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| August 13, 2007 |
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IRS/Treasury Officials' Informal Views on VCP Submissions, Hardship Distributions, Deduction Rules
Excerpt: "The Joint Committee on Employee Benefits (JCEB) of the American Bar Association has posted a report on the May 2007 question-and-answer (Q/A) session between JCEB representatives and officials from the IRS and Treasury Department. Most of the 56 Q/As contained in the report address 401(k)-related issues on a variety of topics, including off-cycle determination letter filings, diversification of employer stock, rollovers, and changes to vesting schedules." (Employee Benefits Institute of America Inc.)
Government Plans May Cause a Social Security Offset Trap for the Unwary!
Excerpt: "[I]f a qualified pension plan under Internal Revenue Code Section 401(a) is also a 'government plan' i.e., a plan adopted by a state or local government, or political subdivision, agency or instrumentality thereof, the existence of a Social Security offset is a real possibility. The Social Security offset is of two varieties: (i) the windfall elimination provision and (ii) the government pension offset provision." (Reish Luftman Reicher & Cohen)
Opinion: Enroll Your Employees in 401(k) for Purely Selfish Reasons
Excerpt: "I didn't create a 401(k) plan just to give my employees an opportunity to benefit from pre-tax savings either. I created it so that I could put away more pre-tax savings. Saving taxes is what penny pinching is all about." (Portland Business Journal via bizjournals.com; free registration required)
Latest 401(k) Benny: Debit Card to Tap Savings
Excerpt: "The ease of plastic is coming to retirement plans. The Reserve, the fund company that pioneered the money-market fund, now offers a product that lets 401(k) participants borrow from their accounts using either a debit card or checks." (Financial Week; free registration required)
Many 401(k) Fees Are Hidden: Employers' Retirement Plans Have Costs That Cut Into Return
Excerpt: "High fees can exact a heavy toll on a 401(k) plan over the course of an employee's career, but workers trying to determine their expenses are at a loss because the fees are not clearly disclosed." (The Dallas Morning News; free registration required)
Retirement Plans' Penalty: Tell Employees to Diversify, or Else
Excerpt: "It's official: beginning October 9, the Department of Labor can hand out civil penalties -- albeit small ones -- to corporations that fail to tell employees they can diversity holdings in company-sponsored retirement plans. That includes notifying workers they can divest the company's own stock." (CFO.com)
Storm Brewing Over Bill Mandating Inclusion of Index Fund As Investment Option in 401(k) Plans
Excerpt: "The index fund requirement, if it becomes law, would be the first time a specific kind of investment option would be mandated for defined contribution plans. The index fund provision is included in 401(k) fee legislation introduced July 26 by Rep. George Miller, D-Calif." (Pensions & Investments)
Retirement Groups Weigh In on Miller Fee Disclosure Proposal
Excerpt: "Legislation meant to demystify 401(k) fees and remove conflicts of interest between mutual fund companies and plan sponsors has prompted concern within retirement circles that more information for plan participants may actually thwart retirement savings efforts and hike administrative costs." (PLANSPONSOR.com; free registration required)
Labor Department Sets $100 a Day Fine for 401(k) Company-Stock Snafu
Excerpt: "Companies that offer their own stock as an investment option in their 401(k) plans have been put on warning by the Department of Labor: If they fail to let workers know when they are eligible to sell their company stock holdings, companies could be fined as much as $100 a day." (Financial Week; free registration required)
House Bill Would Augment 401(k) Plan Fee Disclosure
Excerpt: "From Spencer's Benefits Reports: Rep. George Miller (Cal.) has introduced the 401(k) Fair Disclosure for Retirement Security Act of 2007 (H.R. 3185), which would amend ERISA to provide special reporting and disclosure rules for individual account plans (i.e., 401(k) plans) and to establish in the Department of Labor an Advisory Council on Improving Employer-Employee Retirement Practices." (Wolters Kluwer Law & Business)
American Benefits Council Fast Facts on 401(k) Plans - The Difference Between 401(k) Plans and IRAs (PDF)
1 page. Excerpt: "401(k) mutual fund investors tend to pay lower investment expenses than the industry average. [While] Depending on the investment provider the individual chooses and/or whether they retain a financial professional, mutual funds selected for the IRA are typically offered at a 'retail' price." (American Benefits Council)
Another Question is Answered in the Who's the Employer Q&A Column
I have just moved to a new company and have increased my salary to $175,000. I assume that makes me a highly compensated employee (HCE). Has does that impact 401(k) contributions? (BenefitsLink.com)
Overview: Disclosure of 403(b) Fees and Expenses
Excerpt: "The U.S. Department of Labor has recently proposed modifying the reporting and disclosure requirements for 403(b) plans that are subject to Title I of ERISA. Currently, those plans have extremely limited reporting requirements. While the proposed revisions would not impact government plans (because they are exempt from ERISA), they will include many private sector 403(b) plans, almost all of which hold significant amounts of assets." (Reish Luftman Reicher & Cohen)
Reish: Some Mistakes We See in the 403(b) and 457(b) Investment Process by Sponsors
Excerpt: "In the course of our work for school districts, cities, counties and other governmental entities, we are often called upon to help find a solution for a problem in the 403(b) or 457(b) plan. This gives us a perspective that we believe will be helpful to others in similar situations." (Reish Luftman Reicher & Cohen)
Overview: GASB's New Pension Disclosure Rules (PDF)
2 pages. Excerpt: "Public sector plan sponsors should consider the following issues related to GASB's Statement No. 50: Understanding implications for their plans and any impact this requirement may have on the plan sponsor's ability to borrow money, Understanding the relationship between contribution patterns and funding ratios, and Performing modeling and valuation projections based on alternative cost methods." (The Segal Group, Inc.)
Letter to the Editor: Pension Fund Investments
Excerpt: "'Pensions and the Mortgage Mess' (editorial, Aug. 7) rightly alerts readers to the dangers of pension funds investing in newfangled derivative products or the hedge funds. One also needs to note the dismal future workers face in the large-scale employer abandonment of private pension plans." (David Langer via The New York Times; free registration required)
Retirement Income Industry Association Establishes Principles for Retirement Income Tools
Excerpt: "The RIIA, Boston, has introduced a statement of principles for creating industry standards for the development of retirement income calculators, tools, and illustrations that promote retirement income products and strategies, according to Richard Fullmer, chair of the group's methodologies committee." (The National Underwriter Company; free registration or paid subscription required)
Investing Your Lump Sum at Retirement (PDF)
Excerpt: "This essay is based, in part, on a study by the same authors entitled 'Rational Decumulation,' Wharton Financial Institutions Center Working Paper #06-14, May 2007. That study was co-sponsored by the Wharton Financial Institutions Center and New York Life Insurance Company. The usual disclaimer applies. http://fic.wharton.upenn.edu/fic/papers/06/p0614.htm" (New York Life Insurance Company)
Employees Look at Reality of Retirement Goals 5, 10 Years in Advance
Excerpt: "You're at the top of your game, the peak of your career, and you're making more money than you've ever made. Now is the perfect time to think about quitting. Say what? It's true. The five-to-10-year period before you retire is the time to assess your retirement preparations to see whether they're realistic. And if you're falling shy of your goals, you still have time to make adjustments." (Kiplinger's Money Power via The Baltimore Sun)
Appeals Court Revives ERISA Lawsuit
Excerpt: "Wilmington Shipping Co., Wilmington, N.C., can sue New England Life Insurance Co. under ERISA for breach of fiduciary duty in allegedly mismanaging pension plan investments that caused the plan severe financial loss leading to its insolvency and termination, according to a ruling last week by the U.S. Court of Appeals for the 4th Circuit in Raleigh, N.C." (Pensions & Investments)
The Importance of Social Security as Source of Retirement Income
Excerpt: "Understanding the larger complexities of retirees' sources of income and earnings today may help policymakers make some key decisions about helping Baby Boomers and subsequent generations cope with retirement in the coming decades. As our analysis will show, Social Security's benefits must be protected and strengthened because low-income workers and minorities rely especially on this source of retirement income." (Center for American Progress)
Longevity Annuity Begins Payments Only If You Live a Long Time - Result Is Protection at Lower Cost
Excerpt: "The longevity annuity is an innovative new product, just beginning to gain traction. More formally known as an advanced life deferred annuity, it is also 'an annuity people might actually buy,' as a recent paper by Anthony Webb, Guan Gong and Wei Sun for the Center for Retirement Research at Boston College put it." (The Washington Post; free registration required)
Resolved: Public Corporations Shall Take Us Seriously
Excerpt: "[The TriState Coalition for Responsible Investment, a regional alliance of Roman Catholic investors, and] the Caldwell, N.J., Dominicans, are using the power of their pension funds to pressure companies to take action on issues as varied as genetically modified organisms and health care for employees with H.I.V." (The New York Times; free registration required)
Summary: Initial Guidance on In-Service Distributions under the Pension Protection Act
Excerpt: "In light of the Pension Protection Act's addition of pre-retirement distributions, the IRS has finalized a portion of the 2004 proposed regulations (1.401(a)-1) and has requested comments with respect to the portion of the proposed regulations relating to phased retirement programs." (Gray, Plant, Mooty, Mooty & Bennett, P.A.)
Overview of Clarifications and Modifications to Determination Applications for Retirement Plans
Excerpt: "The recent IRS guidance clarifies the requirements for plan amendments and determination filings that relate to the Pension Protection Act of 2006." (McDermott Will & Emery)
PBGC Disaster Relief Announcement 07-14 in Response to Severe Storms, Tornadoes, Flooding in Kansas
Excerpt: "The Pension Benefit Guaranty Corporation is waiving certain penalties and extending certain deadlines in response to the severe storms, tornadoes and flooding that occurred beginning June 26, 2007, in Kansas." (Pension Benefit Guaranty Corporation)
PBGC Disaster Relief Announcement 07-13 in Response to Severe Storms Tornadoes and Flooding in Iowa
Excerpt: "The Pension Benefit Guaranty Corporation is waiving certain penalties and extending certain deadlines in response to the severe storms, tornadoes and flooding that occurred on May 5, 2007, in Iowa." (Pension Benefit Guaranty Corporation)
Analysis of Revenue Procedures 2007-44 and 2007-49
Excerpt: "In mid-June 2007, the Internal Revenue Service (IRS) released Revenue Procedure 2007-44 (http://www.irs.gov/irb/2007-28_irb/ar12.html), which was printed in the Internal Revenue Bulletin on July 9th. The guidance updates and supersedes Rev. Proc. 2005-66, and in part responds to the public comments that the IRS had received since the issuance in late 2005 of Rev. Proc. 2005-66." (ASPPA via McKay Hochman Co., Inc.)
Status of Defined Contribution Provisions One Year after PPA
Updates and pending guidance are noted in the list. (McKay Hochman Co., Inc.)
Links to Items on Executive Comp, Benefits in General
IRS 2007-2008 Priority Guidance Plan (PDF)
28 pages. Names the regulations the IRS hopes to issue next, including regulations on employee benefit plans (see pages 2-5). (Internal Revenue Service)
As Work Force Ages, Companies Must Adapt with Flexible Policies
Excerpt: "In the next decade or so, the U.S. workplace will be transformed with an explosion of flexible work schedules and a host of technologies that will make work tasks easier. What will cause these changes? A boatload of middle-aged workers. That's right, by 2020, there will be more 55-plus workers grinding away than at any other time in our history. As a result, labor experts foresee a rush by the nation's businesses to accommodate the aging workforce." (MSNBC.com)
PGA Creates a Deferred Compensation Plan Called the FedEx Cup
Excerpt: "The PGA seems to have wandered into the pension universe with the FedEx Cup, a deferred-compensation-plan-slash-golf-championship where participants are publicly awarded allocation points based on how well they finish in golf tournaments. The number of allocation points determines a participant/player's share of the $35 million FedEx Cup deferred compensation award." (Pension Protection Act Blog)
Newly Posted Events
New Era for 403(b) Plans - Webcast
Nationwide on August 16, 2007
presented by Lincoln Financial Group
Newly Posted Press Releases
MetLife's Preferred Dentist Program Now Includes Over 100,000 Participating Dentist Locations
MetLife
Dalbar and Foundation for Fiduciary Studies Agree to Create QDIA Workshop
Foundation for Fiduciary Studies
The Hanover Offers ERISA Bonds Online
Hanover Insurance Group, Inc.
Suit Alleges Firm's Officers Drained 401(k) Funds
Lansing State Journal
401k Advisors Introduces System to Measure Performance of Asset Allocation Portfolios
401k Advisors
Newly Posted or Renewed Job Openings
(Post a Job | View All Jobs |
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Senior Pension Analyst
for Boyce & Associates, Inc.
in AZ
Administrator
for Continental Benefits Group, Inc.
in NJ
Government Relations Specialist (WAS0008O)
for Mercer Human Resource Consulting
in DC
Human Resources Manager (Global Retirement)
for Aecom
in CA
401(K) Recordkeeper - Contract
for BeneTemps, Inc.
in MA
Account Manager - Retirement Plans
for Standard Insurance Company
in PA
Defined Benefits Senior Analyst
for Constantin Control Associates
in NJ
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