BenefitsLink
Retirement Plans
Newsletter
July 1, 2008
Here are the Web's best new links about compliance and cost
aspects of plan operation, design and policy.
Today's sponsor is ASC & The ASC Institute
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ASCi launches its IRS-approved Volume Submitter 401(k) document! Additional EGTRRA documents will be rolling out throughout this spring and summer. Join the many practitioners who have already used ASCi?s highly acclaimed DGEM system to prepare thousands of new and restated documents and remain far ahead in restating their clients? plans to comply with EGTRRA.
Click here to see a DGEM video or contact us at asci@asc-net.com .
[Official Guidance] Text of PBGC Proposed Regs: Termination of Single-Employer Plan While Sponsor in Bankrup.tcy (PDF)
15 pages. Excerpt: "This is a proposed rule to implement section 404 of the Pension Protection Act of 2006. Section 404 amended Title IV of ERISA to provide that when an underfunded, PBGC-covered, single-employer pension plan terminates while its contributing sponsor is in bankrup.tcy, sections 4022 and 4044(a)(3) of ERISA are to be applied by treating the date the sponsor's bankrup.tcy petition was filed as the termination date of the plan. . . .Thus, under the 2006 amendments, when a plan terminates while the sponsor is in bankrup.tcy, the amount of benefits guaranteed by PBGC and the amount of benefits in priority category 3 are fixed at the date of the bankrup.tcy filing rather than at the plan termination date. This will, in most cases, reduce the amount of guaranteed benefits and the amount of benefits in priority category 3." (Pension Benefit Guaranty Corporation)
[Official Guidance] Text of IRS Revenue Ruling 2008-40: Transfers from Tax-qualified Plan to Nonqualified Foreign Trust or Puerto Rican Plan (PDF)
9 pages. Certain transition relief is provided; also discusses application of section 410(b) minimum coverage rules to employees in Puerto Rico and other possessions of the United States. Excerpt: "HOLDINGS: 1. A transfer of amounts from a trust under a plan qualified under ? 401(a) to a nonqualified foreign trust is treated as a distribution from the transferor plan. 2. A transfer of assets and liabilities from a qualified plan to a plan that satisfies section 1165 of the Puerto Rico Code is also treated as a distribution from the transferor plan, even if the plan is described in section 1022(i)(1) of ERISA." (Internal Revenue Service)
[Guidance Overview] IRS Proposed Regs Extend DB Plan Accrual Rules for Plans with Two or More Formulas
Excerpt: "The IRS has issued proposed regulations that refine and extend defined benefit (DB) plan accrual rules for plans with two or more benefit accrual formulas, such as converted cash balance plans. The proposed rules provide a limited exception to the requirement to aggregate accrued benefits under all statutorily prescribed benefit accrual formulas." (Wolters Kluwer)
Putnam Finds Diminishing 401(k) Contributions
Excerpt: "A survey by Putnam Investments has found a troubling trend among 401(k) participants. The tough economic environment is causing them to decrease contribution levels. Putnam found that 21% of plan participants are contributing at a lower rate to their 401(k)s. Another 4% have stopped contributions altogether." (On Wall Street)
Equity Valuation Effects of the Pension Protection Act of 2006
Excerpt: "We examine pension firms' abnormal returns surrounding key dates in the legislative process leading to the adoption of the PPA 2006. We also estimate a multivariate model that isolates the equity valuation effects by the key provisions of the legislation. Third, we amend the multivariate model to assess whether there are differential valuation effects for firms in the different at risk categories defined by the PPA 2006." (Social Science Research Network)
New 403(b) Regulations - Followed by a Stepped Up IRS Audit Program to Ensure Compliance
Excerpt: "The first stage in the IRS initiative came in June 2007, when the IRS launched an outreach project aimed at ensuring that school districts across the country are complying with the universal availability requirement. Roughly a month later, the IRS released the final 403(b) regulations, giving plans and plan sponsors until the beginning of next year to comply with new document and operational rules." (PLANSPONSOR.com; free registration required)
Federal Thrift Savings Plan Moves Forward on Spousal Benefits and IT Modernization
Excerpt: "The Thrift Savings Plan is on track to undergo a major technology modernization and is moving forward with efforts to allow spousal beneficiaries to keep funds in the TSP. But changes to the plan's offerings and the enrollment process were the subject of debate at the first joint meeting of the Employee Thrift Advisory Council and the Federal Retirement Thrift Investment Board on Monday." (GovernmentExecutive.com)
Vermont Public Pension Plan Changes Effective Today
Excerpt: "The pension plan used by Vermont state employees is changing today. Now many state employees will see more money from their paychecks going into their pensions. New state employees will have to work for three more years to receive full retirement benefits. And the age of full retirement is increasing from 62 to 65." (AP via Vermont Public Radio)
Hewitt Study Reveals Widening Gap Between Retirement Needs and Employee Saving Behaviors
Excerpt: "According to Hewitt's study, which examined the projected retirement levels of nearly 2 million employees at 72 large U.S. companies using actual employee balances and behaviors, less than one in five (19 percent) will be able to meet 100 percent of their estimated needs in retirement." (BusinessWire)
The Best Way to Take a Pension - A Lifetime of Monthly Checks Usually Beats a Big Lump Sum
Excerpt: "According to an analysis by T. Rowe Price, you have nearly a 30% chance of depleting a $300,000 lump sum by age 85, assuming you invest in a diversified stock and bond portfolio and withdraw $2,000 a month. Live to 90 and the likelihood hits 57%. As Oxnard, Calif. actuary Steve Vernon notes, 'Not good odds for such an unpleasant outcome.'" (CNNMoney.com)
PPA Change Bill Includes Smoothing Provision
Excerpt: "New Congressional legislation in the form of a Pension Protection Act technical corrections bill would effectively clarify lawmakers' intention that corporate pension plans can use 24-month smoothing.' (PLANSPONSOR.com; free registration required)
Why CFOs Are Hooked on Pension Earnings
Excerpt: "Cecil Hemingway, executive vice president and head of the U.S. retirement practice at Aon Consulting, says companies -- and more importantly, their earnings -- are dependent on pensions to generate an additional source of steady income every year. So much so, that he estimates the 500 largest companies will log pension earnings somewhere in the neighborhood of $20 billion to $25 billion this year, combined. Who would walk away from that?" (Financial Week; free registration required)
Delphi Retirement Plan Gets $2.2 Million
Excerpt: "The federal government has obtained court approval to restore $2.2 million in retirement plan assets owed to hourly employees of auto supplier Delphi Corp. The U.S. Department of Labor said in a statement Monday the settlement approved by U.S. Bankrup.tcy Court ensures assets are available to pay future retirement benefits for workers." (AP via mlive.com)
Older Parents Scramble to Save for Retirement
Excerpt: "It's becoming increasingly difficult for parents to save for retirement while they're putting away money for their children's college tuition, according to new research by Putnam Investments. Two factors have made these dual tasks more difficult over roughly the last 30 years: the fact that women are having children later in life, coupled with the movement away from defined benefit plans, the Boston-based fund company said." (Investment News; free registration required)
Sponsored by: ASPPA
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It's the best of both worlds, and should not be missed. Join the Western Pension & Benefits Conference and ASPPA for this unique conference designed with all retirement, health, welfare and benefits professionals in mind. The Western Benefits Conference offers attendees seven separate professional learning tracks with over 50 individual sessions all led by nationally renowned speakers and both national and local government representatives. Network with your peers, private sector experts, and government officials at planned events throughout the conference. Be in Seattle with over 900 of your colleagues July 13-16, 2008 and experience this conference first hand. Register NOW and don't miss out.
(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
[Guidance Overview] IRS Announces Mid-Year Increase in Mileage Rates for Transportation to Obtain Medical Care and Moving Expenses
Excerpt: "" (Employee Benefits Institute of America)
[Guidance Overview] Section 409A Compliance Deadline: December 31, 2008 (PDF)
4 pages. The newsletter provides a '409A Recommended 'To Do' List." (Powell Goldstein LLP)
Union at Con Ed Fears the Loss of High Pay and Solid Benefits
Excerpt: "As the power industry was deregulated over the past decade, Con Edison, like other utilities, has been under pressure from shareholders and customers to keep labor costs down, eroding some of the benefits that drew workers to the utility." (The New York Times; free registration required)
Relocation Policy Changes Show Employers Controlling Costs
Excerpt: "Recent relocation policy changes cited by employers participating in a recent survey indicate a greater focus on controlling costs. According to Prudential's Move Forward newsletter, adopting or increasing pre-decision counseling for homeowners (46%) is the single biggest reported change among those surveyed companies that have made, or plan to make, relocation policy revisions. Companies want to help homeowners effectively conduct risk-assessment that includes understanding the limits of the relocation policy, but are also increasingly focused on reining in downstream cost exposure by guiding homeowners in their purchase decisions." (PLANSPONSOR.com; free registration required)
Anheuser-Busch to Take $400M in Charges from Early Retirement Offer
Excerpt: "A-B said that on June 25, it had approved an enhanced retirement program to be offered to certain salaried employees in connection with its plan to reduce costs and improve efficiency. The program will provide enhanced pension and retiree medical benefits to salaried employees who are at least 55 years old as of Dec. 31 this year, according to the filing." (St. Louis Business Journal; bizjournals.com; free registration required)
Anheuser-Busch to Cut Health and Pension Benefits for Salaried Employees
Excerpt: "The nation's biggest brewer laid out its benefit-cut plan in a memo . . . . The memo says employees' individual, lump sum payouts under the pension plan will be reduced by approximately 5 percent to 6 percent in 2009 and approximately 15 percent by 2012. Workers also will make a bigger contribution to their health insurance plan, rising from approximately 21 percent today to 25 percent of the cost beginning in 2009." (AP via Forbes.com)
Newly Posted Events
Keep Current On Pension Legislation and Non-Qualified Deferred Comp. 409A Regulations
in California on August 6, 2008
presented by National Institute of Pension Administrators
Newly Posted Press Releases
Watson Wyatt Data Services Releases 2008/2009 Survey Report on Non-Qualified Benefits and Perquisite Practices
Watson Wyatt Data Services
Alliance Benefit Group Completes Acquisition of RGS & Associates
Alliance Benefit Group
401k Widgets Announces Website Applications for Retirement Plan Industry
PensionOnline
FINRA, International Foundation Partner On Resources for Companies, Employees To Guard Against Early Retirement Seminar Scams
International Foundation of Employee Benefit Plans
ING Closes Acquisition of CitiStreet; Solidifies Leadership Position in Defined Contribution Retirement Plan Market
ING Group
MassMutual Chosen as Full-Service Provider for Blue Bird Corporation
MassMutual
With Economy In Decline And Workers Increasingly On Edge, Joint Economic Committee To Examine Benefits Of Public Workers' Pension Plans
Joint Economic Committee
Employees Realize a 100% Increase in Company Contributions if Employer Sponsors a Cash Balance Plan
Kravitz
Newly Posted or Renewed Job Openings
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Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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