Headlines about "Ret plans - design"

Gathered from the web by the editors at BenefitsLink.com.
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)

Private Sector Jobs With the Best Retirement Benefits
Excerpt: "Here's a look which jobs provide the most retirement benefits and how their value has changed since 1998." (U.S. News & World Report)

5 Tips in Using Retirement Planning Tools
Excerpt: "Retirement planning software is available for free on several major investment and retirement websites. But according to a recent analysis sponsored by the Pension Research Council, these programs do an inconsistent and often poor job." (U.S. News & World Report)

[Guidance Overview] Be Careful With Severance Plans; ERISA Reporting and Disclosure Rules Can Apply
Excerpt: "While most employers are well aware of ERISA's application to retirement plans and group health plans, many are surprised to learn that some severance arrangements are considered 'welfare pans' under ERISA and, are therefore, subject to ERISA's reporting and disclosure requirements, as well as the rules for processing and determining claims. Because not every severance arrangement is covered by ERISA, many employers overlook its potential application when they are implementing or designing a severance plan." (Fisher & Phillips)

[Guidance Overview] Federal Government Employees See Benefits Enhanced by Defense Authorization Act
Excerpt: "Workers under the Federal Employees Retirement System (FERS) will get credit for their length of service for unused sick leave. . . . Current employees under the CSRS retirement program will be able to transition into retirement (by working part-time) without lowering their pension payments. . . . Federal civil servants in Alaska, Hawaii, Puerto Rico and various U.S. territories will gradually trade in their tax-free cost of living allowances (worth up to 25 percent) and instead get locality pay based on similar private sector jobs in Anchorage, Honolulu or San Juan." (Washington Times)

Comparing Individual Account Retirement Plans to Defined Benefit Retirement Plans: Neither is Risk-Free
Excerpt: "DB plans have their own set of risks. Because DB plans are 'back-loaded', the final benefit is strongly determined by earnings in the final years of employment. Individuals who are involuntarily separated, who leave voluntarily, or who die before reaching retirement age lose a significant portion of what would have been their benefit had they worked for the company until retirement." (David Wray of the Profit Sharing/401k Council of America)

Solo 401(k) Offers Big Tax Savings For Self-Employed
Excerpt: "The solo 401(k) plan allows you to make a contribution of $16,500 (or $22,000 if age 50 or older) of your self-employment income each year. Plus, you can also make what's called a profit sharing contribution to your plan, which could bring the maximum contribution up to $49,000 for the year." (CBS Money Watch)

[Opinion] The 401(k): Don't Believe the Hype
Excerpt: "If someone made me America's personal-finance dictator, I'd scrap the 401(k). These workplace retirement plans are inequitable, as some companies offer good ones, some bad ones and others none at all. Fees are often too high. And even the better plans often don't provide enough investment options. Instead, I'd like to see the Roth IRA opened up to allow 401(k)-sized contributions - $16,500 a year instead of $5,000. (Or $22,000 and $6,000 for people 50 and over.) And I'd like to see the Roth's income limits lifted, so anyone could have one. . . . But since I'm not running things, the best I can do is suggest ways to make the traditional 401(k) work best." (Community Television Foundation of South Florida Inc.)

IRS Delays Retirement Age Rule for Public Pension Plans
Excerpt: "The Internal Revenue Service has given sponsors of state and local government pension plans a second extension to comply with an IRS rule that defines the 'normal' retirement age for a pension plan. In Notice 2009-86 published Wednesday, the IRS said public plan sponsors generally will have until Jan. 1, 2013, to comply with the rules. The IRS originally set a Jan. 1, 2009, effective date, but last year delayed the effective date to Jan. 1, 2011. The IRS said the latest extension is intended to give the agency and the Treasury Department more time to consider comments made by public plan sponsors on the impact of the regulations." (Business Insurance)

401(k) Plans: Several Factors Can Diminish Retirement Savings, but Automatic Enrollment Shows Promise for Increasing Participation and Savings
Testimony presented by Barbara D. Bovbjerg, director, education, workforce, and income security, before the Senate Special Committee on Aging, October 28, 2009. 22 pages. Excerpt: "Recently, policy makers have focused attention on the ability of 401(k) plans to provide participants with adequate retirement income and the challenges that arise as 401(k) plans become the predominant retirement savings plan for employees. As a result, GAO was asked to report on (1) challenges to building and maintaining of savings in 401(k) plans, and (2) recent measures to improve 401(k) participation and savings levels." (U.S. Government Accountability Office)

Defined Benefit 401(k)s Set to Make Debut
Excerpt: "Small business owners have plenty of options to choose from when it comes to a qualified retirement plan for the company. It can range from a Savings Incentive Match Plan for Employees (SIMPLE) to a Simplified Employee Pension (SEP) to a 401(k). But now there's a new kid on the block. Strategy: Consider the defined benefit 401(k) plan (called the 'DB/401(k)' for short) for small business clients. This hybrid plan combines some of the advantages of a traditional pension plan with a regular 401(k). Why haven't you heard more about the DB/401(k)? The authority for this new plan, which becomes available on Jan. 1, 2010, was buried deep within the massive Pension Protection Act of 2006. But interest in DB/401(k)s is expected to heat up during the coming year." (accountingweb.com)

[Guidance Overview] Chart of 2009 and 2010 Retirement Plan and Other Inflation‑Adjusted Benefits (PDF)
3 pages. Also included are transportation and adoption benefits. (Seyfarth Shaw LLP)

How Do Pension Changes Affect Retirement Preparedness? The Trend to Defined Contribution Plans and the Vulnerability of Retirement Age Population to Stock Market Decline of 2008-2009 (PDF)
55 pages. Excerpt: "This document has two parts. The first part presents background information on trends in pensions drawn from our forthcoming book, Pensions in the Health and Retirement Study. Using data from the Health and Retirement Study (HRS), trends in pensions are described among three cohorts: those aged 51 to 56 in 1992, called the HRS cohort; those 51 to 56 in 1998, called the war baby cohort; and those 51 to 56 in 2004, called the early boomer cohort. The second part is a paper which deals with the likely effects of the stock market decline on those approachingretirement age." (University of Michigan Retirement Research Center)

Automatic Annuitization: New Behavioral Strategies for Expanding Lifetime Income in 401(k)s (PDF)
24 pages. Published July 2009. Excerpt: "Each of the 'automatic' or default strategies outlined here -- including acquiring lifetime income incrementally through the use of employer contributions or embedding adeferred annuity in a QDIA, as well as the Gale-Iwry-John-Walker (2008)automatic trial income proposal -- is designed to draw on experience andinsights from behavioral economics to help replicate, within the 401(k), one of the valued features of the traditional defined benefit pension. That feature is guaranteed lifetime income at group rates (combined, in most cases, with professional investment management)." (The Retirement Security Project)

[Guidance Overview] New IRS Guidance: Application to Retirement Plans (PDF)
4 pages. Excerpt: "Last month, the IRS issued a series of Revenue Rulings and Notices to promote retirement plan savings. This Client Bulletin provides a brief description of this new guidance as well as its potential application to your retirement plans." (Bryan Cave LLP)

What Sponsors and Advisors Should Know About Retirement Plans
Excerpt: "According to a 2007 U.S. Labor Dept. survey, 68% of small business owners feel unprepared for retirement and just 42% maintain a retirement plan. Here are four frequently overlooked tips about retirement plans for plan sponsors and their advisors." (BusinessWeek)

Congress Will Consider Option for Federal Workers to Contribute Unused Leave Toward Retirement Account
Excerpt: "Many federal employees lately have been thinking a lot about saving for retirement. One idea currently being kicked around inside the Beltway is allowing government workers to roll their unused annual leave into their Thrift Savings Plans. President Barack Obama endorsed the idea during his Labor Day radio address in September. 'The rules ought to be written to encourage people to save instead of discouraging them,' he said. . . . Congress currently is considering a separate proposal to allow workers in the Federal Employees Retirement System to count their unused sick leave toward their retirement annuities. That legislation affects only the defined retirement benefit portion of FERS, not the TSP, which operates as a defined contribution plan." (GovernmentExecutive.com)

[Guidance Overview] IRS Regulations on Pension Funding and Benefit Restrictions (PDF)
2 pages. Excerpt: "The Internal Revenue Service and the Treasury Department recently published final funding regulations for single-employer pension plans, which will generally first take effect for the 2010 plan year. Employers can also rely on these regulations for 2008 and 2009, if they choose. The regulations contain a large amount of technical details. This Bulletin gives a high-level summary of key provisions that might be of interest to private sector employers. It notes highlights of the following: The rules for determining minimum required contributions and The rules for how benefit restrictions are administered." (The Segal Group, Inc.)

Re-Envisioning Retirement Security; A Conference
Excerpt: "On October 21, 2009, Retirement USA held a conference, Re-Envisioning Retirement Security, in Washington, D.C. Labor Secretary Hilda Solis delivered the keynote address, and other notable speakers included Richard Trumka, president of the AFL-CIO; Anna Burger, SEIU secretary-treasurer and chair of Change to Win; and Pulitzer Prize-winning journalist David Cay Johnston. Conference participants heard why a new private retirement system is needed; learned about the principles that should underlie a new system; and discussed proposals for a universal, secure, and adequate system for the future. Retirement USA is an initiative that is working to create a system that, along with Social Security, will provide universal, secure, and adequate retirement income to future retirees. [Conference materials are linked from the target page.]" (Retirement USA)

.For Delphi Pensioners, the Union Label Helps
Excerpt: "The Pension Benefit Guaranty Corporation, which insures pension plans, caps the amount of benefits it will pay, using a formula based on age and the type of benefits an employee earned. But in a side arrangement, G.M. is agreeing to pay special supplements, called top-ups, so that Delphi's union retirees get everything they were promised. The automaker is drawing the money from its own pension fund, according to a person familiar with the arrangement. In a sense, the G.M. pension fund is being weakened to help the Delphi union members." (The New York Times; free registration required)

Health Care Organizations Hire Advisers / Change Plan Designs, According to Survey
Excerpt: "The new 403(b) regulations and the recent market volatility, combined with heightened fiduciary concerns, led more health care organization retirement plan sponsors to retain a retirement plan adviser, according to a survey conducted by Diversified Investment Advisors and the American Hospital Association (AHA). A press release said three-quarters of survey respondents reported they now have a plan adviser. In addition, 21% of plan sponsors consolidated the number of vendors used in their 403(b) plans and 20% converted to a single vendor arrangement." (PLANSPONSOR.com; free registration required)

[Guidance Overview] Supreme Court of Montana Upholds Verdict for Retirees
See item #7. Excerpt: "Northwestern Corporation and others appealed a jury verdict rendered against them and in favor of Ammondson and others, which awarded plaintiffs/retirees approximately $17.5 million dollars in compensatory damages and $4 million dollars in punitive damages based on a claim for breach of contract, and the torts of breach of the covenant of good faith and fair dealing, abuse of process and malicious prosecution. Ammondson and the others were all former employees of Montana Power Company for periods ranging from 3 to 40 years. Each retiree left MPC after entering into separate agreements that provided them monthly payments to supplement their regular retirement plans. These agreements were known as 'Top Hat Contracts,' a term derived from the Employee Retirement Income Security Act." (Cypen & Cypen)

[Guidance Overview] Plan Administrator Cannot Consider Motivation for Participants' Divorces When Determining Status of QDRO
Excerpt: "EBIA Comment: Plan administrators generally are not required to analyze whether a divorce order is valid under state domestic relations law. However, according to a prior DOL advisory opinion (also addressing allegedly sham divorces by pilots), if there is credible evidence that the order has been procured through fraud, plan administrators should take appropriate steps to resolve the validity of the order. Those steps will depend on the facts and circumstances, and could include relaying the evidence of fraud to the court or agency that issued the order. But if requested guidance from the court or agency is not received within a reasonable time, the plan administrator must proceed with determining the validity of the order (in other words, the plan administrator may not independently determine that the order is not valid under state law). Because these issues can be complex and fact-specific, plan administrators faced with potentially fraudulent QDROs may wish to seek the advice of experienced legal counsel." (Employee Benefits Institute of America)

[Opinion] Divorce and Pensions: Continental Style
Excerpt: "This is one of the great ERISA stories of all time - its like something out of a Boston Legal episode. I am speaking, of course, of the case, detailed here, of the Continental pilots who, concerned that the retirement plan may go belly up long before they retire, divorced their wives, executed QDROs transferring the retirement benefit to their now ex-spouses, after which the ex-wives took out lump sum payments, as the plan allowed. . . . [L]urking in the background, behind the entertaining fact pattern (entertaining, at least, to ERISA lawyers): the fact that we have a retirement system that is so tenuous that employees feel it is necessary to go to lengths such as this to protect themselves. That is the more significant issue that needs addressing, much more so than whether plan terms or QDRO requirements should be able to be manipulated in such a manner." (Stephen Rosenberg of The McCormack Firm, LLC)

Retirement Savings: Automatic Enrollment Shows Promise for Some Workers, but Proposals to Broaden Retirement Savings for Other Workers Could Face Challenges
Excerpt: "Because of questions about the extent of retirement savings and prospects for a sound retirement for all Americans, GAO was asked to determine (1) what is known about the effect of automatic enrollment policies among the nation's 401(k) plans, and the extent of and future prospect for such policies; and (2) the potential benefits and limitations of automatic IRA proposals and state-assisted retirement savings proposals. To answer these questions, GAO reviewed available reports and data, and interviewed plan sponsors, industry groups, investment professionals, and relevant federal agencies." (U.S. Government Accountability Office)

Same-Sex Couples Face Significant Disadvantages in Retirement, According to Study
Excerpt: "A new study released . . . details the inequalities faced by same-sex couples in employer-sponsored retirement plans. Without legal recognition of their relationships under federal law, the report concludes, lesbians and gay men have less retirement income and are disadvantaged in their ability to pass on savings to their families after their death. The study, 'The Impact of Inequality for Same-Sex Partners inEmployer-Sponsored Retirement Plans,' provides the first detailed demographic portrait of older same-sex couples. It was released by the Williams Institute at the UCLA School of Law with funding support from Merrill Lynch in conjunction with National Save for Retirement Week. 'The findings show that, in particular, female same-sex couples have far lessretirement income than different-sex married couples,' says study author Naomi Goldberg." (Reuters)

[Guidance Overview] COLAs for 2010 and Clarification of Operation of 401(k) Plans and Other Retirement Programs and Fringe Benefits
Excerpt: "The Internal Revenue Service ('IRS') and the Department of Labor ('DOL') recently issued several pieces of guidance of interest to sponsors of retirement plans, with particular focus on profit sharing and 401(k) plans. Overall the new guidance contains cost-of-living adjustments ('COLAs') for 2010 and provides practical approaches to satisfy operational obligations and document requirements. This recent flurry of regulatory guidance will be helpful in meeting deadlines later this year." (Baker & McKenzie LLP)

New Roth Conversion Opportunities: Is Converting a Traditional IRA, 403(b) or 401(k) a Smart Move, Unwise or Much Ado About Nothing?
Excerpt: "While the decision to convert to a Roth account can provide tax savings for some, it is not a wise move for all. Typically the most important consideration is a comparison between the marginal income tax rate in the conversion year and the marginal income tax rate in the withdrawal year if not converted, where this latter tax rate is usually a tax rate from a retirement year. If the future income tax rate is anticipated to be higher, converting to a Roth may be appealing, but if the future income tax rate is expected to be lower, converting may be unwise. When the anticipated tax rates are similar, other factors should be considered, such as required minimum distributions, tax diversification, beneficiary taxation, taxation of Social Security benefits, Medicare Part B premium amounts, and itemized deductions." (TIAA-CREF Institute)

[Guidance Overview] Elective Deferral Limits for 2010 for Employees of Non-Profit and Governmental Employers (PDF)
2 pages. Excerpt: "The chart . . . describes and summarizes these limits based on the plan(s) available and the type of employer." (Prudential Retirement)

In Search of a Fair Pension Formula: Realistic Income-Replacement Ratios in the 'New Normal' Economy
Excerpt: "The ratchet effect. Now that reality has set in, public managers are beginning the painful work of reviewing their retirement-benefits formulas. In some states, like California, their hands are tied with respect to incumbent employees. Perversely, some state laws preclude plan-design changes for incumbents who are viewed as having vested rights to the highest multiplier awarded during their entire career. The great economist John Maynard Keynes presciently called this the 'ratchet effect:' What goes up can never come down. As a result, most public managers must look first at new 'tiers' for pension benefits. This means that new hires will get a lower benefit with a lower formula and often a higher retirement age than the senior incumbents -- who happen to sit on the negotiating committees." (Governing.com)

A Call for Papers: Funding Strategies for Single Employer Defined Benefit Plans under PPA
Excerpt: "The Pension Section Research Team is seeking papers outlining effective funding strategies under PPA. It is not expected that there is a one-size fits all approach. As such, authors are encouraged to share their opinions and perspectives. Primary considerations of interest include what conditions make a given strategy appropriate, when strategies need to be reviewed and/or revised, and how robust a single strategy can be. Papers considering stochastic methodology and issues are also of interest. . . . Please submit an abstract or outline of your proposed paper by December 15, 2009 . . . ." (Society of Actuaries)

Benefits and Finance Departments Collaborate on 401(k)s
Excerpt: "While benefits executives report they are, in general, working well with their counterparts in finance, research points to patterns of divergent perceptions of 401(k) participants' goals and needs, as well as different operational priorities for the plan itself, that could hinder its ultimate success. . . . [A] recent survey did, however, show a basic consensus among benefits and finance professionals that employees are focusing more on long-term 401(k) investment returns than on simply avoiding short-term losses." (Employee Benefit News; free registration required)

How to Improve the Defined Contribution Retirement System
Excerpt: "Everyone agrees that 401(k) plan participants simply are not saving enough, but it's not all because of behavior. 'It is vital to address gaps in the defined contribution system,' says Christine Marcks, president of Prudential Retirement and co-author of a new white paper on ways to enhance retirement security for employees. First, says Marcks, retirement income is not protected from poor market conditions, as demonstrated by the recent market downturn. Market declines reduce the amount of retirement income a retiree can draw from their assets. Near-retirees are also vulnerable, as significant asset losses right before retirement impacts an individual's future retirement income." (Employee Benefit Adviser; free registration required)

Companies Plan to Reinstate 401(k) Matches
Excerpt: "Many businesses are quietly restoring plans to match a portion of their employees' 401(k) contributions. About half of the companies that suspended matches will be restoring them in 2010, says Byron Beebe, U.S. retirement market leader at Hewitt Associates. The majority of employers never expected to make the suspension permanent, says Mr. Beebe. Already, some big companies, including American Express Co. and Motorola Inc., have announced that they would reinstate suspended matches in 2010. Until recently, many employers have offered up to 6% of gross pay. Some companies are considering offering a lower match or using a tiered approach, which takes into account a person's length of employment." (The Wall Street Journal)

Watson Finds Employer Spending on Retirement Benefits Declining
Excerpt: "Employers' investment in workers' retirement benefits, measured by benefit values as a percentage of pay, has dropped consistently over the last decade, according to research by Watson Wyatt. A Watson Wyatt analysis of 183 employers found that the total value of retirement benefits -- DB, DC and retiree health plans -- provided to employees decreased from 7.8% of pay in 2002 to 6.9% of pay in 2008, according to a press release. For the 79 companies that maintained DB plans throughout this period, the value of the overall benefits declined from 9.4% to 8.6% of pay, mostly due to a significant cut in post-retirement health benefits." (PLANSPONSOR.com; free registration required)

Advisers Find Roth IRA Conversion Opportunity a Tough Sell
Excerpt: "[M]any advisers are having a hard time persuading clients to make the conversion and pay taxes now instead of later, given that most of them have taken such a huge hit from the market downturn, advisers said. Starting Jan. 1, people making more than $100,000 annually will be eligible to convert their traditional individual retirement accounts or 401(k) plans with previous employers into Roth IRAs. Currently, only those who make less than that amount a year are eligible to convert. Logically, it would make sense for many of these clients to convert next year, since their portfolios and their taxable income are probably smaller now than they will be years from now . . . ." (Investment News; free registration required)

[Opinion] Do We Still Need ERISA? Only If We Want to Shortchange Savers
Excerpt: "With the technological advancements in money management platforms and payroll systems, one has to wonder whether the costs associated with ERISA compliance could be removed from the retirement plan system. If we could safely remove those costs, it's likely we could help employees accumulate between 20% and 30% more money for retirement. So it's worth considering. Since most employees work for small employers, and the costs of complying with the Employee Retirement Income Security Act of 1974 are high for small plans, most plans are carrying a big compliance drag. While it's difficult to estimate the exact drag on retirement assets, it's probably somewhere in the range of 0.5% to 1% of assets, depending on the size of the plan." (Investment News; free registration required)

Research Project: Post-Retirement Adjustments in Defined Benefit Pensions
Excerpt: "Few private defined benefit pension plans index benefits after a worker begins receiving them. Previous (now dated) research finds that most plans do, nonetheless, make 'voluntary' adjustments, which compensate for roughly 40% of the price increases after retirement. This project will measure actual adjustments experienced by HRS respondents, and relate them to inflation, institutional factors suggested by past research (collective bargaining, government sector), and changes in the financial conditions of the industries providing the benefits. We will examine the implication of these findings for our understanding of the adequacy of pension benefits as individuals age and for between-group differences in pension wealth." (University of Michigan Retirement Research Center)

[Guidance Overview] New Roth IRA Conversion Rules for 2010
Excerpt: "Starting in 2010, all taxpayers will be eligible to convert a regular IRA to a Roth IRA, regardless of their level of adjusted gross income ('AGI'). The option opens new opportunities, but also may require important tax planning. This article will discuss the new rules for conversion of a traditional IRA to a Roth IRA and the issues a taxpayer should consider before converting." (Warner Norcross & Judd LLP)

[Opinion] The Roth IRA: A Savings Vehicle in Which All Earnings, Appreciation, and Interest Can Be Free of Income Tax Forever
Excerpt: "If the rules are met, there's no RMD to be taken, no income tax due on withdrawals, and, while the account assets are included in your estate, withdrawals by your beneficiaries can also be tax-free. It hasn't been available to everyone because of income limits, but it soon will be. I'm speaking about the Roth IRA, of course. Until now, higher-income taxpayers ($100,000 modified adjusted gross income or higher) couldn't convert their savings from a traditional IRA to a Roth. But that's about to change." (The Vanguard Group, Inc.)

[Guidance Overview] IRS Guidance on Contribution of Unused Paid Time Off, Automatic Enrollment and Tax Notices (PDF)
Pages 1-3 of 6 pages. Excerpt: "During his weekly address over this past Labor Day weekend, President Obama announced several new initiatives with the goal of providing American workers additional avenues to save for retirement. The details of those initiatives were subsequently published in several Internal Revenue Service ('IRS') rulings and notices [and are summarized in the target document]." (Trucker Huss)

[Guidance Overview] 2010 Benefit Limits
Excerpt: "The Service has also released health and fringe benefit plan adjustments effective January 1, 2010." (Kilpatrick Stockton LLP)

2010 Qualified Plan Limits Pocket Card (PDF)
1 page. To print and carry in your wallet. (Swerdlin & Company)

Employers May Not Restore Benefits to Pre-Recession Levels
Excerpt: "'Since the downturn began, thousands of employers have cut pay, increased workers' share of health-care costs or reduced the employer contribution to retirement plans,' The Wall Street Journal reports. 'Two-thirds of big companies that cut health-care benefits don't plan to restore them to pre-recession levels, they recently told consulting firm Watson Wyatt. When the firm asked companies that have trimmed retirement benefits when they expect to restore them, fewer than half said they would do so within a year, and 8% said they didn't expect to ever.' The changes are 'reshaping unemployment in America' and 'eroding two pillars of the late-20th-century employment relationship: employer-subsidized retirement benefits and employer-paid health care.'" (Kaiser Family Foundation)

[Guidance Overview] Retirement and Savings Initiatives' Review as of October 2009 (PDF)
3 pages. Excerpt: "In a recent flurry of activity, the Internal Revenue Service has issued a series of notices and revenue rulings designed to promote retirement savings and address technical issues related to certain plan distributions. These initiatives are intended to: (i) encourage employers to add automatic enrollment features to their 401(k) plans; (ii) enable employees to convert unused vacation into additional retirement savings; and (iii) assist both employers and employees to better understand the available options for distributions from tax-favored retirement savings. A brief summary of the various pronouncements is set forth . . . ." (Dechert LLP)

Employee Benefit Cost Pressures Plague CFOs, Survey Finds
Excerpt: "Of all the pricing pressures that senior finance executives are most worried about, employee benefits tops the list by far, according to the results of a Grant Thornton survey released Monday. Fully 77% of the 846 U.S. CFOs and senior comptrollers participating pointed to benefits-cost pressures, including those involving health care and pensions. . . . Perhaps aligning with their concern about benefits pressures, 33% said their companies were cutting average per-employee health-care costs and 26% said their employers would reduce their matches of their employees' 401(k) contributions." (CFO.com)

Frozen or Trimmed Benefits Budgets Spur Interest in Efficiency, Employee Health
Excerpt: "A recent study conducted by Prudential Financial revealed that employee benefits budgets have been frozen or trimmed during these difficult economic times. Fewer than half of benefit plan sponsors said that their benefits budgets increased in 2009, compared with two-thirds of those surveyed in the prior two years, according to Prudential's study, A New Day in Employee Benefits: A Companion Report to the Study of Employee Benefits: 2009 & Beyond." (Wolters Kluwer)

[Opinion] Comments Regarding Possible Issues Under Internal Revenue Code Section 414(x) on Combined Defined Benefit and Employee Cash or Deferred Arrangement Plans
9 pages. Excerpt: "The broad intent of ASPPA comments is to ask for clarification that, in those areas not specifically addressed within IRC ?414(x), current law and regulations will apply to eligible combined plans as separate defined benefit and employee cash or deferred arrangement plans. Key recommendations, which are described in greater detail in the Discussion of Issues section, include . . . ." (American Society of Pension Professionals & Actuaries)

Redefining Defined Contribution Plans to Enhance Retirement Security
18 pages. Excerpt: "Legislators, plan sponsors, and plan participants are questioning the long-term viability of the DC system, and whether DC plans are equipped to serve as the primary retirement savings vehicles for most Americans. These doubts are natural in light of the losses sustained; total assets in DC plans declined by over $1 trillion during 2008. Although the market collapse has increased the urgency of efforts to reform DC plans, it is important to note that the shortcomings of these plans existed long before the current financial crisis, and will persist after an eventual market recovery. Most participants are not saving enough, retirement income is not protected from adverse marketconditions, and participants can exhaust their assets during retirement." (Prudential Retirement)

In Louisiana, Information on Current Public Retirement Plan Differs
Excerpt: "Legislators studying changes to the state employees retirement systems received contradictory information Monday on the cost and effects of closing the pension plan. However, the systems' benefit structure and debt load could be too costly to change at this time anyway, national retirement experts said. . . . The state House and Senate retirement committees heard from the systems and other national groups about defined-contribution plans, which are similar to 401(k)s and require employees to manage their own investments. . . . The meeting stems from a study resolution by House Speaker Jim Tucker, R-Terrytown, which seeks to determine the feasibility of establishing a defined-contribution plan for all new employees hired on and after July 1, 2010, in the four state public retirement systems." (The Advocate)

[Opinion] Alternative to 401(k)s Is a Tax Trap in Disguise
Excerpt: "An employee's 401(k), then, can take credit for one or more of the following: 1) the current plan, 2) previous 401(k) money left at former employers, and 3) roll-over IRAs. According to McKinsey and company, anyone in their 60s has five times more money than would have been their retirement nest-egg of the pre-401(k) era. (a McKinsey statistic.) Why? Because average job tenure has always been seven years, and retirement plans were operated with vesting schedules that denied any benefit at all to those who left before 10 years." (San Jose Mercury News)

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