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January 22, 2009

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.


Today's sponsor is ASPPA

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Banner ad for ASPPA

The ASPPA 401(k) SUMMIT, March 22- 24, 2009

Register now and be a part of this unique forum for retirement sales and investment professionals in the 401(k) arena. Hear Arthur Laffer discuss the condition of our new global economy, participate in interactive networking activities and specialized education tracks, and listen to our industry’s leaders discuss where the trends are taking us and how to be prepared. Don’t miss out on the longest running event dedicated solely to the sales and investment segment of our industry, register now.

[Official Guidance]
Text of White House Memo Regarding Status of Pending Regulations (PDF)

2 pages. (The White House via American Benefits Council)


[Guidance Overview]
IRS Guidance to Financial Institutions on Reporting Rules Applicable to RMDs for 2009

Excerpt: "The IRS has issued guidance to financial institutions on the reporting rules applicable to required minimum distributions (RMDs) for 2009, reflecting the Worker, Retiree, and Employer Recovery Act of 2008 (P.L. 110-458). The Act waives any RMDs for 2009 for individual account plans, such as 401(k) plans and 403(b) plans, and for IRAs. This means that most participants and beneficiaries otherwise required to take minimum distributions from these types of plans are not required to withdraw any amount in 2009." (Wolters Kluwer)


[Guidance Overview]
Another Question is Answered in the 401(k) Plans Q&A Column

I am working with a 401(k) plan that was deemed top-heavy at 60.24%. Is there any reason why I cannot work with whole numbers and round down to 60% to avoid top-heavy status? (BenefitsLink.com)


401(k) Plans Are Not the Problem, Defenders Say
Excerpt: "The drop in 401(k) account balances in 2008 was not caused by a fundamental defect in the defined contribution retirement plan approach, but by a catastrophic failure in the operation of capital markets, according to Profit Sharing/401k Council of America (PSCA), a nonprofit association of retirement plan sponsors. 'It is hardly surprising that 401(k) plans did not escape a collapse that has stricken almost every financial system or arrangement in the world,' says David Wray, PSCA president." (Society of Human Resource Management)


401(k) Balances and Changes Due to Market Volatility: Data to January 20, 2009
1 page Chart. Title: Change In Average Account Balances From Jan. 1, 2008 - Jan. 20, 2009 Among 401(k) Participants with Account Balances as of Dec. 31, 2007 (Employee Benefit Research Institute)


Why You'll Work Through Your Retirement
Excerpt: "There is a major social and cultural message in the current economic collapse for the future retirees of America: Forget retirement. That's right. The recession is making clear what we've suspected for a long time. The concept of not working and embracing leisure for the last third of one's life isn't practical for most people. Put it this way: Survey after survey has shown that a majority of aging baby boomers plan on working in retirement. Well, that plan is coming true." (BusinessWeek)


President Obama's Plan for Retirement Savings Reform: Does It Involve Change? (PDF)
3 pages. Excerpt: "The concept of saving for retirement is relatively new in the United States. U.S. Social Security is a mere 75 years old and, with some notable exceptions, most company-sponsored retirement plans are even younger. Yet, as the stock market plunges along with the value of individuals' retirement savings and companies see their defined benefit pension plan contributions skyrocket, many Americans are asking if it's time for the United States to take another look at how we pay for retirement." (Buck Consultants)


Recognizing Fiduciary Status Is the First Step in Satisfying ERISA's Requirements
Excerpt: "As fiduciaries, investment committee members must, either by knowledge and experience or with help from advisers, be capable of prudently selecting the investments. After all, the quality of the employees' retirement benefits -- and of their standard of living after retirement -- rests to a large degree on the committee members capably performing their duties. If the committee members do not have the education and experience to handle the job, then, as one court has said: 'ERISA fiduciaries are held to the standard not of a 'prudent layperson' but of a 'prudent fiduciary with experience dealing with a similar enterprise.' ... If they do not have all of the knowledge and expertise necessary to make a prudent decision, they have a duty to obtain independent advice.'" (PLANSPONSOR.com; free registration required)


Americans Vow for More Retirement Savings in 2009
Excerpt: "Some 59% of those responding to a recent survey said their top New Year's resolution for 2009 was to either start or build up their retirement nest egg. A TD AMERITRADE news release about its December survey said 48% of respondents vowed to pay off debt in the new year, and 47% promised themselves to start or build a general investment portfolio." (PLANSPONSOR.com; free registration required)


White House Chief of Staff's Memo May Put DOL Advice Rule at Risk
Excerpt: "White House Chief of Staff Rahm Emanuel asked all executive branch agencies to put last-minute Bush administration regulations on hold, a move that could delay or lead to a revision of a Department of Labor proposal that would set ground rules for providing investment advice to defined contribution plan participants, ERISA attorneys said. . . . Mr. Emanuel's memo on Tuesday asks agencies to consider putting off the effective date of last-minute regulations for an additional 60 days to give Obama administration executives an opportunity to review the rules." (Pensions & Investments)


[Opinion]
Comments on IRS's Employee Plan's Compliance Unit Compliance Check Program for Pre-Approved Retirement Plan Documents (PDF)

10 pages. Excerpt: "While ASPPA understands the importance of monitoring compliance with Revenue Procedure 2000-20, the depth, timing and tone of the EPCU Program as it is currently structured is unduly burdensome on both pre-approved plan sponsors and adopting employers. The EPCU Program as presently operated could have a chilling effect on the use of pre-approved plan documents by practitioners and their clients, resulting in a significant increase in the use of individually designed documents for EGTRRA plan restatements. This would require a reallocation of IRS resources in a less productive manner." (American Society of Pension Professionals & Actuaries)



DATAIR Employee Benefit Systems, Inc. (Sponsor)

(Click on company name or banner to learn more.)
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Links to Items on Executive Comp, Benefits in General

[Official Guidance]
DOL Advisory Opinion 2009-01A on Use of Certain Bank Collective Investment Funds

Excerpt: "This is in response to your request for an advisory opinion on behalf of AmeriServ Trust and Financial Services Company (ATFSC) concerning the application of section 408(b)(4) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and the parallel provisions under section 4975(d)(4) of the Internal Revenue Code of 1986, as amended (the Code),(1) to the use of deposit accounts of its banking affiliate for investment of cash of certain bank collective investment funds for which it serves as trustee, under the circumstances as described herein." (U.S. Employee Benefits Security Administration)


[Guidance Overview]
Second Circuit Reinstates Age Discrimination Case

Excerpt: "This is an important age discrimination case for the times we are in: Carras v. MGS 782 Lex, Inc. The Second Circuit Civil Rights Blog writes about it here. In [a previous post], I have written about how targeting for layoff those employees who are costing the company more when it comes to health care costs or pension costs is unlawful under ERISA Section 510. The Carras case, however, involved targeting for layoff an older employee who was costing the company more when it came to his salary. (Benefits were not discussed.) Unfortunately, the case involves what is probably a likely scenario in our day: an older highly-paid worker being replaced by a younger less-experienced worker for 'cost-cutting' reasons." (Attorney B. Janell Grenier via Benefitsblog.com)


Treasury Requires CEOs of Banks in TARP to Certify Executive Compensation Curbs
Excerpt: "In one of its final acts under Secretary Henry Paulson, the Treasury Department required the chief executives of banks getting aid under the $700 billion bailout to certify that they are complying with the executive compensation limits of the program. Only the banks' compensation committees have been required to put their names on the line in asserting institutions' compliance with curbs on senior executives' severance pay and other incentives." (Workforce Management; free registration required)


Employee Benefits Developments, January 2009
Excerpt: "A brief look at developments in Employee Benefits law from December [2008] and January 2009, including cases, rulings, and opinions." (Hodgson Russ LLP)


Center for State and Local Government Excellence 2008 Research Highlights on Pensions and Retiree Health Benefits (PDF)
7 pages. Excerpt: "The Center's five research priorities are: Retirement plans and savings; Retiree health care; Financial education for employees; Talent strategies and innovative employment practices; Workforce development." (Center for State and Local Government Excellence)




Newly Posted Events

Understanding and Addressing your 401(k) Fiduciary Duties
Nationwide on January 29, 2009
presented by AFS Financial Group



Newly Posted Press Releases

Great-West Retirement Services® Appoints Regional Sales Directors To Focus On Advisers, Consultants And TPAs
Great-West Retirement Services

Actuaries Laud New President’s Medicare and Social Security Message, Call for Bipartisan Solution
American Academy of Actuaries

Retirement Plan Advisory Group Announces Comprehensive Brand Initiative
Retirement Plan Advisory Group

NewRiver Rolls Out Summary Prospectus Delivery Solution
NewRiver, Inc.



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