Retirement Plans Newsletter |
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| October 20, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
ASPPA (Advert.)
LIVE! ...on your Computer or Cell Phone! November 4th The ASPPA "Q & A Sessions with the IRS" - Defined Benefit and Defined Contribution With so much change in the air—these two sessions are "must attend" opportunities to hear candid comments from key IRS personnel. We’ll answer your questions about the new DB regulations and cover the latest activity on DC plans. Unable to attend this year’s annual conference? ...We’ve got the solution. For the first time ever, the Q&A Sessions will be streamed LIVE over the Internet. Watch from the convenience of your office. Or, call-in and listen on your cell phone! Year after year, the Q & A Sessions with the IRS offer some of the best takeaway information from the ASPPA Annual Conference. If you can’t be there in person, you can still join us by phone or computer. Register HERE today! |
[Guidance Overview]
For 2010, Only PBGC Single Employer Premium to Increase, No Change in PBGC Guarantee Limit Anticipated (PDF)
2 pages. Excerpt: "For 2010, the per capita flat-rate Pension Benefit Guaranty Corporation (PBGC) premium for single employer plans will increase by one dollar and the per capita flat-rate premium for multiemployer plans will be unchanged. The PBGC has not yet released its monthly maximum guarantee for 2010, but because there was no change in the 'old law Social Security wage base' ($79,200), Segal does not expect the maximum benefit guaranteed by the PBGC under private-sector single employer pension plans that terminate during 2010 to change from the 2009 level." (The Segal Group, Inc.)
[Guidance Overview]
Guidance on 2009 Required Minimum Distributions for Defined Contribution Retirement Plans (PDF)
4 pages. Excerpt: "Action Steps for Plan Sponsors[:] Although the Act provides an extended period of time to formally adopt plan amendments, practically speaking plan sponsors need to make immediate decisions and take action now. Specifically, plan sponsors should: No later than November 30, 2009, decide what approach will be taken with respect to the temporary suspension for 2009 RMDs and review existing RMD procedures. Until further IRS guidance is published, it appears that plan sponsors may have the following options . . . ." (Patterson BelknapWebb & Tyler LLP)
[Guidance Overview]
California Acts to Regulate Placement Agent Influence
Excerpt: "This edition of . . . Private Equity Alert discusses the newly-adopted California law that aims to ensure transparency and accountability in the activities of placement agents that provide services to all state and local public pension funds in California." (Nixon Peabody LLP)
[Guidance Overview]
The Roles of the ESOP Trustee in the ESOP Valuation Process (PDF)
8 pages. Presentation at the ESOP Association Mid-Atlantic Chapter Conference, October 16, 2009, Charlottesville, VA. (Morgan, Lewis & Bockius LLP)
[Guidance Overview]
Important 2009 Deadlines for Retirement Plans (PDF)
2 pages. Excerpt: "This chart describes certain deadlines and planning items for the months of November and December that apply to tax-qualified plans. The deadlines are noted by the type of tax-qualified plan. The term DC Plan refers to a defined contribution plan including a 401(k) Plan and the term DB Plan refers to a defined benefit plan. Items that only apply to a 401(k) Plan are shown separately." (Drinker Biddle Reath LLP)
[Guidance Overview]
Retirement and Savings Initiatives' Review as of October 2009 (PDF)
3 pages. Excerpt: "In a recent flurry of activity, the Internal Revenue Service has issued a series of notices and revenue rulings designed to promote retirement savings and address technical issues related to certain plan distributions. These initiatives are intended to: (i) encourage employers to add automatic enrollment features to their 401(k) plans; (ii) enable employees to convert unused vacation into additional retirement savings; and (iii) assist both employers and employees to better understand the available options for distributions from tax-favored retirement savings. A brief summary of the various pronouncements is set forth . . . ." (Dechert LLP)
[Guidance Overview]
Penalty for Failure to Disclose Listed Transaction Involving Roth IRA Applies Only to Participating Spouse
Excerpt: "The IRS Chief Counsel has advised in IRS Letter Ruling 200938022 (Chief Counsel Advice) that the penalty for the failure to disclose a listed transaction involving the avoidance of contribution limits for Roth IRAs as required by IRS Notice 2004-8 should not be treated as a joint and several liability of a husband and wife who file joint tax returns where only one of the spouses engaged in the transaction." (Wolters Kluwer)
California to Sue Bank for Overcharging Two State Pension Funds
Excerpt: "California's attorney general said he will sue a 'major institutional bank' in an attempt to recover almost $200 million in illegal overcharges and penalties charged to the state's two largest pension funds. California Attorney General Jerry Brown will announce the lawsuit filing and name the bank at a news conference in Oakland today, he said in an e-mailed statement. Brown's spokesman, Scott Gerber, declined to name the bank before the announcement. The unidentified bank assessed the overcharges and penalties against the California Public Employees' Retirement System, the largest U.S. defined-benefit public pension fund, and the California State Teachers' Retirement System, according to the statement." (Bloomberg L.P.)
2010 Qualified Plan Limits Pocket Card (PDF)
1 page. To print and carry in your wallet. (Swerdlin & Company)
Research Project: Should You Borrow from Yourself? The Determinants and Effects of 401(k) Loans
Excerpt: "This project proposes to evaluate the economic rationale for 401(k) plan loans and the empirical determinants of loan patterns. We will show how plan design and participant characteristics contribute to borrowing from one's pension, as well as default and repayment behavior. This research will be useful to employers in developing plan design, and also to employees seeking to enhance their retirement preparedness." (University of Michigan Retirement Research Center)
Research Project: The Effects of the Economic Crisis on Retirement and Spending
Excerpt: "The United States is experiencing the greatest economic crisis since the Great Depression. Housing prices have declined, leaving many with negative equity; falling stock values have substantially reduced household net worth; high and increasing rates of job loss jeopardize the economic foundations of many families. Little is known about how these different effects are distributed in the population, and even less is known about how households and individuals adjust in the domains of actual and anticipated retirement and spending. We propose to assess, quantitatively, the effects of the economic crisis, both gross and net of household behavioral responses." (University of Michigan Retirement Research Center)
Research Project: The Social Security Early Retirement Benefit as Safety Net
Excerpt: "This project will use the Health and Retirement Study to examine the health and economic status of those who collect Social Security early retirement benefits and will predict their behavioral reaction to an increase in the Early Entitlement Age or a change in the Full Retirement Age that reduces the value of the early retirement benefit. We would use a propensity score reweighting method to estimate who uses early retirement benefits as a safety net against deteriorating health and who might be induced to apply for disability benefits or retire without income replacement if the generosity or availability of early retirement benefits were reduced." (University of Michigan Retirement Research Center)
ERISA Advisory Council to Meet November 3-4
Excerpt: "The Advisory Council on Employee Welfare and Pension Benefit Plans (the ERISA Advisory Council) has announced an open meeting on November 3-4, 2009. The purpose of the open meeting is for the Advisory Council members to finalize their recommendations to be presented by the Advisory Council to the Secretary. At the November 4 afternoon session, the Council members will receive an update from the Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA) and present their recommendations. The Council recommendations will be on the following issues: (1) Promoting Retirement Literacy and Security by Streamlining Disclosures to Participants and Beneficiaries, (2) Stable Value Funds and Retirement Security in the Current Economic Conditions, and (3) Approaches for Retirement Security in the United States. Descriptions of these topics are available on the Advisory Council page of the EBSA Web site. Organizations or members of the public wishing to submit a written statement may do so by mail or e-mail on or before October 27, 2009. Individuals or representatives of organizations wishing to address the Council may request to do so. Oral presentations will be limited to ten minutes, but an extended statement may be submitted for the record." (International Foundation of Employee Benefit Plans)
Retirement Planning and Risk: How Much Is Enough? (PDF)
20 pages. Excerpt: "While the global financial crisis that shook markets to their core last autumn may have finally begun to abate, the damage inflicted on investors' portfolios -- and their psyches -- has proven far more enduring. For all investors but especially those poised to retire, the fallout has resulted in an imbalance among the current value of retirement assets, the projected future retirement needs of investors and the ability to close the gap through additional funding. Investors face difficult choices related to what we've termed the 'trilemma,' where the three dimensions of retirement planning -- increasing savings, adjusting risk levels and resetting goals -- must be reevaluated as part of a comprehensive financial plan. But merely highlighting these dimensions -- and the difficult decisions they require an investor to make -- may still not be enough to bring portfolios back into balance. Thus, we propose a nontraditional approach toward managing retirement assets that allows investors to match specific segments of their portfolios to clearly defined objectives, which reflect stated needs, wants and wishes." (UBS Financial Services Inc.)
Redefining Defined Contribution Plans to Enhance Retirement Security
18 pages. Excerpt: "Legislators, plan sponsors, and plan participants are questioning the long-term viability of the DC system, and whether DC plans are equipped to serve as the primary retirement savings vehicles for most Americans. These doubts are natural in light of the losses sustained; total assets in DC plans declined by over $1 trillion during 2008. Although the market collapse has increased the urgency of efforts to reform DC plans, it is important to note that the shortcomings of these plans existed long before the current financial crisis, and will persist after an eventual market recovery. Most participants are not saving enough, retirement income is not protected from adverse market conditions, and participants can exhaust their assets during retirement." (Prudential Retirement)
In Louisiana, Information on Current Public Retirement Plan Differs
Excerpt: "Legislators studying changes to the state employees retirement systems received contradictory information Monday on the cost and effects of closing the pension plan. However, the systems' benefit structure and debt load could be too costly to change at this time anyway, national retirement experts said. . . . The state House and Senate retirement committees heard from the systems and other national groups about defined-contribution plans, which are similar to 401(k)s and require employees to manage their own investments. . . . The meeting stems from a study resolution by House Speaker Jim Tucker, R-Terrytown, which seeks to determine the feasibility of establishing a defined-contribution plan for all new employees hired on and after July 1, 2010, in the four state public retirement systems." (The Advocate)
Group Seeks Answers for Retirement 'Crisis'
Excerpt: "America faces a retirement crisis, says an influential group of organizations that have started a new retirement initiative called Retirement USA. Wednesday, the group meets in Washington, D.C., to begin searching for solutions. Retirement USA was launched last March by the Economic Policy Institute, the National Committee to Preserve Social Security and Medicare, the Service Employees International Union and the Pension Rights Center. The coalition has grown since, adding the AFL-CIO, the National Caucus and Center on Black Aged and the National Consumers League, among others. The group's goal is to create a new retirement system that works in conjunction with Social Security and existing plans." (USA TODAY)
PBGC Annual Charge Increases for 2010
Excerpt: "Defined benefit sponsors will see their per-participant insurance premiums to the Pension Benefit Guaranty Corp. (PBGC) go up by $1 next year. Business Insurance reported a federal law mandating a premium adjustment to reflect changes in the national average weekly wage during the prior year will bump the annual figure from $34 to $35." (PLANSPONSOR.com; free registration required)
Law Firms Circle Another Potential Stock Drop Case
Excerpt: "On October 14, the law firm of Coughlin Stoia Geller Rudman & Robbins LLP announced that a class action had been commenced on behalf of 'an institutional investor' in the United States District Court for the Eastern District of Pennsylvania on behalf of purchasers of Advanta Corp. Class A and/or Class B common stock during the period between October 31, 2006 and November 27, 2007." (PLANSPONSOR.com; free registration required)
Judge Throws Out Continental's Suit Against Divorced Pilots
Excerpt: "We wrote this summer about Continental Airlines' decision to sue some of its pilots who, the company thought, had undergone bogus divorces in order to get some pension benefits. The pilots were still in love, the airline essentially argued, and therefore shouldn't be getting the early pensions that come with divorce (and what kind of anti-marriage stance is that, Continental?) A federal judge here ruled against the airline today, saying that no one knows what is in another's heart. Or something like that." (Village Voice Media )
A ''Tipping Point'' for Public Pensions?
Excerpt: "Any discussion of the serious issues affecting public pension funds today must begin with talking about what's going on in our nation. Public pensions exist within a broader societal context and are not immune from factors affecting society in general. Further, taxpayers pay for public pensions. Therefore the mood and plight of our society and taxpayers is important to take note of in discussing the challenges facing public pensions." (Benchmark Financial Services, Inc.)
[Opinion]
Comments Regarding Possible Issues Under Internal Revenue Code Section 414(x) on Combined Defined Benefit and Employee Cash or Deferred Arrangement Plans
9 pages. Excerpt: "The broad intent of ASPPA comments is to ask for clarification that, in those areas not specifically addressed within IRC ¤414(x), current law and regulations will apply to eligible combined plans as separate defined benefit and employee cash or deferred arrangement plans. Key recommendations, which are described in greater detail in the Discussion of Issues section, include . . . ." (American Society of Pension Professionals & Actuaries)
[Opinion]
Alternative to 401(k)s Is a Tax Trap in Disguise
Excerpt: "An employee's 401(k), then, can take credit for one or more of the following: 1) the current plan, 2) previous 401(k) money left at former employers, and 3) roll-over IRAs. According to McKinsey and company, anyone in their 60s has five times more money than would have been their retirement nest-egg of the pre-401(k) era. (a McKinsey statistic.) Why? Because average job tenure has always been seven years, and retirement plans were operated with vesting schedules that denied any benefit at all to those who left before 10 years." (San Jose Mercury News)
DATAIR Employee Benefit Systems, Inc. (Advert.)
DC/401(k) Administration Software from DATAIR DATAIR’s DC/Win System for Allocations, Discrimination Testing, and Proposals. Handles New Comparability Plans, Sole Proprietorships, 401(k) and 403(b) plans. Use with our DB System for Cash Balance and Combo Plans. Expert support. DC/401(k) System includes * Downloads from many allocated account fund providers * Automated loan processing * Flexible data import/export *Interface with DATAIR's 5500/1099R system. sales@datair.com or call 1-888-328-2474 |
Links to Items on Executive Comp, Benefits in General
[Guidance Overview]Many Companies Need to Amend for 162(m) by Year End (PDF)
2 pages. Excerpt: "Many companies will need to amend their employment agreements, equity plans and awards, and other incentive plans and agreements by December 31, 2009, to preserve the deductibility of performance-based awards and amounts under Code Section 162(m) [the $1 million limit on public companies' ability to deduct compensation payments to their named executive officers] in light of Rev. Rul. 2008-13. . . . Companies generally do not need to review or revise arrangements with employees who are not subject to Code Sec. 162(m) - and are highly unlike ever to become subject to Code Sec. 162(m). However, a company should cast its net broadly, because Code Sec. 162(m) applies in the year the award or other compensation becomes taxable - and deductible by the corporation - which may be several years in the future, after certain employees have been promoted." (Winston & Strawn LLP)
[Guidance Overview]
Public Companies Face Deadline to Amend Incentive Pay and Preserve Tax Deductions
Excerpt: "Many public companies . . . will have to comply with the Revenue Ruling for incentive plans and arrangements having a 2010 performance period. Public companies should review their executive employment agreements and compensation plans and arrangements to determine whether any modifications are needed to ensure the deductibility of incentive pay. For calendar year plans, action by the board of directors or the appropriate committee may be necessary before January 1, 2010." (Pillsbury Winthrop Shaw Pittman LLP)
[Guidance Overview]
Executive Compensation Tax Rules May Require Year-End Planning
Excerpt: "As 2009 winds down, companies should consider a number of executive compensation tax rules that are sensitive to year-end deadlines. This Commentary discusses (i) planning opportunities under Code Section 409A to address potential tax rate increases on deferred compensation, (ii) how typical severance benefits, including bonus termination payments, may cause problems under the Code Section 162(m) $1 million deduction cap (the '$1 Million Cap'), and (iii) the need to consider the IRS' corrections program for Code Section 409A operational failures." (Jones Day)
2009 Director Compensation: NASDAQ 100 vs . NYSE 100 (PDF)
27 pages. Excerpt: "For the first time in the seven years that Frederic W. Cook & Co. has conducted its annual study of outside director compensation, median compensation for directors at the 100 largest NYSE companies exceeded that provided by the 100 largest NASDAQ companies. New to this year's report is an analysis on the prevalence of mandatory retirement policies for outside directors." (Frederic W. Cook & Co., Inc.)
The Future of Work-Family Policy: Is 'Choice' the Right Choice?
Excerpt: "This article reviews the new, interdisciplinary book, Women and Employment: Changing Lives and New Challenges, which contains a set of empirical studies and policy proposals on work-family balance. This review uses the book's research and analysis as a springboard for considering the role that gender equality should play in advancing a coherent work-family policy agenda, and more specifically, what 'gender equality' means in the context of care work and labor force participation." (Social Science Research Network)
Employers May Not Restore Benefits to Pre-Recession Levels
Excerpt: "'Since the downturn began, thousands of employers have cut pay, increased workers' share of health-care costs or reduced the employer contribution to retirement plans,' The Wall Street Journal reports. 'Two-thirds of big companies that cut health-care benefits don't plan to restore them to pre-recession levels, they recently told consulting firm Watson Wyatt. When the firm asked companies that have trimmed retirement benefits when they expect to restore them, fewer than half said they would do so within a year, and 8% said they didn't expect to ever.' The changes are 'reshaping unemployment in America' and 'eroding two pillars of the late-20th-century employment relationship: employer-subsidized retirement benefits and employer-paid health care.'" (Kaiser Family Foundation)
Employee Benefit Cost Pressures Plague CFOs, Survey Finds
Excerpt: "Of all the pricing pressures that senior finance executives are most worried about, employee benefits tops the list by far, according to the results of a Grant Thornton survey released Monday. Fully 77% of the 846 U.S. CFOs and senior comptrollers participating pointed to benefits-cost pressures, including those involving health care and pensions. . . . Perhaps aligning with their concern about benefits pressures, 33% said their companies were cutting average per-employee health-care costs and 26% said their employers would reduce their matches of their employees' 401(k) contributions." (CFO.com)
Frozen or Trimmed Benefits Budgets Spur Interest in Efficiency, Employee Health
Excerpt: "A recent study conducted by Prudential Financial revealed that employee benefits budgets have been frozen or trimmed during these difficult economic times. Fewer than half of benefit plan sponsors said that their benefits budgets increased in 2009, compared with two-thirds of those surveyed in the prior two years, according to Prudential's study, A New Day in Employee Benefits: A Companion Report to the Study of Employee Benefits: 2009 & Beyond." (Wolters Kluwer)
[Opinion]
What Exactly Does It Mean to Finance Retirement?
Excerpt: "Let's talk really macro policy for a bit. 401(k) plans and DB plans are (private) vehicles for financing retirement income. Social Security is a public vehicle for the same purpose. So, in fact, is Medicare. As people age, medical costs make up a greater and greater share of the cost of living. For many, in the end, medical costs are all you spend money on. So, one pretty useful way to think about Medicare is as another (public) vehicle for financing retirement." (PLANSPONSOR.com; free registration required)
Webcasts and Conferences
401(k) Plan Roundup: This Year's Most Significant DevelopmentsNationwide on November 19, 2009
presented by EBIA / Thomson Reuters
Correcting the Inevitable 409A Mistakes and Other Issues
Nationwide on October 26, 2009
presented by ABA Joint Committee on Employee Benefits
Ethical Issues in Representing Compensation Committees
Nationwide on October 26, 2009
presented by ABA Joint Committee on Employee Benefits
Health Care Reform Is On Its Way - How Will It Impact Your Benefit Strategies
in New York on November 19, 2009
presented by WEB (Worldwide Employee Benefits Network ), New York Chapter
Single Employer Defined Benefit Plan Funding and Benefit Restriction Notice Requirements: The New IRS Final Regulations
Nationwide on November 12, 2009
presented by ABA Joint Committee on Employee Benefits
(Click to post your webcast or conference)
Press Releases
Social(k) Adds Tobacco-Free Funds to 401k Retirement PlatformSocial(k)
Online 401k Partners With Five New Independent Payroll Providers
Online 401k
ING Survey: One Year Later, Investors Remain Committed to their Workplace Retirement Plans
ING Retirement Services
(Click to post your press release)
Employee Benefits Jobs
Retirement Plan & Benefits Analystfor Williams Kastner
in WA
Paralegal
for Nyhart
in IN
Data Engagement Analyst
for Lincoln Financial Group
in IL
Group Insurance Account Manager
for Benefit Sources & Solutions
in NJ
(Click to post your job opening | View all jobs |
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EmployeeBenefitsJobs.com (Sponsor)
(Click on banner to learn more.)
| Where the best employers find the best candidates! |
Handy Links:
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