Retirement Plans Newsletter |
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| November 24, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
ASC (Advert.)
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[Official Guidance]
PBGC Technical Update 09-4: Reportable Events; Funding-Related Determinations; Missed Quarterly Contributions; Guidance for 2010 Plan Years
Excerpt: "This Technical Update addresses two topics: Funding-related determinations for purposes of waivers, extensions, and the advance reporting threshold test. Missed quarterly contributions." (Pension Benefit Guaranty Corporation)
[Official Guidance]
Text of IRS Notice 2009-94: 2010 Limitations on Benefits and Contributions Under Qualified Retirement Plans (PDF)
Excerpt: "The limitation for defined contribution plans under § 415(c)(1)(A) remains unchanged for 2010 at $49,000. . . . The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) remains unchanged at $16,500. . . . The dollar limitation under § 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over remains unchanged at $5,500." (Internal Revenue Service)
[Official Guidance]
Text of IRS Announcement 2009-85: Form 5307 GUST Applications for Pre-Approved DB Plans to Stop on Feb. 22, 2010 (PDF)
Excerpt: "On February 22, 2010, the Service will temporarily stop accepting applications for determination letters for defined benefit plans that are filed on Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans for the GUST program. The Service is taking this action because all pre-approved . . . defined benefit plans are required to be restated to comply with items identified for review in Notice 2007-3, 2007-1 C.B. 255 ('2006 Cumulative List') . . . . These restated pre-approved plans will be submitted to the Service for a determination letter (if needed) using Form 5307 during a period of approximately two years, which the Service expects to announce early in 2010. The temporary hiatus in accepting Form 5307 applications will allow the Service to prepare to receive the applications submitted by adopters of these restated pre-approved plans." (Internal Revenue Service)
[Guidance Overview]
Additional IRS Anti-Cutback Relief for Cash Balance Plans (PDF)
Excerpt: "Pending the publication of final regulations, the IRS has recently issued Announcement 2009-82 to provide additional relief for sponsors of hybrid plans that must amend their plans' interest crediting rates. First of all, the IRS does not expect the final regulations to go into effect before the first plan year that begins on or after January 1, 2011. Secondly, the IRS plans to provide additional anti-cutback relief for plans that are amended before the effective date of the final regulations to reduce the future interest crediting rate, even if the amendment is adopted after the last day of the first plan year beginning on or after January 1, 2009." (Prudential Retirement)
[Guidance Overview]
End of Year Compliance Items for Qualified Retirement Plans (PDF)
4 pages. Excerpt: "The Pension Protection Act of 2006 ('PPA') made several changes to the laws governing qualified retirement plans and requires documentary and operational changes to such plans by the end of the 2009 plan year. [The target document] is a brief summary of each of those changes. Also included are brief summaries of the provisions of the Heroes Earnings Assistance and Relief Tax Act of 2008 ('HEART Act') and the Worker, Retiree and Employer Recovery Act of 2008 ('WRERA') that require amendments or other changes that may be included in 2009 year-end amendments, but are not required until later dates." (Bryan Cave LLP)
[Guidance Overview]
IRS's Final Rule on Notice Requirements for Pension Plan Amendments That Reduce Benefits Accrued Before the Plan Amendments' Applicable Amendment Dates
Excerpt: "In its guidance, the agency said except as otherwise provided, section 204(h) notice must be provided at least 45 days before the effective date of any section 204(h) amendment (15 days for small plans and multiemployer plans). For certain amendments effective not later than December 31, 2008, section 204(h) notice does not fail to be timely if the notice is provided at least 30 days, rather than 45 days, before the date that the amendment is first effective." (PLANSPONSOR.com; free registration required)
Contractor Isn't Eligible 'Employee' Under Pension Plan, Appeals Court Says
Excerpt: "A pension plan administrator acted reasonably in denying coverage to a contract worker who was not on the company's payroll, the 10th US Circuit Court of Appeals has ruled (Scruggs v. ExxonMobil Pension Plan). Key factors in the decision included the method by which the worker was paid, the wording of plan provisions, and the plan's reliance on payroll data for benefits administration and communications. Though the 10th Circuit sided with the plan sponsor, employers may wish to consider steps to minimize litigation exposure for similar claims." (Mercer LLC)
IRS Supplemental Instructions for Pension Plans' 2008 Form 5500 Schedules MB, SB and R
Excerpt: "IRS has issued supplemental instructions for pension plans' 2008 Form 5500 Schedules MB, SB and R. Sponsors that have already filed Form 5500 do not need to file revised forms; the new instructions clarify entries for plans that have not yet filed. The revisions generally relate to changes in funding rules made by the Worker, Retiree and Employer Recovery Act of 2008 and effective in 2008. The new instructions also clarify that single-employer plans could use the full yield curve for a lookback month in 2008 and need not attach an explanation of 2008 method changes to comply with PPA." (Mercer LLC)
PBGC and UK Agencies Sign Memorandum of Understanding to Share Information
Excerpt: "The PBGC and the United Kingdom's (UK's) The Pensions Regulator and the Pension Protection Fund have signed a Memorandum of Understanding (MOU) to share any unrestricted information that advances the security of defined benefit plans sponsored by private-sector companies. The PBGC notes that confidential information about those companies will not be shared." (Wolters Kluwer)
Text of ''Sensible Transparency for Retirement Plans Act of 2009'' (PDF)
18 pages. Excerpt: "To amend title I of the Employee Retirement Income Security Act of 1974 to provide for disclosure regarding compensation for services to pension plans." (U.S. House of Representatives via American Benefits Council)
The Evolving Role of IRAs in U.S. Retirement Planning (PDF)
32 pages. Excerpt: "Both direct contributions and rollovers from employer-sponsored retirement plans have led to widespread ownership of IRAs. Unlike many other categories of wealth ownership -- such as direct equity holdings -- total IRA assets were not highly concentrated among the very wealthiest of families, and a significant fraction (40.5 percent) of U.S. households owned some form of IRA. IRA ownership and account balances were widespread across many different socioeconomic dimensions, including age, income, and educational attainment." (Investment Company Institute)
Laying the Groundwork for a Big 2010 for Fiduciary Law
Excerpt: "With the final month of 2009 fast approaching, 2010 is looking to be a big year in the fiduciary arena as regulators and legislators prepare to pass key regulations and legislation, and the high court delivers a key ruling and also considers whether to take up more fiduciary issues." (fi360 blog)
Congress May Delete Advice Provision from Pension Bill
Excerpt: "Lawmakers in Washington are discussing scrapping the conflicted-advice provision of the 401(k) Fair Disclosure and Pension Security Act of 2009 -- a move that would be welcomed by many in the financial services industry. The advice provision of the bill, which was approved by House Education and Labor Committee in June, would have allowed only independent advisers to work with 401(k) plans." (Investment News; free registration required)
Best Practices for Meeting Prudent Person Standard on 401(k)
Excerpt: "Securian identified six best investment fiduciary practices for retirement plan sponsors. They include: Maintaining an investment policy statement with clear goals and objectives for the plan. Meeting ERISA section 404(c) requirements when constructing an investment array so employees can create diversified portfolios of varying degrees of risk that meet their investment needs. Prudently selecting and monitoring a default investment that qualifies as a Qualified Default Investment Alternative (QDIA). A QDIA provides a plan with relief from the fiduciary liability of investment outcomes for participants using the plan's default investment option, according to Securian. Avoiding proprietary fund requirements. Some investment firms bundle their investment options, forcing plan sponsors to include options that may not fit the plan's investment policy, Securian officials said. Demanding fee transparency and revenue neutrality. Selecting an investment array that is appropriate for employees' knowledge and skill levels, thus preventing employee investment decisions that can be harmful to their ability to meet their retirement objectives." (Insurance & Financial Advisor)
[Opinion]
Contemplating the True Nature of Retirement Planning
Excerpt: "Retirement planning is different from investment planning because it is not as much about managing probabilistic expectation as it is about delivering specific outcomes. Retirement planning also means that the professional needs to learn about the client's human and social capital in addition to the client's financial capital. We can also expect that retirement planning will not be an exercise in presenting utopian perfection but instead an annual effort in discovering the most tolerable imperfections. How much of retirement planning is in diagnostic work rather than execution work? Overall, I believe we would agree that, everything else being equal, retirement planning is likely to involve more diagnostic work than investment planning." (Research Magazine)
DATAIR Employee Benefit Systems, Inc. (Advert.)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]New IRS Final Rules on Employee Stock Plans: New Reporting Requirements for ESPPs and ISOs to Begin in 2010
Excerpt: "The new reporting rules apply to an ESPP only if the purchase price is set at a discount from the fair market value of the stock. In addition, the reporting requirement does not apply to the year in which the stock is transferred from the company to the employee, but when the stock is transferred from the employee to a third party. In recognition of the fact that most companies no longer issue certificates to employees who purchase stock through an ESPP, the final regulations provide that the stock will be considered to have been transferred by the employee when the stock is deposited into a brokerage account for the employee's benefit. However, if the company does still issue certificates -- either automatically or upon the employee's request -- the company will need to have its transfer agent monitor when the employee transfers the stock." (Seyfarth Shaw LLP)
[Guidance Overview]
New Final ESPP Regulations
Excerpt: "As they promised at NASPP Conference, the IRS and Treasury Department issued final regulations governing Employee Stock Purchase Plans under Code Sec. 423 last week (as if we did not already have enough to do by the end of 2009). Many companies recognize the ESPP as a low-cost opportunity to incentive employees, on a tax-favored basis, by selling them company stock at a slight discount. The good news is that the final regulations made no dramatic changes. However, the Regs do make a few important clarifications (and reject one widely-sought change). The following key issues bear special mention: Determining the Grant Date; Application of the $25,000 limitation; Coverage of Non-US employees; Shareholder Approval." (Michael Melbinger via Winston & Strawn LLP)
SEC Official Warns of Crackdown on Executive Pay Disclosure
Excerpt: "Companies with material deficiencies in next year's executive pay disclosures can expect SEC to require amended filings, a deputy director of the SEC's Division of Corporation Finance said Nov. 9. Because annual meeting dates will have passed, companies probably won't need to amend deficient proxy statements but could have to file amended Forms 10-K, which could interfere with using simplified registration statements for shelf offerings and employee benefit plans. SEC staff plan to continue scrutinizing the analysis and performance targets in disclosures." (Mercer LLC)
[Opinion]
Request for Clarification of Proposed Regulations Governing the Performance of Actuarial Services Under ERISA (PDF)
Excerpt: "The Academy's Pension Committee comments to the Joint Board in response to proposed regulations governing the performance of actuarial services under the Employee Retirement Income Security Act of 1974 (ERISA)." (American Academy of Actuaries)
Webcasts and Conferences
Impact of Final 403(b) Regulations and Preparing for 2010 Auditsin California on December 2, 2009
presented by No. Calif. Chapter of Certified Employee Benefits Specialists (ISCEBS)
Los Angeles Benefits Conference
in California on January 20, 2010
presented by American Society of Pension Professionals & Actuaries (ASPPA)
NTSAA National Conference
in California on January 27, 2010
presented by National Tax Sheltered Accounts Association
The ASPPA 401(k) SUMMIT
in Florida on March 14, 2010
presented by American Society of Pension Professionals & Actuaries (ASPPA)
Year-End Program - Wrapping up 2009 and Ramping Up for 2010
in California on December 3, 2009
presented by No. Calif. Chapter of Certified Employee Benefits Specialists (ISCEBS)
(Click to post your webcast or conference)
Press Releases
Fiduciary Benchmarks Launches Retirement Readiness Index (RRI) For 21,000 PlansFiduciary Benchmarks, Inc.
Employers Forced to Drop Insurance for Employees Find New Benefit in HCPR
BASE
(Click to post your press release)
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Plan Document and Compliance Manager
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in TX
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