| BenefitsLink Retirement Plans Newsletter |   |
February 13, 2007
Sponsored by: Employee Benefits Institute of America Inc. (EBIA)
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Overview: DOL Guidance Interpreting PPA 'Investment Advice' Provisions
Excerpt: "In response to multiple questions about the 'investment advice' exemption . . . of the Pension Protection Act of 2006 . . ., the Department of Labor ('Department') has just released Field Assistance Bulletin 2007-01 . . ., addressing issues of significant importance to financial institutions servicing employee benefit plans and individual retirement accounts . . . ." (Groom Law Group)
Overview of Why Everyone Should Review Their 401(k) Fees and Investment Charges
Excerpt: "Class action suits have been filed against large companies alleging that their 401(k) plan fees are too high. Although the initial waves of lawsuits were filed against large companies, the legal theories and facts asserted in the cases could apply to any 401(k) plan." (Poyner & Spruill LLP)
CalPERS Dismisses Report on Pension Costs
Excerpt: "The U.S. $225 Billion California Public Employees' Retirement System (CalPERS) has dismissed a report on 'rapidly escalating' pension costs as 'a highly contrived, biased study that fails to show the big picture'. The study, prepared for the Howard Jarvis Taxpayers Association by the Center for Government Analysis, said many funds were struggling under the weight of pension costs and added public funds were in far worse financial condition than just a few years ago." (Global Pensions)
Social(k) Catalyzes 'Socially Responsible Investment' Retirement Opportunities for Employees
Excerpt: "As companies try to realign their business plans with their retirement plans, a new option is being offered to businesses looking to be more socially responsible. Social(k), based in Springfield, MA, was created to help companies interested in putting their retirement funds into a diversified socially responsible platform." (SocialFunds.com)
Overview: Calculating the Safe Harbor 401(k) Nonelective Contribution
Excerpt: "The Internal Revenue Code does not mandate a compensation definition for this purpose. But IRS guidance states that the compensation to be used must satisfy the 414(s) definition of compensation." (McKay Hochman Co.)
ERIC Files Comments on PPA Diversification Requirements
Excerpt: "In written comments filed with Treasury and the IRS, ERIC encouraged officials to change proposed regulations implementing the Pension Protection Act's (PPA) employer stock diversification requirements. ERIC's comments focused on a provision that forbids a defined contribution plan from subjecting investments in the plan's employer securities investment option to restrictions or conditions that the plan does not impose on other investment options." (The ERISA Industry Committee)
Report: Mandatory Employer Pensions in Ireland, Germany, and the United Kingdom
Excerpt: "Germany, Ireland, and the United Kingdom have enacted within the past five years 401(k)-type pensions that are mandatory on employers. . . . This AARP Public Policy Institute Issue Paper describes these three countries' experiences in the operation of their new mandatory plans and how their features compare with those of 401(k) plans in the U.S." (AARP)
GAO Report Says PBGC is at 'High Risk'
Excerpt: "On January 31, the Government Accountability Office (GAO) released the report 'High Risk Series: An Update' in which it identifies over 20 federal programs and operations that are at high risk due to 'their greater vulnerabilities to fraud, waste, abuse, and mismanagement.'" (Hewitt Associates)
Plan Loan Repayments Count for Bankrup.tcy Repayment
Excerpt: "A University of Toledo employee who took a loan from her profit-sharing retirement plan account before filing for U.S. Bankrup.tcy Court liquidation must consider her loan repayments in her ability to repay her debts, a judge has ruled." (PLANSPONSOR.com; free registration required)
Priests' Trust Shaken: Clergy Say Mismanagement Left Pension Funds in Trouble
Excerpt: "Hundreds of distraught Boston-area priests are facing stark cuts in their retirement benefits as the Archdiocese of Boston scrambles to shore up its teetering pension system after decades of poor fiscal management." (Boston Herald)
Overview: Plan Compensation and Disability Pay
Excerpt: "A frequently asked question we wanted to address: Is disability pay included in compensation for qualified plan purposes? The answer: 'It depends.' Disability payments are not plan compensation if they are paid by the third party insurer instead of the employer." (McKay Hochman Co.)
What Moves the National Retirement Risk Index? A Look Back and an Update
Excerpt: "This brief looks at the three major factors that have caused the Index to increase since the early 1980s. These factors are: 1) a decline in Social Security replacement rates due to the decline in one-earner couples and the increase in Social Security's Normal Retirement Age; 2) lower pension replacement rates as a result of the shift from defined benefit to defined contribution plans; and 3) lower annuity payments due to the dramatic decline in real interest rates." (Center for Retirement Research at Boston College)
Best and Worst IRA Rollover Decisions
Excerpt: "IRA owners and their advisors make expensive mistakes handling these accounts. These mistakes range from the simple to the complex.' (WebCPA)
Web Site: International Pensions
Excerpt: "Retirement systems vary throughout the world, but all face similar challenges. Many countries are experimenting with new approaches for addressing these challenges. Their experiences provide a testing ground for concepts that can provide guidance as U.S. policymakers look for new ways of providing retirement security for American workers. . . . These summaries were prepared by John Turner, a leading expert on retirement programs around the world . . . ." (Pension Rights Center)
Working Paper: Money in Motion: Dynamic Portfolio Choice in Retirement
Excerpt: "Retirees confront the difficult problem of how to manage their money in retirement so as to not outlive their funds while continuing to invest in capital markets. We posit a dynamic utility maximizer who makes both asset location and allocation decisions when managing her retirement financial wealth and annuities, and we prove that she can benefit from both the equity premium and longevity insurance in her retirement portfolio." (Pension Research Council; registration required to download full-text of paper)
IRS 30 Year Treasury Securities Rate Updated for January 2007
30 Year Treasury Securities Rate for January 2007: 4.85% (Internal Revenue Service)
IRS Composite Corporate Bond Rate Table Updated for February 2007
Corporate Bond Weighted Average Interest Rate = 5.79 for February 2007 (Internal Revenue Service)
Working Paper: The New Pension Law and Defined Benefit Plans: A Surprisingly Good Match
Excerpt: "Much of the commentary on the new pension reform law suggests that it will be deleterious to defined benefit plans. We describe the economic policy background leading to the new law, the law's main funding provisions, and analyze the volatility of required minimum contributions, leading us to the opposite conclusion." (Pension Research Council; registration required to download full-text of paper)
Overview: IRS Opening of Pre-Approved Defined Benefit Program
Excerpt: "The IRS has announced that, as of February 1, 2007, it began accepting applications for advisory and opinion letters for pre-approved (volume submitter and master and prototype) defined benefit plans in accordance with Rev. Procs. 2005-16 . . . and 2005-66 . . . ." (Wolters Kluwer Law & Business)
Sponsored by: BeneCom Associates, LLC
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Links to Items on Executive Comp, Benefits in General
Overview: Reporting Requirements for Incentive Stock Options and Employee Stock Purchase Plans (PDF)
2 pages. Excerpt: "The Tax Relief and Health Care Act of 2006 that was signed into law late last year made a change in the reporting requirements for stock transferred pursuant to an incentive stock option ('ISO') or under an employee stock purchase plan ('ESPP')." (Powell Goldstein LLP)
Your Retirement: Understanding Your Resources and How Best to Use Them (PDF)
32 pages. Excerpt: "Finding money to set aside for retirement can be a big challenge. Once you have money put away, you want to learn how to make the most of it. This booklet is intended to help you understand the things you need to consider, and how to avoid pitfalls as you transition to retirement status, however you define it." (The Women's Institute for a Secure Retirement)
Newly Posted Events
401(k) Testing Techniques - 6 Cities Added
Nationwide on February 21, 2007
presented by SunGard Relius
Cafeteria Plan Election Changes -- When to Say “Yes” and When to Say “No”
Nationwide on February 8, 2007
presented by Employee Benefits Institute of America Inc. (EBIA)
Newly Posted Press Releases
Fight Against Tobacco Addiction Reached "Tipping Point" In The U.S. During 2006, Reports Free & Clear
Free & Clear
Newly Posted or Renewed Job Openings
Pension Benefit Advisor
for The Guardian Life Insurance Company of America
in NY
Client Support Manager
for Buck Consultant An ACS Company
in AZ
Senior Compensation Analyst - Arlington, VA
for Watson Wyatt Worldwide
in VA
401(k)/DC Administrator (all levels of experience)
for TPA in Temecula
in CA
Assistant Administrator (Retirement Plan Administration)
for Qualified Benefits a BenefitStreet company
in CA
Employee Benefits Attorney
for Special Counsel
in TX
Retirement Program Manager
for Publix Super Markets, Inc.
in FL
Software Application Developer
for Buck Consultant An ACS Company
in AZ
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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