Retirement Account
Excerpt: "[The DOL was asked w]hether an IRA owner's granting to a broker of a security interest in assets held in his non-IRA accounts to cover potential indebtedness of an IRA established with the broker would result in prohibited transactions under Code section 4975." (U.S. Employee Benefits Security Administration)
Convenience, Choice, And Control Are Important Factors As Investments Become More Conservative
Excerpt: "Saving for retirement is very important, according to 96.9% of respondents to a survey conducted by ING Institute for Retirement Research. In addition, respondents overwhelmingly (92.4%) said that automatically deducting from the paycheck is the best way to save; 83.6% said that their employer's plan was very important for saving for retirement, with 11.4% saying that their employer plan is fairly important." (Wolters Kluwer Law & Business)
[Guidance Overview] Reminders for Qualified Retirement Plans of Imminent PPA '06 Compliance Deadlines
Excerpt: "This Compliance Alert reminds sponsors of qualified plans about imminent deadlines for compliance with certain provisions of the Pension Protection Act of 2006 (PPA '06). Most significantly, by December 31, 2009, sponsors of calendar-year plans must adopt amendments required by PPA '06. Moreover, sponsors of defined benefit plans that chose to provide PPA '06-required individual benefit statements to all active, vested participants every three years (instead of providing an annual notice of availability upon request) are reminded that the first of these periodic statements must be provided for the 2009 plan year, subject to a delayed effective date for collectively bargained participants." (Segal Company)
[Guidance Overview] Verizon Escapes $1.6 Billion Pension Liability for Drafting Error
Excerpt: "A federal judge in Illinois who ruled last year that Verizon was bound by the language in its defined benefit plan document even if it included a drafting error has now decided that Verizon can simply correct the error that could have cost $1.67 billion." (PLANSPONSOR)
Banner Year for Federal Benefits: One Other Big Benefit May Be On the Way
Excerpt: "Despite a deficit of $12 trillion or so, a major recession and unemployment of about 10%, this has been a banner year for federal employee benefits. With the passage of the Defense authorization bill into law, federal employees found themselves with a new list of benefits (or at least changes) including: . . . [Also,] you may find that you have the ability to rollover the cash value of your unused sick leave or annual leave balances that cannot be carried into the next year into your Thrift Savings Plan account." (FedSmith)
Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2008
Excerpt: "About 56 percent of all working-age (21?64) wage and salary employees work for an employer or union that sponsors a retirement plan. Among full-time, full-year wage and salary workers ages 21?64 (those with the strongest connection to the work force), just under 63 percent worked for an employer or union that sponsors a plan." (Employee Benefit Research Institute (EBRI))
[Guidance Overview] Defined Benefit Plan Funding Relief Bill Introduced; Implications for Plan Sponsors
Excerpt: "Congressmen Pomeroy (D-ND) and Tiberi (R-OH) have introduced the Preserve Benefit and Jobs Act of 2009, a bill implementing many of the defined benefit plan funding relief proposals being advocated by sponsor and participant groups. In this article we review the bill and its implications for plan sponsors." (J.P. Morgan)
Why You Won't Be Able to Retire
Excerpt: "[T]he most recent reading shows that 51% of Americans will not be ready to retire at age 65, up from 44% in 2007. Frighteningly enough, that figure doesn't even take into account health-care or long-term care costs. When those costs are included, the percentage of Americans who aren't ready to retire jumps to 70%!" (Motley Fool)
Second Circuit Limits Impact of Employer's Oral Misrepresentation of Benefits Plan
Excerpt: "Ever since the Second Circuit Court of Appeals held more than 15 years ago in Mullins v. Pfizer, Inc. . . . that a fiduciary's material misrepresentation concerning the availability of future voluntary retirement benefits could be considered a breach of fiduciary duty under [ERISA], the Second Circuit has been a relatively hospitable venue for such claims. Larger companies had the impossible task of policing hundreds of potential manager/human resource personnel 'fiduciaries' to prevent misrepresentations; a misrepresentation, even in a casual conversation, could be an ERISA violation. This all changed on September 30, 2009, when the Second Circuit decided in Ladouceur v. Credit Lyonnais . . . ." (Paul Hastings)
Small Increases in Compensation Costs in September 2009
Excerpt: "Compensation costs and its components -- wages and salaries and benefits -- decelerated for private industry workers for the 12-month period ending September 2009, registering the smallest increases since each series began. The differences were not statistically different from last quarter. Wages and salaries make up about 70 percent of compensation and benefits make up the remaining 30 percent." (Bureau of Labor Statistics, U.S. Department of Labor)
Service Requirements for Joining 401(k) Easing, Survey Shows
Excerpt: "The Hewitt Associates Inc. survey of 300 mid- to large-size employers found that 74% of 401(k) plans do not have a service requirement, up from 61% in a comparable survey Hewitt conducted in 2007." (Business Insurance)
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