The IRS has launched a new project aimed at 401(k) plan compliance. According to the IRS’s website, the initiative is driven by (1) awareness that 401(k) plans now represent the largest retirement plan market segment, and (2) results from a previous IRS study revealing that these plans are by far the most noncompliant plan type.
The IRS will be randomly selecting 1,200 401(k) plans that filed a Form 5500 for the 2007 plan year and sending their plan sponsors a 46-page questionnaire. The plan sponsors will have 90 days to answer the questionnaire and submit their responses via a dedicated website. The IRS intends to use the information for a report on needed education and guidance on compliance issues. Failure by a contacted plan sponsor to complete the questionnaire will lead to IRS enforcement action.
Plan sponsors receiving the survey should contact their third-party service providers to ensure that the questionnaire is completed accurately. The questionnaire asks for information about 401(k) plans, including participation, contributions, distributions, plan operations, and administration, but also about the number of nonqualified deferred compensation plans that the plan sponsor has (including those under tax code section 409A).
Go to the IRS website for more info about the “401(k) Compliance Check Questionnaire Project.”
What does it take to make the move from a working life to retirement, and to make that move successfully? Robert Powell addresses those questions in the May 27 issue of MarketWatch.
The short answer: a checklist. And the one developed by experts at MetLife’s think tank works pretty well.
Essentially, you need to organize your trip through retirement just as you would a long vacation drive (though the two differ in their ultimate destinations, of course).
The broad categories you’ll be addressing: work, leisure, relationships, income, benefits, planning, and time. How these are structured, and how they relate to each other, of course, depends completely on you. We think he should add health/medical to the list as well.
This from a press release on Marketwire:
AARP and The Insurance Marketplace Standards Association (IMSA) will convene an Annuity Suitability Summit Meeting in Washington, D.C. on June 10, 2010. State and federal regulators, consumer advocates, life insurance companies, and those who sell and distribute products will gather to address the critical issues regarding the suitability of annuity sales to consumers and the challenges of coordinating regulatory approaches to best serve consumers.
Retirement Security in a Regulated Marketplace: Annuities in 2010 & Beyond is designed to address the changes taking place in the annuities marketplace and its evolving regulation. Given the proposal that annuities be factored into 401(k) planning, annuity suitability is more important than ever before. Confirmed participants include:
- Roger Sevigny, New Hampshire Insurance Commissioner and NAIC Market Regulation and Consumer Affairs (D) Committee Chair;
- Thomas Sullivan, Connecticut Insurance Commissioner and NAIC Life Insurance and Annuities (A) Committee Chair;
- John Walsh, Chief Counsel, Office of Compliance Inspections and Examinations, SEC; and
- Larry Kosciulek, Investment Companies Regulation Director, FINRA.
Milliman’s Sydney-based Financial Risk Management (FRM) practice leader Wade Matterson provides some perspective on Australia’s efforts to boost its underdeveloped annuities market, in an article by Anthony Sibilin in the May 20 edition of the Business Review Weekly. The article is about the wide-scale analysis of taxation—the “Henry Tax Review”—currently being conducted by federal Treasury Secretary Ken Henry. One important aspect of the review, of course, concerns pensions and the effect of longevity risk on retirement products, funding, and planning.
The debate focuses on whether government should enter the annuities markets with its own products.
Matterson thinks not, at least as a major provider of annuity products. “It is relatively early days in the whole longevity debate,” he says, noting that it’s premature for government to take responsibility without first giving the private sector an opportunity to develop solutions.
He thinks that the tsunami of Boomer retirees will actually accelerate private sector innovation and product development “with or without a nudge from government.”
This is from Global Pensions:
“April saw a return to the liability-driven dynamics that characterized much of 2009,” said Milliman 100 Pension Funding Index co-author John Ehrhardt.
“We saw positive asset movement in April but a significant increase in the pension benefit obligation that dwarfed the month’s investment gains. This explains how, despite an 18% cumulative asset return, we’ve still seen pension funding status decrease by $14bn during the last 12 months.”
The pension funding deficit increased to $239bn at the end of April. Milliman said given current interest rates, investment gains of 21.5% for the remainder of 2010 would be needed to reach a 90% funded ratio, which would still leave the deficit at $136bn.
The latest version of the Milliman 100 Pension Funding Index shows a $33 billion decrease in pension funding status. Here’s some perspective from co-author John Ehrhardt:
April saw a return to the liability-driven dynamics that characterized much of 2009. We saw positive asset movement in April but a significant increase in the pension benefit obligation that dwarfed the month’s investment gains. This explains how, despite an 18% cumulative asset return, we’ve still seen pension funding status decrease by $14 billion during the last 12 months.
More on that here.