Retirement Plans
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October 5, 2006
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ASPPA Fall 2006 Exams -- Early Registration Ends September 30

ASPPA’s 2006 fall proctored examination window will be November 1 - December 15. Early registration ends September 30, and the final registration deadline is October 31.
Register online at To learn more about ASPPA exams, visit the Education and Examination Web page at Complete your exams this year. Sign up today!

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

Deciphering the New Rules of Retirement Advice
Excerpt: "[M]ajor firms such as Merrill Lynch say for now they prefer to stick to the computerized third-party advisory plans that they have been using under a Department of Labor (DOL) exemption to ERISA's 'prohibited transaction' rule, which forbids any activity that would actually result in transactions (i.e., sales of products or services for a fee)." (Registered Rep)

Overview: Reg on Default Investment Alternatives under Participant Directed Individual Acct Plans (PDF)
2 pages. Excerpt: "The safe harbor default investment alternative is a key feature in the new law's provisions on automatic enrollment in 401(k) plans. It addresses the concern that some plan fiduciaries have expressed over potential liability for investment losses in the absence of affirmative participant directions." (Winston & Strawn LLP)

Overview: EBSA Proposed Rules to Implement PPA Provision Allowing Default Investment Alternatives
Excerpt: "DOL'S Employee Benefits Security Administration (EBSA) has published a proposed regulation detailing how individual account plans, such as 401(k) plans, can implement the changes allowed by the Pension Protection Act of 2006 (PPA) with respect to investing participants' assets, in the absence of investment directions from the participants. (Prop Labor Reg § 2550.404c-5)" (Pension & Benefits Week via RIA News Briefings)

Overview: DOL Proposed Default Investment Rules
Excerpt: "On September 27, 2006, DOL published proposed regulations creating, in effect, a default fund 'safe harbor.' The big news: life-cycle, target retirement date and balanced funds are in the safe harbor, but GICs, money market and other 'capital preservation-only' funds are not." (CCA Strategies, LLC)

Overview: Plaintiffs' Bar Filing of ERISA Claims Alleging Excessive 401(k) Fees (PDF)
3 pages. Excerpt: "Thus far, other plaintiffs' firms have not followed suit with similar actions but, given the challenges to recovery under the Investment Company Act of 1940 and the broad fiduciary duties laid down under ERISA, companies and other entities with large 401(k) plans may be targeted with similar claims, especially if these latest cases were to gain traction in the federal courts." (Dechert LLP)

Overview: Distribution from DC Plan Was Not 'Compensation' for Purposes of the IRA Deduction Rules
Excerpt: "A taxpayer was not entitled to deduct the amount of a contribution made to an IRA where the taxpayer had not received any compensation or earned income during the year at issue, the U.S. Tax Court has ruled. Amounts received as distributions from a defined contribution plan could not be counted as compensation, the court held." (CCH Pension and Benefits)

Court OKs $100M AOL Time Warner 401(k) Suit Settlement
Excerpt: "A federal judge in New York has approved a $100-million settlement in a 401(k) fiduciary responsibilities breach case against AOL Time Warner. US District Judge Shirley Wohl Kram of the US District Court for the Southern District of New York noted that an independent fiduciary had already reviewed the settlement's terms and agreed that the settlement would be fair, according to the ruling." (; one-time registration required)

FASB Vote Sets Standard for Companies to Disclose Only Next Years' Expected Pension Contribution
Excerpt: "The Financial Accounting Standards Board (FASB) voted 6-1 yesterday against taking up a project on pension disclosure that could have led to requiring companies to disclose information about their expected pension contributions for the next five years." (; one-time registration required)

Market Impact of Pension Accounting Reform (PDF)
24 pages. Excerpt: "[Merrill Lynch estimates] a total reduction in shareholder equity at 31 December 2006 of $217bn (or 6%)." (Merrill Lynch, Pierce, Fenner & Smith Incorporated)

Pennsylvania Pension Plan Funding Should Be Increased, Report Says
Excerpt: "Defenders of Pennsylvania's state pension systems released a report yesterday calling on state government to increase funding for state workers' and teachers' pension plans so future retirees can 'look forward to enjoying a secure middle-class retirement.' The labor-backed Keystone Research Center, of Harrisburg, and the Washington-based Center for American Progress also called on state officials to subsidize retirement savings plans for small businesses and low-wage workers." (The Philadelphia Inquirer; one-time registration required)

Arkansas Teacher Retirement Fund Adds $1 Billion, According to Report
Excerpt: "The actuary's report also will have a bearing on whether the system would increase retirement benefits. The system's retirees had an average retirement benefit of $ 18, 300 a year as of June 30, 2005. Under state law, the system would be precluded from increasing benefits if the actuary finds that would take the system more than 30 years to pay off the system's unfunded liabilities." (

Tax-Efficient Sequencing of Accounts to Tap in Retirement (PDF)
21 pages. Excerpt: "This study discusses strategies for selecting the sequence of withdrawing funds from savings vehicles during retirement. For example, should a retiree withdraw funds from the taxable account then the traditional IRA and then the Roth IRA or would another sequence be preferable?" (TIAA-CREF Institute)

World Pension Reform -- Who's Doing What Toward Self -Sufficiency in Retirement
Excerpt: "We all can draw inspiration from the accomplishments of other countries. Fortunately, there are many, many examples of pension reform from which to choose. Since the early '90s, the World Bank has been involved in pension reform in more than 80 countries and says the demand for reform support continues to grow." (Resource via LOMA)

Registered Rep Asks, 'So, How Bad Is This Retirement Savings Crisis?'
Excerpt: "[R]obert Pozen, chairman of MFS Investment Management, described what should be done to fix Social Security and entice workers to save." (Registered Rep)

Towers Perrin U.S. Legislative Tracking Charts -- Retirement -- Updated September 29, 2006 (PDF)
13 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)

Section 404(c) Compliance Audit Checklist (PDF)
14 pages. Excerpt: "This checklist summarizes the requirements that a plan must satisfy in order to comply with the provisions of Section 404(c) of the Employee Retirement Income Security Act (ERISA)." (Snell & Wilmer)

Overview: SEC Amendment of the Mutual Fund Redemption Fee Rule (PDF)
3 pages. Excerpt: "The SEC has extended to April 16, 2007, the date by which funds must enter into shareholder information agreements with their omnibus intermediaries." (Paul, Hastings, Janofsky & Walker LLP)

Investment Company Institute Statement on Cross Trading Exemption for ERISA Plans
October 3, 2006, Statement to the ERISA Advisory Council Working Group on Plan Asset Rules, Exemptions and Cross Trading (Investment Company Institute)

IRS 30 Year Treasury Securities Rate Updated for September 2006
30 Year Treasury Securities Rate for September 2006: 4.85% (Internal Revenue Service)

IRS Composite Corporate Bond Rate Table Updated for October 2006
Corporate Bond Weighted Average Interest Rate = 5.79 for October 2006 (Internal Revenue Service)

The IRS's Retirement Plans Frequently Asked Questions
Excerpt: "Three examples of the subjects covered are: Retirement Plans FAQs regarding the Audit Closing Agreement Program; Retirement Plans FAQs regarding the amendments required to comply with the Community Renewal Tax Relief Act of 2000 (CRA); and, Retirement Plans FAQs regarding Designated Roth Accounts." (Internal Revenue Service)

Women's Retirement Security Bill Introduced
Excerpt: "The Women's Retirement Security Act, a newly introduced bill sponsored by Sen. Gordon Smith (R-OR), places heavy emphasis on encouraging and educating women to save. The legislation is intended to provide women -- who tend to live longer and earn less than men -- simplified solutions that could help strengthen their ability to build retirement security." (Investment Company Institute)

Links to Items on Executive Comp, Benefits in General

IRS Notice 2006-79: Additional Transition Relief under Section 409A (PDF)
13 pages. The final regs will not become effective until Jan. 1, 2008; the notice generally extends through 2007 the transition relief provided for 2006 in the preamble to the proposed regulations except with respect to certain discounted stock rights; it provides additional transition relief for certain payment elections in linked plans and certain collective bargaining arrangements; and it extends the amendment date for certain plans that took advantage of transition relief provided for 2005." (Internal Revenue Service)

Overview: Deferred Compensation and Section 409A: The IRS Pushes Back the Deadlines -- Again
Excerpt: "[N]ot all of the Section 409A deadlines were extended. This Client Alert focuses on the new deadlines." (O'Melveny & Myers LLP)

Feds Delay 409A Regulations Enforcement for One Year
Excerpt: "The US Treasury Department and Internal Revenue Service (IRS) announced [yesterday] that full compliance with the operational and documentary requirements of the Section 409A is delayed until January 1, 2008, 'at which time an adequate opportunity will have been provided for taxpayers to digest and comply with the final regulations,' the officials asserted." (; one-time registration required)

Overview: IRS Transition Relief under Code Section 409A for Nonqualified Deferred Compensation Plans (PDF)
1 page. Excerpt: "Generally, the additional transition relief extends the deadline for amending nonqualified deferred compensation plans for compliance with Code Section 409A until December 31, 2007." (Gardner Carton & Douglas LLP)

Overview: Pension and Retiree Health Funded Status Must Be on Balance Sheet (PDF)
5 pages. Excerpt: "Statement 158 requires employers to recognize the funded status of defined benefit pension, retiree health, and other postretirement plans as an asset or a liability on the balance sheet. Employers' expense for these plans on the income statement will not change." (Aon Consulting)

Overview: SEC Revamp of the Executive Compensation Disclosure Rules (PDF)
1 page. Excerpt: "Although the CD&A and new tables will report equity compensation and option grant information, the SEC devoted extra discussion to this item in the rules due to the recent backdating cases. Issuers must disclose how the timing of the release of information relates to stock option grants and how it affects other compensation." (Porter, Wright, Morris & Arthur LLP)

Fed Chief Says Boomers Are Threat to Social Security and Medicare System
Excerpt: "Federal Reserve Chairman Ben Bernanke said yesterday the burden from retiring baby boomers will strain the nation's budget and economy, unless Social Security and Medicare are revamped. 'Reform of our unsustainable entitlement programs' should be a priority, Bernanke told the Economics Club of Washington. 'The imperative to undertake reform earlier rather than later is great.'" (AP via Lexington Herald-Leader)

Listing of IRS Published Guidance for January 2006 -- September 2006
The target page links to guidance published by the Service relating to retirement plans: Treasury Regulations; Revenue Rulings; Revenue Procedures; Notices; and, Announcements. (Internal Revenue Service)

Towers Perrin U.S. Legislative Tracking Charts -- Human Resources -- Updated September 29, 2006 (PDF)
11 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)

Newly Posted Events
(Post Yours!)

(ERISA Basics Series) Health & Disability Plans: Everything You Always Wanted to Know but Were Too Busy to Ask
Nationwide on October 17, 2006
presented by ABA Joint Committee on Employee Benefits

17th Annual Employee Benefits Conference
in Florida on November 15, 2006
presented by Greenberg Traurig, PA

ASPPA Annual Conference Highlights presented by Robert Richter, APM, J.D., LL.M.
in Massachusetts on November 7, 2006
presented by ASPPA Benefits Council (ABC) of New England

Electronic Health Records: Show Me The Money - Webcast (Part 2 of 2 Part Series)
Nationwide on November 9, 2006
presented by National City Corporation

Electronic Health Records: What You Must Know Today - Webcast (Part 1 of a 2 Part Series)
Nationwide on October 12, 2006
presented by National City Corporation

Governmental Benefits Update Seminar
in Pennsylvania on October 13, 2006
presented by Rhoades & Wodarczyk, LLC

Overview of Form 1099R
Nationwide on December 4, 2006
presented by McKay Hochman Co., Inc.

Pension Protection Act: What To Do In 2006 Teleweb
Nationwide on October 26, 2006
presented by International Foundation of Employee Benefit Plans

Newly Posted Press Releases
(Post Yours!)

Workers Facing New Benefit Options in Open Enrollment Season
(Watson Wyatt)

Findley Davies Announced the Results of its 10th Annual Health Care Trend Survey
(Findley Davies, Inc.)

"Your Pension and Your Spouse–The Joint and Survivor Dilemma" Aids in Effective Pension Planning
(International Foundation of Employee Benefit Plans)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Defined Benefit Administration Software Consultant (ProAdmin)
for Winklevoss Technologies
in CT

Compliance Analyst
for Wachovia
in MN

Benefits Coordinator
for Baker & Daniels LLP
in IN

Client Consultant Compliance/Technical
for Lincoln Financial
in IN

Data Analyst
for Vanguard
in PA

Plan Review Consultant
for Vanguard
in AZ

Marketing Manager - Retirement Plan Services
for Vanguard
in PA

401(k) Plan Administrator/Analyst
for The Pension Group, Inc.
in CA

Conversion Team Leader
for Retirement Alliance, Inc.
in NH

Retirement Compliance Testing Administrator
for Vanguard
in PA

Recordkeeping Services Manager
for Vanguard
in PA

401(k) Plan Administrator
for Qualified Plans, LLC
in GA

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