Retirement Plans Newsletter |
|
|
| October 15, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
ASC (Advert.)
TPAs Stay Competitive in a maturing 401k Marketplace! TPAs are looking to inhouse daily valuation as a strategy to stay competitive in this tough economy and maturing market. TPAs using DV Direct daily valuation can compete against the largest firms in the industry and win. DV Direct brings greater flexibility, professional web access, fee transparency, greater access to fund families, cost efficiencies and more. See how in this 1 min video or email info@asc-net.com www.asc-net.com |
[Guidance Overview]
ERISA Plan Sponsors Should Get Ready Now for New Form 5500 Requirement to Disclose Compensation Paid to Plan Service Providers
Excerpt: "Action Items for Plan Sponsors: Identify all plan service providers, including investment managers, record keepers, trustees, actuaries, brokers, claims administrators, etc. Contact all service providers to determine when and how they will provide the required disclosure. For example, some disclosure may be 'embedded' in other documents (e.g., prospectuses) rather than provided as a stand-alone disclosure in a single document. Work with ERISA counsel to ensure that the information received is sufficient to satisfy the Schedule C disclosure requirement and forward the information to the person or entity who will prepare the Schedule C. Follow up promptly with service providers who fail to provide information or provide information that is incomplete. For service providers who assert that they are not required to provide separate reporting, the plan sponsor should receive written statements to that effect along with the service provider's reasoning or support. Incorporate the information received and reported on Schedule C as part of the plan sponsor's periodical review of the service provider's performance and compensation levels to determine whether the compensation arrangement continues to be reasonable." (Paul, Hastings, Janofsky & Walker LLP)
[Guidance Overview]
PBGC Rules for Standard Terminations Leave Questions for Future Guidance, Speaker Says
Excerpt: "The Pension Benefit Guaranty Corporation takes a dim view of employers that purchase annuities at a favorable price before initiating a standard termination process to end their pension plan, an employee benefits attorney said Oct. 10 at an American Law Institute-American Bar Association Conference. 'PBGC tends not to like the idea of purchasing irrevocable commitments and then doing a standard termination as an afterthought,' said attorney Harold Ashner, [a partner at Keightley &Ashner]. [Click on the title link under 'Items of Interest' on the target page.]" (Keightley & Ashner LLP)
[Guidance Overview]
Sponsors of Defined Contribution Plans Must Determine Minimum Distribution Policies by Nov. 30, 2009
Excerpt: "The key decisions facing employers are: Whether to give plan participants the option to waive required minimum distributions from a defined contribution plan for 2009 Whether the defined contribution retirement plan will accept rollovers of amounts that were previously distributed, under the required minimum distribution rules, but for which distribution could have been waived Whether to inform participants who are first subject to the minimum required distribution rules in 2009 of their distribution options and rollover rights with respect to such distributions[.]" (Davis Wright Tremaine LLP)
[Guidance Overview]
Revenue Rulings 2009-31 and 2009-32 Dealing with Contribution of Dollar Equivalent of Unused Paid Time Off to Profit Sharing Plan (PDF)
4 pages. Excerpt: "Under the facts presented in both Revenue Rulings, all the employers maintain a profit sharing plan which includes a 401(k) feature that, prior to the amendments permitting the dollar equivalent of unused paid time off to be contributed to the plans, meets the requirements of IRC section 401(a) and IRC section 401(k). The plans have a calendar plan year and limitation year and the contribution of the dollar equivalent of unused paid time off (when combined with other plan contributions and annual additions) does not exceed the limitations of IRC section 415(c), dealing with the maximum contributions on behalf of a participant under a defined contribution plan, or the limitations of IRC section 401(a)(30), dealing with the limitations on elective deferrals. In addition, the contributions to the plans are made timely by the employers and qualify as a deduction on the employers' tax return for the applicable taxable year." (Transamerica Center for Retirement Studies)
Restoring Americans' Retirement Security: A Shared Responsibility (PDF)
31 pages. Excerpt: "McKinsey's analysis indicates that a consistent focus on four policy principles could enable the average American family to reduce their retirement readiness gap by nearly half, injecting over $3.5 trillion in incremental assets into the retirement system over the next decade. These four principles are: (1) improving the accessibility of retirement plans, (2) increasing plan participation and savings rates for all Americans, especially lower- and middle-income households, (3) helping Americans to better manage their in-retirement risks in order to draw a stable 'retirement paycheck,' and (4) enabling Americans to work longer. The trend toward greater individual responsibility for retirement security will undoubtedly continue, particularly given the deteriorating state of employer and government balance sheets." (McKinsey & Company, Inc. via Retirement Made Simpler)
Comparing Spending Approaches in Retirement
Excerpt: "This chapter describes and evaluates alternative approaches to spending in retirement, including income annuities, common rules of thumb for spending used by financial planners and advisors, and the spending rules that have been incorporated into payout funds, a relatively new type of investment product designed to be used by investors in the spending stage of life." (Pension Research Council; registration required to download fulltext of paper)
Social Security Literacy and Retirement Well-Being
Excerpt: "We build upon the growing literature on financial literacy, which studies the prevalence of lack of knowledge about various financial issues, and analyze how much people know about the Social Security rules using a small pilot survey conducted in 2007, and a follow-up and extended survey funded by MRRC conducted in December of 2008. We then assess the consequences of the apparent prevalence of lack of information by individuals about the rules governing the Social Security system using a realistic and empirically-based life-cycle model of retirement behavior under uncertainty." (University of Michigan Retirement Research Center)
The Displacement Effect of Public Pensions on the Accumulation of Financial Assets
Excerpt: "The generosity of public pensions may depress private savings and provide incentives to retire early. While there is plenty of evidence supporting the latter effect, there remains considerable controversy as whether or not public pensions crowd out private savings. This paper uses international micro-data sets collected over recent years to investigate whether public pensions displace private savings." (University of Michigan Retirement Research Center)
ERISA Litigation
Excerpt: "As the spate of recent cases show, the risk of ERISA litigation has increased for companies. Heavy stock losses and the severity of punishments for scandals being handed out by courts have encouraged plaintiffs to test the boundaries of ERISA fiduciary law. Defendants may be exposed to a costly battle. 'With any litigation, there is the risk of prolonged litigation and its attendant costs. That risk can be greater in ERISA litigation, where the complex benefit issues often require retention of experts and claims are brought on behalf of all participants in the plan,' explains Howard Shapiro, a partner at Proskauer Rose LLP. 'While only equitable relief is available under ERISA, such relief can be costly if reformation of the plan, reversal of a plan amendment, or the removal of plan trustees is a possibility.'" (Financier Worldwide Limited)
Are Target-Date Funds the No-Worries Answer to Saving for Retirement?
Excerpt: "How could an investment specifically aimed at someone retiring in just a few years be so heavily into stocks? Shouldn't the money be tucked in less risky options, like bonds and money market instruments? Congress, the Labor Department and the Securities and Exchange Commission all held hearings looking into the funds' marketing and investment strategies. 'The problem with target-date funds is that the underlying message has been, 'Look Ma, no hands!' ' said Steve Vernon, a financial adviser in Oxnard, Calif. 'They tried to make them idiot-proof. But if you put your money in a fund without knowing what they're invested in, you're an idiot.'" (The New York Times; free registration required)
Retirement Plan Maximums to Remain Flat for 2010
Excerpt: "The maximum contribution that can be made to 401(k) and other defined contribution plans, and the maximum benefit that can be funded through defined benefit plans will hold even in 2010, an Obama administration official said Wednesday. The senior official said the Internal Revenue Service will formally announce the 2010 pension plan contribution and funding maximums later this week. The IRS decision will end uncertainty among employers and consultants whether the limits might decrease because the cost of living, on which the limits are based, has gone down the past 12 months." (Business Insurance)
CalPERS Offered Incentives to Inflate Pension Funds' Value/Plans' Benefits
Excerpt: ".A labor-friendly CalPERS board offered local governments an incentive eight years ago to boost public employee pension benefits, now called 'unsustainable' by some. CalPERS said it would reward higher benefits by inflating the value of the local government's pension investment fund, making it easier to pay for more generous pensions. Booming pension fund earnings in previous years were cited in a self-congratulatory board resolution approving the incentive in 2001. But the stock market boom had already cooled by then." (Capitol Weekly)
California's Governor Signs Law on Placement Agents Doing Business with Public Pension Funds
Excerpt: "California Governor Arnold Schwarzenegger has signed a bill clamping down on placement agents, the marketing middlemen hired by private equity groups and other investment firms to secure business from public pension funds. The Sacramento Bee reports that Assembly Bill 1584 requires disclosure of fees paid by investment firms to placement agents. It also requires agents to notify pension system governing boards of any campaign contributions or gifts they've made to system board members. The new rules are in response to a multi-state probe into whether placement agents improperly influence pension fund boards that began in New York, where a number of individuals have been indicted . . . ." (PLANSPONSOR.com; free registration required)
Roth IRA Conversion Confusion Creates Opportunity for Investment Advisors, Study Finds
Excerpt: "The pending rule changes around Roth IRA conversions present a huge business opportunity for financial advisors to have deeper conversations with clients, according to a new survey by Charles Schwab & Co. Inc. Starting January 1, people making more than $100,000 annually will be eligible to convert their traditional individual retirement accounts or 401(k) plans with previous employers into Roth individual retirement accounts. Currently, only those who make less than that amount a year are eligible to convert. However, 61 percent of Americans surveyed by Schwab who made more than $100,000 annually were unaware of the Roth conversion rule changes, while only 14 percent of these 400 individuals said they could explain the rule changes." (Workforce Management; free registration required)
Retirement Arrangements of the Self-Employed
Excerpt: "When compared to wage earners, the take up rate of qualified retirement plans by the self-employed seems to be much lower. This paper explores the various factors that influence the observed participation and contributions to such plans. The findings show that participation declines with business interest expenses suggesting liquidity constraints. In contrast, both participation and contributions rise with mortgage interest expenses. They also rise with interest and dividend income, self-employment income, as well as tax rates. On the other hand, they decline with the size of partnership income. The latter is perhaps a reflection of reporting conventions employed by high income partners which may mask the true participation rate." (Social Science Research Network)
CalPERS Begins 'Special Review' of Fees Paid to Agents
Excerpt: "The nation's largest public pension fund, the California Public Employees Retirement System, has begun a 'special review' of fees paid by its external investment managers to so-called placement agents. The agents help outside funds to win big investment management contracts with the $200-billion pension system, known as CalPERS. The review was ordered after CalPERS received information it had requested from fund managers about the fees paid to placement agents and their lobbying and sales activities with the giant pension." (Los Angeles Times)
Obama Proposes $250 for Retirees to Augment Social Security Checks
Excerpt: "President Barack Obama proposed giving payments of $250 to more than 50 million retired Americans who won't get an increase in their Social Security checks next year. The announcement on Wednesday came ahead of the Social Security Administration's expected announcement that seniors will not receive a cost-of-living adjustment in 2010 because of the poor economy." (Capitol Hill Publishing Corp.)
Rethinking the 401(k) if There's No Company Match
Excerpt: "Without a match, many financial advisers say, the first priority should be paying off high-interest debt, like credit card balances with a 20 percent finance charge. 'It's a hole you've dug, and you want to get out,' said Steve Vernon, president of the retirement counseling company Rest-of-Life Communications in Oxnard, Calif. Why not pay off debt anyway, with or without a match? Because the math works against repayment if you have a match of 50 percent or more." (The New York Times; free registration required)
[Opinion]
Joint Comment Letter to IRS on Bank Secrecy Act for Public Pensions
Excerpt: "On October 5, NCPERS, along with NASRA and NCTR, filed comments with the IRS on the Bank Secrecy Act, in response to the IRS' solicitation of comments on the Foreign Bank and Financial Accounts (FBAR) filing obligations. The Bank Secrecy Act (BSA) requires reports 'where they have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.' NCPERS takes the view that a requirement of FBAR reporting and recordkeeping by public pension plans will not further the aims of the statute and will instead create an unproductive and unnecessary administrative burden for plans. As a result, we requested that the Department of Treasury issue specific guidance indicating that public pension plans are not covered by the FBAR reporting requirements or exempting public pension plans." (National Conference on Public Employee Retirement Systems)
DATAIR Employee Benefit Systems, Inc. (Advert.)
DATAIR’s DB Valuation System DB Administration, Discrimination Testing and Proposal software with Multiple Plan and Cash Balance Plan handling. PPA’06 Pension Funding. * Funding Target and Target Normal Cost with 3-rate segments * 404(o) Cushion; 430 minimum and 404(o) maximum contributions * Funding Target Attainment Percentages (FTAPs) Schedule SB reports and links to our 5500/PBGC System, and our FAS 158 and Termination Calculation reporting systems. sales@datair.com or call 1-888-328-2474 |
Links to Items on Executive Comp, Benefits in General
[Guidance Overview]IRS Increases Alternative Per Diem Rate for Travel and Entertainment Expenses
Excerpt: "The alternative per diems companies can use to reimburse employees for business travel, sometimes called 'high-low' rates, have inched up for 2010. Every year, the IRS releases alternative per diem rates for employers that choose not to use the continental U.S. (CONUS) per diem rates set by the General Services Administration (GSA). The new high-low rates are from Oct. 1, 2009 through Sept. 30, 2010. The 'high' per diem rate for 2010 is $258 (up from $256 last year) for travel to any high-cost locality, defined as a place for which the GSA has set a maximum CONUS per diem of $211 or more. The 'low' per diem for 2010 is $163 (up from $158 in 2009). The low rate applies to travel to any destination not considered to be a high-cost location." (Thompson Publishing Group, Inc.)
California Recognizes Same-S.ex Marriages from Other States
Excerpt: "California Governor Arnold Schwarzenegger has signed into law a bill that recognizes same-s.ex marriages entered into in other states, Business Insurance reports. . . . According to the news report, Schwarzenegger said in a statement, 'This measure honors the will of the people in enacting Proposition 8 while providing important protections to those unions legally entered into in other states.'" (PLANSPONSOR.com; free registration required)
Press Releases
SEI Signs Ten New Collective Investment Trust ManagersSEI
(Click to post your press release)
Employee Benefits Jobs
Client Service Managerfor New York Life Retirement Plan Services
in NJ
Operations Control Manager, Pension Payment Services
for JPMorgan
in OH
(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
Jeanette Hull, News Editor
jeanette.hull@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher
david.baker@benefitslink.com
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: