Retirement Plans Newsletter |
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| November 10, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
Plan Action Required: Updated Safe Harbor Rollover Notices (PDF)
2 pages. Excerpt: "It should be noted that the newly issued safe harbor notices do not include a discussion of the special rollover rules that apply if a defined contribution plan has allowed participants to receive a distribution of amounts that would otherwise represent required minimum distribution but for the special waiver of such distributions for 2009. While formal notice is not required of these provisions, plan sponsors may wish to provide participants with information about them." (Patterson BelknapWebb & Tyler LLP)
[Guidance Overview]
California Supreme Court Hears Pension Trustees' Case
Excerpt: "The California Supreme Court last week heard a case that may be of great significance for trustees on pension boards in California. The case, Lexin v. Superior Court, arose out of a decision by the San Diego Employees' Retirement System (SDCERS) board of administration to approve an increase in pension benefits for city employees and at the same time allow the pension fund to be underfunded. The San Diego County district attorney brought criminal proceedings against certain members of the board, alleging a violation of Government Code section 1090. The questions to be decided in the case is whether the petitioners' service on the Board of the San Diego Retirement System, as it related to an increase in pension benefits for members of the system, violate the conflict of interest provisions of Government Code section 1090, and subject them to criminal prosecution, or did the non-interest exemption of Government Code section 1091.5?" (National Conference on Public Employee Retirement Systems)
[Guidance Overview]
DOL's Supplemental FAQs about 2009 Form 5500 Schedule C Fee Disclosure Rules
Excerpt: "This new guidance takes the form of additional answers to frequently asked questions (FAQs), which supplement both the instructions to Schedule C and a set of FAQs released by the DOL in July 2008 (the 2008 FAQs). In general, the new FAQs clarify a number of technical issues and provide additional support for answers given in the 2008 FAQs." (Morgan, Lewis & Bockius LLP)
[Guidance Overview]
Form 5500 E-Signature PINs May Not Be Shared with Preparers
Excerpt: "The DOL has clarified that 5500 filing signers (plan administrators) may not share their EFAST2 PIN with 5500 preparers and that no formalized hardship process will be established for EFAST 2 signers without access to the internet." (Fort William LLC)
[Guidance Overview]
DOL's 'Q&A' Guidance on Reporting Service Provider Compensation on Annual Returns (PDF)
4 pages. Excerpt: "The reporting requirement applies both to 'direct compensation' paid by a plan and indirect compensation' that is paid by sources other than the plan or plan sponsor: (i) for services rendered to the plan or (ii) because of the provider's position with the plan. Examples of reportable indirect compensation include brokerage commissions, amounts charged to investment funds for plan recordkeeping services and fees paid by investment funds to investment managers." (Drinker Biddle Reath LLP)
The Downside of Dollar-Cost Averaging Investing
Excerpt: "If you really don't have much money with which to invest at any one time, dollar-cost averaging may be a sensible option for you. And with 401(k)s, dollar-cost averaging is the way to go. I'm not here to dismiss the strategy completely. But if you're able to invest lump sums, that might be a smarter move. Why? Well, think about the stock market's overall trend: Sure, it's a jagged line, dipping now and then, and even crashing on occasion. But overall, over long periods, it has gone up, averaging about 10% per year. If the market goes up significantly more often than it goes down -- as is the case with most healthy stocks -- then you'll end up paying a higher average price for your investment by dollar-cost averaging than by plunking in a lump sum." (The Motley Fool)
An Update on 401(k) Plans: Insights from the 2007 Survey of Consumer Finance
Excerpt: "Given the collapse of the financial markets and the economy, this paper uses the 2007 SCF data as a starting point in evaluating the condition of 401(k)s and the factors that affect participation and contributions, and relies on more recent data and estimates to paint a full and current picture." (Center for Retirement Research at Boston College)
Fees and Trading Costs of Equity Mutual Funds in 401(k) Plans and Potential Savings from ETFS and Commingled Trusts
Excerpt: "As the role of 401(k) and similar defined-contribution plans continues to expand in our retirement system, plan participants are paying more of the cost of financing their retirement income. This study analyzes the trading costs and fees of the 100 largest domestic equity mutual funds held in defined-contribution pension plans for the years 2004 through 2008." (Center for Retirement Research at Boston College)
Why Financial Literacy Matters to You and Your Employees
Excerpt: "Here are ten components which comprise a Financial Literacy series of workshops: How to Create a Budget/Strategies of Saving; Debt Consolidation; How to Read, Monitor, and Improve Your Credit Report; Understanding Your Company's Retirement Plan; College Planning; The Role of Insurance in Financial Planning; Types of Mortgages/How to Qualify; Tax Issues - Homeowners, Retirement Savings, Estate Planning; Financial Issues of Divorce; Pre-Retirement Issues/When Can I Afford to Retire?" (401kExchange, Inc.)
Financier to Head Federal Pension Benefit Guaranty Unit
Excerpt: "Joshua Gotbaum, an operating partner at the investment firm Blue Wolf Capital, is expected to be named director of the Pension Benefit Guaranty Corporation by President Obama, the White House said Monday in a statement. Mr. Gotbaum, a former chief of the September 11th Fund charity, also served in the administrations of Presidents Jimmy Carter and Bill Clinton." (The New York Times; free registration required)
California Officials Drafting Placement Agent Bill
Excerpt: "Legislation currently being drafted in California would force pension placement agents to register as lobbyists in that state and would eliminate a pay plan for the agents where their compensation is tied to the amount of an eventual pension mandate. A Wall Street Journal news account, quoting anonymous sources, said California Controller John Chiang and Treasurer Bill Lockyear are working on the proposals. Both are board members of the California Public Employees' Retirement System ( CalPERS). The Journal said the proposal would also require all compensation to be disclosed, ban placement-agent campaign contributions, and establish a $10 monthly limit on gifts to pension officials from any individual at a placement-agent firm." (PLANSPONSOR.com; free registration required)
On Using Texting for Communications on Savings
Excerpt: "A new study by a group of economists looking at why people save money found that sending out text reminders to participants cell phones increased savings balances by 6%. According to a Dow Jones news report, the study challenges the idea that people don't have enough self-control to save. Instead Dartmouth University economics professor Jonathan Zinman, one of the study's four authors, said savings just isn't at the top of people's minds. 'Basically all we did was remind them,' he said. The study also found that while positive or negative language didn't have a significant effect on the savings rate, mentioning a customer's specific goal did. In addition, when reminders mentioned incentives offered by the bank for consistent deposits, bank savings increased by almost 16%, the news report said." (PLANSPONSOR.com; free registration required)
Caterpillar Agrees to $16.5-Million Settlement of Excessive Fee Lawsuit in Federal Court in Illinois
Excerpt: "A company newsletter said the September 2006 suit leveled the fiduciary breach charges against Caterpillar regarding its four 401(k) plans for workers and retirees. According to the announcement, the net proceeds of the settlement will be allocated to participant accounts and former participants based generally upon the number of years a participant maintained an account balance in one or more of the plans." (PLANSPONSOR.com; free registration required)
Largest Iowa Public Workers' Union to Vote on Unpaid Days
Excerpt: "Iowa's largest public employee union will vote this month on whether to take five unpaid days off and sacrifice about $75 a month in retirement contributions in exchange for an agreement that none of its members will be laid off for seven months. A 'yes' vote by the American Federation of State County and Municipal Employees would save $26.4 million and 479 jobs, some held by workers who are not dues-paying AFSCME members. Those jobs are spread across many state departments, including human services, revenue, public safety and corrections." (The Des Moines Register)
Fluctuation Can't Derail Disciplined Investors
Excerpt: "Anyone wishing to protect against the downside would have done well to move about a third of their assets to a combination of bond funds (Vanguard short term corporate, GNMA and High Yield) that were mentioned in several columns years ago. Having a third of one's money in that bond-fund mix and the rest in stock funds would have reduced the impact of the recent market downdraft. Today, that same allocation, including a diversified mix of stock investment types, is up substantially -- by more than 20 percent for the year to date." (San Jose Mercury News)
J.P. Morgan Chase to Reinstate 401(k) Company Match
Excerpt: "J.P. Morgan Chase will reinstate its 401(k) company match for its U.S. employees and provide an extra award for lower-paid employees, according to a memo by the bank's human resources director, John Donnelly, obtained by P&I Daily. The match was suspended earlier this year. According to the memo, after a recent review, 'we have decided to provide a full 2009 401(k) match,' as well as a 'special award' of $500 early next year to employees globally with total annual cash compensation of less than $60,000." (Pensions & Investments; free registration required)
EBIA (Advert.)
Register now for EBIA's "401(k) Plan Roundup 2009." The past year has brought a steady stream of developments for 401(k) plans, creating new compliance obligations and important design opportunities. How well have you kept up? Join our experts in this 90-minute web seminar as they survey the top 401(k) developments, including applicable effective dates, what’s required, what’s permitted, and how the rules affect plan design and administration for 2009 and beyond. Visit here for more information. |
Links to Items on Executive Comp, Benefits in General
Stock Plans Holding Up Despite Downturn, According to SchwabExcerpt: "One might think that depressed equity markets, rising unemployment, and shifting accounting treatments would have weighed on stock option issuance. However, a new study of 200 corporate stock plan decision makers from companies around the country commissioned by Charles Schwab found that most employer respondents are offering the same or even more stock plan benefits to their employees since a year ago. According to an announcement of the survey, one in four respondents (25%) says their company plans to increase stock plan benefits in the next year, while more than two-thirds (68%) plan to maintain benefits at the current level. Additionally, Schwab notes that these benefits are not just for senior-level employees . . . ." (PLANSPONSOR.com; free registration required)
Life on Severance Pay
Excerpt: "Overall, companies have been eliminating or trimming severance packages. For those who do receive severance, the median pay allotted is 12.5 weeks' salary, down from 21.8 weeks a decade ago, according to outplacement firm Challenger, Gray & Christmas. But this downtown has brought heavy layoffs to the financial and auto industries, two places where generous exit packages remain more common. The dramatic changes in such sectors mean that many of the eliminated jobs will never come back. Some workers may suffer a permanent hit to their standard of living. Those affected often have trouble accepting their diminished prospects. Hefty severance packages, while intended as a safety net, can lull the unemployed into a false sense of security. Some people continue spending as before." (The Wall Street Journal)
Distributions to Former Participants in Company Stock (Part 2)
In her latest column on the NCEO's site, ESOP consultant and NCEO board member Nancy Dittmer continues her discussion of distributions to former ESOP participants in company stock. (National Center for Employee Ownership)
Webcasts and Conferences
"Ethics with a Smile" Web SeminarNationwide on December 2, 2009
presented by SunGard Relius
Craig J. Davidson, CEBS, Presents the November Smartcast on Technology in the Workplace--November 17th at 10 a.m. and 2 p.m.(CST)
Nationwide on November 17, 2009
presented by FutureOffice Network
(Click to post your webcast or conference)
Press Releases
The Segal Company's Houston Office MovesThe Segal Company
Craig Davidson of FutureOffice Network Shares Insurance Sales Tips in the November Issue of Employee Benefit Adviser
FutureOffice Network
Fiduciary Benchmarks Announces the Ability to Benchmark 98% of All 401(k) Plans
Fiduciary Benchmarks, Inc.
Pen-Cal Appoints Financial Industry Veteran to Lead East Coast Operations
Pen-Cal
(Click to post your press release)
Employee Benefits Jobs
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Benefits Manager
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in MA
Retirement Plan Administrator
for Bates & Company, P.A.
in FL
Business Development Professional
for RiverNorth Retirement Plan Services
in IL
Retirement Plan Service Specialist
for Retirement Alliance, Inc.
in NH
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