BenefitsLink
Retirement Plans
Newsletter
April 10, 2008
Here are the Web's best new links about compliance and cost
aspects of plan operation, design and policy.
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[Guidance Overview] IRS Answers Questions About PPA Distributions
Excerpt: "In Notice 2008-30, the IRS answers questions about certain distribution-related provisions of the Pension Protection Act of 2006 (PPA) that took effect in 2008. The notice addresses interest rate assumptions for lump sum distributions, rollovers from eligible retirement plans to Roth IRAs, qualified optional survivor annuity (QOSA) requirements and gap-period earnings." (Watson Wyatt Worldwide)
[Guidance Overview] Analysis of PBGC's Final Rule Implementing Variable-Rate Premium Changes (PDF)
9 pages. Excerpt: "PBGC premium rules continue to undergo significant change, with dollar consequences that are on the rise for many plans. Understanding not only the PPA statutory changes slated to go into effect starting with the 2008 plan year, but also PBGC's final rule implementing these and other changes to its regulations, will greatly help the practitioner in providing affected clients with the advice they need." (The Bureau of National Affairs, Inc. via Keightley & Ashner LLP)
[Guidance Overview] U.S. Labor Department Unveils Online Video to Help Small Employers Select Appropriate Retirement Plans
Excerpt: "[The online video is meant] to help small employers and accountants understand the various options for providing a retirement program for their employees. 'Choosing a Retirement Solution for Your Small Business' introduces employers to the three most popular retirement arrangements. The video portrays real-life experiences of four small employers that operate simplified employee pension (SEP), savings incentive match plan for employees individual retirement arrangement (SIMPLE IRA) and 401(k) plans. It focuses on the ease in setting up a retirement program appropriate for small business owners as well as the advantages of sponsoring a retirement plan, including tax breaks and as a tool to attract and retain a quality workforce." (U.S. Department of Labor)
[Official Guidance] Minor Technical Correction to Proposed IRS Regs on Multiemployer Plan Funding Issued March 18, 2008
Excerpt: "[T]he language 'Section 1.432-1 provides general' is corrected to read 'Section 1.432(a)-1 provides general'." (Internal Revenue Service)
The Implications of Career Lengths for Social Security (PDF)
60 pages. Excerpt: "Growing fiscal pressures and increasing life expectancy have prompted calls to raise retirement ages. Some fear this change might harm long-career, lower-wage workers. Tying retirement benefit eligibility to years of service might protect low-wage workers who start their careers early. But higher disability rates and greater employment volatility could offset lower-wage workers' early labor force starts. Using survey data matched to administrative records, we describe how work histories vary by gender, education, and other characteristics. We find that years of service are not likely to effectively protect the lowest-wage workers, as those with the least education also work the least." (Urban Institute)
'Architect' of IRS 403(b) Regs Says Limited Formal Guidance Coming
Excerpt: "Those waiting for additional guidance from the IRS dealing with 403(b) model plan language or information sharing agreements shouldn't hold their breath. So explained Robert Architect, of Tax Exempt and Government Entities (TEGE) at the Internal Revenue Service . . . ." (PLANSPONSOR.com; free registration required)
Newspaper Union Moves To Block Pension Merger
Excerpt: "The largest union of The Philadelphia Inquirer and Daily News is suing the newspapers' owner for merging two employee pension plans without its consent. The Newspaper Guild of Greater Philadelphia has charged that one plan is severely underfunded and would endanger the health of the second pension." (PLANSPONSOR.com; free registration required)
Summary of Results of Survey on the Current Economic Situation's Impact on DC Plans (PDF)
6 pages. In addition to survey data, companies describe any steps taken to help ease the mind of participants given the economic concerns. (National Association of Government Defined Contribution Administrators)
California Bill Would Help Workers Save More
Excerpt: "Workers who aren't offered a retirement savings plan by their employers would be able to set up a 401(k)-style account through the state of California, under a proposal unveiled Tuesday by a Democratic lawmaker and backed by Republican Gov. Arnold Schwarzenegger." (San Jose Mercury News)
Investing Pension Assets in Alternative Investments
Excerpt: "Pension plan investment consultants recommend allocations to private equity and/or hedge funds with increasing frequency. Not surprisingly, the number of pension plans investing in these 'alternative' asset classes is on the rise. In fact, it is now commonplace for pension funds to invest in alternatives, and the amount of investor dollars flowing into these asset classes has increased dramatically in recent years." (International Foundation of Employee Benefit Plans)
The Best New Features of a Rich 401(k)
Excerpt: "Over the past year or two, a combo of new government regulations and a chaotic stock market - not to mention the continued slashing of traditional pensions - has spurred many companies to revamp their 401(k) plans in ways that can pay off big-time. Unlike a regular 401(k), the Roth version - permanently greenlighted by Congress in 2006 - lets you make contributions only after the money is taxed. But withdrawals are tax-free. If you'll be in a higher bracket in retirement, a Roth 401(k) can be a better deal." (CNNMoney.com)
Charles County, MD, Official's Eligibility For Pension at Issue
Excerpt: "Charles County officials improperly added an elected state official to county pension rolls last year, arranging for the employee to earn as much as $75,000 a year after she retires." (The Washington Post; free registration required)
The Role of Actuarial Audits in Performing Due Diligence (PDF)
3 pages. Excerpt: "This article discusses actuarial audits as a due diligence tool for plan trustees. High quality actuarial work can do much to ensure the long-term soundness of a pension plan. Similarly, low quality actuarial work, left undiscovered, can undermine a plan's financial security in a fairly short time." (Gabriel Roeder Smith & Company)
U.S. Has It Right When It Comes to DC Plans, According to Speaker at Benefits Conference
Excerpt: "'The truth is Americans have it right when it comes to minimizing risk for plan sponsors and also for ensuring much more certainty for plan members in the defined contribution world,' Koskie Minsky partner Ari Kaplan told a sold out crowd at the Canadian Benefits Summit held last week in Toronto . . . ." (Employee Benefit News; free registration required)
DOL Offers New Information Video for Small Employers
Excerpt: "The U.S. Department of Labor (DoL) has released a new online video to help small employers and accountants understand the various options for providing a retirement program for their employees. 'Choosing a Retirement Solution for Your Small Business' introduces employers to the three most popular retirement arrangements, according to a press release." (planadviser)
Actuary Says Pension Plan Assessment Raised City of Chattanooga's Cost
Excerpt: "A Cheiron actuary responded to another actuarial firm's assessment of Chattanooga's fire and police pension fund by saying the deferred retirement option plan, or DROP, increased the city's cost because of incorrect assumptions." (Chattanooga Times Free Press)
[Opinion] Pension Rights Center Letter on Treasury Ruling that Threatens Pensions of Thousands (PDF)
5 pages. Excerpt: "The Department of the Treasury and the Internal Revenue Service have issued a ruling that could result in devastating losses of pension benefits for thousands of older employees, contrary to the intent of Congress. The ruling also contradicts current tax law and a long-standing regulation. In a letter sent to Treasury Secretary Henry Paulson today, the Pension Rights Center criticized the agencies for Revenue Ruling 2008-7, which legitimizes a corporate practice known as 'wearaway,' a practice that hurts older workers in certain cash-balance plans and that Congress has recognized as unfair. The Center called on the Treasury Department to withdraw the ruling and alerted the chairs and ranking members of labor and tax committees in Congress to the potential harm that the ruling could have on employees." (Pension Rights Center)
[Opinion] Getting Off the Pension Contribution Rollercoaster
Excerpt: "A small New England community organization with fewer than 100 employees wanted a predictable contribution pattern for its defined benefit plan. The funding policy was that contributions would increase 3% per year, on par with the expected long-term salary increases. In reality, however, contribution requirements climbed for several years to much higher levels -- a 79% increase in one year, for example. Changes in federal pension laws were a factor in creating this volatility." (Milliman)
[Opinion] Solving the Portability Puzzle
Excerpt: "To help [a] company formulate a response to the perceived overall increase in worker mobility, Milliman provided background information, including recent studies on worker mobility and the rise in 401(k) plans, which often are implemented by companies hoping to appeal to more mobile workers. Our proposed solution began by laying out the chicken-and-egg issue of worker mobility. Our research and analysis, supported by academic studies, confirmed that rather than 401(k) plans being implemented in response to increased mobility, it is the opposite: Mobility is encouraged by the presence of 401(k) plans." (Milliman)
[Opinion] PAPO = Pension Actuary Pecking Order
Excerpt: "Pension actuaries are a little like doctors, less about 5 years of advanced pre-training and fewer malpractice worries since we've sufficiently complicated simple concepts to dissuade even trial lawyers from wading through our rationales. We've had this regulatory lattice since ERISA in 1974 with changes periodically when either the government needs money or a spate of plans fail." (John Bury via nj.com)
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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
Links to Items on Executive Comp, Benefits in General
[Official Guidance] Text of Taxpayer Assistance and Simplification Act, H.R. 5719 (PDF)
Excerpt: "To amend the Internal Revenue Code of 1986 to conform return preparer penalty standards, delay implementation of withholding taxes on government contractors, enhance taxpayer protections, assist low-income taxpayers, and for other purposes." (U.S. House of Representatives via American Benefits Council)
[Guidance Overview] Official Summary of the Taxpayer Assistance and Simplification Act, H.R. 5719 (PDF)
3 pages. Changes related to IRAs and HSAs are included. (American Benefits Council)
[Guidance Overview] Informal Funding of Deferred Compensation Arrangements (PDF)
Pages 5-7 of 11 pages. Excerpt: "One size does not fit all. For example, a small private company may choose to informally fund its deferred compensation plans with COLI due to the pre-retirement death benefit obligation under the plans and the company's paternalistic nature and emphasis on long-range planning." (Deloitte)
House Judiciary Committee Will Hold More Hearings on Benefits Programs for Retired N.F.L. Players
Excerpt: "In releasing a 144-page report from the Congressional Research Service, the chairman John Conyers said additional government intervention was needed. The report did not make specific recommendations about how the league and the players union should change their benefits programs for retirees." (AP via The New York Times; free registration required)
Five New Members Join 2008 Advisory Council on Employee Welfare and Pension Benefit Plans
Excerpt: "The 15-member council advises Labor Department officials on issues affecting benefit plans governed by the Employee Retirement Income Security Act." (The National Underwriter Company; free registration or paid subscription required)
Older Workers Are Increasing Their Labor Force Participation and Hours of Work (PDF)
14 pages. Excerpt: "IN THE PAST 12 YEARS, A MAJOR REVERSAL of the long-run decline has occurred in the supply of labor at ages 60 and older and apparently in the demand also. Though it is difficult to judge the pace and extent of further gains in the labor force participation rates and full-time employment of these older men and women, there is reason to believe these trends will continue." (U.S. Bureau of Labor Statistics)
Newly Posted Events
2008 Annual Conference
in Maryland on September 13, 2008
presented by NAGDCA (National Association of Government Defined Contribution Administrators, Inc.)
401(k) Safe Harbor Plans, SIMPLE Plans
Nationwide on June 25, 2008
presented by McKay Hochman Co., Inc.
403(b) Plan Document Requirements and Employer Eligibility
Nationwide on September 4, 2008
presented by McKay Hochman Co., Inc.
403(b) Plans: Distributions, Hardships and Loans
Nationwide on September 25, 2008
presented by McKay Hochman Co., Inc.
403(b) Plans: Plan Design Concepts
Nationwide on October 9, 2008
presented by McKay Hochman Co., Inc.
403(b) Plans: Qualified Plan Parity, ERISA versus non-ERISA Plans, Plan Termination
Nationwide on September 11, 2008
presented by McKay Hochman Co., Inc.
403(b) Plans: Transfers, Contract Exchanges, RMD Rules
Nationwide on October 2, 2008
presented by McKay Hochman Co., Inc.
403(b) Plans: Universal Availability Rules, Catch-Up Contributions, Post-severance Compensation
Nationwide on September 18, 2008
presented by McKay Hochman Co., Inc.
ADP and ACP Testing
Nationwide on June 19, 2008
presented by McKay Hochman Co., Inc.
Automatic Enrollment Arrangements
Nationwide on July 2, 2008
presented by McKay Hochman Co., Inc.
Back-to-Basics
in Pennsylvania on May 13, 2008
presented by McKay Hochman Co., Inc.
Cash or Deferred Arrangement Rules, Deferrals, Catch-up and Matching
Nationwide on June 5, 2008
presented by McKay Hochman Co., Inc.
Corrective Distributions and 1099-R Reporting
Nationwide on May 28, 2008
presented by McKay Hochman Co., Inc.
Designated Roth Accounts, Overview of Cross-testing Rules
Nationwide on June 11, 2008
presented by McKay Hochman Co., Inc.
Distribution Triggering Events, Hardships and In-service
Nationwide on April 23, 2008
presented by McKay Hochman Co., Inc.
Eligible Rollover Distributions, Portability and Rollover Rules, QJSA Rules and Disability Distributions
Nationwide on April 30, 2008
presented by McKay Hochman Co., Inc.
Managing in an Employee-Owned Company
in District of Columbia on June 1, 2008
presented by Beyster Institute
Participant Loans
Nationwide on May 22, 2008
presented by McKay Hochman Co., Inc.
QDIA and 401(k) Disclosures
Nationwide on July 10, 2008
presented by McKay Hochman Co., Inc.
Qualified Plan Deceased Payments, Beneficiary Rules and Issues
Nationwide on May 15, 2008
presented by McKay Hochman Co., Inc.
Required Minimum Distributions
Nationwide on May 8, 2008
presented by McKay Hochman Co., Inc.
Retirement Plan Insights
in Pennsylvania on May 13, 2008
presented by McKay Hochman Co., Inc.
Newly Posted Press Releases
U.S. Labor Department Unveils Online Video to Help Small Employers Select Appropriate Retirement Options
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Non-Profits Perplexed by Sweeping New Retirement Plan Regulations
Principal Financial Group
Retirement Security of Thousands Jeopardized by Treasury Action
Pension Rights Center
John Hancock Retirement Plan Services Officially Launches New 401(k) Guaranteed Income for Life Rider
John Hancock Retirement Plan Services
Newly Posted or Renewed Job Openings
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