BenefitsLink |   |
| September 5, 2007 |
| Here are the Internet's newest links on plan operation, design and policy; emphasis is on compliance and costs. |
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| Software for 401(k), Pension and Flex Administration |
| Pick and choose the software modules you need:
DC/401(k) Proposals & Administration - DB Proposals & Administration - Retirement Plan Documents (Prototype and
Volume Submitters) - Government Forms (5500s, 1099-Rs, 5300s) - Cafeteria Plan Administration & Documents - Participant Termination Calculations - FAS 132 Reporting
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Official Guidance; News
Suit Against Principal Alleges Misleading Mutual Fund SalesExcerpt: "An Iowa plaintiffs' firm has filed suit in the S.D. Iowa against Principal Financial Group on behalf of participants in 401(k) plans to which Principal provided bundled services. The purported class action alleges that a Principal subsidiary advises participants in retirement plans serviced by Principal that they should rollover their retirement assets to a Principal IRA offering 'J Shares' class mutual funds." (ERISA Class Action Watch)
N.Y. State Public Pension Fund Gets Better Returns, Saves Taxpayers Money
Excerpt: "Taxpayers will get a $255 million break in 2009 on contributions to public-employee pensions because of the strong performance of investments in the pension system's trust fund, Comptroller Thomas DiNapoli announced . . . ." (Binghamton Press & Sun-Bulletin)
Court Rules on Pension Accruals During Pregnancy Leave; Cash Balance Plans Get Another Boost
Excerpt: "The 9th Circuit Court of Appeals recently ruled that under federal discrimination law, employers must treat pregnancy-related disability leave similar to other types of disability leave in calculating retirement benefits." (Employee Benefit Advisor; free registration required)
Shift 403(b) Assets by September 24, or Else
Excerpt: "On Sept. 24, new Internal Revenue Service regulations take effect that make it more difficult for employees to shift the assets in their 403(b) accounts from one provider of mutual funds and other investments -- such as Fidelity Investments or Charles Schwab -- to another without suffering a tax penalty." (The News & Observer Publishing Company)
DOL to Tell Congress by Year-End If Computer Models Are Suitable for IRAs
Excerpt: "Are computer models that meet the statutory requirements set out in the [PPA] an effective tool to use to provide investment advice to IRA owners and participants in 401(k) plans? The Securities Industry and Financial Markets Association's (SIFMA) president and CEO, Marc Lackritz, told the Department of Labor (DOL) during a recent hearing that those computer models force individuals into a one-size-fits-all investing and advice approach that cannot offer the level of service provided by an investment advisor." (Investment Advisor)
Summary/Analysis of Official Guidance
Overview: Donating Retirement Assets to CharitiesExcerpt: "PPA included a provision that allowed eligible individuals to make non-taxable distributions from certain types of retirement plans to eligible charities. These distributions, for which the proper reference is qualified charitable distribution (QCD), are limited to $100,000 per year apply only to 2006 and 2007 distributions, unless the provision is extended." (RetirementDictionary.com)
Another Question is Answered in the Who's the Employer Q&A Column
A physician (surgeon) wants to establish a defined benefit pension plan sponsored by his professional association. The PA employs two non-highly compensated employees. The physician, through his PA, has entered into a contractual agreement with a surgery center. The physician does not have an ownership interest in the surgery center, but the PA reimburses the surgery center for use of the facilities, equipment, billing services, and services provided by the non-physician medical staff. Because the physician shares the services of the surgery center staff and reimburses the surgery center for those services, are the Surgery Center and PA in a shared employee arrangement? Would a defined benefit pension plan sponsored by the physician's PA have to take into account the surgery center employees who provide services to the physician? (BenefitsLink.com)
Trends; Surveys; Research
Workforce Management and Retirement in a 401(k) WorldExcerpt: "This article, the first in a two-part series based on 'Pension Aspirations and Realizations: A Perspective on Yesterday, Today and Tomorrow,' explores the ways retirement will be different, for both employers and employees, in a 401(k) world." (Watson Wyatt Worldwide)
Company Stock Could Be Taxing Your IRA
Excerpt: "When you have your employer's stock in a qualified retirement plan, there is a little-known tax play you'll want to check out when you decide to retire or leave your company." (TheStreet.com)
Mutual Funds and Insurers Vying Over $90 Billion that 401(k) Default Investments May Bring
Excerpt: "At issue in the regulation are the default investment options. Washington will decide what those products can be. And because many employees, whether they sign up for the plan or their employer does it for them, stick with the default options, the biggest windfall is likely to go to the firms managing those investments." (BusinessWeek)
Changes Ahead for 403(b)s: New Regs Will Add Paperwork and Confusion, Say Critics
Excerpt: "Retirement plan advisors, distributors, and providers are finding themselves responding on the fly to the trends shaping the 403(b) and 457 markets. The old model of manufacturing and distributing is going away, according to The State of 403(b) and 457 Marketplace: Challenges and Opportunities, a Cerulli report released in March that discusses the key attributes and nuances of that marketplace, and offers a look at the providers and advisors serving plan participants in these markets." (Investment Advisor)
Cashing Out: A Threat to Retirement Security?
Excerpt: "To learn more about cashing out, Watson Wyatt looked at the decisions older workers made about their DB and DC plans when they stopped working for their employer. Using the federally sponsored, long-running Health and Retirement Study (HRS),1 we first analyzed the prevalence of cashed-out retirement benefits. We then performed regression analyses to link specific demographic, economic and workforce characteristics to these withdrawals to assess the risk of cashing out." (Watson Wyatt Worldwide)
Working Paper: Efficient Retirement Financial Strategies
Excerpt: "Today's retirees face the daunting task of determining appropriate investment and spending strategies for their accumulated savings. Financial economists have addressed their problem using an expected utility framework. In contrast, many financial advisors rely instead on rules of thumb. We show that some of the popular rules are inconsistent with expected utility maximization, since they subject retirees to avoidable, non-market risk." (Pension Research Council; registration required to download fulltext of paper)
Policy; Opinion; Advocacy
ERISA § 404(c) Best Practices: Myths versus Facts20 pages. Reprinted by the author with permission from BNA, from its ERISA Compliance & Enforcement Strategy Guide. On the target page, click on the link having the foregoing title. Excerpt: "There are many reasons plan sponsors give for electing not to comply with §404(c) . . . (i) Compliance is expensive; (ii) Compliance is time consuming; (iii) Compliance is inconvenient or burdensome; (iv) There is no policing effort, so why bother? (iv) It is impossible to comply; and/or (v) Close is good enough. . . . [T]here is no record of any plan sponsor using any of these before a court as a defense, and for good reason: none of these excuses support the general fiduciary obligation to act solely in the best interests of the participants and beneficiaries." (David J. Witz, Fiduciary Risk Assessment LLC)
Links to Items on Executive Comp, Benefits in General
Corporate Leaders' Compensation Can Include Many Extras That Don't Count As Income
Excerpt: "For CEOs of large companies, being the person in charge often means earning a hefty paycheck. But benefits typically extend beyond a base salary to stock options and other extras, such as company-provided cars, ransom protection and season sports tickets." (Ventura County Star via The Foundation for Taxpayer & Consumer Rights)
No Plans to Extend 409A Compliance Deadline, Treasury Official Says
Excerpt: "Although more than 90 of the country's most prominent law firms have sought to persuade the Treasury Department to extend the deadline for compliance with the new Code Sec. 409A regulations, 'there are no plans to extend the deadline at this time,' Andrew Desouza, a spokesman for the Treasury Department, told CCH on August 22, 2007." (Wolters Kluwer Law & Business)
Handle SEC Executive Compensation Queries with Caution
Excerpt: "Executives of the 300 or so companies that received letters last week from the Securities and Exchange Commission . . . regarding their disclosures on executive compensation should be careful about how they respond . . . .'Companies have to take their time evaluating the letters. The responses will commit companies to include material in their next proxy statements, so everyone should be comfortable with it,' . . . ." (Financial Week; free registration required)
Despite Shareholder Criticism, Company Jet Use by CEOs/Families/Friends for Personal Travel Is Heavy, As Are Costs
Excerpt: "According to a study released today by the Corporate Library, more than half (54%) of 215 large-company chief executives have access to their corporate aircraft for 'non-business' use, with the median costs for such usage last year at $182,929, with a median tax reimbursement (or gross-up) of $37,933." (Financial Week; free registration required)
Issue Brief: Promoting Work: Implications of Raising Social Security's Early Retirement Age
Excerpt: "This brief addresses the question of whether today's workers would be able to work longer without undue hardship if the [Early Eligibility Age] were raised. Answering this question requires exploring trends in both the health of older workers and the nature of jobs. In examining these areas, the brief focuses in particular on economically vulnerable groups -- women and minorities." (Center for Retirement Research at Boston College)
Court Says When in Doubt, Give Veterans the Benefit
Excerpt: "When in doubt, tilt toward the veteran. That's what the U.S. Court of Appeals for the Federal Circuit has suggested to government agencies in two cases involving federal employees who had served in the military reserves and petitioned for back pay because of improperly charged military leave." (The Washington Post; free registration required)
Keeping Workers Happy Pays Off for One Company
Excerpt: "For two consecutive years, Bridge Worldwide has received top honors from the Society for Human Resources Management and Great Place to Work Institute as a small business that is one of the 25 Best Companies to Work for in America. It's significant to get the designation for one year. It's incredible to get it two years in a row. When companies treat workers right, workers respond with drive and devotion." (The Enquirer)
Seniors Taking Advantage of Domestic Partnerships to Avoid Losing Benefits If They Remarry
Excerpt: "Domestic partners get a few of the rights of spouses - hospital visitation, inheritance if there is no will, the right to make medical decisions - but without losing retirement benefits that would disappear if they remarry." (SpokesmanReview.com)
DOL Offers Informal Views on Benefit Statements and Investment Advice
Excerpt: "The Joint Committee on Employee Benefits (JCEB) of the American Bar Association has posted a report on the May 2007 Q&A session between JCEB representatives and DOL officials. Highlights for 401(k) plans include . . . informal, nonbinding remarks about benefit statements and investment advice." (Employee Benefits Institute of America Inc.)
Overview: PowerPoint Presentation Is Not SPD; Plan Language Controls
Excerpt: "EBIA Comment: Although some courts have taken the view that the terms of an SPD control over conflicting terms in a plan document, the courts generally do not allow the terms of non-SPD summaries (such as summaries in an employment handbook or enrollment material) to control over the terms of the plan document, especially in instances where there is an SPD." (Employee Benefits Institute of America Inc.)
Newly Posted Events
401(k) Plans: Beyond the Basics
in Texas on October 4, 2007
presented by SunGard Relius
Employee Benefits Seminar
in West Virginia on October 4, 2007
presented by West Virginia Bar Association
Newly Posted Press Releases
Employers Use Automatic Tools to Jumpstart Participation and Saving in 401(k) Plans
Charles Schwab & Co., Inc.
The Rise of the Mompreneur: How Today's Women are Balancing Work and Motherhood
Worth Collection, Ltd.
Dana Corporation, Inc. Enters Into Settlement Agreement With Dana Retiree Committee
Stahl Cowen Crowley LLC
S.C. BlueCross to Integrate Care Management with Personal Health Record in Real Time
BlueCross BlueShield of South Carolina
Newly Posted or Renewed Job Openings
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Pension/ERISA Attorney
for Major Lindsey & Africa
in MA
Actuarial Benefit Consultant
for Fidelity Investments
in IL, NC, NY, TX
Daily 401k Plan Administrator
for The Newport Group
in NC
Managing Director-Retirement Services, #0702272
for John Hancock
in MA
New Business Account Manager
for Standard Insurance Company
in PA
Managing Director, Independent Consulting Community, (#0605125)
for John Hancock
in CT, MA, ME, NH, NY, RI, VT
Paralegal - Executive Compensation/Employee Benefits
for Perkins Coie LLP
in IL
Supervisor, Non-Qualified Plans
for The Guardian Insurance Company
in NY
Senior Consultant Health & Welfare
for Buck Consultants
in TX
Principal
for Buck Consultants
in IL
Chief Actuary
for National Actuarial Pension Services, Inc.
in TX
Experienced Employee Benefits Attorney
for Warner Norcross & Judd LLP
in MI
Client Service Consultant - Regional
for Standard Insurance Company
in PA
Client Service Pension Administrator
for San Diego Pension Consultants, Inc.
in CA
Attorney
for Law Firm
in PA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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