Retirement Plans Newsletter |
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| November 20, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Official Guidance]
Text of IRS Notice 2009-93 Allowing Various Information Statements to Use a Truncated Social Security Number (PDF)
5 pages. Identity theft is becoming such a large problem that the IRS is allowing the use of truncated (partial) Social Security Numbers on the copies of various statements that go to retirement plan and IRA participants for 2009 and 2010. Paper payee statements for forms in the 1098, 1099 and 5498 series for 2009 and 2010 are eligible for the program. (Internal Revenue Service)
[Official Guidance]
Text of DOL Notice Withdrawing Final Regs on Investment Advice to Participants (PDF)
2 pages. Excerpt: "[A] number of commenters raised legal and policy issues concerning the exemption and, in particular, questioned the adequacy of the final class exemption's conditions to mitigate the potential for investment adviser self-dealing. The Department believes that the questions raised in these comments are sufficient to cast doubt on the conditions' adequacy to mitigate advisers' conflicts. If conflicts are not mitigated advice might be tainted. Therefore the Department has set aside its previous assumption that participants and beneficiaries who follow advice delivered pursuant to the final class exemption will commit investment errors at one-half the rate of those who are unadvised, together with its previous conclusion that the final class exemption's benefits justify its cost." (Employee Benefits Security Administration, U.S. Department of Labor)
[Guidance Overview]
USERRA Benefits Under Title IV of ERISA (PDF)
1 page. Excerpt: "According to the final rule, so long as the participant is reemployed within the time limits prescribed by USERRA, even if the reemployment occurs after the plan's termination date (bankrup.tcy filing date, in the case of the bankrup.tcy of a covered plan sponsor filed on and after September 16, 2006), the PBGC will treat the participant as having satisfied the reemployment conditions as of the plan's termination date. Thus, the participant's benefits would be guaranteed for periods up to the plan's termination date. This final rule is effective December 17, 2009 and will apply to reemployments covered under USERRA initiated on or after December 12, 1994 (the effective date of USERRA). This is great news for affected participants. Starting December 17, 2009, the PBGC will start adjusting final benefit determinations of affected participants and make back payments with interest. The PBGC emphasizes that the scope of this final rule is very narrow. It only applies to the unique circumstances affording special protection to participants serving in the uniformed services entitled to benefits under USERRA." (Transamerica Center for Retirement Studies)
[Guidance Overview]
Text of IRS Retirement News for Employers, Fall 2009 (PDF)
13 pages. This edition includes the following titles: Roth & Roll: 2010 Roth IRAs & Rollovers; 5500 for 2009 and Later Required to be Filed Electronically; Establishing a SEP or SIMPLE IRA Plan; IRA Investments; New Web Tool for SARSEP Plans; We're Glad You Asked!; New on the Web; Employee Plans Published Guidance; Desk Side Chat...With Monika Templeman: The Importance of Internal Controls and Plan Self-Correction; DOL News; Mark Your Calendar; Timing is Everything. (Internal Revenue Service)
[Guidance Overview]
Oral Alteration of Plan Terms Not Enough to Support Fiduciary Duty Claim
Excerpt: "Former pension plan participants may not claim a breach of fiduciary duty solely on the basis of alleged oral misrepresentations that purported to alter plan terms, according to the U.S. Court of Appeals in New York City (CA-2) in Ladouceur v. Credit Lyonnais. Oral promises cannot vary the terms of an ERISA plan." (Wolters Kluwer)
Considering a Conversion? Roth, That Is
Excerpt: "The issues aren't quite the same as those one faces when considering the deepest aspects of personal faith and religious doctrine, but a 'Roth conversion' can pose some difficult issues for investors nonetheless. And we're going to hear much more about this going forward because of a scheduled change in the law: Unless something unexpected happens in D.C., come 2010 there will no longer be income limits on Roth IRA conversions. There will be a lot written on the issue of whether one should convert or not, as well as endless articles describing all kinds of 'strategies' to potentially leverage the change (some legitimate and others more questionable). For me, three things are important in considering this kind of 'conversion' . . . ." (The Vanguard Group, Inc.)
Pension Funding and Individual Accounts in Economies with Life-Cyclers and Myopes
Excerpt: "The present paper studies the growth and efficiency consequences of pension funding with individual retirement accounts in a general equilibrium overlapping generations model with idiosyncratic lifespan and labor income uncertainty. We distinguish between economies with rational and hyperbolic consumers and compare the consequences of voluntary and mandatory retirement plans. Three major findings are derived in our study: First, we quantify the commitment effect of social security for myopic individuals by roughly 1 percent of aggregate resources. It is possible to recapture this commitment technology in IRAs, if those are annuitized. Second, despite the fact that our consumers have an operative bequest motive, the welfare gain from the (implicit) longevity insurance of the pension system is significant and amounts to roughly 0.5 percent of aggregate resources. However, mandatory annuitization reduces unintended bequests so that future generations are significantly hurt. Finally, our results highlight the importance of liquidity effects for social security analysis. These efficiency gains are only attainable if accounts are voluntary and not mandatory." (Social Science Research Network)
Trends and Experience in 401(k) Plans, 2009 (PDF)
8 pages. Excerpt: "A new survey by Hewitt Associates . . . shows employers continue to design their 401(k) plans in a way that encourages positive saving and investing behaviors and helps employees meet their increasing retirement income needs. These efforts include significant increases in the adoption of automated features and target date funds, better investment education tools and an increased focus on lowering plan expenses." (Hewitt Associates via Retirement Made Simpler)
Asset Income Is Now Less Important Than Earned Income for Replacement Ratio Calculations
Excerpt: "The percentage of aggregate income for persons aged 65 or older attributed to earnings has risen in nearly 30 years from 15.9% to 26.0%, while the percentage attributed to asset income has dropped from 22.4% to 12.8%. and the percentage attributed to pension income has dropped from 19.5% to 15.3%. Aggregate income from Social Security and pensions has remained steady at about 58% over the same period, according to statistics compiled by the Congressional Research Service (CRS) from the Current Population Survey collected by the U.S. Census Bureau." (Wolters Kluwer)
DOL's Employee Benefits Security Administration Withdraws the Controversial Final Advice Rule
Excerpt: "The latest move regarding the advice rule follows EBSA's recent extension of the applicability and effective dates of the January 2009 rule to May 17, 2010 (see EBSA Delays Advice Rule - Again ). EBSA said the extension expires on the rule's withdrawal. '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,' EBSA commented in a news release." (PLANSPONSOR.com; free registration required)
[Opinion]
The Pension Committee Comments on H.R. 2748, the Retirement Security Needs Lifetime Pay Act of 2009 (PDF)
3 pages. Excerpt: "The tax incentive for annuities in H.R. 2748 currently excludes qualified defined benefit (DB) plans. We strongly urge you to treat qualified defined benefit plans no less favorably than other sources of retirement income. With so many people reaching retirement age but having to postpone retirement due to declining account balances, our public policies should encourage the expansion of the defined benefit system, rather than create another reason for employers to end their defined benefit plans in favor of defined contribution plans. As lump sums are currently available in many DB plans, an incentive to select the annuity option in all defined benefit plans is good public policy - whether it encourages expansion of defined benefit plans, discourages further cutbacks in DB benefits, or gives participants more of a reason to elect the annuity option over the lump sum option. We believe this incentive should be available to all annuities provided from defined benefit plans, whether or not they are backed by the PBGC or an annuity contract from a private insurance company." (American Academy of Actuaries)
[Opinion]
Who Needs Placement Agents, Anyway? No Place in the Public Pension Boardroom for Mercenaries
Excerpt: "Until there are prohibitions on pension marketers making campaign contributions to board members and strict controls on contributions to anybody else involved in pension governance, the trustees can profit from their decisions to hire investment advisors. Requiring them to get a lobbying license almost makes it a laughable exercise unless there are explicit prohibitions embedded in the law. Otherwise the law would become a 'license to steal.' Board members who accept such payola should be disqualified for voting on any issue that involves a campaign contributor and on any investment or contract/vendor decision remotely related. The proposed CalPERS legislation should include a provision similar to that as well." (Governing.com)
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Links to Items on Executive Comp, Benefits in General
Private Pensions: Sponsors of 10 Underfunded Plans Paid Executives Approximately $350 Million in Compensation Shortly Before Plan TerminationExcerpt: "To identify case study examples GAO analyzed a listing of the 1,246 underfunded plans that were terminated from 1999 to 2008 and selected public companies with large unfunded liabilities, large unfunded liabilities per participant, and a large number of plan participants. GAO reviewed documents provided by companies and executives, and interviewed PBGC and company officials. GAO also reviewed Securities and Exchange Commission (SEC) filings and PBGC documents disclosing plan underfunding at the time of termination and missed contributions. Executive compensation figures may be understated because some company executives could not be located, did not respond to document requests, declined interviews, and did not give GAO access to their tax records." (U.S. Government Accountability Office)
The Lighter Side of Employee Benefits: 'Can We Have Bikini Fridays?' And Other Strange Requests
Excerpt: "In a new survey by CareerBuilder, hiring managers shared the most memorable requests or recommendations they have received in the office suggestion box." (CareerBuilder.com)
IRS Pilot Program to Allow Truncated Social Security Numbers on Information Returns
Excerpt: "The IRS on Thursday announced a pilot program aimed at deterring identity theft (Notice 2009-93). Under the program, filers of certain paper information returns will be allowed to truncate the payee's Social Security number on the payee statement. The change affects statements for 2009 and 2010. Only paper payee statements for forms in the 1098, 1099 and 5498 series are eligible for the program. Filers must meet certain requirements, spelled out in the notice, but if they do, they will be treated as having met the various IRS and Treasury requirements that a payee's Social Security or taxpayer identification number be included on the statement." (American Institute of Certified Public Accountants)
Webcasts and Conferences
401(k) Plan Roundup: This Year's Most Significant DevelopmentsNationwide on November 19, 2009
presented by EBIA / Thomson Reuters
(Click to post your webcast or conference)
Press Releases
Financial Engines Reaches $25 Billion in Managed AccountsFinancial Engines, Inc.
Council Comments on Senate Health Care Reform Bill
American Benefits Council
Survey Finds New Green Initiatives Hold Promise for Jointly Managed Apprenticeship Program Growth
International Foundation of Employee Benefit Plans
Pay-for-Performance Remains Strong; Salary Increases to Rise in 2010, According to Buck Consultants Survey
Buck Consultants, an ACS Company
(Click to post your press release)
Employee Benefits Jobs
Senior Staff Benefits Accountantfor The Savitz Organization
in NJ, PA
Conversion Consultant
for Summit Retirement Plan Services, Inc.
in OH
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EmployeeBenefitsJobs.com (Sponsor)
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