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October 30, 2006
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Key Fiduciary Issues for 401(k) Plans (PDF)
49 pages. Presentation by Fred Reish at the ASPPA 2006 Annual Conference. (Reish Luftman Reicher & Cohen)

DOL Press Release: DOL Finalizes Amendment On Securities Lending Exemption
The final exemption revokes and replaces Prohibited Transaction Exemptions 81-6 and 82-63. The exemption is to be published in the Oct. 31, 2006 Federal Register. Excerpt: "The updated requirements will permit pension plans to earn additional income by lending securities from their portfolios to a greater universe of permissible borrowers." (Employee Benefits Security Administration, U.S. Department of Labor)

Update: New 401(k) Suit 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)

Overview: Default Investment Safe-Harbor
Excerpt: "The Pension Protection Act of 2006 (PPA), amends ERISA Section 404(c) to provide that a participant who receives a notice that (1) explains his or her right to designate how contributions are invested and (2) describes the default investment into which contributions will be invested in the absence of his or her election, will be considered to have exercised control over the default investment." (McKay Hochman Co., Inc.)

Exchange-Traded Funds Industry Eyes Lucrative 401(k) Market
Excerpt: "Once upon a time exchange-traded funds (ETFs) inside 401(k) plans was viewed as a liability, but not anymore. Aside from lower costs and greater transparency, a number of factors are accelerating the expansion of ETFs inside retirement plans. Among these are legislative changes because of the sweeping law passed in August known as the Pension Protection Act of 2006." (

Research Project Abstract: Are 40l(k) Saving Rates Changing? Cohort/Period Evidence from the HRS
Excerpt: "This research will examine the determinants of participation in 401(k) plans and the rate of saving among participants, using two cross-sections of data from the Health and Retirement Study on workers ages 51-56 representing two cohorts: the original HRS cohort (born 1931-41) and the newly-added Early Baby Boomer (EBB) cohort (born 1948-53)." (Regents of the University of Michigan)

GASB Project: Pension DisclosuresóConforming Changes
Excerpt: "The objective of this project is to consider whether GASB Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 27, Accounting for Pensions by State and Local Governmental Employers, should be amended to conform to certain disclosures and required supplementary information presentations now required for other postemployment benefits . . . ." (Governmental Accounting Standards Board)

Protesting Pension Contributions -- Who Should Pay?
Excerpt: "According to a recent article in the Press-Enterprise, University of California workers expressed their outrage at being asked to contribute to their pension plans. Likely to impact 18,000 workers, 'UC officials maintain that employees must contribute to the pensions to preserve them.'" (Pension Risk Matters)

United Pilots Sue over Payout Dispute
Excerpt: "Three United Airlines pilots have sued their union over charges it gave certain furloughed pilots none of a $545-million fund set up as part of a deal to let the air carrier replace its pension plan." (; one-time registration required)

How Some Government Employees in Arizona Earn 150%
Excerpt: "[P]roblems could arise if too many retirees go back to their old jobs, because they're not paying into their pension system. That leaves fewer employees paying for the system and raises the possibility that employees who are paying will be charged increased rates." (Arizona Daily Star)

Research Project Abstract: Economic Resources in Retirement and Returns-to-Scale in Consumption
Excerpt: "Most assessments of the adequacy of retirement resources are expressed as a comparison of pre-retirement income to post-retirement income. Yet, among couples a substantial fraction of retirement years is spent by the surviving spouse living alone. To the extent that singles need less than couples to maintain the same standard of living, assessments of the adequacy of economic resources that make no adjustment for widowing will systematically mis-state economic preparation." (Regents of the University of Michigan)

Opinion: New York's Pension Funds -- Are They Safe?
Excerpt: "As comptroller, [Alan] Hevesi is sole trustee of New York's $145 billion in pension assets, which he invests in the financial markets to fund retirement benefits for nearly 1 million state and municipal workers and retirees. State law governs how Hevesi invests the funds, and he gets plenty of advice from financial firms - but he's the only one who's actually responsible." (New York Post)

If Saving for Retirement Is Good, Isn't It Better to Save Even More?
Excerpt: "Next year, working Fools with 401(k) retirement accounts can stash away up to $15,500, the IRS has announced. That's up slightly from the $15,000 allowed this year." (The Motley Fool)

Small Firms' Pension Pitfalls: Some Employers May Get Stuck with Poor Returns
Excerpt: "Like larger employers, small companies typically farm out management of their retirement plans to mutual fund companies, employee benefit firms or insurance companies. Retirement experts say there are advantages and disadvantages to each of those three options. Plans run by insurance companies, however, often are burdened by two features that critics say saddle workers with extra costs." (Los Angeles Times; one-time registration required)

Chart: COLA Adjustments to Retirement Plan Limitations for 2007 (PDF)
2 pages. Figures are provided back to 1995. (Ice Miller)

Mathematical Illusion: Why Dollar-Cost Averaging Does Not Work
Excerpt: "This paper focuses on . . ., in the opinion of the writer, the primary explanation for the continued popularity of DCA investing. To date, no one has refuted the basic illustration that shows dollar-cost averaging somewhat miraculously producing an average cost per share over a cyclical market that is less than the average price, thereby leading to a greater number of shares bought through DCA . . . ." (Journal of Financial Planning)

Overview: Retirement Plan Amendments for 2006
Excerpt: "The [target page summarizes as of October 27, 2006] the plan amendments for plan year 2006. Many of these are optional; some are required. Each amendment is noted as to whether it is optional or required." (McKay Hochman Co., Inc.)

Research Project Abstract: Children and Household Wealth
Excerpt: "[The authors'] study highlights the role that children play in accounting for the well-know fact that wealth is more dispersed than earnings and enhances understanding of the utility-maximizing asset goals for workers. Our work also has implications for designing government programs targeting retirement wealth." (Regents of the University of Michigan)

35% Enrolled in Retirement Savings Program, According to the WSJ Online/Harris Interactive Poll
Excerpt: "More than half of US adults (57%) said they invest in long-term financial service investment products, including 35% who participated in a 401(k), 403(b) or a similar retirement savings plan and 30% who had a Roth or traditional IRAs." (; one-time registration required)

What Is the Best Age to Retire and the Best Age to Draw Social Security Benefits?
Excerpt: "The way the system is designed, whenever you choose to draw benefits, the amount will be the same -- but only if you live to the average life expectancy for your age and gender. In other words, lower benefits times more years, normal benefits times normal years, and larger benefits times fewer years, add up to the same overall benefit." (The Washington Post; one-time registration required)

Links to Items on Executive Comp, Benefits in General

Year-End Checkup for Benefit Plans (PDF)
Excerpt: "This Alert will help identify general year-end administrative and planning issues that could lead to compliance or employee relations problems if not addressed before, or early in, 2007. In addition, [Aon has] highlighted recent legislative or regulatory developments that may require plan design changes, particularly issues to think about in response to the Pension Protection Act of 2006 (PPA)." (Aon Consulting)

Research Project Abstract: Managing the Risk of Life
Excerpt: "This project . . . will advance our understanding of individuals' financial decisions by introducing the important aspect of risk-aversion with respect to the length of life. We will apply the new framework to Social Security claiming behavior and annuity decisions and extend the analysis to portfolio choice and life insurance holdings." (Regents of the University of Michigan)

Stock Option Backdating Scandal Could Grow, According to Report
Excerpt: "The stock options timing scandal, which has already implicated at least 140 companies, could include hundreds more, according to a new analysis that found lax enforcement of corporate governance reforms that should have prevented the practice." (Washington Post; one-time registration required)

Dodging Taxes Is a New Stock Options Scheme
Excerpt: "Securities regulators are now focusing on several cases where it appears the exercise dates of the options were backdated, according to a senior S.E.C. enforcement official, who asked not to be identified because of the agency's policy of not commenting on active cases. Besides raising disclosure and accounting problems, backdating an exercise date can result in tax fraud." (The New York Times; one-time registration required)

Newly Posted Events
(Post Yours!)

401(k) Plans: Beyond the Basics - NEW 2-Day Program!
Nationwide on November 1, 2006
presented by SunGard Corbel

401(k) Plans: Beyond the Basics - NEW 2-Day Program!
in Massachusetts on November 15, 2006
presented by SunGard Corbel

401(k) Plans: Beyond the Basics - NEW 2-Day Program!
in Kansas on November 29, 2006
presented by SunGard Corbel

Automatic Enrollment: Is It Appropriate For Your Clients?
Nationwide on February 8, 2007
presented by McKay Hochman Co., Inc.

ERISA Workshop - With Significant Coverage of PPA 2006
in Wisconsin on November 15, 2006
presented by SunGard Corbel

ERISA Workshop - With Significant Coverage of PPA 2006
in Michigan on November 15, 2006
presented by SunGard Corbel

ERISA Workshop - With Significant Coverage of PPA 2006
in New York on November 16, 2006
presented by SunGard Corbel

Fourth Quarter 2006 Update
Nationwide on November 20, 2006
presented by McKay Hochman Co., Inc.

In-Service Withdrawals From Qualified Plans
Nationwide on November 15, 2006
presented by McKay Hochman Co., Inc.

Pension Law - 2006
in California on January 17, 2007
presented by McKay Hochman Co., Inc.

Plan Design Workshop
in New York on November 29, 2006
presented by SunGard Corbel

Plan Design Workshop
in Illinois on November 30, 2006
presented by SunGard Corbel

Tax Deductions after PPA: Cruising on the 404
Nationwide on November 1, 2006
presented by American Society of Pension Professionals & Actuaries (ASPPA)

Newly Posted Press Releases
(Post Yours!)

Report Examines Cost-Sharing Lessons From RAND Health Insurance Experiment
(Kaiser Family Foundation)

Employee Benefits Security Administration Releases Second Field Assistance Bulletin on Health Savings Accounts
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))

U.S. Labor Department Finalizes Amendment On Securities Lending Exemption
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))

Morningstar's Ibbotson Unit Announces Retirement Income Patent
(Morningstar, Inc.)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Pension Administrator
for Primark Benefits
in CA

Compliance Manager
for Associated Pension Consultants
in CA

Compliance Analyst
for The Newport Group
in FL

401(k) Qualified Plan Administrator
for Carroll Enterprises, Inc.
in MA

Relationship Manager
for MassMutual Financial Group
in AZ, CA, CO, ID, MT, NM, NV, OR, TX, UT, WA, WY

Cafeteria Plan Administrator
for ERISA Services, Inc.
in TN

401(k) Administrator
for Fast Growing Company in the Inland Empire, CA

Senior Benefits Consultant
for Freddie Mac
in VA

Document Specialist
in CO

Senior Plan Consultant
for July Business Services
in TX

Senior Consultant - Non-Discrimination Testing
for Fidelity Investments
in KY

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