Compliance May 8, 2008

EBSA Studying 403(b) Orphan Contract Problem

May 8, 2008 (PLANSPONSOR.com) - A top Department of Labor (DoL) benefits regulator on Thursday revealed that the agency is studying ways to help 403(b) plan sponsors better deal with the difficult problem of getting an exact accounting of their orphan contracts.
Reported by

Scott C. Albert,   Chief of the Division of Reporting Compliance at the Employee Benefits Security Administration (EBSA), offered that information in a Webinar discussing employee benefit plan reporting requirements.

With new 403(b) Form 5500 requirements becoming effective for the 2009 plan year, Albert noted the difficulty many plan sponsors are having tracking down all contracts between annuity providers and participants including those involving former employees (See  403(b) Summit: New Form 5500 Regs Mean “Scary” 2009 Plan Year for 403(b) Sponsors ). Albert said plan sponsors will be expected to “make a good faith effort to track them down.”  

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

403(b) sponsors attending PLANSPONSOR’s recent 403(b) Summit heard a series of discussions about how, in many cases, providers are refusing to give plans the details of the contract that may be executed by the provider directly with the participant (See  403(b) Summit: With Investment Options, More Is Not Always Better ).

While 403(b) sponsors generally are having to shoulder a significantly heavier regulatory burden with the recent imposition of new government regulations, Albert pointed out that the due date for the Form 5500 report is not until July 31, 2010, and can be extended to October 15. Offered Albert: “There is plenty of time to prepare.”

The presentation from Thursday’s Webinar is available  here .

Benefits May 7, 2008

Lack of Health Care Weighs Heavily on Decision to Retire

May 7, 2008 (PLANSPONSOR.com) - Older workers without other health care insurance options are more likely to defer retirement to stay covered under their employer's plan, Watson Wyatt Worldwide found in a data analysis.
Reported by

According to a press release on the analysis conclusions, employees who rely on their employers for health care coverage and do not expect to receive employer-provided health benefits in retirement are 16.5 percentage points less likely to retire in any given year than workers with access to health care coverage through another source. Other health insurance sources that allow an employee to decide to retire, according to the data, include a spouse’s health insurance plan, public health insurance, COBRA coverage, or employer-sponsored retiree health insurance.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

The analysis of workers over age 50 also indicated that having only a defined benefit plan, such as a traditional pension, increases the likelihood of retirement by 4.1%. In addition, while workers’ household financial wealth has an effect on their retirement decisions, Watson Wyatt found the source of the wealth makes some difference – a $100,000 increase in expected income from a pension plan or Social Security is more likely to prompt earlier retirement than an increase in housing equity or other household financial assets.

The gradual increase of the Social Security full benefit age is also having a considerable effect on retirement decisions, according to the analysis. With the age incrementally increasing from 65 to 67, workers born in the 1940s are less likely to retire early than those born in the 1930s, the release said.

Watson Wyatt analyzed data collected from 1992 to 2004 as part of the University of Michigan’s Health and Retirement Study, a biannual survey of 22,000 older U.S. workers.

The technical paper on workers’ retirement behavior can be downloaded at www.watsonwyatt.com/retirementtiming . Registration is required.

«