Retirement Plans Newsletter |
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| June 17, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
Stock Contributions to Pension Plans
Excerpt: "With the current cash-tight environment, some sponsors are considering using stock in lieu of cash as a contribution to pension plans. In this article, we highlight key considerations for plan sponsors considering a stock contribution." (JPMorgan Chase & Co.)
Texas's Teachers' Pension Fund Adopts Pay-to-Play Limits
Excerpt: "Texas's $77.9 billion Teacher Retirement System, the sixth-largest public pension fund in the U.S., has adopted a policy prohibiting pay-to-play by companies trying to win business managing investments. As of July 1, those seeking management work from the fund will face disclosure requirements regarding placement agents and restrictions on the fees paid them, according to the new policy." (Bloomberg L.P.)
IRS Trends, Tips, Internal Control Questionnaire and Plan Documentation Guide Online
Excerpt: "The Internal Revenue Service (IRS) has recently added important guidance to its Employee Plan Team Audit (EPTA) website that is very helpful to retirement plan sponsors and retirement plan administrators. This article summarizes the important features of these IRS materials." (Littler Mendelson P.C.)
Sources of Funding of Public Pension Plans (PDF)
1 page. Excerpt: "Unlike private-sector defined benefit plans, public-sector pension plans are not funded entirely by employers. They are financed by workers as well as employers . . . . Public pension revenue relies on three sources: earnings from investments, government (employer) contributions, and worker contributions. Public pension plans depend largely on investment earnings, because they are generally financed on a 'funded' basis rather than a pay-as-you-go basis." (Employee Benefit Research Institute)
Tax-Exempt/Governmental Plans Guidebook
Excerpt: "[The website is] devoted to following legal developments related to retirement and benefit plans maintained by tax-exempt organizations and governmental entities[.]" (ERISA Fiduciary Guidebook)
SEC-DOL Target-Date Hearing Witness Lineup Released
Excerpt: "The Securities and Exchange Commission (SEC) has announced the lineup of witnesses organized in nine panels that are set to testify before SEC and Department of Labor (DOL) officials on June 18 about target-date funds. . . . Witnesses will include representatives of plan participants and beneficiaries, plan sponsors, investor organizations, academia, and the financial services industry. The hearing will be transcribed, and a live Webcast will be available at the SEC and Labor Department Web sites. The SEC hearing announcement is available at http://sec.gov/news/press/2009/2009-138.htm. For more information, contact Tara Buckley in the SEC's Division of Investment Management at (202) 551-6825." (PLANSPONSOR.com; free registration required)
Tax Proposal Has Silver Lining for IRAs, Social Security
Excerpt: "[HR 882] proposes to increase the required age for distributions from qualified retirement plans to 75 from 70½. The effective date would be for years beginning after the date of enactment. Thus, if the bill were to become law this year, the age 75 rule would be effective for 2010 and thereafter. The bill would also provide for contributions to traditional individual retirement accounts to the year prior to age 75 rather than the present rule of 70½ ." (Investment News; free registration required)
Massachusetts Governor Exults in Signing Pension Reform Bill
Excerpt: "Gov. Deval L. Patrick, struggling all year with multibillion deficits, squabbles with the Legislature and scandals erupting over legislative payoffs and bid rigging, broke through that Beacon Hill funk today and was beaming over signing a bill closing loopholes in state pension laws that have outraged the public for years. . . . The 'one day-one year rule' allowed legislators whose terms expire Jan. 1 to take a year of pension credit for serving one day in a calendar year. 'King for a day' pension rules let employees retire on accidental disability pensions at a pay rate of their supervisors if they worked for one day in that job as a fill-in. The 'termination allowance' gave a substantial pension boost to elected officials if they were voted out of office." (Worcester Telegram & Gazette Corp.)
The SEC's and DOL's Cross Agency Retirement Plan 'Compliance Waltz'
Excerpt: "It is striking . . . how separate the securities compliance world is from the ERISA compliance world-though it is a 'separation' which will eventually die a natural death. Security practitioners and ERISA practitioners will be getting to know each other well, and probably sooner than later. So this is my contribution to that effort. The link below brings you an article which describes ERISA compliance for the security law compliance officer. To many of you, this will be very basic, and pretty boring stuff. The securities folks, however, have expressed amazement of some of the basic things I have written about, things which we take for granted. ['SEC's and DOL's Cross Agency Waltz: The ERISA Connection to Disclosure, Advice, Compensation and Conflict of Interest' at http://www.businessofbenefits.com/uploads/file/Toth_PCRM_03-09(2).pdf]" (Giller & Calhoun, LLC)
[Opinion]
Statement on Behalf of Profit Sharing / 401k Council of America for Hearing on Investments in Target Date Funds and Similar Investment Options (PDF)
5 pages. June 18, 2009, Hearing. Excerpt: "In April 2009, PSCA and Casey, Quirk & Associates, a management consultancy focused on the global fund management industry, conducted a survey of target date fund practices in employer sponsored defined contribution plans. More than four hundred companies of various sizes participated. Twenty-one percent have fewer than 200 hundred participants and twenty-seven percent have 5,000 or more participants. Eighty-seven percent use a packaged target date fund program. Thirteen percent of the programs are custom designed. Most plan sponsors in the survey are satisfied with their target date investment options, despite weak performance during the recent market crisis." (Profit Sharing / 401k Council of America)
[Opinion]
Abolish Retirement Schemes, or Not: A Debate Published in The Economist
Excerpt: "The Economist online today called for abolishing current retirement schemes and starting over. In support, George Magnus argued that current schemes are unsustainable. Opposing, Christian Weller contended that the current system can be put right if we have the will to do it." (Mind Over Market)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]Obama Administration Outline of Executive Compensation Guidelines and Legislative Initiatives (PDF)
3 pages. Excerpt: "While boards of directors and compensation committees have recognized that compensation practices are now under intense scrutiny, there have been no mandated changes to public companies' existing practices, except for financial institutions receiving funds under the United States Treasury Department's Troubled Asset Relief Program ('TARP'). Now the Obama Administration is proposing legislation that would continue the regulatory course begun with the Sarbanes-Oxley Act ('SOX'), mandating changes in corporate governance for all public companies." (Locke Lord Bissell & Liddell LLP)
[Guidance Overview]
Treasury Secretary Signals Direction of Executive Compensation Reform (PDF)
4 pages. Excerpt: "Treasury Secretary Tim Geithner issued a public statement on June 10, 2009 outlining five broad-based principles intended to bring compensation practices more in line with the interests of shareholders and reinforce the stability of firms and the financial system. Along with the statement of principles, Treasury released two fact sheets - one on shareholder 'say-on-pay' and one on compensation committee independence." (Buck Consultants)
[Guidance Overview]
Revenue Ruling 2008-13 Reminder: Review Bonus Plans Intended to Provide Qualified Performance-Based Compensation under IRC § 162(m)
Excerpt: "In PLR 200804004, the IRS departed from previous PLRs and held that compensation paid pursuant to a plan's provision that permits payment without regard to whether the performance goals are met in the event the employee is terminated without cause or terminates for good reason would be subject to IRC § 162(m) disallowance even if the performance goals were satisfied." (Deloitte via BenefitsLink.com)
New EESA/ARRA Interim Final Rules on Executive Compensation for TARP Institutions
Excerpt: "Later in the week I will provide a link to a full summary of the new Interim Final Rules. Until then I summarize below the many refinements in the new Rules that went against TARP institutions. In fact, the new Rules shot down nearly every proposed strategy devised by practitioners for dealing with the more onerous EESA/ARRA TARP restrictions." (Michael Melbinger via Winston & Strawn LLP)
Work-Sharing May Help Companies Avoid Layoffs
Excerpt: "As companies struggle to make it from recession to recovery, many are turning to a novel but unheralded program that cuts their costs while sparing their workers' jobs. Under the program, known as work-sharing, employers reduce their workers' weekly hours and pay, often by 20 or 40 percent, and then states make up some of the lost wages, usually half, from their unemployment funds." (The New York Times; free registration required)
IRS Says Cell Phone Law Obsolete
Excerpt: "In a reversal of course, the Internal Revenue Service says it will suggest that there be no tax consequence for employers or employees for personal use of work-related cell phones. In a statement, IRS Commissioner Doug Shulman said: 'Although some of the proposed changes would add clarity, the current law will inevitably leave widespread confusion among employees and businesses. Therefore, (Treasury) Secretary (Timothy) Geithner and I ask that Congress act to make clear that there will be no tax consequence to employers or employees for personal use of work-related devices such as cell phones provided by employers.'" (PLANSPONSOR.com; free registration required)
U.S. Government to Extend Its Job Benefits to G.ay Partners
Excerpt: "President Obama will sign a presidential memorandum on Wednesday to extend benefits to same-s.ex partners of federal employees, administration officials said Tuesday evening, but he will stop short of pledging full health insurance coverage." (The New York Times; free registration required)
Government Work Is No Longer the Job of Last Resort
Excerpt: "Post-crash, job seekers are lining up to apply for the new hot career: in government. Public-sector work has new appeal: no taint of scandal, low risk of layoffs." (Workforce Management; free registration required)
Webcasts and Conferences
Fiduciary Responsibility in the New Age of 403(b) Plans (Recorded Webinar)Nationwide on June 17, 2009
presented by Nixon Peabody LLP
(Click to post your webcast or conference)
Press Releases
PBGC Assumes Source Financing's Fortunoff Pension PlanPension Benefit Guaranty Corporation (PBGC)
(Click to post your press release)
Employee Benefits Jobs
Pension Specialistfor Diversified Investment Advisors
in MO
Nurse Case Manager - Mental Health Case Manager
for The Standard
in OR
Manager, Trust Quality Assurance
for The Standard
in OR
Defined Benefits Analyst
for Randstad
in PA
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