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| September 8, 2008 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
Today's sponsor is SunGard
(Click on company name or banner to learn more.)
| EGTRRA Restatement Outsourcing Service |
| Do you have 300 or more defined contribution plans to restate for EGTRRA? Outsource them to us. SunGard’s expert Document Management Services (DMS) staff can work as your "invisible" back office resource to help you through the restatement process. Let us focus on your plan documents, so you can focus on growing your business. Contact Ellen Nasrallah at 800-326-7235, ext. 5968. |
[Official Guidance] September 2008 Pension Funding Segment Rates
Generally for plan years beginning after 2007, the rates in the tables . . . apply for minimum funding requirements under section 430 of the Code. (Internal Revenue Service)
[Official Guidance] IRS 30 Year Treasury Securities Rate Updated for August 2008
30 Year Treasury Securities Rate for August 2008: 4.50% (Internal Revenue Service)
[Official Guidance] IRS Composite Corporate Bond Rate Table Updated for September 2008
Corporate Bond Weighted Average Interest Rate = 6.10 for September 2008 (Internal Revenue Service)
[Guidance Overview] Surprise—You Just Missed a PBGC Reporting Deadline! (PDF)
4 pages. Excerpt: "PBGC reporting requirements can catch you off guard. This article highlights several 'traps for the unwary' so that you won't fall into one of them." (Journal of Pension Benefits via Keightley & Ashner LLP)
[Guidance Overview] IRS Expands Transition Relief To Help Small Pension Plans Comply With New Funding Rules
Excerpt: "[I]n Notice 2008-73, the IRS explains, 'Because technical corrections to PPA have not yet been enacted, many small plans that would have otherwise retained end-of-year valuation dates will adopt beginning-of-year valuation dates for the 2008 plan year. This change will make those plans ineligible for the transition relief set forth in Section III.B of Notice 2008-21. Accordingly, these plans may have difficulty in complying with the timing requirements for certifying the plan's AFTAP." (Wolters Kluwer)
[Guidance Overview] Department of Labor Proposed Regulations on Participant Fee Disclosure (PDF)
4 pages. Excerpt: "The proposed regulations address the types of information that must be disclosed, the timeframes for providing the information and the form in which information may be disclosed." (Transamerica Center for Retirement Studies)
[Guidance Overview] Minimum Funding: What if Technical Corrections Passes? Or Doesn't?
Excerpt: "The House has passed a version of the PPA '2006 technical corrections bill that is similar to, but not identical to, the Senate version passed last December. At this time, practitioners are waiting to see whether the Senate will agree to the different provisions of the House bill or will make additional changes. There are currently two provisions in both versions that could affect 2008 minimum funding requirements for defined benefit plans: (1) asset smoothing; and (2) reflection of plan-related expenses and employee contributions in target normal cost." (Tax Management Inc.)
[Guidance Overview] IRS Updates Qualified Plan Correction Program
Excerpt: "The latest version of a popular IRS program provides expanded correction opportunities and additional streamlined procedures. On August 14, 2008, the IRS issued Rev. Proc. 2008-50 updating the Employee Plans Compliance Resolution System (EPCRS), the comprehensive system of correction programs for sponsors of qualified retirement plans. The components of EPCRS are the Self-Correction Program (SCP), the Voluntary Correction Program (VCP) and the Audit Closing Agreement Program (Audit CAP)." (Tax Management Inc.)
[Guidance Overview] Revenue Ruling 2008-45 Says Company Cannot Transfer Frozen Defined Benefit Pension Plan to Independent Investment Firm
Excerpt: "Treasury and the Internal Revenue Service have issued Revenue Ruling 2008-45 stating that a transfer of sponsorship of a company's frozen tax-qualified pension plan to an unrelated taxpayer, such as an investment firm, violates the exclusive benefit rule of Internal Revenue Code Section 401(a) when the transfer is not connected with a transfer of significant business assets." (Jim Hamilton's World of Securities Regulation)
Defined Benefit Plans Amid Market Volatility (PDF)
31 pages. Excerpt: "A report prepared by CFO Research Services in collaboration with Towers Perrin takes an in-depth look at how senior finance executives view their company's defined benefit pension plans and how they expect to manage them over the next two years." (Towers Perrin)
Personal Retirement Accounts and Saving
Excerpt: "Many countries are including personal retirement accounts (PRAs) as part of their social security systems. PRA systems boost private savings at the macro level by converting a government financial liability into private wealth. At the micro level, however, crowing-out effects on household savings could be offsetting some of this increase in private savings and may lead to inadequate preparedness for retirement." (RAND via Social Science Research Network)
Defined Benefit Pension Is a Huge Contributor to Financial Security in Retirement
Excerpt: "Ernst & Young LLP recently completed research on financial security in retirement. The study examines the retirement savings and other resources for Americans with $50,000 to $100,000 of preretirement income. It considers investment returns, volatility, healthcare expenses, and takes into account the eventual death of a spouse. The study concludes that households with a defined-benefit pension as well as Social Security and savings are far less likely to outlive their savings than households without a defined-benefit pension. [Published August 30, 2008.]" (The Boston Globe)
How Well Do You Know Your 401(k) Plan?
Excerpt: "[T]his month's quiz tests your knowledge of 401(k) retirement-savings programs, the primary savings vehicle for many Americans. Here we quiz you on the latest developments." (The Wall Street Journal)
CalSTRS Adds Public Health Criteria to Investment Policy Statement
Excerpt: "The California State Teachers' Retirement System (CalSTRS) has added a new plank to its investment policy calling for a consideration of public health issues when deciding on future investment moves. CalSTRS' Investment Committee unanimously approved the addition of the public health criterion on the motion of State Treasurer Bill Lockyer. A Lockyer news release said the component was added to CalSTRS' Environment, Social and Governance Policy (ESG), which measurers risk and governs decisions related to CalSTRS investments." (PLANSPONSOR.com; free registration required)
Jacksonville, FL Finance Committee OKs New City Employee Pension Plan
Excerpt: "It has taken nearly a year for the legislation to make its way through City Council, but Tuesday the Council Finance Committee finally approved a bill that paves the way for hundreds of City employees to elect one of two pension options. Ordinance 2007-1136 was first introduced to Council Oct. 23 of last year." (The Daily Record)
Employee Ownership: What Every Professional Service Adviser Ought to Know
Excerpt: "For professionals who advise business leaders – accountants, lawyers, bankers, financial advisors and general business consultants – this represents an opportunity to practice their craft (and generate income) by offering accurate, informed guidance. Conversely, professional advisors who remain poorly informed about employee ownership are likely to lose clients who are looking for direction on this topic. So, without becoming full-fledged experts, what are the basics that professionals should know about employee ownership in order to provide sound guidance and good direction to their clients?" (Beyster Institute)
New Multiple Fund Scheme System Created for Latin America's Colombia
Excerpt: "New legislation will allow Colombia's contributors to its defined contribution retirement system access to more investment options. The new regulation, which will come into effect in 2010, aims to more accurately align risk profiles with returns and to increase the return on investment received by workers." (Watson Wyatt Worldwide)
Pension Accounting Change Needed, But Not As Suggested
Excerpt: "Employers believe changes to current pension accounting standards are necessary, but most are not in favor of the changes proposed in the International Accounting Standards Board's (IASB's) preliminary views paper, according to a recent survey by Watson Wyatt Worldwide." (PLANSPONSOR.com; free registration required)
Protect Your Assets with Retirement Plans and Plan Administrators
Excerpt: "Small-business owners are always looking for smart ways to use their money. One good option is to offer employees a qualified retirement plan, such as a 401(k) or profit-sharing plan, which can provide the business with a significant tax advantage while helping owners and their employees save for retirement." (Jacksonville Business Journal via bizjournals.com; free registration required)
401(k) 'Dippers' Robbing Future to Pay Now
Excerpt: "In its early days, prematurely tapping into the tax-deferred savings plan could only be done for special purchases, such as for a down payment on a home. For financial relief, many consumers would use home-equity loans and other forms of credit, leaving 401(k)s to accumulate money for retirement. But now, with home values falling and credit drying up for many consumers, 401(k) plans are being raided with greater frequency to pay medical bills and credit-card debt, avert home foreclosures and other big-ticket problems, and even pay for day-to-day expenses, such as groceries." (The Atlanta Journal Constitution)
The Pros and Cons of Offering 401(k) Loans to Employees
Excerpt: "[I]ncreasing numbers of employees are beginning to take advantage of 401(k) plans that offer the option of taking funds out of the retirement plan in the form of a loan. When drafting or amending a plan, the employer determines whether to include a loan feature or not. Employers should carefully examine their 401(k) plans and determine whether they want to make loans available to participants." (The Central New York Business Journal)
Confusion Over IBM Pension Hike
Excerpt: "IBM pensioners are frustrated and bewildered by the technology giant's silence months after it announced they might get a raise. . . . 'It's taking us a little longer to determine their specific adjustment because of the complexity of their personal situation,' [IBM spokesman Douglas] Shelton said, adding that the increases became effective Sept. 1. 'Payments to those people for whom we are still calculating adjustments will be retroactive to that date.'" (Hudson Valley Media Group)
[Opinion] Restructure New York State's Pensions
Excerpt: "State Comptroller Tom DiNapoli last week was eager to publicize the latest local payroll contributions to the state's pension system. And why not? The rate will drop next year and in 2010, and the savings to local governments outside of New York City will be $180 million. But there's some grit amid the glitter. And the state has to do much more to reform its famously generous pension structure and revise the way the public invests in the system with the goal of reducing property taxes, particularly upstate." (Rochester Democrat & Chronicle)
Sponsored by: The National Institute of Pension Administrators
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| NIPA’s APA/APR online exam registration deadline is October 15 |
| The National Institute of Pension Administrators’ (NIPA) Accredited Pension Administrator (APA) and Accredited Pension Representative (APR) designation exams will be administered online, beginning with the November 2008 exam testing period.
The new online exam format, the result of a partnership with KRYTERION, makes it easier and more convenient for retirement plan professionals to schedule and complete their APA/APR exams. Visit www.nipa.org to download the November 2008 APA/APR brochure and to register by October 15. |
| (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) |
Links to Items on Executive Comp, Benefits in General
In Singapore, Stock Option Tax Exempted for Employees of Qualifying Start-Ups
Excerpt: "Employees of qualifying start-up companies will enjoy a 75 percent tax exemption on gains from stock options or share ownership plans under the Equity Remuneration Incentive Scheme (ERIS). ERIS will be available between February 16, 2008 and February 15, 2013." (Watson Wyatt Worldwide)
Auditing Your Employee Benefits (PDF)
2 pages. Excerpt: "[W]hile employee benefits are necessary to attract and retain strong employees, they are also one of the fastest growing elements of a company's cost structure. Here are some points you should consider to maximize benefits while reducing costs." (The Ohio State Bar Association via Thompson Hine LLP)
SEC Proposes Roadmap for U.S. Companies to Adopt International Accounting Standards (PDF)
Excerpt: "Significant differences in U.S. GAAP and IFRS accounting now exist, including requirements for employee benefit plans and stock-based compensation programs. The FASB and IASB have worked together over the last several years toward convergence of their accounting standards. In some cases, the Boards assigned major projects, such as changes to the reporting of financial performance, to teams that include members of both staffs. In other situations, the Boards have decided to take on projects such as accounting for employee benefit plans individually, but have closely monitored each other's progress and have, at times, focused on different aspects of the subject matter." (Buck Consultants)
Dutch Companies Seeking to Improve Reward Programs (PDF)
2 pages. Excerpt: "Employers in the Netherlands recognize the need to make improvements in their reward programs and are looking for ways to do so, according to a recent Towers Perrin survey of 60 Dutch companies representing a variety of industries. The survey comes at a time when the Dutch labor market is on the verge of fundamental change. Over the next decade, companies will be faced with more work and a smaller workforce, making it even more important to have effective reward strategies in place to meet ongoing business demands." (Towers Perrin)
DOL to Offer Free Fiduciary Workshops for Small Businesses
Excerpt: "The U.S. Department of Labor's Employment Benefits Security Administration (EBSA) will provide a free workshop this month to help small businesses, employers, employee benefit professionals and others understand their fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA). [More information is online at http://www.dol.gov/ebsa/pdf/FidEdTN.pdf.]" (PLANSPONSOR.com; free registration required)
[Opinion] New Teacher Pay Rule from IRS
Excerpt: "The reason for creating this rule is to allow teachers and other eligible public school employees to annualize their compensation. Typically, this allows a teacher to receive pay in equal amounts from the beginning of a school year (say, September) to the beginning of the next school year (say, the following August). The unwillingness of the IRS to extend the rule to non-teachers, incidentally, serves as an example of the clout of K-12 teachers and otherwise has absolutely no justification." (403(b)-457 Plans Blog)
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Handy Links:
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