Retirement Plans Newsletter |
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| November 13, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
November 30, 2009, Deadline for Important Decisions Regarding 2009 RMDs
Excerpt: "Because the relief under WRERA is optional, plan sponsors must decide now how they intend to treat 2009 RMDs. Plan sponsors have the following three options: Forego the optional waiver and continue with 2009 RMDs as normal. Waive 2009 RMDs, unless a participant elects a distribution of such amounts. Distribute 2009 RMDs, unless a participant elects to waive such amounts." (Troutman Sanders LLP)
[Guidance Overview]
IRS Further Extension of Effective Date of Normal Retirement Age Regulations for Governmental Plans (PDF)
1 page. Excerpt: "The IRS recently published Notice 2009-86, which further delays the effective date for governmental plans to plan years beginning on or after January 1, 2013. This extension will provide the IRS with additional time to consider comments received with respect to the effect of the normal retirement regulations on governmental plans. . . . Plan sponsors should review their plan documents to determine if their plan's current definition of normal retirement age complies with the new IRS regulations. If a plan amendment is required and Prudential Retirement provides document services for your plan, we will work with you to ensure that your plan complies with the extended amendment deadline." (Prudential Retirement)
[Guidance Overview]
IRS Grant of Hybrid Pension Plan Relief on Timing of Amendments and Notices (PDF)
3 pages. Excerpt: "On November 10, the IRS released Announcement 2009-82, which gives sponsors of cash balance and other hybrid pension plans additional time to bring their plans into compliance with the Pension Protection Act of 2006 (PPA) requirement that the plan's interest-crediting rate not exceed a 'market rate of interest.' The IRS indicated in the announcement that regulations outlining what constitutes a market rate of interest under PPA will be issued 'in the near future.' The announcement also grants 204(h) notice relief for plan sponsors that adopt amendments to adopt a market rate of interest by the end of the 2009 plan year." (Morgan, Lewis & Bockius LLP)
[Guidance Overview]
Deflation and the Effect on Benefit Plan Limits
Excerpt: "Most 2010 IRS benefit plan limits and Social Security benefits and thresholds remained unchanged from 2009 despite a roughly 2% decrease in the CPI. In this article we look at the implications of this unusual occurrence beyond 2010." (J.P. Morgan Compensation and Benefit Strategies)
[Guidance Overview]
Final PPA Funding Rules
Excerpt: "For those who have been following the evolution of PPA funding rules, most of the [target date article] is review. Probably the biggest outstanding issue at this point is whether and how Congress will temporarily change these rules to provide additional breathing room for plan sponsors struggling in the wake of the 2008 financial crisis." (J.P. Morgan Compensation and Benefit Strategies)
[Guidance Overview]
Seventh Circuit Holds That a Plan Amendment Does Not Violate ERISA's Anti-Cutback Rule
Excerpt: "In Wetzler v. Illinois CPA Society & Foundation Retirement Income Plan, No. 08-2923 (7th Cir. 2009), the plaintiff, Thomas Wetzler, wanted a lump-sum payment of his entire retirement benefit from the Illinois CPA Society & Foundation Retirement Income Plan (the 'Plan'). The Plan is a tax-qualified defined benefit pension plan. The plaintiff was a highly compensated employee. The Plan had always allowed lump-sum payments. However, prior to the plaintiff's retirement, the Plan had been amended to reflect certain provisions of the Internal Revenue Code (the 'Code') and the underlying Treasury regulations, under which the Plan could not make a lump- sum payment to certain highly compensated employees, such as the plaintiff, when the Plan is not sufficiently funded (the 'Amendment'). At the time of the plaintiff's request for a lump-sum payment, there were not enough assets in the Plan to cover this payment." (ERISA Lawyer Blog)
[Guidance Overview]
The DOL's New FAQ on Credentials for EFAST2
Excerpt: "To eliminate any doubt as to its position regarding sharing filing signer credentials, the Department of Labor (DOL) added a new FAQ to the series of EFAST2 FAQs it issued in late August . . . . The new FAQ followed closely on the heels of instructions the DOL provided to third party software developers in which they reminded software developers of their obligation to protect the integrity and privacy of the electronic signatures." (SunGard Relius)
PBGC Press Release on the Annual Management Report for Fiscal Year 2009
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) ended fiscal year 2009 with an overall deficit of $22 billion, according to the agency's Annual Management Report submitted to Congress today. The result compares with the $11.2 billion deficit recorded at the previous fiscal year-end on September 30, 2008." (Pension Benefit Guaranty Corporation via BenefitsLink.com)
Pension Benefit Guaranty Corporation Annual Management Report for Fiscal Year 2009 (PDF)
99 pages. Excerpt: "[Some of the Fiscal Year 2009 Financial Statement Highlights are as follows:] PBGC's combined financial condition declined by $10.80 billion, increasing the Corporation's deficit to $21.95 billion as of September 30, 2009, from $11.15 billion as of September 30, 2008. PBGC's portfolio achieved a return on investment of 13.2%. The single-employer program's net position declined by $10.40 billion, increasing the program's deficit to $21.08 billion. The multiemployer program's net position declined by $396 million, increasing that program's deficit to $869 million. The primary factors in the single-employer program's net loss included a charge of $10.55 billion due to an unfavorable change in interest factors, $4.23 billion in losses from completed and probable terminations, $3.92 billion in charges due to passage of time, and $383 million of administrative and other expenses. These factors were offset by $6.33 billion in investment income, $1.82 billion in net premium income, and a credit of $573 million from actuarial adjustments." (Pension Benefit Guaranty Corporation)
Retirement Income: the Axiomatic Case for Annuities
Excerpt: "In this article we lay out the axiomatic case for annuities as the investment instrument for providing retirement income. Summarizing: where, over any particular period, the objectives are to maximize lifetime income without risking the possibility that you will outlive your assets, an annuity (vs. self insurance alternatives) will always provide the greatest income. That is because 'gains' from deaths at the beginning of the period can be used to increase the income of those living to the end of the period. This article simply un-packs what, given those premises, is axiomatically 'true.'" (J.P. Morgan Compensation and Benefit Strategies)
Impact of the Market Crisis on Retirement Preparedness
11 pages. Excerpt: "More than half of retired and employed Americans say the market crisis has forced them to make concessions in their lifestyle. They are spending less, postponing retirement, living modestly -- all in an effort to save more money and rebuild their retirement security. Half of Americans are behind in reaching their goals, so suffering market losses has led many to make immediate shifts in their behavior, with a renewed focus on protection and preservation. Retirees are making the most significant concessions. In fact, nearly half are living modestly or struggling." (Prudential Retirement)
Escalating Pension Benefit Costs: Another Threat to Nonprofit Survival? (PDF)
Excerpt: "[A]re spiraling pension costs putting nonprofits across the country at risk of shutting down? How prevalent are pension and other retirement benefits at nonprofit organizations? What types of pressures are nonprofit executives experiencing relating to retirement benefit programs, and how are they responding? Given the dearth of data on nonprofit retirement programs, the Johns Hopkins Nonprofit Listening Post Project undertook a Sounding, or survey, of its nationwide sample of nonprofit human service, community development, and cultural organizations on this important topic. The Sounding specifically focused on the two most common types of retirement benefit plans: defined benefit plans, i.e., plans in which employers maintain control over the investment of assets and that provide a set level of benefits to employees at retirement; and defined contribution plans such as 401(k) or 403(b) plans in which the employer contributes to the cost but the employees maintain control over the investments, and benefit levels are not guaranteed." (Johns Hopkins University)
Fiduciaries Well-Positioned to Bring About Positive Changes in Target Date Funds
Excerpt: "Rather than focusing on past deficiencies in target date funds, the Senate Special Committee on Aging's recent hearing on the funds focused on how they can be turned around quickly. However, the hearings should serve as notice to all fiduciaries involved -- retirement plan sponsors, investment advisers to the plans, fund managers and mutual fund boards -- that they are perceived by regulators as the sources of problems with target date funds and will be held accountable to fix them." (Investment News; free registration required)
Lawmaker Says Utah's Retirement System Must Change
Excerpt: "Change appears to be in the cards for Utah's retirement system, perhaps including one revolutionary option of doing away with the nearly century-old pension system altogether for new hires and replacing it with individual 401(k)s. 'Something has to be done in my opinion. How does it look? What should we do?' are questions that remain, said Sen. Dan Liljenquist, R-Bountiful, chairman of the legislative committee that oversees retirement. But the push for change was met with a unanimous chorus of opposition from public employee unions that urged lawmakers Thursday to go slow and give the current pension system a chance to recover from its battering by the economic downturn." (The Salt Lake Tribune)
The New York Times is Freezing Pension Plan
Excerpt: "The New York Times Company has amended The New York Times Companies Pension Plan, a defined benefit pension plan for non-union employees, to discontinue future benefit accruals and freeze existing accrued benefits effective December 31, 2009. In a filing with the Securities and Exchange Commission, the Times said it is increasing contributions under The New York Times Companies Supplemental Retirement and Investment Plan (SRIP), its 401(k) plan, such that participants will receive a cash contribution of 3% of pay, up to applicable limits, effective January 1, 2010." (The New York Times; free registration required)
[Opinion]
The Retirement Problem
Excerpt: "The problems, in short, are that we don't save enough and we don't invest very well. One could argue that these are a matter of choice. People could save more, and they could make smarter investing decisions. But given that they don't, we could very well see tens of millions of seniors without enough money to live decently in retirement. Given that prospect, perhaps we should question leaving retirement security to individual choices and free markets." (The Washington Post; free registration required)
[Opinion]
Union Pension Bailout Bill Would Burden Employers and Taxpayers
Excerpt: "[Labor union] leaders habitually put high principle aside when their own hides need bailing out. Case in point: a bill introduced in late October by Rep. Earl Pomeroy, D-N.D. (see photo), the Preserve Benefits and Jobs Act of 2009 (H.R. 3936). This legislation would enlist taxpayers to support troubled union-sponsored multiemployer pension plans and impose major burdens upon employers. Ultimately, the general public will pay the tab. It's another example of how interest-group politics benefits the relative few at the expense of the great many." (National Legal and Policy Center)
[Opinion]
Financial and Demographic Developments Point Toward Americans Working Into Their Golden Years
Excerpt: "The Age of Retirement was one of America's most successful social reforms ever. But that era is over. A new vision of old age is emerging from the trauma of the credit crunch and the Great Recession: Forget retirement. Keep working. Surveys show that a majority of baby boomers say they want to work during their golden years. They're going to get their wish. The key question is no longer 'How early can I retire?' It's 'Why retire?'" (MSNBC.com)
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
[Guidance Overview]Executive Employment Agreements and Bonus Plans May Need to Amendment to Comply with Revenue Ruling 2008-13 (PDF)
Excerpt: "Companies subject to the $1 million compensation deduction limitation that rely on the performance-based compensation exception should review all incentive compensation plans and any employment agreements or other arrangements that may result in the payment of at least $1 million to ensure compliance with Revenue Ruling 2008-13 before the start of the new performance period." (Bryan Cave LLP)
Webcasts and Conferences
Self-Auditing Your Retirement PlansNationwide on December 1, 2009
presented by Society for Human Resource Management (SHRM)
(Click to post your webcast or conference)
Press Releases
CEO Stock Ownership Value Plunged in 2008, Watson Wyatt Study FindsWatson Wyatt
PBGC Releases Annual Management Report For Fiscal Year 2009
Pension Benefit Guaranty Corporation (PBGC)
Owner of Marietta, Ga., Insurance Agency Sentenced for Diverting 401(k) Assets
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
InFRE Certified Retirement Counselor(R) Accreditation Helps Consumers Protect Their Retirement Dollars
International Foundation for Retirement Education (InFRE)
CDM Retirement Consultants, Inc. & MG Advisory Services, LLC to Offer Co-fiduciary Services
CDM Retirement Consultants, Inc.
SunTrust Adds FDIC Insured Account to Its 401k Offering
SunTrust Banks, Inc.
Limeade Wellness Program Chosen to Serve Washington State Employees
Limeade, Inc.
Pittsburgh Retirement Consulting Firm Makes Name Change
RetireRight Pittsburgh
Natixis Global Associates Strengthens Presence in Retirement Marketplace
Natixis Global Associates
(Click to post your press release)
Employee Benefits Jobs
Plan Compliance Specialistfor Lincoln Financial Group
in IN
Retirement Plan Specialist
for Administration of Retirement Plans
in KS
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