| BenefitsLink Retirement Plans Newsletter |   |
August 22, 2006
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Link Changed: Hewitt's 52-Page Report on the Pension Protection Act
Excerpt: "The 52-page Special Report provides extensive explanations of key provisions in the Pension Protection Act, with practical commentary on how specific provisions are likely to impact employers and employees." (Hewitt)
Employers Will Soon See 401(k) Plans in a Different Light -- So Should You
Excerpt: "The most potent change is the provision that smoothes the way for employers to automatically enroll workers in 401(k) plans, bump up their contributions over the years, and put them in suitably aggressive investments to meet their retirement needs. As much as the 401(k) is changing, workers need to change the way they think about it." (The Dallas Morning News; one-time registration required)
Beware of Fees As New Pension Law Takes Hold
Excerpt: "[I]f you make a practice of giving your retirement savings a little more attention, you will have to keep an eye on potential changes that could interfere with your investments' earning power in the future. I'm talking about fees." (Chicago Tribune: one-time registration required)
Overview: Automatic Enrollment Rules from the Pension Protection Act of 2006
Excerpt: "The Pension Protection Act's (PPA) of 2006 contains automatic enrollment rules (found in Section 902 of the Act) that are applicable to plan years beginning on or after January 1, 2008. PPA provides several new incentives for sponsoring employers to adopt automatic enrollment in their 401(k) plans." (McKay Hochman Co., Inc.)
Overview: Prohibited Transaction Exemption Rules for Fiduciary Advisors to Provide Investment Advice
Excerpt: "Section 601 of the new law permits retirement plan service providers who offer investments to participant-directed plans ('fiduciary advisers') to provide investment advice, and, if warranted, recommend their own funds without violating fiduciary rules. In general, PPA grants prohibited transaction exemptions for advice provided under an 'eligible investment advice arrangement' after December 31, 2006." (McKay Hochman Co., Inc.)
Overview: The DB(k) Plan -- The Defined Benefit Plan with Elective Deferrals
Excerpt: "[T]his article covers the Pension Protection Act of 2006 rules for the DB(k) plan. . . . The DB(k) is an 'eligible combined plan' that will permit a defined benefit plan to accept 401(k) elective deferrals. Eligibility for this type of plan is limited to employers with no more than 500 employees." (McKay Hochman Co., Inc.)
Overview: Pension Protection Act of 2006 -- IRAs, 403(b) Plans, and 457 Plans (PDF)
15 pages. Excerpt: "This Legal Alert first discusses the changes that apply to IRAs, followed by the provisions that apply to 403(b) and 457 plans. Because many of the same provisions apply to both 403(b) and 457 plans, these arrangements are discussed together, and we have noted where there are differences in treatment between the two." (Sutherland Asbill & Brennan LLP)
Audio: Pension Reform Bill and Pension Anxiety
Participants on the panel are Theodore Francis of the The Wall Street Journal; professor Teresa Ghilarducci of the Higgins Labor Research Center at The University of Notre Dame; Zvi Bode, professor of finance and economics at Boston University School of Management; and Edward Ferrigno of the Profit Sharing 401K Council of America. Excerpt: "Does it make your pension more secure? Or should there be a new box warning: By the way you could end up with nothing." (WBUR.org (Boston National Public Radio))
Defined Benefit Plans and the Pension Protection Act of 2006 (PDF)
19 pages. Excerpt: "Pension funding volatility-- a top priority for more than 70 percent of plan sponsors according to Deloitte Consulting LLP's recent pension funding survey-- remains an issue, although the new law provides more smoothing for defined benefit plans' assets and liabilities than some of the original proposals. However, underfunded plans will be subject to higher funding requirements." (Deloitte)
Overview: Pension Bill Protects Same-Sex Couples
Excerpt: "The Pension Bill that President Bush signed [last] Thursday contains two important protections for same-sex couples (and other Americans who leave their retirement savings to non-spouse beneficiaries). [The blog quotes from the Human Rights Campaign.]" (TaxProf Blog)
Fiduciary Duty Provisions in the Pension Protection Act Affecting Financial Services Providers (PDF)
8 pages. (Morgan Lewis)
Understanding the New Tax Rules Contained in the Pension Law
Excerpt: "On August 17, President Bush signed the Pension Protection Act of 2006 ('the PPA'). While the new law mainly deals with relatively arcane retirement-plan provisions, it also includes important tax changes that will directly affect many individuals, small businesses and charities." (SmartMoney)
When Must Plan Documents Be Amended to Reflect the Changes Made by the Pension Protection Act?
Excerpt: "The general effective date of many of the provisions of the Pension Protection Act of 2006 (PPA) is the first day of the 2009 plan year. Though the actual effective dates of various provisions of PPA range from 2002 through 2012, plan documents will not have to be amended to add PPA provisions until the last day of the 2009 plan year." (McKay Hochman Co., Inc.)
Overview: No Sunset for EGTRRA
Excerpt: "The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) overhauled many retirement plan and Individual Retirement Account (IRA) rules. Thanks to PPA, the EGTRRA rules became permanent and will not sunset on the last day of December 2010." (McKay Hochman Co., Inc.)
Best Practices for Frequent Trading Monitoring by Retirement Plan Record Keepers (PDF)
4 pages. Excerpt: "This best practices summary is intended to (1) help facilitate better Frequent Trading monitoring with respect to retirement plans, (2) help record keepers to better support their mutual fund trading partners to comply with their obligations under Securities and Exchange Commission . . . Rule 22c-2, (3) minimize the number of alternatives required for compliance and thereby reduce the administrative complexity and confusion among service providers . . . ." (The SPARK Institute)
Editorial: Public Pensions in Trouble
Excerpt: "New York is certainly not alone in wrestling with pension burdens. But the sheer size of its work force, with 180,000 municipal retirees and a quarter-million current employees, makes it a useful harbinger of the coming financial storm for governments, local, state and federal." (The New York Times; one-time registration required)
Appeals Court Mandates Aggregate Consideration of Failing Pension Programs
Excerpt: "An employer seeking to terminate more than one pension plan as part of its case before a US Bankrup.tcy Court should consider all of its plans together when making its case for termination, the 3rd US Circuit Court of Appeals has ruled." (PLANSPONSOR.com; one-time registration required)
Plaintiffs Ask Full Court to Review IBM Cash Balance Pension Decision
Excerpt: "On Aug. 7, three of the appellate court judges ruled that the plan does not discriminate against older workers. [Yesterday], lawyers representing certain IBM workers filed a petition 'en banc,' which asks all 11 active judges on the bench to review the opinion." (MarketWatch)
Overview: Reversal of IBM Case
Excerpt: "The latest chapter of the continuing saga of the conversion of the IBM pension plan from a traditional defined benefit plan to a 'cash balance plan', results in a federal appeals court determining that IBM's cash balance plan did not discriminate against older workers. Cooper v. IBM Personal Pension Plan, (7 th Cir., No 05-35888/7/06)." (McKay Hochman Co., Inc.)
State Upgrades Pensions, and City Gets the Bill
Excerpt: "It began with a simple plea for equity, for the same deal that other unions had. It ended with thousands more former New York City employees getting expensive Christmas presents: bonus checks in each year of retirement that would eventually reach $12,000, all paid for by taxpayers." (The New York Times; one-time registration required)
Overview: SEC Guidance on Soft Dollars Safe Harbor (PDF)
5 pages. Excerpt: "In a speech on July 31, SEC Commissioner Roel C. Campos urged investment managers to 'err on the side of caution' in determining whether a service is 'research' within the scope of the safe harbor. He emphasized the fact that 'the context in which we are analyzing services is a safe harbor from a fiduciary duty -- not an entitlement.'" (White & Case LLP)
Freddie Mac Agrees to $4.65M Retirement Plan Settlement
Excerpt: "Freddie Mac announced [yesterday] it has settled for $4.65 million Employee Retirement Income Security Act (ERISA) class-action litigation that was filed following the company's restatement of financial results for the years 2000 through 2002." (PLANSPONSOR.com; one-time registration required)
Overview: IRS Strategy to Simplify/Expand Correction of Qualified Plan Operational & Other Defects
Excerpt: "Given the obvious advantages of correcting plan defects via EPCRS, it is of particular importance to plan sponsors to have proper compliance procedures in place, to quickly identify any compliance issues that may arise, and take prompt action to correct any defects." (White & Case LLP)
Poll Shows Americans Taking Notice of Shift in Retirement Savings Responsibility
Excerpt: "A recent poll found that about three-quarters of Americans prefer 401(k)-type plans over defined benefit plans, a nod to the idea that people may want to take on more of the responsibility for managing their money." (PLANSPONSOR.com; one-time registration required)
Switzerland: Pension Issues -- Monitoring Investment Strategy and the Role of the Actuary (PDF)
2 pages. Excerpt: "The August edition of 'Perspectives', Watson Wyatt's regular commentary on issues and trends in Swiss Pensions is now available. In the main articles this month, Antoine Cuenod focuses on the role of the foundation board in deciding on the right investment strategy for pension funds in Switzerland and Ljudmila Bertschi outlines the potential new role for actuaries in Switzerland in verifying the investment strategy of pension funds." (Watson Wyatt Worldwide)
Links to Items on Executive Comp, Benefits in General
Opinion: PPA Provisions Reflect Unique Role of Life Insurance in Providing Retirement Security
Excerpt: "One provision [of the Pension Protection Act] will make long-term care insurance more attractive to consumers. The other will help ensure that more of tomorrow's retirees will enjoy the guarantee of lifetime income offered by annuities that retirees from traditional 'defined benefit' plans receive today. . . . The long-term care provision [which becomes effective in 2010] allows for the combination of long-term care insurance with annuities." (Jack Dolan of the American Council of Life Insurers)
Court Finds SPD Created Expectations of Benefits
Excerpt: "The US District Court for the Northern District of California has ruled that accidental death and dismemberment claims for a man who completely lost vision in his left eye should be based on the plan's summary plan description (SPD) and not the plan document itself." (PLANSPONSOR.com; one-time registration required)
Overview: New Restrictions on Executive Compensation and COLI under the Pension Protection Act
Excerpt: "This article summarizes the affect of the PPA on funding vehicles such as rabbi trusts and corporate-owned life insurance ('COLI')." (Ice Miller LLP)
Overview: SEC's Comp Disclosure Reform Includes Additional Requirements Re Stock Option Awards
Excerpt: "Granting options in advance of material positive news is not clearly illegal and is a hotly debated issue. While the Enforcement Division of the SEC has been examining this issue as a basis for claims of securities fraud, Commissioner Paul Atkins has argued that the practice could, in fact, be good for outside shareholders." (Orrick, Herrington & Sutcliffe LLP)
Ford Looking at Employee Buyouts
Excerpt: "Ford Motor Co. is preparing to extend buyout offers to all its factory workers in North America, two people with knowledge of the plan said." (Arkansas Democrat-Gazette)
Newly Posted Events
Advising Clients Under the Pension Protection Act of 2006: Practitioners' Guide to the Mammoth New Law
Nationwide on August 31, 2006
presented by ALI-ABA (American Law Institute-American Bar Association)
An Overview of HR 4, the Pension Protection Act of 2006
Nationwide on September 12, 2006
presented by ASPPA (American Society of Pension Professionals & Actuaries)
FMLA Update (Two Day Program - Seminar Plus Workshop)- At Locations Around the Country
Nationwide on August 22, 2006
presented by HRTrainingCenter.com
New SEC Executive Compensation Rules and Guidance on Executive Compensation, Stock Option Practices, and Related Party Transactions
in District of Columbia on October 4, 2006
presented by BNA, Inc.
Newly Posted Press Releases
The SPARK Institute Files SEC Comment Letter On The Proposed Columbia Funds Distribution Plan
(SPARK - the Society of Professional Administrators and Recordkeepers)
1,000 Retirement Specialists Meet To Discuss The Future
(Metrics Partners)
Freddie Mac Announces Agreement to Settle ERISA Class Action Litigation
(Freddie Mac)
Newly Posted or Renewed Job Openings
Employee Benefit Plan Consultant
for Vanguard
in PA
Pension Administrator
for Fred S. Shapiro & Associates, Inc.
in MD
Senior Manager
for 1199SEIU Benefit and Pension Funds
in NY
Pension Administrator
for Howard A. Feinstein & Associates, Inc.
in IL
401(k) Plan Administrator
for Northeast Planning Services, Inc.
in MA
Internal 401(k) Wholesaler
for ePlan Services, Inc.
in CO
Sales Associate / Telephone Sales – Financial Services
for Wealth Management Systems Inc.
in NJ
Lead-Retirement Plan Specialist
for Gundersen Partners
in CA
Senior Business Analyst
for Gundersen Partners
in CA
Sales Associate
for Smith Barney
in NY
Regional Director, Retirement Services
for Great-West Retirement Services
in ANY STATE
Assistant Manager, 401k Plan Services
for Great-West Retirement Services
in WI
Software Pension Business Analyst
for Levi, Ray & Shoup, Inc.
in IL
Senior Consultant, Defined Benefit/Defined Contribution
for Schloss & Co., a BenefitStreet Co.
in NY
401k Administrator
for Vanguard
in PA
Data Project Administrator
for Vanguard
in PA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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