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August 24, 2006
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Delta Wins OK to Pay Pilot Claims and End Pension
Excerpt: "Delta Air Lines Inc., the largest U.S. carrier in bankrup.tcy protection, won court approval Tuesday to give retired pilots at least $77 million in claims in return for terminating their pension plan." (Bloomberg News via Los Angeles Times; one-time registration required)

Issue Brief: 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2005 (PDF)
20 pages. Excerpt: "Consistent participation in 401(k) plans helps account balances grow: The average account balance increased 50 percent among 401(k) participants who held accounts from 1999 to 2005, even though one of the worst bear markets for stocks since the Great Depression occurred during that period." (Employee Benefit Research Institute)

Lockheed Cleared of Fiduciary Misstep in Rollover Dispute
Excerpt: "A federal appellate court has cleared Lockheed Martin Energy Systems Inc. (LMES) of wrongdoing in connection with whether IT employees could roll their 401(k) balances to the plan sponsored by the company to which they were outsourced." (; one-time registration required)

Overview: IRS Procedures for Accounting for 'Pick Up' Contributions
Excerpt: "On August 8, 2006, the Internal Revenue Service released Revenue Ruling 2006-43 providing guidance on how state and local governments must document arrangements under which they make or 'pick-up' contributions on behalf of their employees to a pension plan qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the 'IRC')." (Orrick, Herrington & Sutcliffe LLP)

Overview: New Requirements for State and Local Government Pick-Up Contributions (PDF)
2 pages. Excerpt: "In order to allow the Service to better distinguish between pick-up contributions and salary reduction contributions -- in both cases, the employee's compensation is offset by the amount of the contribution this new ruling requires that the employer take formal action providing that the contributions on behalf of a specified class of employee, although designated as employee contributions, will be paid by the employer." (Sutherland Asbill & Brennan LLP)

Overview of WSJ Opinion Piece: Public Pension Price Tag
Excerpt: "Because their size and complexity offer such a wide field for abuse, state and local retirement systems pose a significant moral hazard -- threatening the long-term fiscal stability of many of their sponsors, says E.J. McMahon, senior fellow at the Manhattan Institute." (Wall Street Journal via National Center for Policy Analysis)

PPA Provides Interest Rates for 2006 PBGC Variable Rate Premiums
Excerpt: "The Pension Benefit Guaranty Corporation has updated its page on Valuing vested benefits for PBGC variable rate [] to reflect the PPA provision. (Previously, these PPA rates had been available on the PBGC's page for the 4010 temporary gateway test, which had waived 4010 reporting on the basis of the anticipated PPA rates.)" (Pensions & Benefits Weblog)

Minnesota School District Settles Age Discrimination Claim for $1M
Excerpt: "Another Minnesota school district has been ordered to pay a settlement to former employees, making it the twelfth in a string of age discrimination suits that has cost the districts a total of $2.6 million." (; one-time registration required)

Overview: IRS Final Regulations Clarify Interaction Between Anti-Cutback and Nonforfeitability Rules
Excerpt: "The regulations retain a utilization test introduced in proposed rules issued in 2005 under which certain plan amendments are permitted to eliminate or reduce certain early retirement benefits, retirement-type subsidies, or optional forms of benefit, among other changes." (CCH Pension and Benefits)

Opinion: New York State Pension Fund Critic Creates Phony 'Hole'
Excerpt: "The basic claim in the story is that public pension funds get to take risks that the federal government does not allow for private pension funds. That is completely false." (Binghamton Press & Sun-Bulletin)

Opinion: San Diego Public Employee Pensions -- The County vs. Warren Buffett
Excerpt: "According to a recent article in the Los Angeles Times, Warren Buffett has set the assumed rate of return for his companies' retirement systems at 6.4 percent. It is frankly impossible to guarantee that funds like the county and city will make more than 8 percent on their investments in the future. And prudent financial planning would dictate that these systems plan for at least the possibility that they won't earn that much . . . ." (

Pension Act Tilts to Cash-Balance Plans
Excerpt: "By boosting the volatility of the cash demands that traditional defined-benefit plans place on employers, the new pension reform law makes cash-balance plans all the more alluring, retirement plan experts say." (

New book: The Law of Equity Compensation
The NCEO has released a new book, The Law of Equity Compensation, a guide to litigation and administrative rulings covering stock options and other equity compensation plans during the years 2001-2005. (National Center for Employee Ownership)

Managed Accounts and Participant Portfolios (PDF)
20 pages. Excerpt: "This paper examines the impact of managed account programs on participant equity holdings, company stock exposure, and expected portfolio risk and return. Nearly two-thirds of participants adopting a managed account advisory service saw a sharp increase in their equity exposure. Expected returns rose by 82 basis points (after fund expenses but before any managed account fee), while Sharpe ratios improved by 22%." (Vanguard Center for Retirement Research)

Links to Items on Executive Comp, Benefits in General

Comments on Accounting for Deferred Comp & Post-Retirement Aspects of Split Dollar Arrangements
Excerpt: "The letter contains comments on EITF Issues 06-4, sent to the chairman of the Emerging Issues Task Force of the Financial Accounting Standards Board on July 27, 2006." (Executive Benefit Solutions LLC)

Abstract of Chason on Deferred Compensation Reform
Excerpt: "Eric Chason (William & Mary) [has a] new piece in the Ohio State Law Journal: Deferred Compensation Reform: Taxing the Fruit of the Tree in its Proper Season, 67 Ohio St. L. J. 347 (2006) . . . ." (Workplace Prof Blog)

The SEC's Final Rules on Executive Compensation -- What to Do Now
Excerpt: "Companies must comply with the new disclosure requirements in Forms 8-K for related triggering events that occur on or after 60 days after publication in the Federal Register and in Forms 10-K and 10-KSB for fiscal years ending on or after December 15, 2006." (Thelen Reid & Priest LLP)

Overview: SEC's Final Rules on Disclosure of Executive and Director Compensation (PDF)
21 pages. Excerpt: "The rules prescribe in detail a new regime for disclosure of executive and director compensation at a level that has been long awaited by the investing community. The new rules also address disclosures of related person transactions, director independence, corporate governance and related matters." (Alston & Bird LLP)

Overview: DOL Changes to Voluntary Fiduciary Correction Program
Excerpt: "The Department of Labor issued an updated version of its Voluntary Fiduciary Correction Program in April, adding transactions that can be corrected under the program and expanding the ability to obtain relief from prohibited transactions." (RLRC Department of Labor Voluntary Compliance Bulletin via Reish Luftman Reicher & Cohen)

Employer Cannot be Fiduciary Before its Existence
Excerpt: "The US District Court for the Northern District of Illinois has ruled that a spin-off company cannot be held liable for misrepresentation of benefits to employees before the transaction to create the company is complete." (; one-time registration required)

Editorial: The Corporate Scandal Over Rigged Stock Options Continues to Expand
Excerpt: "More than 100 companies are now either under investigation by the federal government or performing their own internal investigations. Companies are restating earnings and preparing for new tax bills, and in extreme cases, executives are facing criminal charges." (The New York Times; one-time registration required)

Newly Posted Events
(Post Yours!)

FMLA Seminars
Nationwide on August 28, 2006
presented by

WorldatWork Total Rewards Conference & Exposition 2007
in Florida on May 6, 2007
presented by WorldatWork

Newly Posted Press Releases
(Post Yours!)

NAGDCA Announces the 2006 Media Recognition Award Winners
(NAGDCA (National Association of Government Defined Contribution Administrators, Inc.))

Financial Organizations See Significant Business Opportunity in Offering HSAs
(Wolters Kluwer Financial Services)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Six Sigma Black Belt Quality Analyst
for Mercer HR Services
in TX

Manager of Retirement Program
for Publix Super Markets, Inc.
in FL

401(k) SMART and Customer Service Supervisor
for Publix Super Markets, Inc.
in FL

TPA Relationship Manager
for Transamerica Retirement Services
in GA

Consultant 401(k)
for Qualified Benefits, Inc - QBI (a wholly owned subsidiary of BenefitStreet, Inc.)
in CA

Pension Administrator
for Fred S. Shapiro & Associates, Inc.
in MD

Compliance Consultant or Compliance Trainee
for Pinnacle Financial Services, Inc.
in FL

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