Retirement Plans Newsletter |
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| June 23, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
AIRE LLC (Advert.)
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[Guidance Overview]
Final PBGC Regulations on Reporting by Underfunded Plans (PDF)
3 pages. Excerpt: "ERISA requires sponsors of certain underfunded pension plans and their controlled group members to report financial and actuarial information ('4010 filings') to the Pension Benefit Guaranty Corporation (PBGC). . . . Effective for information years beginning after December 31, 2007, [the Pension Protection Act of 2006] changed the 4010 reporting requirements by: Replacing the $50 Million Gateway Test with a new test based on the funding target attainment percentage (FTAP) of each plan in the controlled group; Revising the information that must be included in the 4010 filing; Waiving reporting in certain cases for controlled groups with aggregate underfunding of $15 million or less; and Providing guidance on reporting requirements for sponsors of multiple employer plans. Recently, the PBGC published final regulations to reflect these changes. In addition, the PBGC published Technical Update 09-2, which provides an alternative assumption when determining benefit liabilities for purposes of the 4010 filing." (Prudential Retirement)
[Guidance Overview]
New Rules Allowing Employers to Suspend Nonelective Contributions to Safe Harbor Plans Due to Business Hardship (PDF)
2 pages. Excerpt: "On May 18, 2009, the IRS published rules allowing sponsors of Safe Harbor Plans, including Qualified Automatic Contribution Arrangements (QACAs), to suspend or reduce nonelective contributions before the end of the plan year due to business hardship. These rules provide an attractive alternative to plan termination, which had been the only option for sponsors of Safe Harbor Plans providing required nonelective contributions that needed to reduce or eliminate their ongoing obligations during this time of economic distress. Currently, the rules are only proposed, which means that they are subject to change when they are finalized. However, the IRS will allow plan sponsors to follow them in their current form until they are finalized and will impose any new or more stringent requirements only on a prospective basis. The new rules may be applied to plan amendments adopted after May 18, 2009." (Prudential Retirement)
[Guidance Overview]
Mid-Year Elimination of Safe Harbor Non-Elective Contributions
Excerpt: "While many plan sponsors are resorting to cutting back or eliminating company match contributions in a effort to reduce costs, does recent guidance from the Internal Revenue Service on eliminating safe harbor non-elective contributions offer an alternative solution? In May, the IRS proposed rules that would permit employers affected by substantial business hardship to decide mid-year to reduce or suspend safe harbor non-elective contributions to 401(k) and 403(b) plans . . . . What does this mean for 403(b) plan sponsors?" (PLANSPONSOR.com; free registration required)
[Guidance Overview]
Single Equity Fund Within Plan Did Not Give Rise to Violation of ERISA Diversification Requirement
Excerpt: "Plan participants' charge that single equity investment funds offered under a plan, rather than plan investments as a whole, were insufficiently diversified, did not state a claim under ERISA for fiduciary breach, according to the U.S. Court of Appeals in New York (CA-2) in Young v. General Motors Investment Management Corp. In addition, the participants did not allege sufficient facts to sustain a claim that fees charged by funds under the plan were excessive relative to the services rendered." (Wolters Kluwer)
Lawmakers Plan Push to Reform 401(k) Plans
Excerpt: "Two key lawmakers are expected to introduce a bill on retirement reform later this week that could have substantial implications for investment advisors, 401(k) service providers and the majority of employer-sponsored retirement plans. Rep. George Miller, D-California, and Rep. Rob Andrews, D-New Jersey, are preparing to introduce the 401(k) Fair Disclosure and Pension Security Act on Wednesday, June 24, at a Committee on Education and Labor meeting, confirmed Aaron Albright, press secretary of the committee." (Workforce Management; free registration required)
Owning Too Much Company Stock Puts Workers' Retirement at Risk, According to Study
Excerpt: "Congress should ban employer stock from company-sponsored retirement plans to spare workers the risk of putting too much of their nest eggs in one basket, a new study by a University of Illinois legal expert says. Sean Anderson says employee stock ownership plans, or ESOPs, are the biggest threat, with even heavier investment in company stock than the 401(k) plan that gobbled up workers' savings when energy giant Enron Corp. collapsed amid scandal in 2001. Workers whose employers have ESOPs also typically have no choice about whether to invest in company stock, said Anderson, who wrote an article that will appear in the Loyola University Chicago Law Journal." (Agency Science)
The Economic Crisis Has Accelerated the Decline of Defined Benefit Plans in the U.S. and U.K.
Excerpt: "U.K. policymakers spent some six years investigating second-pillar (employment-related pensions) plans around the world to develop a new U.K. second-pillar institution: the Personal Accounts Delivery Authority. Under the U.K. Pensions Act of 2008, employers will be required to enroll eligible employees into a high-quality workplace pension. . . . U.S. policymakers have not matched U.K. policymakers' initiative; they appear stuck in a DB mindset. Indeed, Congress seems more interested in saving the DB institution for those who have DB benefits than embarking on reforms to create a new second-pillar institution for all, which would minimize the burden on the firm while ensuring retirement security for individuals." (Oxford Analytica via Forbes.com)
Los Angeles Weighing Retirement Option for Reducing City's Workforce
Excerpt: "Looking to avoid the need for layoffs and furloughs, Los Angeles Mayor Antonio Villaraigosa and the City Council are weighing a plan to offer early retirement to thousands of city workers, some of whom would receive an incentive of at least $15,000 to leave. As it attempts to close a $530 million budget gap, the mayor's bargaining team hopes to reduce the workforce by 2,400 while giving no pay increases for most civilian employees in the next two years, according to several sources familiar with the confidential salary talks" (Los Angeles Times)
Hope for Pre-Retirees' Savings Recovery Shown in Analysis
Excerpt: "Financial Engines says its new analysis on the impact of the market decline in 2008 on investors nearing retirement found that even for investors within five years of retirement, modest increases in savings combined with slightly delayed retirement can recover their pre-2008 retirement outlooks if they stay in a diversified, age-appropriate portfolio. According to a press release, many 401(k) participants assume that the large portfolio losses experienced in 2008 mean needing to work five or 10 years longer than planned, but Financial Engines' analysis shows that large portfolio losses do not translate into equally large percentage decreases in projected retirement income." (PLANSPONSOR.com; free registration required)
[Opinion]
Pension Reform in the Aftermath of Enron: Congress' Failure to Deliver the Promise of Secure Retirement 401(K) Plan Participants
Excerpt: "This article examines the historical role of company stock ownership in tax-qualified retirement plans and how Congress is distorting that role to justify its failure to enact meaningful pension reform that restricts 401(k) plan investment in company stock. Specifically, the article addresses H.R. 3762, the Republican-backed House Bill that has arisen like a phoenix out of the ashes of more than 20 pension reform bills introduced by the 107th Congress. The article examines how the House Bill fails to deliver ERISA's promise of a secure retirement by rejecting overall limitations on 401(k) plan investment in company stock, by failing to mandate the appointment of an independent plan fiduciary where company stock is offered as an investment alternative, and by failing to mandate that employers provide participants with investment advice as a condition of fiduciary liability relief." (Social Science Research Network)
[Opinion]
The Death Knell of Traditional Defined Benefit Plans: Avoiding a Race to the 401(k) Bottom
Excerpt: "This article looks at America's loss of retirement security stemming from the shift away from traditional defined benefit plan sponsorship and the embracement of defined contribution plan sponsorship. It also looks at the root causes underlying the shift and how the Act fails to adequately address the looming pension crisis. Finally, the article, recommends additional legislative changes that increase the retirement security provided under employer-sponsored defined contribution plans." (Social Science Research Network)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]Supreme Court Ruling that 'Motivating Factor' Standard Not Allowed Under ADEA (PDF)
2 pages. Excerpt: "Last week, the United States Supreme Court ruled (5 to 4) that employees bringing disparate-treatment claims pursuant to the Age Discrimination in Employment Act (ADEA) must prove that age was the 'but-for' cause of the challenged adverse action, rather than simply a 'motivating factor'. (Gross v. FBL Financial Services, Inc., __ U.S. __, 2009 WL 1685684 (2009). The Supreme Court further ruled that the burden-shifting framework set forth in Price Waterhouse does not apply to ADEA cases. (Price Waterhouse v. Hopkins, 490 U.S. 228 (1989))." (Winston & Strawn LLP)
[Guidance Overview]
Interim Final Rule on Executive Compensation Restrictions for TARP Recipients (PDF)
7 pages. Excerpt: "On June 10, 2009, the Treasury Department issued an interim final rule on the executive compensation restrictions for companies receiving federal assistance under the Troubled Asset Relief Program (TARP). Among other things, the regulations establish a Special Master, prohibit tax gross-ups, require adoption of an excessive or luxury expenditures policy, expand clawback provisions, place additional prohibitions on bonuses and incentive compensation for senior executive officers and certain highly compensated employees, and implement more rigorous requirements for companies receiving 'exceptional financial assistance.'" (Buck Consultants)
A Note on the Financial Accounting Standards Board Accounting Standards Codification
Excerpt: "Avi Lev, [a very smart tax lawyer,] recently pointed out that, effective July 1, there is a new codification of accounting opinions. This sounds dry, but for those who work in this area, it is a phenomenal endeavor. These are the rules that regulate the reporting of most financial activity, and they have previously been scattered and disunited in their presentation. [See the Codification Website at http://asc.fasb.org/home.]" (theworkplace.biz)
Extending Benefits Under Federally-Regulated Employee Benefit Plans to Same-S.ex Couples
Excerpt: "The article examines state, county, municipal and private employer initiatives extending rights and benefits to same-s.ex couples and how those initiatives are negated in the area of federally-regulated employee benefit plans. The article also analyzes recent federal and state court decisions challenging federal and state laws denying legal recognition to same-s.ex couples, and concludes that court decisions are unlikely to extend rights to same-s.ex couples in the area of federally-regulated employee benefit plans. Finally, the article recommends an amendment to the federal regulatory scheme that will afford benefits and tax advantages to same-s.ex couples consistent with ERISA's goals. The recommended amendment is also palatable in that it confers rights under these plans to same-s.ex couples while avoiding the political 'hot potato' of federal recognition of same-s.ex civil marriages or civil unions." (Social Science Research Network)
Webcasts and Conferences
2009 Web/Telephone Seminar: HSA BasicsNationwide on July 16, 2009
presented by Ascensus
2009 Web/Telephone Seminar: Introduction to QRP Distributions
Nationwide on July 28, 2009
presented by Ascensus
2009 Web/Telephone Seminar: Retirement Distribution and Income Planning
Nationwide on July 23, 2009
presented by Ascensus
(Click to post your webcast or conference)
Press Releases
Companies Planning to Reinstate Some Programs Cut During the Economic CrisisWatson Wyatt
PBGC Assumes Pension Plans of Dan River Inc.
Pension Benefit Guaranty Corporation (PBGC)
SouthWest Benefits Association Survey Finds Employers Continue to Focus on Health and Wellness during Economic Downturn
SouthWest Benefits Association
Update on 2009 CRR Grant Programs for Retirement Research
Center for Retirement Research at Boston College
CFDD Launches Women In Pensions Networking Group
Center for Due Diligence
The Source 403(b) and 457(b) Plans CD Is Available
National Tax Sheltered Accounts Association
RelayHealth Partners with Lighthouse1 to Provide Consumer Driven Healthcare Payment Solutions
RelayHealth
(Click to post your press release)
Employee Benefits Jobs
Transition Managerfor American United Life a OneAmerica Financial Partner
in IN
Benefits/HR Lawyer
for Baltimore Benefits Boutique
in MD
Benefits Consultant (Multiemployer)
for The Segal Co.
in CA
Account Administrator
for Retirement Strategies, LLC
in NM
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