Design Flexibility and Potential Pitfalls in IRS Final Rules for Employee Stock Purchase Plans
Excerpt: "These final rules under I.R.C. § 423 generally apply to options granted under an ESPP after 2009, and the new reporting rules apply to shares transferred after 2009. This article highlights significant clarifications in the final rules that should be of interest to employers that already maintain, or may be considering establishing, an ESPP."
(Groom Law Group)
DOL Clarification of Form 5500 Filing Time Requirement
Excerpt: "In response to questions regarding the deadline for transmitting a Form 5500 (or 5500-SF), the DOL has indicated it will issue in the near future a new FAQ on the EFAST2 website. These Q&As address the anticipated guidance."
Clarification of Form 5500 Reporting for § 403(b) Plans
Excerpt: "As § 403(b) plan administrators and plan auditors prepare to file the 2009 Form 5500 - which, for most plans, will be the initial annual report - the Department of Labor issued new guidance to clarify when certain annuity contracts and custodial accounts can be excluded. Elucidating on the carve-out provided under Field Assistance Bulletin 2009-02, the new guidance makes clear, among other things, that the relief applies to both large and small plans, and applies for 2009 and later reporting years."
(Deloitte via BenefitsLink.com)
High 401(k) Plan Fees Continue to Deplete Retirement Savings Balances
Excerpt: "'Plan fees are eating up thousands of dollars of employees' retirement savings without them even knowing it,' said Alison Borland, retirement strategy leader at Hewitt Associates. 'As concern over employees' retirement income adequacy levels continues to grow, it's more important than ever for Congress to enact legislation that will provide employers and employees with an apples-to-apples comparison of the fees in their 401(k) plan. This will enable them to better understand the financial impact of these costs and, if necessary, take steps to reduce them.'"
2010 Survey of Defined Contribution Plans: Summary and Results
Excerpt: "This report contains two sections. The National Summary provides a narrative overview of the key areas involved in administering governmental 457, 401(k), 401(a), and 403(b) plans. The survey also provides a pdf of the Overall Survey Results, which offers a look at the survey through charts and responses from all participating entities."
(National Association of Government Defined Contribution Administrators, Inc.)
DOL Amicus Brief in Loomis v. Exelon Corporation Investment Fees Case
Excerpt: "According to the amended complaint, a substantial majority of the investment options the fiduciaries included in the Plan paid retail-level investment fees, when the Plan, which at times exceeded $1 billion in assets, could have selected investment options designed for large institutional investors. Id. . . . The complaint alleges that the fiduciaries imprudently caused the Plan participants to pay excessive fees in relation to the services received, when compared to other plans or institutional investors of comparable size and bargaining power."
(U.S. Department of Labor)
Target-Date Collective Trust Funds Taking Hold in the DC Market
Excerpt: "According to Cerulli's latest retirement-focused research, collective trust funds (CTFs) are experiencing a renewed interest over the last few years in the defined contribution landscape. Target-date CTFs are taking hold due to their low fees, flexibility, and fiduciary structure and as a result, these products are poised for growth, Cerulli said in a press release."
New Jersey Won't Make Required Pension Contribution
Excerpt: "New Jersey Governor Chris Christie announced the state won't make a required $3.06 billion pension contribution for the fiscal year starting July 1. According to Business Insurance, an outline of the state budget, posted on the governor's Web site, said 'it is understood that the deferral of this $3.06 billion payment will lead to a larger unfunded liability and greater costs' in future years. In a speech before the state Legislature, Christie said withholding the pension payment 'results from recognizing that our pension system must be reformed before we can or should fund a broken, out-of-control system.'"
San Diego County, California, Pension Fund Eyes Novel Plan for Management
Excerpt: "[T]he county's retirement system has been unable to lure top investment executives in three recent searches because of salaries capped by county ordinance. Its solution? To outsource its investment management, and potentially shift its existing eight-member financial staff, to a contractor. Proponents of the arrangement, which retirement board members will be discussing today, say its adoption would be a first for any county in the state."
(The San Diego Union-Tribune)
Passage of Pension Funding Relief in Senate
Excerpt: "Under the Senate bill, the funding relief would not be limited to active plans, but would be available only for contributions that are due after the date the legislation is ultimately enacted. The House now needs to act. Observers predict the imposition of a fee disclosure requirement or possibly an active plan requirement (i.e., ongoing accruals) by the House. These and other changes are a possibility before the bill is enacted into law."
(Deloitte via BenefitsLink.com)
Pension Funding Relief Included in Amendment to Tax Extenders Bill
Excerpt: "Pension funding relief for single- and multiemployer plans, which had earlier been dropped from a jobs bill, is part of an amendment to a larger tax extenders measure moving through Congress. On March 1, 2010, Senate Finance Committee Chairman Max Baucus (D-MT) offered a substitute amendment to the Tax Extenders Bill of 2009 (H.R. 4213) which was approved by the House on December 9, 2009. The substitute amendment (The American Workers, State, and Business Relief Bill) would extend a large package of expired tax provisions, as well as provide pension funding relief."
Questions, and Answers, about ERISA Bonds
Excerpt: "ERISA requires that plan officials who manage, oversee, recommend or handle funds or other property of an employee benefit plan must be covered by a personal fidelity bond, according to the U.S. Department of Labor."
Assessing the Benefits of Defined Benefit vs Defined Contribution Plans: for Small Businesses, a DB Plan May Be Better
Excerpt: "While small businesses have been exploring the DB space and there has been a noticeable uptick in the number of pension plans they're implementing, many people are still not aware of the advantages that these plans offer . . . . Advisors working with small business owners need to be better informed about these DB plans so that they can help figure out whether a DB or a DC plan is a better fit for a particular business . . . because there can be no one-size-fits all kind of approach, especially in fiscally tight times."
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Executive Compensation; Benefits in General
Conflict Forming in the Circuits: ERISA Preemption of State Laws that Prohibit Discretionary Clauses
Excerpt: "The Tenth Circuit recently held that ERISA preempts a Utah state insurance statute which prohibits insured employee benefit plans from including 'discretionary clauses' other than those prescribed by the statute. Discretionary clauses, which reserve to the plan administrator the discretion to interpret the plan document and determine the benefits payable, have long been staple language in ERISA plans. The decision conflicts with decisions in the Ninth and Sixth Circuits, which held such state laws enforceable."
(Deloitte via BenefitsLink.com)
Final Version of Tax Incentives for New Hiring Passes Senate, Awaits President's Signature
Excerpt: "President Obama is expected to sign into law today the first significant job-creation measure passed by Congress since Democrats earlier this year vowed to attack the nation's high unemployment rate. The bill, which the Senate passed by a 68-29 vote Wednesday, is a $17.6 billion package intended to spur hiring nationwide by, among other things, granting employers a payroll-tax 'holiday' for the rest of the year for hiring new workers."
(Arizona Daily Star)
Cost of San Francisco's Public Employee Benefits Devours Basic City Services
Excerpt: "San Francisco is hardly alone in sitting atop a ticking time bomb of unfunded municipal employee benefit IOUs. However, new projections from the City Controller's Office show in bleak clarity how our current expenditures have become impossible to sustain in today's tougher economy. The City's next budget must somehow neutralize a shortfall of more than a half-billion dollars while public employee pensions, salary costs and health care benefits that are expanding uncontrollably."
(The San Francisco Examiner)
Work-Life Balance Award Act of 2010
Excerpt: "The Work-Life Balance Award Act, introduced in March 2010, establishes an annual Work-Life Balance Award at the Department of Labor to be given out annually by the Secretary of Labor to employers with exemplary work-life workforce policies. These policies are defined as workplace practices 'designed to enable employees to achieve a satisfactory work-life balance.' Any public or private employer of any size is eligible for the award, as long as they are in compliance with federal and state labor and employment laws."
(U.S. House of Representatives, Committee on Education & Labor)
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