Retirement Plans Newsletter |
|
|
| September 14, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
www.ftwilliam.com (Advert.)
EFAST 2 5500 Software. It's not too early to start thinking about next year. Here are some of the reasons why ftwilliam.com is the fastest growing 5500 software vendor:
|
[Guidance Overview]
IRS Guidance on Model Tax Notices, Contributions of Unused Paid Time Off, and Automatic Enrollment Features
Excerpt: "The IRS issued two model tax notices for compliance with Code Section 402(f) -- one for a distribution of designated Roth contributions and one for distribution of traditional contributions. A participant or beneficiary eligible to receive a distribution of both types of contributions will need to receive both explanations. The new model notices address relatively recent issues such as rollovers to Roth IRAs, rollovers by non-spouse beneficiaries to inherited IRAs, and the waiver of the 10% early distribution penalty on qualified reservist distributions." (Seyfarth Shaw LLP)
[Guidance Overview]
Plan Fees: Fiduciaries Must Focus on Float
Excerpt: "During this period of heated debate on economic instability and health care reform, retirement plan fiduciaries should not forget that plan fee reform is on the horizon. Legislation regarding plan fees is moving through Congress, and the Department of Labor (DOL) is finalizing regulations regarding fee disclosure under ERISA. These efforts will focus on: Revenue sharing (the process by which one service provider collects fees from plan assets and distributes them among other providers), and Disclosure of plan fees to plan participants and the government. This WorkCite article focuses on 'float' - a form of service provider compensation that continues to be in the plan fee spotlight." (McGuireWoods LLP)
[Guidance Overview]
Investment Companies May Provide Summary Prospectuses to 401(k) and Other ERISA Plans Offering Their Funds
Excerpt: "On September 8, 2009, in Field Assistance Bulletin 2009-3, the U.S. Department of Labor (DOL) approved the use of 'summary prospectuses' for mutual funds to satisfy prospectus delivery obligations of employee benefit plans, such as 401(k) plans.[1] As a result, 401(k) and similar plans will be able to satisfy their obligations to deliver prospectuses for mutual funds offered by their plans by using summary prospectuses rather than full prospectuses, where the funds provide the plans a summary prospectus." (Kilpatrick Stockton LLP)
[Guidance Overview]
U.S. District Court Says Cash Balance Plan ADEA Claim Not Time Barred Under Lilly Ledbetter Act (PDF)
2 pages. Excerpt: "In Tomlinson v. El Paso Corporation, a federal court in Colorado applied the Lilly Ledbetter Fair Pay Act to allow an age discrimination claim involving a cash balance plan conversion to proceed, reversing its prior dismissal of the lawsuit. The case involves a company that converted its traditional defined benefit pension plan to a cash balance plan in 1997 with a wearaway provision. Although the court initially dismissed the case for not being timely filed, it found that the subsequently enacted Ledbetter Act required it to reconsider this decision. While this is one court's ruling and is limited to Colorado, it demonstrates the potential reach of the Ledbetter Act beyond payroll practices to pension-related claims." (Buck Consultants)
[Guidance Overview]
IRS Response to President Obama's New Initiative Regarding Retirement Savings
Excerpt: "The Internal Revenue Service ('IRS') has followed up on President Obama's . . . call for more opportunities to save for a 'rainy day.' In particular, the IRS guidance relates to: Contribution of the value of unused paid vacation, sick and other leave ('paid time off') to a defined contribution plan; Automatic enrollment arrangements; and Required notice with regard to eligible rollover distributions." (Blank Rome LLP)
[Guidance Overview]
Section 404(c) and the Related Regulation to Protect Plan Fiduciaries from Liability (PDF)
3 pages. Excerpt: "The Court of Appeals for the 7th Circuit recently issued an order in the case of Hecker v. Deere that 'clarifies' its earlier ruling in the case...though in our view, the 'clarification' is more of a reversal of course. The issue addressed in the new order (and in this Bulletin) is the interplay between ERISA Section 404(c) and the fiduciary obligation to prudently select and monitor the investments offered in a 401(k) plan; that is, if you comply with 404(c), do you still need to prudently select and monitor the investments?" (Reish & Reicher)
[Guidance Overview]
IRS Answers to Questions on Taxability of Roth Conversions
Excerpt: "In Notice 2009-75, the Internal Revenue Service provides guidance in the form of a Q&A on the tax treatment of eligible rollover distributions from qualified plans into a Roth IRA. The guidance further clarifies that a qualified plan is a qualified plan described in § 401(a), an annuity plan described in § 403(a), a plan described in § 403(b), or a governmental § 457(b) plan." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
IRS's New Safe Harbor Notice Regarding Eligible Rollover Distributions
Excerpt: "On September 5, 2009, the IRS released a substantially restructured and updated safe harbor rollover notice that is required to be provided to people who receive eligible rollover distributions from qualified plans, 403(b) annuities and governmental 457(b) plans. The safe harbor rollover notice provides a more streamlined, simplified explanation of the rollover options available to distributees. The IRS released two separate versions of the safe harbor rollover notice: one for individuals receiving distributions from a designated Roth account and another for individuals receiving distributions that are not from a designated Roth account." (Sonnenschein Nath & Rosenthal LLP)
How Ordinary Consumers Make Complex Economic Decisions: Financial Literacy and Retirement Readiness
Excerpt: "This paper reports on several self-assessed and objective measures of financial literacy newly added to the American Life Panel (ALP), and it links these performance measures to efforts consumers make to plan for retirement. We evaluate the causal relationship between financial literacy and retirement planning by exploiting information about respondents' financial knowledge acquired in school - before entering the labor market and certainly before starting to plan for retirement. Results show that those with more advanced financial knowledge are those more likely to be retirement-ready." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)
Automatic Contributions Mask Poor 401(k) Performance
Excerpt: "One of the biggest mysteries to emerge from the recession is why investors have stuck with their 401(k) in the face of a 55% market decline between October 2007 and March 2009. The simple reason, The Wall Street Journal reports, is the payroll deductions every two weeks continuously pump up participants' balances, and unwitting, disengaged investors see their balances holding steady. Instead, they actually should be looking at performance. And if they did, more of them would bail out of the market." (Financial Planning)
6 Ways for Small Employers to Ease Retirement Plan Costs
Excerpt: "[M]anaging a retirement plan is costly, and because plan assets shrank when the market plunged, it could get costlier. . . . Here are six ways to help you mitigate rising retirement costs without bailing on benefits . . . ." (The Wall Street Journal)
U.S. Supreme Court to Hear Case Regarding Excessive Mutual-Fund Fees This Fall
Excerpt: "[The U.S. Supreme Court] is scheduled to hear the case of Jones vs. Harris Associates this fall. The case concerns allegedly excessive fees paid by mutual funds to their investment advisers. Last summer, a three-judge panel in the U.S. 7th Circuit Court of Appeals in Chicago rejected the lawsuit brought by investors, who charged that three Oakmark mutual funds had overpaid their investment adviser. Chief Judge Frank H. Easterbrook wrote in the opinion that the marketplace should determine whether such fees were excessive. In his dissent opinion, however, Judge Richard A. Posner said the marketplace can't always be trusted to regulate such fees. Further, he said, executive compensation is spinning out of control and is not adequately regulated. That Posner and Easterbrook should disagree to such an extent practically guaranteed that the case would be brought before the Supreme Court, says Robert C. Christenson, a partner in the Atlanta office of Fisher & Phillips." (Human Resource Executive Online)
Pension Sponsorship and Participation: Summary of Recent Trends, September 11, 2009 Update (PDF)
Excerpt: "The proportion of year-round, full-time workers employed at firms that sponsored a retirement plan fell from 59.9% in 2007 to 59.0% in 2008. The participation rate among these workers fell from 52.0% in 2007 to 51.1% in 2008. Between 1990 and 2000, plan participation among full time workers increased from 54.6% to 57.4%. It has since fallen by more than six percentage points. Between 2007 and 2008, the proportion of part-time or part-year workers employed by firms that sponsored a retirement plan fell from 38.3% to 37.2%. The percentage of part-year and part-time workers who participated in employer-sponsored retirement plans was unchanged from 2007 to 2008, at 23.0% in both years." (U.S. Congressional Research Service)
Ohio Public Pension Plans Outline Reforms: Cost to Taxpayers Could Hit $1 Billion in Next 10 Years
Excerpt: "The proposals came during a meeting of the Ohio Retirement Study Council, which met yesterday to address the financial problems of the state's five public pension funds. . . . Two funds -- the State Teachers Retirement System of Ohio and Ohio Police & Fire Pension -- asked for an increase in the contributions schools and municipalities make into employee accounts. 'If no changes are made we will eventually be unable to pay benefits,' Michael Nehf, executive director of the State Teachers Retirement System, told the retirement council. The teacher's pension fund asked for schools to increase their contribution from 14 percent to 16.5 percent over five years, starting in 2016." (The Columbus Dispatch)
Treasury/Labor Departments Angling for 'Automatic Annuities' in 401(k) Plans
Excerpt: "The Department of the Treasury and the Department of Labor will soon be taking steps to make it easier for companies to offer 'automatic annuities' in 401(k) plans, Treasury senior adviser Mark Iwry said [September 11]. Federal officials are looking at ways 'to make it much more possible, feasible and practical for lifetime income to return to the scene,' Mr. Iwry said at a conference this morning in Washington, which was sponsored by the American Council of Life Insurers. 'The 401(k) defined-contribution space seems to be a particularly propitious place to do that,' he added while addressing attendees at the Guaranteeing Savings to Last a Lifetime conference." (Investment News; free registration required)
Upswing in Retirement Plan Fees: What Small Businesses Need to Know
Excerpt: "Socking away retirement funds is becoming more expensive for small-business owners and employees. When the stock market plunged roughly 40% last year, retirement plan assets also took a dive. . . . Compounding the blow to retirement savings, the decline in plan assets is spurring higher management fees and greater expenses at some mutual fund companies and 401(k) providers. And although such changes will likely affect employer-sponsored plans across the board, small plans, which often have fewer employees and fewer assets, may get hit the hardest." (The Wall Street Journal)
[Opinion]
QDROs, the Drainville Decision, and Albert Feuer
Excerpt: "I don't think anyone has made as sustained a study of the law of QDROs as Albert Feuer. Albert has a new piece he has authored on the Drainville decision, which I discussed here, in which Albert concurs that it is both well reasoned and accurate in treating substantial compliance with the statutory QDRO requirements as sufficient. Albert, however, has long maintained a particular scholarly view on the QDRO requirements, which is that they only apply to pensions under the statutory language, and don't reach other ERISA governed plans or benefits. Albert points out that the Drainville court erred in its analysis for this reason." (Stephen Rosenberg of The McCormack Firm, LLC)
[Opinion]
Overcoming Short-termism: A Call for A More Responsible Approach to Investment and Business Management
This post on The Harvard Law School Forum on Corporate Governance and Financial Regulation is a statement by the Aspen Institute Business & Society Program's Corporate Values Strategy Group, of which John Olson is a signatory, along with 27 other business, investment, academic, & labor leaders. Excerpt: "We believe a healthy society requires healthy and responsible companies that effectively pursue long-term goals. Yet in recent years, boards, managers, shareholders with varying agendas, and regulators, all, to one degree or another, have allowed short-term considerations to overwhelm the desirable long-term growth and sustainable profit objectives of the corporation. We believe that short-term objectives have eroded faith in corporations continuing to be the foundation of the American free enterprise system, which has been, in turn, the foundation of our economy. Restoring that faith critically requires restoring a longterm focus for boards, managers, and most particularly, shareholders -- if not voluntarily, then by appropriate regulation." (The President and Fellows of Harvard College)
ASPPA (Advert.)
Attention all Retirement Plan Professionals! The 2009 ASPPA Annual Conference (November 1 – 4) is bigger and better than ever. Join 1,600 of your peers at the exquisite Gaylord National Resort and Conference Center on the historic Potomac River. Take advantage of over 60 interactive workshops presented by nationally renowned experts and top practitioners from all facets of the retirement plan industry, including representatives from the IRS and DOL. Advance your knowledge. Enhance your credibility. Expand your network of like-minded professionals! This is the industry’s top venue for all retirement plan professionals - - with up to 24 hours of ASPPA CE credit, ERPA CPE credit and core/non-core JBEA credit hours for Enrolled Actuaries, including professionalism credits. In this rapidly changing environment, it’s never been more important to attend. Register today and stay at the top of your game! |
Links to Items on Executive Comp, Benefits in General
Employer Costs for Employee Compensation, June 2009 (PDF)Excerpt: "Employers spent an average of $1.29 for employee retirement and savings plans for every hour worked in June 2009, the U.S. Department of Labor's Bureau of Labor Statistics reported . . . . This accounted for 4.4 percent of total compensation. Retirement and savings, which includes both defined benefit and defined contribution plans, is one benefit category included in the Employer Costs for Employee Compensation series, along with wages and salaries." (U.S. Bureau of Labor Statistics)
Recovery Act Tax Benefits Include Work-Related Education Deduction
Excerpt: "The Internal Revenue Service (IRS) has established an information center describing the various tax credits, deductions, and savings plans available under the American Recovery and Reinvestment Act (ARRA) to assist with higher education expenses. The tax benefits include a business deduction for work-related education expenses. Individuals who are employees and can itemize deductions, may be able to claim a deduction for the expenses paid for work-related education." (PLANSPONSOR.com; free registration required)
Webcasts and Conferences
Advisory Council on Employee Welfare and Pension Benefit Plans Meetingin District of Columbia on September 29, 2009
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Health Care Reform Webcast Series: What It Means for Employers and Employees - Session Three
Nationwide on October 13, 2009
presented by Buck Consultants, an ACS Company
Planning for Open Enrollment: Compliance Solutions for Cafeteria Plans and Component Benefits
Nationwide on September 10, 2009
presented by EBIA / Thomson Reuters
SPARK Forum 2009
in Florida on November 8, 2009
presented by SPARK Institute
(Click to post your webcast or conference)
Press Releases
ExpertPlan Launches Trading Platform with Charles Schwab Trust CompanyExpertPlan
Plan Sponsors and Participants Stay Strong, Crave Basics Moving Forward
Principal Financial Group
Survey Finds Employers Plan to Continue or Expand Health & Productivity Programs in Spite of Tough Economy
Integrated Benefits Institute
Benefit Informatics and Eldorado Computing Join Forces to Offer Health Plan Payers a Comprehensive Solution
Benefit Informatics
(Click to post your press release)
Employee Benefits Jobs
Benefits Analystfor Haynes and Boone, LLP
in TX
Pension Administrators
for Ingham Retirement Group
in ANY STATE
401(k) Plan Administrator
for Professional Capital Services, LLC
in PA
401(k) Plan Administrator
for PASI, LLC
in CT
(Click to post your job opening | View all jobs |
RSS feed of all jobs )
EmployeeBenefitsJobs.com (Sponsor)
(Click on banner to learn more.)
| Where the best employers find the best candidates! |
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
Subscribe to the BenefitsLink Health & Welfare Plans Newsletter, Too!
Sign-up form is at https://benefitslink.com/newsletter (free).
This email has been published by:
BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park FL 32789
(407) 644-4146
Fax: (407) 644-2151
David Rhett Baker, J.D., Editor
Copyright 2009 BenefitsLink.com, Inc.; except that you can forward this email in full (including this boilerplate part) or otherwise reprint this email in full (including this boilerplate part) without obtaining our permission.
Anyone can receive these emails; just have them sign up at this web page: https://benefitslink.com/newsletter/
Other useful links: