BenefitsLink Retirement Plans Newsletter for February 26, 2007

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Retirement Plans
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February 26, 2007

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Overview: New IRS Compliance Tool Highlights Top 10 Compliance Issues for 401(k) Plans
Excerpt: "The IRS has announced a new online compliance tool that specifically addresses 401(k) compliance issues. According to the IRS newsletter 'Retirement News for Employers' (Winter 2007), Publication 4531 highlights the top 10 compliance issues occurring in 401(k) plans and 'is designed to bring awareness of these issues to plan sponsors.'" (Employee Benefits Institute of America)

Text of ASPPA's Comments to DOL on 45-Day Period for Benefit Statements
Excerpt: "ASPPA, SBCA, the Chamber and NFIB recommend that the deadline for trustee-directed defined contribution plans annual benefits statements be no later than the deadline (with extensions) for filing the Form 5500 (e.g., October 15, in the case of a calendar-year plan)." (ASPPA)

Overview: IRS Further Clarifies New Beneficiary Rollover Rules
Excerpt: "The criticisms and the IRS response relate to two issues: (1) Was the statute, when originally enacted last year, intended to guarantee all non-spouse beneficiaries the right to make an IRA rollover regardless of the provisions of the distributing plan? (2) Do non-spouse beneficiaries who make a rollover to an IRA have the right to stretch out distributions over the beneficiary's life expectancy, even if the distributing plan would not have provided this right. " (BNA Tax Management)

Overview: PPA Provisions Affecting Employee Benefit Plans in 2007
Pension Benefit Statements, Interest Rate Assumptions for Lump-Sum Distributions, Hardship Distributions, Rollovers for Nonspouse Beneficiaries, Vesting of Nonelective Contributions, and Notice and Consent Period for Distributions. (Perkins Coie)

Plan Participants: Don't Let an Automated 401(k) Lull You to Sleep
Excerpt: "But whether or not you're taking advantage of an automated 401(k), it's folly to think that you can literally set your retirement plan in your 20s or 30s and forget it until you retire." (New York Times; free registration required)

Pension Plans: Frozen But Not Forgotten
Excerpt: "With the Financial Accounting Standards Board's (FASB) new rules requiring balance sheet recognition of pension liabilities for fiscal years ending after December 15, 2006, new funding rules effective for the 2008 plan year, and a worldwide trend toward mark-to-market accounting, it appears that funding and expense volatility will continue. . . . In this Perspective, we take a look at the financial implications of freezing a plan and how best to manage the process. " (Mercer Human Resource Consulting)

New Studies Underscore the Value of Flexible Phased Retirement Programs
Excerpt: "A Federal Reserve Board study found that if employees delayed full retirement until age 67, the additional increase in savings required to ensure Social Security solvency would be a mere 1.5 percent, compared with 14 percent if retirement ages stayed the same going forward." (HR Policy Association)

Overview: New Retirement Plan Investment Advisor Rules Put More Obligations on Plan Sponsors
Excerpt: "Plan sponsors generally will not be liable for the advice offered to the participants; however, plan sponsors (or some other fiduciary appointed by them) will have substantial responsibility with respect to the appointment of the investment advisor and ongoing monitoring of its services. . . . In some cases, plan sponsors may feel that the obligations associated with appointing and monitoring the investment advice provider are too onerous and decide not to offer the service." (BNA Tax Management)

New Institute to Focus on Corporate Governance Effects of Public Sector Pension Systems
Excerpt: "The Council of Institutional Investors (CII) announced that it has joined with two public sector retirement organizations to form the National Institute on Retirement Security. Among other things, the Institute will focus on the role of public pension funds in capital markets financing and corporate governance." (HR Policy Association)

Could You Really Save Too Much for Retirement?
Excerpt: "Running down how much you need to save for retirement has never been an exact science. Too many unknowns. Retirement specialists developed rules of thumb as guidance, such as retirees need 70 percent to 85 percent of preretirement income. These common assumptions often are built into online calculators to help workers make projections. Now, as the [New York] Times reported, a small group of economists is challenging the conventional wisdom." (Baltimore Sun)

Overview for Participants: The Need for Diversification for Self-Directed Accounts
Excerpt: "When it comes to retirement savings, the choices are basically stocks, bonds, and cash and cash equivalents, such as savings accounts, certificates of deposit and money-market funds. . . . But you also need to spread your risks within each asset category." (Washington Post; free registration required)

DOL Guidance on Plan Investment Advice Might Hurt Independent Plan Providers
Excerpt: "Department of Labor guidance allowing money managers to offer investment advice directly to 401(k) plan participants could squeeze the bottom lines of leading independent-advice providers Financial Engines Inc. and Morningstar Associates LLC, but it's a big win for mutual fund companies." (InvestmentNews)

Opinion: 2008 Presidential Budget Again Renews Misdirected Administration Efforts On Savings Plans
Excerpt: "The Bush Administration's Fiscal 2008 proposed budget once again includes proposals to consolidate existing 457, 401(k), and 403(b) retirement savings plans, and several types of IRAs. In addition, health savings accounts (HSAs) would replace Flexible Savings Accounts and other tax-advantaged health care cost programs -- all in the name of simplification." (ICMA-RC)

Overview: MVRA Trumps ERISA Anti-Alienation Rules, Says En Banc 9th Circuit Decision
Excerpt: "The Ninth Circuit issued a significant opinion last week that permits a perpetrator's vested retirement benefits to be used to compensate a victim of a crime under the Mandatory Victim Restitution Act (MVRA)." (Workplace Prof Blog)

Links to Items on Executive Comp, Benefits in General

8th Circuit Requires Detrimental Reliance Before Employee Can Recover Due to SPD Error
Excerpt: "This case is one of three recent Eighth Circuit opinions involving summary plan descriptions (see case note below). As in the case of the other two opinions, this decision reverses a district court holding in favor of the plan participant." (Health Plan Law blog by Attorney Roy F. Harmon III)

Opinion: Alaska Supreme Court Ruling on Same-Sex Benefits is Faulty Application of Constitution
Excerpt: "Homose.xual activists and their supporters claim that the state uses an unequal pay scale by paying spousal benefits only to married employees. Their remedy is to include homose.xual 'partners.' The court's proposed plan adds only same-sex partners, giving them 'special rights' by granting marital privileges without the responsibility of a marital contract." (Debbie Joslin in the Anchorage Daily News)

ERISA Preempts Washington State Law on Health Coverage for Domestic Partners, Official Says
Excerpt: "In August, a heterose.xual woman . . . became one of the first people to ask for protection under the law. [She] claimed that her employer discriminated because it did not provide benefits to her male partner, while providing benefits to partners of g.ay and les.bian co-workers. On Friday, the Human Rights Commission said a federal law that governs some health care plans pre-empts the state civil-rights law invoked in [her] case." (Seattle Post-Intelligencer)

Significant Case: CEO and Companies Liable for Squandering Plan Assets
Excerpt: "In a series of transactions, the CEO and companies used funds of two ERISA pension plans to, among other things, make a personal loan to the CEO, pay the CEO's tax liability, fund payroll, make loans to the companies, finance a casino project, and secure and pay other corporate debts. Along the way, the bulk of the plans' loans to the companies was converted into a 40% stock equity holding in the companies." (Employee Benefits Institute of America)

Newly Posted Events

2007 Employee Benefits Conference: Employee Benefits after the Pension Protection Act of 2006
in New York on May 10, 2007
presented by New York State Society of CPAs

Annual Legal and Regulatory Update
in Ohio on March 15, 2007
presented by WEB (Worldwide Employee Benefits Network) Cleveland Chapter

Newly Posted Press Releases

U.S. Labor Department’s EBSA Extends Parity Rule Covering Mental Health Benefits
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

New Selection of Employee Benefits and Compensation Books Available
International Foundation of Employee Benefit Plans

Treasury, Education Host Summit About Teaching Students Better Money Management
U.S. Department of Treasury

SureWest Communications to Freeze Pension Plan
SureWest Communications

Newly Posted or Renewed Job Openings

Sr. Member Retirement Services Specialist
for Orange County Teachers Federal Credit Union
in CA

Communications Consultant/SPD Specialist
for a boutique communications consulting firm in the Phoenix area
in AZ

Assistant Director of Administration
for MidAmerica Administrative & Retirement Solutions, Inc.
in FL

Benefit Solutions Sr. Sales Executive
for Ceridian
in AR, FL, LA, MS, OK, TN

Conversion Specialist
for The Newport Group
in NC

Plan Document Specialist
for Preferred Pension Planning Corporation
in NJ

Client Services - Account Manager
for ExpertPlan, Inc.
in NJ

Financial Transactions Specialist
for ExpertPlan, Inc.
in NJ

Associate Product Manager, 401(k) Products
for Citi, Smith Barney
in 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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