Retirement Plans
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November 1, 2006
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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

PPA Lump-Sum Payout Provision Leaves Sponsors Wondering
Excerpt: "To relax or to recoup? That is the question defined benefit plan sponsors may be asking following a recent Wall Street Journal article detailing a provision in the new Pension Protection Act regarding lump-sum distributions." (BenefitNews Connect)

Overview: Plan Sponsors Sued over 401(k) Fees Highlighting Need for Fiduciaries to Focus on Fees Paid by Plans (PDF)
4 pages. Excerpt: "At least eight of the nation's largest companies have recently been sued in class actions challenging the fees paid to service providers for 401(k) plans. The complaints, all filed in Illinois or Missouri federal court by the same law firm, assert claims for breach of fiduciary duty under the Employee Retirement Income Security Act of 1974, as amended (ERISA)." (Pillsbury Winthrop Shaw Pittman LLP)

Issues in Brief: Job Tenure and the Spread of 401(k)s
Excerpt: "Commentators constantly cite an increase in labor mobility as a major reason for the shift in the private sector from defined benefit to defined contribution plans. But while most casual observers accept such a phenomenon, economists have been hard pressed to find any significant change over time." (Center for Retirement Research at Boston College)

Employee Ownership Update for November 1, 2006
NCEO Executive Director Corey Rosen discusses the Pension Protection Act's easier ESOP/401(k) safe harbor test and how companies will be less likely to offer company stock as an employee investment choice. In other news, the SEC has expanded its inquiry into backdated stock options to over 100 companies, and it will pursue spring-loading cases as well. Outside the SEC, interesting information about option dating continues to turn up. (National Center for Employee Ownership)

Audit Calls for Overhaul of Fort Worth, Texas, Pension Fund
Excerpt: "The city's employee retirement plan needs a sweeping overhaul to stop workers from gaming the system to spike their pensions, compel administrators to rein in excessive fees and force board members to be accountable to taxpayers, according to an audit presented to the City Council on Tuesday." (Star; one-time registration required)

San Diego's Aguirre Asks Judge to End Two Pension Benefits
Excerpt: "City Attorney Michael Aguirre called on a judge yesterday to strike down two San Diego pension deals he believes were tainted, a move he said would give the city time to come up with other solutions to its intractable financial problems." (The San Diego Union-Tribune)

Research Project Abstract: The Role of Fixed and Variable Annuities in Life-Cycle Asset Allocation
Excerpt: "Payout annuities help pool longevity risk. Prior studies focused only on fixed lifetime annuities as retirement financing tools (Dus/Maurer/Mitchell 2005); by contrast, this research analyzes both investment and longevity insurance products, recognizing that variable annuity payouts are not known for certain at retirement." (Regents of the University of Michigan)

The Issue of the Role of Friendly Reviews and 'Independent Fiduciaries' Hired by Plan Sponsors
Excerpt: "The [target page] article was printed in Pensions & Investments as a Letter to the Editor during August 2005. The article discusses the merits of forensic investigations of pension wrongdoing and the drawbacks of the popular (and costly) 'no blame' 'forward looking operational audits.'" (

Chart: Elective Deferral Limits for 2007 for Employees of Non-Profit and Governmental Employers (PDF)
2 pages. Excerpt: "Some non-profit and governmental employers can choose to offer one or more plans, including 403(b), 401(k), and section 457(b) plans. Generally, contributions made to 403(b) and 401(k) plans are aggregated when applying the contribution limits, while those made to section 457(b) plans are subject to separate limits." (The Prudential Insurance Company of America)

Research Project Abstract: Private Pensions and Decisions of When to Retire
Excerpt: "This research would shed light on two key labor-supply questions, namely, the effect on retirement of recent declines in DB pension plans and the cross-sectional effect on retirement of differences in late-in-career earning trajectories." (Regents of the University of Michigan)

United Kingdom Government 'Fails on Pension Reform'
Excerpt: "The government came under attack yesterday for failing to address some of the most crucial concerns still facing the country's pensions crisis. James Purnell, the minister for pensions reform, laid out the Department of Work and Pensions' (DWP) response to consultation following the publication of the final Turner Report and the white paper - 'security in retirement: towards a new pensions system' - earlier this year." (The Scotsman via Human Resource Executive Online)

Links to Items on Executive Comp, Benefits in General

Listing of IRS Published Guidance for January 2006 -- October 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)

Overview: Accounting for Past Stock Option Transactions and Amending Prior Years' Filings (PDF)
7 pages. Excerpt: "Because of recent regulatory actions involving backdated options, numerous entities are reviewing past option granting practices to determine whether their employee (and certain director) options were accounted for correctly." (Grant Thornton LLP)

A Different Perspective -- That of the Benefit Plan Auditor
Excerpt: "First, the plan audit process is a lot more complicated than it used to be and over the next several years, plan sponsors are going to find it even more complex. Today the complexities arise from paperless systems, HIPAA and other privacy considerations, mergers and acquisition activity, service providers' desire to protect what they see as their proprietary interests and changing investment arrangements." (Pensions & Benefits Weblog)

Amending a Misleading Summary Plan Description
Excerpt: "The Courts of Appeals for the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth and Tenth Circuits have held that where a summary plan description ('SPD') conflicts with the terms of an employee benefit plan, the summary plan description may control." (Buchanan Ingersoll & Rooney PC)

CalPERS Seeks Injunction on UnitedHealth CEO's Options
Excerpt: "Pension fund CalPERS, the lead plaintiff in a shareholder suit against UnitedHealth Group Inc., wants a federal court to impose a string of financial restrictions on outgoing CEO William McGuire, including a freeze on his retirement package." (Reuters)

Overview: Executive Compensation and Related Person Disclosure (PDF)
11 pages. Excerpt: "This legal alert specifically addresses general information regarding the revisions to the disclosure rules for Security Ownership of Certain Beneficial Owners and Management; Transactions with Related Persons, Promoters and Certain Control Persons; and Corporate Governance." (Sutherland Asbill & Brennan LLP)

409A Guidance 'Well Along,' Says Treasury Benefits Tax Counsel
Excerpt: "Daniel Hogans, attorney-advisor, Treasury Office of Benefits Tax Counsel, speaking at New York University's 65th Institute On Federal Taxation in New York on October 22, 2006, reported that, while the final regulations under Code Sec. 409A would not be released immediately, Treasury is 'well along in the process.'" (CCH Pension and Benefits)

Mercer International Headlines, October 25, 2006
Excerpt: "The top stories in this issue are as follows: Australia: Consultation on private health insurance legislation; Belgium: 2007 budget; Italy: TFR breakthrough; Stock option regime relaxed; Japan: Subsidy for supplemental leave pay; Netherlands: Unemployment benefit reform; FTK requirements to change; UK: NHS cost recovery scheme." (Mercer Human Resource Consulting LLC and Mercer Investment Consulting, Inc.; registration required)

Research Project Abstract: Trends in the Labor Force Participation of Married Women
Excerpt: "[The authors] propose to construct a life-cycle including key determinants of married women's labor force participation and to estimate the new formulation's coefficients. This project would aid in understanding increased participation of married women, a dramatic trend that, due to spousal entitlements, has enhanced Social Security's solvency." (Regents of the University of Michigan)

SEC Says More Charges to Come in Stock Option Probe
Excerpt: "Securities and Exchange Commission (SEC) Chairman Christopher Cox said Monday new charges on suspicious timing of stock option grants can be expected in the near future, the Associated Press reports." (; one-time registration required)

Prevalence, Characteristics and Employee Views of Financial Participation in Enterprises
Excerpt: "The past several decades have seen a dramatic increase in direct employee participation in the financial performance of private companies. From profit sharing, gain sharing and bonuses to a variety of employee ownership plans and broad-based stock options, employees in U.S. companies are increasingly receiving part of their compensation in performance-based 'shared capitalism' plans." (Beyster Institute)

Newly Posted Press Releases
(Post Yours!)

IRS Announces 2007 Standard Mileage Rates
(Internal Revenue Service (IRS))

Treasury, IRS Issue Regulations on Requirements for Disclosing Reportable Transactions and Maintaining Lists
(U.S. Treasury Department and Internal Revenue Service)

CIGNA HealthCare to Launch HealthePass(SM) to Assist Patients in Paying for Health Care
(CIGNA HealthCare)

Innovative Trust Fund Makes Payment to 40,000 USW Retirees and Spouses
(United Steelworkers of America (USWA))

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Pension Recordkeeper
for Guidant Financial Group, Inc
in WI

Vice President-Eastern Region
for Great-West Retirement Services
in MA

Senior Counsel I - Employee Benefits
for Northrop Grumman Corporation
in CA

Employee Benefits Attorney
for Employee Benefits Institute of America Inc. (EBIA)
in WA

Benefits Finance Manager
for NYU
in NY

Daily Val Recordkeeper
for Ingham Group
in SC

Client Services - Account Manager
for ExpertPlan, Inc.
in NJ

Assistant Defined Benefit Administrator
for The Pension Service, Inc.
in CT, MA, ME, NH, NY, RI, VT

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