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| January 26, 2009 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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[Guidance Overview]
Disclosure Regulation Not Approved (PDF)
2 pages. Excerpt: "This is a follow up to our bulletin of January 12 providing an update on the DOL's proposed regulation under ERISA section 408(b)(2) related to the disclosure of service provider compensation and conflicts of interest. Here's what has happened since then . . . ." (Reish Luftman Reicher & Cohen)
[Guidance Overview]
PBGC's Guidance on PPA Provisions Affecting Annual Reporting and Reportable Events Regs
Excerpt: "The PBGC has issued a Technical Update, providing guidance on the applicability of changes made by the Pension Protection Act of 2006 (PPA; P.L. 109-280) as they relate to PBGC's reportable events regulations under ERISA §4043. In general, the Technical Update provides that for purposes of the reportable events regulation, a plan's unfunded vested benefits (UVBs) and the value of its assets and vested benefits are determined for a plan year beginning in 2009 in the same manner as for premiums for the preceding plan year. It also provides options for applying the 'Form 1 extension' for plan years beginning in 2009." (Wolters Kluwer)
MetLife U.S. Pension Risk Behavior Index: A Study of Risk Management Attitudes and Aptitude Among Pension Plan Sponsors (PDF)
44 pages. Excerpt: "The research underlying this study was performed before the market downturn. The downturn presents enormous challenges, and it is not suggested by any means that this study provides easy or full answers to those challenges. The hope is that this study can provide new perspectives on risk management methodologies that can, along with other factors, help in the recovery and in preparing for the future." (MetLife)
DB/DC Public Plans: Choices of Employees (PDF)
13 pages. (Milliman)
Partial Settlement of Employee Stock Ownership Plan Class Action Preliminarily Approved
Excerpt: "The United States District Court for the Northern District of California granted preliminary approval for a partial settlement of $40 million in a class action on behalf of participants in and beneficiaries of the Employee Stock Ownership Plan ('ESOP') of K-M Industries Holding Co., Inc. ('K-M Industries'), the parent company of Kelly-Moore Paint Co., Inc. and Capital Insurance Group. The case, Fernandez et al. v. K-M Industries Holding Co., Inc. et al., Case No. C 06-07339 (CW), is pending in U.S. district court in Oakland, CA." (Lewis, Feinberg, Lee, Renaker & Jackson, P.C.)
The U.S. Economic Crisis and Its Impact on Pensions
Excerpt: "Value collapse of financial assets such as corporate equities and bonds has contributed to pension plan losses of as much as $2 trillion -- roughly 20 percent of their value -- in the United States. As a result, employers that sponsor defined benefit plans are facing unexpected financial obligations imposed by the Pension Protection Act of 2006." (International Pension Lawyer via Faegre & Benson)
2009 ERISA Compliance Calendar for DB/DC/403(b) Plans
Excerpt: "Note: Plan amendments for provisions of the Pension Protection Act of 2006 should be retroactively effective and will not violate anti-cutback rules if made on or before the last day of the plan year beginning on or after January 1, 2009 (or 2011 for governmental plans)." (PLANSPONSOR.com; free registration required)
Florida's State Board of Administration Loses One-Third of the Agency's Assets
Excerpt: "The State Board of Administration is supposed to play it safe. It protects $97.3-billion in pension money for nearly 1-million current and retired teachers, public employees and their families. It invests an additional $25.3-billion for more than 800 school districts and state and local government entities to, among other things, pay police and teachers, buy books and health care for children and help hurricane victims. But in audit after audit over the past eight years, the supposedly low-risk agency was warned again and again about making risky, complex investments, without proper controls." (St. Petersburg Times)
Examining a 401(k) Balance
Excerpt: "As always, though, it is important to put the numbers in perspective. According to the Employee Benefit Research Institute, people with more than $200,000 in their accounts have still managed an average increase of 161 percent in their balance since 2000." (The New York Times; free registration required)
NYC Mayor Pleads with State Legislators on Budget Cuts, Makes Pension Suggestion
Excerpt: "Mr. Bloomberg also discussed measures to control rising pension costs. One new proposal that could save millions of dollars without costing a single job, he said, would place 21,000 employees enrolled in the Board of Education retirement system into a larger system, like the ones used by teachers and civil servants. Another plan, already mentioned by Mr. Paterson, would reduce benefits for newly hired state and local workers by creating a new pension category, and would require employees to work longer and retire later to receive pension benefits." (The New York Times; free registration required)
State Courts Cannot Determine If Domestic Relations Order Is Qualified Under ERISA
Excerpt: "The Minnesota Court of Appeals has overturned a lower court's decision that a domestic relations order (DRO) was a qualified domestic relations order (QDRO), saying the lower court did not have the jurisdiction to make that determination. According to EBIA, the court cited the Department of Labor's view that federal courts have exclusive jurisdiction to determine whether a DRO is a QDRO." (PLANSPONSOR.com; free registration required)
PBGC Programs Designated High-Risk by GAO
Excerpt: "The Government Accountability Office (GAO) has designated the Pension Benefit Guaranty Corporation (PBGC) and the pension insurance programs that it administers as one of the federal government areas that need urgent attention and transformation. In an update of its listing of high-risk areas, first detailed in January 2007, GAO said that although the combined net financial condition of PBGC's single- and multi-employer insurance programs has recently improved, the programs and the agency are designated high risk because of the ongoing threat of losses from the termination of underfunded plans." (PLANSPONSOR.com; free registration required)
Economic Times Experience Affects Investment Behavior
Excerpt: "A new study suggests the economic times we live through have a significant impact on how we invest our money. In their study, Stefan Nagel, Associate Professor of Finance, Stanford Graduate School of Business, and Ulrike Malmendier, from the University of California, Berkeley, found individuals who had experienced high stock market returns throughout their lives were less risk adverse, more likely to participate in the stock market, and more inclined to invest a higher percentage of their wealth in stock." (PLANSPONSOR.com; free registration required)
GM Settles with SEC over Pension Accounting Charges
Excerpt: "General Motors Corp. and the U.S. Securities and Exchange Commission reached a settlement Thursday over charges that the company improperly represented pension estimates in 2002. The Detroit Free Press reports GM was not fined by the SEC, but the auto giant agreed to follow SEC regulations in the future and is subject to a federal injunction under which it would face stiff penalties for any future violations. GM did not admit or deny any wrongdoing." (PLANSPONSOR.com; free registration required)
Wisconsin Lawmaker, Other State Workers Find Leaving Early Results in Benefits at Pre-Stock Market Collapse Level
Excerpt: "Former state Rep. David Travis (D-Waunakee) got some advice from another state worker last month: Consider resigning from the Assembly early, before your term ends on Jan. 5, to avoid having the stock market collapse of 2008 hurt your pension. Retiring early would tie your pension to the more favorable investment earnings for the five-year period 2003-'07. Travis, 60, listened to the tip and quickly - and quietly - resigned from the Legislature, effective Dec. 30. He wasn't alone. State figures show hundreds of other public employees apparently made the same decision, opting to retire at the end of the year so their pensions would be based on 2003-'07 stock market earnings, instead of the five-year period that ended with an abysmal 2008." (Journal Sentinel Inc.)
Illinois State Pension Funds' Liabilities Typify a Looming Problem
Excerpt: "The state's five pension funds are looking pasty. Illinois has $54.4 billion of unfunded pension liabilities, with just 54% of the assets it needs to pay for future promises to its workers; 80% is the proportion experts usually consider adequate. These figures, the most recent available, are from June 2008. Since then, they have probably got worse." (The Economist)
[Opinion]
Group Letter to Congress on Additional Pension Funding Reform (PDF)
7 pages. Excerpt: "The Worker, Retiree, and Employer Recovery Act of 2008 provided needed technical corrections and a modification to the transition rule. However, our organizations remain extremely concerned about the viability of defined benefit pension plans during the current economic situation. Because of the importance of this issue to workers' retirement security and the overall U.S. economy, we strongly urge Congress to adopt follow-up, temporary provisions that allow companies to responsibly address the financial crisis impacting their pension funds." (American Benefits Council)
[Opinion]
Today's Grim Reality Calls for an Expanded Approach by Policy Makers to Retirement Issues
Excerpt: "The shift to 401(k)'s also shifted investing risks and responsibilities from employers to employees, but as long as participants generally made money and recovered losses quickly, the risks seemed reasonable. Now many Americans are inevitably having second thoughts. So far, the cumulative wipe-out of household retirement savings totals about $2 trillion, and no one believes that the downturn is anywhere near over. As a result, participants in 401(k)'s are in greater danger than ever of coming up short in retirement." (The New York Times; free registration required)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]
IRS Updates Maximum Values for Employee Automobile Use
Excerpt: "The IRS has updated for 2009 the maximum allowable value of an employer-provided vehicle for which the cents-per-mile and fleet-average rules may be used in determining the value of an employee's personal use of the vehicle as a taxable fringe benefit." (Journal of Accountancy)
[Guidance Overview]
IRS's Updated Version of Publication 521 (Moving Expenses) for Use in Preparing 2008 Returns
Excerpt: "The IRS has released the latest version of Publication 521 (Moving Expenses), which is for use in preparing 2008 tax returns. This publication explains what types of work-related moving expenses may be deductible on an individual's federal income tax return and who can deduct moving expenses. In addition, the publication details how and when the deduction is reported. Special rules for members of the Armed Forces are also included. For individuals who receive reimbursement from their employers for certain work-related moving expenses, the publication provides a brief overview of different reimbursement methods an employer might use and explains where on an employee's Form W-2 the reimbursements should be reflected. The publication indicates that an employer should tell an employee what method of reimbursement is being used and what records are required." (Employee Benefits Institute of America)
[Guidance Overview]
Section 409A Follow-Up for 2009 - Correction of Errors
Excerpt: "As promised, this blog continues to discuss housekeeping items for ongoing 409A compliance in 2009 -- whether you like it or not. At the very end of 2008, the Internal Revenue Service Notices issued Notice 2008-113, which creates a correction procedure for certain 409A operational failures (and let's face it, there will be failures). Notice 2008-113 expands and clarifies the prior correction program announced in Notice 2007-100." (Michael S. Melbinger via Winston & Strawn LLP)
Chrysler Eliminates Jobs Bank for Now
Excerpt: "Chrysler LLC has eliminated -- at least temporarily -- the controversial 'jobs bank' program that gives union workers most of their pay and benefits while they are laid off, according to a union official. The jobs bank will end on Monday, according to a letter sent to union members by United Auto Workers Vice President General Holiefield." (AP Online via NewsEdge via Human Resource Executive Online)
Newly Posted Events
2009 ECFC Administrators Symposium
in Minnesota on July 29, 2009
presented by Employers Council on Flexible Compensation (ECFC)
28th ECFC Annual Conference
in Virginia on March 4, 2009
presented by Employers Council on Flexible Compensation (ECFC)
401k Hot Topics for Practitioners and Litigators
Nationwide on January 29, 2009
presented by West LegalEdcenter
Compliance Assistance Seminar For Retirement Plan Fiduciaries - Free
in Louisiana on January 28, 2009
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Newly Posted Press Releases
Worst Decline in 30 Years for the Largest U.S. Retirement Funds
Pensions & Investments
Benefit Informatics Providing CNIC Health Solutions with Data Analysis and Reporting Solutions
Benefit Informatics
Northern Trust Universe Tallies the Impact of 2008 Market Collapse on U.S. Institutional Plan Sponsors
Northern Trust
Newly Posted or Renewed Job Openings
(Post a Job | View All Jobs |
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Development Analyst
for Diversified Investment Advisors, Inc.
in MA
Reconciliation and Trade Group Manager
for Professional Capital Services, LLC
in PA
Retirement Plan Administrator
for Sentinel Financial Group
in RI
Pension Administrator
for Altigro Pension Services, Inc.
in NJ
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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