Retirement Plans Newsletter
December 11, 2009

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  • FAS 132/158: Audit Letter, Worksheets, Schedules
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DATAIR Employee Benefit Systems, Inc.


[Official Guidance]
Text of IRS Notice 2009-98: 2009 Cumulative List of Changes in Plan Qualification Requirements (PDF)

19 pages. Excerpt: "The 2009 Cumulative List is to be used primarily by plan sponsors of individually designed plans that are [or have elected to be] in Cycle E. . . . The list of changes in section VI of this notice does not extend the deadline by which a plan must be amended to comply with any statutory, regulatory, or guidance changes. . . . In accordance with Rev. Proc. 2007-44, the Service will start accepting determination letter applications for Cycle E plans beginning on February 1, 2010." (Internal Revenue Service)



[Official Guidance]
Text of IRS Notice 2009-97: Extension of Deadline for Certain Qualified Plan Amendments Required by PPA and WRERA (PDF)

6 pages. Excerpt: "The deadline is extended to the last day of the first plan year that begins on or after January 1, 2010. This extension applies to: 1. The deadline for amending single-employer defined benefit plans to meet the requirements of §§ 401(a)(29) and 436, relating to funding-based limits on benefits and benefit accruals under single-employer plans; 2. The deadline for amending cash balance and other applicable defined benefit plans, within the meaning of § 411(a)(13)(C), to meet the requirements of § 411(a)(13) (other than § 411(a)(13)(A)) and § 411(b)(5), relating to vesting and other special rules applicable to these plans; and 3. The deadline for amending applicable defined contribution plans, within the meaning of § 401(a)(35)(E), to meet the requirements of § 401(a)(35), relating to diversification requirements for certain defined contribution plans. This notice also provides limited relief from the anti-cutback requirements of § 411(d)(6) . . . ." (Internal Revenue Service)



[Guidance Overview]
Pending Divorce Does Not Require Spousal Consent for SERP Payout, According to Ruling

Excerpt: "Although the SERP was presumably a defined benefit arrangement, the court concluded that ERISA's qualified joint and survivor annuity rules, which require a participant's spouse's consent to the election of a form of benefit other than a QJSA, did not apply. That was because the SERP was a top hat plan, and top hat plans are not subject to ERISA's survivor annuity rules. (The United Way actually denied that a SERP existed and maintained instead that the $2 million was paid pursuant to a separation agreement, but the court assumed for purposes of its ruling that a SERP did exist.)" (Utz, Miller & Eickman, LLC)



[Guidance Overview]
IRS's Final Guidance on Section 204(h) Notice Requirements (PDF)

3 pages. Excerpt: "The final regulations state that the IRS and Treasury will be issuing guidance in the future which will address the following: The interaction of the IRC section 432(e)(8)(c) notice (relating to multiemployer plans in endangered or critical status) with the requirements for a section 204(h) notice; and Application of IRC section 4980F to plan amendments made pursuant to PPA section 1107 to comply with IRC section 411(b)(5)(B)(i) relating to market rates of return." (Transamerica Center for Retirement Studies)



[Guidance Overview]
401(k) Plan Fiduciaries Face Claims Over Mutual Fund Fees

Excerpt: "A rift among federal appellate courts has been opened by three decisions this year, including two in recent weeks, over whether the fees charged by mutual funds and the funds' revenue-sharing arrangements give rise to claims by 401(k) plan participants for breach of fiduciary duty under the Employee Retirement Income Security Act of 1974, as amended (ERISA). Sponsors and fiduciaries of 401(k) plans now must assess the impact of the following decisions rendered by Circuit Courts in class actions that challenged the plans' fee structures and disclosures . . . ." (Pillsbury Winthrop Shaw Pittman LLP)



[Guidance Overview]
New Lump Sum Distribution Notices Required for 2010 (PDF)

1 page. Excerpt: "Linked [at the end of the article] are Word versions of the two new safe harbor notices contained in IRS Notice 2009-68 that you can download and modify for your use: Safe Harbor Notice - Roth Account; Safe Harbor Notice - Non-Roth Account." (Locke Lord Bissell & Liddell LLP)



[Guidance Overview]
IRS's Limited Cash Balance Plan Interest Crediting Rate Relief

Excerpt: "Sponsors of hybrid plans, including cash balance plans, have faced issues concerning the PPA requirement that the interest crediting rate under a cash balance plan not exceed a 'market rate.' The IRS recently published Announcement 2009-82 to provide temporary guidance." (J.P. Morgan Compensation and Benefit Strategies)



[Guidance Overview]
PBGC's Guidance on Reportable Events Requirements for 2010 Plan Years

Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) has issued PBGC Technical Update 09-4 for plan years beginning in 2010 providing guidance on compliance with the reportable events requirements of ERISA §4043 and related regulations. The Technical Update extends the guidance provided in PBGC Technical Updates 09-1 and Technical Update 09-3 for 2010 plan years. The PBGC said it expects to supersede the guidance in this Technical Update with final regulations amending the reportable events rules 'sometime during 2010.'" (Wolters Kluwer)



[Guidance Overview]
Towers Perrin Monthly Retirement Regulatory Round-Up, November 2009 (PDF)

Towers Perrin Monthly Retirement Regulatory Round-Up, November 20097 pages. Excerpt: "The Monthly Regulatory Round-Up is a high-level summary of legal and regulatory developments that occurred during July 2009 that may be relevant to large employers. Developments are sorted according to federal legislative developments, federal regulatory guidance, other developments (e.g., significant litigation, studies, select state law developments)." (Towers Perrin)



Pension Asset-Liability Management: An Answer
Excerpt: "With litigation related to fiduciary duties running rampant and pension assets and liabilities fluctuating constantly, pension asset-liability management is a concern for many plan sponsors. Here we make the case on how an asset-liability perspective can be successfully integrated into the process of ongoing management of pension investment decisions." (J.P. Morgan Compensation and Benefit Strategies)



Retirement Income Policy Proposals
Excerpt: "In this article, . . . we analyze policy initiatives related to retirement income. Here we cover proposals made by Congressmen Pomeroy (D-ND) and Conrad (D-ND), the Government Accountability Office, and Mark Iwry, currently senior adviser to the secretary and deputy assistant Treasury secretary for retirement and health policy." (J.P. Morgan Compensation and Benefit Strategies)



Employee Benefits Bounce Back As Raises, 401(k) Matches Slowly Return
Excerpt: "The height of the recession saw slashes of 401(k) matches, merit-based raises and bonuses by businesses of all sizes in bids to conserve cash. But nearly two-thirds of firms that froze salaries last year will begin to offer raises again, according to a new report from human resources consultancy Towers Perrin. And a third of those that sliced 401(k) matches plan to increase or restart those company contributions next year. Employer surveys from other human resource consultants, such as Watson Wyatt, have also echoed this trend." (USA TODAY)



403(b) Plan Sponsors Show Confidence in Compliance, According to Survey
Excerpt: "When asked if they understand their fiduciary responsibilities under the new regulations, an overwhelming majority of respondents from all surveyed segments -- church, public school, health, and other organizations -- claimed they understand their responsibilities, according to the research report. Ninety-three percent of public school respondents said they understand their fiduciary responsibilities, while 88% of health care and other organizations and 84% of church plan sponsors said the same." (planadviser)



The Psychology Behind Plan Decisions: The Decumulation Phase
Excerpt: "This article focuses on the final phase, retirement, and in particular, on how an understanding of member behavior can help sponsors and trustees structure their DC plans to support participants during the payout, or decumulation, phase of their retirement." (Mercer LLC)



PBGC Plays a Stronger Hand in Economy Weakened by Frequent Bankruptcies
Link to the title under 'Items of Interest' on the target page. Excerpt: "The Pension Benefit Guaranty Corporation is aggressively using its statutory options for managing the agency’s pension insurance programs and guaranteeing its own solvency ahead of creditors’ claims under the federal bankruptcy code, according to employee benefits attorneys and the agency. An emerging view among employers and practitioners is of a PBGC increasingly inclined to intervene when employers close down operations at any of their facilities." (Keightley & Ashner LLP)



PBGC Issues Semi-Annual Regulatory Agenda
Select Pension Benefit Guaranty Corporation from the drop-down list on the target web page. Projects in the proposed rule stage include expansion of the existing Missing Participants program to cover multiemployer plans, small professional service employer plans (25 or fewer active participants), and individual account plans; and a rule on valuing benefits in terminating cash balance and other hybrid plans. (RegInfo.com)





The ASPPA 401(k) Summit | March 14 – 16, 2010 | Orlando World Center Marriott Resort

The ASPPA 401(k) Summit | March 14 – 16, 2010 | Orlando World Center Marriott Resort

The ASPPA 401(k) SUMMIT is bigger and better than ever in 2010! Expect 140 exciting exhibits in the hall, dozens of top-notch workshop sessions like "Plan Designs for the Age of Obama," and the presentation of the prestigious Morningstar-ASPPA 401(k) Advisor Leadership Award. The SUMMIT offers 14 hours of ASPPA Continuing Education (CE) credit and is designed to comply with various CE programs, including ERPA CPE.

For more information and to register, click here: The ASPPA 401(k) SUMMIT.

ASPPA


Links to Items on Executive Comp, Benefits in General

[Official Guidance]
Text of IRS Notice 2009-92: Compliance with TARP Advisory Opinion Will Not Cause Plan to Fail 409A Requirements (PDF)

16 pages. Notice 2009-92 provides that a delay or acceleration of the payment of nonqualified deferred compensation in order to comply with an advisory opinion issued by the Office of the Special Master for TARP Executive Compensation, pursuant to the Emergency Economic Stabilization Act of 2008 and regulations thereunder, including conditioning payment on satisfaction of a requirement related to the Troubled Asset Relief Program (TARP), such as repayment of the financial assistance granted under TARP, will not cause the plan to fail to meet the requirements of Internal Revenue Code section 409A. The notice is effective for arrangements in opinions issued after September 30, 2009. (Internal Revenue Service)


[Guidance Overview]
Final Regulations for Employee Stock Purchase Plans

Excerpt: "Employers that offer their employees an opportunity to purchase company stock under an employee stock purchase plan ('ESPP') (as defined in Section 423 of the Internal Revenue Code of 1986, as amended (the 'Code')) should review their ESPPs for compliance with newly released final regulations to ensure that shares issued under the plan remain eligible for favorable tax treatment and to consider the options available for new offerings under the ESPP." (Pillsbury Winthrop Shaw Pittman LLP)


[Guidance Overview]
Towers Perrin Monthly Regulatory Round-Up on Executive Compensation, November 2009 (PDF)

Towers Perrin Monthly Regulatory Round-Up on Executive Compensation, November 2009 5 pages. Excerpt: "The Monthly Regulatory Round-Up is a high-level summary of legal and regulatory developments that occurred during July 2009 that may be relevant to large employers. Developments are sorted according to federal legislative developments, federal regulatory guidance, other developments (e.g., significant litigation, studies, select state law developments)." (Towers Perrin)


SEC to Consider Finalizing Changes to Executive Compensation Disclosure Rules Next Wednesday
Excerpt: "In case you have not already heard, the SEC announced . . . [http://www.sec.gov/news/openmeetings/2009/ssamtg121609.htm.] that it will consider next Wednesday, November 16, whether to adopt amendments to rules and forms under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 to enhance the disclosures that registrants are required to make about compensation and other corporate governance matters." (Michael Melbinger via Winston & Strawn LLP)


Summary of Payroll Tax Rates and Limits for 2010 (PDF)
2 pages. (Lindquist LLP)


Taking Care of Business Starts with Taking Care of Employees
Excerpt: "Commentary: Bob Nelson, keynote speaker for the Workforce Management online conference Road to Recovery: HR Strategies for Post-Recession Success, discusses some simple perks that organizations can give employees to sustain engagement during the downturn." (Workforce Management; free registration required)



Webcasts and Conferences

The Defined Contribution Plans Summit
in New York on February 24, 2010
presented by IQPC

Value-Based Purchasing: An Approach to Improving Health Care
in Maryland on January 7, 2010
presented by Worldwide Employee Benefits Network (WEB) - Baltimore Chapter

(Click to post your webcast or conference)

Press Releases

NTSAA Combines Operations with ASPPA
ASPPA (American Society of Pension Professionals & Actuaries)

U.S. Labor Department Obtains Appointment of Independent Fiduciary for Abandoned 401(k) Plan of Defunct Bennington, Vt., Company
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

The Principal Announces New TPA Expense Allowance Program
Principal Financial Group

ING Expands Multicultural Sales Efforts in the U.S. -- Expands Team and Bolsters Efforts in Retirement Services Business
ING Retirement Services

(Click to post your press release)

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