Distributions

FASB Proposal to Report Participant Loans As Notes Receivable Rather Than an Investment
Excerpt:"The amendments to Subtopic 962-325 would require that participant loans be classified as'notes receivable'from participants, which are segregated from plan investments and measured at their unpaid principal balance plus any accrued but unpaid interest."(Wolters Kluwer)

Vanguard Reshapes the Annuity Evaluation Process
Excerpt:"Those who want to purchase an annuity can face some perplexing challenges. They may find it hard to compare offers among different companies because they can't tell how various features affect payouts. They also may find it difficult to determine overall costs. And their ability to make a decision may be further complicated by annuity providers who aren't using up-to-date technology."(The Vanguard Group, Inc.)

[Guidance Overview] IRS Guidance for Calculating Excludable Portion of Pension Distributions Where No Exclusions Were Reported in Prior Years
Excerpt:"Two methods that were suggested by the participant for correcting the prior years'returns were rejected because they did not comply with Code Sec. 72 and underlying regulations."(Wolters Kluwer)

[Opinion] The SPARK Institute Comment Letter to FASB on Proposed Accounting Standards Update for DC Plan Loans (PDF)
2 pages. (The SPARK Institute)

New York State Comptroller's Website Offers Tips on Padding Pension
Excerpt:"[O]n the comptroller's website, under the heading'Maximizing Your Benefits,'DiNapoli provides tips for government employees to pad their pension by stockpiling vacation and sick time or working overtime and holidays."(Rochester Democrat&Chronicle)

Fury Over Public Pensions Sparks Disclosure Lawsuits
Excerpt:"Several state and local retirement funds have balked at disclosing the pensions of individual government workers, triggering lawsuits that claim taxpayers have the right to such information."(The Wall Street Journal)

Know Your Annuity Options for Retirement Income
Excerpt:"Assuming that more and more people will choose some form of a life contingency annuity for their retirement portfolios, the question arises: what form of retirement income option should be selected?"(Morningstar)

[Guidance Overview] 401(k) Participant at Fault in Account Withdrawal Dispute
Excerpt:"A federal judge in Oklahoma has cleared a 401(k) plan administrator of wrongdoing in a dispute over whether the employer should be forced to repay the participant for funds his ex-wife took out of his account."(PLANSPONSOR.com)

The Obama Administration Wants to Nudge Retirees Toward Annuities: Here's What Is Available Now
Excerpt:"[M]any financial pros say annuities and related products can help reduce the risk you'll outlive your savings. For people interested in securing an income stream for life, here's a look at some available offerings . . . ."(The Wall Street Journal)

[Opinion] Public Pensions and Our Fiscal Future
Excerpt:"Few Californians in the private sector have $1 million in savings, but that's effectively the retirement account [guaranteed] to many government employees."(Arnold schwarzenegger via The Wall Street Journal)

FASB Proposed Accounting Standards Update Re: DC Plan Loans (PDF)
16 pages. Comments due by September 7, 2010. (FASB via The SPARK Institute)

Text of Agenda for September 14-15 Joint Hearing on Lifetime Income Options for Retirement Plans (PDF)
2 pages. Excerpt:"A live webcast of the hearing is available on EBSA's Web site at www.dol.gov/ebsa[.]"(U.S. Employee Benefits Security Administration)

[Guidance Overview] September Deadline Set for Refiling Pension Overpayment Suit
Excerpt:"[The U.S. District Court] ordered that if a new suit against [the defendant] is not filed under [ERISA] by that date, [the court's] order throwing out ING's original case filed under Illinois state law will become permanent. The court ruled that the state law claims against Barrington in the original suit would be pre-empted by ERISA."(PLANSPONSOR.com)

Lifetime Income Options for Retirement Plans Hearing Agenda Unveiled
Excerpt:"The hearing was designed to hear testimony regarding: certain participant concerns affecting the choice of lifetime income relative to other options; information to help participants make choices on the management and spend down of retirement benefits; disclosure of account balances as monthly income streams; the fiduciary safe harbor for selection of lifetime income issuers or products; and alternative designs of in-plan and distribution lifetime income options."(PLANSPONSOR.com)

New Tax Laws May Increase the Popularity of Life Insurance and Annuities with Long-Term-Care Riders
Excerpt:"[The] so-called combo LTC products, including annuity/LTC as well as life insurance/LTC blends, are likely to become even more popular as some deferred tax breaks take effect and pricing benefits become clearer."(Employee Benefit Adviser; free registration required)

Another Illinois Pension Plan Sells Investments to Cover Benefits
Excerpt:"Illinois Teachers'Retirement System . . . plans to sell $3 billion in investments, or about 10% of its $33.1 billion in assets, in the current fiscal year to pay pension benefits . . . . The system is the fifth Illinois statewide defined benefit plan to sell off investments this fiscal year to pay benefits."(Pensions&Investments; registration may be required)

FASB Would Drop Fair Value for Pension Plan Loans
Excerpt:"FASB [has] issued a Proposed Accounting Standards Update . . . that is intended to clarify how defined contribution pension plans should classify and measure loans to participants."(American Institute of Certified Public Accountants)

Does the 4% Retirement Spending Rule Hold Up?
Excerpt:"Now, when economists hear about this'4% rule'for spending in retirement, they tend to cringe. (At least one well-known one has written an article explaining some reasons why.) One of the biggest issues they point out is, as the chart shows, that the'4% rule'in most cases tends to leave a lot of money unspent (at least over the 30-year horizon), and is hence potentially inefficient."(The Vanguard Group, Inc.)

Fidelity Finds 2nd Quarter Uptick in 401(k) Withdrawals
Excerpt:"The latest quarterly data from Fidelity Investments found that while the majority of 401(k) participants continued to save during the quarter, the percentage of participants either initiating a loan or a hardship withdrawal increased ? albeit not by much."(PLANSPONSOR.com)

Retirement Fund Withdrawals Rise In Downturn, According to Fidelity
Excerpt:"Among the 11 million workers whose 401(k) plans are run by Fidelity, 11 percent took out a loan from their plan during the 12 months ended June 30, the company said, up from 9 percent at the same point a year earlier."(Reuters via The New York Times; free registration required)

DC Plans Shouldn't Classify Participant Loans As Investments, According to FASB
Excerpt:"According to the proposal,'If a participant were to default, the participant's account would be reduced by the unpaid balance of the loan, and there would be no effect on the plan's investment returns or any other participant's account balance.'"(Pensions&Investments; registration may be required)

The Next Pension Crisis: Taft-Hartley Multiemployer Plans
Excerpt:"[A post by'The Lid'on the underfunding of multiemployer pension plans includes the following:]'Many multi-employer plans are struggling after years of financial hits especially after the last recession. Along with the value of the plans going down, as the boomer generation is reaching retirement age, every year the number of people tapping those retirement funds hits a new record.'"(Workplace Prof Blog)

Should Annuities Be an Option in 401(k)s?
Excerpt:"'There are fundamental problems with putting these kinds of products into an employer-sponsored plan, not least because they are very complex and difficult to understand, and many people think that the guarantee they offer is for their principal,'. . . ."(Investment Advisor)

Labor and Treasury Departments to Hold Joint Hearing on Lifetime Income Options
Excerpt:"After reviewing [requested] comments, the Departments distilled five specific areas in which they would like to receive further input. In a notice issued on August 10, they announced that a joint hearing will be held on September 14, and, if necessary, September 15 . . . ."(Deloitte via BenefitsLink.com)

[Official Guidance] Text of PBGC Final Rule: Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Valuing and Paying Benefits (PDF)
2 pages. (Pension Benefit Guaranty Corporation)

'Overpaid'Pensions Being Seized
Excerpt:"There aren't any statistics regarding pension overpayments, but senior advocates say they have seen a spike of'recoupment'cases, which are now one of the most common pension problems some advocacy groups are handling."(The Wall Street Journal)

[Guidance Overview] IRS Updated Specifications for Electronic Filing of Certain 2010 Information Returns, Including Forms 1099-R and 5498
Excerpt:"The revenue procedure, which supersedes Rev. Proc. 2009-30 published as Publication 1220, must be used for the preparation of Tax Year 2010 information returns and information returns for tax years prior to 2010 filed beginning January 1, 2011."(Wolters Kluwer)

States Test Whether Public Pension Benefits Can Be Reduced for Retirees
Excerpt:"Lawmakers in Colorado, Minnesota and South Dakota voted earlier this year to limit cost-of-living increases they previously had promised to thousands of current and future retirees, who courts historically have protected from benefit reductions."(The Pew Charitable Trusts)

The Beauty of a Cash Balance Plan Buy-Out Tool
Excerpt:"In the context of a partnership buy-out, a cash balance plan can be incorporated as an overlay to an existing 401(k) plan and create the opportunity for massive retirement plan contributions for older people in their 60s."(WebCPA)

[Official Guidance] Text of Notice of Hearing on Certain Issues Relating to Lifetime Income Options for Participants and Beneficiaries in Retirement Plans (PDF)
11 pages. Joint IRS/EBSA hearing to be held Sept. 14, 2010. (U.S. Employee Benefits Security Administration)

[Opinion] Retirement Income Adequacy: How Big Is the Gap and How Might the Market Respond?'(PDF)
Pages. 9-18 of 20 pages. Excerpt:"This article provides highlights of new EBRI research and experts'reactions to it."(Employee Benefit Research Institute)

Immediate Annuities Fit Well in Retirement Income Plans
Excerpt:"A fixed immediate annuity is a contract with an insurance company. Policyholders invest a lump sum in return for insurance company-guaranteed income, generally monthly, for as long as they live."(Financial Advisor Magazine)

[Guidance Overview] IRS Provides Instructive Primer on Serving Notices of Levy on Retirement Plans
Excerpt:"A recently issued Chief Counsel Advice memorandum explains the proper way for the IRS to serve notice of levy on a retirement plan. It explains that there are two kinds of levy that can be served on retirement or pension accounts, and the form of notice depends on whether or not the participant is currently'entitled to income.'"(Deloitte via BenefitsLink.com)

[Guidance Overview] Plan Administrators May Be Estopped from Correcting Pension Benefit Calculations
Excerpt:"The Sixth Circuit has joined a growing number of U.S. circuit courts which, in certain circumstances, will prevent an ERISA pension plan administrator from correcting an inaccurate benefit calculation. Where the inaccurate benefit is represented in writing and extraordinary circumstances exist in which the equities strongly favor the participant, the Sixth Circuit now recognizes equitable estoppel by which a plan administrator can be prevented from correcting a previously calculated benefit amount notwithstanding the terms of the plan."(Deloitte via BenefitsLink.com)

Retirement Income Solutions Discussed at Conference
Excerpt:"As [one speaker pointed out], retirement plan participants really like the concept of contributing to the plan and having that immediately translate to an income stream. However, there is confusion on how retirement income products work and how to translate their value."(PLANSPONSOR.com)

PBGC Holding $197 Million in Unclaimed Pensions
Excerpt:"For the more than 36,000 people still missing, individual benefits range from $1 up to $676,436 and average about $6,550."(Wolters Kluwer)

The Once-Maligned Annuity Is Bringing in a Bigger Share of Advisors'Revenues
Excerpt:"Media reports are increasingly highlighting the benefits of annuities, particularly their ability to help Americans convert retirement savings into guaranteed streams of income."(Financial Planning)

[Guidance Overview] Simplified Method for Multiemployer Defined Benefit Plans to Disregard Benefit Reductions in Calculating Withdrawal Liability
Excerpt:"Under the simplified method, the amount of unfunded vested benefits allocable to an employer that withdraws after the last day of the plan year in which the benefit reduction occurred is equal to the sum of (1) the amount determined in accordance with ERISA ?4211 under the method in use by the plan and (2) the employer's proportional share, determined as of the end of the plan year prior to withdrawal, of the unamortized balance of the value of the reduced nonforfeitable benefits (i.e., affected benefits)."(Wolters Kluwer)

[Guidance Overview] Relaxed Retirement Plan Loan Disclosures Now Effective
Excerpt:"The exemption applies to an exempt loan to a participant in a qualified plan (e.g., a 401(k) or profit sharing plan), a 403(b) plan or a governmental 457(b) plan."(SunGard Relius)

The Data Layouts for Retirement Income Solutions (PDF)
72 pages. Excerpt:"The Data Layouts for Retirement Income Solutions . . . were developed by The SPARK Institute in order to facilitate uniform expectations among retirement income product providers and record keepers who decide to offer these products and solutions in employer sponsored retirement plans."(The SPARK Institute)

[Guidance Overview] IRS Issues Guidance on Basis Reporting Errors (PDF)
2 pages. Excerpt:"The IRS recently issued unofficial guidance on Form 1099-R reporting error due to failure to take into account a participant's basis for annuity payments received from a section 401(a) qualified plan."(Groom Law Group)

Philadelphia's Deferred Retirement Option Plan Pays City Employees Six-Figure Cash Bonuses When They Retire
Excerpt:"Rather than get rid of it, city officials have raised property taxes 10 percent and passed budget cuts that will shut down firehouses, whack millions of dollars in police overtime, and shelve plans to hire 200 new cops."(The Philadelphia Inquirer)

NYPD Accused of Short Changing Army Reservist in Pension Calculation
Excerpt:"The Manhattan U.S. Attorney's office is suing the New York Police Department for allegedly cheating a retired detective out of pension benefits for two years he fought in Afghanistan and Iraq for the Army reserve. . . . The suit could result in bigger pensions for hundreds of city employees."(PLANSPONSOR.com)

[Guidance Overview] Supreme Court Rules That Divorce Decree Could Not Overcome the Express Terms of a Plan Document
Excerpt:"Under ERISA, the plan administrator is obligated to act'in accordance with the documents and instruments governing the plan'insofar as such documents and instruments are consistent with the provisions of Title I and Title IV of ERISA."(Passion for Subro!)

Poll: Running Out of Money In Retirement Is Worse Than Death
Excerpt:"In a new poll of people ages 44 to 75, more than three in five (61 percent) said they fear depleting their assets more than they fear dying."(AARP)

Roth Conversions and Estate Planning
Excerpt:"A traditional IRA generally consists of pre-tax contributions and tax-deferred earnings that are taxed as ordinary income when the owner takes distributions. Leaving this account to your heirs means they might pay federal taxes twice??'once on the estate (if it's large enough to incur estate taxes) and again when taking distributions."(The Vanguard Group, Inc.)

[Opinion] American Benefits Council Statement for Senate Special Aging Committee Hearing'The Retirement Challenge: Making Savings Last a Lifetime'(PDF)
10 pages. Excerpt:"While the Council believes that sufficient lifetime income to support retirees is a very important issue, we recognize that current policies regarding fiduciary responsibilities and administrative requirements discourage employers from providing access to lifetime income in defined contribution plans and current attitudes and beliefs of manyparticipants trigger rejection of lifetime income options when they are offered."(American Benefits Council)

[Opinion] ASPPA and NTSAA Request Relief for Certain IRC ??403(b) Plan Hardship Distributions
5 pages. Excerpt:"ASPPA recommends that the IRS provide relief from the requirements of Revenue Procedure 2007-71 by modifying the requirements for financial hardship withdrawals from contracts held by ???de-selected??? providers."(American Society of Pension Professionals&Actuaries / National Tax Sheltered Accounts Association)

Lifetime Income Options in Defined Contribution Plans (PDF)
4 pages. Excerpt:"This article looks at historical background around retirement as well as recent developments on the issue."(Aon Consulting)

[Guidance Overview] Does Supreme Court Prefer Administrative Remand for Erroneous ERISA Benefit Determinations?
Excerpt:"It is plain that a majority of the Justices are prepared to vigorously defend, and arguably expand, Firestone deference after Conkright. Perhaps the majority was concerned that Glenn or its progeny may have called this stance into question. It would appear Conkright also may stand for the proposition that a possible remedy for wrongfully denied benefits may not be an award of benefits by the court, but a remand for further administrative review."(Jackson Lewis LLP)

Massachusetts Pension Loophole Continues to Benefit'Retirees'Who Go Work in Other States
Excerpt:"State lawmakers recently passed pension reforms that closed a number of loopholes, including a provision that let retired government workers return to their jobs as'consultants'with a full salary and pension benefits. But the new reforms don't address the trend of top government workers retiring with pensions and then taking jobs with six-figure, taxpayer-funded salaries in another state."(Lowell Sun)

[Opinion] It Is Important to Convince Policymakers of the Difference Between Tax Deferred Expenditures and Tax-Free Exclusions
Excerpt:"Unfortunately, cash flow accounting does not account for the taxable withdrawals during the withdrawal phase of an individual's retirement plan life cycle. As a result, the true revenue loss of the employer-sponsored retirement system relative to other revenue or outlay proposals is significantly overstated."(Profit Sharing / 401k Council of America)

[Guidance Overview] The Effect of the Lincoln National Life Insurance Company Ruling on the Retirement Income Debate (PDF)
6 pages. Excerpt:"Late in 2009, the [IRS] released PLR 200951039 to The Lincoln National Life Insurance Company, which addresses the application of plan distribution rules to Lincoln variable annuity contracts with the i4LIFE® Advantage rider . . . [as to whether] the election of i4LIFE would require the application of [QJSA] rules upon the initial election of i4LIFE at the start of the access period or if the QJSA rules would not apply until the access period is over and the balance is converted to a traditional life annuity."(Lincoln National Life Insurance Company)

Four South Dakota Retirees Suing the State to Protect Their Annual Cost of Living Increases
Excerpt:"The retirees claim that individuals drawing benefits from the system will lose between $40,264.62 and 477,414.68 in pension benefits over the next 20 years because of a change in state law enacted by the 2010 Legislature."(PLANSPONSOR.com)

[Opinion] American Academy of Actuaries Written Comments submitted to Senate Special Committee on Aging for Hearing on'The Retirement Challenge: Making Savings Last a Lifetime'(PDF)
23 pages. (American Academy of Actuaries)

Is a Roth IRA Safe from Taxes?
Excerpt:"Without a crystal ball, it is impossible to answer the question definitively. But the short answer appears to be:'No, Congress won't tax Roth conversions, at least not soon.'And the prospect of longer-term changes isn't deterring experts who are converting their own accounts."(The Wall Street Journal)

[Guidance Overview] IRS Reviews Tax Levy Rules for Retirement Plan Funds and Income
Excerpt:"The memorandum also confirmed that a levy on retirement income is subject to an exemption amount (that is, a portion of the participant's retirement income is exempt from the levy) and generally remains in effect after the statutory collection period expires, until the IRS releases it."(Employee Benefits Institute of America)

Research Cautions against 4% Spending in Retirement Rule
Excerpt:"Researcher Nobel Laureate William Sharpe . . . says the suggestion that the retiree spend an inflation-adjusted 4% of his or her retirement assets each year, while keeping the balance of those assets in a portfolio that typically includes both stocks and bonds, might be a reasonable strategy in a world where stocks aren't risky."(PLANSPONSOR.com)

Double-Dipping State and Local Employees Collect Paycheck and a Pension in Ohio
Excerpt:"An analysis by Ohio's eight largest newspapers found: One in four public school leaders in Ohio's 614 districts bring home the bacon twice. Allowing superintendents to retire early halts their contributions into the fund and pulls millions of dollars out -- while a variety of factors threaten the fund's long-term financial health."(Cleveland Live, Inc.)

A Little More Respect for Annuities in Retirement Plans, Guaranteed Lifetime Income
Excerpt:"President Obama's Middle Class Task Force called earlier this year for wider availability of annuities and other forms of guaranteed lifetime income. Annuities reduce the risk'that retirees will outlive their savings or that their retirees'living standards will be eroded by investment losses or inflation,'the task force observed."(AARP)