Monthly Archives: November 2010

Actuaries chart retirement course

U.S. News & World Report looks at the challenge facing retirees and the role actuaries might play in surmounting this challenge. Here is an excerpt:

There are roughly 110 million middle-class households. According to financial planning research, at most two million, or about 2 percent, receive financial planning services. The Society of Actuaries (SOA) hardly sounds like the group that would be riding to the rescue of the other 108 million. Think again. Actuaries specialize in analyzing and understanding the financial consequences of risk. What better skills could you have in fashioning and executing a successful financial plan for retirement?

In two recent studies sponsored by the SOA, it has assembled a wealth of research and practical advice aimed at middle income retirement needs.

Read the full article here.

DOL issues proposed regulation on target date disclosure

The U.S. Department of Labor (DOL) issued this announcement today:


The Department published in the Federal Register of October 24, 2007 a final regulation (the qualified default investment alternative regulation) providing relief from certain fiduciary responsibilities for fiduciaries of participant-directed individual account plans who, in the absence of directions from a participant, invest the participant’s account in a qualified default investment alternative. On October 20, 2010, the Department published a final regulation that requires the disclosure of certain plan and investment-related information, including fee and expense information, to participants and beneficiaries in participant-directed individual account plans (the participant-level disclosure regulation).

This proposed regulation contains proposed amendments to the qualified default investment alternative regulation to provide more specificity as to the information that must be disclosed in the required notice to participants and beneficiaries concerning investments in qualified default investment alternatives, including target date or similar investments. This document also contains a proposed amendment to the participant-level disclosure regulation that would require the disclosure of the same information concerning target date or similar investments to all participants and beneficiaries in participant-directed individual account plans.

Written comments on the proposed regulation should be received by the Department of Labor no later than 45 days after publication of the regulation in the Federal Register. The proposed regulation is scheduled to be published on November 29, 2010.


IRS issues new guidance on Roth rollovers

New guidance out today:

The IRS has issued Notice 2010-84 providing guidance under § 402A(c)(4) of the Internal Revenue Code, relating to rollovers from § 401(k) plans to designated Roth accounts in the same plan (“in-plan Roth rollovers”), as added by § 2112 of the Small Business Jobs Act of 2010 (“SBJA”), P.L. 111-240. The guidance in this notice also generally applies to rollovers from § 403(b) plans to designated Roth accounts in the same plan.

The guidance, in the form of 20 questions and answers, discusses what amounts are eligible for in-plan rollovers, plan loans, tax consequences of an in-plan rollover and specific issues regarding plan amendments.

Find the full guidance here. You might also find this useful.

Fighting fire with fire

Bloomberg looks at how low interest rates are driving corporate decision-making:

Companies facing the biggest pension deficit since at least 1994 are selling bonds at the fastest pace in more than seven years to plug the hole, betting that future returns will exceed their borrowing costs.

United Parcel Service Inc., the world’s largest package- delivery business, Dow Chemical Co., Northrop Grumman Corp. and PPG Industries Inc. sold at least $5.25 billion of investment- grade U.S. corporate bonds in November to fund their pensions, making it the busiest month since June 2003, according to data compiled by Bloomberg.

The Federal Reserve’s effort to hold down interest rates to stimulate the economy has caused corporate pension obligations, which are pegged to bond yields, to rise by $105.8 billion this year to $1.44 trillion as of October, according to Milliman Inc. Now, companies are taking advantage of borrowing costs at about the lowest on record as Goldman Sachs Group Inc. says interest rates will rise as the global economy recovers.

“They’re fighting fire with fire,” John Lonski, chief economist at Moody’s Capital Markets Group in New York, said in a telephone interview. “They’re being victimized by low bond yields, so why not go ahead and use them as an offset?”

DOL issues proposed regulation implementing the annual funding notice requirement

This is from the U.S. Department of Labor (DOL); the full proposed regulations are available here:

The Department of Labor has issued a proposed regulation that, on adoption, would implement the annual funding notice requirement in the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Pension Protection Act of 2006 (PPA) and the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA).

As amended, section 101(f) of ERISA generally requires the administrators of all defined benefit plans, not just multiemployer defined benefit plans, to furnish an annual funding notice to the Pension Benefit Guaranty Corporation (PBGC), participants, beneficiaries, and certain other persons. A funding notice must include, among other information, the plan’s funding target attainment percentage or funded percentage, as applicable, over a period of time, as well as other information relevant to the plan’s funded status.

The document also contains proposed conforming amendments to other regulations under ERISA, such as the summary annual report regulation, which became necessary when the PPA amended section 101(f) of ERISA. The proposed regulation would affect plan administrators and participants and beneficiaries of defined benefit pension plans, as well as labor organizations representing participants and beneficiaries and contributing employers of multiemployer plans.

Comments on this proposed regulation should be received on or before 60 days after the date of publication in the Federal Register. Publication of the proposed regulation is scheduled for November 18, 2010.