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| January 16, 2009 |
| 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]
IRS Publication: Automatic Enrollment 401(k) Plans for Small Businesses (PDF)
16 pages. Excerpt: "This publication constitutes a small entity compliance guide for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996." (U.S. Employee Benefits Security Administration)
[Guidance Overview]
New Pension Relief Law a Mixed Bag for Plan Sponsors (PDF)
3 pages. Excerpt: "[Recent] legislation amending the 2006 Pension Protection Act [provides] some limited relief from the drastic contribution increases that many plan sponsors are facing due to the severe financial market decline. However, the impact of the new law . . . may vary significantly from one plan to the next." (Cheiron, Inc.)
[Guidance Overview]
The Top Ten Things to Do If Your 401(k) Plan Fails Nondiscrimination Testing
Excerpt: "401(k) plan sponsors generally do not relish the annual call from their 401(k) consultant with their plan's nondiscrimination testing results. If your plan regularly passes testing, that's great news. However, if you are not so fortunate or your plan is on the cusp, there are steps you can take to greatly increase your plan's chances of success. This article discusses those choices." (TRI-AD)
[Guidance Overview]
Federal Agencies Expand Form 5500 Rules for 403(b) Plans (PDF)
Excerpt: "[A]lthough the final 403(b) rules issued in July 2007 provided certain 403(b) contracts with special treatment, there is no corresponding provision in the final 5500 rules to exclude assets from the 5500 filing. The assets under those 403(b) contracts must be included on the plan's Form 5500. This publication discusses the structure of the Form 5500 and the various schedules to help ERISA 403(b) plan sponsors become more familiar with standard Form 5500 filing requirements." (Prudential Retirement)
[Guidance Overview]
Annual Limit Increase for Puerto Rico Retirement Plans (PDF)
1 page. Excerpt: "On August 7, 2008, the governor of Puerto Rico signed into law Act 186 to increase annual limits on employee pre-tax deferrals to plans qualified under the Puerto Rico Internal Revenue Code (PRIRC). These developments impact 'dual-qualified plans' (plans that are qualified under both the PRIRC and the United States Internal Revenue Code), as well as plans qualified solely under the PRIRC. These developments do not affect plans that are qualified solely under the United States Internal Revenue Code (U.S.-qualified plans) that have Puerto Rican participants." (Prudential Retirement)
The 2008 Annual Report of the PBGC (PDF)
70 pages. Excerpt: "PBGC's deficit shrank to $11.2 billion at the end of FY 2008. In FY 2006 the deficit was $18.9 billion, and in FY 2007 it was $14.1 billion, so this is indeed a welcome change. This year's improved position is largely the result of three factors: None of the very large plans we insure terminated; the interest rate we use to measure the value of our liabilities went up, causing the present value of these liabilities to go down; and we significantly reduced our liabilities for probable terminations. The Corporation has sufficient liquidity to meet its obligations for a number of years; however, neither of its insurance programs at present has the resources to fully satisfy PBGC's long-term obligations to plan participants." (Pension Benefit Guaranty Corporation)
Limiting Distributions to 4% Annually at Retirement Might Be Much Too Conservative
Excerpt: "[Two financial planners recently] concluded that a 4% withdrawal rate does not carry a [4% to 5%] risk of failure, but rather a 0.7% risk of failure, i.e., running out of money before running out of heartbeat. To ratchet up to a [4% to 5%] risk of failure, the initial withdrawal rate should be 5%, a 25% increase in spending from your retirement assets." (The Two Legged Stool)
403(b) Sponsors Could Do More to Help Employees Save
Excerpt: "While new Internal Revenue Service (IRS) regulations are the primary driver of recent 403(b) plan changes, hopefully sponsors have been considering changes that will also make their programs a better retirement savings vehicle for employees. However, their programs cannot benefit employees that are not participating in them, and PLANSPONSOR's 2009 403(b) Industry Report shows 403(b)s are lagging in employee participation and plan features that incent participation. The Industry Report is based on the responses of 358 403(b) plan sponsors to the 2007 Defined Contribution . . . ." (PLANSPONSOR.com; free registration required)
Automatic Enrollment Information for Small Employers
Excerpt: "The U.S. Department of Labor and the Internal Revenue Service (IRS) released a new publication to help small employers understand automatic enrollment for 401(k) plans. According to a press release, Automatic Enrollment 401(k) Plans for Small Businesses provides a comprehensive overview of the advantages of starting and operating this type of 401(k) arrangement. The publication describes an automatic enrollment 401(k) plan, how to set up the plan, management of the plan, fiduciary responsibilities, and a checklist to ensure compliance with the law." (PLANSPONSOR.com; free registration required)
PBGC Initiatives Focus on the Future
Excerpt: "[As PBGC Executive Director Charles E. F.] Millard prepares to leave office, the PBGC has launched another new initiative, this one focused on the impact of longevity of beneficiaries on the agency's liabilities and how it manages to meet them going forward. 'It is strange: Nobody considers longevity to be a problem, and if it is, then it is one that, personally, everyone hopes to suffer from. But while it is a social good, it is clearly a risk that all pension plans and insurers must address,' he says." (PLANSPONSOR.com; free registration required)
The Problem with Pension Investment Return Assumptions
Excerpt: "That 8 percent annual return on investment you and your pension fund manager were banking on is now looking almost as optimistic as Madoff's magic 12 percent, as deleveraging and deflation bite. With extremely low or negative interest rates and everyone from consumers to banks trying to shed debt and assets at the same time, what seemed like reasonable projections for a mixed portfolio of stocks, bonds and other assets are now substantially too high." (Reuters)
Advisers Could Give 401(k) Participants Investment Advice Under New Rule
Excerpt: "The Office of Management and Budget has cleared a Department of Labor rule that will allow financial advisers affiliated with mutual funds and brokerage firms to provide direct investment advice to 401(k) plan participants." (Investment News; free registration required)
Interview with Don Blandin of Investor Protection Trust on Avoiding Financial Scams
Excerpt: "[S]tatements were coming from Bernie Madoff, not from the institution that was managing the funds. Those are two things you tell investors: Don't make out checks to individuals and don't accept statements coming from people. Those are two red flags right there." (Investment News; free registration required)
Crisis Fuels Interest in 401(k) Guaranteed Products
Excerpt: "As their retirement assets dwindle, anxious investors are looking more closely at guaranteed 401(k) products to provide a measure of safety -- and are now willing to pay the extra cost for the guarantee. . . . Advisers have concerns about the portability and cost of these annuity products in 401(k) plans, but believe the offerings are getting better and will eventually succeed in the marketplace." (Investment News; free registration required)
Fixed-Income Annuity Sales Jump, But Advisers Are Still Skeptical
Excerpt: "Despite the increase in sales, however, advisers are still lukewarm toward the product. Some recommend them as part of a diversified portfolio while others fret about their lack of liquidity and the impact on heirs once the insured person dies." (Investment News; free registration required)
Mercer Sees 'Worrying Increase' in Retirement Plan Withdrawals
Excerpt: "Consulting Mercer giant says more retirement plan participants are requesting withdrawals compared to last year -- requests rose 59% in November and December of 2008, according to a press release from Mercer." (BusinessWeek)
[Opinion]
Is It Safe to Say That the Taxpayers Now Own Corporate America?
Excerpt: "Thinking about the Ayn Rand novel 'Atlas Shrugged,' I found myself wondering if we 401(k) investors are propping up Wall Street. Are we to be the unsung heroes of an economic turnabout? Do American workers and taxpayers effectively own Corporate America? What happens if we decide to shrug?" (Bay Area News Group)
Financial Research Associates (Sponsor)
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| THE 8TH ANNUAL STARS & STRIPES Summit |
| Join us at THE 8TH ANNUAL STARS & STRIPES Summit - The 2009 National Public Employees' Retirement Funds Summit. Packed with Timely Topics on the Current Issues Affecting Public Funds TODAY! Taking place April 26th - 28th, 2009 at The Doral Golf Resort and Spa Miami, Florida |
Links to Items on Executive Comp, Benefits in General
[Guidance Overview]
Special Reporting Requirements Regarding Incentive Stock Options and Employee Stock Purchase Plans
Excerpt: "This Alert will serve as a reminder of certain year-end reporting requirements imposed with respect to incentive stock options and employee stock purchase plans and as a notification of changes in future reporting requirements." (Cooley Godward Kronish LLP)
[Guidance Overview]
Offshore Hedge Funds, and Others, in the Cross-Hairs as IRS Issues Interim Guidance Implementing Code § 457A
Excerpt: "Section 801(a) of the Tax Extenders and Alternative Minimum Tax Relief Act of 20081 added to the Internal Revenue Code (the 'Code') new Section 457A. Code § 457A changes the tax rules that apply to deferred compensation arrangements maintained by certain foreign corporations and domestic and foreign partnerships. On January 9, 2009, the IRS issued Notice 2009-8, which provides interim rules implementing Code § 457A and invites comments on certain aspects of the new law. This client advisory explains the key features of Notice 2009-8." (Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C.)
Employees Refocus on Stabilizing Income and Benefits During Down Economy
Excerpt: "Economic strain and fear of losing their jobs seems to have employees shifting their focus from maximizing career advancement and incentive opportunities to securing basic pay and benefit packages, according to Towers Perrin research." (PLANSPONSOR.com; free registration required)
Tax Breaks Offered for Bicycle Commuters: Companies May Reimburse Employees
Excerpt: "A new law introduced by a congressman from Oregon may soon have commuters reaching for bike helmets instead of car keys. The Bicycle Commuter Act, sponsored by Rep. Earl Blumenauer, allows tax breaks for companies who have employees bicycling to and from work. Companies that opt in for the Bicycle Commuter Act can receive a $20 tax credit each month for every employee biking to work. The credit is meant to offset the costs of bicycle purchase, improvement, repair and storage. Based on how the employer offers the benefits, the employee may bring receipts to be reimbursed or may sign up for monthly payments." (KPTV; Portland, OR)
Employee Ownership Update for January 15, 2009
NCEO Executive Director Corey Rosen discusses an increase in stock drop cases involving 401(k) plans and ESOPs; an analysis of stock option valuation assumptions; the recoverability of equity-based compensation deferred tax assets; NCEO volunteer opportunities; and the Great Game of Business conference. (National Center for Employee Ownership)
Newly Posted Events
Communicating with Employees during Economic/Market Downturn (Economic E-Conference)
Nationwide on February 26, 2009
presented by International Foundation of Employee Benefit Plans
Current Issues in Employee Benefit Plans Seminar
in New York on January 21, 2009
presented by Salibello & Broder LLP
HIPPA And Other Health Benefits Laws Compliance Assistance Seminar - Free
in Florida on January 28, 2009
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Innovative Ways to Save Money Yet Enhance Your 401(k) (Economic E-Conference)
Nationwide on February 25, 2009
presented by International Foundation of Employee Benefit Plans
Introduction to Benefits
in Pennsylvania on February 11, 2009
presented by PEBA --Penjerdel Employee Benefits & Compensation Assn.
Saving Short-Term - Retaining Long-Term (Economic E-Conference)
Nationwide on February 24, 2009
presented by International Foundation of Employee Benefit Plans
The Colorado Economy: Then and Now (with Alison Felix of the Federal Reserve Bank)
in Colorado on February 10, 2009
presented by Western Pension and Benefits Conference-Denver Chapter
Newly Posted Press Releases
PBGC Posts Financial, Performance Gains in 2008 Annual Report; Director Millard Urges Continued Investment Diversification
Pension Benefit Guaranty Corporation (PBGC)
U.S. Labor Department And IRS Unveil Publication To Help Small Employers Understand Automatic Enrollment For 401(k) Plans
U.S. Treasury Department and Internal Revenue Service
Public Sector Employers Unlikely To Adopt Consumer-Driven Health Plans, Instead Turn to Wellness and Disease Management Programs to Control Costs and Improve Quality
International Foundation of Employee Benefit Plans
Convergent Retirement Plan Solutions, LLC, Launches Interactive, Online Retirement Education And Planning Resource For Near Retirees
Convergent Retirement Plan Solutions, LLC
Newly Posted or Renewed Job Openings
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