Compliance September 24, 2009

IRS Puts Out RMD Waiver Guidance

The Internal Revenue Service (IRS) on Thursday provided sponsors with two sample plan amendments to help them implement the one-year waiver of the required minimum distribution (RMD).

Reported by

According to Notice 2009-82, the amendments provide that participants and beneficiaries can choose to receive or not to receive the 2009 RMD and provide for the rollover of certain 2009 RMDs.

The tax agency document said sponsors may need to tailor the sample amendment to their plan’s particular terms and administration procedures and must adopt the amendment no later than the last day of the first plan year beginning on or after January 1, 2011 (January 1, 2012, for governmental plans).

The RMD waiver was contained in the Worker, Retiree, and Employer Recovery Act (WRERA) of 2008 (see “Bush Signs RMD, Pension Relief Bill“).

Also in the notice, the agency acknowledges that because of the timing of the WRERA enactment, many sponsors have not been able to put the required plan amendments into place.

So, the agency said, plans will not be treated as failing to satisfy the requirement that it be operated in accordance with its terms merely because, during the period beginning on January 1, 2009, and ending on November 30, 2009:

  • distributions that equal the 2009 RMDs or that are one or more payments in a series of substantially equal distributions (that include the 2009 RMDs) made at least annually and expected to last for the life (or life expectancy) of the participant, the joint lives (or joint life expectancy) of the participant and the participant’s designated beneficiary, or for a period of at least 10 years were or were not paid.
  • participants and beneficiaries were not given the option of receiving or not receiving distributions that include 2009 RMDs, or;
  • a direct rollover option was or was not offered for 2009 RMDs or for other amounts that can be rolled over pursuant to the rollover relief provided in the following paragraph.


The IRS guidance also indicated that plan investors who have already received their 2009 RMD can still roll over the funds until the later of November 30, 2009 or 60 days after the distribution. The IRS indicated IRA owners could also take advantage of the 60-day rollover period extension.

The IRS document also presents a series of questions and answers about the RMD regulations. The latest guidance is available here.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Products September 24, 2009

Russell Unveils Target-Date Fund Family Performance Metrics

Russell Investments has developed a methodology to provide investors with a way to measure and compare target-date fund families.

Reported by

A Russell news release about its Russell Target Date Metric product said it offers a returns-based measure of how well a target-date fund family performed over a specific time period.

The offering’s methodology was designed to measure conventional performance universes over typical historical intervals, such as three months, one year, and three years, Russell said.

The company said it will measure the comparison of the retirement wealth generated by a family of target-date funds to the wealth generated by some selected benchmark over the selected time period. The metric will take into account all aspects of the family’s investment process, including active management, asset allocations within equity and fixed income, and glide path design.

According to Russell, a feature of the methodology measures the wealth generated by the family of funds as a weighted average of the returns of all the funds in the family.

The weight attached to each fund’s return is determined by where that fund is along the glide path and the pattern of cash contributions. The methodology results in the returns of the funds nearer their target dates having greater weights than the returns of funds more distant from their target dates.

“While target-date funds are designed to be easy to use, the design behind them is complex,” said Grant Gardner, director for portfolio strategies at Russell, in the news release. “Comparing one fund family to another tends to be subjective at best, but now defined contribution plan sponsors and others can select among the increasing variety of target date products with an objective, returns-based measure of performance that is appropriate for evaluating target date fund families.”

Russell initially aims to calculate the metric for 43 fund families and expects to begin making the comparisons available in the fourth quarter.

More information is available here.

«