Retirement Plans
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December 26, 2006

Sponsored by: ASC & The ASC Institute

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Text of IRS Notice 2007-8: In-Service Benefits Permitted to be Provided at Age 62 by a Pension Plan (PDF)
7 pages. Excerpt: "This notice requests comments on issues presented by § 401(a)(36) of the Code [as added by the Pension Protection Act] with respect to defined benefit plans. . . . [S]hould only unsubsidized benefits be permitted pursuant to § 401(a)(36)? . . . If subsidized benefits are permitted to be distributed to a participant who has attained age 62 but is still in-service and has not yet attained normal retirement age, how should [those benefits] be characterized for purposes of § 411?" (Internal Revenue Service)

Opinion: The Disruptions to a 401(k) Plan with a Switch in Recordkeepers
Excerpt: "Deals like the one announced on Friday by The 401(k) Company, Nationwide, and Schwab are the kind of thing that gives plan sponsors heartburn. Not that one in particular, I should hasten to add -- one could have the same queasiness about the recent Great-West/US Bank deal . . ., the sale of Southeastern Employee Benefit Services . . ., or just about any structural change at a 401(k) recordkeeper." (; free registration required)

Comments on Elements of Defined Contribution Plan Fees and Service Provider Compensation (PDF)
2 pages. Excerpt: "The [Defined Contribution Fee Glossary] identifies service- and fee-related data elements that defined contribution plan sponsors and service providers may want to discuss when entering into agreements. This list was developed by plan sponsor and financial services industry organizations as a reference tool to aid plan sponsors and service providers in complying with their responsibilities under ERISA Section 408(b)(2)." (American Benefits Council)

Glossary of Selected Terms Related to Defined Contribution Plan Fee Disclosure (PDF)
5 pages. The glossary was submitted to the DOL. (American Benefits Council)

The Benefits of a Roth 401(k)
Excerpt: "Exchange-traded funds win raves as great low-fee alternatives to mutual funds. Introduced in January 2006, the new Roth 401(k) gets similar kudos for enabling Americans to put after-tax funds into retirement plans for tax-free withdrawal after age 59 and a half. So some brokerages are beginning to couple the two for a new retirement plan concept: the ETF-based Roth 401(k)." (Entrepreneur Magazine)

Discussion: Written Plan Requirement for 403(b) and 457
Excerpt: "A major service provider in retirement plans recently issued a new advisory on 403(b) plan document requirements. This post is to disagree with most of what that advisory says. (Most of these comments apply to 457 plans as well, but with less force because they tend to be in better shape with respect to compliance issues.)" (403(b)-457 Plans Blog; posted by Thomas L. Geer)

Judge Says Cash-Balance Plans Discriminate
Excerpt: "Rejecting the reasoning of a federal appeals court, a U.S. district court judge says cash-balance pension plans discriminate against older employees." (Workforce Management; free registration required)

Audio: Transfer Charitable Donations Directly from IRAs
Excerpt: "Until the end of the year, some Americans can take advantage of a law that lets them donate money directly from their IRA without paying any tax on it. It's a pilot program, but an idea that's been around for years." (Morning Edition via National Public Radio)

Chile Proposes to Reform Pension System
Excerpt: "Responding to growing complaints that the privatized pension system here is failing to deliver adequate benefits, the Chilean government has recommended that it be supplanted by a system in which the state would play a much larger role. The current system is a favorite of free-enterprise enthusiasts, including President Bush." (The New York Times; free registration required)

Summary of Notice 2007-6 Guidance on Cash Balance and Other Hybrid Defined Benefit Plans (PDF)
3 pages. The target page provides a summary of some of the key points in the guidance. (American Benefits Council)

Opinion: Alpha-Beta May Spell 'The End' for Mutual Funds
Excerpt: "The very model of a mutual fund is indeed outmoded, argues a large and growing group of financial researchers and professional money managers who are busy describing, building and proselytizing for a different way of doing things. The new system doesn't lack for complexities. But its basics are straightforward enough." (The Journal News)

Sharing Equity in a Startup or Established Entrepreneurial Venture
NCEO Executive Director Corey Rosen discusses how to tailor an equity-sharing program (stock options, SARs, phantom stock, restricted stock, etc.) in a closely held startup or established entrepreneurial company. (National Center for Employee Ownership)

United Kingdom Government Aims to Change New Pension Regime to Avoid Abuse
Excerpt: "The government is proposing further changes to the new tax regime for pensions that came into force on April 6, 2006, in an effort to prevent abuses and relax or simplify provisions that are proving difficult for pension schemes to administer. U.K. Chancellor of the Exchequer, Gordon Brown, announced the proposals in his pre-budget report on December 6, 2006." (Watson Wyatt Worldwide)

In Australia, Time for Employers to Prepare for Likely Superannuation Changes
Excerpt: "With bills to implement the federal government's proposed superannuation changes now before parliament and gaining political support, early 2007 will be a prime time to begin preparing employees for the ramifications of the new laws." (Watson Wyatt Worldwide)

Sponsored by: DATAIR Employee Benefit Systems, Inc.

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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)

Links to Items on Executive Comp, Benefits in General

Pennsylvania Protections for Social Security Numbers
Excerpt: "On December 26, 2006, Pennsylvania joins a growing list of states (including New Jersey) that seek to combat identity theft through restrictions on the use and disclosure of Social Security Numbers. Employers, businesses and other entities in Pennsylvania will be required to comply with these new restrictions or face fines of $50 - $500 for a first offense and $500 - $5,000 for subsequent offenses." (Ballard Spahr Andrews & Ingersoll, LLP)

The SEC Links Executive Compensation Disclosure with FAS 123R
Excerpt: "The Securities and Exchange Commission late Friday [December 22] announced new rules governing how executive stock options are to be calculated in proxy reports that will be filed next year." (; free registration required)

Alaska High Court Says Implement State Employee Same-Sex Benefit Program Now
Excerpt: "The Alaska Supreme Court has thrown out a lower court ruling ordering clarifications for administrative rules on benefits for same-sex partners of state employees and retirees, and ordered the regulations be put in place by January 1, 2007." (; free registration required)

Overview: IRS Guidance on Reporting Section 409A Deferred Compensation (PDF)
2 pages. Excerpt: "Employees must report as income and pay taxes on amounts includible in gross income for 2006, and, to the extent not already reported, for 2005, by filing an amended income tax return by the due date of his or her 2006 return (including extensions), unless relief is provided." (Haynes and Boone, LLP)

Opinion: A Bipartisan Fix for Retirees' Economic Security
Excerpt: "Our nation's saving rate is a big problem. It requires a big solution. We cannot tinker with the federal tax code and expect personal savings to increase dramatically. By harnessing the power of compound interest through individual savings accounts and small paycheck deductions, we can ensure that almost every American will retire a half-millionaire." (The Washington Post; free registration required)

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