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| December 28, 2007 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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| Software for 401(k), Pension and Flex Administration |
| Pick and choose the software modules you need:
DC/401(k) Proposals & Administration - DB Proposals & Administration - Retirement Plan Documents (Prototype and
Volume Submitters) - Government Forms (5500s, 1099-Rs, 5300s) - Cafeteria Plan Administration & Documents - Participant Termination Calculations - FAS 132 Reporting
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(a) New Guidance Documents
Text of Proposed IRS Regs on PPA Funding Rules; Reliance Is Permitted for 2008 Plan Year (PDF)
74 pages. Excerpt: "This document contains proposed regulations providing guidance on the determination of plan assets and benefit liabilities for purposes of the funding requirements that apply to single employer defined benefit plans. . . . For plan years beginning in 2008, plans are permitted to rely on the provisions set forth in these proposed regulations for purposes of satisfying the requirements of section 430." (Internal Revenue Service)
Text of Proposed IRS Regs on Cash Balance and Other Hybrid Defined Benefit Plans (PDF)
22 pages. (Internal Revenue Service)
(b) News
(None today; but see next section for details of the newly issued cash balance and PPA funding regs.)
(c) Summaries of Guidance; Filed Comments
Overview: IRS Proposes Regulations on New PPA Rules for Cash Balance and Other Hybrid Plans
Excerpt: "The proposal leaves several issues open, pending feedback from the public. The IRS has not exempted any opening balance conversions from the prohibition against wear-away, but solicits input on how such an exemption might be structured. In addition, the proposal offers no specific guidance for pension equity plans (PEPs) but asks for comments on various PEP issues. (The IRS has not yet opened the determination letter process for PEPs.)" (Mercer LLC; free registration required)
Overview: Proposed IRS Regulations on Cash Balance and Other Hybrid Defined Benefit Plans
Excerpt: "The proposed regulations generally apply to defined benefit plans under which any or all of a participant's accrued benefit is based on the balance of a hypothetical account maintained for the participant or an accumulated percentage of the participant's final average compensation (applicable defined benefit plans). They describe a safe harbor protecting such plans from liability for age discrimination in the calculation of accumulated benefits. If each individual's accumulated benefits can never be less than that of a similarly situated, younger participant, the safe harbor is satisfied." (CCH Incorporated)
Overview: Automatic Enrollment
Excerpt: "A 401(k) plan may be amended to provide for automatic enrollment at any time. That is, an automatic contribution arrangement (including an eligible automatic contribution arrangement) may be implemented without waiting until the first day of a plan year. On the other hand, any qualified automatic contribution arrangement must be implemented as of the first day of a plan year, and it must remain in effect for at least 12 months. This is because a QACA must comply with the same rules that apply to pre-PPA safe-harbor plans. Prop. IRS Reg. §1.401(k)-3(a)(2) (cross-referencing IRS Reg. §1.401(k)-3(e)(1)). Presumably, this full-plan-year requirement is designed to avoid the complications that would result from having a plan subject to ADP and ACP testing for only a portion of a plan year." (Spencer Fane Britt & Browne LLP)
Automatic Contribution Arrangements: Civil Penalties for Failing to Provide ERISA Notice
Excerpt: "EBIA Comment: The final regulations for qualified default investment alternatives (QDIAs) provide that the notice requirement under ERISA Section 514(e)(3) can be satisfied by satisfying the QDIA notice requirements . . . . We note, however, that ERISA Section 514(e)(3) requires only an annual notice, whereas the DOL in the preamble to these proposed civil penalty regulations seems to take the position that the timing of the QDIA notice also applies to the notice under ERISA Section 514(e)(3) -- that is, in addition to an annual notice, the notice must be furnished at least 30 days before a participant's date of plan eligibility. Given the severity of the penalty for each violation, we look for clarification of this issue in the final regulations." (Employee Benefits Institute of America)
Overview: Pension Regulations Require Quick Changes for Some Defined Benefit Plans
Excerpt: "Guidance recently released by the Internal Revenue Service (IRS) is forcing traditional pension plan sponsors to review their plan provisions and participant communication strategies regarding lump sum distributions and benefit restrictions." (Watson Wyatt Worldwide)
Draft Practice Note: Multiemployer Plan Actuarial Certifications Under the Pension Protection Act of 2006 (PDF)
10 pages. Excerpt: "[This practice note's] primary purpose is to provide guidance to actuaries preparing actuarial certifications for multiemployer pension plans under the Pension Protection Act of 2006 (PPA). This statute applies, for the first time, an actuarial 'best-estimate' standard to projections of the funding-standard account credit balance many years into the future." (American Academy of Actuaries)
Overview: IRS Extends Transition Relief for Diversification Rights of Publicly Traded Employer Stock
Excerpt: "EBIA Comment: The IRS notes that the final regulations under Code Section 401(a)(35) are not expected to be effective before plan years beginning on or after January 1, 2009. Until the regulations become effective (unless otherwise provided in the proposed or final regulations), plans must continue to apply Notice 2006-107, as modified by Notice 2008-7." (Employee Benefits Institute of America)
(d) Trends, Surveys, Research
Most PBGC Retirees Get Full Earned Benefit, Study Shows
Excerpt: "The vast majority (84%) of retirees who receive benefits from the PBGC's pension insurance program are paid the full benefit amount they earned under their retirement plan. This is one of the many findings of the 2006 edition of the Pension Insurance Data Book, an annually updated statistical reference that tracks the experience of the PBGC's insurance programs and the defined benefit pension plans they protect." (Wolters Kluwer Financial Services)
In Can.ada, New Law on Phased Retirement Approved
Excerpt: "Workers who choose to phase in their retirement will be eligible to receive pension payments and continue to accrue benefits under broader budget legislation approved by the Canadian government on December 14, 2007. The new law, effective immediately, could provide a valuable financial tool to help employers compete in a tight labor market and retain skilled workers." (Watson Wyatt Worldwide)
Reluctant Retirement Savers May Be Scared Straight by These Data
Excerpt: "What's the best way to motivate Americans to save, invest and prepare for retirement? Some behavioral finance experts suggest using the carrot. Others suggest using the stick. And still others suggest using a combination of carrot and stick. As for me, I suggest the use of statistics." (MarketWatch)
(e) Policy, Opinion, Advocacy
(None today.)
Newly Posted Events
NIPA Webcast: Common 401(k) Plan Mistakes
Nationwide on February 7, 2008
presented by National Institute of Pension Administrators
Webcast: Common 401(k) Plan Mistakes
Nationwide on February 7, 2008
presented by National Institute of Pension Administrators
Newly Posted Press Releases
Treasury, IRS Issue Proposed Regulations for Cash Balance and Other Hybrid Pension Plans
U.S. Treasury Department and Internal Revenue Service
IRS, Treasury Issue Additional Proposed Regulations on Pension Protection Act Funding Rules
U.S. Treasury Department and Internal Revenue Service
Newly Posted or Renewed Job Openings
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Plan Administrator
for Beneco, Inc.
in AZ
Retirement Services Facilitator
for National Life Group
in
Relius Expert Needed
for Benesystems
in AZ
Defined Contribution Team Manager/401K Plan Administrator
for National Life Group
in VT
Handy Links:
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- Using the Web for Employee Benefits Research (hypertext article)
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