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| December 22, 2008 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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[Official Guidance]
Text of Treasury Department Letter to Rep. George Miller; No Required Minimum Distribution Relief for 2008 (PDF)
1 page. Excerpt: "Any steps Treasury could take would be substantially more limited than the relief enacted by Congress and could not be made available uniformly to all individuals subject to required minimum distributions. In addition, implementation of such changes would be complicated and confusing for individuals and plan sponsors." (Department of the Treasury)
[Guidance Overview]
Key Provisions of the 'Worker, Retiree, and Employer Recovery Act of 2008' (PDF)
5 pages. Excerpt: "The . . . memorandum describes the key provisions of the Worker, Retiree, and Employee Recovery Act of 2008. This memorandum focuses on the provisions dealing with required minimum distributions, the funding requirements for defined benefit pension plans, and a handful of other provisions likely to be of interest to sponsors and administrators of private pension plans." (Groom Law Group)
[Guidance Overview]
Year-End ERISA Fidelity Bond Reminder
Excerpt: "Since the fidelity bond requirement is high up on the Department of Labor's compliance priorities, it's not a great leap to assume that the Department of Labor monitors this item on Form 5500. But 2007 was then, and this is now. It's not too late to meet the bonding requirements for 2008 . . . ." (National Benefit Services, Inc.)
It Is Time for Income Considerations for 401(k) Plans (PDF)
6 pages. Olivia Mitchel and Jeffrey Brown speak on the income issue. (Pension Research Council)
Answers to Questions Currently Being Asked of the Financial Planning/Services Community
Excerpt: "[K]eep in mind that savings itself should be handled based on age and years until retirement. The most important factors are the post-retirement income and the value of the overall investments in determining how to allocate a portfolio. Diversified investments focusing more on capital preservation and income generation, and less on riskier growth stocks, are usually considered the best bets. Older investors may opt for the safety of money market funds." (WebCPA.com)
Quantitative Research Analyzing Plan Sponsors' Needs and Experiences (PDF)
Study originally published in 2006. 19 pages. Excerpt: "The study revealed that, the higher the average account balance, the less likely a plan is to have a third-party advisor. In addition, among plans with a primary third-party advisor, the current advisor has been in place an average of 6.6 years. Tenure is higher for smaller plans, higher average account balance plans, and among plans relying on Third Party Administrators (TPAs), benefits consultants and Registered Investment Advisors (RIAs)." (MassMutual Retirement Services)
Three Defined Contribution Rules Imperiled Because of Missed Deadline
Excerpt: "Three key defined contribution proposed regulations could be in jeopardy because the Department of Labor failed to win White House approval far enough ahead of the change in presidential administrations, pension industry lobbyists and attorneys said. One regulation would set ground rules for providing investment advice to participants in DC plans. A second would detail the fee information that the plans are supposed to provide to plan participants, while the third would spell out the fee and compensation information that service providers have to provide to DC plan sponsors." (Pensions & Investments)
On Pension Proposals, New York Governor Takes Tactic from the Past
Excerpt: "Under the proposals the governor made last week, nonuniformed state and local government workers hired after the legislation was passed would, generally, pay 3 percent from the day they were hired until the day they retired. They would have to be at least age 62 to draw pension benefits. The governor also offered separate provisions for uniformed New York City workers, who were not covered by the 1976 changes. Uniformed workers -- police officers, firefighters, correction officers and sanitation workers -- hired in the future would have to work for 25 years and be 50 to qualify for full pensions. They can now retire with full pensions after 20 years, regardless of age." (The New York Times; free registration required)
List of Retirement Plan Victims of Madoff Scheme Grows
Excerpt: "The list of retirement plan victims of a huge Ponzi scheme authorities claim was run by Bernard L. Madoff continues to grow with word that the entire profit-sharing plan run by suburban Minneapolis drugmaker Upsher-Smith Laboratories had been placed with Madoff's firm. A news report in the Minneapolis Star Tribune said Joel Green, general counsel and vice president of legal affairs at Upsher-Smith, declined to estimate how much money might be lost and how many past and current Upsher-Smith employees are affected." (PLANSPONSOR.com; free registration required)
Experts Stress Benefits of Information Sharing Best Practices for 403(b)s
Excerpt: "Due to new 403(b) regulations requiring plan monitoring for compliance with distribution and loan rules and withdrawal and contribution limits, plan sponsors have faced the task of deciding on procedures for information sharing to and from plan vendors. In the 401(k) world, since typically plans have a third party administrator or recordkeeper responsible for making sure funds are invested properly and recorded, the TPA or recordkeeper may have required formats for sponsors to send participant contribution, loan repayment, and census data. However, in the 403(b) world, this 'aggregator' role is new, so sponsors may consider enlisting the help of a provider of common remitter services." (PLANSPONSOR.com; free registration required)
Bill Would Allow Retirees to Let Nest Eggs Sit in '09
Excerpt: "Retirees with substantial nest eggs are getting some good news -- but not exactly the news they were hoping for. President Bush is expected soon to sign into law a bill that would suspend for one year a requirement for many retirees to withdraw a minimum amount from their individual retirement accounts and 401(k) plans. The measure is a response to the plunge in the stock market this year. But the reprieve applies only to 2009. It doesn't affect the requirement for distributions in 2008." (Los Angeles Times)
Retirement Vehicles in the Breakdown Lane
Excerpt: "An expert on pensions and retirement plans, [Teresa] Ghilarducci is the author of 'When I'm Sixty-Four: The Plot Against Pensions and The Plan to Save Them.' She calls her proposal 'a mandated savings program' in which 'the federal government subsidizes each account with an annual grant of $600; workers and employers share the cost equal to 5 percent of pay contribution ... .The federal government pays a guaranteed 3 percent rate of return above inflation.' Her aim, by replacing the defined benefit company pensions which are fast disappearing, is to provide income, which combined with Social Security, would amount to 70 percent of pre-retirement earnings. Social Security now provides, on average, just under 40 percent of pre-retirement earnings. Personal savings could further provide retirement income." (Newsday)
Retirement Saving in Wake of Financial Market Volatility (PDF)
16 pages. Excerpt: "This paper summarizes results from two surveys conducted by the Investment Company Institute (ICI) in the past few months. With recent financial market volatility and millions of households personally directing their retirement savings, ICI sought to get a sense of retirement savers' reactions to the current market conditions. ICI took a two-pronged approach: surveying defined contribution (DC) plan recordkeepers regarding participant activity and conducting a household survey asking American households about their thoughts on their retirement accounts and retirement plan reforms suggested in policy circles." (Investment Company Institute)
In Need of Cash, More Companies Cut 401(k) Match
Excerpt: "When the FedEx Corporation slimmed down its pension plan last year, it softened the blow by offering workers enriched 401(k) contributions to make up for the pension benefits some would lose. But last week, with Americans sending fewer parcels and FedEx's revenue growth at a standstill, the company said it would suspend all of its contributions for at least a year. . . . FedEx is not the only one. Eastman Kodak, Motorola, General Motors and Resorts International are among the companies that have cut matching contributions to their plans since September, when the credit markets froze and companies began looking urgently for cash. More companies are expected to suspend their matching contributions in 2009, according to Watson Wyatt, a benefits consulting firm." (The New York Times; free registration required)
International Update, December 2008: Latest Developments in Public and Private Pensions Worldwide (PDF)
3 pages. (U.S. Social Security Administration)
[Opinion]
Don't Throw 401k Baby Out With the Bathwater
Excerpt: "That AARP would even take seriously the notion of replacing stocks with bonds in 401k plans ('401k Plans: Too Risky for Retirement Security?') reflects the woeful state of innumeracy in this country. 401k plans have problems but it's the stingy employer match that's making them ineffective, not the fact that employees invest in stocks. What's more, if employers were forced to use only bonds in defined benefit plans employers would probably terminate the plans-and I wouldn't blame them. Why? Over the long haul stocks outperform bonds by huge margins so employers would have to contribute more to ensure that their employees are on track." (Jane White via 401khelpcenter.com)
[Opinion]
ASPPA Letter to Wall Street Journal on Dec. 14 Article, 'How to Fix 401(k)s' (PDF)
1 page. (American Society of Pension Professionals & Actuaries)
IRS & AIRE, LLC (Sponsor)
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| The Enrolled Retirement Plan Agent Program is now available! |
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]
The Legal Implications of Nontraditional Workweeks
Excerpt: "As employers consider adopting nontraditional schedules, what some of them are not doing is taking a clear-eyed look at the wage and hour ramifications of these arrangements. There are potential pitfalls -- under both federal wage and hour law and the requirements of other jurisdictions -- that demand close attention." (Workforce Management; free registration required)
U.S. Capital Market Update: Plunging Interest Rates Causing Issues for Pension and Postretirement Welfare Plans (PDF)
5 pages. Excerpt: "The stream of bad financial news for pension plan sponsors continues for the fourth straight month. While the downturn in equity values calmed a bit in December, corporate bond yields - which initially spiked upwards with the credit crisis - have fallen dramatically in recent weeks. Before the crisis began, a combination of moderate equity losses and a 40 to 50 basis point increase in long-term high quality corporate bond yields had already caused a reduction in the funded ratio of a typical U.S. defined benefit plan (as measured for U.S. GAAP financial reporting purposes) of approximately 6% through August. Since then, the funded position of U.S. pension plans has worsened each month. By the end of November, the funded ratio for Towers Perrin's benchmark plan (presumed to be invested in a diversified 60/40 portfolio) had declined from 92.7% to 72.9%. The decline was fueled by a crash in equity values . . . ." (Towers Perrin)
More Companies Are Cutting Labor Costs Without Layoffs
Excerpt: "A growing number of employers, hoping to avoid or limit layoffs, are introducing four-day workweeks, unpaid vacations and voluntary or enforced furloughs, along with wage freezes, pension cuts and flexible work schedules. These employers are still cutting labor costs, but hanging onto the labor." (The New York Times; free registration required)
Employers Opening up Communications on Economy Crisis Effects
Excerpt: "Recognizing the significant amount of employee anxiety about the nation's continuing economic crisis, a new survey found most U.S. employers are communicating with their workforce about their financial picture in a variety of ways. Watson Wyatt said its poll found that 77% of respondents have already sent, or are planning to send out, communications on the impact of the financial crisis - and that more than two-thirds (69%) of these employers cited easing employee anxiety as one of the top two goals of their crisis-related internal communication. The second, at 32%, was earning employees' trust." (PLANSPONSOR.com; free registration required)
Chronological Summary of Major Post-ERISA Benefit Legislation (PDF)
17 pages. (Hewitt Associates)
List of Employee Benefits Legislation since ERISA
Chronological [list] of Major Post-ERISA Benefit Legislation (The One-Stop ESOP Blog)
New Jersey Could Be First State to Legalize Marriage for Same-Sex Couples Through Legislative Action
Excerpt: "Civil unions are an inadequate substitute for marriage. Creating a separate, new legal structure to confer some benefits on same-sex couples neither honors American ideals of fairness, nor does it grant true equality. The results are clearly visible in New Jersey, which continues to deny same-sex couples some of the tangible civil benefits that come with marriage." (The New York Times; free registration required)
[Opinion]
Predictions and Forecasts for Human Resource Management
Excerpt: "One thing is certain about the coming year: It probably won't turn out as forecasted. This year certainly didn't! Benefits-related items on the agenda include health reform and issues affecting retirement savings. With money tight, however, proposals will likely be less expansive than once anticipated." (Dallas Salisbury via Human Resource Executive Online)
Newly Posted Events
2009 RMD Relief Imminent!
Nationwide on January 6, 2009
presented by Convergent Retirement Plan Solutions, LLC
Newly Posted Press Releases
ASPPA Applauds Congress for Passing Pension Relief Measures
American Society of Pension Professionals & Actuaries (ASPPA)
Newly Posted or Renewed Job Openings
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Handy Links:
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