Products December 1, 2006

BISYS Adds Education and Advice to Retirement Services

BISYS has announced additions to its retirement plan services that provide education, advice and additional reporting to participants.
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According to the announcement, enhancements include:

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  • Enhanced Enrollment Booklet – A comprehensive educational enrollment booklet entitled It’s Your Story, containing targeted and personalized financial illustrations, tips on investing for retirement, and how to get started in their plan.

  • Participant Guidance and Advice – No cost access to guidance and advice around a tailored investment and deferral rate strategy along with an online library of investment resources such as fund analyses, financial articles and calculators, provided through Morningstar Retirement Manager.

  • Personalized Rate of Return – To monitor progress toward their goals, participants can now also check their personal rate of return on the Web. This customized return gauges the total performance of the specific investments held in a participant’s portfolio.

  • Automatic Account Rebalancing – Participants in BISYS-administered plans will gain the option to automatically rebalance their accounts at quarterly, semi-annual or annual intervals to retain their desired asset allocation.

  • Improved Participant Account Statement – A new participant account statement with comprehensive information in an easier-to-understand format.

BISYS announced in September the addition of an automated enrollment and automated deferral feature to its 401(k) plan platform, (k)ruiseControl.

For more information, visit www.bisys.com.

Compliance December 1, 2006

Guidance Provides Relief for 409A Income Reporting

The Treasury Department and the Internal Revenue Service (IRS) have issued Notice 2006-100 providing guidance to executive compensation plan sponsors and participants on how to report certain amounts deferred from executive compensation on Forms W-2 or 1009-MISC for calendar years 2005 and 2006.
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The guidance provides relief from reporting deferrals that are not includible in income during those years. Under the relief, employers and other payers need not report annual deferrals of compensation that are not includible in income for 2005 or 2006 under Internal Revenue Code Section 409A on Form W-2 or Form 1009-MISC. Amounts includible in income under § 409A for 2005 and 2006 must be reported on Form W-2 or Form 1099-MISC.

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Notice 2005-94 issued last year, which provided relief for reporting 2005 deferrals as income, said employers and other payers may have to file amended information returns to report amounts includible in income for 2005. However, Notice 2006-100 supersedes Notice 2005-94.

In addition, the notice provides guidance on how to meet income tax withholding requirements for amounts includible in income under § 409A for 2006. According to the guidance, “An employer is required to report such amounts as wages paid on line 2 of Form 941, Employer’s Quarterly Federal Tax Return, and in box of Form W-2. An employer must also report such amounts as Section 409A income in box 12 of Form W-2 using code Z.”

The notice also provides guidance to service providers on their income tax reporting and tax payment requirements for amounts includible in gross income under 409A for 2005 and 2006.

Also included in the guidance are interim rules for 2005 and 2006 on calculating amounts includible in gross income under 409A. The amount includible in gross income and required to be reported by the employer or payer equals the portion of the total amount deferred under the plan that, as of December 31, 2006, is not subject to a substantial risk of forfeiture as defined in Notice 2005-1, and has not been included in income in a previous year, plus any amounts of deferred compensation paid or made available to the service provider under the plan during the calendar year 2006. An amount properly reported by the employer or payer on a 2005 Form W-2, Form 1099-MISC, or Form W-2c or corrected Form 1099-MISC is considered previously reported and should not be reported again.

The notice provides calculation guidance for amounts in account balance plans, amounts in non-account balance plans that are reasonably ascertainable, amounts deferred under stock rights covered by 409A, and other deferred amounts.

Internal Revenue Code Section 409A was created by the American Jobs Creation Act of 2004.

The IRS and Treasury ask in Notice 2006-100 for comments to aid in their formulation of general guidance with respect to the income inclusion requirements, the additional taxes, and the reporting and withholding requirements of 409A. The notice is here.

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