Retirement Plans
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December 15, 2006

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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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IRS Notice 2007-03: 2006 Cumulative List of Changes in Plan Qualification Requirements (PDF)
The 2006 Cumulative List is to be used primarily by plan sponsors of individually designed plans and multiple employer plans that fall in Cycle B, and plan sponsors and practitioners in drafting defined benefit M&P or volume submitter plans for their first submission under the initial remedial amendment cycle under Revenue Procedure 2005-66. An individually designed plan is in Cycle B if the last digit of the employer identification number is 2 or 7. (Internal Revenue Service)

IRS Adds EGTRRA and PPA Provisions to Qualification Requirements
Excerpt: "The Internal Revenue Service (IRS) has issued Notice 2007-3 containing the 2006 Cumulative List of Changes in Plan Qualification Requirements for plan sponsors to consider when submitting a request for opinion, determination or advisory letters." (; free registration required)

Overview of 401(k) Plan Fees and Expenses As Lawsuits Continue to Proliferate (PDF)
4 pages. Excerpt: "These lawsuits are largely the byproduct of the increased scrutiny directed toward the structure and fee arrangements used by 401(k) plans in recent years. Much of the scrutiny has been focused on how plan service providers get paid and on the transparency of these arrangements." (Morgan, Lewis & Bockius LLP)

Overview: IRS Company Stock Diversification Notice Includes Model Participant Notice
Excerpt: "The model may have to be adapted to reflect particular plan provisions. For example, changes would generally be necessary if either the plan has more than one class of company stock, the plan provides the same diversification rights for participants without regard to whether they have three years of service, some of the plan's investment options are closed, the plan receives participant elections electronically, or the transition rule at 401(a)(35)(H) is being applied." (CCA Strategies, LLC)

Congressional Democrats' Letter to DOL Regarding the Default Investment Regulation for DC Plans (PDF)
5 pages. (American Benefits Council)

Overview: Department of Labor Proposed Regulations Regarding Default Investment Options (PDF)
2 pages. Excerpt: "Fiduciaries of plans that currently do not provide a default investment option procedure may wish to consider implementing one in 2007, in light of the fiduciary relief to be afforded by the final regulations." (Bond, Schoeneck & King, PLLC)

Fidelity Hit with 401(k) Suit
Excerpt: "Fidelity Investments, the Boston-based mutual fund giant, is the most recent target of lawsuits being filed against 401(k) retirement plans claiming that participants were charged improper, undisclosed and excessive fees, the Wall Street Journal reported today." (Investment News; free registration required)

True or False: Your 401(k) Plan Is Costing You More Than $1,000 a Year
Excerpt: "The Caterpillar suit is one of several filed recently accusing big corporations . . . of failing to offer employees a fair shake in their 401(k) plans. The accusations in many of these suits are of this nature: The plan fees are too high, or the fees are buried deep in disclosure documents where they are all but impossible to tally or are not revealed at all, or the providers are tainted by conflicts of interest or even de facto pay-for-play kickbacks." ( via MJM Financial, LLC)

Court Gives Thumbs Down to Citigroup Cash Balance Plan
Excerpt: "A federal judge in New York has ruled in a lawsuit that Citigroup's cash balance plan is not 'age neutral' in the latest in a long line of federal court rulings on the controversial pension issue." (; free registration required)

Overview: Notices and Disclosures for Plan Sponsors under the PPA
Excerpt: "This article will briefly outline [the] new information-related requirements and comment on some of the potential implications of the new requirements." (Trucker Huss, APC)

Most San Diego City Pension Increases Will Stand
Excerpt: "A Superior Court judge crippled City Attorney Michael Aguirre's push to reduce San Diego's billion-dollar pension debt yesterday by ruling that most of the benefits cannot be challenged, a decision Aguirre said he will immediately appeal." (The San Diego Union-Tribune)

Overview of ERISA Bonding Provisions in the Pension Protection Act of 2006 (PDF)
2 pages. Excerpt: "In summary, PPA '06 provides an additional bonding exemption that applies to registered brokers or dealers under the 1934 Act, provided they purchase bonds in accordance with the requirements of a self-regulatory organization. These bonds may differ in scope of coverage, including the deductible and how the limits of liability apply." (The Segal Group, Inc.)

CBO Economic and Budget Issue Brief: Is Social Security Progressive? (PDF)
8 pages. Excerpt: "[A]nalyses that consider the entire Social Security system will generally find more overall progressivity than studies that focus only on retired workers." (U.S. Congressional Budget Office)

Commentary: Stop Raids on Social Security
Excerpt: "Here's a modest proposal: Why doesn't the new Congress get itself straight with the American people, stop the raid on Social Security, begin paying the interest it owes to the Social Security Trust Fund and devote those interest payments along with the annual payroll-tax surpluses to financing a refundable tax credit to anyone opening a retirement account for a child younger than 18? Call them Head Start Retirement Accounts." (The Washington Times)

Plan Sponsors Should Prepare for New DOL Compliance Initiative, Panelists Caution
Excerpt: "Panelists at a recent CCH audio conference stressed the need for plans to conduct compliance self-audits, particularly in light of recent regulatory initiatives undertaken by the Labor Department." (Wolters Kluwer Law & Business)

Chart: Summary of Hybrid Plan Litigation, Updated December 14, 2006 (PDF)
13 pages. (Davis & Harman LLP via American Benefits Council)

Cash Balance Plans -- A Clearer Future After the PPA? (PDF)
Pages 3-5 of 6 pages. Excerpt: "Until other circuit courts, or the U.S. Supreme Court, clarify the issue, sponsors of pre-PPA cash balance plans will have to contend with uncertainty about whether their plans violate ERISA's antidiscrimination provision." (Trucker Huss, APC)

The Roth -- A New 401(k) Option for Many Retirement Savers
Excerpt: "For many employees, the retirement plan options have been expanded. The newcomer to the field is the Roth 401(k), or for government and nonprofit groups, the Roth 403(b)." (The Times via New Jersey On-Line LLC)

Links to Items on Executive Comp, Benefits in General

Other Companies Don't Choose to Adopt Google's GOOG New Transferable Stock Options Program
Excerpt: "When Google Inc. announced a new wrinkle in granting employee stock options earlier this week, executives at the search engine said they believed they were creating an employee compensation model that other companies would soon adopt. But so far, Google's GOOG new transferable stock options program have hit a brick wall with some major technology firms, which include some of the likeliest candidates to follow Google's lead." (MarketWatch via NewsEdge Corporation via Human Resource Executive Online)

New Rules Go Into Effect Today Requiring Companies to Clearly Explain Compensation Practices
Excerpt: "The new regulations mark the biggest change to corporate pay disclosure in 25 years. They will force companies to release more information about different kinds of compensation and to more clearly justify those payments." (The Washington Post; free registration required)

Overview: 2005 and 2006 Violations of 409A Trigger Last Minute Reporting and Withholding Obligations (PDF)
4 pages. Excerpt: "The Notice makes clear that it has no impact on the FICA treatment of nonqualified deferred compensation subject to Code section 3121(v)(2) and does not address FICA treatment for other amounts (e.g., discount options)." (Groom Law Group)

A Review of Employee Benefits Developments, November 2006
This edition of the newsletter includes: Rulings, Opinions, Cases titled: IRS issues final regulations on the use of electronic notices and elections; Update from IRS on per diem business expenses for lodging, meals, and incidental expenses; Reducing volatility of plan investments may be part of prudent investment strategy; DOL guidance on health savings accounts: Are HSAs subject to ERISA?; and Immaterial omission does not invalidate beneficiary designation. (Hodgson Russ LLP)

Governmental Plans Answer Book, Second Edition, Published
The Governmental Plans Answer Book remains the only full-length book devoted to legal questions affecting the pension and retirement systems of state and local government employers. The Second Edition, published November 22, 2006, updates the information in the book to reflect federal, state, and local legal and practical developments since the original edition was published in 2002. (Calhoun Law Group, P.C.)

Newly Posted Events
(Post Yours!)

Income Tax Accounting and Compensation and Benefits: Make Sure You Know Where You Stand
in California on January 10, 2007
presented by Deloitte

Newly Posted Press Releases
(Post Yours!)

Industry Leaders Announce Personal Health Record Model
America's Health Insurance Plans (AHIP)

Freddie Mac Offers Back-Up Elder Care for Employees
Freddie Mac

SEI Releases 2007 Update of FAS 87 Disclosure Assumptions Research for Pension Plan Sponsors

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Benefit Calculation Developer
for Vanguard
in PA

Retirement Plan Professional
for RG Wuelfing & Associates
in NC

Pension Recordkeeper
for Guidant Financial Group, Inc
in WA

Profit Sharing and 401(k) Administrator
for Goldberg, Swedelson & Associates, Inc.
in CA

Daily 401k Plan Administrator
for The Newport Group
in NC

Defined Contribution 401(k) Plan Administrator
for Certified Financial Group, Inc.
in FL

Department Head - Institutional Client Services
for Consistently ranked one of the 100 Best Companies to Work for in America.
in AZ

Plan Document Specialist
for Louis Kravitz & Associates
in CA

Account Manager, Employee Benefits
for ABD Insurance and Financial Services
in CA

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