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[Official Guidance]
Text of New Guidance from EBSA on Reporting of Service Provider Compensation on 2009 Schedule C of Form 5500
Excerpt: "On November 16, 2007, the Department of Labor's Employee Benefits Security Administration (EBSA) published final form revisions and a final regulation, generally effective for plan years beginning on or after January 1, 2009, providing new requirements for reporting service provider fees and other compensation on the Schedule C of the 2009 Form 5500 Annual Return/Report of Employee Benefit Plan. The purpose of these FAQs is to provide guidance to plan administrators and service providers on complying with the requirements of the 2009 Form 5500 Schedule C." (Employee Benefits Security Administration, U.S. Department of Labor)


[Guidance Overview]
COLAs for 2010 and Clarification of Operation of 401(k) Plans and Other Retirement Programs and Fringe Benefits
Excerpt: "The Internal Revenue Service ('IRS') and the Department of Labor ('DOL') recently issued several pieces of guidance of interest to sponsors of retirement plans, with particular focus on profit sharing and 401(k) plans. Overall the new guidance contains cost-of-living adjustments ('COLAs') for 2010 and provides practical approaches to satisfy operational obligations and document requirements. This recent flurry of regulatory guidance will be helpful in meeting deadlines later this year." (Baker & McKenzie LLP)


[Guidance Overview]
Elective Deferral Limits for 2010 for Employees of Non-Profit and Governmental Employers (PDF)
2 pages. Excerpt: "The chart . . . describes and summarizes these limits based on the plan(s) available and the type of employer." (Prudential Retirement)


[Guidance Overview]
IRS's Final Rule on Pension Funding and Benefit Restrictions (PDF)
2 pages. (Milliman)


[Guidance Overview]
Final Regs on Benefit Restrictions for Underfunded Plans, Measurement of Plan Assets and Liabilities
Excerpt: "Underfunding presumptions: The regulations set forth a series of presumptions that are used to apply the Code Sec. 436 benefit limitations in situations where the plan's enrolled actuary has not yet issued a certification of the plan's AFTAP for the plan year and that describe the interaction of the application of those presumptions on plan operations with plan operations after the plan's enrolled actuary has issued a certification of the plan's AFTAP for the plan year. The rules in the final regulations have been revised from those in the proposed regulations." (Wolters Kluwer)


[Guidance Overview]
403(b) Plans and EFAST2
Excerpt: "This article focuses on how EFAST2 will affect the Form 5500 filing requirements for 403(b) plans. In addition, the article discusses the DOL's changes to the Form 5500 filing requirements for 403(b) plans." (SunGard Relius)


[Guidance Overview]
Second Circuit Reverses Earlier Citigroup Cash Balance Plan 'Backloading' Judgement for Plaintiffs
Excerpt: "A somewhat surprising, technical decision that permits Citigroup to skirt ERISA prohibitions against 'backloading,' which occurs when a pension plan awards covered employees disproportionately higher benefit accruals for later years of service." (Wrobel & Schatz LLP)


Senate Sends Bill Ending Pentagon Pay-for-Performance System to President's Desk
Excerpt: "The Senate on Thursday approved the final version of the fiscal 2010 Defense authorization bill by a vote of 68-29, sending it to the president's desk. In addition to language dismantling the National Security Personnel System and allowing a military pay raise 0.5 percentage points higher than that requested by Obama, the measure contains significant changes to federal retirement law." (GovernmentExecutive.com)


401(k) Performance: The Numbers Add Up
Excerpt: "I'm a little tired of reading about how 'buy and hold' is dead, and diversification doesn't work, and how 'target-date funds don't work,' and that there was too much risk, especially for pre-retirees, in these balanced funds. These stories seem to continue regardless of what's going on in the real world. So I won't discuss much. Instead, here's some math." (The Vanguard Group, Inc.)


Converting Assets to Income in Retirement: What Near-Retirees are Thinking
Excerpt: "Savings is necessary but not sufficient to generate a secure and adequate lifetime income for retirees. In retirement, savings must be managed and used to generate a stream of income. Annuitization is the only means to convert savings into an income stream guaranteed to last the lifetime of a retiree. This report examined the concerns of savers approaching retirement age in the higher education sector regarding managing that savings in retirement and their plans for converting it into income." (TIAA-CREF Institute)


New Roth Conversion Opportunities: Is Converting a Traditional IRA, 403(b) or 401(k) a Smart Move, Unwise or Much Ado About Nothing?
Excerpt: "While the decision to convert to a Roth account can provide tax savings for some, it is not a wise move for all. Typically the most important consideration is a comparison between the marginal income tax rate in the conversion year and the marginal income tax rate in the withdrawal year if not converted, where this latter tax rate is usually a tax rate from a retirement year. If the future income tax rate is anticipated to be higher, converting to a Roth may be appealing, but if the future income tax rate is expected to be lower, converting may be unwise. When the anticipated tax rates are similar, other factors should be considered, such as required minimum distributions, tax diversification, beneficiary taxation, taxation of Social Security benefits, Medicare Part B premium amounts, and itemized deductions." (TIAA-CREF Institute)


California Adopts 'Pay-to-Play' Restrictions
Excerpt: "Prohibition of Self-Interested Transactions: Members and employees of the board of a public pension or retirement system are prohibited under AB 1584 from engaging in various self-interested transactions with public pensions and retirement systems. Such members and employees may not sell investment products to any public retirement system in California, have a personal interest in any investment made by the board, or borrow or use funds of the retirement system." (Pillsbury Winthrop Shaw Pittman LLP)


Marking Social Security's Open Group Liability to Market (PDF)
33 pages. Excerpt: "This paper marks Social Security's open group liability to market taking into account the riskiness of its aggregate benefit payments and tax receipts. The open group liability references the present value of the system's net cash flow from now through the indefinite future. We treat the growth rates of the system's aggregate benefits and taxes as implicit securities that are spanned by the returns on marketed securities." (University of Michigan Retirement Research Center)


What Replacement Rates Should Households Use? (PDF)
37 pages. Excerpt: "Common financial planning advice calls for households to ensure that retirement income exceeds 70 percent of average pre-retirement income. We use an augmented life-cycle model of household behavior to examine optimal replacement rates for a representative set of retired American households. We relate optimal replacement rates to observable household characteristics and in doing so, make progress in developing a set of theory-based, but readily understandable financial guidelines. Our work should be a useful building block for efforts to assess the adequacy of retirement wealth preparation and efforts to promote financial literacy and well-being." (University of Michigan Retirement Research Center)


In Search of a Fair Pension Formula: Realistic Income-Replacement Ratios in the 'New Normal' Economy
Excerpt: "The ratchet effect. Now that reality has set in, public managers are beginning the painful work of reviewing their retirement-benefits formulas. In some states, like California, their hands are tied with respect to incumbent employees. Perversely, some state laws preclude plan-design changes for incumbents who are viewed as having vested rights to the highest multiplier awarded during their entire career. The great economist John Maynard Keynes presciently called this the 'ratchet effect:' What goes up can never come down. As a result, most public managers must look first at new 'tiers' for pension benefits. This means that new hires will get a lower benefit with a lower formula and often a higher retirement age than the senior incumbents -- who happen to sit on the negotiating committees." (Governing.com)


Desire for Advice Influenced Retirement Money Movement in Past Year
Excerpt: "A new analysis shows that contrary to popular opinion, mass affluent consumers were not passive during the difficult financial environment of 2008-2009 - they moved significant amounts of retirement money, including taxable assets, over the past year, in search of better value, personalized advice and guidance, and a financially sound provider. 'Retirement Money in Motion: Capitalizing on IRA, Rollover & Taxable Money Movement' found that the desire to consolidate accounts was the number one driver of Retirement Money in Motion decisions - but a minimum, pre-existing 20% wallet-share capture was required to win this business. Financial soundness perceptions (and realities) drove a third of retirement money movement decisions." (PLANSPONSOR.com; free registration required)


Market Decline Could Affect Public Pensions for Several Years, According to Report
Excerpt: "The Public Fund Survey sponsored by the National Association of State Retirement Administrators and the National Council on Teacher Retirement indicates that the market decline in 2008 resulted in a median investment return for public pension funds of -25.3% for the year. According to the report, the fall in asset values has caused aggregate funding levels to move downward from 86.7% in FY 07 to 85.3% in FY 08. However, the report notes that because public pension actuarial methods are designed to temper the effect of market volatility, public pensions will recognize the investment losses incurred in 2008 over several years. During this recognition period, funding levels are expected to decline, although losses may be partially offset with investment gains." (PLANSPONSOR.com; free registration required)


Financial Capability in the United States: Consumer Decision-Making and the Role of Social Security
Excerpt: "This project will analyze new data from the 2009 U.S. Treasury/FINRA Financial Capability Survey. This survey provides new and unique information to assess how American households make financial decisions, how they fare in current economic conditions, and in what ways financial knowledge contributes to financial capability. In addition, it includes data about information that the Social Security Administration (SSA) provides to consumers. The project will examine how financial literacy contributes to financial capability with regard to debt behavior, i.e., financial capability as it relates to management of credit card debt, mortgage debt, and other debt. Moreover, it will evaluate how information from SSA affects behavior." (University of Michigan Retirement Research Center)


Explaining the Growth in Social Security Benefits among the Retirement Age Population
Excerpt: "Social Security wealth represents almost one-third of the total wealth of the Health and Retirement Study's (early boomer) cohort aged 51 to 56 in 2004. It grew by over 50 percent in real terms over the period 1992 to 2004. This project will explore HRS cohort data to determine the reasons for the growth in real Social Security wealth over this period, including the effects of the increase in the cap on covered earnings and different earnings trends for women and men. Distributional patterns will be examined and implications for policies that would change the earnings cap derived." (University of Michigan Retirement Research Center)


New York Attorney General Unveils Plan to Overhaul State Pension System
Excerpt: "New York Attorney General Andrew Cuomo unveiled his plan to overhaul the state pension system, even as the state comptroller expressed concern that there could be constitutional problems with it. . . . The proposed legislation would impose stringent limits on political contributions, require extensive disclosures from investment fund personnel, create a code of conduct, compel any licensed professional to report conflicts of interest, and would bar investment firms from using placement agents or lobbyists to get business from the state pension fund. One of the more significant proposals is to change oversight of New York's $120-billion pension fund - the state's single largest asset, Cuomo said - from the current system of sole trustee to a 13-member, bipartisan board of trustees. Currently, only three states - New York, Connecticut and North Carolina - have pension funds with a sole trustee." (Newsday)


Behind the Rally in Retirement Accounts
Excerpt: "Despite the biggest and broadest decline in financial markets in a generation, the median 401(k) retirement account at Vanguard Group on Sept. 30, 2009, was up 7% from where it was two years earlier, when the market was near its all-time high." (The Wall Street Journal)

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Links to Items on Executive Comp, Benefits in General

Curbing Excessive Executive Compensation by Making It Non-Deductible
Excerpt: "Aaron Zelinsky . . . proposes curbing excessive executive compensation by making it nondeductible. The best part: the IRS can do it by simply re-interpreting an existing provision of the tax code, so there's no need for a bruising political battle in Congress." (Workplace Prof Blog)


Some Retiring CEOs Take Good Stock Prices with Them, Study Says
Excerpt: "A new study indicates that companies that use Supplemental Executive Retirement Plans (SERPs) could see their shares suffer when the CEO departs. The study found that for Fortune 1000 companies in the 1997-2006 period, stock prices lagged those of peers by 8.3% over three years following the retirements of CEOs whose SERPs were based on their performance in their last years, Reuters reports. Professor Paul Kalyta of McGill University in Montreal, author of the study, said the CEO 'has strong incentives to make accounting choices that increase firm short-term income and, therefore, amplify the value of his/her pension,' leaving the shares of companies with big CEO SERPs 'temporarily overpriced.'" (PLANSPONSOR.com; free registration required)


Bailed-Out Firms Ordered to Slash Top Pay
Excerpt: "The Treasury Department today ordered seven companies that received billions of dollars in government bailouts to halve total compensation for their top executives. But the big reductions will not apply to pay earned before November. Kenneth Feinberg, the Treasury official leading the pay review, told reporters that average salaries for the top 25 executives are being cut 90 percent starting next month. The action will apply to the top executives at Bank of America Corp., American International Group Inc., Citigroup Inc., General Motors, GMAC, Chrysler and Chrysler Financial." (DelawareOnline)


Flexible Benefit Options Proving Cost-Efficient, According to Mercer
Excerpt: "The concept of employee choice in the type of benefits received from employers is taking hold worldwide, particularly as it offers a chance for employers to cut costs without cutting benefits, according to benefits consulting firm Mercer L.L.C. The company conducted a survey of more than 1,700 employers in 47 countries outside of the United States in May and June to find out what kinds of benefits companies offer and how they plan to change them. Attitudes and strategies toward employee benefits varies widely across the globe and depends largely upon local health systems and taxation systems. But the survey found that interest in flexible benefits packages that provide employees with wider choice about the mix of benefits received is becoming more popular in many countries." (Business Insurance)


Some Employers Adapt for Parents with Workplace Child Care, Time Off, Among Teacher Furlough-Day Measures
Excerpt: "Some working parents are getting help from their employers to care for children who will be out of school tomorrow, the first 'furlough Friday' for Hawaii public school teachers. Many companies with work rules that include flex-time or sick leave that can be used to care for dependents expect some employees to be absent tomorrow to care for school-age children. Others are offering special assistance such as in-office child care to help their employees cope with the disruption resulting from the effort to plug the state's budget shortfall." (Honolulu Advertiser)

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Webcasts and Conferences

"Cross-Testing: Making the Most of Single-Member Groups" Web Seminar
Nationwide on November 24, 2009
presented by SunGard Relius

Executive Compensation: What to Expect in 2010 from Regulatory and Design Perspectives
Nationwide on November 17, 2009
presented by Buck Consultants, an ACS Company

( Click to post your webcast or conference )

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Press Releases

U.S. Department of Labor Obtains Consent Judgment Requiring Winter Park, Florida, Law Firm to Terminate Pension Plan and Distribute Assets to Participants
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Court Judgment Requires Mokena, Illinois-based Company and Chief Executive Officer to Restore Retirement Fund Losses
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Employee Benefits Security Administration Issues Additional Guidance on Schedule C Reporting for 2009 Form 5500
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

McGraw Wentworth Recognized As One Of Southeast Michigan's Top Three Small Employers
McGraw Wentworth

401k Advisors Opens Dallas Office
401(k) Advisors

Hand Benefits & Trust Adds Shariah Compliant Option to Collective Investment Funds
Hand Benefits & Trust

( Click to post your press release )

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Employee Benefits Jobs

Retirement Compliance Testing Manager
for Vanguard
in PA

Employee Benefits / ERISA Attorney
for Hill Ward Henderson
in FL

Account Manager-Chicago
for AUL/OneAmerica Financial Partners, Inc.
in IL

Senior Conversion Analyst
for Administaff
in TX

( Click to post your job opening | View all jobs | RSS feed of all jobs )

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EmployeeBenefitsJobs.com (Sponsor)

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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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