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March 25, 2009 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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[Official Guidance]
Nonamenders and the Voluntary Correction Program
Excerpt: "Voluntary Correction has written an explanation of the nonamender process under the VCP. This explanation will tell you all you need to know about filing for relief under VCP for nonamender failures, including when you can file (with examples of when Appendix D or F should be used) and when a determination letter should be filed as part of a VCP submission." (Internal Revenue Service)
[Guidance Overview]
Retirement Plan Loans to Be Exempt from Truth in Lending Act's Disclosure Requirements
Excerpt: "The new exemption applies to any extension of credit to a participant from: an employer-sponsored retirement plan qualified under Code Section 401(a), a tax-sheltered annuity under Code Section 403(b), or an eligible governmental deferred compensation plan under Code Section 457 (b) (including plans not subject to ERISA), provided that the extension of credit is comprised of fully vested funds from the participant's account and is made in compliance with other applicable provisions of the Internal Revenue Code." (Seyfarth Shaw LLP)
[Guidance Overview]
Final Automatic Contribution Arrangement Regulations
Excerpt: "On February 24, 2009, following consideration of many questions and comments, the IRS published its final regulations on Automatic Contribution Arrangements. Many of the issues addressed in the proposed regulations are either confirmed or clarified in the final regulations. Only minor changes have been made to the general provisions of the IRS guidance. This article highlights key points of the final regulations that could potentially affect current or future Automatic Contribution Arrangements." (McGuireWoods LLP)
[Guidance Overview]
PBGC Final Regulations on Reporting for Underfunded Plans (PDF)
4 pages. Excerpt: "The PBGC has issued final regulations on its reporting requirements for underfunded defined benefit plans under ERISA Section 4010. In addition to implementing changes made by the Pension Protection Act of 2006 (PPA), these regulations waive reporting for controlled groups with less than $15 million in underfunding, modify some of the information required to be reported, and make other clarifying changes. Section 4010 filings are required to be submitted within 105 days after the end of the information year (generally the fiscal year). For 2008 calendar year information years, the filing is due April 15, 2009." (Buck Consultants)
[Guidance Overview]
IRS's Interim Guidance on Asset Valuation Rules for Single-Employer Defined Benefit Plans (PDF)
Excerpt: "The IRS has issued Notice 2009-22, which provides interim guidance on asset valuation methods for minimum funding purposes after changes made by the Worker, Retiree, and Employer Recovery Act of 2008. Importantly, the notice provides automatic approval for changes in asset valuation methods for 2009 plan years." (Buck Consultants)
[Guidance Overview]
Avoid Incurring a Top-Heavy Minimum Contribution
Excerpt: "In terminating, freezing or reducing the contributions in a safe harbor 401(k) plan, an employer must take into account the possibility of incurring a top-heavy minimum contribution which might equal or exceed the safe harbor contribution that the employer is eliminating. In FAQs [on the target page], we address the top-heavy issues that apply when reducing or terminating a safe harbor 401(k) plan." (Sungard)
A New Minimum Social Security Benefit for Low Lifetime Earners
Excerpt: "Despite working hard and playing by the rules over long periods, many workers end up poor in retirement. We propose an enhanced minimum benefit for Social Security that targets long-career workers with low lifetime earnings along with a modest credit that compensates workers for up to three years out of the labor market due to caregiving, unemployment, or poor health. By combining these elements, the proposal provides work incentives, yet recognizes realities facing low-wage workers, many of whom have had intermittent work careers. We show that these proposed enhancements would allow more adults to retire with a secure financial foothold." (The Urban Institute)
Financial Literacy in Times of Turmoil and Retirement Insecurity
Excerpt: "The financial crisis has caused a reported $2 trillion loss in retirement accounts nationwide. A majority of Americans are worried their retirement funds may not be sufficient, and young and old alike are concerned about financial and retirement security. On March 20, the Brookings Institution, Wharton's Pension Research Council and Boettner Center, the University of Michigan Retirement Research Center, and The Retirement Security Project co-sponsored a conference on financial literacy and retirement preparedness. . . . The conference focused on how workers and retirees can better manage saving for retirement, and how they can stay secure during retirement. Participants identified research and policy directions for the future. Conference Memos and Presentations [are available on the target page.]" (The Retirement Security Project)
State Pension and Retirement Legislation Introduced January 1 - March 4, 2009
Excerpt: "The goal of the report is to convey a sense of the major issues under consideration in the legislatures, not to report every bill. Bills that would affect a narrow class of active or retired employees and housekeeping legislation have been excluded. Bills that affect specific local government retirement plans have been included only when the local system is very large (for example, Chicago public employees) or when the bill addresses all the systems in a state. More attention has been given legislation that affects large groups of system members (like teachers or general state employees) than bills that affect small groups (like forest wardens or lifeguards). The existence of bills identical or similar to those itemized below has been noted as a way of indicating a topic of broad concern in a given legislature." (National Conference of State Legislatures)
DOL Rules Allowing Retirement Plan Administrators to Offer Specific Investment Advice
Excerpt: "Lawmakers say the regulations may make it harder to obtain independent advice, risking workers' retirement savings, said Representative Robert Andrews, chairman of the Health, Employment, Labor and Pensions Subcommittee. 'We believe it runs the risk of spreading the conflict-of- interest disease to the world of pension holdings,' said Andrews, a New Jersey Democrat." (Bloomberg L.P.)
New Rules on Retirement Advice Get Mixed Reviews
Excerpt: "Experts debate whether the new rules will improve plan participants' access to investment counsel. [Alan] Vorchheimer, who specializes in defined contribution plans, said some plan fiduciary advisers might view the new regulations -- including annual audits and ensuring computer models are in compliance -- as burdensome. That may discourage investment and financial services firms that serve as plan fiduciaries from creating business opportunities that focus on providing investment advice to 401(k) and IRA participants enrolled in their funds." (Financial Planning)
GOP Congressmen Offer Savings Proposal
Excerpt: "A group of Republican Congressmen have proposed a plan they say offers a shot in the arm for American savings. The Savings Recovery Act has been introduced by the House GOP's Solutions Group for Savings Restoration - a group of Republican Congressmen led by U.S. House of Representatives Minority Leader John Boehner. According to an announcement, the proposal is designed to help Americans rebuild their retirement, college, and personal savings." (PLANSPONSOR.com; free registration required)
California State Retirement Systems Seek to Lead BofA Class Action
Excerpt: "The nation's two largest state public pension funds filed a joint motion Tuesday in the U.S. District Court for the Southern District of New York to be designated lead plaintiff in class actions against Bank of America over its merger with Merrill Lynch. The California Public Employees' Retirement System (CalPERS) and California State Teachers Retirement System (CalSTRS) announced that the move was made 'to protect the retirement security of over two million members.' The suits allege BofA misled its shareholders by not disclosing the depths of Merrill's problems while shareholders were considering whether to support the deal . . . ." (PLANSPONSOR.com; free registration required)
Pension Plan Choices May Shrink: Underfunding Could Affect Many
Excerpt: "The stock market's decline has already ravaged your 401(k) plan. Now it could hurt your pension, too. Under a law that took effect last year, underfunded pension plans may be forced to limit lump-sum payments and suspend cost-of-living increases for retirees. In addition, some plans could be frozen, preventing current employees from earning credit for additional years on the job." (The Boston Globe)
Target Date Funds Took Too Many Risks for Near-Retirees
Excerpt: "The nation's experiment with simple 401(k) investing didn't turn out to be so simple after all, as millions of workers have lost large chunks of their life's savings when they can least afford it -- on the verge of retirement. So-called target date funds, perhaps with retirement dates of 2010 or 2015 in their names, were intended in part to get sixtysomething employees' 401(k) savings ready for retirement. But instead of being the simple and safe funds some individuals imagined when their employers touted them, the funds have taught employees and employers that one-size-fits-all investments can be faulty when the risks aren't understood and people are approaching retirement." (Chicago Tribune)
Record Losses in Pension Funded Status During 2008 Erase Five Years of Gains
Excerpt: "The ongoing financial crisis drove the 100 largest corporate pension plans to a record $300 billion loss of funded status in 2008. Asset losses fueled a decrease in funded status from about 106% at the end of 2007 to less than 80% at the end of 2008. Losses continued into 2009 with a $30 billion decrease in funded status in the first two months. At the end of February, the funded status of these 100 pension plans stood at 74%, the lowest level since May 2003." (Milliman)
Mercer Launches New Strategy Tied to Liability Driven Investment Approach
Excerpt: "Mercer's investment management business has launched a new long duration investment grade credit strategy to help plan sponsors seeking to reduce the funded status volatility of their pension plans. Mercer said the new strategy is intended to be used in conjunction with its Liability Driven Investment (LDI) approach, which seeks to improve the correlation between pension plan assets and liabilities. Mercer explained that the new strategy's investment performance and the present value of plan liabilities are both affected by the level and movement of corporate bond yields which are the primary drivers of the expected correlation." (PLANSPONSOR.com; free registration required)
SEC Changes Regulatory Agenda in Light of Market Changes
Excerpt: "Andrew J. Donohue, Director, Division of Investment Management, U.S. Securities and Exchange Commission, said the change in the market over the past two years necessitates a change in the Commission's regulatory agenda. Specifically, in his speech at the Investment Company Institute's 2009 Mutual Funds and Investment Management Conference, Donohue said the SEC is deferring 'wholesale reconsideration of rule 12b-1.'" (PLANSPONSOR.com; free registration required)
GAO Testimony: Private Pensions: Conflicts of Interest Can Affect Defined Benefit and Defined Contribution Plans
16 pages. Statement of Charles A. Jeszeck, acting director, education, workforce, and income security, before the Subcommittee on Health, Employment, Labor, and Pensions, House Committee on Education and Labor, March 24, 2009. Excerpt: "GAO's analysis of available data on pension consultants and plans revealed a statistical association between inadequate disclosure and lower investment returns for ongoing plans, suggesting the possible adverse financial effect of such nondisclosure. Specifically, our econometric analysis using ongoing defined benefit (DB) plans and Securities and Exchange Commission (SEC) study data on pension consultants registered as investment advisers, who adequately disclosed their conflicts of interest and those who did not, detected lower annual rates of return for those ongoing plans associated with consultants that had failed to disclose significant conflicts of interest." (U.S. Government Accountability Office)
Eight AIG Stock-Drop Cases Meld into One
Excerpt: "A federal judge has consolidated eight employee stock-drop cases against American International Group, Inc. (AIG) U.S. District Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York ruled that the cases involved some of the same defendants and factual and legal issues. The consolidated case will now move forward as In re American International Group Inc. ERISA Litigation II (08 Civ. 5722). The suits alleged the company breached its fiduciary duty by keeping the stock as an investment option in its 401(k) plan . . . ." (planadvisor)
Pfizer/Pharmacia Stock-Drop Case Moves Forward
Excerpt: "A judge gave the OK for current and former Pfizer Inc. and Pharmacia Corp. employees to move forward with their fiduciary breach suit. The suit alleges the companies did not warn employees that their stock share price was artificially inflated." (planadvisor)
[Opinion]
Comments for the Hearing on Retirement Security: The Importance of an Independent Investment Adviser (PDF)
5 pages. U.S. House of Representatives, Committee on Education and Labor, Subcommittee on Health, Employment, Labor and Pensions hearing on March 24, 2009. Excerpt: "During these difficult economic times, Americans need access more than ever to independent and professional investment advice. ASPPA, CIKR and NAIRPA commend the Chairman for holding this timely hearing. Furthermore, to ensure adequate protection to participants and beneficiaries, ASPPA, CIKR and NAIRPA recommend that the DOL withdraw the Class Exemption portion of the final, DOL investment advice regulation. We also encourage Congress to consider legislation that encourages the provision of independent investment advice to retirement plans and participants." (American Society of Pension Professionals & Actuaries (ASPPA), the Council of Independent 401(k) Recordkeepers (CIKR), and the National Association of Independent Retirement Plan Advisors (NAIRPA))
[Opinion]
DOL's Final Investment Advice Regulation and Class Exemption
Excerpt: "Although the fundamental structures of both the regulation and class exemption are unchanged from the DoL's proposals, the final version contains a few important modifications. Please keep in mind two important caveats: (1) The regulation and class exemption do not cover advice to plan sponsors, and (2) they do not cover discretionary investment programs." (PLANSPONSOR.com; free registration required)
ASPPA (Advert.)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]AIG Bills Also Make 409A Amendments
Excerpt: "Lost in last week's excitement over the competing House and Senate Bills to tax AIG bonuses was the fact that the Senate Bill, the so-called 'Compensation Fairness Act of 2009,' also would amend Code Section 409A, by adding a new section (a)(5), which provides that: 'In the case of any Federal emergency economic assistance recipient maintaining a nonqualified deferred compensation plan, the requirements of this paragraph are met if the plan provides that the aggregate amount of compensation which is deferred for any applicable taxable year beginning after December 31, 2008, with respect to a participant under the plan may not exceed $1,000,000.'" (Michael S. Melbinger via Winston & Strawn LLP)
Retention Edges Out Cost Reduction as Benefits Objective
Excerpt: "More employees are depending on company benefits to weather the recession, and employers are keeping an eye on costs even while they see benefits as a retention tool, according to a new survey by MetLife. The study shows that 41 percent of employees polled in November 'consider workplace benefits to be the foundation of their personal safety net as they awaken to current realities about their financial security,' up from 33 percent in August. That number rises to 52 percent for workers in a company that employs 2,500 people or more." (Workforce Management; free registration required)
Webcasts and Conferences
(Click to post your webcast or conference)401(k) Plan Costs Including Recent Update on Supreme Court Rule LaRue v. DeWolff, Boberg & Associates Inc.
Nationwide on April 3, 2009
presented by Lorman Education Services
Changes to Cafeteria Plans: What You Need to Know to Prepare
Nationwide on April 28, 2009
presented by Lorman Education Services
COBRA and HIPAA Compliance Workshop
in New York on May 14, 2009
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
COBRA Provisions in the American Recovery and Reinvestment Act Workshop
in Texas on April 3, 2009
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
COBRA Provisions in the American Recovery and Reinvestment Act Workshop
in Missouri on April 6, 2009
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Internal ERISA Audits: Getting It Right Before the Government Shows Up
Nationwide on May 1, 2009
presented by Lorman Education Services
The New HIPAA Special Enrollment Rules and Related Disclosure Issues
Nationwide on May 5, 2009
presented by Lorman Education Services
Webinar Series: Topical Practice Management Trends
Nationwide on March 27, 2009
presented by AccuDraft, Inc.
Why Is This Guy Still on My Health Plan?
Nationwide on June 2, 2009
presented by Lorman Education Services
Press Releases
(Click to post your press release)NAIRPA to Represent Independent Retirement Plan Investment Advisors
ASPPA (American Society of Pension Professionals & Actuaries)
ASPPA, CIKR, & NAIRPA Support Independent Investment Advice
ASPPA (American Society of Pension Professionals & Actuaries)
Benefit Software Inc. Helps Companies Meet Growing Challenge of Managing COBRA Claims
Benefit Software Inc.
Council Expresses Support for Savings Recovery Act
American Benefits Council
FASCore, LLC, To Provide Retirement Plan Recordkeeping Services To Putnam Investments
Great-West Life & Annuity Insurance Company
Healthcare 311 Reaches Employer-user Milestone, Introduces New Usability Features
Benefits Information Group
Segal Hires New National Retirement Compliance Practice Leader
Segal Advisors
Deffenbaugh Industries to Host Self-Funding Healthcare Conference in Kansas City
Savvy Self-Funding Healthcare Conference & Expo
GASB 45 for the Masses--Welcome to the "Party"
Scenic Valley Associates
DST Retirement Solutions to Support New AARP 401k Offering
DST Retirement Solutions
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