Retirement Plans
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November 17, 2006
Today's sponsor: Employee Benefits Institute of America Inc. (EBIA)

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EBIA's 401(k) Plans Manuals and Seminars!

A must-have resource for employers, administrators, and advisors, our 401(k) Plans manual explains the Internal Revenue Code and ERISA requirements for 401(k) plans, and it explores all sorts of plan design and administration issues. Subscribers love the depth of our legal analysis and our practical, real-world tips. Topics include eligibility, vesting, contributions, distributions, plan loans, hardship withdrawals, discrimination testing, fiduciary duties, plan investments, plan corrections, and much more.

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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)

Text of PBGC Final Regs on Premium Penalty Waivers, Including Meaning of 'Reasonable Cause' (PDF)
Excerpt: "[G]uidance is not being issued at this time on the determination of the amount of premium penalties nor on procedures for the assessment and review of premium penalties. Otherwise, the provisions in this final rule are generally the same as the premium penalty provisions in the 2001 proposed rule with only minor changes." (Pension Benefit Guaranty Corporation)

PBGC Publishes Premium Penalty Policy Rule
Excerpt: "The rule adopts policy guidance on premium penalty waivers, including guidance on the meaning of 'reasonable cause' for premium penalty waivers, according to a press release from the nation's priva[t]e pension insurer." (; free registration required)

NBER Working Paper Abstract: The Effect of Default Options on Retirement Savings
Excerpt: "Most employer-provided pension plans in the U.S. have standard enrollment, where workers must opt in if they wish to participate. However, some plans have automatic enrollment, where workers instead must opt out if they do not wish to participate. The authors find that having automatic enrollment leads workers to join the plan at a much faster rate." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full-text)

Default Investment Alternatives After the Pension Protection Act: What Should You Be Doing Now?
Excerpt: "Proposed regulations recently issued by the Department of Labor under the Pension Protection Act of 2006 ('PPA') offer employers a road map for creating a 'qualified default investment alternative' ('QDIA') that carries ERISA § 404(c) protection." (Dorsey & Whitney LLP)

Text of ERIC's Comments on Proposed Regs on Default Investment Alternatives (PDF)
Excerpt: "Some employers have had concerns about automatic enrollment. Some have been concerned that automatic enrollment could expose plan fiduciaries to potential liability under ERISA based on the investment decisions that the fiduciaries make on behalf of automatically-enrolled participants who fail to submit investment directions. . . . Section 404(c)(5) and the Department's regulation have the potential to alleviate very substantially the concern regarding ERISA liability." (The ERISA Industry Committee)

Auto Enrollment Programs Alone Insufficient to Ensure Adequate Retirement Savings, Study Indicates
Excerpt: "A study of 2.6 million American employees reveals that automatic enrollment programs increase employee participation in 401(k) plans, but are insufficient to insure that participant contribution levels and investment choices will provide participants with adequate retirement savings." (Wolters Kluwer Law & Business)

Working Paper: A Value Driven, Results Oriented Process for Fiduciaries Running 401(k) Plans (PDF)
4 pages. Excerpt: "Class action lawyers in increasing numbers will be hunting 401(k) fiduciaries that keep using a compliance/procedure based process for running their plans. That's the bad news. The good news is that if the fiduciaries switch to a value driven, results oriented process, they will have the advantage of the best and most effective defense." (Richard D. Glass via Investment Horizons Inc.)

GMAC Workers Need to Make Right Choice with 401(k)
Excerpt: "GMAC workers [faced a deadline November 10] on a special offer to move money from their old retirement savings plans to a new one. The choice stems from the impending sale of a majority interest of GMAC, General Motors Acceptance Corp., the finance unit of General Motors Corp." (The Detroit News)

Offer for Delta Raises Questions on Some Pensions
Excerpt: "US Airways' bid for Delta Air Lines has cast new uncertainty over the pensions of roughly 90,000 Delta employees and retirees, just months after a new law was supposed to have assured their future." (The New York Times; free registration required)

Opinion: San Diego Isn't the Only City with Pension Troubles
Excerpt: "What other municipalities are committing fraud when they sell bonds, by not coming clean about the size of their pension shortfall? How many are committing that kind of fraud? These are the questions investors have to pose after the city of San Diego settled fraud charges with the Securities and Exchange Commission this week." (Bloomberg)

American Benefits Council Chart on Cash Balance Plan Litigation (PDF)
22 pages. (American Benefits Council; Prepared by Davis & Harman LLP)

Overview: Notice and Disclosure Requirements for Single-Employer Plans under the PPA (PDF)
5 pages. Excerpt: "The Act assesses significant penalties for failure to provide certain notices. This newsletter highlights, in order of effective date, the Act's major changes in the notice and disclosure requirements that apply to single-employer benefit plans." (Reinhart Boerner Van Deuren s.c.)

IRS Instructions for Forms 1099-R and 5498 -- Main Contents
Excerpt: "Specific instructions are provided for the 2006 versions of IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., and IRS Form 5498, IRA Contribution Information." (Internal Revenue Service)

Overview of the Study: 'The We Generation -- When Retirement and Family Needs Collide'
Excerpt: "A survey conducted for Putnam Investments found 15 million workers age 45 or over are providing financial support for an aging parent or adult child, and that is altering their retirement plans." (; free registration required)

The PPA -- A Summary of Certain Provisions Affecting Governmental Plans (PDF)
26 pages. Excerpt: "[Ice Miller has] generally arranged [this] discussion in Internal Revenue Code section order, followed by ERISA and ADEA provisions and then followed by non-code amendments. [They] have included PPA provisions that amend ERISA where [they] believe that governmental plans would benefit from that discussion." (Ice Miller LLP)

Text of Fall 2006 Issue of Retirement News for Employers Published by IRS (PDF)
14 pages. The issue includes: Provisions of the Pension Protection Act of 2006 Effective in 2007; The ACT Asks for Your Comments; Delay in Effective Date for Regulations Under Section 403(b); Critical Few Michael Julianelle (Director, EP Examinations); Product Profile - Have you hand your Check-up this year? for 401(k) Retirement Plans; The Fix Is In: Common Plan Mistakes; Safe Harbor Notice Reminder. (Internal Revenue Service)

Text of PBGC's Annual Management Report for Fiscal Year 2006 (PDF)
90 pages. Excerpt: "This report includes the PBGC's financial statements, the reports of its Inspector General and independent auditor on the Corporation's financial statements and internal controls, and the Corporation's Annual Performance Report as required under the Government Performance and Results Act." (Pension Benefit Guaranty Corporation)

Overview of the Prudential Retirement Fifth Annual Workplace Report on Retirement Planning
Excerpt: "Two-thirds of America's youngest workers say they would be 'grateful' and 'optimistic' if their employer automatically enrolled them in the company's defined contribution plan, according to a new poll." (; free registration required)

Links to Items on Executive Comp, Benefits in General

NBER Working Paper Abstract: Effect of Depression on Retirement & Disability Insurance Applications
Excerpt: "Poor health has long been established as one of the most critical determinants of retirement behavior. Yet the existing literature has focused primarily on the role of physical illness. Since the early 1990s, mental illnesses have been the fastest growing source of claims for Disability Insurance (DI) and Supplemental Security Insurance (SSI) benefits, particularly among people aged 45-64. This suggests that poor mental health may also be an important factor in retirement decisions." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full-text)

Opinion: Recognition of Entitlement Liabilities by the U.S. Government
Excerpt: "The new Congress faces an urgent need to reposition the big entitlement programs, Social Security and Medicare, on a sounder financial footing. With each passing year, these programs' massive fiscal imbalances grow larger, making it harder to solve the problem, but all the more necessary to do so." ( via Cato Institute)

More Than Backdating in Common: Study Links Options Abuses to Inside Directors, Long-Term CEOs
Excerpt: "The research, by a trio of business professors, suggests that recent stock-option abuses have their roots in broader corporate governance problems -- and not only at technology companies that have been a focus of a widening scandal over the backdating of option grants." (The Washington Post; free registration required)

Newly Posted Press Releases
(Post Yours!)

Council Supports Administration’s Four Cornerstones Proposal on Value-Driven Health Care
American Benefits Council

Newly Posted or Renewed Job Openings
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in NE, OH

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in NJ

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in MA

Actuarial Analyst V
for Stanley, Hunt, Dupree, & Rhine, Inc.
in NC

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for Veritude
in MA, NC

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