Retirement Plans
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September 15, 2006
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A 401(k) Fees Litigation Wave Has Hit!
Excerpt: "These lawsuits all target large 401(k) plans sponsored by large employers. The lawsuits name the employer as defendant, and in some cases, plan fiduciary committees and their various individual members. In the 'cookie-cutter' complaints, the plaintiffs allege a variety of breaches of fiduciary duties and prohibited transactions relating to fees paid by 401(k) plans." (Seyfarth Shaw LLP)

FAQs Regarding Loans from Retirement Plans
Excerpt: "Loans are not permitted from IRAs or from IRA-based plans such as SEPs, SARSEPs and SIMPLE IRA plans. Loans are only possible from qualified plans that satisfy the requirements of §401(a), from annuity plans that satisfy the requirements of §403(a) or 403(b), and from governmental plans. (Code §72(p)(4); Reg. § 1.72(p)-1, Q&A-2) [The target page has frequently asked questions and answers regarding loans.]" (Internal Revenue Service)

FAQs Regarding Hardship Withdrawals
Excerpt: "Many plans that provide for elective deferrals provide for hardship distributions. Thus, 401(k) plans, 403(b) plans, and 457(b) plans may permit hardship distributions. [The target page contains frequently asked questions and answers on hardship withdrawals.]" (Internal Revenue Service)

The ABCs of Understanding a Plan's SAS 70 Report (PDF)
2 pages. Excerpt: "In order to help our readers understand the accountant's role in reporting on internal controls, this article will address a type of internal control examination frequently associated with 401(k) plans: A SAS 70 report (SAS is short for Statement on Auditing Standards). [The authors] explain when a SAS 70 engagement is appropriate, what is included and how it is beneficial." (401k Advisor via Grant Thornton LLP)

White Paper: 401(k) Fiduciary Risks in a Rising Interest Rate Environment (PDF)
3 pages. Excerpt: "For defined contribution plan sponsors, a much less understood consequence of rising rates can have significant implications to one of the most popular investment options. . . The Stable Value Option (SVO)." (National Retirement Partners)

Overview: PPA Changes Affecting 403(b) and 457
Excerpt: "The most important thing the Pension Protection Act did was to make permanent the changes in the law passed by EGTRRA." (403(b)-457 Plans Blog)

Text of IRS Announcement 2006-70: Election of Alternative Funding Schedule for Airline Businesses (PDF)
2 pages. Excerpt: "This announcement sets forth the procedures for electing an alternative funding schedule for contributions as described in section 402(a)(1) of the Pension Protection Act of 2006 (PPA), Pub. L. No. 109-280." (Internal Revenue Service)

Public Employee Pensions Could Cripple Government Budgets in Alaska
Excerpt: "Starting next year, Alaska school districts and municipalities will see huge spikes in what they have to pay into the state's retirement systems. The Alaska Retirement Management Board approved the increases in employer contributions to the Public Employees Retirement System, or PERS, and the Teachers Retirement System, or TRS, this week. The increases are meant to whittle away at the systems' $6.9 billion shortfall over the next 25 years." (AP via Anchorage Daily News)

Social Security Reform: Implications of Different Indexing Choices (PDF)
74 pages. Excerpt: "Given the recent attention focused on indexing, this report examines (1) the current use of indexing in the Social Security program and how reform proposals might modify that use, (2) the experiences of other developed nations that have modified indexing, (3) the effects of modifying the indexing on the distribution of benefits, and (4) the key considerations associated with modifying the indexing." (U.S. Government Accountability Office)

Overview: IRS Final Regs Disallow Deduction of Payments Used to Reacquire Corporate Stock from ESOPs
Excerpt: "The regs address issues that have arisen under the application of stock reacquisition expenses under Code Sec. 162(k) and deductions for dividends paid on employer securities under Code Sec. 404(k)." (CCH Pension and Benefits)

Proposal Would Make Retirement Benefits a Factor in Bidding for Federal Contracts
Excerpt: "The proposal would prevent contractors from obtaining an advantage if they provided less generous retirement benefits than the government does to its employees. Contractors said that would drive up the cost of bids by 24 percent." (The Washington Post; one-time registration required)

CalPERS to Devote $5 Billion to Governance Investing
Excerpt: "The fund, whose full name is the California Public Employees' Retirement System, said the increase follows reports that the 10 corporate governance firms it has been using posted annual returns of 17.7 percent from 1999 through March 31, 2006, nearly three times the industry benchmark." (Reuters via The New York Times; one-time registration required)

Hewitt's Global Retirement Update -- September 2006 (PDF)
2 pages. Excerpt: "[Hewitt's] Global Retirement Update summarizes recent legislative developments and trends related to retirement and financial management and highlights recently passed and pending legislation that may require employers to take action to comply with new rules or review existing plans." (Hewitt Associates)

Sweden Could Crack Down on Pension Investing in Activist Funds
Excerpt: "If ruling Social Democrats are returned to office in Swedish elections this weekend, pension officials in that country will be prohibited from supporting activist investment funds targeting leading Swedish companies." (; one-time registration required)

National Save for Retirement Week, October 22-28, 2006
Excerpt: "[S]enator Gordon Smith (R-OR) and Senator Kent Conrad (D-ND) have introduced a Resolution to declare a National Save for Retirement Week, which will be held the last week of October (October 22-28, 2006). The Resolution, S. RES. 550 was introduced on August 3, 2006 and passed by unanimous consent on September 13, 2006. [The 3-page resolution is at]" (National Association of Government Defined Contribution Administrators, Inc.)

NASD Investor Alert Warns Workers About Early Retirement Investment Pitches
Excerpt: "NASD issued an Investor Alert [September 14] warning workers about investment pitches that guarantee comfortable early retirements. These pitches -- often made at free seminars -- promise high annual returns but make little or no mention of the risks associated with the aggressive investment scenarios the early retirement packages involve." (

Links to Items on Executive Comp, Benefits in General

New York Comptroller Sued for Recognizing Same-Sex Marriages
Excerpt: "New York State Comptroller Alan Hevesi is being challenged over his recognition of Canadian same-sex marriages for public retirement system benefits." (; one-time registration required)

Making It Real -- Moving Beyond Corporate Policy in the Day-to-Day Lives of LGBT Employees (PDF)
16 pages. Excerpt: "[This] is a new report from Ernst & Young designed to help companies implement corporate policies that impact the everyday work experiences of les.bian, g.ay, bise.xual, and transgender (LGBT) employees. The report is the result of a roundtable in which select global companies that scored 100% on the Human Rights Campaign's index of LGBT inclusiveness shared their best practices." (Ernst & Young)

Slide Presentation on the Final SEC Executive Compensation Disclosure Requirements (PDF)
44 pages. Detailed coverage of the issue. (Morgan Lewis)

Federal Income Taxation of Nonqualified Deferred Compensation and Its Plans (PDF)
120 pages. Excerpt: "CAVEAT: This article is intended to address only the general principles governing nonqualified deferred compensation plans after the enactment of the American Jobs Creation Act of 2004." (NYU Review of Employee Benefits and Executive Compensation via Haynes and Boone, LLP and T. David Cowart)

Practical Guidance for Planning for the New Proxy Disclosure Rules (PDF)
13 pages. Excerpt: "The purpose of this letter is to begin identifying the issues to be addressed and the data sources that will likely be needed when preparing executive compensation disclosure under the new rules. Following are illustrative action lists for those who will be responsible for drafting the Compensation Discussion & Analysis and preparing the Summary Compensation Table, supporting tables and narratives." (Frederic W. Cook & Co., Inc.)

Analysis Needed on ROI of Benefits for Expats
Excerpt: "Many companies aren't looking at the return on investment on expatriate employees and the money that's seeping out of cracks in their benefit programs. Thirty-eight percent of firms say their overseas assignment programs are 'more generous than they need to be,' and 48% believe their international assignees take 'too much time and effort to administer,' up 12% from last year, according to a new report from KPMG, which provides audit, tax and advisory services." (BenefitNews Connect)

The Timing of Stock Options Issue: A Legal Challenge for Companies and Much More
Excerpt: "Winston & Strawn partner Gail Standish discusses current issues in corporate compliance with regard to stock option backdating, with a focus on current government investigations, possible consequences for companies found liable, and what the role of both inside and outside counsel may play in remedying violations. [The one-page PDF is at]" (Winston & Strawn LLP)

Ford Offering 75,000 Employees Buyout Packages
Excerpt: "The Ford Motor Company agreed Thursday to offer buyouts and other incentives worth as much as $140,000 each to its 75,000 hourly workers in the United States to persuade them to leave their jobs." (The New York Times; one-time registration required)

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Managing a Retirement Plan? Timing Is Everything!

Trying to play "beat the clock" when it comes to solving the many questions facing your retirement program? Automated features may be right for your 401(k) plan, but should you implement them right away? Perhaps your DB plan has seen better days. When will you take a closer look at alternatives? Setting a schedule for plan management strategy can be a challenge. Luckily, the countdown to management solutions has begun. Set your alarm for the 14th annual Mid-Sized Pension Management Conference in Chicago.

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Newly Posted Events
(Post Yours!)

2nd Annual Pension Funds in Crisis
in District of Columbia on October 18, 2006
presented by Strategic Research Institute

HSA 2006
in Arizona on December 7, 2006
presented by Business Capital Edge

Risky Business: Mitigating Broker-Vendor-Advisor Fiduciary Exposure
in California on September 21, 2006
presented by Western Pension & Benefits Conference - Orange County Chapter

The Pension Protection Act of 2006 - Changes Affecting 401(k) Plans
in California on October 19, 2006
presented by Western Pension & Benefits Conference - Orange County Chapter

Newly Posted Press Releases
(Post Yours!)

NASD Investor Alert Warns Workers About Early Retirement Investment Pitches
(NASD (National Association of Securities Dealers))

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Marketing Director
for BISYS Retirement Services
in PA

Retirement Services Compliance Manager
for Regions Financial Corporation
in AL

Systems Business Analyst II
for Regions Financial Corporation
in AL

Operations Manager (CA)
for Zenith Administrators
in CA

New: Exclusive In-House Employee Benefits Counsel Opportunity - Heathrow, Florida
for McCormack Schreiber Legal Search Inc.
in FL

Senior Defined Contribution Plan Administrator
for Strategic Pension Services, Inc. (“SPS”)
in CA

Senior Underwriter - Stop Loss
for Great-West Corporate
in CO

Internal Service Representative
for Northwestern Benefit Corporation of Georgia
in GA

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