Retirement Plans Newsletter |
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| October 26, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
Administrative Remedies Need Not be Exhausted in Cash Balance Case
Excerpt: "The U.S. District Court for the Eastern District of Kentucky has declined to dismiss a case against BP Corporation North America over calculations used in its cash balance plan, saying the plaintiff was not required to exhaust his administrative remedies under the plan. The court found that Robert French's complaint challenges the overall legality of BP's plan methodology, so administrative exhaustion would be futile and is not required. The court said a 6th U.S. Circuit Court of Appeals opinion makes clear that when a plaintiff's 'suit [i]s directed to the legality of [a plan], not mere interpretation of it[,] exhaustion of the plan's administrative remedies would be futile.'" (PLANSPONSOR.com; free registration required)
[Guidance Overview]
EBSA's Additional Guidance on Form 5500 Schedule C
Excerpt: "The Department of Labor's Employee Benefits Security Administration (EBSA) has issued additional guidance in response to questions from plans and service providers on the requirements for reporting service provider fees and other compensation on Schedule C of Form 5500. The EBSA noted that the expanded requirements apply to reporting for plan years beginning on or after January 1, 2009. The guidance is provided in the form of 25 frequently-asked questions (FAQs), and topics covered include: Gifts, entertainment, and other non-monetary compensation; Compensation to hedge fund investment managers; 'Look-through' investment funds; Mutual fund redemption fees; and ERISA fee recapture accounts." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
401k Better or Worse: You Need Your Spouse's Consent
Excerpt: "A woman who claimed that a plan distribution form indicating her consent to her late husband's distribution election was never properly notarized and therefore invalid has the agreement of a federal judge[.] The husband had elected a split distribution: one half in a lump sum and one half in an annuity without survivor benefits. The husband passed away after having received the lump sum distribution and two annuity payments. The wife then sued over the waiver's validity. ERISA requires that the distribution waiver form be witnessed by a plan representative or a notary. In this case the notary had stamped the document without the wife present The US District Court threw out the waiver form signed by the woman, finding it had not been properly witnessed by a plan representative or a notary as required by ERISA." (Self Directed 401k)
[Guidance Overview]
An IRS Notice Provides Relief for Some on Unwanted Required-Minimum Distributions Received
Excerpt: "Although the distribution requirements were waived for this year, some people were not aware of the tax law change and took distributions anyway. For those who realized the situation within 60 days, the answer was to roll the funds back to an individual retirement account or plan (providing they were eligible) and eliminate the tax bill. Unfortunately, many did not recognize this opportunity until the 60-day window had closed. Though they didn't want to keep the distributions, there apparently was no relief. But a new Internal Revenue Service ruling can help some taxpayers return the unwanted distributions. IRS Notice 2009-82, released Sept. 24, grants a rollover extension. Under the new guidelines, unwanted 2009 distributions already received may be eligible for rollover until Nov. 30 or 60 days after receipt, whichever is later." (Investment News; free registration required)
CALPERS Trustees Increasing Proportion of Risky Investments
Excerpt: "As the entire pension industry questions what level of risk it should be taking in the aftermath of last year's financial meltdown, Calpers in June increased its target for venture capital and private equity -- what the fund's advisor itself called the highest risk, highest reward bet -- to 14 percent of overall investments, up from 10 percent." (Reuters)
Asset Allocation Guidance for Defined Contribution Plans, 1999 and 2009 (PDF)
2 pages. Excerpt: "Recommendation. The Government Finance Officers Association (GFOA) recommends that public employers as plan sponsors work actively with the plan administrators to provide investment options and education to help employees who participate in defined contribution plans attain their income replacement goals in retirement. . . . To accomplish these objectives, the following practices are suggested: 1. To provide adequate diversification, plan administrators should ensure participants are offered a broad spectrum of investment choices that include all the major asset classes (e.g., equities, fixed income, and cash equivalents). The investment choices should include several passively managed investment options such as low-fee index funds. Another option is a family of asset allocation funds. In addition to mutual funds, plan administrators should consider lower-cost commingled funds and separate account funds as investment options." (Government Finance Officers Association of the United States and Can.ada)
Participant Education: Guidance for Defined Contribution Plans, 2009 (PDF)
2 pages. Excerpt: "The GFOA recommends that public plan sponsors make sure high-quality investment education is provided to defined contribution plan participants who are allowed to direct their investments. To accomplish this goal: 1. The plan should provide a consistent, ongoing educational program that uses a number of communication channels to address participants' different career stages and learning styles. Channels could include one-on-one meetings, seminars, phone calls, the internet . . . ." (Government Finance Officers Association of the United States and Can.ada)
Back to Basics: A Companion Report to the Study of Employee Benefits: 2009 & Beyond (PDF)
5 pages. (Prudential Retirement)
Affluent Investors Do Better Over the Long Term When They Are Engaged with Advisers
Excerpt: "Households that regularly receive advice are better prepared financially for retirement than households that do not receive advice as often. That's the essence of the findings of a recent report, 'Financial Advisors and Boomers,' that I recently completed with Elvin Turner of Turner Consulting LLC for the Retirement Income Industry Association. We sought to explain this differential in preparedness, and found four equally important reasons . . . ." (Investment News; free registration required)
Senate to Address Conflicts in Proprietary Target Funds
Excerpt: "Insiders say that the Senate Special Committee on Aging hearings Wednesday will focus on the potential for conflict of interest within proprietary target date funds. As of Sept. 30, 98% of target date fund assets were in proprietary funds, according to Strategic Insight/ Simfund. Ninety-one percent of target date funds are proprietary. Specifically, the committee wants to get a better understanding of the fiduciary role of investment managers who oversee these funds, said an aide to Sen. Herb Kohl, D-Wis., chairman of the committee." (Investment News; free registration required)
Same-S.ex Couples Face Significant Disadvantages in Retirement, According to Study
Excerpt: "A new study released . . . details the inequalities faced by same-s.ex couples in employer-sponsored retirement plans. Without legal recognition of their relationships under federal law, the report concludes, les.bians and g.ay men have less retirement income and are disadvantaged in their ability to pass on savings to their families after their death. The study, 'The Impact of Inequality for Same-S.ex Partners in Employer-Sponsored Retirement Plans,' provides the first detailed demographic portrait of older same-s.ex couples. It was released by the Williams Institute at the UCLA School of Law with funding support from Merrill Lynch in conjunction with National Save for Retirement Week. 'The findings show that, in particular, female same-s.ex couples have far less retirement income than different-sex married couples,' says study author Naomi Goldberg." (Reuters)
[Opinion]
Getting Real About 401(k) Dollar Caps; Australia's Limit on Contributions by Older Employees Reflects Actual Retirement Needs
Excerpt: "Not only are Australian employers required to contribute the equivalent of 9% of pay to their employees' accounts up to a salary ceiling of more than $145,000 -- compared to the equivalent of 3% here, but workers over age 50 can contribute over $100,000 per year to their accounts. This is nearly 20 times the measly $5,500 additional contribution ceiling for those over 50 in the U.S, a ceiling that also remains unchanged in 2010." (Jane White of Retirement Solutions)
[Opinion]
The Colorado Public Pension Fund's Board Needs to Attach Financial Values to Complex Recovery Plan It Is Presenting to Lawmakers
Excerpt: "The board of the state's financially troubled retirement fund has come up with a rescue plan that involves a good bit of fiscal pain and sacrifice. It appears to be a commendable starting point for state lawmakers in that it involves the sort of shared sacrifice we've supported in the past. Predictably, governments -- meaning taxpayers -- would be on the hook for what could be a significant part of the bailout. And while that's concerning, a more troubling element, we think, is the failure of the Colorado Public Employees Retirement Association pension board to attach financial values -- real dollars -- to the various components of the complex plan it's presenting to state lawmakers. PERA officials told us they couldn't supply such figures. The legislature ought to demand the information before moving forward with a plan to prop up PERA, which is facing $27.5 billion in unfunded liabilities." (The Denver Post)
DATAIR Employee Benefit Systems, Inc. (Advert.)
DATAIR 5500 / PBGC / 1099-R / 5300 / FAS 158 Software Pension Reporter System. Easy to use PC based software for EFAST2 electronic filing. Full instructions and expert support. Choose from 4 modules:
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]IRS Guidance on the Taxation of Employment-Related Settlement Payments
Excerpt: "In an internal memorandum dated October 22, 2008, but released only in July of this year, the Internal Revenue Service (IRS) Office of Chief Counsel has outlined information necessary to determine the correct tax treatment of employment-related settlement payments. See Office of Chief Counsel Internal Revenue Service Memorandum, PMTA-2009-035, dated October 22, 2008, Income and Employment Tax Consequences and Proper Reporting of Employment-Related Judgments and Settlements (the 'IRS Counsel Memorandum'). The IRS Counsel Memorandum outlines both the income and employment tax consequences, as well as the appropriate reporting, of settlement payments and contains useful information for companies settling employment-related lawsuits." (Tax Management Inc.)
Prevalence and Design of Executive and Director Stock Ownership Guidelines Among the Top 250 Companies (PDF)
21 pages. Excerpt: "The past year may prove to be another important year in the evolution of stock ownership guidelines and their prevalence among the Top 250 companies. The dramatic market decline has once again refocused investor attention on reinforcing alignment of interests between executives and directors and long-term shareholders. In addition, the fall in stock prices has affected executives' and directors' abilities to comply with stock ownership guidelines, encouraging companies to reexamine their policies. As presented in this report, the Top 250 companies commonly employ value-based ownership guidelines under which the number of shares required to be owned fluctuates based on changes in stock prices." (Frederic W. Cook & Co., Inc.)
Firms Boost Workplace Benefits to Attract and Retain Tech-Savvy Workers
Excerpt: "Pingpong and pool, free lunches on Fridays, fully stocked refrigerators, on-site yoga, generous vacation time, telecommuting options and employer-paid health coverage: If the list of perks sounds like a throwback to the dot-com boom, think again. At a time when many businesses are slashing benefits to the bone, a growing number of Chicago-area companies are bucking the trend. Those fortunate employers who can afford to go the extra mile for their workers can boost productivity and ultimately gain market share, said Joe Dwyer, chief executive at Brill Street + Co., an Internet matchmaker for job seekers and employers. 'These companies go all out to attract and retain the best and brightest,' he said." (Chicago Tribune)
Webcasts and Conferences
19th Annual National Health Benefits Conference & Expo (HBCE)in Florida on January 25, 2010
presented by Health Benefits Conference & Expo
Announcing the Results of Buck Consultants' 2009 Global Wellness Survey
Nationwide on November 18, 2009
presented by Buck Consultants, an ACS Company
Eligibility Audits for Health Plans (including Health FSAs and HRAs): Protect Your Plans From Covering Ineligibles
Nationwide on October 22, 2009
presented by EBIA / Thomson Reuters
(Click to post your webcast or conference)
Press Releases
benefitsCONNECT® Announces Real-Time Integration with Colonial Life’s Harmony® PlatformTranscend Technologies Group, Inc.
(Click to post your press release)
EmployeeBenefitsJobs.com (Sponsor)
(Click on banner to learn more.)
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