Retirement Plans Newsletter |
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| June 9, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
AIRE LLC (Advert.)
Enrolled Retirement Plan Agent (ERPA) Exams Open Retirement plan practitioners who seek the new Internal Revenue Service Enrolled Retirement Plan Agent designation and who now are ineligible to act as clients agents pursuant to IRS Form 2848 may register now. Register by July 6, 2009 and take the examination up to August 31, 2009. Get valuable resources to prepare for the ERPA special enrollment examination at www.airellc.org. |
[Guidance Overview]
Calculating 403(b) 'Annual Additions'
Excerpt: "The section 415 annual additions limit is applicable to 403(b) plans. There is an aggregation of all 403(b) plans of the same employer for the annual additions limit ($49,000 in 2009), including related employers. Like qualified plans, if an employee participates in more than one 403(b) plan in a year with unrelated employers, the section 415 limit applies separately for each employer. However, with a 403(b), the 415 annual additions limit is generally applied as if the employee, and not the employer, maintains the plan. Thus, generally, the 403(b) plan is not aggregated with the qualified plan for 415 purposes." (McKay Hochman Co., Inc.)
Supreme Court Delays Sale of Chrysler to Fiat
Excerpt: "The Obama administration's effort to hurry Chrysler through bankrup.tcy court ran into an unexpected last-minute delay on Monday, when the Supreme Court said it would consider whether to hear the objections of three Indiana state funds and consumer groups. The implications of the court's move -- Judge Ruth Bader Ginsburg issued a one-sentence order that amounted to a holding action -- are unclear." (The New York Times; free registration required)
Webcast: Getting Ready for the 2009 Form 5500 and Electronic Filing, June 11, 2009
Excerpt: "To help plan sponsors and plan service providers prepare for the changes to the Form 5500 and the electronic filing requirement that begin with the 2009 plan year filings, the Department of Labor will be providing webcasts and other educational outreach throughout the year. This second webcast will address frequently asked questions about preparing the Form 5500 and preparing for electronic filing and the new EFAST2 system. The webcast also will highlight new features of the Delinquent Filer Voluntary Compliance Program that make it easier to use. As part of the changes to the 2009 Form 5500, a new Form 5500-SF was created for certain small plan filers and a number of the schedules to the Form 5500 were changed. The webcast will feature the layout of the new Form 5500-SF and the key changes to the Form 5500 schedules and their instructions. Along with the form changes, the ERISA Filing Acceptance System (EFAST) is being modernized. The new filing system, EFAST2, will receive only electronic filing submissions. The webcast will discuss the key dates surrounding the EFAST decommissioning and transition to EFAST2 and address the questions the Department has been receiving about the new system. [Registration is on the target page.]" (U.S. Department of Labor, Employee Benefits Security Administration)
Trade Groups/Providers Comment on 403(b) Prototype Program
Excerpt: "The deadline for comments on the Internal Revenue Service's proposal for a 403(b) plan document prototype program was June 1, and trade groups and industry providers had a number of concerns. The biggest suggestion among all commenters was to allow prototype plans to include vesting schedules. The SPARK Institute said it believes the most significant revision that is necessary to expand the availability of the prototype program is to permit the use of a vesting schedule in the prototype plan . . . ." (PLANSPONSOR.com; free registration required)
Teachers Union Takes Minnesota County to Court over Vendor Reduction
Excerpt: "The Minnesota District 861 school board may now wish it had heard employees' grievances over the reduction in vendors offered in their 403(b) plan. The Winona Post reports that district officials learned that the teachers union and paraprofessionals union have filed a joint lawsuit in Winona County District Court seeking to compel them to go to arbitration over a decision made last year regarding 403(b) investment offerings. Former school board chair Brian Neil told the unions in January that the matter is not open to arbitration or grievance because it is an issue not governed by union contracts . . . ." (PLANSPONSOR.com; free registration required)
Default, Framing and Spillover Effects: The Case of Lifecycle Funds in 401(k) Plans
Excerpt: "Important behavioral factors such as default and framing effects are increasingly being employed to optimize decision-making in a variety of settings, including individually-directed retirement plans. Yet such approaches may have unintended 'spillover' effects, as we show with regard to the introduction of lifecycle funds in U.S. 401(k) plans. As anticipated, lifecycle funds do reshape individual portfolio choices through large default and framing effects. But unexpectedly, they also create a new class of investors which holds these funds as part of more complex portfolios. Our results are directly relevant to those interested in retirement plan design and retirement security; they also highlight the importance of assessing such spillover effects in other consequential settings where techniques drawn from behavioral economics may be employed." (Pension Research Council; registration required to download fulltext of paper)
State Pensions and Retirement Legislation, January to June, 2009
Excerpt: "This report summarizes major pensions and retirement enactments in the state legislatures as of June 3, 2009. At that time, a number of the 50 state legislatures and the Legislature of Puerto Rico remained in session. This report is therefore an incomplete review of what will have been enacted by the end of legislative sessions later in 2009. Because of the huge bulk of introduced legislation on pensions and retirement, this report includes only bills that have been enacted into law and resolutions a legislative body has adopted." (National Conference of State Legislatures)
Strengthening Target-Date Funds with Guarantees to Enhance Retirement Security (PDF)
15 pages. Excerpt: "While plan sponsors and participants have been quick to adopt target-date funds, the inherent risks of this approach have become apparent during the recent financial turmoil. Plan providers can mitigate these risks by combining target-date funds with income guarantees." (Prudential Retirement)
403(b) Changes Mean Altered Provider Landscape
Excerpt: "Labeling the 403(b) space 'arguably the most dynamic retirement market sector,' a new report by two research firms predicts the pace of transition and turnover by 403(b) providers is likely to pick up in coming months. 'Retirement Market in Focus,' released by RG Wuelfing and Associates and Retirement Research Inc., notes that 'marginal providers' have already exited from the 403(b) custody business or at least the multivendor 403(b) space and anticipates that will increasingly be the case (see The New 403(b) Model: Exclusive versus Multiple Vendor Programs). In the next year or two, more providers will likely get out, outsource, or stay and acquire 403(b) competitors, the report asserts." (PLANSPONSOR.com; free registration required)
Vanguard Provides Three Expert Perspectives on Target-Date Funds
Excerpt: "In a recent publication, Target-Date Funds: A Solid Foundation for Retirement Investors , three Vanguard experts weigh in on the benefits of target-date investing and why we believe these funds are still a sound approach even in challenging market conditions." (The Vanguard Group, Inc.)
Annuity Ladders
Excerpt: "Enter the concept of laddered annuities. Or perhaps we should say welcome back. In a recent study entitled Variable Payout Annuities and Dynamic Portfolio Choice in Retirement, Olivia Mitchell, a professor of insurance and risk management at the Wharton School of the University of Pennsylvania, argues that by laddering the purchase of annuities-buying annuities gradually over time, while keeping the rest of a portfolio invested in a mix of equities and bonds-people can substantially increase the likelihood of meeting their retirement income goal. They can also 'do almost as well as the fully optimized outcome if they hold variable annuities invested 60/40 in stocks/bonds.'" (Financial Planning)
Small-Business Owners Worry about Continuing 401(k) Match
Excerpt: "A Nationwide Financial Services survey found that 44% of all of the employers who responded said they may have to cut back or cut out their 401(k) match. Small-business owners seemed more concerned. Some 75% of polled small businesses don't expect the economy to affect their ability to continue offering a 401(k) plan, but 51% of the small-business owners anticipate the downturn could force them to reduce or eliminate their matching contributions." (planadvisor)
The 401(k): Employers Look to Cut Costs, Workers Crave Stability Following Market Crash
Excerpt: "Retirement plan consultants foresee financial firms and employers embracing hybrid plans with features of both 401(k)s and pensions. Fred Cox, director of compensation and benefits at Evansville-based Vectren Corp., talked with a vendor in late May about adding an annuity option to the gas and electric utility's 401(k) plan. The option would help participants invest in stable choices that guarantee a certain yearly payment upon retirement -- like a pension does. 'What you've created is sort of a floor out of what's going to come out of that annuity,' Cox said. Such tweaks are not enough for Monique Morrissey, an economist at the liberal Economic Policy Institute in Washington, D.C. She wants to see individual retirement accounts mandated, controlled and guaranteed by the government -- because 401(k)s have failed to provide Americans what they need in retirement." (Indianapolis Business Journal)
[Opinion]
Social Security in Better Shape Than Medicare, But Wave of Baby Boomer Retirements Will Change That
Excerpt: "In our view, the Social Security trust fund projections are extremely solid at this point. Numbers could change slightly because of inflation and cost-of-living adjustments, but any reduction in benefits would likely be matched by reduced revenues because of lower wage growth. The underlying problem is that today there are five workers for every retiree; in 20 years, there will only be three." (Standard & Poor's RatingsDirect via BusinessWeek)
[Opinion]
American Benefits Council Proposed Modifications to 401(k) Fair Disclosure for Retirement Security Act (PDF)
6 pages. Excerpt: "Chairman Miller previously introduced H.R. 3185, a bill that addressed both the disclosure of plan fees by a service provider to a plan administrator and the disclosure of plan fees by a plan administrator to participants. We very much appreciate the open and constructive approach that the Committee used in amending H.R. 3185 prior to its approval by the Committee last year. The revised bill, which has been reintroduced as H.R. 1984, included many very significant improvements to the proposed legislation." (American Benefits Council)
DATAIR Employee Benefit Systems, Inc. (Advert.)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]Federal Government's Acquisition of Equity Interests Does Not Constitute 409A Payment Event
Excerpt: "On June 4, 2009, the Internal Revenue Service (IRS) released Notice 2009-49 clarifying that, for purposes of Section 409A of the Internal Revenue Code, the U.S. Department of the Treasury's acquisition of equity interests in a financial institution or other entity under the Emergency Economic Stabilization Act of 2008 (EESA) does not constitute a permissible change in control payment event. The notice, which is immediately effective, is available at http://www.irs.gov/pub/irs-drop/n-09-49.pdf." (McDermott Will & Emery)
[Guidance Overview]
SEC's Interpretive Guidance on New Executive Compensation Disclosure Rules (PDF)
6 pages. Excerpt: "The staff of the Securities and Exchange Commission (SEC) on January 24, 2007, issued interpretive guidance on the new executive and director compensation proxy disclosure rules. The guidance was updated on August 8, 2007, July 3, 2008, and further updated on May 29, 2009. The guidance is in the form of questions and answers of general applicability to the disclosure rules, as well as interpretive responses regarding particular situations. The guidance replaces staff interpretations issued in previous years, and is drafted in a manner that facilitates periodic future updates. The interpretative guidance is briefly summarized [on the target page] with the May 29, 2009 guidance presented in italics." (Frederic W. Cook, Inc.)
Shartsis Friese versus JP Morgan Over Funding Fiasco
Excerpt: "Shartsis Friese squared off against JP Morgan Retirement Services in San Francisco federal court Monday over who was responsible for six years of miscalculated contributions to the San Francisco firm's deferred compensation and profit-sharing plan. The firm says its plan contributions didn't meet IRS rules because of bad advice from its outside benefits consultant. The firm said it has had to spend $1.2 million to bring the fund back into compliance." (Law.com)
Higher Income Taxes and Economic Uncertainty Make It Harder to Decide When to Defer Compensation: Here Are Some Guidelines
Excerpt: "While deferred comp plans may encompass both salary and bonus for high-paid employees, most deferrals are just for bonuses. June 30 is the deadline for deciding whether to defer 2009 performance-based bonuses. But the economic uncertainties are so great that many people are deciding to take the cash. After all, if you defer, you won't have access to that money if you need it." (BusinessWeek)
[Opinion]
More Funny Business with Executive Stock Trading?
Excerpt: "As a follow up to [the June 4] Blog on 10b5-1 plans gone bad, I wanted to draw readers' attention to the results of another academic study reported in The Wall Street Journal yesterday ('Executives' Stock Deals Preceded Price Drops,' p. C1). This study found a 'statistically significant' difference (8% in this study) between the stock prices of companies in the year following the date an executive entered into a prepaid variable forward contract, when compared to a peer group of similar companies where no executive entered into such a contract." (Michael Melbinger via Winston & Strawn LLP)
Webcasts and Conferences
Annual Roundtable Discussionsin Illinois on June 25, 2009
presented by WEB - Chicago West
Can Benefits Lawyers and Other Service Providers be Sued for Malpractice for Services to ERISA Plans
Nationwide on June 25, 2009
presented by ABA Joint Committee on Employee Benefits
WEB West Golf Open
in Illinois on July 23, 2009
presented by WEB - Chicago West
(Click to post your webcast or conference)
Press Releases
Watson Wyatt Data Services Releases its 2009/2010 Survey Report on Health Care Administrative & Support Personnel CompensationWatson Wyatt Data Services
Owner of Defunct North Carolina Sign Company Sentenced for Embezzling 401(k) and Health Plan Assets
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Health Reform “Exchange” Plan Would Restructure Health Insurance Market, Has Big Implications for Current Employment-Based Benefits
Employee Benefit Research Institute (EBRI)
ERIC Expresses Concern Over Proposals that Could Undermine Employer-Based Health System
ERIC (ERISA Industry Committee)
CPI Creates Program for Same-Day Investment of Payroll Contributions
CPI Qualified Plan Consultants, Inc.
Social Media an Increasingly Important Tool in Keeping Employees Engaged During Tough Economic Times, Survey Finds
Buck Consultants, an ACS Company
The Phia Group to Utilize Benefit Informatics Data Analysis Services to Increase Claim Recovery for Clients
Benefit Informatics
Survey Reveals Employees' Most Prized Summer Benefits
OfficeTeam
New Nutrisystem Works(TM) Offers Corporate America New Weapon in the Fight Against Obesity
Nutrisystem, Inc.
Munger, O'Melveny, and Oaktree to Open Child Care Center for Employees
O'Melveny & Myers LLP
(Click to post your press release)
Employee Benefits Jobs
401(k) Wholesalerfor Howard Simon & Associates, Inc.
in IL
Investment Advisor And Enrollment Manager
for American Pensions, Inc.
in SC
(Click to post your job opening | View all jobs |
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