BenefitsLink |
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| February 16, 2009 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
Today's sponsor is Employee Benefits Institute of America (EBIA)
(Click on company name or banner to learn more.)
| EBIA's 401(k) Plans Manuals and Seminars! |
| Since the enactment of the Pension Protection Act of 2006 (PPA), the IRS and DOL have been issuing significant guidance interpreting numerous PPA changes affecting 401(k) plans. EBIA's 401(k) Plans manual, written and edited by five experienced employee benefits attorneys, analyzes and explains the PPA and other new guidance and provides practical guidance on how to comply. If you are not a current subscriber, now is the time to add 401(k) Plans to your library. And don't forget to check out our popular in-person 401(k) plans seminars, which will be presented in several cities this spring. |
[Guidance Overview]
Seventh Circuit Ruling Against Plaintiffs in Deere ERISA 'Excessive Fees' Case
Excerpt: "On February 12, 2009, in a highly anticipated decision, the U.S. Court of Appeals for the Seventh Circuit issued its decision affirming the district court's dismissal of all claims in Hecker v. Deere & Company. The ruling is the first significant appellate decision concerning the ERISA excessive fees litigation that has recently plagued large companies. The Seventh Circuit's decision in Hecker rejects several recently popular plaintiffs' ERISA theories regarding improper 'revenue sharing' and 'excessive fees.'" (McDermott Will & Emery)
[Guidance Overview]
Divorce and Retirement: Take Control of Retirement Benefits (PDF)
20 pages. Excerpt: "Let's start with the fact that retirement benefits are not automatically split during a divorce. Just like other marital assets, a divorce court judge or an agreement between you and your spouse divides the benefits. Find out as much as you can about the benefits earned by you and your husband during the marriage. Then make sure you and your lawyer protect your right to those benefits." (Women's Institute for a Secure Retirement (WISER))
[Guidance Overview]
2009 Compliance Calendar for Defined Contribution Plans
Excerpt: "Vanguard Strategic Retirement Consulting (SRC) has created a 2009 compliance calendar that alerts you to key dates and gives you instant access to compliance deadlines. This calendar, a companion piece to SRC's Regulatory Limits poster, lists recurring compliance and notice requirements for qualified defined contribution plans." (The Vanguard Group, Inc.)
[Guidance Overview]
Solving a Multiemployer Pension Plan's PPA Issues
Excerpt: "The Pension Protection Act of 2006 (PPA) requires that multiemployer defined benefit pension plans arrange and report annual actuarial certification of their plans' funded status to the IRS within three months of the end of each plan year. Plans that are currently at least 80% funded and projected to meet minimum funding requirements for the next seven years are certified as healthy plans ('green' zone)." (Milliman)
[Guidance Overview]
EBSA's Guidance on Fiduciary Duties in Response to Alleged Abuses Involving the Madoff Investment Firm
Excerpt: "EBIA Comment: The guidance outlines several common-sense steps that should be considered by fiduciaries whose job it is to protect plans that may have been exposed to investment losses resulting from the Madoff firm's alleged multibillion dollar Ponzi scheme. One of those steps is to consider whether there may be claims against other plan fiduciaries for the plan's investments with Madoff. Although the conduct of fiduciaries will likely be subject to rigorous scrutiny in the aftermath of that scheme's spectacular collapse, numerous cases have made it clear that the actions of the investing fiduciaries should not be judged by the outcome of those investments." (Employee Benefits Institute of America)
Union Sues Over Madoff Pension Losses
Excerpt: "A Philadelphia-area union pension fund has filed a federal court lawsuit against Austin Capital Management Ltd. over losses from the securities fraud which authorities say was controlled by Bernard Madoff. A news release from the Philadelphia law firm of Spector Roseman Kodroff & Willis said the firm filed the suit on behalf of the Pension Fund for Hospital and Health Care Employees - Philadelphia and Vicinity, and that the suit seeks class action status. The suit alleges Austin Capital Management Ltd. violated the Employee Retirement Income Security Act (ERISA) by imprudently investing the union funds in Madoff-controlled securities." (PLANSPONSOR.com; free registration required)
Senators Harkin and Kohl Reintroduce Bill to Give Consumers Full Information on 401(k) Plan Management Fees
Excerpt: "'It is absurd that millions of Americans rely on 401(k) plans for their retirement security and yet they aren't told what fees they are paying to maintain these accounts,' said Senator Harkin. 'This bill will shed light on the 401(k) selection process and give Americans more control over their retirement future. In an economy with more and more defined benefit plans being slashed or frozen everyday, it is vital that employees have access to all the information they need to maximize their retirement savings.'" (U.S. Senate Special Committee on Aging)
401(k) Fee Bill Introduced in Senate
Excerpt: "Legislation aimed at improving disclosure of 401(k) fee information was introduced in the Senate [February 10]. Sens. Tom Harkin, D-Iowa, and Herb Kohl, D-Wis., introduced the Defined Contribution Fee Disclosure Act of 2009, which would require 401(k) plan providers to disclose all fees." (Investment News; free registration required)
Participants Continue to Contribute, But Market Takes Toll on 401(k) Balances
Excerpt: "Despite ongoing contributions into 401(k) plans, unprecedented market declines resulted in the average workplace savings account balance dropping 27% in 2008 to $50,200 from $69,200 in 2007, according to Fidelity Investments' 2008 State of the 401(k) update." (Wolters Kluwer)
Mutual Funds Fees Are Too High
Excerpt: "This study on mutual funds, Identification And Performance of Equity Mutual Funds with High Management Fees and Expense Ratios by Haslem, Baker and Smith, finds that economies of scale are not generally shared with fund holders because the market lacks the competitive pressures to drive fund expense downward. This is due to product a variety of product differentiation strategies that probably have little correlation to a funds future success." (Fiduciary Investor)
It's Time to Fix the 401(k)
Excerpt: "What would a better system look like? It would be universal and strike a more conservative balance of risk and return. Most of all, it would be designed for savers, not employers or money managers. Here are five principles for reform." (CNNMoney.com)
Legacy of a Crisis: A Generation Shy of Risk
Excerpt: "Are we in the process of minting a new generation of adults who are averse to taking chances, whether it's buying real estate or investing in stocks? 'We trained people that if you took risk and diversified and played by the rules that you'd have a great life for yourself,' said Howard L. Simons of the bond specialist Bianco Research. 'But all of that can disappear in a hurry. And most of us can look in the mirror and say, 'What did I do to cause this?'" (The New York Times; free registration required)
Does Ledbetter Act Resolve AT&T v. Hulteen?
Excerpt: "You might remember AT&T v. Hulteen . . . , the case about whether retirees should be given service credit for maternity leave they took (and did not get service credit for) before Title VII was amended by the Pregnancy Discrimination Act. The Supreme Court heard oral argument on December 10. Well, Harper Jean Tobin reports at ACS Blog that the employees have filed a supplemental brief with the Court, arguing that the Ledbetter Fair Pay Act of 2009 resolves the issue in their favor." (Workplace Prof Blog)
Retirement Income Planning Lessons from the Economic Meltdown (PDF)
5 pages. Excerpt: "The grand theories and hypothetical retirement models that have been red hot for almost a decade have finally melted down along with the rest of the economy. And we've learned some unhappy lessons. Of course, all kinds of people in all areas of the economy (and the world) have been hurt. But we'll focus on the unique lessons pertaining to retirement income planning." (Still River Retirement Planning Software, Inc.)
New Ways to Make People Save: A Social Marketing Approach
Excerpt: "In this study, we use a social marketing approach to develop a planning aid to help new employees at a not-for-profit institution contribute to supplementary pensions. We employed different methods, such as surveys, focus groups and in-depth interviews, to 'listen' to employees' needs and difficulties with saving. Moreover, we targeted specific groups that were less likely to save and contribute to supplementary pensions, such as women and low-income employees. The program we developed is not only effective but also inexpensive. While this program was implemented at a single institution, it is suitable to be applied to a variety of employers and demographic groups." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)
Congress Begins Review of 401(k)s
Excerpt: "Although retirement-plan design is probably not at the top of any company's agenda in these tumultuous times, delaying such consideration may not be an option for long. With trillions being lost and Congress preparing for hearings, HR leaders may need to start paying more attention to this issue." (Dallas Salisbury via Human Resource Executive Online)
Managing Post-Retirement Risks: A Guide to Retirement Planning (PDF)
16 pages. Excerpt: "Recognizing this growing trend towards individual responsibility and the risks that may be encountered, the Society of Actuaries (SOA) launched a broad research and information effort in the late 1990s to raise awareness of post-retirement challenges and seek ways to address them. As part of this ongoing effort, the SOA published an informational chart in 2003 that explained the risks of retirement and served as an educational tool to help individuals prepare for them. In everyday language, the chart provided a comprehensive summary of the risks and complemented other retirement planning material. With the passage of time, the creators of the original chart recognized there would be value to updating it with insights into recently introduced products, legislative changes and new issues confronting retirees. As a result, the SOA is pleased to make available this new version." (Society of Actuaries)
Philadelphia to Cut Payments Into Pension Fund
Excerpt: "A board that oversees Philadelphia's pension fund approved a plan on Friday to cut the city's pension payments by $172 million over five years by reducing the fund's assumed rate of return and amortizing its unfunded liabilities over a longer period." (Reuters)
Tax-Rate Comfort and Flexible Withdrawals Among Selling Points for Roth Accounts
Excerpt: "With a Roth, contributions are made after taxes, but your earnings and withdrawals are not taxed after age 59 1/2. In comparison, contributions to a traditional IRA or 401(k) are tax-deductible, and earnings grow tax-free too. But you have to pay tax on the savings that you take out in retirement. Mathematically, there is little difference between a Roth account and a traditional retirement plan if your tax rate remains the same. You're simply choosing either to pay Uncle Sam now or later." (Chicago Tribune)
New York's Public Pensions Are Socking Taxpayers: Costs Jumped 100 Percent in 10 Years
Excerpt: "In 1998, New York spent about $3.4 billion on pensions for state and local government workers. A decade later, that figure had ballooned to nearly $7 billion, a jump of more than 100 percent, according to the state comptroller. State taxpayers footed most of the bill. In fact, last year, for every $100 a government worker spent on his or her retirement, taxpayers contributed about $1,000. At the same time, residents continued to see their own private pensions shrink or disappear." (The Post-Standard via Syracuse Online LLC)
[Opinion]
Rube Goldberg-Like Rules for Retirement Plan Advice Would Be Unnecessary Under a Fiduciary Standard
Excerpt: "I want to offer four reasons why the Department of Labor should rescind a class exemption that would allow conflicted advisers to offer advice to retirement plans under certain circumstances." (Investment News; free registration required)
401khelpcenter.com (Sponsor)
(Click on company name or banner to learn more.)
| Make Your 401(k) Education a Takeaway Rather than a Throwaway!! |
| Are you a 401(k) plan sponsor who is looking for a cost-effective way to get your employees to appreciate their plan and save more? "It’s Your Money" information sheets are now available as e-mailable newsletters sent to your employees at the same time that they receive their quarterly 401(k) statements. They can now be customized with your company logo, a valuable retention tool! |
Links to Items on Executive Comp, Benefits in General
[Guidance Overview]
Final Executive Compensation Provisions of American Recovery and Reinvestment Tax Act of 2009
Excerpt: "The Final Version of the 'Stimulus' Bill is now available and officially known as the American Recovery and Reinvestment Tax Act of 2009. There were just a few interesting changes to the final ARRTA from the Senate version I described in detail on Tuesday. Rather than describe the ARRTA executive compensation provisions in full again, I will only highlight the two significant changes from the Senate Bill." (Michael S. Melbinger via Winston & Strawn LLP)
[Guidance Overview]
Section 409A: A Second Chance to Comply, Especially for Government and Exempt Employers
Excerpt: "The IRS mandated full compliance with Code section 409A's requirements for deferred compensation plans by January 1, 2009. Did you miss the deadline? You may have some relief! This article discusses how employers may still bring plans into compliance without adverse consequences, provided that none of the participants' benefits became vested after 2004." (Chang, Ruthenberg & Long PC)
[Guidance Overview]
Revised Executive Compensation Requirements for Participants Under the Troubled Assets Relief Program
Excerpt: "On February 13, 2009, Congress passed the American Recovery and Reinvestment Act of 2009 ('ARRA'), widely described as the Stimulus Bill. President Obama is expected to sign ARRA into law shortly, and the following summary assumes that ARRA will become law. ARRA significantly expands the executive compensation requirements previously imposed under the Emergency Economic Stabilization Act of 2008 ('EESA'), which established the Troubled Assets Relief Program ('TARP'). ARRA's executive compensation restrictions apply to any entity that has received or will receive financial assistance under TARP (a 'TARP Recipient'), and generally will continue to apply for as long as any obligation arising from financial assistance provided under TARP remains outstanding (the 'TARP Assistance Period')." (Jones Day)
Compensation Objectives and the Organization-Wide Use of Non-Cash Pay
Excerpt: "This study investigates the effects of attraction, retention, and incentive objectives on the organization-wide use of two non-cash pay elements: benefits and broad-based equity (stock and stock option) grants. Recent economic theories lead to conflicting implications for the use of various non-cash pay elements in achieving these objectives. Data from the European operations of 185 large firms indicate that benefits are primarily provided for retention purposes. Broad-based option grant eligibility is positively associated with incentive and attraction purposes, but negatively associated with retention objectives, despite claims that options' vesting provisions enhance their retention advantages. Stock grant eligibility is also positively associated with incentive objectives, but has little relation with either attraction or retention objectives." (Social Science Research Network)
Stimulus Plan Places New Limits on Wall St. Bonuses
Excerpt: "A provision buried deep inside the $787 billion economic stimulus bill would impose restrictions on executive bonuses at financial institutions that are much tougher than those proposed 10 days ago by the Treasury Department. The provision, inserted by Senate Democrats over the objections of the Obama administration, is aimed at companies that have received financial bailout funds. It would prohibit cash bonuses and almost all other incentive compensation for the five most senior officers and the 20 highest-paid executives at large companies that receive money under the Treasury's Troubled Asset Relief Program, or TARP." (The New York Times; free registration required)
Employee Benefits Survey on Nonproduction Bonuses
Excerpt: "The National Compensation Survey is publishing corrected estimates of worker access to nonproduction bonuses for each of its 2003 through 2008 publications on employee benefits in the United States. The previously published estimates were calculated such that workers with more than one of a given type of nonproduction bonus were counted multiple times. For example, if a worker had two attendance bonuses, then the worker was included in the numerator twice while only included in the denominator once. The result was the overestimation of the percent of workers with access to specific types of nonproduction bonuses." (U.S. Bureau of Labor Statistics)
IRS Employee Plans FY 2009 Work Plan of Operating Priorities (PDF)
15 pages. Excerpt: "The work plan provides the strategic Operating Priorities for Employee Plans (EP) for FY 2009, as well as specific program guidance for Examinations, Rulings & Agreements and Customer Education & Outreach employees. In fulfilling EP's mission of protecting retirement plan assets and the benefits of plan participants, it is incumbent that the EP organization fosters and promotes plan sponsors compliance with the applicable Internal Revenue Code provisions. While the Determination, Voluntary Compliance and Technical Activities programs are designed to assist plan sponsors compliance with the Internal Revenue Code (IRC), EP Examinations and the EP Compliance Unit also play an integral role in ensuring compliance through their enforcement actions." (Internal Revenue Service)
When Is $100 Worth $155? If You're in 28 Percent Tax Bracket, That's the Value of Paying for Personal Expenses with Pre-Tax Dollars
Excerpt: "Any time you take advantage of a tax savings opportunity, less of your hard-earned money goes to taxes and, therefore, more ends up in your pocket. So, let's . . . review some of the tax breaks available to you these days." (The Boston Globe)
Newly Posted Events
Consumer Driven Care Web Summit
Nationwide on March 19, 2009
presented by MCOL
Money Talks: Getting the Best Return from Your Employee Compensation Budget Webcast
Nationwide on March 11, 2009
presented by Buck Consultants, an ACS Company
New COBRA Provision in Economic Stimulus Legislation Webcast
Nationwide on February 26, 2009
presented by International Foundation of Employee Benefit Plans
Welfare Benefit Plans Webcast
Nationwide on February 18, 2009
presented by Retiree Medical Solutions
Welfare Benefit Plans Webcast
Nationwide on February 19, 2009
presented by Retiree Medical Solutions
Newly Posted Press Releases
New Booklet Helps Women Navigate the Complicated Terrain of Dividing Retirement Benefits at Divorce
Women’s Institute for a Secure Retirement (WISER)
Newly Posted or Renewed Job Openings
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Retirement Plan Administrator
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Handy Links:
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