Retirement Plans Newsletter |
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| August 4, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
Using Desktop Software Under EFAST2
Excerpt: "In our continuing series of FAQs on EFAST2, we are addressing the issues and procedures with which Form 5500 preparers and plan sponsors will need to familiarize themselves to make the transition to electronic filing. Over the past couple of decades, desktop software has become the primary method for preparing 5500s. Under EFAST2, desktop software will play an essential role in complying with the mandatory electronic filing requirement. Preparers will need to understand the options that are available to them for transmitting the 5500s to the DOL. Because of the restrictions the DOL has placed on sharing credentials, preparers generally will need to rely on third party web-based systems to transmit the 5500s to the DOL. The [target page] FAQs address the issues regarding preparing and transmitting 5500s with desktop software." (SunGard)
[Guidance Overview]
DOL's Limited Relief for Section 403(b) Tax Sheltered Annuity Arrangements' Annual Reporting Requirements
Excerpt: "Employers with Section 403(b) arrangements that have not already rethought the structure and features of those arrangements in light of the one-two punch of tax and ERISA regulation changes should do so soon, in order to ensure that their limited funds used for compensation and benefits are deployed in the most cost-effective manner, to minimize administrative and overhead expenses, and to remain in compliance with the ever-changing law." (Sonnenschein Nath & Rosenthal LLP)
Dollar Cost Averaging in Practice: Minimize Market Risk While Maximizing Potential Returns
Excerpt: "For those of you who aren't familiar with the concept, simply stated, dollar cost averaging is consistent investment of set amount of money in periodic intervals to reduce market risk. Instead of investing a lump sum trying to time the market, dollar cost averaging spreads out the investments over time and minimizes the negative impact of market fluctuations while taking advantage of the increase in purchase power during down market cycles." (Precept Employee Benefits Blog)
House Passes National Save for Retirement Week Resolution
Excerpt: "A resolution recognizing National Save for Retirement Week (NSRW) has passed in the House of Representatives. H Res. 647 was sponsored by Rep. Allyson Schwartz (D-PA) and Rp. Sam Johnson (R-TX) and designates Oct. 18-24, 2009, as a week set aside for 'raising public aware of the various tax-preferred retirement vehicles.'" (ICMA-RC)
Eliminating Inequities in 401(k) Plan Participation (PDF)
9 pages. Excerpt: "Employees may have equal access to 401(k) plans, but participation is anything but equal. The recent release of Ariel Investments' and Hewitt Associates' 401(k) Plans in Living Color study confirmed what individual client studies have shown for years -- that ethnicity is the number one predictor of 401(k) behavior. Supported by the data of 3 million 401(k) eligible employees, researchers concluded that African-Americans and Hispanics save less, invest less aggressively in stocks and, as a result, have lower 401(k) balances compared to their white and Asian colleagues. These findings have broader implications beyond retirement readiness, as 401(k) participation has a positive correlation to employee retention, engagement, wellness and productivity." (The Sentinel Group via Employee Benefit Research Institute)
Individual Account Retirement Plans: An Analysis of 2007 Survey of Consumer Finances, With Market Adjustments to June 2009 (PDF)
36 pages. Excerpt: "This Issue Brief assesses the current status of Americans' savings for retirement by examining the incidence of individual account plans among families, as well as the average amount of assets accumulated in these accounts. The 2007 Survey of Consumer Finances (SCF), the Federal Reserve Board's triennial survey of wealth, is the basis for this study, as it is a leading source of data on Americans' wealth, provides detailed information on retirement plan incidence and account balances among families, and is the latest available." (Employee Benefit Research Institute)
Los Angeles Pension Board Delays Vote on Early Retirement Plan
Excerpt: "A Los Angeles pension board delayed a vote Monday on the city's planned early retirement program, as union leaders stepped up their campaign to derail a controversial proposal for making the city pay off the program's cost 10 years sooner than expected. Eric Holoman, president of the Los Angeles City Employees' Retirement System board, said he would instead convene a three-member panel to discuss the payment timeline for the early retirement initiative, which is supposed to help the city eliminate a $530 million budget shortfall." (Los Angeles Times)
[Opinion]
Working Longer Has Become No. 1 Retirement Planning Strategy
Excerpt: "The economic crisis appears to have created a number of sea changes that will affect employers for decades to come. First and foremost is the awakening of individuals to how meager their savings were before the markets crashed, let alone afterward. Second, and most important for the employer and the workforce, is an appreciation of the new reality that the easiest way to cope is to work longer, since it is likely too late for most workers to get to a retirement-savings goal by the time they sharpen their focus." (Dallas Salisbury via Human Resource Executive Online)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]Notes on Preparing Form 5500; Implementing New Rules for Reporting of Fees
Excerpt: "Generally, all organizations that offer employee retirement and welfare benefit plans are required to file a Form 5500 each year. There will be significant changes to filing procedures for 2009, including the requirement to report both direct and indirect fees and to file electronically instead of by mail." (Hewitt Associates)
[Guidance Overview]
ERISA Litigation Newsletter for August 2009 from Proskauer Rose (PDF)
Articles include Bucking the Trend, District Court Finds That Utah's Attempt to Bar Discretionary Clauses Is Preempted By ERISA; When Discretion Is Gone... Is There Full Blown Federal Discovery?; Are Unpaid Employer Contributions to an ERISA Plan 'Plan Assets'? Courts and Government Weigh In; Defendants Acquire Favorable Judgments in Latest Round of Stock Drop Cases Involving Subprime and Stock Option Claims; Seventh Circuit Rules That 'Normal Retirement Age' Need Not Be Defined By Reference To A Specific Age. (Proskauer Rose)
[Guidance Overview]
IRS Summary of How Accountable Plan Rules Apply to Per Diem Payments
Excerpt: "EBIA Comment: As the information letter points out, business expense reimbursements paid by an employer generally must satisfy the accountable plan rules in order to be nontaxable. The accountable plan rules themselves are not complex, but administering them can be time-consuming, so shortcuts to satisfying the substantiation and return of excess requirements -- like the use of per diem payments -- are welcome if they can be properly applied. While this information letter does not go into much detail about the conditions for using per diems (for the details it refers readers to IRS Publication 15 (also known as Circular E)), it does offer a useful introduction to the general subject of accountable plans." (Employee Benefits Institute of America)
[Guidance Overview]
SEC Proposal to Expand Compensation and Governance Disclosure for 2010 Proxy Season
Excerpt: "This Update provides a high-level overview of the proposed rules and a more detailed summary of the key components of the proposed rule changes and the SEC's comment requests relating to executive compensation disclosure, as well as practical guidance for public companies preparing for the 2010 proxy season." (Perkins Coie LLP)
[Guidance Overview]
IRS States it Can Enforce Tax Levy by Seizing and Selling Employee/Taxpayer's Stock Options
Excerpt: "Late in June, the IRS released a memorandum from the Office of the Chief Counsel, declaring that the IRS can seize and sell executive stock options held by a taxpayer regardless of restrictions on the transferability of the options. The taxpayer had received and held both Incentive Stock Options (ISOs) and Non-Incentive Stock Options (NISOs). His Employer's Stock Plan and the Option Award Agreements unambiguously provided that the Options: could not be transferred except by will, the laws of descent or distribution, or pursuant to a qualified domestic relations order (QDRO)*, and during the taxpayer's life, could only be exercised by the taxpayer, his guardian or legal representative, or the Taxpayer's transferee pursuant to a QDRO." (Michael Melbinger via Winston & Strawn LLP)
Former In-House Counsel Loses Law License Due to Backdating of Stock Options
Excerpt: "A New York state appellate court has suspended for three years the Empire State law license of the former general counsel of a New York video games maker in connection with backdating stock options. A New York Law Journal report said the penalty was handed down against Kenneth Selterman in connection with stock-option backdating activities at Take-Two Interactive Software where Selterman served as general counsel from 1999 to 2007. The company makes the popular 'Grand Theft Auto' game series." (PLANSPONSOR.com; free registration required)
Understanding Benefit Practices: Business Owner Market Study (PDF)
16 pages. Excerpt: "Recognizing that not all companies make changes on an annual basis, business owners were asked if they plan to change . . . benefits in the next 12 months. The likelihood is low, with 19% of business owners saying they may change their Group Medical plan and Wills. In addition, individual disability income for the business owner and Executive Bonus may have more market opportunity than other plans, each coming in at 12%." (Principal Financial Group)
12-Month Private Industry Compensation Costs Increase in June
Excerpt: "Compensation costs for private industry workers increased 1.5 percent for the 12-month period ending June 2009. This is the smallest percent change published for this series since it began in 1980. The cost increases -- evident in both wages and salaries as well as benefits -- were the smallest increases published in the history of these data series." (U.S. Bureau of Labor Statistics)
After 6,000 Take Buyouts, G.M. to Lay Off Thousands
Excerpt: "Workers who agreed to leave their job received cash payments of $20,000 to $115,000, with the largest amount going to those who gave up retirement benefits other than their pensions. Departing workers also received a voucher worth $25,000 toward a new-vehicle purchase." (The New York Times; free registration required)
Webcasts and Conferences
EFAST 2 - What You Should KnowNationwide on August 14, 2009
presented by ftwilliam.com
ERISA Class Actions – Up Close and Personal: An In Depth Look At The Myriad Of Complex And Ever-Evolving Issues Webcast
Nationwide on August 6, 2009
presented by BNA, Inc.
Is Your Compensation Committee Ready for the Executive Compensation Disclosure and Governance Changes? Webcast
Nationwide on August 11, 2009
presented by BNA, Inc.
What You Need to Know: Final Regulations (and Penalties Related to HIPAA Security Breaches Webcast
Nationwide on August 27, 2009
presented by International Foundation of Employee Benefit Plans
(Click to post your webcast or conference)
Press Releases
Financial Engines Managing Over $20 Billion In Retirement AssetsFinancial Engines, Inc.
Pension and Law Enforcement Experts Join Forces to Create New Standard of Investment Scrutiny
Benchmark Financial Services, Inc.
HHS Delegates Authority for the HIPAA Security Rule to Office for Civil Rights
U.S. Department of Health & Human Services
(Click to post your press release)
Employee Benefits Jobs
Project Based Services Center Specialistfor ACS, Inc. (Affiliated Computer Services)
in NJ
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