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| March 17, 2008 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
Today's sponsor is www.ftwilliam.com
(Click on company name or banner to learn more.)
| Looking for a more efficient way to manage your plans? |
| You can count on ftwilliam.com to provide you with the knowledge and software you need to make the EGTRRA restatement process a breeze. We will be offering periodic webinars to inform you of everything you need to know about EGTRRA restatements. In addition, we've provided new features such as batch document conversion, customer communications, custom cover letters and more!
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[Official Guidance] IRS Requests Comments on Form 1099-R; No Changes Proposed (PDF)
2 pages. Excerpt: "Written comments should be received on or before May 16, 2008 . . . Form 1099-R is used to report distributions from pensions, annuities, profit-sharing or retirement plans, IRAs, and the surrender of insurance contracts. This information is used by the IRS to verify that income has been properly reported by the recipient. . . . There are no changes being made to the form at this time. . . . Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents . . . ." (Internal Revenue Service)
[Guidance Overview] IRS Guidance on Accrual Rules in Defined Benefit Plan Conversions (PDF)
2 pages. Excerpt: "The IRS recently issued Revenue Ruling 2008-7, to provide guidance on the application of the accrual rules when a traditional defined benefit plan converts to a cash balance plan or other hybrid plan formula before 2009, and provides a 'greater of' benefit formula. This type of transition formula provides the greater of a participant's benefit as calculated under the original traditional plan formula or his benefit as calculated under the hybrid plan formula. It is designed to prevent an impermissible reduction of participants' accrued benefits." (Prudential Retirement)
[Guidance Overview] New Federal Regulations for 401(k) and Other Defined Contribution Plans (PDF)
2 pages. (Milliman)
[Guidance Overview] Deadlines Approach for Revised 'Normal Retirement Age' Definition (PDF)
2 pages. (Milliman)
[Guidance Overview] IRS Guidance on PPA Provisions Relating to Distributions, Spousal Annuities, 'Gap Earnings'
Excerpt: "[Notice 2008-30] provides guidance on qualified optional survivor annuities (QOSAs) and on amending retirement plans to require that distribution of excess deferrals includes earnings from the end of the taxable year to the date of distribution (referred to as 'gap-period' earnings)." (Wolters Kluwer)
[Guidance Overview] IRS Issues Guidance on Rollovers to Roth IRAs, Optional Survivor Annuity Rules
Excerpt: "The IRS has issued guidance, in question-and-answer format, on the provisions of the Pension Protection Act of 2006 (PPA, P.L. 109-280) which relate to distributions after December 31, 2007." (Wolters Kluwer)
[Guidance Overview] Deferral Deposit Deadline
Excerpt: "The actual deadline would be the 7th business day following the day that amounts would have been payable to the participant in cash or received by the employer to repay a participant loan (thus incorporating Advisory Opinion 2002-02A)." (McKay Hochman Co., Inc.)
[Guidance Overview] IRS Agents Reprimanded - Conduct Is Found 'Extortionary, Deplorable, and Wrong'
Excerpt: "Practitioners have been grumbling for some time about the often quirky way in which the Internal Revenue Service administers its determination letter program, but it's not often that the Service gets called to the carpet by a federal district court judge for 'extortionary, deplorable, and wrong' behavior." (Baker & Daniels LLP)
How the Income Tax Treatment of Saving and Social Security Benefits May Affect Boomers' Retirement Incomes (PDF)
51 pages. Excerpt: "Income tax provisions affect the buildup of retirement assets during workers' careers and after-tax income following retirement. This paper uses the Urban Institute's DYNASIM model to simulate how potential changes in the tax treatment of retirement saving, Social Security benefits, and income from assets outside retirement accounts may affect boomers' retirement incomes. Changes in the income thresholds for taxing Social Security benefits have the largest impact on middle-income boomers, while changes in contribution limits for retirement saving plans and tax rates on capital gains and dividends have the largest impact on the highest-income boomers." (Urban Institute)
Optimizing the Equity-Bond-Annuity Portfolio in Retirement: The Impact of Uncertain Health Expenses
Excerpt: "This paper derives optimal equity-bond-annuity asset portfolios for households in the retirement phase who, with or without a bequest motive, face stochastic capital market returns, have differential exposures to mortality risk and uncertain uninsured health expenses, and have differential Social Security and defined benefit pension coverage." (Pension Research Council; registration required to download fulltext of paper)
Protecting Frozen Defined Benefit Assets from Heat
Excerpt: "The changes in asset allocation were designed to 'reduce the potential negative impact that equity markets or interest rates might have on the funded status' of IBM's defined-benefit plans, the annual report said. In other words: Lock in the funded status and make sure the company meets its stream of long-term liabilities." (Financial Week; free registration required)
A Retirement Plan Checkup: A Guide to Self-Diagnose Problems
Excerpt: "The [target page provides] a list of important questions for plan sponsors to ask administrators and recordkeepers in order to identify potential problems." (Employee Benefit News; free registration required)
Early Loans, Withdrawals from 401(k) Could Cost You
Excerpt: "'While a loan from your 401(k) plan seems like an obvious choice when you're in need of money, many are unaware that this short-term solution can often create more problems,' . . . . 'Once you terminate employment, most retirement plans require that you repay the loan in full or it will be considered a taxable distribution in which regular income tax applies and, if you are under age 59-1/2, an additional 10 percent penalty applies.'" (The Dallas Morning News)
Pension Burden Grows for States
Excerpt: "The health of public pension systems has declined sharply since 2000. In 2006, the most recent period with comparable data, the average state reported pension assets of $8.10 for every $10 in expected liabilities. Six years earlier, the average state pension fund had more assets than expected liabilities." (AP via The Seattle Times)
IRS Lays Out Simplified Determination Letter Application Process
Excerpt: "The Internal Revenue Service (IRS) has issued Announcement 2008-23, which lays out a new simplified process for obtaining determination letters for pre-approved defined contribution plans." (PLANSPONSOR.com; free registration required)
Chicago Schools Sue State over Pension Funding
Excerpt: "The Chicago Public Schools system is charging it was unconstitutionally required to maintain certain pension funding levels despite a shortfall in state funding." (PLANSPONSOR.com; free registration required)
Sponsors Not Entirely Confident on Plan Fee Knowledge
Excerpt: "Plan sponsors may insist they are comfortable with fee disclosure efforts as they exist now, but a new Chatham Partners study asserted that many of them are racked with under-the-surface doubts about their understanding of the fee issue." (PLANSPONSOR.com; free registration required)
IBM Raises the Bar with New 401(k) Plan
Excerpt: "IBM has been overhauling and enhancing its $30-billion-in-assets 401(k) plan, the largest in the country, for the last several years. On Jan. 1, the company finally flipped the switch on its new and improved plan -- a retirement vehicle for 125,000 workers that many believe could set the standard for a new generation of corporate 401(k) plans. (Pensions & Investments)
Paulson Proposes Institutional Investors Get Better Pension Investment Information
Excerpt: "Pension funds and their money managers should be required to obtain better information about the riskiness of structured credits in which they invest, the President's Working Group on Financial Markets' recommendations say." (Pensions & Investments)
Hewitt Associates Restores More Than $11.2 Million to Settlement Fund for Former Enron Employees Who Lost Retirement Savings
Excerpt: "The settlement resolves a contempt motion filed by Elaine Chao, secretary of labor, in February against Hewitt Associates LLC, a Lincolnshire, Ill.-based human resources firm that was hired by the Enron Creditors Recovery Corp. to allocate settlement funds owed to Enron employees." (Investment News; free registration required)
The Easiest Retirement Calculator Ever
Excerpt: "Knowing how much you'll need in retirement -- and what you need to save now to get there -- puts you in the driver's seat of your financial future. The steps [outlined in the target article] will give you a good general idea . . . ." (The Motley Fool)
West Virginia Pension Proposal Meets Key Tests
Excerpt: "During the 60-day regular session of the Legislature, several proposals regarding pensions for teachers were offered. The governor's office, House of Delegates and state Senate all offered bills, each differing in details. When the session ended last weekend, there was no agreement on what plan to pursue. But on Friday and Saturday, a recommendation that appears to be satisfactory was hammered out by Manchin's office." (The Intelligencer / Wheeling News-Register)
Pension Plans, Retirement Funds Loom Large When Getting Divorce
Excerpt: "Anyone who is getting divorced faces a daunting array of financial decisions, but none is more important than how to divvy up the retirement assets. According to Consumer Reports' Money Adviser, in most states, retirement plans acquired during a marriage -- including pensions, annuities, 401(k)s and IRAs -- are considered marital property and will have to be included in the division of marital assets in the event of divorce." (The Modesto Bee)
Workers Using on-the-Job Training for Retirement Planning
Excerpt: "Since Congress passed a law in 2006 making it easier for employers to provide financial advice, a growing number of companies have started offering tools designed to help workers prepare for life without a paycheck - from advice delivered via computer program to on-site financial advisers." (The Lubbock Avalanche-Journal)
The Retirement Nest Egg and Divorce in Mississippi
Excerpt: "Here is a common situation I see as a Mississippi divorce lawyer. A wife wants to divorce her husband. The husband works for a large employer in Madison, Mississippi and has accumulated a nice retirement account from the employer while married to his spouse. In fact, other than the house, the husband's retirement account is the largest asset this couple owns. The wife wants to know if she is entitled to any of the retirement account. If so, can it be divided." (DivorceHelpNetwork.com)
[Opinion] Blame Actuaries and Politicians for NJ Pension Underfunding
Excerpt: "The actuaries said the plan was overfunded. It had the money to cover all liabilities and then some. Investment gains would cover future benefit accruals. This lasted through the Whitman, DiFrancesco, McGreevey, and Codey administrations. No pension contributions were made even though benefits were enhanced in 2001 by about 9%. Even when Governor Jon Corzine came in, the contributions he was now told were required barely covered a half-year's benefit payouts and there was a supposed $25 billion shortfall." (NJ.com)
[Opinion] Cap Pension Payments to Relieve New Jersey's Budget Burden
Excerpt: "The biggest cause of high taxes in New Jersey is the high cost of government employee pensions. Police officers and paid firemen can retire after 25 years regardless of age. Most others, including public school employees, can retire at age 55." (Asbury Park Press)
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Links to Items on Executive Comp, Benefits in General
[Opinion] What's the Size, Role & Future of TPAs' Marketplace?
Excerpt: "The estimates used in this report are intended for guidance to understand what is really going on in the marketplace...not to be used as 'gospel' or plugged into statistical formulas. Basic differences in vocabulary means every number has a built-in 1,000% potential distortion factor. For example, a family of parents and 10 children are variously described as 1, 2, 3, 4, or 12 'lives', so even simple counting of heads will be distorted." (Frederick D Hunt, Jr. via Society of Professional Benefit Administrators)
[Guidance Overview] Federal Circuit Rejects Blanket SUB Pay FICA Tax Exemption in CSX Corp. v. United States (PDF)
Excerpt: "The lower court had held that all severance payments satisfying the definition of supplemental unemployment benefits ('SUB'), as defined in section 3402(o) of the Internal Revenue Code (the 'Code'), are non-wages and, therefore, not subject to Federal Insurance Contribution Act ('FICA') taxes." (Miller & Chevalier Chartered)
[Guidance Overview] DOL Proposes Full Disclosure of Compensation and Conflicts from Service Providers
Excerpt: "Providers of services to employee benefit plans governed by the Employee Retirement Income Security Act might soon be called upon to tell the truth, the whole truth and nothing but the truth about key business practices, and stand ready to be held accountable for the veracity of their representations." (Investment News; free registration required)
[Guidance Overview] Preparing for the Code section 409A Compliance Deadline
Excerpt: "The extension for amending plans for compliance with Code section 409A and the final regulations thereunder under Notice 2007-86 does not mean that companies or individuals should wait to address these issues until later this year. During the course of an IRS examination, one company received an information and document request from the IRS agent inquiring regarding what the company was doing to comply with Code section 409A." (The Bureau of National Affairs, Inc.)
How to Get Workers to Think and Act Like Owners
Excerpt: "[J]ust establishing an ESOP often isn't enough to get employees to think like owners. Companies that want to create an ownership culture need to make an explicit effort to teach employees about their stake and keep them focused on increasing stock value, says Corey Rosen, executive director of the National Center for Employee Ownership. To that end, they should give workers the freedom to take initiatives to cut costs and boost a company's bottom line. Companies should 'push decision-making down,' he says." (The Wall Street Journal)
The Role of Severance in Today's Employment Environment (PDF)
4 pages. Excerpt: "This 'InsightOut' addresses three issues related to severance benefits: Do some severance programs currently miss their mark? How can employers implement the kind of severance program that would be cost effective for them and equitable for employees? (The three options presented can be used separately or in combination.) What savings might employers achieve by implementing each of the three severance program options presented?" (Buck Consultants)
Newly Posted Events
2008 Web/Telephone Seminar: Coverdell Education Savings Accounts
Nationwide on April 1, 2008
presented by Ascensus
2008 Web/Telephone Seminar: HSA Market Entry
Nationwide on April 1, 2008
presented by Ascensus
2008 Web/Telephone Seminar: Advanced HSAs
Nationwide on April 17, 2008
presented by Ascensus
2008 Web/Telephone Seminar: Basic IRAs
Nationwide on April 3, 2008
presented by Ascensus
2008 Web/Telephone Seminar: HSA Basics
Nationwide on April 10, 2008
presented by Ascensus
2008 Web/Telephone Seminar: IRA Excess Contributions
Nationwide on April 10, 2008
presented by Ascensus
2008 Web/Telephone Seminar: PPA Update
Nationwide on April 22, 2008
presented by Ascensus
2008 Web/Telephone Seminar: Selecting the Best 401(k) Plan Design
Nationwide on April 8, 2008
presented by Ascensus
Avoid a Hidden Liability: Your Cafeteria Plan Needs a Checkup Now
Nationwide on April 1, 2008
presented by Osler, Hoskin & Harcourt LLP
Newly Posted Press Releases
The SPARK Institute Continues Work On 403(b) Plan Issues, Schedules Meeting To Address Technology Issues
SPARK Institute
ING Releases Findings from Retirement Number Study
ING Group
Looking Beneath the Surface: Plan Sponsor Perspectives on Fee Disclosure
Chatham Partners
Newly Posted or Renewed Job Openings
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Defined Contribution Plans New Business Consultant
for New York Life Retirement Plan Services
in MA
Defined Benefit Conversion Project Leader
for New York Life Retirement Plan Services
in MA
Pension Plan Consultant / Administrator
for RSM McGladrey Retirement Resources
in IL
Vice President, Retirement Policy
for The ERISA Industry Committee
in DC
Compliance Testing Administrator
for RSM McGladrey Retirement Resources
in IL
Actuarial Analyst
for RSM McGladrey Retirement Resources
in IL
Senior Actuarial Analyst
for RSM McGladrey Retirement Resources
in IL
Actuarial Consultant
for RSM McGladrey Retirement Resources
in IL
Human Resource Manager
for Sentinel Benefits Group
in MA
Director of Advanced Sales
for The Lafayette Life Insurance Company
in IN
AVP-Special Markets-Southeast
for John Hancock Financial Services
in AL, AR, FL, GA, LA, MS, NC, SC, TN, VA
Manager - Lincoln Rollover Consulting
for Lincoln Financial Group
in PA
401(k) Administrator
for Suburban Philadelphia Pension Consulting Firm
in PA
Product Manager - Retirement
for Mercer
in MA
401(k) Plan Administrator
for IPA Northeast, LLC
in NJ
401(k) Education Specialist
for Administaff
in TX
Pension Administrator- experienced
for Polycomp Administrative Services
in CA
OmniPlus Consultants
for Szymborski Sharpless & Co, PC.
in ANY STATE
Handy Links:
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- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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