Retirement Plans Newsletter
January 18, 2010
January 18, 2010
New NIPA Certificate Programs ? Enroll Today!
The National Institute of Pension Administrators? (NIPA) adds three new certificate programs to its education offerings in 2010, providing retirement plan professionals with comprehensive, timely information on loans, IRAs and the fundamentals of qualified plans. NIPA?s low-cost, online certificate programs are suited for entry-level and experienced industry professionals. Upon successful completion, you can earn NIPA and ERPA continuing education credits. For more information, visit www.nipa.org/enroll .
National Institute of Pension Administrators
[Guidance Overview]
DOL Final Safe Harbor for Timely Remittance of Participant Contributions to Small Plans (PDF)
2 pages. Excerpt: "The regulation is intended to clarify when such contributions have been timely made to the plan, which in turn relieves plan sponsors of the civil legal obligations attached to holding 'plan assets' from (i) the payroll date or other date of receipt to (ii) the date of remittance to the plan. The safe harbor is part of DOL's ongoing campaign to reduce persistent delinquencies in employee contributions to plans." (Sutherland Asbill & Brennan LLP)
[Guidance Overview]
401(k) Benefits Properly Paid to Ex-Wife As Named Beneficiary on the Account
Excerpt: "U.S. Magistrate Judge Kenneth P. Neiman of the U.S. District Court for the District of Massachusetts ruled that Nadine Staelens properly deserved ex-husband Aaron's 401(k) benefits because she had not explicitly given up her rights to the money when the couple divorced in 2004 after 15 years of marriage." (PLANSPONSOR.com)
[Guidance Overview]
Participant Files too Late to Pursue Interference of Benefits Claim
Excerpt: "A former retirement plan participant claiming he was terminated to prevent him from becoming vested in the plan has made his complaint too late. The U.S. District Court for the Western District of Michigan said that although Employee Retirement Income Security Act (ERISA) § 510 does not have its own statute of limitations, courts should 'apply the limitations period for the most analogous state law claim.'" (PLANSPONSOR.com)
[Guidance Overview]
Bankrup.tcy Doesn't Relieve Plan of ERISA Mandates
Excerpt: "A Department of Labor (DOL) administrative law judge has rejected the appeal by a 401(k) plan administrator of an $86,500 civil penalty, ruling the administrator's bankrup.tcy did not relieve it of requirements to properly file an annual report." (PLANSPONSOR.com)
[Guidance Overview]
DOL Final Seven-Business-Day Safe Harbor for Depositing Participant Contributions and Loan Repayments in Small Plans
Excerpt: "By finalizing the safe harbor, the DOL clearly hopes to encourage plan sponsors to accelerate their remittance practices and improve compliance. The decision not to expand the safe harbor to larger plans may be disappointing to sponsors of those plans, but the reason for that decision -- a lack of information to appropriately evaluate the costs and benefits of expanded relief -- leaves some hope for the future." (Employee Benefits Institute of America)
Social Security Retirement Benefit Awards Hit All-Time High in 2009
Excerpt: "Record numbers . . . began collecting Social Security benefits in 2009. New awards surged last year partly because the age-62 population grew rapidly. More importantly, older Americans were much more likely to claim Social Security in 2009 than recent previous years, probably because many seniors were unable to find work. Social Security benefits provide an important safety net for unemployed older adults, but early claimants receive permanently reduced benefits, threatening their future economic well-being." (Urban Institute)
Work Ability and the Social Insurance Safety Net in the Years Prior to Retirement
Excerpt: "Questions persist about how well Social Security Disability Insurance, workers' compensation, Supplemental Security Income, and veterans' benefits protect people who are unable to work. This study examines disability benefit receipt, income, and poverty status for a sample of Americans as they age. The results underscore the precarious financial state of most people approaching traditional retirement age with disabilities. Fewer than half of people who meet our disability criteria ever receive disability benefits in their fifties or early sixties. Poverty rates for those who do are more than three times as high after benefit receipt than before disability onset." (Urban Institute)
What Replacement Rates Should Households Use?
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." (University of Michigan Retirement Research Center)
Increasing the Effectiveness of Retirement Saving Programs for Females and Low Income Employees: A Marketing Approach
35 pages. Excerpt: "Our project seeks to meet three objectives: (1) to reduce anxiety about future retirement needs; (2) to increase awareness about financial knowledge including interest in professional advice; and (3) to increase participation and contribution to supplementary retirement accounts (SRAs) among female and low income workers." (National Endowment for Financial Education)
[Opinion]
Clarity Needed on the Depth and Breadth of Fiduciary Authority and Discretion Under ERISA
Excerpt: "The fiduciary profession is an honorable and rewarding one. The roles and responsibilities undertaken by every fiduciary are important and valuable. Yet their true value must be conveyed to plan sponsors accurately in order to (a) fulfill statutory requirements prudently and (b) avoid creating frustration and confusion that comes from scrambled fiduciary messages." (Matthew D. Hutcheson via 401khelpcenter.com)
[Opinion]
How Retirees Saved the Banks
Excerpt: "If you're a retiree who relies on interest income, you know that the tap is running dry. In fact, many investors in certificates of deposits, savings accounts and money market accounts are losing money once taxes and inflation are subtracted from today's extremely low yields." (The New York Times; free registration required)
MassMutual: 2010 Calendar Helps You Fulfill Your Fiduciary Duties
Need help with prototype document services, participant notices, or DC specialized testing services? We've got you covered. Averaging over 20 years of retirement plan experience per person, MassMutual's ERISA Advisory Services team is truly a group of industry experts. While our clients benefit from a broad range of services, you can benefit from our expertise as well. For more information on how MassMutual's ERISA consulting experts can help your company, contact EASConsulting@massmutual.com .
MassMutual Financial Group
Executive Compensation; Benefits in General
[Guidance Overview]Who is Entitled to Life Insurance Benefits and Top-Hat Benefits from an ERISA Plan Following a Divorce or a Marital Separation?
Excerpt: "ERISA plans generally need not follow state-court orders. On the other hand, ERISA plans must follow the designation terms of those DROs which are qualified domestic relations orders ('QDROs'). Questions have been raised about whether life insurance plans and top-hat plans (which are pension plans maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees), must follow the designation terms of a DRO that 'satisfies the QDRO requirements,' but contradicts a designation made pursuant to the plan terms." (NYSBA Family Law Review Newsletter via Social Science Research Network)
[Guidance Overview]
Notice with Plan Document Correction Procedures for 409A Goes Way Beyond Correction Procedures
Excerpt: "On January 5, 2010, the IRS issued Notice 2010-6, Relief and Guidance on Corrections of Certain Failures of a Nonqualified Deferred Compensation Plan to Comply with § 409A(a) (the 'Notice'). Importantly, the Notice does much more than just offer correction methods. It contains numerous examples of situations that the 409A final regulations do not clearly address - and provides for significant penalties for many plan provisions that a normal person might view as a foot fault." (Michael Melbinger via Winston & Strawn LLP)
[Guidance Overview]
Document Correction Guidance Under Section 409A
Excerpt: "Groom principals, Brigen Winters and Jeffrey Kroh, provide an overview of Notice 2010-6, which provides 'reasonable solutions' on how to fix Section 409A plan document failures. In addition to discussing the various types of corrections available and summarizing substantive guidance provided in the notice, the authors identify significant advantages to making corrections in 2010 under the notice's special transition rules." (Groom Law Group)
Official Summary of the Wall Street Compensation Reform Act of 2010 (PDF)
3 pages. (American Benefits Council)
Employee Ownership Update for January 15, 2010
Corey Rosen discusses the following: Promoters are offering to install ERSOPs (employee retirement stock ownership plans) at a low cost, but you should get a second opinion. A bill would exclude from gross income compensation received by employees in the form of employer stock held for at least 10 years. Some object to recent stock option repricings. The change in basis step-up rules for 2010 has implications for the estates of those who sold to an ESOP and elected the Section 1042 tax deferral. (National Center for Employee Ownership)
Press Releases
National Federation of Nurses Applauds Agreement to Exempt Union Health Plans from Tax on Worker?s Healthcare BenefitsNational Federation of Nurses
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