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| January 23, 2009 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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White House Executive Order Snares Fee Disclosure, Advice Regs
Excerpt: "Caught up in the order to stop processing unpublished rules are pending DOL proposed directives requiring service providers to disclose fees, compensation, and conflicts of interest to fiduciaries of 401(k) and other benefit plans . . . . DOL also released a proposed fee disclosure regulation for participant-directed individual account plans on July 23 . . . . Both were still reported to be in process at the federal Office of Management and Budget (OMB) -- which has to approve new federal rules -- but had not been published in the Federal Register by Inauguration Day." (PLANSPONSOR.com; free registration required)
Obama Administration to Make Regulatory Review
Excerpt: "Some other benefits-related regulations within the 'not yet effective' window of Emanuel's memo are: DOL Final Regs. on Civil Penalties under ERISA 502(c)(4) . . . PBGC Final Regs. on Allocation of unfunded vested benefits to withdrawing employers from a multiemployer pension plan . . . IRS Proposed Regs. with respect to the Calculation of the amounts includible in income under section 409A(a) and the calculation of the additional taxes under section 409A(a). . . ." (The Farnam Law Firm)
Longevity Could Increase Pension Liability by $250B
Excerpt: "A recent report from Hewitt Associates suggests companies across the world should factor in up to $250 billion more in pension liabilities now that people live longer. According to Reuters, the report noted that longer life spans could add up to 15% to the current estimated pension liabilities of defined benefit pension schemes. European companies, especially in the UK, recognize longevity risk more so than their counterparts in other parts of the world, Hewitt found." (PLANSPONSOR.com; free registration required)
Static vs. Dynamic Investment Policy: Matching Asset Management to Investor Risk Preferences (PDF)
26 pages. Excerpt: "This article outlines several asset management approaches and discusses the importance of aligning Investment Policy with investor risk preferences. If the investment policy ignores this critical 'calibration,' there is little hope that the investor will be able to maintain the policy during recessionary periods. It presents a follow on simulation study to illustrate the range of possible portfolio evolutions under various asset management approaches." (Schultz Collins Lawson Chambers, Inc.)
Pension Benefit Guaranty Corp. Doesn't Automatically Take Over a Pension Plan When a Company Goes Bankrupt
Excerpt: "'First of all, the company needs to decide if it wants to terminate the plan,' he said. 'If it does want to, it has to demonstrate it cannot afford the plan.' If a bankrup.tcy court agrees that the company can't afford the plan, the PBGC will then guarantee individual pensions up to a certain amount." (Newport News, Va., Daily Press)
White House Executive Order Snares Fee Disclosure, Advice Regs
Excerpt: "Caught up in the order to stop processing unpublished rules are pending DOL proposed directives requiring service providers to disclose fees, compensation, and conflicts of interest to fiduciaries of 401(k) and other benefit plans . . . . DOL also released a proposed fee disclosure regulation for participant-directed individual account plans on July 23 . . . . Both were still reported to be in process at the federal Office of Management and Budget (OMB) -- which has to approve new federal rules -- but had not been published in the Federal Register by Inauguration Day." (PLANSPONSOR.com; free registration required)
State Street 401(k) Plan Losses Probed
Excerpt: "State Street Corp.'s $1.3 billion Salary Savings Program 401(k) plan is being examined by two law firms for possible ERISA violations, confirmed . . . officials at the law firms. The two firms -- Pyle Rome Lichten Ehrenberg & Liss-Riordan and Stember Feinstein Doyle & Payne -- are looking into whether plan fiduciaries knew or should have known their statements about the company's financial health were incorrect. The firms said the statements could have contributed to Boston-based State Street shares being overvalued." (Pensions & Investments)
GAO Continues to List PBGC Insurance Programs on 'High Risk' List of Federal Priorities
Highlights are at pp. 91-92 of the 99-page document that includes discussion of other high risk federal priorities. PBGC had made the 1990 list but was removed in 1995; it made the list again in 2003 and has remained there. (U.S. Government Accountability Office)
Life Expectancy and Old Age Savings
Excerpt: "Rich people, women, and healthy people live longer. We document that this heterogeneity in life expectancy is large, and we use an estimated structural model to assess its effect on the elderly's saving. We find that the differences in life expectancy related to observable factors such as income, gender, and health have large effects on savings, and that these factors contribute by similar amounts. We also show that the risk of outliving one's expected lifespan has a large effect on the elderly's saving behavior." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)
Retirement Saving Outside of Your Company 401(k) Plan
Excerpt: "You know that now's a great time to invest and save for your future. But with so many choices, you may have trouble deciding which one will make the most difference in the long run. With employer 401(k) plans, tax-deferred annuities, and more types of accounts with 'IRA' in their names than you know what to do with -- well, it can get intimidating fast. To narrow things down, let's focus on just one decision: picking between a traditional IRA and a Roth IRA. In comparing these two methods for saving for retirement, you'll find a number of differences that could make one a lot more beneficial than the other." (The Motley Fool)
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Links to Items on Executive Comp, Benefits in General
[Official Guidance]
Text of Guidance on Executive Compensation Requirements for Participants in Capital Purchase Program under Troubled Asset Relief Program (PDF)
18 pages. Excerpt: "SUMMARY: This interim final rule . . . provides further guidance on the executive compensation provisions applicable to participants in the Troubled Asset Relief Program (TARP) Capital Purchase Program (CPP). The Department of the Treasury published an interim final rule in 31 CFR Part 30 on October 20, 2008 (October Interim Final Rule) providing guidance on section 111(b) of EESA, which requires financial institutions from which the Treasury is purchasing troubled assets through direct purchases to meet appropriate standards for executive compensation and corporate governance. This interim final rule provides one technical amendment and two clarifications to the October Interim Final Rule and provides reporting and recordkeeping requirements regarding the executive compensation requirements in the October Interim Final Rule and this interim final rule." (American Benefits Council)
[Guidance Overview]
IRS's Interim Guidance on Taxation of Deferred Compensation Maintained by Certain Partnerships and Foreign Corporations (PDF)
6 pages. Excerpt: "This month, the IRS issued Notice 2009-8 as interim guidance on Section 457A of the Internal Revenue Code ('457A'), which imposes immediate taxation, and in certain circumstances a 20-percent penalty plus interest, on deferred compensation arrangements maintained by certain partnerships and foreign corporations. The interim guidance basically elaborates on 457A's statutory scheme, in much the same manner as IRS Notice 2005-1 established guidelines for interpreting Code Section 409A ('409A') after its enactment. Taxpayers may rely on the interim 457A guidance until the IRS issues further guidance, with the IRS promising not to expand 457A's scope other than prospectively after future guidance." (Paul, Hastings, Janofsky & Walker LLP)
[Guidance Overview]
EBSA Guidance on Filing of Registration Statement for Controlled Groups by Administrator of Top-Hat Plan
Excerpt: "EBSA has clarified that a plan covering a 'controlled group of corporations' or a 'group of trades or businesses under common control' can file a single registration statement, satisfying the alternative method of compliance, for participating employers." (Wolters Kluwer)
Google Offers Workers Cheaper Stock Options
Excerpt: "Google Inc. is allowing its employees to swap their stock options for new ones that will give them a better chance to profit from their holdings. The Mountain View-based company outlined the exchange program Thursday in its fourth-quarter earnings report. . . . Google will have to absorb another hit to earnings to pay for the new options being made available to its 20,222 employees. Management expects the accounting charge to be about $460 million, assuming the new exercise price for the options is around $300." (AP via The Washington Post; free registration required)
Experts Call on Congress To Address Entitlement Program Spending and Economy Simultaneously
Excerpt: "Lawmakers should consider legislation to reduce spending on Medicare and other entitlement programs as they consider bills to address the current economic recession, experts said on Wednesday during a Senate Budget Committee hearing, CQ HealthBeat reports. During the hearing, Alice Rivlin, former director of the Congressional Budget Office and the White House Office of Management and Budget, said that lawmakers should act 'on two fronts at once, including a strong anti-recession package and immediate steps to reduce the contributions to future deficits of Social Security and Medicare.'" (Kaiser Family Foundation)
Newly Posted Events
Top Ten COBRA Mistakes: How to Identify, Correct, and Prevent the Big Problems
Nationwide on January 15, 2009
presented by EBIA / Thomson Reuters
Workshop with Sal Tripodi
in California on February 19, 2009
presented by National Institute of Pension Administrators - San Francisco Bay Area Chapter
Newly Posted Press Releases
ERIC Urges Congress and Obama Administration to Approve Meaningful Pension Funding Relief
ERIC (ERISA Industry Committee)
ERIC Urges Congress Not to Extend COBRA Health Coverage Beyond Original Legislative Intent
ERIC (ERISA Industry Committee)
DALBAR Adviser Audit Upgraded for New IRA and 401k Regulation
Dalbar, Inc.
OFG Update: Transparency Regulation Postponed
OneFiduciary Group, LLC
Newly Posted or Renewed Job Openings
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Retirement Plan Administrator
for PlanTech, LLP
in AL
Consulting Plan Actuary
for July Business Services
in TX
Client Service Consultant
for The Standard
in TX
Retirement Plan Administrator
for Sentinel Financial Group
in MA
Handy Links:
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- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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