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July 9, 2007
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Complicated 401(k) Fees Prompt Lawsuits, Regulation
Excerpt: "'It's not just the lawsuits anymore,' said Gregory Ash, a corporate lawyer with Spencer Fane Britt & Browne LLP in Overland Park. 'There's a very vigorous movement in Washington to address, on a regulatory level, these perceived abuses.'" (The Business Journal of Kansas City via MSNBC.com)

Opinion: 401(k), 403(b) and 457 Plans All Under Attack
Excerpt: "The only hope that defined contribution plans will provide retirement security for participants who increasingly rely almost exclusively upon them, is if these plans are massively improved. Litigation has a way of bringing about rapid change." (Benchmark Financial Services)

SEC Demurs, Yet Again, on 12b-1 Fees: Vows to Propose 'Something,' But Offers Little Consensus
Excerpt: "The fees, named for the section of securities law that provided for them 27 years ago, have swelled in total size and in function. Today, 12b-1 fees are applied to everything from getting space on a platform, to compensating brokers for providing advice, to mailing annual prospectuses, to maintaining fund companies' websites." (Financial Planning)

Value Funds versus Growth Stocks in the Stock Mutual Funds in Your 401(k) Plan
Excerpt: "For years, the nearly unanimous recommendation from academia was to invest all of the equity allocation in value funds and nothing in growth funds. But the best approach, according to a powerful strand of recent research, is to divide a long-term portfolio just about equally between the two types." (The New York Times; free registration required)

Former Enron Workers' First Settlement Payments Miscalculated
Excerpt: "Thousands of former Enron Corp. employees may have to pay back a portion of the first payment they received as part of a settlement over lost employee stock ownership and 401(k) plan savings after the company's collapse." (PLANSPONSOR.com; free registration required)

Reasons for the Lack of Direct Access to No-Load, Low-Expense 403(b) Plans in Many School Districts (PDF)
13 pages. Excerpt: "Even though the tax laws changed many years ago to allow teachers to purchase mutual funds within 403(b) plans, school districts have been slow to change. As a result, many school district continue to only give teachers the option to invest in high cost variable annuities sold by insurance companies." (403bwise.com)

2007 Report on Corporate Pension Funding Levels (PDF)
13 pages. Excerpt: "The distribution of pension liabilities and assets of S&P 500 companies is relatively concentrated among the largest plans. As of the end of fiscal year 2006, over half of the total pension assets and liabilities were held by the 21 and 24 largest plans when ranked by asset and liability size, respectively." (Wilshire Consulting)

Actuaries Blamed for UK Pension Scheme Deficits
Excerpt: "Research published by the Financial Reporting Council (FRC) indicates U.K. pension scheme trustees believe actuaries have contributed to the huge deficits faced by many pension schemes by failing to take account of improved life expectancy in their advice." (PLANSPONSOR.com; free registration required)

Retirement Plan Disclosure: Ethical Principles and Legal Obligations
Excerpt: "It will take time, but in the author's opinion, there is an excellent prospect of resolving the fundamental issues of inadequate disclosure of all relevant information to plan decision makers and thus avoid potentially unfavorable long-term consequences which participants and beneficiaries would otherwise bear." (Social Science Research Network)

China May Possess Key to Americans' Retirement Security
Excerpt: "It may come as a surprise to many Americans, but their retirement security may depend in large measure on China's development of capital markets and the willingness of Chinese savers to buy the stocks and bonds that baby boomers will unload in coming years." (Victoria Advocate)

Overview: DOL Imposes Penalty in ERISA Case
Excerpt: "The Labor Department's 2006 lawsuit alleged that Hagemeyer North America Inc., GreatBanc Trust Co., and members of the plan administrative and advisory committees violated the Employee Retirement Income Security Act (ERISA) by mismanaging two ESOPs sponsored by the Cameron & Barkley Co. (C&B) and CSI." (Health Plan Law blog by Attorney Roy F. Harmon III)

Risk Shifting versus Risk Management: Investment Policy in Corporate Pension Plans
Excerpt: "The asset allocation of defined benefit pension plans is a setting where both risk shifting and risk management incentives are likely be present. Empirically, firms with poorly funded pension plans and weak credit ratings allocate a greater share of pension fund assets to safer securities such as government debt and cash, whereas firms with well-funded pension plans and strong credit ratings invest more heavily in equity." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)

Overview: IRS Cure for Failure to Timely Adopt Interim Amendments
Excerpt: "The IRS has provided the cure for failure to timely adopt interim amendments of law changes through the Voluntary Correction Program (VCP). At the time of correction, the plan may not be the subject of an Employee Plans Examination and must meet other requirements." (Wolters Kluwer Law & Business)


Links to Items on Executive Comp, Benefits in General

IRS Clarifies Rules on Transfers of Substantially Vested Stock
Excerpt: "In its latest revenue ruling the Internal Revenue Service (IRS) clarifies the tax consequences under Section 83 of the Internal Revenue Code when restrictions are imposed on substantially vested stock causing that stock to become substantially nonvested." (PLANSPONSOR.com; free registration required)

Private Companies May Win Exemption from SEC Registration of Option Grants
Excerpt: "Private companies would not have to register securities used in employee stock option plans, under a proposed rule from the Securities and Exchange Commission." (Financial Week; free registration required)

Court Refuses to Enforce Alleged Oral Modification of ERISA Plan
Excerpt: "EBIA Comment: This case caught our eye because it illustrates the perils of an employee's reliance on oral statements to enforce alleged rights under an ERISA plan. Oral communications cannot change the terms of a plan. And a claim for estoppel based on oral misrepresentations will be ineffective when there are clearly written plan terms to the contrary." (Employee Benefits Institute of America Inc.)

Stock Taxable When Options Exercised
Excerpt: "The 7th U.S. Circuit Court of Appeals has ruled that a taxpayer was incorrect when she claimed income for stock shares obtained when options were exercised based on the price at which she later sold the shares and not at the price of the shares at the time the stock options were exercised." (PLANSPONSOR.com; free registration required)


Newly Posted Press Releases

Many Workers Struggle With Basic Health Benefit Terms, Watson Wyatt Survey Finds
Watson Wyatt

Judge OKs Delay in Exelon 401(k) Case
Pensions & Investments

Dell Delays Filing 401(k) Statement
Dell


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