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| December 16, 2008 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
Today's sponsor is ASC & The ASC Institute
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| Now you can create 5500 and other forms more quickly and efficiently than before! |
| ASC's 5500 forms package utilizes the latest .NET technology to make this often burdensome task a snap. You can quickly produce: DOL/IRS Form 5500 and associated schedules; Summary Annual Reports (SAR); Other related forms (such as Form 5558). ASC provides a full line of retirement plan automation products and services. Learn more today! info@asc-net.com |
[Guidance Overview]
Pension Relief Bill Passed by Congress (PDF)
Excerpt: "Congress has passed the Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7327), which President Bush is expected to sign into law shortly. The bill provides long awaited technical corrections to the Pension Protection Act of 2006 (PPA) along with limited defined benefit plan funding relief for plan sponsors due to the economic downturn. This For Your Information describes the provisions of the bill and discusses issues arising from these changes." (Buck Consultants)
[Guidance Overview]
Proposed Nevada Trust Company Regulation Would Increase Retirement Fees Paid by Nevada Workers (PDF)
1 page summary of ASPPA's position on a proposed Nevada regulation that appears to potentially affect recordkeepers and administrators even if they do not hold plan assets or act as fiduciaries. Excerpt: "If the proposed regulation is adopted, Nevada would become the only state to require nonfiduciaries to be licensed as trust companies. No state currently has such an expansive definition of entities subject to trust company licensure. It simply serves no useful purpose to burden retirement plan service providers that are not in any way performing trust company functions with the expense of licensing as a trust company." (American Society of Pension Professionals & Actuaries)
[Guidance Overview]
EBSA Guidance on ERISA Bonding Requirements
Excerpt: "Responding to questions raised by its ERISA plan examiners, the Employee Benefit Security Administration (EBSA) issued clarifying guidance - in easy-to-use question and answer format - on ERISA's fidelity bond requirements. It made clear that third-party service providers must be bonded if they 'handle' funds, that the $1,000,000 maximum limit for plans holding employer securities does not apply where a plan holds the securities merely because of investment in a pooled investment vehicle, and that the bond may use an omnibus clause to name insured plans (e.g., a bond may cover 'all the employee benefit plans' sponsored by the company)." (Deloitte via BenefitsLink.com)
[Guidance Overview]
IRS Rules Transferred Surplus DB Assets Can Not Fund Matching Contributions
Excerpt: "Final Treasury Regulations under IRC § 401(k) & (m) impose new stringent timing requirements on the contribution of matching contributions. Amounts cannot be contributed to fund matching contributions before the employee completes the deferral election or performs the underlying service that relates to the deferral. IRS recently ruled that this timing requirement also applies to the transfer of surplus assets from a terminated defined benefit plan. Transferred surplus assets cannot be used to provide matching contributions if the assets are contributed before the employee completes the deferral election or performs the underlying service." (Deloitte via BenefitsLink.com)
[Guidance Overview]
403(b) Plan Document Delay
Excerpt: "The relief is very welcome, but advisors and employers need to know what it REALLY means. It DOES NOT mean there is a delay in the compliance rules, it merely delays the requirement that a plan document be signed by January 1. When you think about it, the plan document was the most manageable of the new 403(b) risks that the employers were facing. This does not delay the requirement that the employer monitor contribution limits, loans and distributions. It only means that the plan document outlining all of this doesn't have to be in place until the end of next year. It buys time to do that in a sane way." (National Benefit Services, Inc.)
[Guidance Overview]
Another Question is Answered in the 401(k) Plans Q&A Column
I have a 401(k) plan with a 10/1/2007 - 9/30/2008 401(k) limitation and plan year. All of the deferrals for the plan year for one participant were made during 2008. (No other contributions were made.) What is his 415 limit? (BenefitsLink.com)
Special Report on Retirement: Retirement Portfolio Growth - Set a Course for Higher-Yielding Stocks and Bonds
Excerpt: "'People have to ask themselves, 'Is my retirement plan still moving me toward my goal?' Chances are, after what we've been through, the answer is no, ' says Mark Cortazzo, an investment adviser at Macro Consulting of Parsippany, N.J. 'If you were going somewhere and got lost, you would create a new route to get to your destination and forget about your old route. That's what investors have to do.' Adopting a repair strategy now, rather than waiting until the markets have rebounded, could well reduce the sacrifices you will have to make in coming years to compensate for recent market declines." (Barron's)
Congress Waives Minimum Distributions for 2009
Excerpt: "On Thursday, Congress passed a waiver of the minimum distribution rule for 2009, but not for 2008, for employer-provided qualified retirement plans and individual retirement accounts and annuities in H.R. 7327, the Worker, Retiree, and Employer Recovery Act of 2008. President Bush is expected to quickly sign it. The Treasury Department is studying whether to provide relief with regard to 2008 minimum distributions." (WebCPA.com via On Wall Street)
How Much Do Respondents in the Health and Retirement Study Know About Their Tax-Deferred Contribution Plans? A Cross-Cohort Comparison
Excerpt: "We find that, among respondents for whom SSA administrative records are available, those in the younger cohorts were more likely to report accurately that they were included in a tax-deferred plan. Contrary to our expectation, identical proportions (70 percent) of respondents in both the older and the younger cohorts accurately reported whether they made a contribution during the interview year. Furthermore, we find no significant difference between the older and younger cohorts in the degree of reporting accuracy of contribution amounts, with approximately one-half of respondents in each cohort reporting contributions within plus/minus 25 percent of the true value. Both cohorts' self-reported contributions are systematically larger than the true values." (University of Michigan Retirement Research Center)
Many Older Workers Unaware of Retirement Distribution Options
Excerpt: "As workers approach retirement, they must make decisions that will affect their long-term financial futures. One of these is choosing the form of distribution from their defined benefit (DB) plan and defined contribution (DC) account. While there might be several distribution options, for many DB plan participants it comes down to a choice between a life annuity and a lump sum. But how many older workers know enough to make an informed decision? According to research by Watson Wyatt, the answer is 'not many.'" (Watson Wyatt Worldwide)
Fiduciary Responsibility and ETIs: A Conflict?
Excerpt: "The U.S. Department of Labor (DOL) recently issued Interpretive Bulletin 08-1, which warns plan fiduciaries against selecting investments to promote public policy preferences. The notice specifically addresses economically targeted investments (ETIs), which create economic benefits apart from their investment return. The bulletin replaces Interpretive Bulletin 94-1 and clarifies and formalizes the DOL's position." (Watson Wyatt Worldwide)
Emigration and the Age Profile of Retirement Among Immigrants
Excerpt: "This paper analyzes the relationship between immigrants' retirement status and the prevalence of return migration from the host country to their country of origin. We develop a simple theoretical model to illustrate that under reasonable conditions the probability of return migration is maximized at retirement. Reduced-form models of retirement status which control for the rate of return migration are then estimated using unique data on emigration rates matched to individual-level data for Australia. We find that immigrants, particularly immigrant women, are more likely to be retired than are native-born men and women with the same demographic, human capital, and family characteristics." (Social Science Research Network)
The Unintended Consequences of Pension Freezes (PDF)
8 pages. Excerpt: "This brief explores important factors public employers should keep in mind when making decisions about their retirement programs. We conclude that caution should be the watchword for governments that might be tempted to follow the trend in the private sector to abandon defined benefit (DB) pensions in favor of defined contribution (DC) plans." (National Institute on Retirement Security)
The Funding Status of Locally Administered Pension Plans (PDF)
17 pages. Excerpt: "Are big city pensions and other locally administered pension plans in trouble? While state-administered plans are about as well funded as private sector plans, stories circulate about the perils facing Philadelphia, Omaha, Atlanta, and other cities./1/ To answer the question about locally administered pensions, we collected data on 84 plans from 38 states. This brief describes the results of that survey, reporting the funding status of these locally administered plans and the extent to which their sponsors have a funding strategy and are sticking to it." (Center for Retirement Research at Boston College)
Official Staff Summary of H.R. 7327 - the Worker, Retiree, and Employer Recovery Act of 2008 (PDF)
3 pages. The summary has two sections: 1) Technical Corrections Related to Pension Protection Act (PPA) of 2006, and, 2) Pension Provisions relating to the Economic Crisis. (American Benefits Council)
Setting Goals for Your Retirement Plan for the New Year
Excerpt: "The start of a new year is a good time to set goals for improving your participant-directed retirement plan. Here are some ideas . . . ." (PLANSPONSOR.com; free registration required)
Social Media Used to Improve 401(k) Participation Rates
Excerpt: "[At] a Webinar about the power of Web 2.0 in talent management. One of the highlights was how Best Buy increased their 401k participation by 30%. 30%? How the heck did they do that? With a contest. A video contest. They asked employees throughout the retail chain to submit motivating videos that would help increase overall 401k participation. They did just that and the winner is [linked from the target page]." (HR marketeer blog)
Bill to Change Nevada Public Retirement System to 401(k) Type Retirement Plan for Newly Hired Employees Being Drafted
Excerpt: "[Public Employees Retirement System] benefits average $27,692 per year. Both state Sens. Bill Raggio, R-Reno, and Bob Coffin, D-Las Vegas, told Bilyeu that Nevada faces severe budget problems and steps must be taken to reduce state contributions. They questioned whether the system would save on benefit costs by increasing the retirement age to 65. That might well save money, Bilyeu said, but state and federal laws prevent any reductions in benefits -- including increasing the retirement age -- to existing participants in PERS." (Las Vegas Review-Journal)
PBGC Taking a Fresh Look at Securities Lending
Excerpt: "Securities lending programs have long been a way for institutions to add a little income, to help offset custody fees, or pay for some of their staff costs. . . . 'We see now that securities lending contains real risks, and needs to be treated like any other part of an investment policy, and institutions need to know whether they are being compensated for the risks they take,' says [Charles] Millard. The PBGC's program is substantial: at the end of September 2008, PBGC had loaned about $ 3.6 billion of securities, and earned $35 million for the year then ended." (PLANSPONSOR.com; free registration required)
Tennessee County Accused of Delaying Employees' Retirement Contribution Deposits
Excerpt: "A Knox County, Tennessee, employee filed suit against the county government in an attempt to recover lost interest from years of delayed pension fund deposits." (PLANSPONSOR.com; free registration required)
Is There a Plot to Kill the 401(k)?
Excerpt: "When the U.S. House of Representatives Committee on Education and Labor held hearings in October on the financial crisis' impact on workers' retirement security, some people got the message that 401(k)s' days could be numbered . . . . So, look for Congress to take up 401(k) plans again in 2009, and to think about the issues raised in the October hearings -- particularly, how to get more Americans into retirement plans, and how to increase their balances." (PLANSPONSOR.com; free registration required)
[Opinion]
The PLANSPONSOR 2008 Year in Review
Excerpt: "A year ago, I said that 2008 looked 'to be a pivotal year for retirement plans' -- an observation that, in hindsight, may well qualify as the understatement of the decade. Of course, a year ago, that was a commentary on the changes as plans assimilated the impacts of the Pension Protection Act, and the preparations for a new Administration. There's been all that, of course (though the impact of the latter still lies ahead). Still, what has dominated the headlines of late -- and the focus of plan sponsors and participants alike -- was not even on our radar screen last year. Here's where we've been, where we are, and what's ahead . . . ." (PLANSPONSOR.com; free registration required)
University Conference Services (Sponsor)
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| Find Your Way Out of Today’s Plan Management Maze |
| Many plan sponsors are feeling lost in a maze of uncertainty. Volatile financial markets, a battered economy and a changing regulatory environment seem to obscure the pathway to effective plan management. The San Francisco Mid-Sized Retirement & Pension Plan Management Conference, March 10–13, 2009, is the ideal place to explore the issues, hear what plan management experts have to say and gain new ideas you can implement immediately. |
Links to Items on Executive Comp, Benefits in General
[Guidance Overview]
Final Regulations Phase-In Form 5500 Filing Requirements (PDF)
Excerpt: "These regulations do not change the basic filing requirement for plan years that began in 2007 (generally, filing Form 5500 in 2008). Special rules may apply for situations involving short plan years and small plan (fewer than 25 participants) filings. The regulations delay the PPA electronic filing requirement for one year. As a result, electronic Form 5500 filing will first be required for all plans for plan years beginning in 2009 (i.e., filed in 2010)." (Prudential Retirement)
[Guidance Overview]
401(k), Pension, and Welfare Plans: 2008 Year-End Compliance Matters (PDF)
5 pages. Excerpt: "With the year rapidly coming to an end, it is timely for retirement and welfare plan sponsors to consider updating their plans to reflect recent changes in applicable law. This alert provides information about four developments from 2008 that should now be on the radar screen for plan sponsors. (1) Code Section 415; [(2) Proposed Section 125 (Cafeteria Plan) Regulations; (3) Mental Health Parity; (4) The HEART Act.]" (Paul, Hastings, Janofsky & Walker LLP)
[Guidance Overview]
Advance Informational Copies of 2008 Form 5500 and Instructions
Excerpt: "The IRS, PBGC, and Employee Benefits Security Administration (EBSA) have released advance informational copies of the 2008 Form 5500 and instructions. Modifications to note are the new Schedules SB and MB, new information required on Schedule R, and short plan year filing provisions." (Wolters Kluwer)
[Guidance Overview]
Interim Guidance on Reporting, Wage Withholding Requirements for Deferred Compensation
Excerpt: "In Notice 2008-115, the Internal Revenue Service provides interim guidance to employers and payers on their reporting and wage withholding requirements with respect to amounts includible in gross income under IRC Sec. 409A. The notice also provides interim guidance to employers and payers on their reporting requirements with respect to all deferrals of compensation under Sec. 409A, and provides guidance to service providers on their income tax reporting and tax payment requirements with respect to amounts includible in gross income under Sec. 409A." (Wolters Kluwer)
[Guidance Overview]
Further Delays on Tax Reporting for Compliant Deferred Compensation (PDF)
1 page. Excerpt: "On December 10, 2008, the IRS issued Notice 2008-115, which provides that tax reporting for 2008 will not be required for deferrals of compensation under nonqualified deferred compensation arrangements that comply with § 409A of the Internal Revenue Code. The Notice also provides guidance to employers and taxpayers regarding reporting and amounts includable in income in the case of non-compliant deferred compensation subject to § 409A." (Sutherland)
Federal Government Releases FY 2008 Financial Report; Social Security, Medicare Costs Continue to Climb
Excerpt from press release: 'Over the next two decades, Social Security and Medicare expenditures are projected to increase from their current 8 percent of GDP to about 11 percent. Without reform, the cost of these programs is projected to approach 18 percent of GDP by 2080." (Treasury Department; Office of Management and Budget)
Employee Ownership Update for December 15, 2008
NCEO Executive Director Corey Rosen discusses the Tribune Company bankrup.tcy and the Tribune ESOP; employee ownership in LLCs; and applying for the Winning Workplaces awards. (National Center for Employee Ownership)
Newly Posted Events
The SPARK Institute Schedules 403(b) Webcast On Common Remitter Issues
Nationwide on December 19, 2008
presented by SPARK Institute
ERISA Litigation: An Update From The Front Lines
in Massachusetts on January 14, 2009
presented by ASPPA Benefits Council of New England
Newly Posted Press Releases
U.S. Government Releases FY 2008 Financial Report
U.S. Treasury Department
Newly Posted or Renewed Job Openings
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Deputy Regional Director
for U.S. Department of Labor, Employee Benefits Security Administration
in CA
Health and Welfare Benefit Consultant
for Charon Planning
in PA
Retirement & Institutional Sales Officer
for BOK Financial
in KS
Actuary
for Prestigious mid-Long Island New York Firm
in NY
Pension Administrator
for Attiliis & Associates, Ltd.
in VA
Consultant
for Pension Benefits Unlimited, Inc.
in CA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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