Retirement Plans Newsletter |
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| October 27, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
SunGard (Advert.)
Get ready for the new 403(b) requirements. Let SunGard help. The Internal Revenue Service (IRS) issued new 403(b) regulations, which became effective in January 2009, replacing regulations that were more than 40 years old. Most 403(b) plans need to comply with new plan document requirements, changes to coverage and non-discrimination testing rules and limitations to transfers and exchanges. Turn to SunGard for our 403(b) plan solutions. For more information, call 1-800-326-7235 x1100 or click here. |
[Official Guidance]
PBGC Announces Maximum Insurance Benefit for 2010: Remains At $54,000 Per Year
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) today announced that the maximum insurance benefit for participants in underfunded pension plans terminating in 2010 will be $54,000 per year for those who retire at age 65. The amount is higher for those who retire later and lower for those who retire earlier or elect survivor benefits . . . . The PBGC maximum insurance benefit is indexed to a contribution and benefit base in Social Security law. Because that amount does not increase for 2010, the PBGC maximum insurance benefit is unchanged from 2009." (Pension Benefit Guaranty Corporation)
[Guidance Overview]
IRS Notice 2009-82 Provides Guidance on 2009 Required Minimum Distributions
Excerpt: "[With the 2009 RMD deadlines of 12/31/09 and 4/1/10] coming closer, you may be dealing with questions such as: Can I still pay a required minimum distribution if the participant would like to take it? Do participants have to opt out or do they opt in? Are 2009 RMD amounts eligible for a rollover? What about the plan document? IRS Notice 2009-82 - Guidance on 2009 Required Minimum Distributions provides some additional guidance . . . ." (The One-Stop ESOP Blog)
[Guidance Overview]
IRS Regulations on Pension Funding and Benefit Restrictions (PDF)
2 pages. Excerpt: "The Internal Revenue Service and the Treasury Department recently published final funding regulations for single-employer pension plans, which will generally first take effect for the 2010 plan year. Employers can also rely on these regulations for 2008 and 2009, if they choose. The regulations contain a large amount of technical details. This Bulletin gives a high-level summary of key provisions that might be of interest to private sector employers. It notes highlights of the following: The rules for determining minimum required contributions and The rules for how benefit restrictions are administered." (The Segal Group, Inc.)
[Guidance Overview]
Supreme Court of Montana Upholds Verdict for Retirees
See item #7. Excerpt: "Northwestern Corporation and others appealed a jury verdict rendered against them and in favor of Ammondson and others, which awarded plaintiffs/retirees approximately $17.5 million dollars in compensatory damages and $4 million dollars in punitive damages based on a claim for breach of contract, and the torts of breach of the covenant of good faith and fair dealing, abuse of process and malicious prosecution. Ammondson and the others were all former employees of Montana Power Company for periods ranging from 3 to 40 years. Each retiree left MPC after entering into separate agreements that provided them monthly payments to supplement their regular retirement plans. These agreements were known as 'Top Hat Contracts,' a term derived from the Employee Retirement Income Security Act." (Cypen & Cypen)
[Guidance Overview]
Plan Administrator Cannot Consider Motivation for Participants' Divorces When Determining Status of QDRO
Excerpt: "EBIA Comment: Plan administrators generally are not required to analyze whether a divorce order is valid under state domestic relations law. However, according to a prior DOL advisory opinion (also addressing allegedly sham divorces by pilots), if there is credible evidence that the order has been procured through fraud, plan administrators should take appropriate steps to resolve the validity of the order. Those steps will depend on the facts and circumstances, and could include relaying the evidence of fraud to the court or agency that issued the order. But if requested guidance from the court or agency is not received within a reasonable time, the plan administrator must proceed with determining the validity of the order (in other words, the plan administrator may not independently determine that the order is not valid under state law). Because these issues can be complex and fact-specific, plan administrators faced with potentially fraudulent QDROs may wish to seek the advice of experienced legal counsel." (Employee Benefits Institute of America)
The National Retirement Risk Index: After the Crash
Excerpt: "The National Retirement Risk Index measures the share of American households who are 'at risk' of being unable to maintain their pre-retirement standard of living in retirement. The Index results from comparing households' projected replacement rates - retirement income as a percent of pre-retirement income - with target rates that would allow them to maintain their living standard. The results showed that even if households work to age 65 and annuitize all their financial assets, including the receipts from reverse mortgages on their homes, in 2004 43 percent would have been 'at risk' of being unable to maintain their standard of living in retirement." (Center for Retirement Research at Boston College)
Re-Envisioning Retirement Security; A Conference
Excerpt: "On October 21, 2009, Retirement USA held a conference, Re-Envisioning Retirement Security, in Washington, D.C. Labor Secretary Hilda Solis delivered the keynote address, and other notable speakers included Richard Trumka, president of the AFL-CIO; Anna Burger, SEIU secretary-treasurer and chair of Change to Win; and Pulitzer Prize-winning journalist David Cay Johnston. Conference participants heard why a new private retirement system is needed; learned about the principles that should underlie a new system; and discussed proposals for a universal, secure, and adequate system for the future. Retirement USA is an initiative that is working to create a system that, along with Social Security, will provide universal, secure, and adequate retirement income to future retirees. [Conference materials are linked from the target page.]" (Retirement USA)
Sustainable Funding Practices of Defined Benefit Pension Plans, 2009 (PDF)
3 pages. Excerpt: "Recommendation. The Government Finance Officers Association (GFOA) recommends that state and local government officials ensure that the costs of the benefits promised in public employee DB plans are properly measured and reported, in accordance with generally accepted accounting principles (GAAP) /1/. The GFOA believes sustainability requires that governments that sponsor or participate in a defined benefit pension plan contribute the full amount of their actuarially determined annual required contribution (ARC) each year. Failing to fund the ARC during recessionary periods impairs investment returns by depriving the fund of its opportunity to invest when stock prices are low. Long-term investment performance will suffer and ultimately require higher contributions." (Government Finance Officers Association of the United States and Can.ada)
For Delphi Pensioners, the Union Label Helps
Excerpt: "The Pension Benefit Guaranty Corporation, which insures pension plans, caps the amount of benefits it will pay, using a formula based on age and the type of benefits an employee earned. But in a side arrangement, G.M. is agreeing to pay special supplements, called top-ups, so that Delphi's union retirees get everything they were promised. The automaker is drawing the money from its own pension fund, according to a person familiar with the arrangement. In a sense, the G.M. pension fund is being weakened to help the Delphi union members." (The New York Times; free registration required)
Health Care Organizations Hire Advisers / Change Plan Designs, According to Survey
Excerpt: "The new 403(b) regulations and the recent market volatility, combined with heightened fiduciary concerns, led more health care organization retirement plan sponsors to retain a retirement plan adviser, according to a survey conducted by Diversified Investment Advisors and the American Hospital Association (AHA). A press release said three-quarters of survey respondents reported they now have a plan adviser. In addition, 21% of plan sponsors consolidated the number of vendors used in their 403(b) plans and 20% converted to a single vendor arrangement." (PLANSPONSOR.com; free registration required)
Senate Hearing Will Ask: Are Target-Date Funds Missing the Mark?
Excerpt: "On October 28 Senator Kohl plans to hold an Aging Committee hearing on strengthening the 401(k) system, 'with a particular focus on the proliferation, composition, and regulation of target date funds.'' (PLANSPONSOR.com; free registration required)
Retirement Savings: Automatic Enrollment Shows Promise for Some Workers, but Proposals to Broaden Retirement Savings for Other Workers Could Face Challenges
Excerpt: "Because of questions about the extent of retirement savings and prospects for a sound retirement for all Americans, GAO was asked to determine (1) what is known about the effect of automatic enrollment policies among the nation's 401(k) plans, and the extent of and future prospect for such policies; and (2) the potential benefits and limitations of automatic IRA proposals and state-assisted retirement savings proposals. To answer these questions, GAO reviewed available reports and data, and interviewed plan sponsors, industry groups, investment professionals, and relevant federal agencies." (U.S. Government Accountability Office)
[Opinion]
American Benefits Council Letter to IRS Regarding Partial Rollovers under Notice 2009-68 (PDF)
4 pages. Excerpt: "The Council is writing to urge the Internal Revenue Service to clarify the treatment of a partial rollover to an IRA of a distribution from a tax-preferred employer plan that includes after-tax contributions. Notice 2009-68, which was published on September 4,2009, updates the safe harbor '402(f) notice,' which describes the tax rules applicable to eligible rollover distributions from employer plans. The updated 402(f) notice includes a description of the tax rules applicable to plan distributions that include after-tax contributions. The description suggests for the first time a distinction in the tax treatment of partial rollovers that turns on whether the rollover is accomplished as a 60-day rollover or a direct rollover. The Council believes that there is no such distinction and urges the Service to clarify the matter." (American Benefits Council)
[Opinion]
Divorce and Pensions: Continental Style
Excerpt: "This is one of the great ERISA stories of all time - its like something out of a Boston Legal episode. I am speaking, of course, of the case, detailed here, of the Continental pilots who, concerned that the retirement plan may go belly up long before they retire, divorced their wives, executed QDROs transferring the retirement benefit to their now ex-spouses, after which the ex-wives took out lump sum payments, as the plan allowed. . . . [L]urking in the background, behind the entertaining fact pattern (entertaining, at least, to ERISA lawyers): the fact that we have a retirement system that is so tenuous that employees feel it is necessary to go to lengths such as this to protect themselves. That is the more significant issue that needs addressing, much more so than whether plan terms or QDRO requirements should be able to be manipulated in such a manner." (Stephen Rosenberg of The McCormack Firm, LLC)
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! |
Webcasts and Conferences
Announcing the Results of Buck Consultants' 2009 Global Wellness SurveyNationwide on November 19, 2009
presented by Buck Consultants, an ACS Company
Boosting Employee Morale - Webinar Demonstrates How To Produce Personalized Employee Benefit Statements In House On Your Own Computer
Nationwide on November 4, 2009
presented by Benefit Software Inc.
Discover The Keys To Improving Employee Morale - Total Rewards Webinar
Nationwide on October 29, 2009
presented by Benefit Software Inc.
Employee Benefit Enrollment Made Easy! Webinar Demonstrates How To Simplify Complex Benefits Enrollment
Nationwide on October 29, 2009
presented by Benefit Software Inc.
Legislative and Regulatory Overview and Legal Update
in District of Columbia on November 19, 2009
presented by Capital Chapter ISCEBS
The New Pension Funding Regulations: It's Not All It Appears To Be Webcast
Nationwide on November 4, 2009
presented by International Foundation of Employee Benefit Plans
(Click to post your webcast or conference)
Press Releases
PBGC Announces Maximum Insurance Benefit for 2010Pension Benefit Guaranty Corporation (PBGC)
New Charles Schwab Data Reveals Increase in 401(k) Plan Participation
Charles Schwab & Co., Inc.
Transamerica Recovery Action Plan Receives Top Honors from the Profit Sharing/401k Council of America
Transamerica Retirement Services
New Benefits and Compensation Glossary Provides Essential Definitions For Benefits Professionals
International Foundation of Employee Benefit Plans
Donald J. Segal Honored by the American Academy of Actuaries
American Academy of Actuaries
CDM Retirement Consultants, Inc. Announces Defined Benefit and Cash Balance Plan Services.
CDM Retirement Consultants, Inc.
(Click to post your press release)
Employee Benefits Jobs
DC / 401(k) Compliance Consultantfor The Savitz Organization
in DE, NJ, PA
Pension Administrator
for Chambers Benefit Group
in NM
Recordkeeping Manager
for Prudential
in IA
Plan Administrator/Conversion Analyst
for Employee Fiduciary
in AL
Defined Benefit Plan Administration Professional
for Goldleaf Partners
in AZ, FL, MN
Wellness Program Administrator
for Blood Systems
in AZ
Sr Benefits Administrator
for DePaul University
in IL
Executive Director - New Business Development
for GuideStone Financial Resources of the Southern Baptist Convention
in TX
Consultant-TPA (Third Party Administrator) Services, #0901438
for John Hancock Financial Services
in MA
Business Development Director - ESOP
for RSM McGladrey
in IL, MN
Staff Consultant - Retirement Plan Administrator
for BKD, LLP
in MO
Qualified Plan Administrator
for Howard Feinstein & Associates
in IL
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