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March 2, 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]
Practioners' Forum Discussion on Qualified Retirement Plans: Timing of Interim and Discretionary Amendments

Excerpt: "The [target page] is a summary of an informal discussion of employee benefit practitioners held in Washington, D.C. on January 15, 2009. The topic involved the deadlines prescribed by the IRS in Rev. Proc. 2007-44, 2007-28 I.R.B. 54, for adopting interim and discretionary amendments to qualified retirement plans." (Tax Management Inc.)


[Guidance Overview]
IRS Rules on 401(k) Will Help Some Employers: Nondiscrimination Tests Not Required for Auto Enroll Feature

Excerpt: "Final rules issued last week by the Internal Revenue Service will aid employers that want to add an automatic enrollment feature to their 401(k) plans without running nondiscrimination tests. However, the rules only apply to two types of automatic enrollment programs: qualified automatic contribution arrangements and eligible automatic contribution arrangements. Under the rules, employers that meet the specific QACA design requirements are exempt from actual deferral percentage/actual contribution percentage nondiscrimination testing. Those tests determine that contributions made by highly compensated employees don't, on average, exceed contributions by lower-paid employees by amounts set by law." (Business Insurance)


[Guidance Overview]
IRS Final Regs on 401(k) Automatic Contribution Arrangements

Excerpt: "The regulations relating to qualified automatic contribution arrangements (QACAs) apply to plan years beginning on or after January 1, 2008. The regulations relating to eligible automatic contribution arrangements (EACAs) apply for plan years beginning on or after January 1, 2010." (Wolters Kluwer)


[Guidance Overview]
Towers Perrin U.S. Legislative Tracking Charts -- Retirement -- Updated February 27, 2009 (PDF)

4 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)


[Guidance Overview]
Fidelity Bond vs. Fiduciary Liability Insurance

Excerpt: "In today's ever-changing world of the retirement plan market, plan sponsors are asking if they need a Fidelity Bond or Fiduciary Insurance or both. The two may sound similar but there are big differences between them. A Fidelity Bond helps make a plan whole from losses resulting from dishonest or fraudulent acts by employees in the handling of plan participants' money or securities. All qualified retirement plans must obtain an ERISA fidelity bond. On the other hand, fiduciary liability insurance protects plan fiduciaries from breaches of their fiduciary duty under ERISA." (The Precept Employee Benefits Blog)


[Guidance Overview]
Are Terminated 401(k) Participants Still Costing You Money?

Excerpt: "The answer to this question is almost certainly 'yes.' Former employees/participants don't always focus on moving their accounts to their new employer or a rollover IRA, and it's easily forgotten by plan administrators. There are at least two ways that this could be costing you money -- perhaps a LOT of money . . . ." (Westport Benefits Group)


[Guidance Overview]
IRS Guidance on Reporting Required Minimum Distributions for 2009 (PDF)

1 page. Excerpt: "In Notice 2009-9, the Internal Revenue Service (IRS) provides guidance to financial institutions on the reporting requirements for required minimum distributions for 2009 after the enactment of the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA)." (Transamerica Center for Retirement Studies)


[Guidance Overview]
Attorney Fees Cannot be Paid with Participants Vested Benefits

Excerpt: "The 2nd U.S. Circuit Court of Appeals has ruled that a law firm cannot obtain fees from a distribution of retirement plan benefits that it claims it helped secure. In overturning a lower court decision, the court said Kickham Hanley P.C. was attempting to avoid the application of the Employee Retirement Income Security Act's (ERISA) anti-alienation provision 'by asserting that the common fund doctrine grants Kickham an interest in that portion of the plan's benefit funds that it allegedly helped to create or preserve and that, accordingly, the plan participants have no claim to Kickham's part.'" (PLANSPONSOR.com; free registration required)


Questions Arise from GM's Use of Pension for Buyouts and VEBA Trust
Excerpt: "Details are emerging about how General Motors Corp.'s U.S. pension funds went from a $20-billion surplus at the end of 2007 to a $12.4-billion deficit 12 months later. Newly released numbers show that the funds, which help support more than 650,000 Americans, were tapped for billions of dollars over the past year for employee buyout programs, benefit increases and as part of the UAW's retiree health care trust deal." (Detroit Free Press)


Target-Date Funds Are Proliferating, Evolving and Receiving Tougher Employer Scrutiny
Excerpt: "Target-date retirement funds have been put through their paces lately. Whether 'TDFs' -- and, more importantly, the employees who invest in them through their 401(k) plans -- have emerged from the crucible of the markets' turmoil since late 2008 with their financial integrity intact may take several years to determine. But the question is of no small import to HR executives who have begun embracing TDFs enthusiastically since 2006, when they became a permissible 'qualified default investment alternative' for defined-contribution plans under the Pension Protection Act." (Human Resource Executive Online)


DC Participant Decisions to Stop Contributions 2006-2008 (PDF)
Excerpt: "In 2008, 3.1% of active participants in Vanguard defined contribution plans stopped making contributions -- up by 0.7% from the prior year. In any given year a small percentage of active participants stops making plan contributions; the economic and market downturn in 2008 appears to have raised that rate slightly." (The Vanguard Group, Inc.)


West Virginia Bill to Target Pensions for Professional Firefighters and Police Officers
Excerpt: "State lawmakers this year will again try to help cities tackle nearly $700 million in unfunded liability in pensions for professional firefighters and police officers. 'These are basically promises made to these firemen and policemen,' Sen. Dan Foster, D-Kanawha, said last week. 'The problem is if we don't do something we're concerned that there may be defaults in some of these cities.' Half the unfunded liability in West Virginia's 53 different fire and police pension plans comes from the Charleston, Huntington and Wheeling areas." (Charleston Daily Mail)


Senate Hearing: Boomer Bust? Securing Retirement in a Volatile Economy, February 25, 2009
The target page has links to Witness Testimony: Jeanine Cook, Baby Boomer, Myrtle Beach, SC; Dallas L. Salisbury, Employee Benefits Research Institute; Dean Baker, Co-Center for Economic and Policy Research; Ignacio Salazar, SER - Jobs for Progress; Barbara B. Kennelly, National Committee to Preserve Social Security and Medicare; Deena Katz, CFP, Associate Professor, Texas Tech University, and Chairman, Evensky & Katz. (U.S. Senate Special Committee on Aging)


Introduction of Public Plan Legislation in Congress (PDF)
Page 2 of 6 pages. Excerpt: "On January 27, Representative Kendrick Meek (D-FL) introduced a bill to amend the Internal Revenue Code of 1986 to modify the exception from the 10 percent penalty for early withdrawals from governmental plans for qualified public safety employees. Sec. 828 of the Pension Protection Act of 2006 amended 26 U.S.C. 72(t) to allow retired public safety employees beginning at age 50 to take distributions from their defined benefit pension plans without paying the 10 percent early distribution tax." (National Conference on Public Employee Retirement Systems)


Saving for Retirement Top Priority for Majority of Mutual Fund Investors
Excerpt: "Saving for retirement is a financial goal in 95% of households that own mutual funds, and the number one goal for 76% of fund-owning households, according to a report from the Investment Company Institute (ICI)." (PLANSPONSOR.com; free registration required)


Pendency of Request for Approval of Special Withdrawal Liability Rules; Service Employees International Union Local 1 Pension Trust Fund
Excerpt: "The Pension Benefit Guaranty Corporation ('PBGC') has received a request from the Service Employees International Union Local 1 Pension Trust Fund for approval of a plan amendment providing for special withdrawal liability rules. Under section 4203(f) of the Employee Retirement Income Security Act of 1974 and the PBGC's regulation on Extension of Special Withdrawal Liability Rules, a multiemployer pension plan may, with PBGC approval, be amended to provide for special withdrawal liability rules similar to those that apply to the construction and entertainment industries. Such approval is granted only if the PBGC determines that the plan amendment will be used in an industry with characteristics that would make use of the special rules appropriate and that the plan amendment would not pose a significant risk to the PBGC. This notice advises interested persons of the pendency of this request and invites public comment." (FIND, Inc. via COMTEX via Technology Marketing Corp.)


ERISA Statute of Limitations Case Relating to a Ponzi Scheme
Excerpt: "A Fourth Circuit decision . . . provides an interesting discussion of the statute of limitations issues that can arise with respect to bringing suit under ERISA for plan losses resulting from a Ponzi scheme. The case provides a summary of the various Courts of Appeals positions on the issue of what constitutes 'actual knowledge of the breach or violation' under Section 413 of ERISA." (Attorney B. Janell Grenier via Benefitsblog.com)


Pension Fund Shortfalls Causing Problems in Balance Sheets of Some of Chicago Area's Biggest Companies
Excerpt: "Boeing Co.'s shareholder equity is now $1.2 billion in the hole thanks to an $8.4-billion gap between its pension assets and the projected cost of its obligations for 2008. At the end of 2007, Boeing had a $4.7-billion pension surplus. If its investments don't turn around, the Chicago-based aerospace giant will have to quadruple annual contributions to its plan to about $2 billion by 2011. Stock market losses also pounded pension funds at Abbott Laboratories Inc., Caterpillar Inc. and Exelon Corp., with others sure to emerge as companies file their annual financial reports with the Securities and Exchange Commission in coming weeks." (Crain Communications, Inc.)


Pension Liabilities to Hit Local, State Governments, Buffett Says
Excerpt: "Pension underfunding will be a significant contributor to the economic troubles of local and state governments this year, Warren E. Buffett, chairman and CEO of Berkshire Hathaway, Omaha, said . . . in his annual letter to Berkshire shareholders. 'Many cities and states were surely horrified when they inspected the status of their funding at year-end 2008,' Mr. Buffett, 78, wrote in the letter, which was released on the company's website. [http://www.berkshirehathaway.com/letters/2008ltr.pdf] 'The gap between assets and a realistic actuarial valuation of present liabilities is simply staggering.'" (Pensions & Investments)


Are 401(k)s Untouchable After a Layoff?
Excerpt: "Cashing out your account and getting a check should be your very last resort. There are some ways to unlock the 401(k) while avoiding penalties, but they are complicated." (Star Tribune)


ESOP a Great Incentive for Employees
Excerpt: "What is an ESOP? . . . . The acronym stands for Employee Stock Ownership Plan. But, during this financial downturn, you might want to think of it as an Economic Stimulus Offering Possibility -- the possibility to inspire employee loyalty and provide liquidity for your company (or you), all while enjoying significant tax breaks." (The Atlanta Journal-Constitution)


[Opinion]
Defined Contribution Plans: A Successful Cornerstone of Our Nation's Retirement System (PDF)

17 pages. Excerpt: "Employer-sponsored 401(k) and other defined contribution retirement plans are a core element of our nation's retirement system, playing a critical role along with Social Security, personal savings and employer-sponsored defined benefit plans. Defined contribution plans successfully assist tens of millions of American families in accumulating retirement savings. Congress has adopted rules for defined contribution plans that: facilitate employer sponsorship of plans, encourage employee participation, promote prudent investing by plan participants, allow operation of plans at reasonable cost, and safeguard plan assets and participant interests through strict fiduciary obligations and intensive regulatory oversight." (American Benefits Council)


[Opinion]
Summary of Defined Contribution Plans: A Successful Cornerstone of Our Nation's Retirement System (PDF)

3 pages. Excerpt: "Employer-sponsored 401(k) and other defined contribution retirement plans are a core element of our nation's retirement system and successfully assist tens of millions of families in accumulating retirement savings. Congress has adopted rules that facilitate employer sponsorship of these plans, encourage employee participation, promote prudent investing, allow operation at reasonable cost, and safeguard participant interests through strict fiduciary obligations. While individuals have understandable retirement income concerns resulting from the recent economic downturn, it is critical to acknowledge the vital role these plans play in ensuring personal financial security." (American Benefits Council)


[Opinion]
Obama's Automatic Workplace Pensions: 403(b) Redux?

Excerpt: "President Obama's new budget proposes the establishment of a new 'Automatic Workplace Pension' (see pages 84 and 85 of the OMB's budget description . . . .) It is based upon proposals from the Retirement Security Project run by Mark Iwry, David John and William Gale. There is little doubt that the proposal will catch a lot of heat, as the logistics of establishing this type of program seems, at first glance, to be almost overwhelming. A number of trade groups are already discussing the issue of what kind of financial products and services can and should be used to implement this proposal, and there doesn't seem to be an easy answer at first glance." (Giller and Calhoun)



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Links to Items on Executive Comp, Benefits in General


[Guidance Overview]
Law Firms Navigating A Minefield Through Reductions In Force

Excerpt: "The Editor interviews Robert M. Projansky, Partner, and Marc Mandelman, Senior Counsel, who are Co-chairs of Proskauer Rose LLP's Managing Change/Reductions in Force Practice Group. . . . Editor: We're seeing a number of RIFs as a result of the current economic crisis. Section 409A of the IRS Code has various proscriptive measures regarding severance. How are employers able to sidestep the requirements of Section 409A of the IRS code when structuring a RIF?" (The Metropolitan Corporate Counsel, Inc.)


[Guidance Overview]
Towers Perrin U.S. Legislative Tracking Charts -- Human Resources -- Updated February 27, 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)


Obama Budget Plan Raises Employer Issues
Excerpt: "The $3.5 trillion budget unveiled Thursday includes proposals to reform health care, expand unemployment benefits and require employers to automatically enroll workers in retirement accounts." (Workforce Management; free registration required)


Best HR Ideas for 2009
Excerpt: "The editors of HRE announce their top picks for ideas launched this past year that helped strengthen productivity, boost morale and engagement, and put a well-deserved spotlight on the creative powers within HR." (Human Resource Executive Online)


DOL's Reporting and Disclosure Guide for Employee Benefit Plans, Revised October 2008 (PDF)
21 pages. Excerpt: "It is intended to be used as a quick reference tool for certain basic reporting and disclosure requirements under the Employee Retirement Income Security Act of 1974 (ERISA). Not all ERISA reporting and disclosure requirements are reflected in this guide. For example, the guide, as a general matter, does not focus on disclosures required by the Internal Revenue Code or the provisions of ERISA for which the Treasury Department and Internal Revenue Service have regulatory and interpretive authority." (U.S. Employee Benefits Security Administration)


Issue Brief: The State of Employee Ownership 2009
The NCEO presents excerpts from The State of Employee Ownership 2009, an issue brief that reviews the number of plans, participants, and assets for ESOPs and similar plans, broad-based stock options, 401(k) plans with company stock, and employee stock purchase plans. It also reviews the most relevant research on employee ownership and corporate performance and recent political and legal developments in the field. (National Center for Employee Ownership)


Employee Ownership Update for February 27, 2009
NCEO Executive Director Corey Rosen discusses new estimates of the number of ESOP plans and participants; an employee-owned company that is a poster company for the stimulus bill; provisions in the stimulus bill that may help ESOP companies; and an award from the Center for Business Education at the Aspen Institute to be given for a dissertation on shared capitalism through employee ownership. (National Center for Employee Ownership)


A Statistical Profile of Employee Ownership
The NCEO has released the 2009 update of its Statistical Profile of Employee Ownership. The Web page with the data also explains the methodology behind the new estimates of the number of ESOPs. (National Center for Employee Ownership)


A Statistical Profile of Employee Ownership
The NCEO has released the 2009 update of its Statistical Profile of Employee Ownership. The Web page with the data also explains the methodology behind the new estimates of the number of ESOPs. (National Center for Employee Ownership)




Newly Posted Events



401(k) Challenges in Troubled Economic Times
in Illinois on March 19, 2009
presented by ASPPA Benefits Council of Chicago

New COBRA Rules: Implementing Them Without Getting Bitten
Nationwide on March 4, 2009
presented by Greenberg Traurig, LLP

New COBRA Subsidy Webcast
Nationwide on March 4, 2009
presented by Trucker Huss

Who’s the Employer: Aggregation Aggravation (Presented by S. Derrin Watson, Esq.)
in Colorado on March 10, 2009
presented by Western Pension and Benefits Conference-Denver Chapter



Newly Posted Press Releases



U.S. Treasury and Federal Reserve Board Announce Participation in AIG Restructuring Plan
U.S. Treasury Department and Internal Revenue Service

Buck Consultants Launches Critical Communications Consulting Services in Canada
Buck Consultants, an ACS Company

President Obama’s Budget Includes Automatic IRA Proposal And Expansion Of Saver’s Credit For 401(k)/IRA Savings
Retirement Security Project

ING Institutional Plan Services to Provide 401k Services for BNY Mellon
ING Retirement Services

The Vitality Group Announces Expansion to Board of Directors
The Vitality Group

Two New Senior Investment Analysts Join Arnerich Massena
Arnerich Massena & Associates



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