Retirement Plans Newsletter |
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| June 15, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
Section 403(b) Plan Participants Need to Correct Defective Contract Exchanges by June 30
Excerpt: "Plan sponsors whose plans permitted exchanges with non-approved vendors after September 24, 2007, and who did not enter into ISAs with such vendors by January 1, 2009, might wish to remind plan participants of the upcoming deadline and the need to re-exchange any such contracts back into the plan in order to avoid the potential income tax consequences." (The Segal Group, Inc.)
[Guidance Overview]
Loans on 401(k) Plans a Tax Trap
Excerpt: "Conventional wisdom and prudent financial planning caution against borrowing against a 401(k) retirement account for anything other than emergencies. A post by Dana Wilkinson on Bankrup.tcy Law Network similarly urges caution in using 401(k) loans to pay off dischargeable credit card debt. Now, given last year's overwhelming decline in investment portfolio value, people who borrowed against their 401(k) plans for any reason while the market was still strong may have come out ahead, provided they are able to repay the loans as originally scheduled." (Bankrup.tcy Law Network, LLC)
[Guidance Overview]
403(b) Plan or 401(k) Plan: How to Decide
Excerpt: "In the half century since Congress created §403(b) contracts, the regulatory regime has evolved to resemble ever more closely the qualified plan rules. In fact, the IRS announced at the end of 2008 that it intends to create an application for determination procedure for §403(b) contracts. There remain, however, material differences in the two sets of rules, so that employers that have a choice should consider carefully the relative advantages and disadvantages." (Tax Management Inc.)
[Guidance Overview]
DOL and Banks' $9.6M Settlement in Aloha Airlines Pension Dispute
Excerpt: "The U.S. Department of Labor (DOL) and two Hawaiian banks have worked out a $9.6-million settlement of a lawsuit over funds from Aloha Airlines' pension plans used to buy now-worthless shares of stock in the now-defunct air carrier's parent company. A DOL news release said the money from the suit against Aloha Airlines Inc., Bank of Hawaii and First Hawaiian Bank over plan losses from the stock purchase will be paid to the Pension Benefit Guaranty Corporation, which now runs the four plans from the bankrupt airline . . . ." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
Judge Throws Out Unpaid Contribution Collection Provision in Plan Document
Excerpt: "A federal judge in Massachusetts has ordered the sponsor of a master plan to strike a clause in its plan documents relieving the trustee of the duty to collect unpaid employer plan contributions. U.S. District Judge Douglas P. Woodlock of the U.S. District Court for the District of Massachusetts ruled that Employee Retirement Income Security Act (ERISA) Section 403 imposed the duty on a trustee to monitor and pursue unpaid employer contributions. A plan provision going against that obligation would be contrary to public policy and shouldn't be allowed to stand, Woodlock asserted." (planadvisor)
[Guidance Overview]
Administrator Breach of Fiduciary Duties by Loaning Plan Funds to Start-Up Company
Excerpt: "EBIA Comment: Investments sometimes go awry. Fiduciaries are not required to guarantee good investment results -- but they are required to follow a prudent process when evaluating plan investments. To satisfy this 'procedural prudence' standard, fiduciaries should follow a thoughtful and prudent review and decisionmaking process and document the steps they have taken." (Employee Benefits Institute of America)
Auto Sector Pension Plans: Information for Workers and Retirees
Excerpt: "This information page is offered as a service to workers and retirees who have questions about their PBGC-insured benefits. The PBGC is not commenting on the future of U.S automotive companies or suggesting their pension plans will be assumed by the PBGC." (Pension Benefit Guaranty Corporation)
Accounting for Pensions: Under Construction
Excerpt: "The purpose of this article is to bring together in one place - and try to make sense of - the various ongoing Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) projects on pension accounting. IASB deliberations are relevant to US companies because FASB and IASB are coordinating a broad review/revision of pension accounting with a view to 'convergence' -unifying, where possible, FASB and IASB accounting." (JPMorgan Chase & Co.)
The Future of Retirement: Fact Sheet for the United States (PDF)
4 pages. Excerpt: "The fifth annual HSBC Future of Retirement report builds on the previous year's reports in exploring the current attitudes and behaviour towards retirement. Whilst for many people in the US retirement is viewed as a new age of opportunity, the issue that needs to be addressed is how families envisage funding and supporting their retirement years. The report explores how Americans are responding to the new responsibility of being increasingly accountable for their pension provision. The report also identifies the current 'preparedness gap' - the feeling shared by that the vast majority of people in the US that they are currently doing too little to actively prepare for a comfortable retirement." (HSBC Insurance Holdings Limited)
The Future of Retirement, 2009 (PDF)
64 pages. Excerpt: "This report is inspired by the rapid improvements in longevity witnessed in the last half century. With these trends set to continue, the way in which we fund retirement will become one of the most profound challenges facing the world. The presence of a demographic mega-trend will affect every aspect of our economic and social life. This will include changing working patterns, family life, as well as the need to reassess funding healthcare and what will, in all likelihood, be an extended retirement." (HSBC Insurance Holdings Limited)
Appendix with Additional Data on the U.S. Retirement Market, 2008 (PDF)
23 pages. Excerpt: "Share of Total Retirement Market. Total U.S. retirement assets fell by 22 percent in 2008 to $14.0 trillion . . . . Mutual fund assets held by individual retirement accounts (IRAs) and employer-sponsored defined contribution (DC) plans represented 22 percent of U.S. retirement assets at the end of 2008 . . . . Annuities (variable and fixed) not held in retirement savings accounts held $1.4 trillion of the total U.S. retirement market . . . . Variable annuity (VA) mutual fund assets outside of retirement accounts were $687 billion at year-end 2008 . . . ." (Investment Company Institute)
The U.S. Retirement Market, 2008 (PDF)
Excerpt: "employer-sponsored retirement plans play a key role in helping American workers save for retirement. The bulk (nearly two-thirds) of Americans' retirement assets was held in employer-sponsored retirement plans at year-end 2008. Furthermore, a significant portion of assets held in IRAs originated in employer plans and were then transferred (or 'rolled over') into IRAs." (Investment Company Institute)
Plans and Government Go Toe-to-Toe Over Need for Pension Funding Relief
Excerpt: "'PBGC has questioned whether or not the case has been made as to whether additional relief is necessary,' said Kyle Brown, retirement counsel at Watson Wyatt Worldwide, Arlington, Va. 'There are plenty of us who believe the case has been made.' In a series of meetings with Capitol Hill committee aides -- and through a widely circulated talking-points paper -- executives at the PBGC claim pension plan officials and lobbyists haven't made a credible case for additional relief." (Pensions & Investments)
GM Slashes Pensions at the Top
Excerpt: "General Motors Corp. is making dramatic reductions in the pensions of some of its outgoing high-level executives -- a move that is expected to cost ousted CEO Rick Wagoner up to $15 million. GM President and CEO Fritz Henderson confirmed Friday that pensioners whose yearly payments are $100,000 or less will lose nothing. But those who get more will receive a third of what they had expected in excess of $100,000. No one is likely to lose as much as Wagoner, who was fired more than two months ago by President Barack Obama." (The Detroit News)
Detroit Pension Trustees Take Trips on Funds' Tab
Excerpt: "The trustees who oversee Detroit's two public pensions, their lawyers and staff spent $380,000 over the past year circling the globe to attend conferences -- often traveling in packs, with virtually no limitation on where they went or how often they traveled. Trustee Ronald Gracia spent the most time on the road -- billing the General Retirement System for $105,000 in travel, including three trips to Singapore and $18,600 on travel to Hong Kong, according to records provided by the pension funds." (Detroit Free Press)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview][Guidance Overview]
The IRS Says, Unofficially, We Want to Save Employers $$ on Cell Phone Taxes
Excerpt: "An Internal Revenue Service (IRS) official, in an anonymous Reuters interview, asserted the tax agency is actually trying to save employers money by revamping the way employers and workers account to the IRS for the use of an employer-provided cell phone. The IRS this week called for public comment on its suggestions that included letting employers deduct the entire sum of a worker's cellphone use if a worker can establish he or she uses a personal phone for some period, and letting employers use statistical sampling to generalize about usage . . . . 'Minute by minute documentation really doesn't make any sense -- we've been hearing all about it, and we said yes it makes no sense,' the unnamed official told Reuters. The IRS' proposed changes are intended to 'reduce how much employers have to spend trying to comply with the tax law,' the official added." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
Executive Compensation and Corporate Governance Standards for TARP Recipients
Excerpt: "The new interim final rule will be effective upon publication in the Federal Register, which is expected to occur on Monday, June 15. The new interim rule clarifies that the executive compensation and corporate governance standards described in the rule generally do not apply until the final rule is formally published in the Federal Register. The only exception is the 'say on pay' shareholder resolution, which became effective on February 17, 2009 (the date ARRA was enacted)." (McGuireWoods LLP)
[Guidance Overview]
Final Executive Compensation Rules for TARP Recipients and Proposed Legislation for All Public Companies (PDF)
6 pages. Excerpt: "The Interim Final Rule (the 'Rule') consolidates and supersedes the prior executive compensation guidance and adopts additional standards. Generally, the provisions of this Rule are effective immediately upon publication in the Federal Register (scheduled for June 15th), and to the extent previous contractual provisions are not inconsistent, such provisions shall remain effective and continue to apply to TARP recipients. For example, TARP recipients that agreed not to claim a deduction for compensation during a taxable year in excess of $500,000 for certain executive officers shall continue to be required to forego such deduction. On the same day that the Rule was released, Treasury announced that it will pursue two pieces of executive compensation legislation that would apply to all public companies." (Groom Law Group)
[Guidance Overview]
Pfizer Dealt Setback in Severance Benefit Court Battle
Excerpt: "A federal judge in New Jersey ruled against Pfizer in a dispute over severance benefits arising out of the deal for it to acquire rival Pharmacia. U.S. District Judge Stanley R. Chesler of the U.S. District Court for the District of New Jersey asserted that Pfizer improperly denied $158,250 in benefits to former Pharmacia Corp. Director Vasantha Nair when Nair was stripped of her job responsibilities. Chesler rejected Pfizer's argument that Nair maintained the same job title and compensation and did not suffer a demotion as a result of the deal; a demotion is often a triggering event to pay benefits." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
Obama Administration Releases Executive Compensation Principles and Proposals for U.S. Public Companies (PDF)
6 pages. (Frederic W. Cook, Inc.)
[Guidance Overview]
Treasury Department and SEC Announce New Executive Compensation Initiatives
Excerpt: "The U.S. Department of the Treasury and the Securities and Exchange Commission (SEC) recently announced several initiatives that affect all public companies regardless of whether they participate in the Troubled Asset Relief Program (TARP) under the Emergency Economic Stabilization Act of 2008 (EESA) as modified by the American Recovery and Reinvestment Act of 2009 (Recovery Act)." (McDermott Will & Emery)
Reining in Executive Compensation
Excerpt: "While the administration is keeping a hands-off approach, thus far, to imposing salary ceilings on all companies, there continues to be increased focus on more transparency for executive compensation. New rules expected to be released by the SEC in July will mandate additional proxy-statement disclosures, including 'say on pay' and information about potential conflicts of interest by comp consultants." (Human Resource Executive Online)
Salaried Chrysler Retirees Get Some Good News on SERP
Excerpt: "According to the Detroit Free Press, about 1,000 salaried employees who had non-qualified pension benefits through the automaker's Supplemental Executive Retirement Plan faced losing all those benefits because of the bankrup.tcy. But, according to the report, Chrysler said Friday that those benefits would be resumed in full until the salaried retiree reaches age 62. Salaried retirees who are 62 or older, though, still would lose those specific pension benefits. About 700 salaried retirees in that group are 62 and older now; the rest are under age 62, according to the Free Press." (PLANSPONSOR.com; free registration required)
Employee Ownership Update for June 12, 2009
NCEO Executive Director Corey Rosen discusses Cleveland's plan to create worker-owned cooperatives in the green business sector; fellowships awarded by Rutgers University to study shared capitalism; the performance of companies in the Employee Ownership Index published by Field Fisher Waterhouse LLP; a study finding that executive equity ownership among company founders has declined in pre-IPO companies; and a proposal to escrow a portion of executive equity compensation for a defined period. (National Center for Employee Ownership)
Webcasts and Conferences
ARRA: Implementing the COBRA Subsidy, Electronic Medical Records, and HIPAA Updatesin Washington on June 26, 2009
presented by International Society of CEBS - Pacific NW Chapter
Health and Welfare Plan Management for Mid-Sized Employers Conference
in Nevada on September 13, 2009
presented by University Conference Services
Online Benefits Enrollment Webinar
Nationwide on June 18, 2009
presented by Benefit Software Inc.
Pension Plan Management Today: Crisis or Opportunity? Webcast
Nationwide on June 25, 2009
presented by McHenry Partners
Webcast: Qualified Plans in a Challenging Economy
Nationwide on June 24, 2009
presented by NIPA and Wolters Kluwer Law & Business (CCH, TAG and Aspen Publishers)
(Click to post your webcast or conference)
Press Releases
Fiduciary360 Relocates Offices to Accommodate GrowthFiduciary360 (fi360)
(Click to post your press release)
Employee Benefits Jobs
Trust Administration Supervisorfor Associated Pension Consultants
in CA
Consultant
for The Paragon Consulting Group, Inc.
in CA
401(k) Plan Administrator
for TPA Firm located in South Florida
in FL
Sr. Product Manager
for Federated Investors, Inc.
in PA
401 (K) Recordkeeper
for Northwestern Bank
in MI
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