August 2011
The following highlights the most significant New Developments published in the Pension Plan Guide since the last update on July 28, 2011.
In the courts: the fiduciary exception to the attorney-client privilege was extended to communications regarding plan administration between an ERISA trustee and a plan attorney, confirming application of the exception to DOL compliance audits; the post-bankruptcy petition portion of a multiemployer defined benefit fund's withdrawal liability claim against a debtor employer was ruled an administrative expense that was entitled to priority under the Bankruptcy Code; and an e-mailed list of FAQs sent by an employer stating that a participant was not eligible for enhanced pension benefits was not sufficient to support the futility exception to the exhaustion of remedies requirement.
The Financial Accounting Standards Board (FASB) has finalized the disclosure requirements for employers contributing to a multiemployer pension plan. Among the requirements, employers would need to disclose: whether a funding improvement plan or rehabilitation plan had been implemented or was pending; contributions made to the plan for each annual period that an income statement is presented; and whether the entity paid a surcharge to the plan.
Finally this Update contains a discussion of recent survey documenting automatic enrollment practices among 401(k) plans. The survey reveals that automatic enrollment and automatic contribution escalation have become standard features in defined contribution plans. However, the survey also cautions of low default rates that effectively decrease the overall amount of retirement contributions.
NEW DEVELOPMENTS
1. Fiduciary Exception to Attorney-Client Privilege Applies to Documents Related to Plan Administration Subpoenaed in DOL Audit
The fiduciary exception to the attorney-client privilege extends to communications regarding plan administration between an ERISA trustee and a plan attorney, according to the Fourth Circuit Court of Appeals. The case, which has significance for all ERISA plans, confirms application of the exception to DOL enforcement efforts under ERISA Sec. 502 and compliance audits under ERISA Sec. 504.
Documents subpoenaed pursuant to DOL audit. As part of a compliance audit under ERISA Sec. 504, the DOL ordered two multiemployer plans to turn over documents relating to a $10 million loss of plan assets as result of investments in entities related to convicted swindler Bernard Madoff. The required materials included documents dealing with: Board of Trustee and Policy Committee minutes for the funds; documents referenced to or distributed during the meetings; notes taken at the meetings; any correspondence relating to the fund’s Madoff-related investments; and other documents withheld based on privilege claims.
The funds refused the request, citing both attorney-client privilege and the work-product privilege. The district court held that the privileges did not apply and ordered the documents to be produced. The funds appealed.
Fiduciary exception. The fiduciary exception to the attorney-client privilege stems from trust law and is based on the rationale that the benefit of any legal advice obtained by a trustee regarding matters of trust administration runs to the beneficiaries of the trust, and not to the trustees. In the ERISA context, courts have ruled that a fiduciary’s duty to act in the exclusive interest of beneficiaries supersedes a fund’s right to assert attorney-client privilege.
The funds conceded that the exception extends to the DOL when it acts on behalf of beneficiaries in the context of an ERISA enforcement action under ERISA Sec. 502. However, the funds argued, the fiduciary exception should not extend to a DOL compliance investigation under ERISA Sec. 504. According to the funds, the DOL, under ERISA Sec.504, is acting as a ``regulator’’ and not as a statutory designee seeking recovery on behalf of fund participants. Therefore, the interests of the DOL and the plan beneficiaries may not align.
The Fourth Circuit disagreed, finding no "principled basis" on which to differentiate between enforcement actions and investigative actions when applying the fiduciary exception. Under ERISA Sec. 502 and 504 the DOL seeks complete disclosure of documents in order to protect the interests of participants. In addition, as a practical matter, effective enforcement under ERISA Sec. 502 will depend upon effective investigations under ERISA Sec. 504.
Noting further that the fiduciary exception did not require a showing of good cause in the ERISA context, the court affirmed the trial court’s order to produce the documents related to the administration of the funds.
Solis v. The Food Employers Labor Relations Association, et al., was reported in PEN Report 1901 (August 15, 2011) at Par 24,009N.
2. SEC Increases Asset Threshold for Pension Adviser Registration to $200 million
The Securities and Exchange Commission has increased the threshold from $50 million to $200 million above which a pension consultant must have assets under advisement in order to be registered with the SEC instead of registering with the states. The change was part of a set of SEC regulations implementing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The change is effective September 19, 2011.
As explained in the preamble to the SEC rules, "pension consultants typically do not have 'assets under management,' but we [the SEC] have required these advisers to register with us because their activities have a direct effect on the management of large amounts of pension plan assets. As a result of this amendment, advisers currently relying on the pension consultant exemption [who are] advising plan assets of less than $200 million may be required to withdraw from SEC registration and register with one of more states."
The SEC rules were discussed in PEN Report 1901 (August 15, 2011). Relevant portions of the final regulations are reproduced at Par. 16,567U.
3. IRS Authorizes Waiver of 60-day Rollover Requirement to Fix Unsuccessful Transfer of IRA Funds Based on Incorrect Advice
Taxpayers who unsuccessfully attempted to transfer amounts from their individual retirement accounts (IRAs) to a retirement plan from which the amounts were originally distributed based on incorrect advice from their financial adviser were allowed 60 days by the IRS to contribute the amounts into rollover IRAs.
Taxpayers, upon retirement, rolled their plan distributions over to IRAs. Acting on the advice of their financial adviser, the taxpayers requested distributions of their IRA funds and deposited the amounts in an account. The taxpayers then directed the human resources manager of their prior employer to transfer the amounts from the account into each taxpayer's account in their old retirement plan.
The human resources manager learned from the plan administrator that the taxpayers were not eligible to make a rollover contribution to the plan because they were no longer plan participants. The taxpayers, however, were not informed that they could not make the rollover contribution until after the expiration of the 60-day rollover period contained in Code Sec. 408(d)(3).
The IRS, in a private letter ruling, concluded that the information and documentation submitted by the taxpayers were consistent with their assertion that their failure to make a timely rollover was caused by incorrect advice from their financial adviser. Therefore, the IRS waived the 60-day rollover requirement generally applicable to IRA distributions and granted the taxpayers 60 days from the issuance of the letter ruling to contribute their funds to a rollover IRA.
IRS Letter Ruling 201122032 was reported in PEN Report 1902 (August 22, 2011) and reproduced at Par. 17,433N.
4. FASB Finalizes Changes to Disclosures by Employers Contributing to Multiemployer Plans
The Financial Accounting Standards Board (FASB) has finalized the disclosure requirements for employers contributing to a multiemployer pension plan. The Accounting Standards Update, Compensation --Retirement Benefits --Multiemployer Plans (Subtopic 715-80): Disclosure about an Employer's Participation in a Multiemployer Plan, was approved at the July 27, 2011 FASB meeting. Final language will be approved in September, according to an announcement by the FASB.
The disclosures are being adopted retrospectively. The effective date for public entities will be for annual periods ending after December 15, 2011. The effective date for nonpublic entities will be deferred for one year, to annual periods ending after December 15, 2012.
Disclosure requirements. An employer would be required to disclose specified information for each multiemployer plan for which contributions are individually material in relation to the employer's participation in such plans. Among the information that must be disclosed is the most recent certified zone status, as of the date each balance sheet is presented. If zone status is not available, an employer should disclose whether the plan was (1) less than 65% funded; (2) between 65% and 80% funded; or (3) greater than 80% funded.
In addition, the employer would need to disclose: whether a funding improvement plan or rehabilitation plan had been implemented or was pending; contributions made to the plan for each annual period that an income statement is presented; and whether the entity paid a surcharge to the plan.
For each annual period for which an income statement is presented, an employer would have to disclose the total contributions made to all multiemployer plans as well as the contributions made to each individually material plan. Additionally, the employer would have to disclose the total contributions made to all other plans in the aggregate.
The employer would also be required to provide a description of the nature and effect of any changes that would affect comparability for each period presented in the statement of income. This disclosure would include any business combination or divestiture that took place, any change in the rate of employer contributions, and any change in the number of employees covered by multiemployer pension plans.
The FASB rules were discussed in PEN Report 1902 (August 22, 2011).
5. Post-Petition Portion of Fund's Withdrawal Liability Claim Was Administrative Expense Entitled to Priority
In an issue of first impression, the U.S. Court of Appeals in Philadelphia (CA-3) has held that the post-bankruptcy petition portion of a multiemployer defined benefit fund's withdrawal liability claim against a debtor employer was an administrative expense that was entitled to priority under the Bankruptcy Code.
Employer filed bankruptcy petition. An employer filed a Chapter 11 bankruptcy petition and operated as a debtor-in-possession thereafter. The employees continued working, and the current collective bargaining agreement (CBA) continued operating until about 10 months after the bankruptcy petition was filed. About a month before the CBA expired, the employer and the union agreed to continue the terms of the CBA until a new contract was negotiated. No new CBA was negotiated. However, because the CBA and the multiemployer defined benefit fund were maintained and the employer continued to employ covered employees, the employees continued to accrue pension credits and, thus, benefits, and the employer continued to make contributions.
The contributions ended when the employer's assets were sold to a successor company. At that point, the successor company ceased to employ the employees. The pension fund determined that employer had made a complete withdrawal from the fund within the meaning of ERISA, as amended by the Multiemployer Pension Plan Amendments Act (MPPAA), and assessed withdrawal liability against the employer. The fund filed a claim in the employer's bankruptcy proceeding for the withdrawal liability to be treated as a post-petition administrative expense claim under Bankruptcy Code Sec. 503(b). The employer objected to the fund's claim and filed a motion to reclassify it as a general unsecured claim.
The district court, reversing the bankruptcy court's decision, held that the portion of the withdrawal liability attributable to the post-petition period was entitled to priority.
Portion of withdrawal liability related to employees' post-petition work entitled to priority. Under the Bankruptcy Code, administrative expenses are entitled to priority over the claims of general unsecured creditors. The appellate court explained that, to qualify for administrative priority, an expense had to arise from a post-petition "transaction with the debtor- in-possession," had to "be beneficial to the debtor-in-possession in the operation of the business," and had to be actual and necessary.
The appellate court determined that the covered employees were needed to perform work post-petition in order to keep the employer in operation and, thus, conferred a benefit to the bankruptcy estate. Under the continued CBA and pension plan, the employer had promised to provide pension benefits in exchange for the post-petition work. The successor company owed the portion of the withdrawal liability that corresponded to the employees' post-petition work to fulfill the promise the successor company assumed as part of the purchase of the employer's assets. Thus, according to the court, the Bankruptcy Code requirements were satisfied.
In re Marcal Paper Mills, Inc. was reported in PEN Report 1903 (August 29, 2011) at Par. 24,009P.
6. Denial of Pension Benefits Via E-Mailed FAQ Did Not Establish Futility of Filing a Claim
An e-mailed list of frequently asked questions (FAQs) sent by an employer explicitly stating that a participant was not eligible for an enhanced pension benefit was not sufficient to meet the futility exception to the exhaustion of remedies rule, according to the U.S. Court of Appeals in St. Louis(CA-8). Thus, a participant who thought he was entitled to an enhanced benefit under a “change in control” provision was required to exhaust his administrative remedies with the plan prior to filing suit.
Change in control provision. The change in control provision in the plan enabled participants to be eligible for enhanced retirement benefits if their employment was involuntarily terminated within three years of a change in control. In 2008, the employer was sold. In 2009, the new owner agreed to sell the participant’s subsidiary to a private equity firm. Before the sale was finalized, the participant received an e-mail captioned
“Salaried Employee Transition Frequently Asked Questions.” This e-mail stated that the participant would not be eligible for the enhanced benefit after his termination of employment.
On the day the sale was finalized, the participant filed an ERISA class action seeking benefits pursuant to the change in control provision of the plan. The trial court dismissed the suit for failure to exhaust administrative remedies.
On appeal, the participant conceded that plan language provided an administrative remedy but argued that the FAQ e-mail demonstrated the futility of filing a claim with the plan. The court, however ruled that, while the e-mail may have provide ‘’some indication” of what the plan administrator’s position would be if a claim were filed, it did not establish with certainty that the participant’s claim would have been denied.
Angevine v. Anheuser-Busch Companies Pension Plan was reported in PEN 1904 (September 6, 2011) at Par. 24,009Q .
7. Survey of Trends in DC Plans Highlights Potential Pitfalls in Increased Use of Automatic Enrollment
Automatic enrollment and automatic contribution escalation have become standard features in defined contribution plans. However, a recent survey by Aon/Hewitt notes that automatic enrollment is generally restricted to new hires that are defaulted at such low rate as to effectively decrease the overall amount of retirement contributions.
The comprehensive survey further indicates that plan sponsors have increased the use of outside investment advisory services while offering plan participants greater access to online investment guidance.
Note: The ``Trends and Experiences in Defined Contribution Plans’’ survey has been conducted every two year since 1991. The 2011 survey represents the experience of 546 employers sponsoring DC plans, including 401(k), profit-sharing, 401(a), and 457(b) governmental plans.
The surveyed plans have a combined total of more than 12 million employees and hold $780 billion in assets. Over one-third of the surveyed employers have 10,000 or more employees. The median/ average number of employee is 6,000/23,286, and the median/average plan size is $384 million/$1.64 billion. The scope of the survey provides a good portion of the 401(k) landscape.
DC plan design. Defined contribution plans are the primary retirement savings vehicle for the majority of employees. While employers have cut back on their defined benefit plans during the past two years, many of the same employers have simultaneously enhanced their DC plans (e.g., by introducing matching contributions (13 percent) and / or nonmatching contributions (10 percent)).
Nearly three-quarters of employers offer their DC plans to salaried and non-union hourly employees. In addition, 85 percent of employers extend the plan to their part-time employees.
Most employers (71 percent) provide for immediate plan eligibility. Over one-half (52 percent) also allow for immediate eligibility for employer matching contributions.
Most plans authorize catch-up contributions. Of these plans, 94 percent further provide for Roth contributions.
Note: The majority of employers (81 percent) consider their plans to be compliant with ERISA Sec. 404(c). However, this may reflect optimistic assumptions on the part of employers rather than actual plan experience.
Employer contributions. Most employers (93 percent) contribute money to the plans. Eighty-five percent provide matching contributions (fixed, graded, service, or other). However, the majority of employers (63 percent) utilize a fixed match, while 18 percent use a graded match. Nearly, one-third (29 percent) of employers provide non-matching contributions.
The most common type of fixed match remains $0.50 per $1.00 up to 6 percent of pay (14 percent of employers). In total, 19 percent of employers match $0.50 per $1.00 up to a specified percentage of pay. One quarter of plans with a fixed match formula reported a $1 per $1 match up to a specified percentage of pay. Ten percent of plans provide for a fixed match of $1.00 per $1.00 up to 6 percent of pay.
In nearly one-half (43 percent) of plans, employer contributions immediately vest. The most prevalent vesting schedule remains 3-year cliff vesting (18 percent), followed by a 5-year grade schedule (16 percent).
Employer stock investments. Over one-third (36 percent) of the surveyed plans authorize employer stock as an investment option. However, the employer stock investment option is more common among large employers with over 500 employees (52 percent) than smaller employers (18 percent).
Most plans that provide the employer stock investment option (93 percent) allow participants to direct their employer contributions in the employer stock fund. Only 23 percent of plans restrict participants’ investment in employer stock (by contribution or account balance). However, plans imposing restrictions are increasingly doing so at a lower threshold (i.e., decreasing the amount of contribution and/or balance that employees may invest in employer stock). The average maximum percentage in contributions is 23 percent, while the average maximum balance allowable is 22 percent.
Only 12 percent of plans require matching contributions to be invested in employer stock (compared to 17 percent in 2009 and 36 percent in 2005). In addition, 90 percent of plans empower participants to diversify employer matching contributions at any time (compared to 84 percent in 2009 and 46 percent in 2005).
Automatic enrollment and other features. Automation has become a standard feature in DC plans, as 56 percent of plans automatically enroll participants. However, the number of employers offering automatic enrollment has not increased since 2009.
Companies that offer both DC and DB plans are more likely to automatically enroll employees (62 percent) compared to employers that offer only DC plans (47 percent). Significantly, however, 82 percent of plans continue to restrict automatic enrollment to new hires.
Target date funds as main default investments. Default investments under automatic enrollment plans are dominated by target-date portfolios. The vast majority of plans (78 percent) default participants’ funds into a target date fund (compared to 69 percent in 2009 and 50 percent in 2007). Balanced or target-risk funds are featured in 13 percent of plans, managed accounts in 3 percent, and stable value or money market funds in 6 percent of plans.
Default rates remain low. Most plans (66 percent) continue to use a 1 percent to 3 percent default rate. However, 15 percent of plans default at a rate of 6 percent or higher (compared to 12 percent in 2009).
Note: The low default rates are problematic, as they can result in a decreased level of overall retirement contributions.
Automatic escalation. Automatic contribution escalation is also increasing, as 51 percent of plans offer the feature (compared to 44 percent in 2009). Forty-five percent of plans use automatic escalation with automatic enrollment (up from 40 percent in 2009).
Note: Plans may allay participant concern over auto-escalation by allowing employees to opt-out of the arrangement.
Automatic rebalancing. Automatic rebalancing is becoming increasingly popular. Such a feature is offered by 53 percent of plans, compared to 47 percent in 2009.
Investment monitoring
Most employers (83 percent) use an external investment consultant to assist in evaluating and monitoring investment options. Written investment policy statements have been adopted by 87 percent of plans (compared to 83 percent in 2007 and 78 percent in 2005). Nearly 80 percent of plan sponsors further include a watch-list policy in their investment policy statement, while 74 percent include fee-related topics.
Fees and expenses continue to be the most important factor for sponsors in selecting plan funds (67 percent compared to 59 percent in 2009). Fund investment processes were cited as very important by 65 percent of employers, followed by historical performance (63 percent of employers). Name recognition and the availability of fund information in public sources were cited as very important considerations by only 8 percent and 12 percent of sponsors, respectively.
Tiered investment structure
Plan sponsors are increasingly using tiered investment structures. The most prevalent tiers include: target date portfolios, asset class funds with a mix of active and passive, and a brokerage window or expanded fund set.
The number of funds being offered in plans has remained flat. Excluding pre-mixed funds (target date and target risk funds), the average number of funds being offered declined from 14 to 13. However, the median number of funds grew from 12 to 13.
Target date portfolios are offered by 81 percent of plans (up from 71 percent in 2009). By contrast, target-risk funds are available in only 10 percent of plans, down from 18 percent in 2009 and 32 percent in 2007.
Among core funds, the most prevalent asset classes remain Stable Value, Intermediate Long-Term Bond, Large Cap Equity, Small Cap Equity, and International Equity. Significantly, the use of Specialty bond funds has increased by 17 percent since 2007, primarily due to the increased adoption of Treasury inflation-protected securities (TIPS) funds. Similarly, the use of Real Estate Investment Trusts (REITs) has doubled since 2007.
Plans are also increasingly adopting self-directed brokerage windows. Twenty nine percent of plans offer a self-directed brokerage window, up from 26 percent in 2009 and 18 percent in 2007.
Index funds remained prevalent in large cap equity and intermediate bond asset classes. Nonmutual funds have grown substantially. In plans with over $1 billion in assets, 62 percent had most of their investment offerings as institutional vehicles, compared to 57 percent of plans in 2009 and 49 percent in 2007.
Across all plan assets, two-thirds of assets are invested among 4 categories: stable value (20 percent), pre-mixed portfolios (13 percent), large cap equity (22 percent) , and employer stock (13 percent)
Investment education and advisory services
Plan sponsors continue to use written materials in communicating investment concepts, although only 22 percent found the use of the materials to be effective. The most effective media for participant communication was reported to be on-site seminars/ workshops/ meetings (ranked effective by 54 percent of plans), followed by call center counseling and personalized communication, each ranked effective by 38 percent of plans.
Plan sponsors have significantly increased the use of outside investment advisory services to help employees make investment decisions (74 percent compared to 50 percent in 2009). The types of service offered include: online advice (37 percent), guidance tools (47 percent), one-on-one counseling (44 percent), and managed accounts (29 percent).
Nearly one-half (47 percent) of employers offer participants access to online guidance (compared to 28 percent in 2009). Forty-four percent of plans provide one-on-one financial counseling. Online advice and managed accounts are now offered by 37 percent and 29 percent of plans, respectively.
Note: Legal and fiduciary concerns remain a significant obstacle for two-thirds of the employers that do not provide outside investment services to their employees. Cost concerns were cited as the primary barrier to providing such services by 18 percent of plans.
Plan expenses. While 63 percent of surveyed employers reported being concerned about fees, the percentage of plans that have calculated total plan costs (fund, administrative, and trustee fees) has actually declined from 84 percent in 2009 to 72 percent. However, three-quarters of employers have made efforts to reduce expenses.
Plan fees are typically paid by employees. In nearly 73 percent of plans, participants pay all recordkeeping fees, either directly or indirectly. Only 22 percent of companies share the fee burden with participants, while 5 percent of employers pay all fees directly (down from 11 percent in 2009).
Note: Plans may elect to assume the fees incurred for employees with small account balances so as not to penalize or discourage participation.
Fee assessments. Plans generally assess fees across plan assets (94 percent). Sixty-six percent assess fees through revenue sharing only, 11 percent through add-on (accruals) to funds, and 17 percent through a combined approach. In addition, 14 percent of plans charge a periodic line-item fee to participants (including 2 percent that also charge fees over assets).
Note: Aon/Hewitt notes that add-ons and line charges are increasingly being used, especially by larger employers, to allow for more equitable sharing of costs with participants.
Fee disclosure. Plan sponsors are using varying vehicles to disclose plan fees. Over one-half (51 percent) of sponsors disclose administrative fees in fund fact sheets and/or prospectus information (compared to 28 percent in 2009), and 43 percent disclose fees in participant account statements (compared to 23 percent in 2009). Significantly, 85 percent of plan sponsors disclose investment management fees in fund fact sheet and/or prospectus information (compared to 60 percent in 2009).
Retirement income solutions
An increasing number of plans (29 percent) provide or promote retirement solutions, inside or outside the plan. Eighteen percent of plans facilitate annuities outside the plan, while 15 percent of companies use an ``in plan solution,’’ such as managed payout funds (11 percent), managed accounts with a drawdown feature (8 percent), and annuities within the plan (8 percent). In addition, nearly three- quarters of plans provide online modeling tools to assist employees in understanding the amount of money they will be able to spend each year in retirement
Terminated employees. Nearly one quarter of employers prefer that the account balances of terminated employees remain in the plan. Larger plans with more than $1 billion in assets are especially partial to this requirement (39 percent). However, 67 percent of plans report having no preference.
The article discussing the Aon/Hewitt, `` 2011 Trends and Experiences in Defined Contribution Plans, Paving the Road to Retirement’ (www.aonhewitt.com) appears in the September 5, 2011 issue of the Practical Guide to 401(k) Plans.
PEN ENHANCEMENTS
1. Rolling PEN Revision. A significant value added feature of PEN is the ``rolling revision,’’ in which important developments in the pension and benefits field are reflected in PEN Explanations within a short period of time following release. Reflecting legislation, court cases, Final and Proposed Regulations, Revenue Rulings, Revenue Procedures, Letter Rulings, Opinion Letters, Field Assistance Bulletins and other releases by IRS, DOL, PBGC, SEC and other governmental agencies allows PEN to be the most current and up-to-date resource available.
2. Latest Benefit Practice Portfolio Analyzes Changes to Puerto Rico Pension Law. Over the past few years, a number of law changes have impacted the coverage of Puerto Rico employees in U.S. tax-qualified pension plans. In the latest CCH Benefit Practice Portfolio, Elizabeth Thomas Dold and David N. Levine describe the changes that have combined to create what they call a “perfect storm” – creating new challenges in finding the right retirement vehicle to provide tax-favored pension benefits to bona fide Puerto Rico employees. Dold and Levine are Principals at the Groom Law Group, Chartered in Washington, D.C.
The Portfolio, “Qualified Pension Plans for Puerto Rico Employees - The Perfect Storm Has Arrived,” is available to Internet subscribers and may be accessed by selecting “Pension Explanations” and clicking on “Benefit Practice Portfolios.”
Benefit Practice Portfolios Provide Practitioner Oriented Insight on Pension Law. Benefit Practice Portfolios are available to internet subscribers to the CCH Pension Plan Guide. These Portfolios, written by nationally recognized experts, provide insights into specific areas of pension law. There are well over 150 Portfolios on a host of diverse subjects, written for pension and benefits practitioners.
A sampling of recent Benefit Practice Portfolios includes:
Cafeteria Plans, HRAs, and External Appeals Requirements Under PPACA (July 2011) by Aimee Nash
Implementing Distributions Under Terminating 403(b) Plans (June 2011) by Glenn Sulzer
IRS Provides Guidance on In-Plan Rollovers to Roth Accounts (January 2011) by Aimee Nash
TheMedicare Tax on Unearned Income and Roth Conversions (November 2010) by Bruce D. Steiner
Foreign Account Reporting for Retirement Plans (September) by Jennifer E. Eller
What's In the IRS's 401(k) Compliance Questionnaire? (July 2010) by Glenn Sulzer
Being a Retirement Plan Fiduciary: More Angst Than Ever (May 2010) by Michael Snyder
Employee Stock Purchase Plan Final Regulations (March 2010) by Brian A. Benko
Suspension of Required Minimum Distributions for 2009 Facilitates Roth Conversions (November 2009) by Bruce D. Steiner
Target-Date Funds: Balancing Risk With Success (September 2009) by Michael Snyder
Impact of PPA on Defined Contribution Plan Administration (May 2009) by Brodie Secrest
The Non-ERISA, Nonprofit 403(b) Plan May be More Difficult to Achieve Post Final 403(b) Regulations (March 2009) by Aimee Nash
Distributing Annuities from Defined Contribution Plans: The Qualified Plan Distributed Annuity (June 2008) by Robert J. Toth, Jr. and Robert W. Kistler
3. DB/K Document from ftwilliam.com is Industry First for Leveraging DB/K Plans
In an industry first, ftwilliam.com, which provides third-party administrators (TPAs) and other retirement plan professionals integrated Software as a Service (SaaS) workflow solutions, has launched its all-new DB/K document. The DB/K document (see CCH Pension Plan Guide ¶136 ), which wraps a 401(k) document (the 401(k) component) and either a cash balance or a defined benefit document (the DB component) together into one plan, is an important tool for individuals working with those types of documents.
“The combined DB/K document is definitely an industry trend right now and after listening to our customers, we’re excited to be the first to offer this unique plan,” said Tim McCutcheon, General Manager of ftwilliam.com. “As DB/K plan safe harbor compliance becomes more popular with businesses, ftwilliam.com is in position to support customers with the new DB/K wrap option.”
The new DB/K “wrap” document is available in the ftwilliam.com retirement plan document package.
4. 2011 Edition of U.S. Master Pension Guide Now Available
The 2011 U.S. MASTER™ PENSION GUIDE is now available for purchase. The book provides a comprehensive explanatory overview of qualified retirement plans and other retirement arrangements, reflecting up-to-date law changes and regulations. Benefit COLAs, calendars, and tables reflect the year 2011 figures.
The book begins with a survey of the different types of plans from which an employer may choose and then describes the procedures for obtaining plan qualification. Rules governing minimum participation, coverage and vesting, nondiscrimination, distributions, reporting and disclosure, funding, and fiduciary standards are covered in separate chapters. Examples and pointers are used to illustrate the rules. The five final chapters cover the special rules applicable to 401(k) plans, ESOPs, tax-sheltered annuities, IRAs, and nonqualified arrangements. The book is one of the more efficient means of keeping current on the constantly changing rules governing qualified plans, especially in the areas of funding, reporting and disclosure, and cash and deferred arrangements.
The 2011 U.S. MASTER™ PENSION GUIDE is available for $89.95 from CCH INCORPORATED, 4025 W. Peterson Ave., Chicago, IL 60646-6085 or by calling 1-800-248-3248 and asking for book no. 0-4537-500. Discounts are available for multiple copies.
5. Keeping Up with PPA Guidance
The Pension Protection Act of 2006 represents the most sweeping overhaul to the pension law in more than 30 years. In addition to making myriad changes to the Internal Revenue Code and ERISA, the PPA requires government agencies to issue perhaps hundreds of guidance items over the next several years.
Keeping track of these guidance issuances will be a monumental task for pension and benefit practitioners. CCH has created a valuable search aid --the Table of PPA Guidance --which allows practitioners to quickly locate PPA guidance items. The Table lists official guidance issued by government agency (Internal Revenue Service, Department of Labor, Pension Benefit Guaranty Corporation, and joint agency releases), form of guidance, date of issuance, short description of the guidance, and the CCH paragraph number at which the guidance item may be found in full text. Internet customers can quickly link from the Table to a specific guidance item. The Table of PPA Guidance is designed to help busy practitioners stay abreast of the continuing flow of PPA issuances and is available exclusively to CCH PENSION PLAN GUIDE subscribers.
The Table of PPA Guidance is at PEN Par. 51C.
6. Comprehensive Plan Reporting and Disclosure Calendar Chart
Employee benefit plans are subject to numerous reporting and disclosure requirements that require information to be provided to plan participants and beneficiaries and filed with the IRS, DOL, PBGC, and other government agencies. Failure to comply with any applicable reporting requirement can result in significant penalties.
In order to assist plan administrators and others in satisfying their reporting obligations, PEN features a plan reporting calendar that neatly encapsulates all of the various reporting requirements. The calendar lists the reports required in a calendar year in chronological order. In addition, the calendar highlights the subject matter of a report and indicates both the party required to file the report and the party to whom the report must be directed.
The Plan Reporting Calendar is at PEN Par. 36.
7. Check "Calendars . Tables . Interest Rates" for Quick Answers
Electronic and print customers of the CCH Pension Plan Guide can find many pertinent pension facts and figures by consulting the handy "Calendars. Tables. Interest Rates" section of the Guide.
Some of the helpful features of this section are:
Current withholding tax tables (PEN Pars. 46, 46A, and 46B)
Cost-of-living adjustment charts for retirement plans, IRAs, and social security (PEN Par 48)
PBGC monthly benefit chart (PEN Par. 49)
Table of Public Laws Amending the Internal Revenue Code and ERISA (PEN Par. 51B)
Table of current and historical interest rates (PEN Par. 52 and following)
Print customers will find the "Calendars . Tables . Interest Rates" division in Volume 1 of their Guide. Internet customers will find the same information by selecting "Pension Plan Guide" under the "CCH Pension Explanations" blue bar, then clicking on "Tables and Other Documents," the first item on the menu.