Retirement Plans Newsletter |
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| May 20, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
Employee Benefits Institute of America (EBIA) (Advert.)
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]
IRS Withholding Table Fix for Pension Payments
Excerpt: "Many plan sponsors will wish to use the new withholding tables and some have already provided their participants with information regarding the February 2009 change in the withholding tables. If the plan sponsor desires to implement the optional procedure to apply additional withholding, a supplemental communication may be appropriate. Plan sponsors should be aware that the IRS will soon launch an outreach effort to educate pensioners about the withholding tables and the Making Work Pay Tax Credit. Plan sponsors should be prepared for inquiries from participants." (McDermott Will & Emery)
[Guidance Overview]
The IRS's Employee Plans Compliance Resolution System for Retirement Plans
Excerpt: "In a perfect world, all retirement plans would be amended on time and operated properly according to the plan terms and the law. However, we don't live in a perfect world and the IRS's Employee Plans Compliance Resolution System (EPCRS) acknowledges that fact. EPCRS lets plan sponsors correct certain common plan failures to satisfy the plan qualification requirements without suffering the severe penalty of plan disqualification. This article provides an overview of EPCRS and how you can save a retirement plan from disqualification." (Chang Ruthenberg & Long PC)
[Guidance Overview]
Radio Shack 401(k) Fiduciary Breach Case Plaintiffs Seek Class Action Nod
Excerpt: "Lawyers representing plaintiffs alleging a fiduciary breach in the operation of the Radio Shack 401(k) have asked a federal judge to certify the suit as a class action to potentially represent as many as 13,000 current and former employees. The suit against the electronics retailer alleges the breach was committed by the company using Putnam mutual funds as investment options even though 'those funds were overpriced and underperforming and were selected to reduce defendants' expenses rather than for their merit.'" (PLANSPONSOR.com; free registration required)
How Does Your Investment Committee Stack Up Against Others?
Excerpt: "Whether you're a new or veteran committee member, you may wonder how your group compares with others in making investment decisions. Preliminary findings from the survey, conducted by Vanguard Investment Counseling & Research in late 2008, show that committees do many things right, but they also fall into some behavioral patterns that can prove counterproductive." (The Vanguard Group, Inc.)
Resources for GASB Invitation to Comment on Pension Accounting and Financial Reporting
Excerpt: "The Governmental Accounting Standards Board currently is reviewing Statements 25 and 27, standards that provide guidance on pension accounting and financial reporting. In April 2009, GASB distributed an Invitation to Comment to solicit perspectives of interested individuals and groups regarding possible changes to these standards. Responses to the ITC are due July 31, 2009. Listed [on the target page] are resources pertaining to the ITC. Portions of the Invitation to Comment reflect views held by those who believe that public pension financial reporting should include plans' so-called market value of liabilities." (Governmental Accounting Standards Board)
The Case for Employer-Sponsored Retirement Plans: Fees and Expenses (PDF)
Excerpt: "This [paper] examines two groups of concerns regarding plan fees and expenses. The first group relates to claims that employer-sponsored retirement plans and their investments are expensive and may erode American workers' retirement savings. The second addresses concerns that employer-sponsored retirement plans and their investment fees and expenses are not adequately understood and disclosed." (The SPARK Institute)
What Does Defined Contribution Plan 'Reform' Mean to Employers? (PDF)
6 pages. Excerpt: "We focus here on DC plan design reforms rather than on distribution or investment option reform. Specifically, this InsightOut: Reviews the growth of DC plans. Describes four proposals for DC plan design reform. Poses questions to consider in assessing whether these proposals would provide a more secure and reliable retirement system." (Buck Consultants)
Q&A with Rep. George Miller on 401(k) Legislation
Excerpt: "Rep. George Miller, D-Martinez, chairman of the House Education and Labor Committee, wants to reform 401(k) plans. His efforts have taken on increased urgency as many investors have taken hits of 30 percent or more on their 401(k) account balances over the last year. A key concern is that 401(k) providers do not clearly spell out the fees they charged to manage the investments and administer the accounts. . . . In a recent interview, Miller explained his view on fee disclosure and the prospects of getting legislation passed this year." (San Francisco Chronicle)
Congress Considers Tough Rules to Oversee PBGC
Excerpt: "The rapidly deteriorating financial health of the federal agency that guarantees 44 million Americans' pensions is raising alarms in Congress, where key lawmakers are demanding tougher rules to insure vigilant oversight of its multibillion-dollar investment portfolio. The recession is forcing into bankrup.tcy an increasing number of companies with underfunded pension plans, leaving the Pension Benefit Guaranty Corp. with billions of dollars more to pay out in pension checks to retirees in the future. Its long-term deficit tripled in the past six months to a startling $33.5 billion." (AP via The New York Times; free registration required)
U.S. Retirement Market Analysis, May 2009
Excerpt: "The U.S. retirement market has grown tremendously over the last 20 years, largely driven by the Baby Boomer phenomenon, amassing over $24 trillion in financial assets by the end of 2008. These assets generated $183 billion in revenues last year. Many of the top financial services firms in the U.S. have invested significant amounts of capital towards creating a profitable business from retirement assets. As firms develop business and marketing strategies to target retirement, it is not clear what data about the market is readily available to support them. Various sources exist, but none present a holistic view. As a result, key strategic questions have been difficult to answer to the necessary degree of specificity . . . ." (Novarica)
Whitepaper Outlines New Solution to Mitigate Pension Plan Risk
Excerpt: "The whitepaper - part of MetLife's Topics in Pension Risk Management Series - claims that a Partial Risk Transfer can mitigate more risk than can a Liability Driven Investment (LDI) program 'at a cost that's competitive with such a program, factoring in the costs and risks of both approaches'. The white paper defines a partial risk transfer as 'the removal of a portion of the assets and liabilities from a plan by 'settling' them with an insurance company through the purchase of a group annuity contract.'" (PLANSPONSOR.com; free registration required)
NYC Comptroller Backs Conduct Code for Investment Firms Dealing with Pension Funds
Excerpt: "New York City Comptroller William Thompson said on Tuesday he will urge the New York City pension funds to adopt the code of conduct announced by New York Attorney General Andrew Cuomo. Cuomo's code, announced last week, bans investment firms managing pension funds from hiring placement agents, lobbyists, or other third-party intermediaries to help hire investors for the funds. 'I have carefully reviewed the attorney general's code of conduct that was recently released, and fully support the principles set forth in the code,' Thompson said." (Reuters)
Chrysler's Pensions Are Underfunded by $10 Billion
Excerpt: "Bankrupt Chrysler LLC's pension plans may be underfunded by more than $10 billion, the federal Pension Benefit Guaranty Corp. has estimated. If the pensions are terminated, the agency's claim for the shortfall in the automaker's bankrup.tcy case 'would exceed $9 billion,' Chrysler lawyers said in a filing today in U.S. Bankrup.tcy Court in New York." (Bloomberg L.P.)
Hearing: No Guarantees: As Pension Plans Crumble, Can PBGC Deliver?
May 20, 2009. Excerpt from May 14, 2009, press release. 'On Wednesday, May 20, U.S. Senate Special Committee on Aging Chairman Herb Kohl (D-WI) will hold a hearing to consider whether the federal government's Pension Benefit Guaranty Corporation (PBGC) has the capability to fulfill its mission to insure the pensions of nearly 44 million Americans, at a time when several of the country's largest automobile companies are teetering on the edge of bankrup.tcy." (U.S. Senate Special Committee on Aging)
Senate Committee Hearing Examines PBGC
Excerpt: "As the current economic downturn weighs on the nation's pension plans, a Senate Committee plans to examine what it means to the nation's private pension plan insurer. Today the U.S. Senate Special Committee on Aging Chairman will hold a hearing - provocatively titled 'No Guarantees: As Pension Plans Crumble, can PBGC Deliver?' - to 'consider whether the federal government's Pension Benefit Guaranty Corporation (PBGC) has the capability to fulfill its mission to insure the pensions of nearly 44 million Americans, at a time when several of the country's largest automobile companies are teetering on the edge of bankrup.tcy,' according to a press release." (PLANSPONSOR.com; free registration required)
PBGC's Deficit Triples to $33.5 Billion
Excerpt: "The federal agency that guarantees corporate pensions was $33.5 billion in the red at the end of March, triple its deficit six months earlier, the agency's head has told a Senate committee. The recession threatens to add to the strain on the Pension Benefit Guaranty Corp. by pushing more companies into bankrup.tcy and leaving the struggling agency responsible for their pensions." (The Washington Post; free registration required)
The Center for Due Diligence (CFDD) (Advert.)
CFDD October 5-7, 2009 Advisor Conference ADAPT, SURVIVE & PROSPER: A Bull Market In Broker of Record Changes The CFDD’s Advisor Conference is an all business event designed to help retirement plan advisors adapt to unprecedented challenges. Distinguished by accomplished advisor attendance and rich content, the advisor-centric conference has become the industry’s premier networking and educational event. To benefit from unbiased guidance, LIMIT liability, IMPROVE investment returns, generate NEW business, PARTICIPATE in broker of record consolidation and CUSTOMIZE your own QDIA Asset Allocation Solutions, register at a discount NOW! Click HERE for more information. |
Links to Items on Executive Comp, Benefits in General
[Guidance Overview]A Primer for Employers on 409A Issues in Compensation Arrangements
Excerpt: "The consequences for non-compliance with Section 409A (either in the terms of the written arrangement or in the operation of the arrangement) are severe, although the consequences primarily affect the employee, not the employer. In the event of non-compliance with Section 409A, the employee will be subject to a 20% excise tax. Additionally, the employee will have immediate taxation of the deferred amount in the year the right to the payment vests (even if not yet received by the employee). Interest also may apply." (Troutman Sanders LLP)
Tax-Free Insurance Benefits Reportedly Used to Pay Executive Bonuses, Deferred Pay and Pensions
Excerpt: "Banks are using tax-free benefits from life insurance policies they hold for their employees to pay executive bonuses, deferred pay and pensions, according to a published report Wednesday. Major financial institutions -- including Bank of America (BAC, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500), Wachovia and its parent, Wells Fargo (WFC, Fortune 500) -- are taking increasing amounts of life insurance policies against their employees, and naming the company as the beneficiary, the Wall Street Journal reported. The company receives a tax-free benefit when the employee dies, whether that employee is still working at the company or not, the report said." (CNNMoney.com)
Do Stock Options Have a Future? (PDF)
3 pages. (WorldatWork via Frederic W. Cook, Inc.)
Automotive Industry Salaried Retirees Join Forces to Save Pensions and Benefits
Excerpt: "More than 200,000 salaried retirees from the U.S. automotive industry have formed a coalition to fight for their benefits. The presidents of each of the four national retiree associations of Chrysler LLC, Delphi Corp., General Motors Corp. and Ford Motor Co. announced Thursday the formation of the National Automotive Coalition (TNAC). . . . [T]he salaried retirees of the four organizations are being urged to meet with their congressional representatives on a face-to-face basis to determine support for their concerns. 'We have a six-point agenda to discuss with each representative,' . . . . 'We want to know if they are for or against us.'" (Kokomo Tribune)
Webcasts and Conferences
401(k) Plans for Rookies: Master the Basics So You Can Handle the DetailsNationwide on May 13, 2009
presented by EBIA / Thomson Reuters
Complying with Mental Health Parity Requirements: What This Means for Plan Sponsors
Nationwide on June 2, 2009
presented by Buck Consultants, an ACS Company
Retirement Fee Regulatory Webinar
Nationwide on June 2, 2009
presented by Redi2 Technologies
(Click to post your webcast or conference)
Press Releases
PBGC Deficit Climbs to $33.5 Billion at Mid-Year, Snowbarger to Tell Senate PanelPension Benefit Guaranty Corporation (PBGC)
U.S. Labor Department Secures 401(k) Plan Assets for J&L Electronic Service Inc. Employees in Chicago Suburb
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
U.S. Labor Department Sues to Appoint Independent Fiduciary for 401(k) Plan Abandoned by Former Iowa Employer
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
The SPARK Institute Addresses 401(k) Plan Fees and Expenses In New White Paper
SPARK Institute
EPIC Advisors, Inc. Partners with a Texas Firm to Support Business Expansion in the Southwestern United States
EPIC Advisors, Inc.
(Click to post your press release)
Employee Benefits Jobs
Plan Administrator/Trust Accountantfor Thomas F. Barrett, Inc.
in MD
EBS Actuarial Analyst I/II/III
for EBS-RMSCO, Inc.
in NY
Retirement Plan Administrator
for PENSYS, Inc.
in CA
Business Development Officer
for First Merchants Trust Company
in OH
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