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August 18, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy

ASPPA (Advert.)

DOL Speaks: The 2009 Employee Benefits Conference –September 14-15,2009 (clickable image)

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.



[Guidance Overview]
2008 and Prior Years' FBAR Filing Deadlines Extended for Certain Persons to June 30, 2010

Excerpt: "We previously alerted you to your potential filing obligations under the revised Report of Foreign Bank and Financial Accounts ('FBAR') form. In light of the lack of clarity in the IRS' interpretation regarding the form's instructions and the ambiguity of certain definitions under that form, we recommended that certain persons file preemptively, including, among others, U.S. feeder funds investing in foreign master funds and U.S. general partners of foreign partnerships. Please see our Alert regarding Revised TD F 90-22.1 -- Report of foreign bank and financial accounts (U.S. Persons Should Consider Filing Preemptively to Avoid Potential Steep Penalties) dated June 24, 2009." (Pillsbury Winthrop Shaw Pittman LLP)


[Guidance Overview]
SEC's Proposed Pay-to-Play Rules That Would Significantly Restrict Political Contributions by Investment Advisers (PDF)

4 pages. Excerpt: "The proposed prohibition on investment advisers compensating placement agents and other third-party solicitors who market private funds (and investment advisory services) to public pension plans and other governmental entities would apply not only to investment advisers that are registered with the SEC, but also to investment advisers that are exempt from registration because they have fewer than 15 clients (collectively, 'Covered Investment Advisers'). The proposed rule would prohibit Covered Investment Advisers from paying a third party to solicit or communicate, directly or indirectly, with a Government Entity for the purpose of obtaining the Government Entity as a client for the Covered Investment Adviser or having the Government Entity become an investor in a Covered Investment Pool managed by the Covered Investment Adviser. This proposed rule is expressly intended by the SEC to apply to finders, solicitors, placement agents or pension consultants who are compensated by investment advisers to market to public pension plans and other Government Entities." (Paul, Hastings, Janofsky & Walker LLP)


[Guidance Overview]
Recent FBAR Extension Helps, But September 23 Amnesty Deadline Still Looms in Many Circumstances

Excerpt: "Our most recent alert discusses the recent extension to file Report of Foreign Bank and Financial Accounts ('FBARs') in certain circumstances, but warns that the extension does not cover all circumstances and urges taxpayers to make an amnesty filing by September 23rd in uncovered circumstances." (Nixon Peabody LLP)


[Guidance Overview]
Supreme Court to Clarify ERISA Plan Standards of Review

Excerpt: "The U.S. Supreme Court has agreed to review the decision of the Second Circuit Court of Appeals in Frommert v. Conkright, 535 F.3d 111 (2d Cir. 2008). At issue is the degree of deference courts should accord the decision of the administrator of a plan subject to ERISA that is made outside the context of an administrative claim for benefits. The Supreme Court will also consider what standard an appellate court should use in reviewing a lower court's interpretation of an ERISA plan's terms. The case will be argued during the Supreme Court's upcoming October term." (McGuireWoods LLP)


[Guidance Overview]
Class Action Suit Against Hedge Fund Highlights the Standard of Care to which ERISA Fiduciaries are Held

4 pages. Excerpt: "On February 12, 2009, the Pension Fund for Hospital and Health Care Employees (the Fund), filed a complaint against Austin Capital Management Ltd. (Austin) in the United States District Court for the Eastern District of Pennsylvania for millions of dollars of losses due to allegedly improper investments in securities controlled by Bernard L. Madoff and his company. Specifically, the complaint claimed that Austin 'directed significant amounts of investment, estimated at present to be $184 million, into Madoff-related securities, virtually all of which were lost when the Ponzi scheme became known in December 2008.' As a result, the complaint alleged that Austin failed to prudently invest the Fund's assets, in violation of the Employee Retirement Income Security Act of 1974 (ERISA)[.]" (The Hedge Fund Law Report via Davis Wright Tremaine LLP)


[Guidance Overview]
Stocks Transferred to New DC Plan As Part of Corporate Reorganization Were 'Securities of the Employer Corporation'

Excerpt: "After a corporate reorganization, shares of stock transferred from two corporate entities to a new defined contribution plan consisting of a cash or deferred arrangement feature and an employee stock ownership plan feature would be treated as 'securities of the employer corporation' within the meaning of Code Sec. 402(e)(4), and the net unrealized appreciation of those shares could be excluded from gross income on distribution by the plan to a participant or beneficiary, according to IRS Letter Ruling 200927040." (Wolters Kluwer)


[Guidance Overview]
IRS Extension of End of Remedial Amendment Period and Affirmation of Cycle E Option for Governmental Plans

Excerpt: "EBIA Comment: The IRS is trying to identify and address plan qualification issues that are unique to governmental plans (see the IRS's web page for governmental plans, available at http://www.irs.gov/retirement/article/0,,id=181779,00.html). This modification of the remedial amendment cycle for governmental plans is another step in that initiative." (Employee Benefits Institute of America)


[Guidance Overview]
Participant Who Voluntarily Cashed Out Has Statutory and Constitutional Standing to Sue for Fiduciary Breach

Excerpt: "EBIA Comment: We found this case interesting, not only for its clarification of the Vaughn decision and its discussion of the Article III standing issue, but also for its clear rejection of the exclusive remedy argument raised by Chief Justice Roberts in LaRue. The Ninth Circuit's opinion does not analyze the Roberts argument in any detail, though, and it relies in part on a contrary case that Chief Justice Roberts himself acknowledged, so it seems likely that we will see the Roberts argument again." (Employee Benefits Institute of America)


[Guidance Overview]
Pension Plan Asset Disclosure Requirements on 2008 Form 5500 Could Catch Some Filers by Surprise

Excerpt: "Pension plan sponsors facing upcoming filing deadlines for the 2008 Form 5500 should take heed of new plan asset disclosures required for Schedule R. For the 2008 plan year, all single-employer and multiemployer defined benefit (DB) plans with 1,000 or more participants must file an attachment providing financial asset breakdowns as of the first day of the plan year (Jan. 1, 2008, for calendar-year plans), including bond duration information. To avoid last-minute filing snags, sponsors of large DB plans should be working with trustees to obtain the required information." (Mercer LLC)


[Guidance Overview]
Wal-Mart Settles ERISA Case for $5M

Excerpt: "A settlement has been proposed in a class-action lawsuit involving Wal-Mart's 401(k) and profit-sharing plans. The suit alleges Wal-Mart and other defendants breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by failing to make promised employer contributions to participant accounts of the Wal-Mart Profit Sharing and 401(k) Plan and/or the Wal-Mart Puerto Rico Profit Sharing and 401(k) Plan. . . . The [King v. Wal-Mart Stores, Inc. (the King Case)] stems from a number of pending class actions in which current or former Wal-Mart employees allege that Wal-Mart engaged in wage and hour violations, including improper 'wage shaving' practices . . . ." (planadvisor)


Stakeholders: please participate! Important Official Survey Asks How the New Retirement Plan IRS Determination Letter Process is Working, How It Might Be Improved
An IRS advisory council is studying the retirement plan document determination letter process. A new online survey form asks for the views of employers, benefits attorneys, third-party administrators, consultants, providers of master & prototype documents, and other stakeholders. In 2005 the IRS radically changed the determination letter process by creating 5-year and 6-year cycles for amending and filing individually designed, volume submitter, and M&P retirement plan documents. Further changes were made in 2007. The advisory council wants to know how the process is working and how it might be improved, including the process for making required amendments or restatements. To learn more or take the survey now, click on the following address or copy and paste it into your web browser: http://www.surveymonkey.com/s.aspx?sm=EL2r2msS3KJI07X_2fq67w6w_3d_3d (IRS Advisory Committee on Tax Exempt and Government Entities (TE/GE))


Senate Bill S 1612, the 'Employee Stock Ownership Plan Promotion and Improvement Act of 2009' Introduced
Excerpt: "The bill is similar to legislation . . . introduced in 2007, but was never reported out of the Senate Finance Committee." (Warner Norcross & Judd LLP)


Most Baby Boomers Not Converting IRAs to Roths
Excerpt: "Seventy-three percent of Baby Boomers who own a traditional IRA are not planning to convert it to a Roth IRA in 2010, when the previous household income limit of $100,000 will be eliminated, USAA Wealth Management found in a survey. Any investor who converts in 2010 will have two years to pay the taxes. Among households with an income of $100,000 or more, 57% don't even know that the income limits on Roth IRA conversions will be eliminated. Sixty-two percent don't know that if they do make the conversion, the money will be subject to tax." (Money Management Executive via On Wall Street)


Unusual Social Security Claiming Strategies: Costs and Distributional Effects
Excerpt: "Recently, several unconventional claiming strategies have come to light -- 'Free Loan,' 'Claim and Suspend,' and 'Claim Now, Claim More Later'-- that have the potential to pay higher lifetime benefits to some individuals, increasing system costs. . . . Of the three strategies, 'Claim and Suspend' appears to have the clearest policy rationale as it provides an incentive for individuals to work longer." (Center for Retirement Research at Boston College)


Companies with ESOP Outperformed Stock Market, According to Survey
Excerpt: "Results from the Employee Ownership Foundation's 18th Annual ESOP Economic Performance Survey show that 88.5% of ESOP companies outperformed the stock market in 2008. According to a press release, the results indicate respondents' companies outperformed the Dow Jones Industrial Average, the NASDAQ Composite, and the S&P 500. In addition, 50.9% of respondents indicated a better performance in 2008 than in 2007; 39.7% indicated a worse performance; and 9.4% indicated a nearly identical performance as the previous year, the announcement said. Nearly 58% indicated revenue increased, and more than half (50.4%) indicated profitability increased." (PLANSPONSOR.com; free registration required)


Atlanta Must Cut Pension Benefits, Join Social Security, According to Report
Excerpt: "The long-anticipated report was released by the City Council's Select Committee on Pensions, created last summer to look at the city's pension obligations -- its future debts to cover benefits for workers and retirees. Last year, those obligations totaled almost $1.2 billion, dwarfing other city costs. This year, after the world recession, pension costs are expected to increase because all the pension funds have lost money in the stock market and other investments. 'What we have is not sustainable,' said councilman Howard Shook, who co-chaired the committee. The report comes as the city administration is hiring outside consultants to make pension reform recommendations." (The Atlanta Journal-Constitution)


Maryland's Public Pension Obligations Loom
Excerpt: "The day of reckoning is approaching when the state must meet its pension obligations -- to teachers, state police officers, judges and thousands of other state workers -- and the funding level for these obligations stood at about 79 percent, just below the minimum recommended level, last year. The funding level is likely to fall even lower as the state closes the books on fiscal 2009, which ended June 30. Already, the State Retirement Agency has announced that it lost 20 percent of its assets under management, about $8.1 billion, last year because of investment losses." (The Daily Record (Baltimore, MD))


IRS Advisory Committee Assessed U.S. Tax Issues for Employers Involved in Cross-Border Transactions
Excerpt: "The IRS should work to break down barriers to US employers desiring to provide pensions to nonresident aliens working in the US and to employees transferred outside the US, according to an IRS advisory group. The IRS recently posted the eighth annual Advisory Committee on Tax Exempt and Government Entities (ACT) report, after its recommendations were presented this summer. The ACT developed recommendations suggesting the IRS address international pension issues such as allocation of deductions, taxation of US citizens on accruals in other countries, and treatment of pension distributions." (Mercer LLC)


[Opinion]
Comments on Proposed Rule on Suspension or Reduction of Safe Harbor Nonelective Contributions (PDF)

2 pages. Excerpt: "The proposed rule will provide significant relief to plan sponsors facing extraordinary economic stress. Most importantly, it will help prevent the termination of retirement plans, an event that will be harmful to the retirement security of American workers. PSCA commends the Service for its timely response to this emergency, including the ability to rely on the proposed rule pending the issuance of a final rule, even if the final rule is more restrictive." (Profit Sharing / 401k Council of America)


[Opinion]
Directing Your 401(k) Investments into Your Employer's Stock Could Be Mistake

Excerpt: "As far as I'm concerned, holding your employer's stock in your 401(k) is one of the biggest mistakes you can make with a retirement plan. The reason is pretty simple: Even if you don't own a single share of your employer's stock, your financial exposure to the company is already huge -- you work there!" (The Motley Fool)


[Opinion]
ASPPA Comments on Suspension or Reduction of Safe Harbor Nonelective Contributions' Proposal

6 pages. Excerpt: "The American Society of Pension Professionals & Actuaries (ASPPA) is writing to comment on amendments proposed to the IRC sections 401(k) and 401(m) regulations. The proposed changes relate to plans that utilize the safe harbor provisions of IRC sections 401(k)(12) and 401(m)(13) and elect to suspend or reduce safe harbor nonelective contributions in the middle of a plan year. . . . ASPPA appreciates the response to our February 20, 2009 letter in which we outlined the potential problem faced by employers sponsoring safe harbor 401(k) plans. The relief provided in the proposed amendments will allow many plans to be maintained that would have otherwise been terminated. As a result, employees will continue to have access to the preferred savings vehicle of a qualified plan." (American Society of Pension Professionals & Actuaries)



DATAIR Employee Benefit Systems, Inc. (Advert.)

DATAIR 5500 / PBGC / 1099-R / 5300 / FAS 158 Software (clickable image)

DATAIR 5500 / PBGC / 1099-R / 5300 / FAS 158 Software

Pension Reporter System. Easy to use and economical electronic and paper filing. Full instructions and expert support. Choose from 4 modules:
* Annual Reporting Series: EFAST 5500-series, PBGC Premium-series, SAR, and 5500 electronic filing
* 1099-R Series: with related forms and 1099 electronic filing/Service Bureau
* Qualification & Termination: 5300/5310-series and PBGC 500/600-series forms
* FAS 132/158: Audit Letter, Worksheets, Schedules
sales@datair.com or call 1-888-324-2474

Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
Governance and Compliance Advisory Update: August 2009

Excerpt: "In July, key decisions and rulings prompted significant activity in executive compensation, retirement, welfare and other benefits. [The update includes insights on the issues.]" (Towers Perrin)


[Guidance Overview]
FBAR's Application to Equity Awards Issued Under a Plan of a Foreign Multinational Company

Excerpt: "Employers should be aware . . . that the FBAR filing requirements also may apply to equity awards granted by a foreign multinational company to a 'U.S. person.' There has been limited guidance from the IRS on the FBAR as it relates to equity plans, so each situation should be analyzed to determine if there is an FBAR filing requirement. Failure to file an FBAR can result in severe civil and criminal penalties, and in certain situations, civil penalties can be as much as 50% of the amount in the account at the time of the violation (up to $100,000)." (Seyfarth Shaw LLP)


[Guidance Overview]
When Closing a Location, How Long Must Employers Retain Employee Benefit Records?

Excerpt: "Issue: Your company is shutting down one of its facilities, and all employees who work at that location will be terminated. You are wondering what to do with the employee benefits files, such as beneficiary forms, enrollment forms and short-term disability claim forms. Are there any legal requirements regarding maintenance and disposal of such files?" (Wolters Kluwer)


[Guidance Overview]
Enforcement of 'Red Flags' Identity Theft Rule Delayed (PDF)

2 pages. Excerpt: "The Federal Trade Commission has delayed until November 1, 2009 enforcement of a rule that requires 'financial institutions' and 'creditors' to implement written identity theft prevention programs. . . . [The FTC has clarified] that 401(k) plans and health flexible spending accounts are not covered by the new rule." (Buck Consultants)


[Guidance Overview]
Proposed Changes to Proxy Disclosure Regarding Executive Compensation and Corporate Governance

Excerpt: "The proposed amendments may significantly increase the amount of information companies are required to generate and disclose, which may place additional pressures on the companies' resources to be able to appropriately and efficiently respond to the proposed amendments. If adopted, the Commission has stated that compliance likely would be required beginning with the 2010 proxy season, which may not allow for a substantial amount of time for the information gathering and analysis background work that will be necessary after publication of the final amendments in the Federal Register. Although the proposed amendments have not been adopted and the level of analysis and restructuring of existing structures, processes, and reporting will vary among companies, companies should begin to consider commencement of this process as soon as possible." (Jones Day)


Supreme Court to Hear Case on Executive Pay
Excerpt: "The Supreme Court will hear the case this fall, as anger over huge bonuses paid to the executives of failing companies continues to grow. The case, Jones v. Harris Associates, may turn out to be the court's first significant statement on the corporate culture that helped lead to the Great Recession. The case arose from the enormous fees mutual funds pay to their investment advisers." (The New York Times; free registration required)


The Employee Ownership Update for August 17, 2009
NCEO Executive Director Corey Rosen discusses the ESOP Improvements Act, the results of the NCEO's new survey on employee stock purchase plans (ESPPs), and an important Ninth Circuit decision in the Johnson v. Couturier case concerning the role of ESOP fiduciaries in dealing with executive pay and the ability of companies to indemnify fiduciaries. (The National Center for Employee Ownership)



Webcasts and Conferences

Employer Forum Workshop
in Massachusetts on September 15, 2009
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

(Click to post your webcast or conference)

Employee Benefits Jobs

Pension Administrator
for Pension Administration Firm located in Westchester, NY
in NY

Actuarial Consultant
for Summit Retirement Plan Services, Inc.
in OH

Retirement Plan Administrator
for Doherty Employer Services
in MN

Retirement Plan Administrator
for Geller Group, LLC
in NY

Compliance Analyst
for The Newport Group
in FL

Defined Benefits Plan Manager--Sarasota
for Growing, progressive TPA
in FL

(Click to post your job opening | View all jobs | RSS feed for jobs RSS feed of all jobs )


EmployeeBenefitsJobs.com (Sponsor)

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Where the best employers find the best candidates!


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