DOL Proposes Default Investment Guidance
The U.S. Department of Labor (DOL) has proposed guidance concerning default investments in participant-directed defined contribution plans under ERISA section 404(c), as required by the Pension Protection Act of 2006. The guidance would protect plan fiduciaries if, in the absence of investment direction from the participant, the fiduciary invests the participant’s assets in a qualified default investment alternative (QDIA) and certain notice and other conditions are met. Plan fiduciaries would still have to prudently select and monitor any QDIAs under their plans. [November 2006]New Determination Letter Program Raises the Stakes for Plan Sponsors
Under the IRS's new determination letter program, individually designed plans have a regular, five-year remedial amendment cycle. [October 2005] IRS Explains Expanded ESOP Dividend Deduction
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) expanded the Code §404(k) dividend deduction for C corporations to apply to dividends participants elect to have paid to an ESOP and reinvested in qualifying employer securities. [February 2002] New Disclosure Rules for Stock Plans
The SEC adopted new disclosure requirements for reporting companies with stock compensation plans. Registrants must include a new table in their annual reports on Form 10-K, as well as in their proxy statements in years when they are submitting a compensation plan for security holder action. [February 2002] Finding the Sweet Spot— Stock Option Overhang
Notwithstanding the current downward trend in the stock market, returns to investors over the past decade have been phenomenal. There are many factors behind this stock market performance, but much of the growth can be attributed to the increased use of stock-based incentive compensation (especially stock options) to link the interests of employees and shareholders. [January 2001] Deflation — A Second Look
Deflation, a decline in the general level of prices, can be viewed as the result of too few buyers chasing too many goods and services. Last month's Watson Wyatt Insider included the article "Deflation, Financial Markets and Plan Sponsors," which described how deflation could affect pension trust funds and contribution or expense calculations. The basic message was that deflation — despite its generally negative effects — need not be catastrophic for plan sponsors. Careful planning, asset-smoothing techniques and investment discipline can help plan sponsors navigate troubled deflationary waters. [November 1998] Deflation, Financial Markets and Plan Sponsors
With worldwide attention focused on the recent Asian market and currency crisis, U.S. investors are debating the possibility of our economic climate shifting from inflationary to deflationary. Our part of the current debate focuses on how mild deflationary influences would affect pension plan investments, plan liabilities, annual plan expense and annual cash funding requirements. [October 1998]
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