Retirement Plans Newsletter |
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| November 4, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Official Guidance]
Court Says Participant in Overfunded Defined Benefit Plan Has No Standing to Sue for Fiduciary Duty Breaches
Excerpt: "[The 8th Circuit majority] held that plan participants 'would if anything be adversely affected by subjecting the Plan and its fiduciaries to costly litigation.'" (PLANSPONSOR)
[Guidance Overview]
2009 Required Minimum Distributions: Plan Sponsors Have Decisions to Make by November 30, 2009
Excerpt: "Plan sponsors must decide by November 30, 2009, how the plan will treat 2009 RMDs. Plan sponsors have three choices: . . . ." (Warner Norcross & Judd)
[Guidance Overview]
IRS Issues Final Regulations under Code Section 436; Single-Employer Defined Benefit Plans Affected (PDF)
At page 5. Excerpt: "On October 15, 2009, the Internal Revenue Service published final regulations construing the new funding and benefit restriction requirements applicable to single employer defined benefit plans for plan years beginning after December 31, 2009, under Internal Revenue Code ('Code') sections 430 and 436. . . . This article highlights some of the key provisions of the final regulations governing the benefit restriction provisions of Code section 436." (Trucker Huss)
[Guidance Overview]
Chart and Outline of 401(k) Fee Litigation, Updated October 2009
Excerpt: "Over the past several years, more than two dozen lawsuits have been filed relating to 401(k) plan fees and, more specifically, 'revenue sharing' arrangements with plan service providers. Initially, the lawsuits were brought by plan participants against plan sponsors and alleged that, by allowing plan service providers to receive revenue sharing payments, the plan sponsors caused the participants to pay excessive fees, in breach of the sponsors' fiduciary duties to the participants. The focus of these lawsuits against the plan sponsors has evolved over time . . . ." (Groom Law Group)
[Guidance Overview]
Pension Plan Amendments Required to Reflect Section 436 Contingent Limitations on Benefits
Excerpt: "Time is running out for sponsors of defined benefit pension plans to adopt amendments that must be made by the end of the year to provide for limits on benefit payments and benefit accruals as required under section 436 of the Internal Revenue Code. These limits apply in the event that the plan falls short of funding targets established under the Pension Protection Act of 2006 (PPA). Limits start to apply if the plan's adjusted funding target attainment percentage (AFTAP), as certified by the plan's actuary, falls below 80 percent, and additional and stricter limits apply if the plan's AFTAP falls below 60 percent." (Faegre & Benson)
[Guidance Overview]
Fiduciary Debate Lands at Supreme Court
Excerpt: "The debate over investment advisors' fiduciary duty has made it all the way to the Supreme Court. On Monday, November 2, Supreme Court Justices heard oral arguments from lawyers for three investors who claimed that Harris Associates of Chicago, the investment advisor for the Oakmark family of mutual funds, charged them higher fees for similar services than it did to independent institutional investors such as pension funds." (Investment Advisor)
[Guidance Overview]
Justices Tackle Case on Investment Fees
Excerpt: "Several Supreme Court justices on Monday seemed reluctant to make the courts arbiters of whether mutual fund investment advisers are charging excessive fees for their work on what has become an essential investment tool for Americans." (Washington Post; free registration required)
[Guidance Overview]
In District Court, Verizon Defeats Group Lawsuit Over Cash Balance Plan That Might Have Cost $1.67 Billion
Excerpt: "The complaint was brought after Verizon mistakenly included language in its pension plan documents, U.S. Magistrate Judge Morton Denlow wrote in a ruling issued Nov. 2. The mistake was in a formula for converting Bell Atlantic employees onto the same pension system following a series of mergers. The new calculations would have almost tripled the opening balances that some employees had accrued, according to the ruling." (Bloomberg)
[Guidance Overview]
San Diego Public Pension Conflict-of-Interest Case Makes It To State Supreme Court
Excerpt: "Public employee pension boards throughout the country are watching the case carefully, as it could affect the makeup of pension boards nationwide. The issue is whether the six San Diego pension board members voted to allow the city to underfund its pension plan in return for higher pension payouts. Defense attorneys argue it was not a 'quid pro quo,' and the defendants are not guilty of conflict of interest. The votes resulted in a billion dollar pension deficit that the city then hid from investors." (KPBS)
[Guidance Overview]
Chart of Year-End Required Participant Notices for Qualified Retirement Plans; Dec. 1 Deadline in Some Cases (PDF)
4 pages. Excerpt: "This advisory focuses on the escalating number of year-end notices that defined contribution plans must issue to participants. These notices must be distributed within a reasonable period of time prior to the start of the plan year. The accompanying charts describe these deadlines." (Alston+Bird)
[Guidance Overview]
Employers Must Make 2009 Required Minimum Distribution Decisions by November 30 (PDF)
Excerpt: "Pursuant to Notice 2009-82, employers must decide by November 30, 2009, whether to: * Suspend all RMDs for 2009, unless the participant affirmatively requests the distribution; * Distribute all RMDs for 2009, unless the participant affirmatively requests the waiver; * Continue RMDs for 2009 in accordance with plan provisions without a choice participants. In addition, employers will need to decide by November 30, 2009, whether and to what direct rollovers of distributions containing 2009 RMDs will be offered to participants." (Womble Carlyle)
[Guidance Overview]
Federal Government Employees See Benefits Enhanced by Defense Authorization Act
Excerpt: "Workers under the Federal Employees Retirement System (FERS) will get credit for their length of service for unused sick leave. . . . Current employees under the CSRS retirement program will be able to transition into retirement (by working part-time) without lowering their pension payments. . . . Federal civil servants in Alaska, Hawaii, Puerto Rico and various U.S. territories will gradually trade in their tax-free cost of living allowances (worth up to 25 percent) and instead get locality pay based on similar private sector jobs in Anchorage, Honolulu or San Juan." (Washington Times)
Drastic 401(k) Reform Unlikely, Expert Says
Excerpt: "Last month, Time magazine ran a cover story titled 'Why It's Time to Retire the 401(k).' But such calls have not won over the bulk of Democratic lawmakers or President Barack Obama, [attorney James Delaplane] said at the conference. The answers on issues such as 401(k) fees are coming from regulators like the U.S. Department of Labor, not from Congress, he said." (Workforce Management)
Critics Call Mutual Funds Option Too Risky for Federal Thrift Savings Plan Participants
Excerpt: "The 2009 Family Smoking Prevention and Tobacco Control Act includes a provision that could enable federal employees to invest their retirement money into mutual funds of their choice, in addition to the broad offerings currently available through the plan. Congress allowed, but did not mandate, that the TSP board create such an option; TSP administrators have said they haven't decided yet whether to implement it, and likely will wait until other upgrades are completed." (GovernmentExecutive.com)
Service Requirements for Joining 401(k) Easing, Survey Shows
Excerpt: "The Hewitt Associates Inc. survey of 300 mid- to large-size employers found that 74% of 401(k) plans do not have a service requirement, up from 61% in a comparable survey Hewitt conducted in 2007." (Business Insurance)
State of Alabama's Pension Fund Plows Millions Into Property in Its Own Backyard
Excerpt: "When David Bronner, the chief executive of the Retirement Systems of Alabama, the pension fund for public employees in the state, first discussed making a major investment in this city, he had an ultimatum for local leaders: show that you're willing to rebuild the city's education system, and the money will flow." (New York Times; free registration required)
Private Sector Jobs With the Best Retirement Benefits
Excerpt: "Here's a look which jobs provide the most retirement benefits and how their value has changed since 1998." (U.S. News & World Report)
5 Tips in Using Retirement Planning Tools
Excerpt: "Retirement planning software is available for free on several major investment and retirement websites. But according to a recent analysis sponsored by the Pension Research Council, these programs do an inconsistent and often poor job." (U.S. News & World Report)
[Opinion]
Testimony of Morningstar Director of Research: Five Concerns About Target-Date Mutual Funds
Excerpt: "[T]here are certain concerns, given the extraordinary position that target-date funds now occupy as the default investment of choice for America's New Retirement Model. These concerns include:* Variation in fees; * The use of proprietary (in-house) funds; * Lack of manager ownership; * Variation in glide paths among the shorter-dated funds; * Lack of transparency" (Morningstar)
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! |
Links to Items on Executive Comp, Benefits in General
[Guidance Overview]Be Careful With Severance Plans; ERISA Reporting and Disclosure Rules Can Apply
Excerpt: "While most employers are well aware of ERISA's application to retirement plans and group health plans, many are surprised to learn that some severance arrangements are considered 'welfare pans' under ERISA and, are therefore, subject to ERISA's reporting and disclosure requirements, as well as the rules for processing and determining claims. Because not every severance arrangement is covered by ERISA, many employers overlook its potential application when they are implementing or designing a severance plan." (Fisher & Phillips)
[Guidance Overview]
New Guidance on 2009 Form 5500 Schedule C Compensation Reporting
Excerpt: "The recent Supplemental FAQs elaborate on . . . 2009 transitional relief and make clear that the DOL will not impose penalties or reject the Form 5500 filing if, in addition to providing the statement, the service provider supplies to the plan administrator the compensation information it was able to collect. DOL also expects the plan administrator to discuss with such service providers the steps they are taking to be able to provide the necessary information in the future." (Deloitte)
[Guidance Overview]
Section 409A Errors That Can Still Be Corrected by December 31, 2009
Excerpt: "Although December 31, 2008, was the official deadline for bringing all deferred compensation plans and agreements into compliance with the new IRS regulations under Code §409A, there are still several steps an employer can take by the end of 2009 to correct, or at least mitigate the effect, of failures to comply with §409A." (Seyfarth Shaw)
Executive Pensions Reportedly Soar as Companies' Value Plummets
Excerpt: "Massive executive-pension growth was driven in part by generous pension formulas and little-scrutinized arcane techniques, the Wall Street Journal reported Tuesday." (Fox News)
Will Rising Required Benefit Plan Contributions Encourage Collapse of the Municipal Bond Market?
Excerpt: "[In a report entitled 'Dark Vision: The Coming Collapse of the Municipal Bond Market', Frederick J. Sheehan] notes that 'spending is rising and revenue is collapsing' for all levels of government. Pension fund losses will require governments to double their contributions to pension plans . . . ." (Phillip Greenspun)
U.S., Massachusetts Clash in Court Over Federal Benefits for Same-S.ex Couples
Excerpt: "The United States government and Massachusetts are clashing over the issue of extending federal benefits to married same-s.ex couples, with the Obama administration arguing that the government is not obligated to provide benefits to g.ay couples." (Berkshire Eagle)
Webcasts and Conferences
2010 NTSAA National Conferencein California on January 27, 2010
presented by National Tax Sheltered Accounts Association
EFAST2, The New DOL 5500 Filing System: Will You Be Ready For It?
in California on November 17, 2009
presented by Western Pension & Benefits Conference, San Diego Chapter
HIPAA and Other Health Benefits Laws: Compliance Assistance Seminar
in Colorado on April 21, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
HIPAA and Other Health Benefits Laws: Compliance Assistance Seminar
in Illinois on June 15, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
ICD-10 Web Summit: Issues for 2010
Nationwide on December 1, 2009
presented by MCOL
Latest Developments in the Public Pension Community Webcast
Nationwide on November 19, 2009
presented by International Foundation of Employee Benefit Plans
(Click to post your webcast or conference)
Press Releases
Hewitt Survey Shows Automation, Low-Cost Investment Options and Investment Advice Becoming Standard Features in 401(k) PlansHewitt Associates LLC
PBGC Expands Cooperation with the UK's Pensions Regulator and the Pension Protection Fund
Pension Benefit Guaranty Corporation (PBGC)
Employers Can’t Afford Not to Have Health and Productivity Programs According to IBI Data Analysis
Integrated Benefits Institute
(Click to post your press release)
Employee Benefits Jobs
Senior Retirement Consultant / Relationship Managerfor Westminster Consulting
in CT, MA, ME, NH, NY, RI, VT
VP, Solution Architect
for Fidelity Investments
in KY
Benefit Specialist
for The NIA Group, LLC
in NJ
Pension Administrator
for Alliance Pension Consultants
in IL
(Click to post your job opening | View all jobs |
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