To BenefitsLink home page

Retirement Plans Newsletter

Search Earlier Newsletters:

Sort by date
Sort by closest match
Fill your job openings fast on EmployeeBenefitsJobs.com!
November 19, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy

NTSAA (Advert.)

How to Succeed in the 403(b) Market! (clickable image)

How to Succeed in the 403(b) Market!

Expand your business in the lucrative 403(b) and 457(b) non-profit market. Learn what you need to know by attending the annual conference of the National Tax-Sheltered Accounts Association (NTSAA). The industry's top practitioners will show you how to not just survive, but thrive!
For more information and to register, visit the NTSAA website or click here.

The 2010 NTSAA Annual Conference...the place to be for 403(b)! January 27 - 30, Indian Wells, CA



[Official Guidance]
DOL Cancels Earlier-Published Bush Administration Final Regulation on Investment Advice to Participants

Excerpt (DOL press release of Nov. 19, 2009): 'The department decided to withdraw the rule based on public comments that raised sufficient doubts as to whether the conditions of the final rule and the class exemption associated with the rule could adequately protect the interests of plan participants and beneficiaries. The department recently extended the applicability and effective dates of the final rule until May 17, 2010. That extension expires upon the effective date of this withdrawal." (Employee Benefits Security Administration, U.S. Department of Labor)



[Guidance Overview]
IRS Guidance Regarding Unused Paid Time Off and an Employer's Qualified Retirement Plan (PDF)

3 pages. Excerpt: "This guidance affects sponsors of and participants in qualified defined contribution plans, including 401(k) plans and multiemployer plans. It does not directly address 403(b) plans or governmental 457(b) plans, and IRS spokesmen have provided mixed unofficial messages regarding its applicability to these plans. As a result, sponsors of these types of plans should not take any action without the advice of legal counsel." (Prudential Retirement)



[Guidance Overview]
Unforeseeable Emergencies and Hardship Withdrawals: What Every 457 Plan Administrator Needs to Know

Excerpt: "The circumstances that constitute an unforeseeable emergency (UE) should be based on facts and made on a case by case basis. The IRS has not provided guidance on what is adequate documentation to validate the UE request and this has created some uncertainty among administrators about whether they are requiring enough documentation from plan participants who are applying for a UE. NAGDCA recently spoke with Cheryl Press, a Senior Counsel for Tax Exempt and Government Entities at Chief Counsel IRS, regarding the feasibility of using self-certification to satisfy the regulations regarding distributions from a section 457 plan for unforeseeable emergencies." (National Association of Government Defined Contribution Administrators)



[Guidance Overview]
November 30, 2009: Deadline for Plan Sponsors to Finalize 2009 Required Minimum Distribution Procedures (PDF)

4 pages. Excerpt: "Under WRERA, if all or a portion of a distribution during 2009 is eligible for a rollover solely because it is no longer an RMD, that portion of the distribution is not treated as an eligible rollover distribution for purposes of the direct rollover rules, including the mandatory 20% income tax withholding and 402(f) notice requirements. However, if a defined contribution plan distributes an amount in 2009 that would have been an RMD in whole or in part but for WRERA, a plan may, but is not required to, offer the participant a direct rollover for the RMD portion. If the plan does not offer a direct rollover of the RMD portion of a 2009 distribution, or if the plan does offer a direct rollover but the recipient receives it in cash, the plan administrator must apply 10% withholding to that portion of the distribution (and give the participant an option to elect no withholding), rather than the mandatory 20% withholding. Additionally, the notice of an eligible rollover distribution does not need to be provided if the distribution is limited to the amount that would have been the 2009 RMD." (Morgan, Lewis & Bockius LLP)



[Guidance Overview]
Timing Requirements for Qualified Retirement Plan Amendments

Excerpt: "There is no one-size-fits-all checklist that identifies each interim plan amendment that must be adopted -- required amendments depend in large part on the provisions in a particular plan document -- but there is guidance. Notice 2008-108 provides the IRS's most recent cumulative list of statutory and regulatory changes as of October 1, 2008, that may require plan amendments. An updated list is expected later this month or in early December." (Miller & Chevalier Chartered)



[Guidance Overview]
With Lawsuits Increasing Against Pension Plan Sponsors, Individual Fiduciaries Should Protect Themselves Against Financial Risks

Excerpt: "If you are a fiduciary for your employer's retirement savings plan, you already know that life isn't getting any simpler. Lawsuits against plan fiduciaries are on the upswing, and some have been found personally liable for plan losses under ERISA, the Employee Retirement Income Security Act of 1974. What you may not know is that neither your company's directors' and officers' insurance nor the bond that all retirement plan sponsors are required by law to carry will indemnify you for claims involving benefit plans. The former excludes such claims, the latter covers only plans themselves. Instead, you need fiduciary liability insurance, and if you don't know whether you have it, you should find out." (CFO.com)



[Guidance Overview]
What You Need to Know About Average Contribution Percentage Testing for 403(b) Plans

Excerpt: "The arrival of the final 403(b) regulations has transformed many compliance issues; however, the regulations are just as noteworthy for what has not been altered. For example, 403(b)s that provide for employer matching or employee after-tax contributions have always been required to perform the Average Contribution Percentage (ACP) test. However, plan sponsors of new 403(b) plans or plan sponsors who have modified their plans to add employer matching or after-tax contributions as a result of the changing 403(b) landscape may be facing ACP testing for the first time this year." (PLANSPONSOR.com; free registration required)



Fidelity Says 401(k) Savings Accounts Recover from 2008 Decline
Excerpt: " Fidelity Investments said the average balance on customers' 401(k) retirement accounts has returned to September, 2008 levels on contributions and third- quarter investment gains. Account balances in plans for U.S. workers benefited from the 22 percent year-to-date gain in the Standard & Poor's 500 Index along with continuing employee contributions, the Boston- based firm said in a statement today, after reviewing 11 million accounts managed by Fidelity. . . . Average account balances rose 13 percent to $60,700 from June to September, Doshier said, and are up 28 percent from $47,500 at the end of March. The gains include investment returns, employee contributions and employer's matches. A typical 401(k) holds a mix of equities, bonds and cash." (Bloomberg L.P.)



Company Stock Can Be a Source of Fiduciary Worry
Excerpt: "[E]ven with a careful, diligent approach, plan sponsors may still find themselves embroiled in company stock problems. Company stock can pose a basic dilemma for plan sponsors. ERISA, the body of law that covers retirement plans, requires fiduciaries to act prudently and offer diversified investments to participants -- but it also allows investment in a single security -- the company's stock. Historically, company stock investments have had volatile returns, which can be challenging for plan fiduciaries." (The Vanguard Group, Inc.)



Class Certification Granted in Lawsuit Alleging That Defendant Engages in Certain Revenue Sharing Practices That Violate ERISA (PDF)
Excerpt: "U.S. District Judge Stefan Underhill recently granted plaintiffs' motion for class certification in Haddock v. Nationwide Financial Services Inc., No. 3:01-cv-1552 (SRU) (D. Conn.), a lawsuit alleging that defendant engages in certain revenue sharing practices that violate ERISA. Judge Underhill found that plaintiffs met all of the requirements for certifying a class under Rule 23(b)(2). . . . In 2001, trustees for a number of employer-sponsored profit-sharing retirement plans filed a putative class action against defendant (the plans' investment provider), alleging that certain payments it received from mutual funds or their affiliates were actually provided in exchange for offering the funds as plan investment options under defendant's variable annuity contracts, rather than for administrative services rendered, and that such payments constituted a breach of fiduciary duty under ERISA. In April 2006, the district court denied defendant's motion for summary judgment in a widely publicized opinion that held, inter alia, that there were triable issues of fact on whether defendant was an ERISA fiduciary by virtue of its authority to eliminate and substitute underlying fund investment options and/or on the basis that revenue sharing payments might be plan assets under ERISA." (Sutherland Asbill & Brennan LLP)



Journal of Pension Economics and Finance enters New Phase
Excerpt: "The Journal of Pension Economics and Finance (JPEF), the only academic journal focusing on the economics and finance of pensions and retirement income programs, announces a new editorial structure and a broadening of its mission effective January 2010. Since 2002, the JPEF has provided an invaluable and influential forum for original research and international policy debate in the pensions area. Demographic aging and tumultuous capital markets are challenging the future of retirement around the globe. The JPEF will lead the way in exploring what these factors imply for retirement security and pension sustainability, and in demonstrating which new models will ensure resiliency in retirement systems. JPEF publishes original research papers; it also offers an Issues & Policy section with reviews of the state of debate on pension policies around the world. In addition, the journal includes reviews on publications of key interest to its readers. JPEF is co-sponsored by the International Organization of Pension Supervisors (IOPS) and the OECD." (Pension Research Council; registration required to download fulltext of paper)



QDROs Can Be Particularly Problematic When Plan Assets Contain Employer Securities
Excerpt: "Divorce is messy. Even once the settlement agreement has been reached, signed and filed with the court, our client still faces one remaining hurdle; the dreaded Qualified Domestic Relations Order (QDRO)." (Morningstar)



Federally Funded Defined Benefit Plan: Options for the Future
Excerpt: "Milliman's client had a crisis with its pension plan. This nonprofit organization was unusual, in that its defined benefit pension plan was funded by the federal Medicare program. The plan provided a modest formula of 1% of final earnings, multiplied by credited service. Funding was fixed several years ago at a very low percentage of total compensation. The amount was sufficient to cover the cost for the annual accrual; until recently, the assets and liabilities were approximately equal. Then the recession hit, and in 2008 the plan lost around 28% of its assets. Taking into account the new requirements under the Pension Protection Act of 2006 (PPA), Milliman came up with a preliminary ten-year funding projection: the plan sponsor was required to make up the asset losses over a seven-year period." (Milliman)




DATAIR Employee Benefit Systems, Inc. (Advert.)

Software for Retirement and Cafeteria Plan Documents (clickable image)

Software for Retirement and Cafeteria Plan Documents

DATAIR Plan Document System.
Choose your documents: RETIREMENT PLANS: 401(k)/Profit Sharing, 403(b), DB, Cash Balance; CAFETERIA PLANS: 125, HSA, HRA
Choose your formats:
* Long format Standardized and Nonstandardized Prototypes   * Short format Standardized and Nonstandardized Prototypes
* IDP format Volume Submitters   * Prototype format Volume Submitters
Contact sales@datair.com or call 1-888-328-2474

Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
IRS's 2009 Version of Form 2106 for Employees to Report Deductible Business Expenses

Excerpt: "EBIA Comment: The accountable plan rules allow employees to avoid tax on business expense reimbursements if three principal requirements are met: the expenses have a business connection, they are adequately substantiated, and any excess reimbursements are returned. If accountable plan reimbursements do not fully cover an employee's expenses, the employee may use Form 2106 to take a deduction for the unreimbursed expenses. Expenses may not be deducted, however, unless the employee maintains adequate records to substantiate them. Options like the standard mileage rate and standard meal allowances . . . can significantly simplify those requirements." (Employee Benefits Institute of America)


[Guidance Overview]
Section 409A Reporting Required This Year for Plan Document Violations, Including Outstanding Discounted Options

Excerpt: "We expect there to continue to be very little code Z reporting in 2009 due, in part, to the IRS's correction program in Notice 2008-113 for operational violations. However, one type of Code section 409A income that will need to be reported this year is the section 409A income from any outstanding discounted options. While most discounted options were corrected or exercised during transition, there may still be some outstanding. The spread on any such options outstanding as of the end of 2009 will need to be reported as code Z income. This will require a careful review of Notice 2008-113, as well as the more detailed guidance in the proposed regulations, and consideration of whether and how the employer will obtain the associated withholding taxes in connection with the Code section 409A income." (Miller & Chevalier Chartered)


Code Sections. 409A and 457A Present M&A Issues, Treasury Official Notes
Excerpt: "Practitioners doing due diligence in mergers and acquisitions (M&A) transactions have been among the first to identify issues under Code Secs. 409A and 457A that may require further guidance, observed Treasury Deputy Benefits Tax Counsel Helen Morrison. Speaking on an executive compensation panel at the Practising Law Institute's (PLI) 'Tax Strategies for Corporate Acquisitions, Dispositions, Spin-Offs, Joint Ventures, Financings, Reorganizations & Restructurings 2009,' in New York on October 28, 2009, Morrison reviewed the Treasury's guidance plans under Code Secs. 409A and 457A." (Wolters Kluwer)


As Pensions Were Abandoned, Four Firms Paid Top Executives $49.5M in Benefits
Excerpt: "Top executives at four companies that jettisoned their employee pension plans received $49.5 million in retirement and severance benefits in the years before the companies filed for bankrup.tcy, while retirees saw their benefits cut by as much as two thirds, congressional investigators conclude in a report to be released today. The Government Accountability Office (GAO) reports that pensions at the companies, United Airlines, US Airways, Polaroid and Reliance Insurance, were underfunded by more than $11 billion when the companies turned them over to a government-backed insurance fund. The report says executives at those four companies and six others that abandoned their pension plans took in a total of $350 million in pay and perks in the years leading up to the bankruptcies." (USA TODAY)


Temporary Extension of Unemployment Benefits: Emergency Unemployment Compensation
Excerpt: "The new tier IV benefit may provide up to an additional 6 weeks of benefits if the state unemployment rate is at least 8.5%; however, at this time tier IV benefits are largely symbolic as few workers will qualify for tier IV before the EUC08 program authorization expires. Congress is likely to address the expiring authorization of the EUC08 program (December 26, 2009) in the next few weeks. Bills that currently propose to extend the authorization of the EUC08 program through 2010 include H.R. 3404 and S. 1647." (opencrs.com)


Pressure Mounts for Special Process in Congress to Address Federal Debt, Including Health Care and Retirement Entitlements
Excerpt: "Noting that the regular order in Congress will not be able to deal with the increasing federal debt load, which is driven largely by entitlement programs such as Social Security and Medicare, Senate Budget Committee chair Kent Conrad (N.D.) concluded in a committee hearing on November 10 that a 'special process' is needed to compel legislators to fix the nation's fiscal problems." (Wolters Kluwer)



Webcasts and Conferences

2009 401(k) Testing Issues Webcast
Nationwide on December 15, 2009
presented by National Institute of Pension Administrators

403(b) vs. 401(k) Plans –Retirement Plan Roadmap Webcast
Nationwide on December 9, 2009
presented by National Institute of Pension Administrators

Confronting Diabetes Crisis through Collaborative Management
in California on December 9, 2009
presented by MCOL

Ethics: What ERPAs and Pension Administrators Need To Know Webcast
Nationwide on December 1, 2009
presented by National Institute of Pension Administrators

(Click to post your webcast or conference)

Press Releases

US Labor Department Withdraws Rules on Investment Advice
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Great-West Retirement Services Appoints Regional Sales Director For Arkansas and Oklahoma
Great-West Retirement Services

Transamerica Taps Top Industry Professional to Head TPA Distribution
Transamerica Retirement Services

John Marshall's Kathryn Kennedy Inducted Into American College Of Employee Benefits Counsel
John Marshall Law School, The

In A Tough Year, Employers Hold The Line On Health Benefit Cost Increases
Mercer

The Standard to Offer Managed Account Service to 403(b) Plans
The Standard

Former Mercer Team Launches Independent Executive Compensation Consulting Firm
Compensation Advisory Partners LLC

(Click to post your press release)

Employee Benefits Jobs

Defined Benefit Plan Administrator
for Chicago Suburban Pension Firm
in IL

(Click to post your job opening | View all jobs | RSS feed for jobs RSS feed of all jobs )


EmployeeBenefitsJobs.com (Sponsor)

(Click on banner to learn more.)
Where the best employers find the best candidates!

Where the best employers find the best candidates!


Handy Links:


Subscribe to the BenefitsLink Health & Welfare Plans Newsletter, Too!

Sign-up form is at https://benefitslink.com/newsletter (free).


This email has been published by:
BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park FL 32789
(407) 644-4146
Fax: (407) 644-2151

Jeanette Hull, News Editor
jeanette.hull@benefitslink.com

David Rhett Baker, J.D., Editor and Publisher
david.baker@benefitslink.com

Copyright 2009 BenefitsLink.com, Inc.; except that you can forward this email in full (including this boilerplate part) or otherwise reprint this email in full (including this boilerplate part) without obtaining our permission.

Anyone can receive these emails; just have them sign up at this web page: https://benefitslink.com/newsletter/

Other useful links: