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| February 2, 2009 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
Today's sponsor is APSCREEN, Employee Locator
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| Benefit Administrators & HR Managers Can Easily Locate Lost Plan Participants |
| Do you need to meet ERISA, GATT, and IRS requirements in locating lost plan participants or past employees?
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In business since 1980, APSCREEN is a full-service CRA. |
[Guidance Overview]
IRS Guidance and Special Options for EGTRRA Determination Letter Cycle D Plans (PDF)
2 pages. Excerpt: "Each year, the IRS publishes a 'Cumulative List of Changes in Plan Qualification Requirements' that must be reflected in the individually-designed plan documents submitted for determination letters in the filing cycle beginning on the next February 1. The 2008 Cumulative List applies to plans submitted in Filing Cycle D. Single employer plans sponsored by employers with employer identification numbers (EINs) ending in 4 or 9 and multiemployer plans must file requests for Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) determination letters in Cycle D. The Cycle D submission period opens on February 1, 2009, and will close on January 31, 2010. In addition to listing the provisions that must be reflected in Cycle D plan documents, the 2008 Cumulative List provides some special options for Cycle D plans." (Prudential Retirement)
[Guidance Overview]
Where Fiduciary Issues Are Headed in 2009: Recent ERISA Litigation
Excerpt: "Class action certifications in the stock-drop cases sometimes take a different turn than those cases challenging fees in 401(k) plans. Thus, class certification was denied in In Re Computer Sciences Corp., Case No. 08-02398 (C.C. Cal. 2008), a lawsuit in which the plaintiff alleged that the plan sponsor imprudently offered company stock as a plan investment option. After noting that the Supreme Court's recent LaRue decision allowed participants to bring ERISA claims on their own behalf, the court, nevertheless, ruled that class certification would be improper, because the proposed class members had an individual remedy." (The Wagner Law Group)
[Guidance Overview]
Twelve Month Filing Period for Cycle D Plans Begins February 1, 2009 (PDF)
3 pages. Excerpt: "Under the IRS' staggered system for obtaining determination letters on qualified plans, individually designed plans have been assigned to one of five filing cycles, Cycle D, in which amendments related to the Pension Protection Act of 2006 will be addressed for the first time, begins on February 1, 2009 and ends on January 31, 2010." (Buck Consultants)
[Guidance Overview]
QDRO Awarding Pension Benefits to Domestic Partner in 'Quasi-Marital Relationship' Upheld on Appeal
Excerpt: "EBIA Comment: The Ninth Circuit looked to state law to define what constitutes 'marital property rights' for QDRO purposes. In so doing, the court rejected the plan's claim that 'marital property rights' for this couple could not exist because they were not married within the meaning of the federal Defense of Marriage Act (DOMA). While the court's conclusion in this case -- in the context of opposite-sex partners -- is relatively straightforward (as the court noted: 'DOMA's legislative history reflects only Congress's concern for same-sex marriages'), it begs the question of how this case might have been decided if the partners were same-sex partners and the DOMA argument not so easily dismissed." (Employee Benefits Institute of America)
[Guidance Overview]
Plan Administrator Properly Followed Plan Documents and Paid Ex-Spouse Despite Divorce Decree Waiver
Excerpt: "EBIA Comment: In relying on the plan document rule, while also addressing the anti-alienation arguments, the Court resolved prior splits among lower courts on both of these issues. This decision brings welcome uniformity to plan administrators who have been faced with uncertainty about whether to honor divorce decree waivers, allowing them now to rely on plan documents to determine beneficiaries. The Court acknowledged that less certain rules would force plan administrators to review 'a multitude' of external documents purporting to waive benefits and face increased risk of being drawn into costly litigation." (Employee Benefits Institute of America)
[Guidance Overview]
Towers Perrin U.S. Legislative Tracking Charts -- Retirement -- Updated January 29, 2009 (PDF)
3 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)
Advisers Still Headed for More Fee Transparency
Excerpt: "Fee disclosure regulations did not make it into the Federal Register before the new administration stepped in, but that is not necessarily a signal for advisers to relax about fee disclosure. In general, the industry is moving toward being more disclosure-oriented, said Roberta Ufford, principal at Groom Law Group, speaking with PLANADVISER.com. One of the drivers behind the move toward transparency is a fear of litigation from participants, she said. In general, the regulatory environment is shifting toward disclosure. 'If you've been waiting for 408(b)(2) regulations to update your disclosures, stop waiting,' Ufford said . . . . It's still a good time to re-examine your fee disclosure." (planadvisor)
Managing Retirement Portfolio Withdrawals in Turbulent Times: Precautionary Savings, Investment Reserves and Mid-Term Adjustments
Excerpt: "This paper provides insights into several issues: Does a 35 percent drop in a retirement portfolio's value translate into a 35 percent drop in expected future retirement income? How should 'rainy day' funds be designed and implemented? What moderate course corrections can retirees take now in order to avoid draconian corrections at a later date?" (Joshua Tree Enterprises, LLC)
Companies That Have Changed or Temporarily Suspended 401(k) Matching Contributions
Excerpt: "[The target page provides] a list of employers that have announced plans to change or stop making matching contributions to their employees' 401(k) plan accounts since June 2008. For details on each company's decision, click the employer's name to see the company's press release or news story announcing the change." (Pension Rights Center)
Court Hears Arguments on PBGC Plan Termination Fees
Excerpt: "U.S. federal judges on Thursday heard arguments whether companies that emerge from bankrup.tcy must pay termination fees to the Pension Benefit Guaranty Corporation (PBGC). According to Reuters, the issue in the case is whether a rule passed in 2005 requiring employers who terminate their plans in bankrup.tcy to pay the PBGC $1,250 per participant per year for three years . . . constitutes a claim that can be discharged in bankrup.tcy." (PLANSPONSOR.com; free registration required)
Welfare and Generational Equity in Sustainable Unfunded Pension Systems
Excerpt: "We evaluate several actual and hypothetical sustainable PAYGO pension structures, including: (1) versions of the US Social Security system with annual adjustments of taxes or benefits to maintain fiscal balance; (2) Sweden's Notional Defined Contribution system and several variants developed to improve fiscal stability; and (3) the German system, which also includes annual adjustments to maintain fiscal balance. For each system, we present descriptive measures of uncertainty in representative outcomes for a typical generation and across generations. We then estimate expected utility for generations based on simplifying assumptions and incorporate these expected utility calculations in an overall social welfare measure. Using a horizontal equity index, we also compare the different systems' performance in terms of how neighboring generations are treated." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)
Strengthening Social Security for Vulnerable Groups (PDF)
68 pages. Excerpt: "By exposing the profound vulnerability of rank and file Americans to the risks of a market economy, the financial crisis points to the need to address the adequacy of Social Security to help retirees and families offset losses elsewhere. A window exists to shape public policy to strengthen Social Security to better meet the needs of elders, people with disabilities, and working families in the 21st century. This project identifies ways to enhance economic security for American workers by improving Social Security benefits for vulnerable groups." (National Academy of Social Insurance)
IRA Appendix: Additional Data on Ownership of IRAs in U.S. Households, 2008 (PDF)
20 pages. Excerpt: "The January 2009 issue of Fundamentals covers U.S. households' Individual Retirement Account (IRA) ownership in 2008. The report highlights data collected by the Investment Company Institute in a recent survey of households owning IRAs. This appendix provides supplementary tables with additional detail for the January 2009 Fundamentals." (Investment Company Institute)
Retirement Plan Participation and Contributions: Trends from 1998 to 2006
Excerpt: "Our analysis of the data showed that: The percentage of private-sector wage-and-salary workers aged 21 and older whose employer sponsored a retirement plan increased from 63% in 1998 to 66% in 2003 and declined to 62% in 2006. The percentage of private-sector wage-and-salary workers aged 21 and older who participated in employer-sponsored retirement plans increased from 45% in 1998 to 49% in 2003 and declined to 45% in 2006. The percentage of private-sector wage-and-salary workers aged 21 and older whose employer sponsored a defined contribution plan, such as a § 401(k) plan, rose from 54% in 1998 to 58% in 2003 and declined to 56% in 2006. The percentage of private-sector wage-and-salary workers aged 21 and older who participated in defined contribution plans increased from 37% in 1998 to 43% in 2003 and declined to 40% in 2006." (Congressional Research Service)
Cash Balance Pension Plan Works Well for Some
Excerpt: "A cash balance plan is an ERISA-qualified defined benefit pension plan. It takes maximum advantage of higher benefit levels available to such plans under federal law. If you and other highly compensated employees are maximizing contributions to your 401(k) and profit-sharing plans, it can be a valuable new addition." (TheLedger.com)
The Role of IRAs in U.S. Households' Saving for Retirement, 2008 (PDF)
20 pages. Excerpt: "Among all IRA-owning households, 78 percent also participated in employer-sponsored retirement plans; that is, they had defined contribution (DC) plan balances, current defined benefit (DB) plan payments, or expected future DB plan payments. Another 29 percent of U.S. households reported employer-sponsored retirement plan coverage, but no IRAs. All told, 70 percent of all U.S. households had some type of formal, tax-advantaged retirement savings." (Investment Company Institute)
Odds Are That Most IRAs Funded by an Employer-Sponsored Retirement Plan
Excerpt: "In a new report, the Investment Company Institute (ICI) says that the most recent available data show that households transferred more than $200 billion from employer-sponsored retirement plans to IRAs in 2004. In fact, the ICI notes that in 2008, nearly 20 million U.S. households - 52% of all U.S. households owning traditional IRAs - had traditional IRAs that included rollover assets." (PLANSPONSOR.com; free registration required)
Retirement Risk and Uncertainty: A Fixed Strategy
Excerpt: "[M]ore people are taking a fresh look at how to provide balance to their retirement portfolio while they are actively saving for the future. One option for your retirement strategy is a fixed annuity because it has a combination of safety, tax-deferral, and the option for guaranteed lifetime income." (The Fort Worth Business Press)
New Web Site, BrightScope, Rates 401(k) Plans
Excerpt: "BrightScope has now publicly launched its rating website, in which you plug in a particular company's name and the site then provides you with a colorful, graphic presentation of that particular plan's performance and structure in comparison to certain benchmarks and comparable companies. Its simply a lot of fun, and, moreover, allows an easy, quick overview of a particular plan, without having to wade through all of the paper information for a particular plan." (Stephen Rosenberg of The McCormack Firm, LLC)
Healthways Inc. Stock-Drop Suit Passes First Hurdle
Excerpt: "An employee 401(k) stock-drop suit survived its first major challenge when a federal judge in Tennessee turned away an early effort by the employer to have the claim dismissed. U.S. District Judge Todd J. Campbell of the U.S. District Court for the Middle District of Tennessee ruled that employee Kenneth Banks had marshaled enough evidence to back up his claims that Healthways Inc. continued having a company stock investment option even after it was no longer prudent to do so. Banks also alleged the company did not properly disclose information about its finances to participants." (planadvisor)
Study of Risk Management Attitudes and Aptitude Among Defined Benefit Pension Plan Sponsors: 2009 U.S. Pension Risk Behavior Study (PDF)
Excerpt: "When MetLife set out to commission research of the leading U.S. defined benefit pension plans, we did so with two goals in mind. The first was to gain insight into plan sponsors' views of the major risks that affect their companies' defined benefit pension plans. The second, equally if not more important, was to assess how well plan sponsors believe they are managing those risks. By any important measure, what the inaugural MetLife U.S. Pension Risk Behavior IndexSM study revealed is very clear: most plan sponsors, regardless of plan design and size, have an opportunity to develop a broader view of the risks to which their plans may be exposed. Among the many survey findings found on the following pages, MetLife has introduced the MetLife U.S. Pension Risk Behavior IndexSM, which develops a baseline for the current state of risk management within defined benefit plans -- and seeks to identify early warning signs of potential risk management gaps for plan sponsors." (MetLife)
[Opinion]
American Benefits Council Pension Funding Proposals (PDF)
4 pages. Excerpt: "It is critical to address [the problem of required pension contributions] with a solution that is consistent with the following principles: The solution must not undermine the funding reforms enacted in the Pension Protection Act of 2006 ('PPA'). The solution must ensure that plans return to a fully funded status as soon as is practicable. This is important from the perspective of both benefit security and the security of the Pension Benefit Guaranty Corporation. The solution must protect employees from reduction or elimination of protected benefits." (American Benefits Council)
[Opinion]
American Benefits Council Letter to Congress Urging Pension Funding Measures (PDF)
2 pages. Excerpt: "[Recent] legislation included two important provisions vital to companies sponsoring pension plans: a clarification of the ability to spread unexpected gains and losses over a 24 month period which had been intended by Congress in the Pension Protection Act (PPA) and a modification to permit more companies to avail themselves of the transition period to meet the higher funding targets established by the PPA. The funding relief provisions reduced average defined benefit pension contributions by approximately one-third. However, even with these changes, average defined benefit plan contributions will double and in some cases because the past relief did not help them the obligations remain much higher." (American Benefits Council)
[Opinion]
Taxpayers Footing the Bill for Some Who Don't Have to Worry About Market Crashes, Medical Costs or Inflation
Excerpt: "America, in case you hadn't noticed, is dividing into two nations. The 22.5-million-strong public sector (that includes retirees) is growing ever larger, and enjoying ever greater wages and benefits often guaranteed by state constitutions." (Forbes.com)
[Opinion]
Letters to the Editor on 'From Here to Retirement,' NYT Editorial of January 26
Some of the letters are from people prominent in the retirement industry. (The New York Times; free registration required)
University Conference Services (Sponsor)
(Click on company name or banner to learn more.)
| Find Your Way Out of Today’s Plan Management Maze |
| Many plan sponsors are feeling lost in a maze of uncertainty. Volatile financial markets, a battered economy and a changing regulatory environment seem to obscure the pathway to effective plan management. The San Francisco Mid-Sized Retirement & Pension Plan Management Conference, March 10–13, 2009, is the ideal place to explore the issues, hear what plan management experts have to say and gain new ideas you can implement immediately. |
Links to Items on Executive Comp, Benefits in General
[Guidance Overview]
Notice 2009-8 Provides Interim Section 457A Guidance But the Devil Is in the Details
Excerpt: "The Notice clarifies that a '§457A short-term deferral' is not deferred compensation under § 457A. Unlike § 409A which uses a 21/2-month rule, a § 457A short-term deferral is compensation paid no later than 12 months after the end of the service provider's (e.g., an employee) taxable year during which the service recipient's (e.g., an employer) right to payment is nonforfeitable. The Notice also clarifies that a service recipient is the person for whom the service provider directly provides services when the compensation becomes nonforfeitable. For example, if an individual provides services to a wholly owned subsidiary, the service recipient is the subsidiary, not its parent corporation." (Tax Management Inc.)
[Guidance Overview]
Towers Perrin U.S. Legislative Tracking Charts -- Human Resources -- Updated January 29, 2009 (PDF)
2 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)
Firms Find Sabbaticals Are Worthy Investments
Excerpt: "Historically, sabbaticals have been associated with academia, but businesses began adopting them as early as the 1960s, with fast-food giant McDonald's Corp., computer chip maker Intel Corp., and some U.S. law firms among the trailblazers. Although they are still relatively rare in the accounting sector, sabbatical programs have been tapped by firms ranging from small to large as a robust retention and recruitment tool. They provide a platform for invaluable talent development that exposes individuals to growth opportunities. They also encourage a team approach to client service, since sabbaticals rely on collaboration to make sure service is never compromised." (Journal of Accountancy)
Wage and Benefits Costs Rise in Q4 2008
Excerpt: "Wages and salaries rose 0.5% and benefits rose 0.4% in the fourth quarter, according to the Employment Cost Index (ECI). Compensation costs for private industry rose 0.5% from September to December 2008, down from the prior quarter's increase of 0.6%. For the fourth quarter, state and local government compensation increased 0.5%, half the prior quarter's increase of 0.9% . . . ." (PLANSPONSOR.com; free registration required)
Employee Assistance Programs for a New Generation of Employees (PDF)
4 pages. Excerpt: "For decades, EAPs have demonstrated their value, both to the individuals whose lives they have improved and to the employers and work organizations that benefit from having healthy workers. As Millennial generation adults enter the workplace, they bring with them an array of unique personal concerns as well as some of the same mental health and substance use issues that employ-ers have been addressing for many years. By developing new strategies and resources, and by strengthening partnerships and linkages with work/life, human resources, health and wellness, absence and disability management, and accommodation efforts, EAPs will be even more effective in assisting this new generation in becoming productive workers in the 21st Century workplace." (U.S. Department of Labor)
Newly Posted Events
Advanced Cafeteria Plans Conference 2009
in Washington on July 8, 2009
presented by EBIA / Thomson Reuters
Federal Securities Law for Employee Benefits Lawyers
Nationwide on February 24, 2009
presented by ABA Joint Committee on Employee Benefits
First Quarter Update
Nationwide on February 10, 2009
presented by McKay Hochman Co., Inc.
First Quarter Update
Nationwide on February 11, 2009
presented by McKay Hochman Co., Inc.
Generational Considerations Affecting Recruitment and Retention
in Illinois on February 26, 2009
presented by WEB - Chicago West
Managing Benefits Risks in a Recessionary Economy
Nationwide on March 3, 2009
presented by Spencer Fane Britt & Browne LLP
Qualified Transportation Plans: Design and Compliance Issues (Including the New Bicycle Commuting Benefit)
Nationwide on January 29, 2009
presented by EBIA / Thomson Reuters
Retirement Savings Plans: Fiduciary Considerations in the Current Economic Climate
in Washington on February 27, 2009
presented by International Society of CEBS - Pacific NW Chapter
Newly Posted Press Releases
ExpertPlan Partners with American Pension Services to Offer Non-Traditional Investments
ExpertPlan
Benefit Software Inc. Announces Results of Eighth Annual Client Employee Online Enrollment Satisfaction Survey
Benefit Software Inc.
Corporate Voices for Working Families Releases Employer Guide Providing Companies with the Tools to Help Employees Take Advantage of Tax Credits and Other Federal Benefits
Corporate Voices for Working Families
Nationally Acclaimed Advisory Team Joins CAPTRUST Financial Advisors
CAPTRUST Financial Advisors
Clarity Adds Two New Consultants To Its Actuarial Practice
Clarity in Numbers, LLC
Newly Posted or Renewed Job Openings
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Senior Pension Sales Consultant
for Executive Benefit Design Group
in ANY STATE
Defined Benefit Administration Consultant (ProAdmin)
for Winklevoss Technologies
in CT
401(k) Administrator
for GAP-Pension Inc.
in NJ
Benefits Manager
for CRAssociates, Inc.
in VA
Administrative Assistant
for Actuarial Enterprises, Inc.
in NJ, PA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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