Retirement Plans Newsletter |
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| August 17, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Official Guidance]
Summer 2009 Edition of 'Retirement News for Employers' by Internal Revenue Service (PDF)
14 pages. Articles include '2009 RMDs from Defined Benefit Plans?', 'ABCs of Loans and Hardship Distributions', 'Correcting a Failure to Implement the Plan's Automatic Enrollment Provisions', 'SIMPLE IRA Plans: The 2-Year Rule on Early Distributions', 'New on the Web', and '7 Steps to Making a Hardship Distribution." (Internal Revenue Service)
[Official Guidance]
Education and Labor Committee Report of the 401(k) Fair Disclosure and Pension Security Act, H.R. 2989 (PDF)
104 pages. Excerpt: "The Committee on Education and Labor, to whom was referred the bill (H.R. 2989) to amend the Employee Retirement Income Security Act of 1974 to provide special reporting and disclosure rules for individual account plans and to provide a minimum investment option requirement for such plans, to amend such Act to provide for independent investment advice for participants and beneficiaries under individual account plans, and to amend such Act and the Internal Revenue Code of 1986 to provide transitional relief under certain pension funding rules added by the Pension Protection Act of 2006, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended do pass." (American Benefits Council)
[Guidance Overview]
Employers Should Be on the Lookout for Common Retirement Plan Errors
Excerpt: "The Internal Revenue Service recently published a list of common recurring mistakes it sees in large case audits of qualified retirement plans and in submissions under its Voluntary Correction Program. This list provides employers with a useful checklist for reviewing the operations of their qualified retirement plans. A number of these errors result from the actions of the third party administrator (TPA). Often the TPA's errors result from the employer's failure either to provide current and accurate information regarding eligible employees and eligible compensation or to properly review and monitor the actions of the TPA." (Haynes and Boone LLP)
Using Risk Profiles to Manage Public Pension Funding Goals (PDF)
4 pages. (Milliman)
How Public Pensions Beat Private Pensions
Excerpt: "The kinds of pension benefits that public employees enjoy are practically unheard-of in the private sector, pension experts say. I'm just going to tell you, they exceed private-pension plans substantially,' said Ben Eastman, whose Sacramento-based business, Pension Services Inc., administers 650 private pension funds. Common features of public sector plans retirement as young as age 50, common for public safety employees and pension checks for some nearly equal to or greater than their pre-retirement paychecks and payments in amounts guaranteed by law, with cost-of-living increases, for the rest of their lives hardly exist in the private sector, Eastman said." (Visalia Times-Delta / Tulare Advance-Register)
Pay for Performance at Large Public Pension Funds
Excerpt: "Much like their Wall Street brethren, investment managers at some of the country's largest public pension funds receive incentive bonuses when fund performance exceeds established benchmarks. When public funds experienced significant investment gains on assets, bonus payments flew under the radar. Amidst the last year of fund losses, however, those bonus payments are drawing howls of criticism." (PLANSPONSOR.com; free registration required)
Court Slims Down JPMorgan Cash Balance Suit
Excerpt: "JPMorgan Chase & Co. has successfully convinced a federal judge that a former employee should be barred from moving forward with allegations about the company's cash balance conversion. Plaintiff Frank Bilello's alleged that the financial services company's notices about its cash balance conversion were legally incomplete and inadequate. However, U.S. District Judge Denise Cote of the U.S. District Court for the Southern District of New York also handed the employer a setback by refusing to throw out the plaintiff's claim that the company committed a fiduciary breach by misleading workers about how the planned conversion would affect their benefit levels. Regarding the inadequate notice issue, Cote ruled that the Employee Retirement Income Security Act (ERISA) did not mandate JPMorgan's corporate predecessors to include additional financial analysis about each employee's benefit impact on their conversion notice, but merely required an alert the conversion was taking place and the date it would happen." (planadvisor)
The Process of Picking a Co-Fiduciary
Excerpt: "The courts have been clear and consistent in requiring fiduciaries lacking adequate training, experience and expertise to make necessary and proper investment decisions to engage competent independent financial advisers and managers to help handle the job. Thus, the duty of prudence is often associated with a companion duty to delegate. A fiduciary who can't demonstrate a professional level of investment ability must fulfill the duty of prudence by carefully selecting and monitoring co-fiduciaries who are investment experts. There are powerful incentives for fiduciaries to delegate investment responsibilities properly." (Investment News; free registration required)
10 Things You're (Probably) Doing Wrong -- or Not Doing Right -- as a Plan Fiduciary
Excerpt: "Note . . . that there is frequently a difference between doing all that the law requires and doing everything that you could do. This listing is a combination of the things that you must do and things that you do not have to do -- but that, if done, would keep you and your plan(s) in good stead. I hope you find this list informative, and that you draw insight and comfort from its contents, as well as a reminder of the awesome responsibilities you have as a plan fiduciary." (planadvisor)
[Opinion]
ERIC Calls IRS 'Substantial Business Hardship' Requirement Unnecessary and Burdensome
Excerpt: "In comments submitted [August 14] to the Department of Treasury and Internal Revenue Service, The ERISA Industry Committee (ERIC) welcomed the relief provided in proposed regulations allowing plan sponsors to suspend qualified non-elective contributions (QNECs) in safe harbor section 401(k) plans, but urged that the 'substantial business hardship' requirement be dropped from the final regulation as unnecessary and burdensome. The Treasury Department and IRS on May 18, 2009, proposed regulations that would allow employers to reduce or suspend safe harbor non-elective contributions to 401(k) and 403(b) plans due to substantial business hardship." (The ERISA Industry Committee)
[Opinion]
CIEBA Comments on Proxy Access Rules (PDF)
3 pages. Excerpt: "[We] have concerns that the Commission's proposed rule on 'Facilitating Shareholder Director Nominations' may encourage actions that are not in the interest of long-term investors." (Committee on Investment of Employee Benefit Assets via Association for Financial Professionals, Inc.)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]IRS Letter Ruling Finding That Expense Reimbursement Arrangement Satisfies Accountable Plan Rules
Excerpt: "EBIA Comment: For guidance about designing a successful reimbursement plan, this private letter ruling is a must-read! The IRS has previously addressed tool reimbursement plans that fail to qualify as accountable plans -- largely due to recharacterization of wages, which violates the business connection requirement, and lax substantiation requirements." (Employee Benefits Institute of America)
[Guidance Overview]
Headlines in Employee Benefits Law E-Alert, August 2009 (PDF)
6 pages. The alert contains Select Compliance Deadlines and Reminders; Retirement Plan Developments; and, Health and Welfare Plan Developments. (Reinhart Boerner Van Deuren s.c.)
U.S. Pay Czar Says He Can 'Claw Back' Executive Compensation
Excerpt: "Kenneth Feinberg, the Obama administration's pay czar, said on Sunday he has broad and 'binding' authority over executive compensation, including the ability to 'claw back' money already paid, and he is weighing how and whether to use that power." (Reuters via The New York Times; free registration required)
IRS Internal Memo on 162(m) and Backdated Options
Excerpt: "In Internal Memo, AM 2009-006, the IRS concluded that a stock option whose exercise price was less than the fair market value of the stock at the date of grant ('discounted stock option') does not, and could not be modified to, qualify as performance-based compensation under Code Sec. 162(m)(4)(C), where the executive reimburses the employer for the excess of the fair market value on the date of grant over the exercise price (or the parties otherwise agree to an increased exercise price)." (Michael Melbinger via Winston & Strawn LLP)
Corporations Not Significantly Scaling Back on Domestic Employee Relocations
Excerpt: "For corporate America, with its continuing need to match talent to locations, the real estate situation has become the top concern in domestic relocation. As the real estate market went from bad to worse, companies began re-evaluating policies and adjusting programs in their struggle to get needed employees to the right sites while also controlling relocation costs. . . . Despite the domestic real estate slump, corporations are forging ahead with relocation programs, with relatively few anticipating major reductions. As a result, relocation spending will likely continue rising throughout 2008." (Workforce Management; free registration required)
Webcasts and Conferences
A Day with Sal Tripodiin California on August 25, 2009
presented by San Diego County Chapter of NIPA
Surviving the New 403(b) Regulatory Environment
Nationwide on August 19, 2009
presented by Cammack LaRhette Consulting
(Click to post your webcast or conference)
Press Releases
Employee Benefits Industry Organizes to Protect Flexible Spending Accounts from Elimination or Contribution LimitsEmployers Council on Flexible Compensation (ECFC)
ERIC Calls IRS "Substantial Business Hardship" Requirement Unnecessary and Burdensome
ERIC (ERISA Industry Committee)
BPAS Rolls Out Annual Plan Review Report with Benchmarking Focus
BPAS
Bert Carmody is Awarded the AIF® Designation
Fiduciary Risk Management, LLC
(Click to post your press release)
Employee Benefits Jobs
Employee Benefits Sales Specialistfor CUNA Mutual
in TX
Compliance Analyst - ERISA
for T. Rowe Price
in MD
Account Executive - Group Benefits
for Lenox Advisors, Inc
in NY
Retirement Plan Administrator
for Pension Advisory Group, Ltd.
in IL
Secretary / Administrative Assistant
for Jennings Law Firm, Ltd. / Dana Consulting Group, Ltd.
in IL
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