Retirement Plans
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October 18, 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)

IRS Announces Pension Plan Limitations for 2007
Excerpt: "[T]he limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) is increased from $15,000 to $15,500 . . . . The limitation for defined contribution plans under Section 415(c)(1)(A) is increased from $44,000 to $45,000. . . . The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $220,000 to $225,000." (Internal Revenue Service)

Text of Final Regs on Use of Electronic Media for Employee Benefit Notices, Elections and Consents (PDF)
50 pages. Excerpt: "These regulations generally apply to applicable notices provided, and participant elections made, on or after January 1, 2007. . . . The participant election rules in these regulations extend the use of electronic media to the notice and election rules applicable to plans that are subject to the QJSA requirements of section 417. . . . []These regulations do not adopt the suggestion that spousal PINs be permitted in lieu of the physical presence requirement . . . ." (Internal Revenue Service)

Social Security Taxable Wage Base is $97,500, SSA Announces
Excerpt: "Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $97,500 from $94,200. Of the estimated 163 million workers who will pay Social Security taxes in 2007, about 11 million will pay higher taxes as a result of the increase in the taxable maximum in 2007." (Social Security Administration)

Social Security Benefit Checks to Rise by 3.3 Pct in 2007
Excerpt: "The cost of living adjustment will translate into an average monthly increase of $33 for the typical retired worker, pushing the average monthly benefit from $1,011 currently to $1,044." (AP via The Washington Post; one-time registration required)

Investment Simulation Comes to Pensionland with DOL's Proposed 401(k) Default Investment Regs
Excerpt: "[T]he . . . proposed 401(k) default investment regulations by [DOL] allows 401(k) plan sponsors to select default investments funds that strive to achieve long-term capital appreciation as opposed to mere preservation of capital. . . . The DoL used a simulation model to estimate the impact of the proposed 401(k) default investment regulations on retirement savings in the U.S. The model, called PENSIM, was developed by the firm Policy Simulation Group . . . ." (The Retirement Plan Blog)

Understanding Trading Behavior in 401(k) Plans (PDF)
44 pages. Excerpt: "[The author uses] a new database covering 1.2 million active participants to study trading activities in 1,530 defined contribution retirement plans. Descriptive statistics and regression analysis indicate some interesting trading patterns. First, [the author shows] that trading activity in 401(k) accounts is very limited: only 20% of participants ever reshuffled their portfolios in two years." (Michigan Retirement Research Center)

Newest 401(k) Suit Is Filed Against Kraft Foods
Excerpt: "In similar fashion to the previously filed suits, plaintiffs claim that Kraft and various committee members breached their fiduciary duties by permitting the 401(k) plan to directly pay unreasonable fees from a master trust arrangement. However, plaintiffs do not allege that the Kraft plan made excessive indirect payments via revenue sharing arrangements." (Spencer Fane Britt & Browne LLP)

An Exchange-Traded Fund Solution for 401(k) Plans
Excerpt: "[At Avatar w]e believe it is possible to build a low-cost and flexible 401(k) plan using exchange-traded funds (ETFs) within a collective trust framework. In our view, this is a practical solution for the challenges faced by small and mid-size 401(k) plans." (; one-time registration required)

GASB Pension Disclosures-- Conforming Changes-- Major Tentative Decisions to Date -- October 17, 2006
Excerpt: "Defined benefit pension plans and sole and agent employers should disclose the following information in notes to the financial statements: The funded status of the plan as of the most recent actuarial valuation date. Accordingly, plans also would relocate the disclosure of actuarial methods . . . ." (Governmental Accounting Standards Board)

American Academy of Actuaries Comments on a Proposed Asset-Question Addition to Form 5500 (PDF)
2 pages. Excerpt: "On behalf of the American Academy of Actuaries' Pension Committee, [the writer expresses] strong objections to the proposed addition of Question 12 to the Form 5500 Schedule B. This question relates to asset classification and duration calculations of these assets." (American Academy of Actuaries)

Comments: IRS Corrects Bloopers Found in August Final Regulations on the 411(d)(6) Anti-Cutback Rule
Excerpt: "Among the mistakes, which the correction observes 'may prove to be misleading and are in need of clarification,' one key sentence of 1.411(d)-3(a)(3) is corrected to read as follows - 'However, such an amendment does not violate section 411(d)(6) to the extent it applies with respect to benefits that accrue after the applicable amendment date.'" (Pensions & Benefits Weblog)

Opinion: Pulling in Above-Average Salaries to Guarantee Above-Average Public Pensions in NJ
Excerpt: "The practice of holding down several public jobs isn't confined to attorneys serving as municipal court judges. There's a fair sprinkling of legislators on the list who derive income -- and pension rights -- from local government jobs as well. Whether it's permitted is not really the issue. Whether it should be is." (The Star-Ledger via

Retirement Anxiety Hits Boomers in U.S., UK, and Japan, According to Survey
Excerpt: "A new international survey from The Hartford found baby boomers in the US and UK are worried about having enough money in retirement, and boomers in Japan are even more so." (; one-time registration required)

Asset Allocation Rises on Investment Time Horizon
Excerpt: "Asset allocation is a diversification technique that can help you manage the risks and returns on your investments. One of the biggest factors that should influence your asset allocation strategy is the amount of time you have to hold your investment." (Employee Benefit News and Educated Investor)

Social Security Benefit Formula 'Bend Points' Updated as of October 18, 2006
Excerpt: "The dollar amounts in the formulas are sometimes called 'bend points' because a formula, when graphed, appears as a series of line segments joined at these amounts." (Social Security Administration)

Overview of the Pension Protection Act of 2006: What Employers Should Be Doing Now
Excerpt: "This Benefits Alert focuses on the PPA changes for which employers may need to take prompt action or to begin planning this year to deal with changes that are taking effect in 2007. (Note that in many cases, later effective dates apply to plans that are subject to collective bargaining, or to other special situations. In most cases, this Benefits Alert describes only the general effective dates.)" (Faegre & Benson LLP)

Links to Items on Executive Comp, Benefits in General

Comments on the Ninth Circuit Decision in Glanton v. AdvancePCS Inc. that Plaintiffs Have No Claim
Excerpt: "Here, the plan clearly suffered an injury. Are the fiduciaries of the plan the only ones allowed to sue to redress that loss if there is no individual participant or beneficiary who is directly (as is true in most cases) affected by the loss?" (BNA Pension & Benefits Blog)

Summary: PCAOB Guidance on Auditing the Fair Value of Share Options Granted to Employees
Excerpt: "On Oct. 17, 2006, the Public Company Accounting Oversight Board . . . issued staff questions and answers applicable to audits of financial statements in circumstances in which a company has granted share options to employees that must be accounted for as compensation cost in conformity with Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (FAS 123R)." (Financial Executives International)

GASB's Comprehensive Implementation Guide Update-- Project Plan, Updated October 17, 2006
Excerpt: "Primary Objective: The objective of this project is to update the 2005 Comprehensive Implementation Guide for the effects of the Other Postemployment Benefits and the Statistical Section Implementation Guides, for new pronouncements issued since June 2005, and for additional issues that have come to the attention of staff." (Governmental Accounting Standards Board)

Mandatory Binding Arbitration Clause Violates Claims Regulations
Excerpt: "EBIA Comment: Arbitration of benefit claims is specifically addressed in ERISA's claims regulations, which permit mandatory arbitration to be used for one of the required two levels of claims appeals, provided such arbitration is not binding. As this court points out, a claimant must be permitted to challenge an arbitrator's decision in court, so binding mandatory arbitration is effectively precluded under ERISA." (Employee Benefits Institute of America Inc.)

IRS Proposes Annuity Exchange Regulations
Excerpt: "The Internal Revenue Service wants to change the tax treatment of trades of property for annuities. The proposed regulations, 'Exchanges of Property for an Annuity,' apply the same rule to exchanges for both private annuities and commercial annuities." (National Underwriter Life & Health; free one-time registration or paid subscription required)

Summary of Executive Compensation Disclosure Tables (PDF)
15 pages. Excerpt: "This outline is intended to provide an overview of the new tabular disclosure requirements and does not discuss any of the other requirements including the new requirement to provide a Compensation Discussion & Analysis section or the new disclosure requirements with respect to Form 8-K or related party transactions." (Miller & Chevalier Chartered)

Experts Say 409A Regulations Delay Could Prove a 'Lifesaver' for Some
Excerpt: "Even though 409A non-qualified deferred compensation plan sponsors have been expected to have their Ps and Qs in order since late 2005, the latest year-long regulatory implementation delay could prove to be a lifesaver." (; one-time registration required)

Overview: SEC's New Executive Compensation Disclosure Requirements & Companies with Retirement Plans
Excerpt: "The changes to the rules for disclosure of executive and director compensation that the Securities and Exchange Commission (SEC) adopted this summer include requirements for additional reporting for companies with retirement plans. . . . This Compliance Alert focuses on the additional requirements and their implications." (The Segal Company)

Restorative Payment Stemming from Trustee's Embezzlement Deductible As Employee Business Expense
Excerpt: "This is the first time that IRS has ruled that a restorative payment made by a company owner is deductible as an employee business expense." (Pension & Benefits Week via RIA News Briefings)

Newly Posted Events
(Post Yours!)

Benefits Compliance Update 2007- webcast 2pm-3pm EDT
Nationwide on November 30, 2006
presented by

ERISA Litigation Forum - The Standard of Judicial Review Applicable to Benefit Claim Denials: Abatie and the Ninth Circuit's New "Middle Path"
Nationwide on November 14, 2006
presented by Paul, Hastings, Janofsky & Walker LLP

Fourth Quarter 2006 Update
Nationwide on November 17, 2006
presented by McKay Hochman Co., Inc.

Qualified Retirement Plan Seminar
in Wisconsin on November 14, 2006
presented by Gucciardi Benefit Resources, a Division of Summit Benefit & Actuarial Services, Inc.

Newly Posted Press Releases
(Post Yours!)

SPARK Institute Files SEC Comment Letter On The Proposed MFS Funds Distribution Plan
(SPARK - the Society of Professional Administrators and Recordkeepers)

IRS Announces Pension Plan Limitations for 2007
(Internal Revenue Service (IRS))

CONEXIS Launches Online FSA Quoting Engine

Wellmark Blue Cross and Blue Shield Announces Clinician-Centered, Information Support Program for Member Health and Productivity
(Wellmark Blue Cross and Blue Shield)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Director, Testing & Reporting Services
for Fidelity Investments
in TX

Defined Contribution/401(k) Administrator
for Third Party Administrator in Southeast Michigan
in MI

Life Benefits Service Representative: Columbia University
for Standard Insurance Company
in NY

Benefits & Compensation Specialist
for Telecare Corporation
in CA

Staff Counsel
for Nationwide Insurance
in OH

Senior Retirement Plan Administrator
for LarsonAllen
in MN

Account Executive - Compliance
for AAAA Benefits, Inc.
in NC

Enrollment Specialist
for National Automobile Dealers Association Retirement Administrators, Inc
in VA

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