Retirement Plans
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September 28, 2006
Today's sponsor: ASPPA • Working for America's Retirement™

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The 6th Annual ASPPA 401(k) SUMMIT

Be in San Diego February 25-27, 2007 at the Manchester Grand Hyatt to join ASPPA and a few thousand of your colleagues for the industry event of the year. We will have all new workshops that target small, mid and large plan markets, world class speakers, luncheon discussion groups for networking and Pension Protection Act 2006 perspectives from industry experts. don't miss out on early registration incentives. The ASPPA 401(k) SUMMIT – The Forum for Retirement Sales and Investment Professionals.

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

Summary in Chart Form of Key Provisions of PPA Impacting Governmental 457(b) and 401 Plans (PDF)
15 pages. Excerpt: "The summary is meant to assist governmental plan sponsors in understanding key provisions impacting 457(b) and 401 plans." (ICMA-RC)

ERIC's Overview: DOL Proposed Regs on Default Investments
Excerpt: "The assets invested on behalf of the participant must be invested in a 'qualified default investment alternative' [and t]here are five requirements for a 'qualified default investment alternative' . . . ." (The ERISA Industry Committee)

Overview: DOL Proposes Default Investment Regulations under ERISA (PDF)
4 pages. Excerpt: "The PPA requires the DOL to adopt these regulations by February 17, 2007. Comments on the proposed regulations are due on or before November 13, 2006. The regulations will take effect 60 days after adoption and publication in final form in the Federal Register." (Sutherland Asbill & Brennan LLP)

The Watchwords for Capturing Retirement Income Opportunities Through Marketing (PDF)
28 pages. Excerpt: "In our analysis, we broadly define market segments of the Baby Boom population. There are roughly 77 million Baby Boomers in 40 million households (households headed by 42- to 60-year-olds). We focus on the near term as Baby Boomers start to restructure their retirement assets. We also observe that some segments have the financial resources to accumulate more retirement assets, as well as other financial assets to help them fund their retirement." (Milliman)

Overview: New 403(b) Regulations (PDF)
3 pages. Excerpt: "In order to provide employers, employees, insurance carriers, and mutual funds involved in section 403(b) arrangements a reasonable advance period before the regulations go into effect, the final regulations generally will not be effective earlier than January 1, 2008." (BDO Seidman, LLP)

Summary: Women and the Retirement Security Bill (PDF)
4 pages. Excerpt: "Study of Spousal Consent for Distributions from Defined Contribution Plans – Under the bill, the Labor and Treasury Departments are required to conduct a joint study of the feasibility and desirability of extending the spousal consent requirements to defined contribution plans and to report the results, with recommendations for legislative changes . . . ." (American Benefits Council)

Overview: Senate Measure Would Protect Retirement Benefits of Defense Contractors
Excerpt: "The amendment, included in legislation to provide funds for the Defense Department in fiscal 2007 (H.R. 5631), would prohibit the Department from contracting with firms for work currently performed by government workers if the only cost savings of a contract results from an employer offering no retirement benefits or benefits inferior to those offered by the federal government." (CCH Pension and Benefits)

Analysis: Working Period for Funding Retirement Benefits Has Been Reduced
Excerpt: "The law requires -- -and logic dictates -- that fiduciaries make decisions based on the 'circumstances then prevailing.' Circumstances are changing. As a result, fiduciaries need to consider these changes -- -the improved health and longevity of their participants -- -in managing their 401(k) plans." (Reish Luftman Reicher & Cohen)

Overview: From the PPA -- Two Types of Fiduciary Advisors and an Audited Prudent Investment Process (PDF)
6 pages. Excerpt: "The Pension Protection Act of 2006 provides exemptions to prohibitive transactions under ERISA and the Federal Tax Code in connection with advisors providing advice through a non discretionary audited prudent investment process ('eligible investment advice arrangement') to plan participants of defined contribution plans who direct the investment of their accounts." (Senior Consultant)

Working Paper: Pension Portfolio Choice and Menu Exposure
Excerpt: "In view of the transition to funded individual account plans in many nations around the world, it is of interest to evaluate how the introduction of a funded defined contribution retirement system affects participants' propensity to participate in the stock market. This chapter evaluates what we call the 'Swedish experiment,' where, in 2000, the traditional Swedish pay-as-you go retirement system was partially replaced by a national defined contribution plan." (Pension Research Center; one-time registration required)

Working Paper: Saving Between Cohorts -- The Role of Planning
Excerpt: "[The authors] compare the saving behavior of two cohorts: the Early Baby Boomers (EBB, age 51-56 in 2004) and the HRS cohort (age 51-56 in 1992). . . . The effect of planning is remarkably similar between the two cohorts; those who do not plan accumulate much lower amounts of wealth . . . than those who do plan. Thus, for both the EBB and the HRS cohort, lack of planning is tantamount to lack of saving irrespective of the many changes in the economy between 1992 and 2004." (Pension Research Center; one-time registration required)

Working Paper: Retiring on the House? Cross-Cohort Differences in Housing Wealth
Excerpt: "Unlike prior studies, [the authors] find that people do view housing as a source of wealth that can help them finance their retirement needs. Indeed, a substantial fraction of older households do move, and in the process, they appear to liquidate some home equity which they convert to financial assets. Consequently, some of the home equity extraction observed in recent years may be related to the aging of the population, rather than a cyclical response to rapid house appreciation." (Pension Research Center; one-time registration required)

National Save for Retirement Week Unanimously Approved
Senate passage of S. Res. 550 designates Oct. 22-28 as 'National Save for Retirement Week." (ICMA-RC)

Issue in Brief: Will Reverse Mortgages Rescue the Baby Boomers?
Excerpt: "The brief's key findings are: Reverse mortgages will become more popular as baby boomers reach retirement with insufficient income; At current interest rates, a 65-year-old household with a $200,000 house could borrow about half of its home value; The amount available through a reverse mortgage is very sensitive to interest rates, so households should not overestimate their accessible home equity." (Center for Retirement Research at Boston College)

An Overview of the Pension Protection Act for Plan Sponsors
Excerpt: "Plan sponsors will have to grapple with more, and more complicated, decisions than ever, even as participant decisions are reduced to adherence with formulative defaults. There is a delicate balance to be struck between the grandiose aspirations of an ownership society and the fundamental responsibility of government to ensure that our old age is not spent rooting about in trash containers." (; one-time registration required)

Links to Items on Executive Comp, Benefits in General

New Tax Law for BOLI/COLI has Teeth but No Bite (PDF)
At pp. 1-2 of 2-page document. Excerpt: "The enactment of the PPA represents a significant change to the taxation of employer-owned life insurance; however, most employers can satisfy the requirements and obtain fully tax-free insurance proceeds by executing a few new policies and procedures before BOLI or COLI policies are issued." (Executive Benefit Solutions)

Summary of FASB Developments on Accounting for Split Dollar Plans (PDF)
At p. 1 of 2-page document. Excerpt: "Recently, the EITF suggested that split dollar benefits could be valued at the death benefit or the employer's 'cost of insurance,' depending upon the arrangement. Currently there is no 'good' measure for 'cost of insurance.' Unless a suitable measure can be developed and agreed upon within the industry, diversity in practice will continue among employers and auditors" (Executive Benefit Solutions)

Results of the 2006 Corporate Board Member Executive & Director Compensation Study (PDF)
8 pages. Excerpt: "The Corporate Board Member/Towers Perrin '2006 Executive & Director Compensation Study' surveyed close to 500 corporate directors. While the survey included themes that recur year to year, such as compensation and stock options practices, recruiting, and committee pay, it also homed in on some previously unexplored topics, including CEO succession readiness and the effect of the new SEC disclosure rules." (Towers Perrin)

GAO Testimony: Aligning Senior Government Executives' Performance with Organizational Results
16 pages. Excerpt: "This testimony addresses (1) the performance management system's regulatory structure, (2) OPM's certification process and agencies' views of it, and (3) OPM's role in monitoring the system, and the number of agencies that have been certified to date. [Highlights of the testimony are at]" (U.S. Government Accountability Office)

The IRS's Employee Plans FY 2007 Work Plan: Operating Priorities (PDF)
13 pages. Excerpt: "EP Operating Priorities support the IRS's Strategic Plan for FY2007-09. The Strategic Plan outlines three strategic goals that guide the future direction of the agency: Improve Taxpayer Service; Enhance Enforcement of the Tax Law; and, Modernize the IRS through its People, Processes and Technology." (Internal Revenue Service)

Opinion: Stock Options, Performance, and the Little Guy
Excerpt: "In the days before stock option grants were counted as an expense, many companies figured it would do no harm to hand out some options to everyone. It helped with cash flow too, because the company could limit salaries. But now the ante has been raised. Give options to all employees and your profits will be hit because of the expense recorded against earnings." (Graef Crystal via Bloomberg News)

Newly Posted Events
(Post Yours!)

Journey deep into the world of IRAs
in Kansas on October 31, 2006
presented by Wolters Kluwer Financial Services

Journey deep into the world of IRAs
in Texas on October 31, 2006
presented by Wolters Kluwer Financial Services

Journey deep into the world of IRAs
in Illinois on October 31, 2006
presented by Wolters Kluwer Financial Services

Journey deep into the world of IRAs
in Illinois on November 1, 2006
presented by Wolters Kluwer Financial Services

Journey deep into the world of IRAs
in Texas on November 1, 2006
presented by Wolters Kluwer Financial Services

Journey deep into the world of IRAs
in Kansas on November 1, 2006
presented by Wolters Kluwer Financial Services

Journey deep into the world of IRAs
in Kansas on November 2, 2006
presented by Wolters Kluwer Financial Services

Journey deep into the world of IRAs
in Illinois on November 2, 2006
presented by Wolters Kluwer Financial Services

Journey deep into the world of IRAs
in Texas on November 2, 2006
presented by Wolters Kluwer Financial Services

Newly Posted Press Releases
(Post Yours!)

ICMA-RC Launches National Save for Retirement Week Web Site
(ICMA Retirement Corporation)

Active-Duty Reservists Get Relief on Retirement Plan Payments: Refunds of 10-Percent Tax Available Back to 2001, New Law Says
(Internal Revenue Service (IRS))

Council Applauds Ways and Means Committee Approval of Health Savings Account Legislation
(American Benefits Council)

Senators Smith, Conrad, Kerry and Bingaman Introduce “Women’s Retirement Security Act of 2006”
(American Council of Life Insurers)

Towers Perrin Survey Shows Employer-Sponsored Health Benefit Costs Continue to Outpace the CPI
(Towers Perrin) Announces the Release of Non-Qualified Plan Documents

National Survey Reveals Seniors' Reactions to Pending 'Doughnut Hole' in Their Medicare Part D Drug Plan
(Guideline, Inc.)

Beazley Expands Risk Management Offering to Include ERISA Advice
(Beazley Group)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

401(k) / Defined Contribution Administrator
for Campbells Administration Inc.
in CA

Assistant Plan Administrator
for RSM McGladrey Retirement Resources
in MN

Senior Plan Administrator
for RSM McGladrey Retirement Resources
in MD

HR/Benefits Manager
for Stephen James Associates

Manager, Alliance Plan Administration
for Sentinel Benefits Group
in MA

Relationship Manager
for T. Rowe Price
in MD

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