Retirement Plans Newsletter |
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| August 14, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
IRS Cycle D Retirement Plan Filings: Six Months and Counting
Excerpt: "Preparing this determination letter filing may take longer, and require more assistance from counsel and others, than past filings because of the new IRS determination letter program rules. Therefore, to assist employers, Sibson Consulting is devoting this issue of Compliance Alert to Cycle D action items." (The Segal Group, Inc.)
[Guidance Overview]
Defined Benefit Plan Contribution Timing under PPA
Excerpt: "In the wake of PPA and its new funding rules, both practitioners and plan sponsors have found it more difficult to get their arms around the timing of required contributions as well as the timing of the calculations that may affect those contributions. In this article, we walk you through the process with stops along the way to better understand the mechanics and the timing." (JPMorgan Chase & Co.)
[Guidance Overview]
A Different Way of Looking at 401(k) Plan Refunds
Excerpt: "When a 401(k) plan fails the ADP test, the usual cure is to give refunds to highly compensated employees. And, recommendations to fix that problem going forward are often restricted to the plan in question. In this article however, we consider the possibility of looking outside that plan for a solution." (JPMorgan Chase & Co.)
[Guidance Overview]
Credit Balances and Contribution Timing Under PPA
Excerpt: "We've already presented a number of articles reviewing the impact that PPA funding rules and end-of-2008 market turmoil have had on defined benefit funding. Here we turn our attention to a more specific set of issues - the use of credit balances to manage defined benefit funding demands. We first provide an overview of the new rules under PPA, followed by an examination of practical considerations, particularly contribution timing and preserving credit balances." (JPMorgan Chase & Co.)
[Guidance Overview]
Five Years of Service Is Valid 'Normal Retirement Age' in Pre-2006 Plan
Excerpt: "A pre-2006 cash balance plan did not violate ERISA when it defined 'normal retirement age' to be five years of service with the employer, the U.S. Court of Appeals in Chicago (CA-7) has ruled in Fry v. Exelon Corporation Cash Balance Pension Plan." (Wolters Kluwer)
[Guidance Overview]
Retirement Plan Loans That Exceeded Statutory Maximum Resulted in a Deemed Distribution
Excerpt: "A series of loans from a retirement plan that collectively exceeded the statutory maximum under IRC Sec. 72(p)(2)(A) resulted in the excess amount being treated as a deemed distribution. In addition, the taxpayer was liable for the IRC Sec. 72(t) 10% additional tax on premature distributions. These were the conclusions of the U.S. Tax Court in Billups v. Commissioner (Docket No. 17470-07S. T.C. Summary Opinion 2009-86)." (Wolters Kluwer)
Social Security Benefits Once Again a Central Role in Retirement Planning
Excerpt: "In today's planning, the question of when to begin Social Security is the real issue. For people born in 1955 and later, the actual full retirement age (FRA) gradually increases from 65 to 67 years old. If they begin taking benefits before that, they lose a percentage of their Primary Insurance Amount (PIA), which is the amount they would receive if they waited until reaching FRA. When clients postpone collecting benefits, they will receive an increased benefit based upon how many years they delay (up to age 70) and their year of birth." (Morningstar, Inc.)
Fidelity 401(k) Survey Shows Hope for Retirement Savings, but Employers Remain Wary
Excerpt: "A Fidelity Investments survey shows that more 401(k) participants are increasing their contributions than decreasing them, marking a reversal in employees' investing patterns. But industry experts say that employers are very wary of encouraging this trend. According to the August 12 survey, 4.7 percent of plan participants increased their 401(k) contribution rate in the second quarter while 3 percent lowered it. 'This is the first time that we saw a reversal in the trend of people who stopped their 401(k) contributions,' said Scott David, president workplace investing at Fidelity." (Workforce Management; free registration required)
Pension Finance Update
Excerpt: "After starting out as a continuation of the latter half of 2008, the rebound in equity markets has more than offset the increase in pension liabilities due to decreases in corporate bond yields. A typical defined benefit plan has probably enjoyed an increase in funded status year-to-date of 5-8%." (JPMorgan Chase & Co.)
Annual 401(k) Benchmarking Survey: 2009 Edition
Excerpt: "The Survey results offer a detailed snapshot of the 401(k) policies, features, objectives and expectations of hundreds of diverse employers. . . . The survey sheds light on the collective 'frame of mind' of employers. For the majority, plan designs have remained relatively consistent from last year. This comprehensive survey offers a detailed examination of 401(k) policies and practices, and how plan sponsors and participants intend to utilize these powerful retirement savings instruments." (Deloitte Development LLC)
Are Age-62/63 Retired Worker Beneficiaries at Risk?
Excerpt: "The findings indicate that persons first accepting Social Security retired worker benefits at ages 62 and 63 experience varying degrees of risk to their well being at these ages, and that these risks condition their well-being in retirement and survival probabilities. The major policy implication is that consideration should be given to providing a health insurance option for persons first accepting retired worker benefits prior to age 65. The major research implication is that retirement researchers should consider utilizing a range of measures - as opposed to a singular and potentially narrow measure -- of risk when assessing the magnitude of risks existing for those accepting retired worker benefits at early ages." (Center for Retirement Research at Boston College)
CalPERS Actuary Says Public Pension Costs Are Not Sustainable
Excerpt: "The CalPERS chief actuary says pension costs are 'unsustainable' and the giant public employee pension system plans to meet with stakeholders to discuss the issue. . . . Now 'sustainability,' a term used in environmental discussions, has become a common label for a big question about public employee pensions: Will the current level of benefits be affordable in the future? The question of pension sustainability emerged as a hot topic during a seminar in Sacramento last week sponsored by the Public Retirement Journal. Ron Seeling, the CalPERS chief actuary, described the process used to 'smooth' the rate increases that will be imposed on the 1,500 local government agencies in CalPERS in 2011 in the wake of the stock market crash. Instead of a rate increase of 4 to 20 percent of pay, the smoothing will reduce the rate hike to a more manageable 0.5 to 2 percent of pay." (Capitol Weekly)
[Opinion]
The 401(k) Plan Is Here to Stay
Excerpt: "For the first time in a year, more workers increased the amount of money they put into their 401(k) accounts during the second quarter than decreased their contributions, according to a report issued Wednesday by a retirement fund manager. . . . Two points. With the automatic enrollment features of the Pension Protection Act of 2006, this is not a surprise. . . . Second point. 401(k) are here and here to stay and that is not necessarily a good thing. Unlike defined benefit accounts which have the ability to weather recessionary storms because of their formulaic, actuarial nature, defined contribution plans, like 401(k)s, even when properly diversified, can be walloped in an economy like this one." (Workplace Prof Blog)
[Opinion]
U.S. Should Offer Tax Relief to People Who Turned to Their 401(k) for a Bailout
Excerpt: "As the Obama administration continues to look for ways to ease the financial pain that people are feeling in this recession, I hope it will provide relief for the many folks who are facing huge tax bills because of 401(k) loans. For some, a 401(k) loan can be an appropriate bailout during difficult times. After all, you're borrowing your own money from your retirement plan and paying it back in monthly installments over five years, unless the loan is used to buy a primary residence. Plus you are paying interest to yourself -- typically the prime rate or prime plus one percentage point. But if you leave your job, either voluntarily or through a layoff, the loan becomes due within 90 days. If you default, it will be costly." (The Washington Post; free registration required)
ASPPA (Advert.)
DOL Speaks: The 2009 Employee Benefits Conference –September 14-15,2009 ASPPA and the U.S. Labor Department EBSA co-sponsor this conference, which focuses exclusively on ERISA Title 1 issues. Get the latest information about ERISA regulatory and legislative issues; DOL audit enforcement, retirement plan and group health-plan issues; fiduciary matters, the fundamentals of managing an ERISA plan and more. There also will be information about the Pension Protection Act. Register now. Washington Hilton Hotel /1919 Connecticut Street, NW / Washington, DC. |
Links to Items on Executive Comp, Benefits in General
A Summary of Judge Sotomayor's ERISA Decisions: Part II (PDF)3 pages. Excerpt: "This handful of cases is representative of Justice Sotomayor's decisions in ERISA cases during her time as a District Court judge. In short, Judge Sotomayor's District Court ERISA decisions are well-reasoned, thoughtful and meticulous. They are not the product of a 'judicial activist.' Although we often see cases in which courts simply don't seem to 'get it' when it comes to ERISA, the same cannot be said for Judge Sotomayor based on a review of those opinions." (Reish & Reicher)
More Employers Plan to Reverse Pay and Benefit Cuts
Excerpt: "The number of employers planning to reverse salary cuts and freezes and reinstate a matching contribution to 401(k) plans has increased in the past two months, according to the latest update to an ongoing series of surveys by Watson Wyatt. The survey found that 24% of employers plan to reverse reductions to 401(k) match contributions in the next six months, versus 5% in June, according to a press release. Additionally, 33% of employers that froze salaries plan to unfreeze them within the next six months, up from 17% two months ago. Forty-four percent plan to roll back salary cuts in the next six months, compared with 30% who said so two months ago." (PLANSPONSOR.com; free registration required)
[Opinion]
U.S. Social Insurance Needs Rethinking
Excerpt: "The U.S. is headed for a fiscal meltdown. Even before Congress began calling for a hugely expensive overhaul of health care, the federal government was a staggering $56 trillion in the hole, in terms of unfunded obligations. That's $184,000 of debt for every American. Even after its tax increases, the House health bill would add an additional $10 trillion in red ink. No wonder foreign investors as well as ordinary Americans are beginning to worry we won't be able to pay our national bills." (Stuart Butler via The Washington Times)
Webcasts and Conferences
"ERPA Test Review Archived Web Seminar, Part 2"Nationwide on August 13, 2009
presented by SunGard Relius
Compensation for Executives and Directors
in New York on October 26, 2009
presented by ABA Joint Committee on Employee Benefits
ftwilliam.com Administration Software 'Sneak Peek'
Nationwide on August 25, 2009
presented by ftwilliam.com
Health and Welfare Benefit Plans: Responding to Change
in District of Columbia on October 19, 2009
presented by ABA Joint Committee on Employee Benefits
Lessons from Madoff: Ideas and Practices for Plan Fiduciaries to Limit Exposure to Financial Fraud
Nationwide on September 29, 2009
presented by ABA Joint Committee on Employee Benefits
(Click to post your webcast or conference)
Press Releases
Segal Releases On-Line Survey Findings: Managing Through Fiscal StressThe Segal Company
U.S. Labor Department Sues Retirement Plan Trustees of Defunct Alabama Wholesaler to Recover Nearly $900,000 in Pension Assets
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
(Click to post your press release)
Employee Benefits Jobs
Trust Administration Supervisorfor Associated Pension Consultants
in CA
Retirement Plan Analyst (Retirement Plan Administration)
for BeneTrends, Inc.
in PA
Defined Contribution Relationship Consultant
for The Douglas Group
in ANY STATE
(Click to post your job opening | View all jobs |
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