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March 18, 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]
PPA Technical Corrections to Defined Benefit Governmental Plans and Non-Electing Church Plans (PDF)
2 pages. Excerpt: "On December 23, 2008, President Bush signed into law the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), which contains technical corrections to the Pension Protection Act of 2006 (PPA). Some of the provisions of WRERA affect defined benefit governmental plans and plans sponsored by churches that do not elect to be covered by ERISA ('non-electing church plans')." (Prudential Retirement)
[Guidance Overview]
Final Regulations on Automatic Contribution Arrangements (PDF)
3 pages. Excerpt: "On February 24, 2009, the Internal Revenue Service (IRS) published final regulations relating to automatic contribution arrangements. An automatic contribution arrangement is an arrangement that provides for a cash or deferred election and which specifies that a covered employee who fails to affirmatively elect to defer (or not defer by making a 0% deferral election) is deemed to have made a default election to contribute the automatic deferral percentage set by the plan." (Transamerica Center for Retirement Studies)
[Guidance Overview]
One-Time Economic Recovery Payment, 2009 (PDF)
8 pages. Excerpt: "On February 17, 2009, President Barack Obama signed into law the American Recovery and Reinvestment Act. This law provides for a one-time economic recovery payment of $250 to people who get certain types of Federal benefits. [This document discusses the distribution of the one-time payment to eligible people.]" (U.S. Social Security Administration)
[Guidance Overview]
Retirees No Longer AT&T Plan Participants, Lack ERISA Claim
Excerpt: "Chastain v AT&T, ___F.3d____(10th Cir. March 9, 2009), is an interesting decision. The 10th held that retired AT&T employees lacked standing to assert an ERISA claim against AT&T after their retirement benefits were transferred to AT&T spin-off Lucent Technologies and then eliminated in part, since the retirees were no longer participants in an AT&T benefits plan." (Adjunct Law Prog Blog)
[Guidance Overview]
IRS's Interim Rules for Pension Funding Relief
Excerpt: "The Internal Revenue Service has issued Notice 2009-22, which provides interim rules regarding asset valuation methods that are permitted to be used by single employer defined benefit pension plans for minimum funding purposes pursuant to changes made by the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA). The notice also provides automatic approval for a change in asset valuation method for plan years beginning during 2009 to any permissible asset valuation method." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
Most Fiduciary Breach Claims Dismissed in Waste Management Stock Case
Excerpt: "A federal judge has thrown out most of the fiduciary breach claims in a suit involving allegations State Street Bank & Trust Co. improperly approved a July 1999 securities settlement involving Waste Management stock held in the company's defined contribution plan. U.S. District Judge Gladys Kessler of the U.S. District Court for the District of Columbia ruled that the Employee Retirement Income Security Act (ERISA) claims dating from January 1, 1990, through February 24, 1998, were filed too late - more than the permitted three years after first finding out about the potential breach. At the same time, however, Kessler approved similar claims involving fiduciary breaches that occurred between July 15, 1999, and December 1, 1999, with Waste Management, State Street, and the plan's fiduciaries listed as defendants." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
Court Rules Former Participant Has No Standing for ERISA Claims
Excerpt: "The U.S. District Court for the District of Minnesota has ruled that a former Wells Fargo employee who took a distribution of her retirement account does not have standing to pursue Employee Retirement Income Security Act (ERISA) fiduciary breach claims against Wells Fargo for 'self-dealing.'" (PLANSPONSOR.com; free registration required)
The Sun Life Financial Unretirement Index
Excerpt: "The UnretirementSM Index measures American attitudes toward retirement over time, as well as the effect of economic, financial and societal forces on these attitudes. As you explore this Web site you will learn how attitudes have changed since August, who is most impacted by the current economic environment, what factors have the greatest effects on American workers and how they are responding." (Sun Life Assurance Company of Can.ada (US))
Budget Proposal on 401(k) Plans May Lead to Unintended Consequences, PSCA Warns
Excerpt: "President Obama's fiscal 2010 budget contains well intentioned enhancements to increase retirement savings, but Congress should carefully examine them for unintended consequences, the Profit Sharing/401(k) Council of America said in a March 3, 2009 news release." (Wolters Kluwer)
Retirement Investing: Finding Safety for Your Investments
Excerpt: "Many investment professionals and financial advisers also say diversification is best even for conservative investors who might rather play it safe with a narrower strategy. 'This idea of 'going safe' in retirement doesn't really hold water,' says Barry Korb, of Lighthouse Financial Planning in Potomac, Md. Conservative investing -- and the resulting low returns year after year -- 'increases the chances of [retirees] running out of money,' he says." (BusinessWeek)
Majority of Employers Continue 401(k) Match, According to Survey
Excerpt: "A survey released by WorldatWork and the American Benefits Council indicates that the majority of employers are continuing to offer a 401(k) match: A full 74 percent of employers reported no change in the employer matching contribution; 15 percent have either increased or are considering increasing the employer match; eight percent have either decreased or are considering decreasing the 401(k) match, and three percent reported eliminating the match." (Attorney B. Janell Grenier via Benefitsblog.com)
Principles for a New Retirement System (PDF)
Excerpt: "This working paper documents the need for a new system, details principles that should guide the development of a new system, and provides examples of plans and proposals that incorporate these principles." (Retirement USA)
How Could Obama Administration and Congress Change the Way You Save for Retirement?
Excerpt: "The most concrete proposals out there are two items in the Obama Administration's budget proposal that have garnered broad support among Democrats in the past. Neither one has been introduced as legislation yet. . . . The first expands the 'savers' credit . . . . [The second is an Individual Retirement Account through automatic payroll deductions.]" (BusinessWeek)
ICI Comments on DOL's Investment Advice Final Rule
Excerpt: "ICI advocates the expansion of opportunities for investment advice and supports DOL's decision to seek public comment and review of its final rules. It is important for the new Administration to review these regulations to be certain they are in the public interest." (Investment Company Institute)
Frontier Asks Judge to Permit 401(k) Match Suspension
Excerpt: "Frontier Airlines on Monday filed a complaint in U.S. Bankrup.tcy Court accusing the union that represents its pilots of now turning its back on an existing agreement allowing the air carrier to stop its 401(k) match. An Associated Press news release said the Denver-based airline, which has been reworking its business operations while under Chapter 11 bankrup.tcy protection since April, 2008, indicated in the court document that the 401(k) match deal with the pilots would have saved Frontier $1.7 million last year and $7 million over the life of the agreement." (PLANSPONSOR.com; free registration required)
Garden State Lawmakers OK Pension Funding Delay Bill
Excerpt: "New Jersey state lawmakers have approved Governor Jon Corzine's proposal allowing financially strapped towns and school districts to delay half their payments to the public employee pension system." (PLANSPONSOR.com; free registration required)
The Oldest and Youngest Baby Boomers Have Different Retirement Plans
Excerpt: "Retirement age. The 1946-born boomers largely say they plan to retire at age 66, while those born in 1964 plan to retire at age 64. But that retirement age could be shifted older as the younger boomers age. The youngest boomers also say they would have to be age 71 to be considered old, while the oldest boomers consider 78 years to be old age." (U.S. News & World Report)
Strange But True: Free Loan from Social Security
Excerpt: "Recently, several unconventional claiming strategies have come to light that have the potential to pay higher lifetime benefits to some individuals and increase system costs. This brief focuses on one of these strategies, which we call the 'Free Loan from Social Security' strategy. The first section outlines the procedure and incentives of employing this strategy. The second section . . . presents estimates of the cost to Social Security under three different scenarios and describes who would gain. The final section concludes that the estimated annual $6 billion to $11 billion cost of allowing free loans from Social Security is likely to increase substantially over time." (Center for Retirement Research at Boston College)
Law Professors' Amicus Brief Filed in 7th Circuit ERISA Case
Excerpt: "Today, as part of a group of law professors around the country with interests in the mutual funds and employee benefits area, I helped to draft and signed on to an amicus brief which asked for the Seventh Circuit Court of Appeals to grant rehearing en banc in the ERISA case of Hecker v. Deere & Company. The case concerns an issue of tremendous importance for American workers' retirements: the appropriate scope of a fiduciary duty under ERISA in the context of personal savings and mutual fund fees." (Paul M. Secunda via Marquette University Law School)
[Opinion]
Time to Embrace Fiduciary Standard
Excerpt: "A consensus is forming that financial regulatory reform should include provisions to require anyone providing advice to adhere to a fiduciary standard of care. The Washington-based North American Securities Administrators Association has recommended this important change most forcefully and articulately." (Investment News; free registration required)
[Opinion]
Summarizing the Risks That Threaten the Profitability (and Possibly Even the Survival) of 401(k) Providers (PDF)
3 pages. Excerpt: "There is more than one way of characterizing the risks that are turning providers' business models upside-down and inside-out. For the purpose of this outline, the risks are divided into two categories . . . ." (Richard D. Glass via Investment Horizons, Inc.)
[Opinion]
The 403(b) Regs Unintended Consequence: The Freezing of Loans and Hardships in a Time of Crisis
Excerpt: "One of the most unfortunate and unintended consequences of the new 403(b) regulations is the freezing of hardship distributions and loans from contracts of 'deselected' vendors, at a time when these funds are needed the most. What at first seemed like an almost esoteric, academic discussion of what to do with contracts which were issued prior to 1/1/09 and to which all contributions ceased as of that date has now become one which is fraught with human tragedy. Participants in 403(b) plans (and, it seems, mostly in non-ERISA plans like school districts) are now caught in a terrible cat-fight between employers and vendors which has resulted in employees not having access to those 403(b) funds to help them through this economic mess in which we find ourselves." (Giller and Calhoun)
[Opinion]
How Congress, Banks and Wall Street Ruined Your 401k Plan
Excerpt: "We do have one of the best economic systems in the world but, in this case, our trust has been abused. We have also done a tremendous disservice to our 401k participants in advising them to ride this market all the way down. We should have recognized that this was not a normal economic recession but a mismanagement of the financial system by those who believe they are so much smarter than the rest of us. They broke the system and we should not have let our clients pay the price." (Russell McAlmond via 401khelpcenter.com)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]An Important Decision on Risk from the Delaware Chancery Court
Excerpt: "Late last month, another important case for executive compensation professionals came out of the Delaware Chancery Court. The In re Citigroup Inc. Shareholder Litigation case touches two distinct areas of importance. First, the case reaffirms Delaware law established by the In re Caremark Int'l Inc. Derivative Litig., 698 A.2d 959 (Del. Ch. 1996) decision, with respect to Board of directors' oversight responsibilities." (Michael S. Melbinger via Winston & Strawn LLP)
The Principal Financial Well-Being Index Survey Summary, First Quarter 2009
Excerpt: "Benefits: The availability of health insurance, defined contribution plans, life insurance, free parking tuition reimbursement, flex time, defined benefit plans, child care subsidies, and on-site day care have decreased significantly when compared to 1st quarter 2008. Employees continue to rate health insurance as the most important benefit, followed by defined contribution plans, dental insurance, disability insurance, and defined benefit plans. Health insurance is the benefit most employees would like to see their company improve upon." (Principal Financial Services, Inc.)
Webcasts and Conferences
(Click to post your webcast or conference)Department of Labor - Are You Prepared for Form 5500 Changes and Electronic Filing? Webcast
Nationwide on April 2, 2009
presented by International Foundation of Employee Benefit Plans
Is the “Chihuahua” Ready to Put Some Bite in Its Bark? Have the Practices of Board Compensation Committees Responded to the 2004 Criticisms of Mr. Buffett? - Webcast
Nationwide on March 20, 2009
presented by BNA, Inc.
Press Releases
(Click to post your press release)U.S. Labor Department Sues Fiduciaries of McHenry, Illinois-based Company to Recover 401(k) Profit Sharing Assets
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
New Survey: Three Out of Five Employers Maintain 401(k) Match Despite Economic Crisis
American Benefits Council
Groups Launch Retirement USA Initiative, Establish Principles for a Visionary Retirement Income System
Pension Rights Center
Seyfarth Shaw Adds Team of Employee Benefits & Executive Compensation Attorneys to New York Office
Seyfarth Shaw LLP
Employee Benefits Jobs
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