September 2011
The following highlights the most significant New Developments published in the Pension Plan Guide since the last update on September 1, 2011.
During the past month, the Employee Benefits Security Administration (EBSA) announced that it will re-propose regulations issued in October 2010 that would have significantly expanded the definition of a fiduciary under ERISA. The new rules, which are expected to be issued in early 2012, will clarify that fiduciary advice is limited to individualized advice directed to specific parties.
EBSA also issued an interim Policy allowing for the electronic disclosure of fees, expenses, and other plan investment information to participants in participant-directed individual accounts. The guidance sets forth separate conditions for the disclosure of information that may be included in pension benefit statements (e.g., fees and expenses) and information that must be provided separately (e.g., investment fund information).
The PBGC has announced that it will waive penalties for the late payment of 2011 premiums. Companies that pay their premiums up to seven days past the due date will not have to pay a penalty to the PBGC.
In the courts, the Seventh Circuit has ruled that administrators of a 401(k) plan did not breach fiduciary duties under ERISA by including retail mutual funds among the plan's investment options or requiring participants to pay fund expenses.
In a related case, the Third Circuit has held that the directed trustee of company's 401(k) plan was not authorized to control the selection and retention of plan investment options and was, thus, not liable as a fiduciary for the allegedly imprudent investment choice. According to the court, the company's selection of retail mutual funds, with allegedly excess fees, as plan investment options was not imprudent because the funds provided a reasonable mix and range of options that included a variety of risk profiles and fee rates.
NEW DEVELOPMENTS
1. EBSA to Re-Propose Regulations Expanding Definition of Fiduciary
The Employee Benefits Security Administration will re-propose regulations issued in October 2010 (see PEN Report 1860 (October 25, 2010)) that would have significantly expanded the definition of a fiduciary under ERISA. The proposed rules generated over 260 written pubic comments and precipitated considerable consternation throughout the benefits community. Financial professionals, especially charged that the proposed rules would increase costs and discourage service providers from furnishing investment advice.
The extended rulemaking process will enable EBSA to consider additional practitioner comments in drafting rules that also serve the Agency's interest in preserving the retirement security of workers.
Scope of re-proposed rules. EBSA indicates that the newly proposed rules, which are expected to be issued in early 2012, will clarify that fiduciary advice is limited to individualized advice directed to specific parties, thereby addressing the concern of practitioners that the regulations cover routine appraisals. The newly proposed rules will also clarify application of the regulations to arm's length transactions, such as swap transactions.
In addition, EBSA anticipates that the newly proposed rules will address the concerns of brokers and advisers regarding the continued applicability of exemptions that allow brokers to receive commissions in connection with mutual funds, stocks, and insurance products. According to EBSA, it will craft new or amended exemptions that can preserve beneficial fee practices, while also protecting plan participants and individual account owners from abusive practices and conflicted advice.
The proposed rules are reproduced at PEN Pars. 14,742D and 17,444. The Preamble to the proposed rules is at PEN Par/. 24,808W.
The EBSA initiative to re-propose the regulations was reported in PEN Report 1907 (September 26, 2011). EBSA News Release No. 11-1382-NAT, September 19, 2011 was reported in the Daily Document Update section of PEN at Par. 109C
2. ERISA Fiduciaries Not Required to Exclude Retail Funds From Investment Menu of 401(k) Plan
Administrators of a 401(k) plan did not breach fiduciary duties under ERISA by including retail mutual funds among the plan's investment options or requiring participants to pay fund expenses, the Seventh Circuit Court of Appeals has ruled.
Retail mutual funds included in investment menu. The company's participant-directed 401(k) plan offered participants 32 investment options, including 24 mutual funds that are open to the public (on the same terms and at the same cost). The funds are no-load vehicles that do not charge investors a fee to buy or sell shares. Purchases and sales occur at net asset value, calculated daily. The no-load funds cover expenses by deducting them from the assets under management. Thus, the fund does not assess an annual flat price per investor (i.e., capitation fee) but assess fees as a percentage of capital under management.
Plan participants brought suit under ERISA, charging that the plan administrator breached fiduciary duties by: (1) including retail mutual funds among the investment options (instead of restricting the options to wholesale or institutional funds exclusively); and (2) requiring participants to bear the expense of the funds, rather than having the plan bear the costs.
Note: In Hecker v. Deere, the 7th Circuit held that a plan that offered 25 retail mutual funds with expense ratios ranging from 0.07% to just over 1% annually provided an acceptable array of investment options, as the expense ratios were set against the backdrop of market competition (see PEN Par. 24,004J). The wide range of investment options, the court stressed, allowed the plan to comply with ERISA's fiduciary requirements. In subsequently denying a petition for rehearing, the court affirmed that the company's election to accept retail fees without negotiating presumptively lower wholesale fees did not constitute a breach of fiduciary duty. The trial court in the instant case found Hecker controlling and dismissed the participants' claims on the pleadings.
Should plan have paid fund expenses? Initially, the court noted that the claim that the plan should have paid the fund expenses directly, allowing participants to realize the gross rather the net return, involved a question of design (and not administration) to which ERISA's fiduciary requirements do not apply. In designing a plan, the court explained, an employer is not subject to a fiduciary duty to make the plan more valuable to participants by providing additional funds to cover operating expenses.
Should plan exclude retail funds? The plan provided 8 alternative options to the retail mutual funds. However, the participants maintained that the plan should not have offered any retail funds, but restricted investment options to wholesale or institutional funds. According to the participants, a plan that offers only institutional vehicles will incur lower average fees.
The court initially noted that Hecker rejected a similar argument because of the benefits of competition offered by retail funds. Specifically, the retail funds provided mark-to market benchmarking that, the court reasoned, allowed participants to better understand and compare fees.
Note: The court, after observing that institutional shares do not always have lower expenses, further explained that institutional investment vehicles have lower liquidity, in that participants may not transfer funds between investment vehicles without incurring a fee. Implicit in the court's reasoning was the understanding that funds with the lowest fees will not always be in the best interest of participants. Participants have the right, the court suggested, to select more expensive funds that provide such benefits as daily valuation and greater liquidity. Retail funds provide benefits that participants may value over lower costs and need not be excluded from a plan's balanced investment menu.
Loomis, et al. v, Exelon Corp., et al, was reported in PEN Report 1908 (October 3, 2011) at PEN Par. 24,009U.
3. Directed Trustee Not Liable as Fiduciary for Allegedly Imprudent Selection of Retail Mutual Funds as Plan Investment Options
The directed trustee of company's 401(k) plan was not authorized to control the selection and retention of plan investment options and was, thus, not liable as a fiduciary for the allegedly imprudent investment choices, the federal appeals court in Philadelphia (CA-3) has ruled. In addition, the company's selection of retail mutual funds, with allegedly excess fees, as plan investment options was not imprudent because the funds provided a reasonable mix and range of options that included a variety of risk profiles and fee rates.
Plan investment option. The corporation's 401(k) plan provided 73 investment options to which non-union employees could allocate contributions. The company matched one-half of a participant's contributions (up to 2 percent of wages), which were invested in company stock fund. Of the 73 investment options, participants could invest in a stable value fund, the company stock fund, or one of the 71 other options provided under a trust agreement with Fidelity. Included in the 71 options provided by Fidelity, were four commingled pools, one of which invested in the S & P 500 Index and three of which invested in bonds.
The remaining 67 investment options were mutual funds which were added to the plan pursuant to a trust agreement with Fidelity. Under the agreement, Fidelity, as the plan's directed trustee, agreed to provide administrative services bundled with investment options. In return, the company agreed that any additions to the funds to be managed by Fidelity would be Fidelity funds. However, the company was not prohibited from adding non-Fidelity options to the plan and contracting with another company to administer the non-Fidelity investments.
Each mutual fund in the plan incurred fees for investment management. The fees were set for each fund as an expense ratio at a percentage of each participant's assets invested in a fund. Expense ratios of the funds included in the plans ranged from 0.1 percent to 1.21 percent. However the fees did not deter investment in the mutual funds, as nearly $1.9 billion of the plan's roughly $2 billion in assets were invested in the funds.
Fiduciary breach in selection of retail mutual funds with high fees. Plan participants brought suit under ERISA alleging that the company and Fidelity breached their fiduciary duties of loyalty and prudence by selecting and retaining retail mutual funds in the mix of plan investment options. Specifically, the participants charged that the administrative fees governed by the trust agreement and the fees associated with each retail mutual fund were excessive in light of the services rendered, as compared to other investment options not included in the plan. According to the participants, the company should have selected investments with lower fees than mutual funds and/ or used the size of its plan as leverage to bargain for lower fee rates on the mutual funds.
Fiduciary status of Fidelity. Fidelity maintained that it was not a fiduciary with respect to the conduct constituting the alleged fiduciary breach. The trial court granted Fidelity's motion to dismiss, ruling that Fidelity and its related entities were not fiduciaries with respect to the challenged conduct because they did not exercise control over the selection and inclusion of investment options in the plan.
Initially, the appeals court explained that an entity is an ERISA fiduciary only to the extent that it possesses authority or discretionary control over the plan. Fidelity as a directed trustee was a fiduciary under the plan with respect to certain assets and administrative functions. The trust agreement, however, limited Fidelity's role to holding and investing plan assets in trust among investment options selected by the applicable fiduciary and expressly disclaimed any role for Fidelity in selecting investment options. According to the court, Fidelity's limited role as a directed trustee (as defined in the trust agreement) did not encompass the activities alleged to comprise a breach of fiduciary duty (i.e., the selection and maintenance of the mix and range of investment options included in the plan). Concluding that Fidelity was not subject to liability with respect to the selection and maintenance of plan investment options, the court stressed that Fidelity had no contractual authority to: control the mix and range of investment options, control the mix and range of investment options, veto the company's selection, or restrain the company from including other investment options in the plan that were administered by an entity other than Fidelity.
Company selection of allegedly expensive plan investment options. The participants' fiduciary breach claims against the company were based on the inclusion among the plan's investment options of Fidelity retail mutual funds, which carried allegedly excessive fees. Specifically, the participants charged that Fidelity's fee compensation under the mutual funds should not have been calculated as percentage of the total assets in the funds, but determined on a per participant basis. The fact that the plan contained few other investment options, the participants maintained, further indicated that the selection and investigation of plan investment options was inadequate.
The court first noted that the plan contained a variety of investment options, including company stock commingled funds, and mutual funds. The retail mutual funds also featured funds with a variety of risk and fee profiles, including low risk and low fee options. As the mix and range of investment options (risk profiles and fee rates) were reasonable, the court found that the conclusory allegations made by the participants about the company's investment selection process to be without support. Therefore, the participants failed to state a claim against the company for fiduciary breach.
Renfro, et al. v. Unisys Corp. was reported in PEN Report 1905 (September 12, 20111) at PEN Par. 24,009R.
4. PBGC Provides Premium Payment Relief to Plan Sponsors
The PBGC has announced that it will waive penalties for the late payment of 2011 premiums. Companies that pay their premiums up to seven days past the due date will not have to pay a penalty to the PBGC. In addition, the PBGC is offering relief in connection with the alternative premium funding target elections.
Seven-day rule. For plan years beginning after 2010, the PBGC will automatically waive premium payment penalties that are assessed solely because premium payments are late by not more than seven calendar days. In applying this policy, the PBGC will assume that each premium payment was made seven calendar days before it was actually made. All other rules will then be applied as usual.
Alternative premium funding target elections. For plan years beginning after 2007, PBGC regulations allow a plan to elect to use the alternative premium funding target to calculate its variable rate premium (VRP). For 2008 and 2009 plan years, over 95% of the plans that used the alternative method filed valid elections to do so. However, some plans that used the alternative method did not make a valid election to do so and later requested the PBGC to treat them as having made a valid election. In response, the PBGC issued Technical Update 10-2 (see PEN Par. 19,975Z-27), under which a plan was deemed to have made a valid election if certain conditions were met.
The PBGC is now providing relief similar to, but more expansive, than the relief provided in Technical Update 10-2 for plan years beginning after 2009. Specifically, relief is available where the plan used the alternative method to determine the VRP for the applicable plan year without filing a valid election to do so for the applicable plan year or a prior plan year. Similar relief is available where the plan used the standard method, but inadvertently made an election to use the alternative method for the applicable plan year.
The PBGC premium payment relief was reported in PEN Report 1907 (September 26, 2011) and reproduced at Par. 19,981Z-23.
5. PBGC Offers Tips for 2012 Premium Filings
The PBGC has provided some helpful tips for plan administrators and other practitioners who are preparing 2012 premium filings and submitting them to the PBGC via the My Plan Administration Account (My PAA).
The PBGC has highlighted two key items to note for 2012:
(1) The PBGC will determine the inflation-adjusted per-participant flat premium rates in October and include them in the online premium Instructions (to be issued in December 2011).
(2) The earliest filing due dates for calendar-year plans are as follows:
(a) The estimated flat-rate filing is due 02/29/2012 for large plans (those with 500 or more participants for the prior plan year).
(b) The comprehensive filing is due 10/15/2012 for large plans and mid-size plans (those with 100 to 499 participants for the prior plan year).
(c) The comprehensive filing is due 04/30/2013 for small plans (those with fewer than 100 participants for the prior plan year).
The PBGC recommends that plan administrators and practitioners read the premium filing instructions completely and carefully before preparing and submitting premium filings. In addition, the PBGC urges filers to keep their My PAA account active and updated. Filers should log in at least once per year and update their accounts when there are changes (e.g., name and e-mail address).
The PBGC tips were reported in PEN Report 1908 (October 3, 2011). The full text of the guidance was reproduced in the Daily Document Update Section of PEN at Par. 109D.
6. EBSA Interim Policy Allows for Use of Electronic Media to Satisfy Participant-Level Fee Disclosure Requirements
The Employee Benefits Security Administration (EBSA) has issued an interim Policy allowing for the electronic disclosure of fees, expenses, and other plan investment information to participants in participant-directed individual accounts. The guidance sets forth separate conditions for the disclosure of information that may be included in pension benefit statements (e.g., fees and expenses) and information that must be provided separately (e.g., investment fund information).
Note: The temporary guidance will allow plan sponsors and service providers to comply with the disclosures required by ERISA Reg. 2550.404a-5 until final guidance is issued. Electronic disclosure promises to allow for compliance with the disclosure conditions at a reduced cost.
Participant-level fee disclosure requirements. ERISA Reg. 2550.404a-5 establishes (beginning May 31, 2011) fiduciary requirements for the disclosure of fees and expenses associated with participant-directed individual account retirement plans. The rules allow certain fee and expense information described in ERISA Reg. 2550.404a-5(e)(1) and (2) to be included in quarterly pension benefit statements required in ERISA Sec. 105(a)(1)(A)(i). Such information includes plan-related information (such as investment instructions (procedures and restrictions), a current list of the plan's investment options, and a description of any brokerage windows), general plan administrative service expenses that may be charged against participants' individual accounts, and individual fees that may be charged against a particular participant's account (e.g., fees for processing plan loans). This information must be given to participants on or before the date they can first direct their investments and then annually thereafter.
Additional information that may be provided in a pension benefit statement includes the dollar amounts for general plan administrative services expenses and individual fees actually charged to a participant's account. According to EBSA Field Assistance Bulletin 2006- 03, good faith compliance with the disclosure requirements of ERISA Sec. 105 could be achieved by furnishing pension benefit statements in conformance with the safe harbor of ERISA Reg. 2530.104b-1(c) with IRS Reg. 1.401(a)-21, and through secure continuous websites provided by pension plans.
By contrast, other disclosures required under ERISA Reg. 2550.404a-5, such as investment-related information, may not be included in a pension benefits statement.
The component of the final regulations relating to the manner of furnishing the fee and expense information was reserved (ERISA Reg. 2550.40-4a-5(g)). However, the Preamble to the final regulations stated that, in the interim period before guidance on electronic disclosures was issued, the general disclosure rules at ERISA Reg. 2520.104b-1, including the safe harbor for electronic disclosures at ERISA Reg. 2520.104b-1(c), apply to information furnished under the final participant-level fee disclosure regulations.
The final regulations apply to plan years beginning on or after November 1, 2011. Under transitional rules, the due date for initial disclosures required on or before the date participants can first direct their investments has been extended to the later of 60 days after the first day of the first plan year beginning on or after November 1, 2011 or 60 days after April 1, 2012. Thus, the earliest date that these disclosures have to be delivered is May 31, 2012.
Effect of interim policy. In issuing the interim relief, EBSA recognizes that it may not be able to provide final guidance on furnishing disclosures under ERISA Reg. 2550.404a-5 until after the applicable compliance date. Pursuant to the interim policy, EBSA will not take any enforcement actions against a plan administrator who complies with the policy's conditions.
Disclosures that may be included in pension benefit statements. Disclosures that may be included in a pension benefit statement in accordance with ERISA Reg. 2550.404a-5(e)(1) or (e)(2) may be furnished in the same way as other information that is included in the same pension benefit statement, according to EBSA. For example, if pension benefit statement information is supplied through a secure continuous access website as allowed under FAB 2006-03, then the disclosures included in the pension benefit statements pursuant to ERISA Reg. 2550.404a-5(e)(1) or (e)(2) may also be furnished electronically in the same manner.
Disclosures that may not be included in pension benefit statements. EBSA explains that disclosures required under the final participant-level fee disclosure regulations that may not be included in pension benefit statements, but must be provided separately, may not be furnished electronically under FAB 2006-03 guidance. Plan administrators may use the safe harbor of ERISA Reg. 2520.104b-1(c ) to deliver the required disclosures through electronic media. Alternatively, pending further guidance, plan administrators may furnish the disclosures through electronic media in accordance with specified conditions.
1. Voluntary provision of e-mail address. Participants and beneficiaries entitled to receive information under ERISA Reg. 2550.404a-5 must voluntarily provide the employer, plan sponsor, or plan administrator (or its designee) with an e-mail address for the purpose of receiving the disclosures. The e-mail address must be provided in response to a request accompanied by an initial notice.
Note: EBSA explains that the mere establishment or assignment of an e-mail address by an employer for a participant or beneficiary will not be treated as the voluntary provision of an e-mail address.
2. Initial Notice. The initial notice must be clear and conspicuous, provided contemporaneously and in the same medium as the request for the e-mail address, and contain a description of the information to be disclosed. In addition, the notice must contain a statement notifying participants of their right to a paper copy of the information and to discontinue the electronic delivery of the notice
3. Annual Notice. Commencing with the year beginning after the year in which the participants or beneficiaries voluntarily provide their e-mail address, and annually thereafter, the plan administrator must furnish an annual notice to each such participant or beneficiary.
The annual notice must contain the information included in the initial notice (except for the required statement concerning the voluntary provision of an e-mail address).
The annual notice must be furnished on paper in accordance with ERISA Reg. §2520.104b-1(b). Alternatively, the plan may furnish the annual notice electronically by sending it to the e-mail address on file for the participant or beneficiary if there is evidence that the participant or beneficiary interacted electronically with the plan after the date the annual notice for the preceding year was furnished (or in the case of the first annual notice, after the date the Initial Notice was furnished).
Special Transition Provision. With respect to e-mail addresses of participants and beneficiaries that are on file with the employer, plan sponsor, or plan administrator (or its designee) on a specified date. The e-mail provision and the initial notice conditions will be deemed satisfied if a transition group initial notice, is furnished to the transition group.
ERISA Technical Release No. 2011-03 was report in PEN Report 1907 (September 26, 2011) at PEN Par. 19,966E.
7. CCH Projects 2012 IRA COLAs
CCH has projected inflation-adjusted phaseout limits that apply to taxpayers making contributions to traditional and Roth IRAs for the 2012 tax year. The projected figures are based on the inflation adjustment provisions of the Internal Revenue Code as currently in force and the average of the Consumer Price Index for All Urban Consumers (CPI-U) published by the Department of Labor for each month in the 12-month period ending on August 31, 2011.
Note: Official IRS figures will not be released until later in 2011.
Roth IRAs. The maximum annual contribution that may be made to a Roth IRA is phased out for taxpayers with modified adjusted gross income (AGI) above certain amounts. According to the CCH projections, the AGI phase-out limits for maximum Roth IRA contributions for 2012 will be: married taxpayers filing jointly, $173,000 ($169,000 in 2011); single taxpayers and heads of household, $110,000 ($107,000 in 2010).
Traditional IRAs. The maximum deductible contributions that may be made to traditional IRAs are phased out for individuals who are covered by an employer-sponsored retirement plan. According to the projections, the AGI limits for maximum IRA contributions for individuals covered by a retirement plan will rise from $90,000 to $92,000 for married filing jointly, and will increase from $56,000 to $58,000 for head of household and single filers. The AGI limit for joint filers when only one spouse is covered by a retirement plan will be $173,000 in 2012, up from $169,000 in 2011.
The COLA projections were published in PEN Report 1908 (October 3, 2011).
8. Deadline for Filing Form 5558 Extension of Form 5500 Report Pending
Plan administrators considering a Form 5558 extension of the Form 5500 annual report will need to file the form by October 17, 2011. The penalties for failure to timely file Form 5500 or an extension can be onerous. However, the Labor Department maintains an effective correction program.
Due dates for filing annual reports. The annual report form (Form 5500 and 5500-EZ) and its accompanying schedules must be filed with the EBSA on or before the last day of the seventh month following the close of the plan year. This is generally July 31 for calendar year plans.
Plan administrators may receive a one-time 2 1/2 month extension of time to file the annual report by filing Form 5558 (Application for Extension of Time to File Certain Employee Plan Returns) with the IRS (and not with the EBSA). The deadline is usually October 15 for calendar year plans. However, because October 15, 2011 falls on a Saturday, the deadline for this year will be October 17, 2011.
Automatic approval of extension request. All applications for an extension of time to file an annual return that are filed before the return's normal due date on a properly completed and signed Form 5558 are automatically approved to the date that is not more than 2 1/2 months after the return's normal due date. A photocopy of the extension request (but not a copy of the approved extension) must be attached to the Form 5500.
Employer need not sign Form 5588. An employer, plan sponsor, or plan administrator is not required to sign a Form 5558 that is filed to secure an extension of the Form 5500 or 5500-EZ filing deadlines. Note, Box 1a on Form 5558 should be checked to indicate a request for a Form 5500 series extension.
Limits on extensions provided under Form 5558. Form 5558 must be filed before the original filing date for the Form 5500. The automatic extension of the due date for filing Form 5500 to the extended due date of an employer's federal income tax return may not be further extended by the filing of Form 5558. Penalties. The IRS and the DOL are empowered to assess penalties for the failure to comply with the annual report rules (including the failure of the plan administrator to electronically sign the report). The penalties are imposed concurrently and are not offsetting. In addition, note that the penalty is a personal liability of the employer or plan administrator and, thus, may not be deducted by the employer or assessed the plan as an administrative expense.
IRS penalties. The IRS authorizes a penalty to be imposed on the plan administrator or the employer of $25 per day (up to $15,000) for the failure to comply with the annual report.
DOL penalties under ERISA. Plan administrators who fail to provide a complete annual report or who file the report after the stipulated due date are, in addition to the IRS penalty, subject to a separate ERISA imposed penalty of $1,100 per day (contrasted to the $25 per day IRS penalty) for each day a complete annual report is not filed. ERISA, unlike the IRC, does not establish a maximum penalty. Thus, the penalty may be assessed from the due date of the return, irrespective of any extensions.
Delinquent Filer Voluntary Compliance Program.
A plan administrator may ameliorate possible penalties for failure to timely file Form 5500 (but not 5500-EZ) prior to receiving a late file notice from the DOL by participating in the Delinquent Filer Voluntary Compliance Program (DFVC). Note , the failure to file Form 5500 may not be corrected under EPCRS.
Under the DFVC, which is available only prior to the issuance of a late file notice by the DOL, the plan administrator voluntarily files the delinquent return and pays a reduced penalty that is based on the size of the plan and the length of the filing delay.
The DFVCP is detailed at PEN Par. 4085.
2. 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:
Qualified Pension Plans for Puerto Rico Employees- The Perfect Storm Has Arrived (September 2011) by Elizabeth Thomas Dold and David N. Levine
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
The Medicare 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)