Headlines about "Distributions - misc"

Gathered from the web by the editors at BenefitsLink.com.
Why Don't the People Insure Late Life Consumption? A Framing Explanation of the Under-Annuitization Puzzle (PDF)
12 pages. Excerpt: "Rather than attempting to rationalize the lack of annuity demand, this paper explores the idea that aversion to annuities is not a fully rational phenomenon. A large literature has documented behavioral biases in a wide range of activities that are important steps in the process of planning for retirement, including whether to participate in employer sponsored pension plans, how much to save, and how to allocate one's portfolio. To the extent that individuals exhibit biases in the wealth accumulation aspects of planning for retirement, it seems natural that similar biases might also extend to the wealth decumulation stage of retirement planning." (TIAA-CREF Institute)

Senators Ask for PBGC Benefits' Calculation Probe
Excerpt: "Citing a recent situation in which the nation's private-sector pension insurer demanded repayments from retirees after the agency had miscalculated pension benefits, a group of U.S. senators called for an agency investigation." (PLANSPONSOR.com; free registration required)

[Guidance Overview] U.S. Supreme Court Rules Disability Benefit Formula That Credits Younger Workers with Additional Years of Service Does Not Violate the ADEA (PDF)
Pages 4-6 of 11 pages. Excerpt: "The Court's opinion saves the imputing of service tied to pension eligibility from being deemed per se unlawful. Because of the numerous factors and qualifications referred to in the majority opinion, it is unclear, however, how broadly its reasoning and rule may apply beyond this context." (Proskauer Rose LLP)

[Guidance Overview] IRS Provides Tips for Correcting Erroneous 401(k) Plan Hardship Distributions
Excerpt: "In order to find such a mistake, the IRS recommends that plan sponsors review: (a) the plan document to determine when distributions may occur; (b) each plan distribution and its related documentation showing the reason for the distribution; and (c) whether distributions designated as hardship distributions were made in accordance with the terms of the plan." (Wolters Kluwer)

Anheuser-Busch to Cut Lump-Sum Payouts
Excerpt: "Anheuser-Busch Cos. will change the way it calculates lump-sum pension payouts that will mean a reduction in payouts of about 5 percent to 6 percent in 2009 and about 15 percent by 2012, according to an internal memo addressed to salaried employees from Tim Farrell, vice president of corporate human resources. The change will affect only salaried employees." (Workforce Management; free registration required)

[Official Guidance] Text of IRS Revenue Ruling 2008-40: Transfers from Tax-qualified Plan to Nonqualified Foreign Trust or Puerto Rican Plan (PDF)
9 pages. Certain transition relief is provided; also discusses application of section 410(b) minimum coverage rules to employees in Puerto Rico and other possessions of the United States. Excerpt: "HOLDINGS: 1. A transfer of amounts from a trust under a plan qualified under § 401(a) to a nonqualified foreign trust is treated as a distribution from the transferor plan. 2. A transfer of assets and liabilities from a qualified plan to a plan that satisfies section 1165 of the Puerto Rico Code is also treated as a distribution from the transferor plan, even if the plan is described in section 1022(i)(1) of ERISA." (Internal Revenue Service)

[Official Guidance] Text of PBGC Proposed Regs: Termination of Single-Employer Plan While Sponsor in Bankruptcy (PDF)
15 pages. Excerpt: "This is a proposed rule to implement section 404 of the Pension Protection Act of 2006. Section 404 amended Title IV of ERISA to provide that when an underfunded, PBGC-covered, single-employer pension plan terminates while its contributing sponsor is in bankruptcy, sections 4022 and 4044(a)(3) of ERISA are to be applied by treating the date the sponsor's bankruptcy petition was filed as the termination date of the plan. . . .Thus, under the 2006 amendments, when a plan terminates while the sponsor is in bankruptcy, the amount of benefits guaranteed by PBGC and the amount of benefits in priority category 3 are fixed at the date of the bankruptcy filing rather than at the plan termination date. This will, in most cases, reduce the amount of guaranteed benefits and the amount of benefits in priority category 3." (Pension Benefit Guaranty Corporation)

The Best Way to Take a Pension - A Lifetime of Monthly Checks Usually Beats a Big Lump Sum
Excerpt: "According to an analysis by T. Rowe Price, you have nearly a 30% chance of depleting a $300,000 lump sum by age 85, assuming you invest in a diversified stock and bond portfolio and withdraw $2,000 a month. Live to 90 and the likelihood hits 57%. As Oxnard, Calif. actuary Steve Vernon notes, 'Not good odds for such an unpleasant outcome.'" (CNNMoney.com)

[Guidance Overview] IRS Proposed Regs Extend DB Plan Accrual Rules for Plans with Two or More Formulas
Excerpt: "The IRS has issued proposed regulations that refine and extend defined benefit (DB) plan accrual rules for plans with two or more benefit accrual formulas, such as converted cash balance plans. The proposed rules provide a limited exception to the requirement to aggregate accrued benefits under all statutorily prescribed benefit accrual formulas." (Wolters Kluwer)

Anheuser-Busch to Cut Health and Pension Benefits for Salaried Employees
Excerpt: "The nation's biggest brewer laid out its benefit-cut plan in a memo . . . . The memo says employees' individual, lump sum payouts under the pension plan will be reduced by approximately 5 percent to 6 percent in 2009 and approximately 15 percent by 2012. Workers also will make a bigger contribution to their health insurance plan, rising from approximately 21 percent today to 25 percent of the cost beginning in 2009." (AP via Forbes.com)

[Guidance Overview] IRS Private Letter Ruling Allows IRA Beneficiary to Take Distributions Over Her Lifetime
Excerpt: "In the private letter ruling, the IRS stated that 'the issue to be addressed is whether the failure to timely take certain required distributions requires that distributions from either IRA X or IRA Y (or both) be made in accordance with the five-year rule of Code section 401(a)(9)(B)(ii).' IRS ruled that the answer was no." (Financial Planning)

More Investors Tapping Retirement Funds Putting their Long-Term Financial Health at Risk
Excerpt: "The number of investors hitting up their retirement accounts appears to be on the rise. The Transamerica Center for Retirement Studies reports that the number of workers with loans outstanding on retirement accounts, such as 401(k) plans, rose to 18 percent in 2007 from 11 percent a year earlier. Anecdotal reports from financial advisers have also shown increases." (AP via The Washington Post; free registration required)

[Guidance Overview] IRS Cannot Require Taxpayer to Suspend Membership in Retirement Fund Prior to Retirement Age
Excerpt: "When the IRS is attempting to levy assets in the retirement fund account of a taxpayer who has not yet reached retirement age, the IRS cannot 'elect,' on behalf of the taxpayer, to suspend the taxpayer's membership in the retirement fund in order to secure the immediate release of the assets in that account, according to IRS Chief Counsel Advice." (Wolters Kluwer)

Steelworkers Reach Settlement with Freightcar America to Provide Pensions and Severance Pay to Johnstown Workers
Excerpt: "The United Steelworkers announced today that a tentative settlement has been reached with FreightCar America (FCA) that will provide pensions to 201 union members and severance pay to another 110 who were laid off in 2007." (SunHerald.com)

Retirement Income Focus of DC Growth
Excerpt: "That was a key conclusion of a new McKinsey & Company study on the DC market's future based on the consultant's interviews with 50 experts and its own modeling and analysis, a news release said. The study asserted that by 2015, the transformed DC market will provide a variety of asset accumulation products, a wide range of personalized advice models, transition planning from work to retirement, and retiree lifetime income solutions." (PLANSPONSOR.com; free registration required)

DC DB-ification Picking Up Steam
Excerpt: "As [an] article from Investment News points out, several of the country's largest insurance companies have rolled out income products within 401(k) plans, and more are sure to follow. While the jury may still be out on how well these particular products fare, one thing seems clear to us: the trend to embrace the 'DB-ification' of defined contribution plans is accelerating." (Baker & Daniels)

[Guidance Overview] Supreme Court Charts New Course in Pension Plan Case Interpreting ADEA
Excerpt: "In Kentucky Retirement Income Systems v. Equal Employment Opportunity Commission, No. 06-1037 (June 19, 2008), the United States Supreme Court interpreted the Age Discrimination in Employment Act (ADEA) to permit Kentucky to increase disabled public safety workers' pensions to the level they would have attained at normal retirement age, even though that meant workers who became disabled after reaching retirement age would not receive any pension increase." (Littler Mendelson P.C.)

John W. Livick v. The Gillette Company; The Gillette Company Retirement Plan
Excerpt: "The Question: Does the Employee Retirement Income Security Act (ERISA) require that a plan pay benefits beyond those provided in the plan document when a company representative and an online benefit calculator provided a mistaken benefits estimate?" (PLANSPONSOR.com; free registration required)

[Guidance Overview] Distributing Annuities from Defined Contribution Plans: The Qualified Plan Distributed Annuity (PDF)
6 pages. Excerpt: "The QPDA has languished in the background for many years, its greatest use in the past being associated with the termination of defined benefit plans. With the growing need for providing portable retirement income benefits, and with the demands forced by the new 403(b) regulations, these hybrid products will enjoy growing prominence in the retirement plan regulatory scheme. This increased focus should ultimately result in a more highly organized regulatory approach to these products." (Baker & Daniels)

[Opinion] The Public Pension COLA Conundrum
Excerpt: "The huge problem facing public pension plans now is that we have entered a period of stagflation in which investment returns are unlikely to pay for COLAs. The 'free lunch' of strong investment returns -- in the 1990s and the middle of this past decade -- is no longer there to pay for benefits increases. If anything, many pension plans will suffer declining funding ratios as their investments fail to meet actuarial assumptions." (Governing.com)

[Guidance Overview] A Revenue Raiser Used to Offset Federal Revenue Losses Created by Heroes Act Includes Stiff Penalties on 'Covered Expatriates'
Excerpt: "Upon expatriation, the Heroes Act requires the covered expatriate to recognize income tax as if the individual had sold all of his or property, to the extent it exceeds $600,000 (indexed), on the day before expatriation. Interestingly, 'eligible deferred compensation items' that are payable to a covered expatriate by a U.S. employer generally would not be subject to immediate taxation, if the expatriate notifies the employer/payor of his or her status as a covered expatriate." (Michael S. Melbinger via Winston & Strawn LLP)

[Guidance Overview] Can One Take a Qualified Health Savings Account Funding Distribution from More Than One IRA?
Excerpt: "No. According to IRS Notice 2008-51, a qualified HSA funding distribution must come from a single IRA." (Wolters Kluwer)

[Guidance Overview] Amara v. Cigna, ERISA Class Actions, and Fiduciary Misrepresentations About Retirement Benefits
Excerpt: "A few months ago, I reported on the District Court's decision in Amara v. CIGNA, an important class-action case on ERISA retirement benefits and on alleged misrepresentations made by the Company about retirement benefits. Over the last few months, then, the court was asked to consider the issue of what is appropriate relief from the decision." (Workplace Prof Blog)

Protecting Your Nest Egg from Inflation
Excerpt: "Wise retirement investors, as well as current retirees, have always taken inflation into account. Especially over the next five to ten years, however, inflation should become an even more significant variable in one's financial planning. The fact is that, by any measure and even at a seemingly modest rate, annual price increases will take a surprisingly large toll out of the purchasing power out of a dollar spent a few years from now." (Employee Benefit News; free registration required)

Deferred Annuities in Defined Contribution Plans (PDF)
4 pages. Excerpt: "Conventional deferred annuities are being repackaged as 'DB in DC' investment options. Various fiduciary and investment considerations are likely to impede their rapid growth." (The Vanguard Group, Inc.)

Cashed-Out Participants Keep Legal Standing Under ERISA
Excerpt: "A federal appellate court ruled that employees don't lose the right to pursue individual claims when they cash out their plan balances. The 4th U.S. Circuit Court of Appeals decision released Monday came in a consolidated action involving four lawsuits charging that employers violated their Employee Retirement Income Security Act (ERISA) fiduciary duties by investing plan assets in mutual funds that permitted market timing." (planadvisor.com)

Will Income Plans Wrapped Around 401(k)s Thrive?
Excerpt: "Industry leaders are divided on whether income options in 401(k) plans will succeed and become a popular product in the next decade. Issues of portability, cost and complexity are still hurdles these products must overcome. Their success will depend on how quickly and how fast vendors can solve these issues, industry leaders said." (Investment News; free registration required)

What to Do with a Retirement Plan Lump-Sum Distribution
Excerpt: "Thanks to the funds in your 401(k) or other type of employer-sponsored qualified retirement plan, if you are retiring or changing careers, you may receive a large chunk of money -possibly the biggest you've ever seen. That's why it's important that you do not overlook the need to 'map out' a lump-sum distribution strategy to protect what you've accumulated. Ideally, it's best to choose a distribution option that meets your retirement needs, minimizes the impact of taxes, and avoids penalties." (The Daily Advertiser)

Policy Brief: Increasing Annuitization in 401(k) Plans with Automatic Trial Income (PDF)
8 pages. Excerpt: "In a paper for The Hamilton Project, a diverse group of retirement experts -- William G. Gale and J. Mark Iwry of the Brookings Institution, David C. John of The Heritage Founcation, and Lina Walker of the Retirement Security Project -- propose a strategy for expanding the role of lifetime income in 401(k) plans." (The Brookings Institution)

Consumption Structure, Welfare Goods and Retirement Income: Linking the Ageing Puzzles
Excerpt: "While the empirical evidence tends to support some predictions of the life-cycle theory, a number of puzzles remain: an ageing-consumption, an ageing-saving and a saving-capitalisation puzzles have been put forward in the literature. This paper analyses the links between these three puzzles and develops a model relating usual life-cycle variables, social transfers (public health care expenditures and the generosity of pension systems) to the level of savings." (Social Science Research Network)

Retirement Income Withdrawal Mistakes to Avoid
Excerpt: "The general idea is that retirees who anticipate long payout periods should plan on lower withdrawal rates. If there are fixed rate assets in the portfolio, these increase the success for low to mid-level withdrawal rates." (The National Underwriter Company; free registration or paid subscription required)

'We've Been Wrongly Taught That Our Property Can Be Our Pension'
Excerpt: "[There could] be bad news not only for people looking to sell up but also for those who have been relying on the rising value of their home to provide a nest egg in retirement through the use of equity release. These schemes allow homeowners to draw down between 20 and 50 per cent of the value of their property as a lump sum or monthly income. In essence, they are lent this sum of money until they either die or go into sheltered accommodation. At that stage the house is sold and the loan, with interest, is repaid." (Black Enterprise)

[Guidance Overview] IRS Changes Reporting Requirements for Section 404(k) Dividends from ESOPs (PDF)
3 pages. Excerpt: "This change applies only to an ESOP's distribution of cash dividends. Dividends on ESOP employer securities that the corporation pays directly to ESOP participants or their beneficiaries will continue to be reported on Form 1099-DIV. The change in reporting will apply to ESOP dividend distributions made on or after January 1, 2009." (Pillsbury Winthrop Shaw Pittman LLP)

Increasing Life Expectancies Are Disrupting Traditional Retirement Distribution Strategies
Excerpt: "[W]hen retirement income is primarily based on annual investment earnings, so that the depletion of principal is spread out over a very long life expectancy, annual retirement income will never fall below annual investment income, even if the retiree lives to age 1,000! . . . . Perhaps . . . learning to live on just investment income (plus Social Security) is an idea whose time has come!" (Brooks Hamilton)

Increasing Annuitization in 401(k) Plans with Automatic Trial Income (PDF)
24 pages. Excerpt: "Specifically, we propose that a substantial portion of assets in 401(k) and other similar plans be automatically directed (defaulted) into a two-year trial income product when retirees take distributions from their plan, unless they affirmatively choose not to participate." (The Retirement Security Project)

IRS Changes Reporting Requirements for Dividends on ESOP Distributions
Excerpt: "Beginning with distributions in 2009, the reporting of dividends on employer securities that are distributed from an employee stock ownership plan (ESOP) under section 404(k) of the Code must be on a Form 1099-R that does not report any other distributions." (PLANSPONSOR.com; free registration required)

[Official Guidance] IRS Announcement 2008-56: Change in Reporting for ESOP Dividends (PDF)
2 pages. Beginning with distributions in 2009, the reporting of dividends on employer securities that are distributed from an employee stock ownership plan under section 404(k) of the Code must be on a Form 1099-R that does not report any other distributions. (Internal Revenue Service)

[Guidance Overview] Court Asks SG's Views on ERISA Retirement Accumulation Case
Excerpt: "This is not the normal age discrimination issue we look at when analyzing cash balance plans, but asks whether it is consistent with ERISA and the IRC to pay a lump sum distribution and if so, how should that lump sum be calculated in the cash balance setting." (Workplace Prof Blog)

Pension Restructuring Cuts Deep Into Steelworkers' Pockets
Excerpt: "[A 55-year-old steelworker] wonders whether he will ever retire since learning in March that his monthly pension benefit will be cut by more than two-thirds to less than $300. He is an unintended victim of a steel company's reorganization after promising benefits it couldn't afford, and a federal policy that cheated him out of his 30-year pension by a matter of weeks." (Chicago Tribune)

Supreme Court Rejects AT&T Appeal in Pension Case
Excerpt: "At issue in the case is whether a pension plan administered by Ameritech, a local phone company, improperly reduced retirement benefits paid to an employee in 1999." (AP via Forbes.com)

Asset Allocation and Location over the Life Cycle with Survival-Contingent Payouts
Excerpt: "This paper shows how lifelong survival-contingent payouts can enhance investor wellbeing in the context of a portfolio choice model which integrates uninsurable labor income and asymmetric mortality expectations." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)

[Guidance Overview] For Actual PPA Cost Savings, Look to New Lump-Sum Calculations (PDF)
4 pages. (Milliman)

Automatic Annuitization Proposed for DC Plans
Excerpt: "Defined contribution plan participants would automatically get temporary annuity-like benefit distributions under a new proposal floated today by several authors affiliated with the Retirement Security Project." (Baker & Daniels)

Immediate Income Annuities and Defined Contribution Plans (PDF)
12 pages. Excerpt: "With the growing interest in generating retirement income, plan sponsors are weighing whether to offer an immediate income annuity as a 'within-the-plan' distribution option. However, fiduciary, tax, and other considerations are likely to inhibit the use of payout annuities as a plan feature. Meanwhile, a broad array of retirement income solutions are emerging outside the qualified plan system." (The Vanguard Group, Inc.)

Retirement Plans See Spike in Early Withdrawals for Everyday Expenses
Excerpt: "Record numbers of Americans are raiding their retirement savings as the economy has soured, threatening their long-term financial security to make their mortgage payments, pay medical bills and cope with rising food and fuel costs." (San Francisco Chronicle)

Retirees Fear Spending Down Retirement Nest Eggs, According to Survey
Excerpt: "A new Nationwide survey found that 57% of retirees are only spending their pension distributions and Social Security benefits without dipping into the rest of their retirement savings." (PLANSPONSOR.com; free registration required)

More Dip Early Into Funds for Retirement - Hardship Withdrawals Can Cause Long-Term Jeopardy
Excerpt: "Record numbers of Americans are raiding their retirement savings as the economy has soured, threatening their long-term financial security to make their mortgage payments, pay medical bills, and cope with rising food and fuel costs." (The Boston Globe)

[Guidance Overview] The Constraint of Promissory Estoppel Versus the Broad Ambit of Deferential Review
Excerpt: "To prevail on an estoppel claim under ERISA, plaintiffs must ordinarily show: (1) a knowing misrepresentation; (2) made in writing; (3) reasonable reliance on that representation by them; (4) to their detriment." (Health Plan Law blog by Attorney Roy F. Harmon III)

IRS Issues IRA-to-HSA Transfer Rules
Excerpt: "Holders of individual retirement accounts can shift some cash into health savings accounts without paying income taxes or penalties on the distributions. Officials at the Internal Revenue Service explain the procedures for carrying out 'qualified HSA funding distributions' in IRS Notice 2008-51." (The National Underwriter Company; free registration or paid subscription required)

U.K. Pension Manager, Pension Corp., Buys Out Steel Products Group Delta's Pension Plan
Excerpt: "In exchange for taking on the liabilities of 10,200 members of Delta's pension plan who are already receiving their pensions, Pension Corp. will receive assets amounting to £451 million ($879 million)." (Business Insurance)

[Guidance Overview] New IRS Guidance on Distribution-Related Provisions of PPA (PDF)
3 pages. Excerpt: "The Internal Revenue Service recently issued Notice 2008-30, which provides guidance on certain distribution-related provisions of the Pension Protection Act of 2006 that became effective in 2008. The guidance provides valuable answers on several issues that affect all qualified defined contribution and defined benefit plans." (Aspen Publishers via Winston & Strawn LLP)

[Guidance Overview] Latest IRS Guidance Addresses PPA '06 Provisions Related to Distributions
Excerpt: "Internal Revenue Service (IRS) Notice 2008-30 uses a question-and-answer format to provide guidance with respect to certain distribution-related provisions of the Pension Protection Act of 2006 (PPA'06) that become effective in 2008. The Notice includes guidance on rollovers to Roth individual retirement accounts (IRAs), the Qualified Optional Survivor Annuity (QOSA) and interest assumptions for lump-sum distributions. Although the payment of gap-period earnings on distributions of excess deferrals is not directly related to PPA'06, the Notice also provides guidance on those payments." (The Segal Group, Inc.)

New Legislation Enhances 401(k) Benefits for Military Personnel, Allows Qualified Reservist Distributions from Health FSAs, and Extends MHPA
Excerpt: "For some 401(k) plans, the Act's rule requiring enhanced survivor benefits may trigger accelerated vesting of matching and profit-sharing contributions for short-service participants. While not previously mandatory, treating differential military pay as plan compensation was already available for 401(k) plans in the final regulations under Code Section 415. (And while not specifically addressed, the Act may also facilitate pre-tax cafeteria plan salary reductions from differential pay.)" (Employee Benefits Institute of America)

OPM Suspends Contract for Electronic Retirement System
Excerpt: "The Office of Personnel Management has suspended a 10-year, $290 million contract awarded to Hewitt Associates to create a new electronic retirement system. Two federal sources who requested anonymity said on Thursday that OPM Director Linda Springer decided late Wednesday to suspend the contract with Hewitt, a human resources consulting company based in Lincolnshire, Ill. Under the contract, Hewitt would create a database that would allow employees to view their work history and salary, calculate different annuity scenarios, and process their retirement online." (GovernmentExecutive.com)

OPM Halts Work on Retirement Calculator
Excerpt: "The Office of Personnel Management sent a 'stop work' letter to the contractor developing a software system to calculate retirement benefits for federal employees, officials said yesterday. The contractor, Hewitt Associates, was given 10 days to propose a remedy for flaws and defects uncovered by the OPM during tests of the benefits calculator. Only five of 61 functions worked as intended during recent testing." (The Washington Post; free registration required)

Airline Pilots Retirement Lawsuit
Excerpt: "The BLT (Blog of Legal Times) has posted an update on litigation by pilots against the FAA over the mandatory retirement age. Let me give you the background before that update to give the issue context." (Workplace Prof Blog)

Retires Steelworkers' Pensions Slashed by PBGC
Excerpt: "Hundreds of retired steelworkers from the former Republic Technologies International are being notified their pensions will be cut, in some cases by as much as 75 percent, to less than $300 a month, due to new calculations by the federal agency that guarantees employer-paid pensions." (Chicago Tribune)

Study Shows Returns Earned in Retirement Actually Fund Most of It
Excerpt: "The investment returns generated by a 401(k) plan during retirement actually play a much more significant role in funding retirement than previously thought. The findings of a new research study should push advisors toward reshaping clients' perception as to how retirement income is actually earned." (On Wall Street)

Retirement 401(k) Debit Cards Are Costly, Finra Says
Excerpt: "Using a debit card to take cash from your 401(k) retirement plan may generate hefty fees and trigger duplicate taxes, the main U.S. brokerage regulator said." (Bloomberg)

House Committee OKs Extenders Package with Pension, Deferred Compensation Provisions
Excerpt: "The House Ways and Means Committee, on May 15, 2008, approved the Energy and Tax Extenders Bill of 2008 (H.R. 6049), legislation that includes provisions affecting IRAs, qualified plan distributions, and nonqualified deferred compensation. The measure was scheduled to be considered by the full House on May 20, 2008." (Wolters Kluwer)

The links shown above have been gathered from the web by the editors at BenefitsLink.com. Each article's publisher is shown above in parentheses. Opinions expressed in each article are those of the article's publisher, not necessarily those of BenefitsLink.com, Inc. or any web site that displays these headlines in a "frame." You should contact the listed publisher for copyright information about any particular article or to inquire into the right to use the article in any manner.