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Retirement Plans Newsletter

July 19, 2010

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  • 1099-R Series: with related forms and 1099 electronic filing/Service Bureau
  • Qualification & Termination: 5300/5310-series and PBGC 500/600-series forms
  • FAS 132/158: Audit Letter, Worksheets, Schedules
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[Guidance Overview]
DOL's Final Fee Disclosure Regulation (PDF)
2 pages. Excerpt: "Keep in mind that the new regulation amends a prohibited transaction rule under ERISA and the Internal Revenue Code. That rule says that it is a prohibited transaction for a plan to enter into an arrangement with a service provider unless the 'arrangement'is reasonable and the compensation being received by the service provider is reasonable. The new regulation adds disclosure requirements for determining whether a service provider arrangement is reasonable."
(Reish & Reicher)

[Guidance Overview]
Using the Safe Harbor 401(k) Plan Top-Heavy Exemption
Excerpt: "The employer should assure that the plan's forfeiture allocation provision allocates forfeitures in a manner that will not create 'non-safe harbor' allocations. The plan therefore should provide for allocating forfeitures to pay plan expenses, to reduce the employer's safe harbor (nonelective or match) contribution requirement, or as a discretionary match not exceeding the safe harbor discretionary match limit."
(SunGard Relius)

[Guidance Overview]
IRS Announces Plan for New Form 8955-SSA to Replace Form 5500 Schedule SSA
Excerpt: "EBIA Comment: Pension plans (including 401(k) plans) previously filed Schedule SSA with Form 5500 to report terminated participants who had not taken a distribution of their entire vested account balances. Now that information will be filed directly with the IRS on Form 8955-SSA."
(Employee Benefits Institute of America)

[Guidance Overview]
EFAST2 FAQs Address Registration Process for Electronic Credentials and PDF File Issues
Excerpt: "Among other FAQs not highlighted [in this document], one FAQ clarifies that EFAST2 users must only register for credentials one time, though credentials will expire if they are not used for three consecutive years (Q/A-15); another FAQ focuses on the difference between an EFAST2 password, User-ID, and electronic transmitter identification number (ETIN) . . . ."
(Employee Benefits Institute of America)

Pensions and Corporate Financial Performance Are Linked (PDF)
24 pages. Excerpt: "We include observations concerning the influence of changes in the regulatory and capital market environments on retirement financial management practices. We also provide some suggestions for improved plan financial performance."
(Towers Watson)

House Committee Hearing on Creating Greater Accounting Transparency for Pensioners
Excerpt: "On Tuesday, July 20, 2010, the Health, Employment, Labor and Pensions Subcommittee of the Education and Labor Committee will hold a hearing [to] explore the increasingly common practice of investing private sector pension funds in hedge funds and private equity funds, and assess if these pension plans receive adequate, transparent accounting information from these funds."
(U.S. House of Representatives, Committee on Education & Labor)

AIG Agrees to Pay $725 Million Settlement in Ohio Public Pension Lawsuit
Excerpt: "The Ohio attorney general's office said on Friday that AIG, which was accused in a lawsuit of defrauding the three Ohio public pension funds and many others, has agreed to pay $725 million to settle the case."
(Cleveland Live, Inc.)

The Impact of Social Security Cuts on Retiree Income (PDF)
22 pages. Excerpt: "This paper assesses the cuts implied by three common proposals for reducing Social Security benefits: 1) Adopting a 'progressive price' indexation (PPI) formula for the basic benefit structure, 2) Accelerating and extending the increase in the normal retirement age, and 3) Reducing the annual cost-of-living adjustment. It calculates the implied cut in benefits and projected income for various age groups and income quintiles of retirees and near-retirees."
(Center for Economic and Policy Research)

How Will the New Pension Accounting Standards Affect You?
Excerpt: "The Academy's Pension Practice Council presented a webinar on July 15 about [GASB's] recently released Preliminary Views document on Pension Accounting and Financial Reporting by Employers. [You may access the webinar from the target page.]"
(American Academy of Actuaries)

California Municipalities Take Aim at Public Pensions
Excerpt: "About 70 local governments, stretching from Redding to Long Beach, are coming up with new, stingier formulas for calculating pension benefits for future hires."
(Los Angeles Times)

Fee Disclosure Is to Ultimately Help Participants Make Informed Choices of Investments
Excerpt: "While the proposed rules applied to defined benefit, defined contribution, and health care plans, the interim final rule only applies to DB and DC plans. [The] rules regarding fee disclosure for health care plans will be addressed separately."
(PLANSPONSOR.com)

Massachusetts 'Municipal Relief' Bill Goes to Governor
Excerpt: "The Massachusetts Senate approved a measure allowing municipalities to pay their pension obligations at a slower rate and offering early retirement programs."
(PLANSPONSOR.com)

A Crusade in San Francisco to Avert Pension Crisis
Excerpt: "'San Francisco's self-employed, restaurant workers, janitors, carpenters, small merchants, house cleaners and freelancers who work every bit as hard as city employees but do not enjoy similar pension or health care benefits now face the further indignity of watching vital civic services get axed in order to meet these obligations. It's not right, fair or reasonable.'"
(The New York Times; free registration required)

[Opinion]
Funded Status Monitor: The Key Measure of Pension Fund Performance
Excerpt: "'The driver of asset allocation decisions is the relationship of total assets to total liabilities -- in other words, the funding ratio. Unlike performance-based metrics, a funded status monitor directly relates a plan's total assets to its liabilities and how the match-up changes over time,' . . . ."
(The Vanguard Group, Inc.)

[Opinion]
House Committee Hearing on Social Security at 75 Years: More Necessary Than Ever (PDF)
10 pages. Excerpt: "The best way to assess the affordability of Social Security in the future is to compare benefits scheduled under current law with the size of the entire economy at the time benefits are due to be paid."
(National Academy of Social Insurance)

[Opinion]
Testimony: 'Encouraging Work at Older Ages' before Senate Committee on Finance (PDF)
8 pages. Excerpt: "The most important forces behind the historical turnaround in labor force participation were rising education levels and technological change leading to less physically demanding jobs. Work at older ages is likely to continue rising in the future, but it will be propelled by different forces."
(RAND)




The ASPPA Annual Conference is attended by 1,600 of your colleagues, with more than 60 workshops and 80 vendor displays in the exhibit hall focusing on all areas of the retirement business. Attendees even get face time with representatives from every aspect of the retirement plan industry, including the IRS and DOL and Members of Congress and their staffs.
Sponsored by ASPPA

Benefits in General; Executive Compensation

[Guidance Overview]
IRS Document Correction Procedures for Nonqualified Deferred Compensation Plans (PDF)
Excerpt: "These correction procedures are available to sponsors of and participants in nonqualified defined benefit or defined contribution plans that provide for the deferral of compensation (section 409A plans), including section 457(f) plans."
(Prudential Retirement)

Financial Reform Bill Imposes New Executive Compensation and Corporate Governance Requirements (PDF)
7 pages. Excerpt: "While the Act is primarily focused on reform of business practices of financial institutions, the executive compensation provisions of the Act will apply, in whole or in part, to almost all publicly traded companies, with additional restrictions applicable only to financial institutions."
(Morgan, Lewis & Bockius LLP)

Financial Reform Law Will Impact Executive Compensation and Corporate Governance Practices (PDF)
5 pages. Excerpt: "Under the new law, at least once every three years, shareholders of public companies will have to be given an opportunity to vote on the compensation of the company's named executive officers (NEOs)."
(Buck Consultants)

Retaliation for Internal Complaint Upheld in ERISA Sec. 510 Case
Excerpt: "The five appellate courts that have ruled on this issue have reached split decisions. The Fifth and Ninth Circuit courts have ruled that the employee is protected while the Second and Fourth Circuit courts now have been joined by the third circuit in ruling that Sec. 510 does not protect the employee from retaliation."
(Wolters Kluwer)


Webcasts and Conferences

"The New Service Provider Regs: The Wait Is Over" Web Seminar
Nationwide on August 10, 2010
presented by SunGard Relius

Labor, Employment and Employee Benefits Law Briefing
in Indiana on November 10, 2010
presented by Ogletree Deakins


Press Releases

Agency Holding $197 Million in Unclaimed Private Sector Pensions
Pension Benefit Guaranty Corporation (PBGC)

U.S. Labor Department Sues Savannah, Georgia, Attorney to Restore Pension Assets
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)


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