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February 21, 2007
Sponsored by: ASPPA
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Text of PBGC Proposed Regs on Effect of PPA, DEFRA 2005 on Premium Rates Payable in 2006, 2007 (PDF)
Excerpt: "The provisions that would be implemented by this rule change the flat premium rate, cap the variable-rate premium in some cases, and create a new 'termination premium' that is payable in connection with certain distress and involuntary plan terminations. This rule does not address other provisions of the Pension Protection Act of 2006 that deal with PBGC premiums." (Pension Benefit Guaranty Corporation)
Pension Gap Divides Public and Private Workers
Excerpt: "As the first wave of 79 million baby boomers heads to retirement, the nation is dividing into two classes of workers: those who have government benefits and those who don't. The gap is accelerating in every way -- pensions, medical benefits, retirement ages." (USA Today)
PSCA Releases Results of 2007 Survey on Roth 401(k)s
Excerpt: "In early 2007, PSCA collected data on 401(k) plan sponsors' current practices and attitudes regarding Roth designated accounts. The majority of plans surveyed either already offer Roth or are considering doing so in the future. Data from 429 plan sponsors of varying size, industry, and geographical location document the current prevalence of Roth accounts as well as the factors involved in the decision-making processes of companies that are not currently offering Roth accounts." (Profit Sharing/401k Council of America)
Analysis: Recent Cash Balance Plan Developments
Excerpt: "In December, IRS provided guidance on the application of new Pension Protection Act (PPA) cash balance plan rules. As cash balance plan litigation continues, different courts continue to come to different conclusions. Most recently, the Third Circuit . . . followed the Seventh Circuit and held for the employer/plan sponsor. In this article we review the IRS Notice in some detail and then briefly discuss the state of cash balance plan litigation." (CCA Strategies)
Participant Contributions to Plans Should Double Over Next 5 Years, Study Says
Excerpt: "Because of auto enrollment and auto deferral increase . . . , TowerGroup said, DC plans will go from $103 billion in assets in 2007 (79% participation rate and 5.4% average deferral) to $109 billion in 2011 without the auto plan features and $204 billion with the auto features (95% participation rate and 8.4% average deferral). " (PLANSPONSOR.com; free registration required)
Indiana Teachers Sue Metlife Over 403(b) Funds
Excerpt: "Several [Northwest Indiana] region teachers filed what they hope will become a class-action lawsuit Friday against Metlife and the state teachers' association financial consultant. They accuse the defendants of rigging retirement options to favor Metlife." (NWI.com)
Overview: The Plan Sponsor's Duty to Know What Investment Advisers and Brokers Are Charging
Excerpt: "I recently reviewed an investment advisory agreement for the adviser to a large 401(k) trust. In that agreement, the investment adviser (who referred to itself as a 'Consultant') made the following representations and disclosures, which I thought were helpful to the plan fiduciaries and supportive of their need to know and evaluate the true cost of the adviser." (Reish Luftman Reicher & Cohen)
DOL Advisory Council's Recommendations on Fee Disclosure and Monitoring Are Worth a Review
Excerpt: "This column focuses on the basic steps that fiduciaries need to take to protect themselves -- and, of course, to best serve their beneficiaries -- the participants. As a starting point, let's look at what the DOL's ERISA Advisory Council said in 2004." (Reish Luftman Reicher & Cohen)
Analysis: Fees and Compensation of Investment Advisers and Service Providers
Excerpt: "The DOL is focused on the disclosure of fees and expenses charged by service providers -- both advisers and plan providers -- and on the reporting of that information. By 'disclosure,' I am referring to the information that must be provided to plan fiduciaries and sponsors before their decisions to purchase the investments and services for their retirement plans. By 'reporting,' I am referring to the information that must be reported on the Form 5500 after the end of each year." (Reish Luftman Reicher & Cohen)
Overview: DOL Issues Guidelines Under New ERISA Cross-Trading Exemption
Excerpt: "The [prohibited transaction exemption, which was added to ERISA by the Pension Protection Act of 2006, allows cross-trades between ERISA accounts and other accounts managed by the same investment manager if certain conditions are satisfied. The Act required the DOL to issue regulations on the content of the policies and procedures under the cross-trading exemption." (Dechert)
Overview: DOL Guidance on Cross-Trading Prohibited Transaction Exemption
Excerpt: "The interim final rules do not establish any compliance burdens for employers and plan administrators; however, employers, plan administrators, and other plan fiduciaries should be aware of these content requirements because they will have to review investment managers' cross-trading policies and procedures before deciding whether their plans will participate in cross-trading programs." (Deloitte)
Federal Thrift Savings Plan Hopes to Engage 'No-Shows'
Excerpt: "For lack of a better phrase, we'll call them the TSP No-Shows. Some members of the Thrift Savings Plan rarely or never check to see how much money is in their retirement accounts. Others have seemingly vanished because their mail is returned to the TSP as undeliverable." (Washington Post; free registration required)
For Public Employees, It Pays to Retire in Quincy, Massachusetts
Excerpt: "The City of Presidents has twice as many municipal retirees taking home $100,000 annual pensions as all the other 13 retirement systems south of Boston combined, a number driven by generous salaries and benefits, said city and police officials. It even has nearly twice as many as Boston , which has eight times as many retirees, according to an analysis of public retirement records by the Globe." (Boston.com)
Opinion: Don't Mess with Utah Government Employees' Defined Benefit Plan
Excerpt: "Utah's public employee pension plan is a thoroughbred; a rock-solid, high-performing $17 billion fund that will carry retirees through the homestretch of their lives. But the state Legislature is treating it like the old gray mare. If approved, House Bill 377, which would give state employees the option of withdrawing from the pension fund in favor of a 401(k) plan, would be the first step toward sending the traditional pension plan program to the glue factory." (Salt Lake Tribune editorial)
Investment Company Institute Urges DOL to Reject Computer Model for IRA Investment Advice
Excerpt: "[I]t is the ICI's position that no computer model can account for all of the investment options generally available to IRAs, including individual equities and bonds. Consequently, the ICI is urging the DOL to concur with the conclusion that a computer model investment advice program is not feasible for IRAs, and to promptly report its findings to Congress well before the end of the year." (CCH Pension and Benefits)
Freezing Defined Benefit Pension Plans: The Process and Post-Freeze Issues
11 pages; orig. published Aug. 4, 2006. Excerpt: "In the past year, many employers have decided to freeze defined benefit pension plan benefits for some or all of their employees. Many other employers are evaluating whether to do so. The article addresses the current trend toward freezing defined benefit plans, discusses requirements for freezing such plans under ERISA and the Internal Revenue Code, and highlights issues for plan sponsors to consider once defined benefit plans have been frozen." (Groom Law Group)
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. . . . In practice, it turns out that many retirees will do almost as well by purchasing a variable annuity invested 60/40 in stocks/bonds. " (Working Paper published by the Pension Research Council)
NBA Old-Timers Get Big Pension Boost
Excerpt: "The former players who will be affected are those who spent three or four years in the NBA, or its predecessor, the BAA, prior to 1965. Previously, pre-1965 players had to have five years of service to qualify. 'Oh, my gosh, I'm getting goose bumps all over,' said John Ezersky, 85, who played for the Boston Celtics in the late 1940s and early 1950s." (ESPN)
Sponsored by: ASC & The ASC Institute
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| ASC Retirement Plan Software, Documents & Education for Over 20 Years! |
| With ASC Compliance Testing Software you get more options and handle plans in less time! For plans that don't pass, ASC's Single-Step Processing and/or ASC's Budget Solving for the 401(a)(4) discrimination testing will automatically crunch the numbers to find the best option for your client. ASC offers a full line of retirement plan software systems and documents. Learn more at www.asc-net.com |
| (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
GAO: EBSA Enforcement Improvements Made but Additional Pension Plan Oversight Could be Made
54 pages. Highlights at http://www.gao.gov/highlights/d0722high.pdf. Excerpt: "EBSA still has not adequately assessed the nature and extent of ERISA noncompliance, even though it has taken steps to do so. Without these data, EBSA is not positioned to focus its resources on key areas of noncompliance nor have adequate measurable performance goals to evaluate its impact on improving industry compliance.' Includes a reply by the agency. (U.S. Government Accountability Office)
New Resource: Insurance Information in Spanish; Useful for Employers and Participants
Excerpt: "Employers with many Spanish-speaking workers may want to take note of a new resource on benefits and insurance topics. To help educate Spanish-speaking consumers on various types of insurance, the National Association of Insurance Commissioners recently launched a new Spanish-language Web site that employers and workers can use." (BenefitNews.com by Employee Benefit News)
Analysis: Senate Finance Committee Passes More Restrictions on Deferred Compensation
Excerpt: "Let's consider some common situations where [the Small Business and Work Opportunity Act of 2007] might cause an employer to have to rethink the way it is compensating its employees. An obvious one is nonqualified pensions, currently thought of as one of the evil areas of executive compensation." (CCA)
New SEC Rules Require Greater Disclosure, But Don't Expect CEOs to Take a Hit
4 pages. Excerpt: "No topic inflames the passions of business leaders and shareholders like executive pay. Companies and compensation consultants argue that, in a free market, they'd be foolish not to pay the going rate for top talent. Investors demand that compensation be tied to performance and complain loudly when pay rises while share prices don't." (Business Week online)
ERISA Benefits Litigation: Who Can Be Sued?
Excerpt: "There has been a surprising lack of consensus by the courts regarding whom a participant should sue under the Employee Retirement Income Security Act of 1974 (ERISA) to recover benefits due under terms of a plan. The article reviews the courts' varying treatment of the subject and proceeds to look at the structure, words, and history of the statute. The article concludes that an employee benefit plan is the only proper party defendant to an ERISA benefits lawsuit." (Groom Law Group)
Newly Posted Events
Health On The Hill - Webcast
Nationwide on February 21, 2007
presented by KaiserNetwork.org
Inherited IRAs Webinar
Nationwide on February 22, 2007
presented by Convergent Retirement Plan Solutions, LLC
Inherited IRAs Webinar
Nationwide on February 27, 2007
presented by Convergent Retirement Plan Solutions, LLC
Newly Posted Press Releases
Little Relief From Health Benefit Cost Increases Expected, Watson Wyatt, National Business Group on Health Survey Finds
Watson Wyatt
Specialized Retirement Plan E-Learning Courses Introduced
International Foundation of Employee Benefit Plans
AccountingWEB Partners with PLANPAYROLL™ to Offer Innovative Online Payroll Service to Accounting Professionals
PAi
Physicians Urged to Consider Non-Traditional Deferred Compensation Strategies
Benefits Solutions Group
Newly Posted or Renewed Job Openings
Senior Account Executive
for BWD Group LLC
in NY
401 (k) Administrative Assistant - Director of First Impressions
for Scholz, Klein & Friends Enlightened Retirement Group, Inc.
in TX
Retirement Plan Analyst
for Standard Insurance Company
in PA
Retirement Services Relationship Manager
for Fulton Financial Corporation
in PA
Retirement Plan Consultant IMT
for Standard Insurance Company
in PA
401(k) Plan Administrator
for Hicks Pension Group - Honolulu Hawaii
in HI
Account Manager
for Parker Group, Inc.
in CT, NJ, NY
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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