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| September 10, 2007 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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| ASPPA's Annual Conference, October 21-24, 2007 |
| Be a part of it all at ASPPA's Annual Conference this year. Join over 1,500 retirement professionals, choose from over 60 workshops, attend numerous networking opportunities and participate in ASPPA’s bi-annual march to the hill. All this and more await you at the Hilton Washington, October 21-24, 2007. Register Now. |
Official Guidance; News
The IRS Could Force a Quicker $100M San Diego City Pension PaymentExcerpt: "The city of San Diego could have to plug $100 million into its troubled pension system as part of its ongoing talks with federal tax agency officials on keeping its status as a qualified plan. A San Diego Union-Tribune news report indicated that the Internal Revenue Service (IRS) has taken issue with the city's 20-year plan to pay off the pension system's $1 billion unfunded liability. The tax agency warned the city in March that it is not appropriate to consider the $100 million as part of that total." (PLANSPONSOR.com; free registration required)
Recordkeeper Ordered to Turn Over Records in Cash Balance Discrimination Case
Excerpt: "A federal magistrate judge ruled that a pension plan sponsor operating a cash balance plan must produce electronic documents from its recordkeeper in an age discrimination suit, despite the plan sponsor's argument that it did not have possession of the data. The underlying suit charges El Paso Corp. with violating the Age Discrimination in Employment Act (ADEA) and the Employee Retirement Income Security Act (ERISA) when it switched from a defined benefit plan to a cash balance plan . . . ." (PLANSPONSOR.com; free registration required)
Senate Hears about Carried Interest and Pensions
Excerpt: "The Senate Finance Committee continued its examination of whether to raise taxes on the earnings of managers of private equity firms and hedge funds by looking at the impact of carried interest taxation on pension funds." (WebCPA)
Delphi to Freeze Pension Plans
Excerpt: "Financially troubled auto parts manufacturer Delphi Corp. will freeze its two pension plans and shift some pension liabilities to former parent General Motors Corp. under a bankrup.tcy reorganization proposal filed [September 6] and an agreement reached with GM." (Business Insurance)
Court OKs Service-Based Retirement Definition for Cash Balance Plan
Excerpt: "The U.S. District Court for the Northern District of Illinois has determined a cash balance plan that defined normal retirement age by years of vesting service was allowed to do so and thus did not owe participants who had reached this retirement 'age' a distribution using a 'whipsaw' calculation." (PLANSPONSOR.com; free registration required)
Summary/Analysis of Official Guidance
IRS Web Page Provides Reminder About Interim and Discretionary Amendment RequirementsExcerpt: "EBIA Comment: The IRS web page provides an easy to use format that generally tracks the 2006 List and indicates which amendments are interim and which are discretionary . . . . While the 2006 List is intended to be used primarily by plan sponsors of individually designed plans and certain multiple employer plans that fall in Cycle B of the EGTRRA remedial amendment cycle, the web page announcement is a good reminder that a 401(k) plan is subject to interim and discretionary amendment requirements . . . ." (Employee Benefits Institute of America)
Overview: September 15 Deadline for Final 401(k) Plan Regulation Amendments
Excerpt: "The regulations were generally effective for plan years beginning after January 1, 2006, but could be adopted as early as any plan year that ended after December 29, 2004. All 401(k) plans are required to be amended to comply with the mandatory portions of the final regulations. The deadline for such amendments depends on a number of factors, but generally the amendments must be adopted no later than the employer's income-tax filing due date for the 2006 income tax return . . . ." (Morgan, Lewis & Bockius LLP)
Overview: Representative Miller's 401(k) Fee Legislation
Excerpt: "The 401(k) Fair Disclosure for Retirement Security Act of 2007 (H.R.3185) would require plans to disclose more information about fees charged to 401(k) participants and potential conflicts of interest. It also would require that 401(k) plans offer an index fund." (Watson Wyatt Worldwide)
Overview: Final 403(b) Regulations
Excerpt: "For the first time, each and every 403(b) sponsor must set forth the material terms of its tax annuity program in writing, and will be held accountable for enforcing such terms, even if the 403(b) arrangement encompasses multiple vendors." (Seyfarth Shaw LLP)
Overview: DOL Guidance Preserves Non-ERISA 403(b) Programs (PDF)
2 pages. Excerpt: "Recently-published IRS regulations require 403(b) arrangements to have written plans in place by January 1, 2009. This requirement has caused concern among employers (other than governmental and certain church employers) that have traditionally made non-ERISA 403(b) programs available to their employees." (Prudential Financial)
Another Question is Answered in the Who's the Employer Q&A Column
Mr. X owns 100% of Corporation A. Corporation A owns 70% of Corporation B; Mr. X owns the remaining 30%. Is this a controlled group? (BenefitsLink.com)
Trends; Surveys; Research
ETFs Seek Room in 401(k) Plans but Mutual Funds Aren't Welcoming ThemExcerpt: "Exchange-traded funds seem to be everywhere these days. But as the industry seeks to maintain its rapid growth, there is one area where the products are struggling to make headway -- 401(k) retirement plans." (The Wall Street Journal Online)
Employers Are Still Grappling with Which Investment Options to Use in Their 401(k) Plans
Excerpt: "A year after pension reform eased concerns about automatically enrolling workers in 401(k)s, employers are still grappling with which investment options to use in their plans. Here, Workforce Management sorts out the positives and negatives of the Department of Labor's qualified alternatives, as well as stable-value funds." (Workforce Management; free registration required)
Public Pensions May Have Grown Addicted to High-Risk Alternative Investments.
Excerpt: "New Mexico's public pension plan is sinking deeper and deeper into a hole. Over the past four years, it has accumulated a $937 million deficit. That's bad news for the state workers who are depending on the fund to pay for their golden years. In hopes of boosting returns, last year the state legislature gave managers the authority to put money into alternative investments such as real estate, private equity, and hedge funds." (BusinessWeek)
Putting Stock in Your Employer Can Save on Taxes
Excerpt: "When it comes time for employees to leave the nest, most are willing to directly roll over all qualified plan assets into a traditional IRA. . . . However, there may be another option available that should be considered, a type of combination approach. This option involves distributing employer stock to the retiree and directly rolling over the remaining balance of the plan assets into a traditional IRA. This combination approach, though not for everyone, may have significant advantages." (Sun-Times News Group)
Working Paper: Participants' Imperfect Knowledge of Pension Plan Type
Excerpt: "This paper investigates the reasons for discrepancies between the pension plan type reported by respondents to the Health and Retirement Study (HRS) and pension plan type obtained from documents produced by their employers, called Summary Plan Descriptions (SPDs). The analysis suggests the discrepancies are sizable and are mainly due to misreports by respondents." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)
Working Paper: The Changing Landscape of Pensions in the United States
Excerpt: "The pension landscape in the U.S. has changed dramatically over the past 25 years. Saving through personal retirement accounts has become the principal form of retirement saving. We document the transition from a defined benefit system to a personal account system and show the effect it has had on wealth at retirement." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)
Working Paper: Social Security and the Timing of Divorce
Excerpt: "The spousal benefit is particularly valuable to secondary workers in couples where there is a large disparity in earnings between the primary worker and the secondary worker. We examine whether these couples, who have more to gain from extending their marriage to ten years, are more likely to delay marriage to the tenth year relative to a control group." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)
Video Overview: Structuring Income for Retirement
Excerpt: "[Fidelity's] Managing Director of Research, Van Harlow, gives a brief overview of the recent report, 'Structuring Income for Retirement'." (Fidelity Research Institute)
How America Saves 2007: A Report on Vanguard 2006 Defined Contribution Plan Data (PDF)
68 pages. Excerpt: "There has been meaningful improvement since 2000 in the percentage of participants choosing to preserve their plan assets for retirement . . . An increase in the percentage of participants choosing to remain in their former employer's plan was somewhat offset by a decrease in the percentage of participants choosing a rollover. Similar trends were evident in the assets available for distribution." (The Vanguard Group, Inc.)
Policy; Opinion; Advocacy
Opinion: Pension Apocalypse, NowExcerpt: "The Financial Accounting Standards Board (FASB) says it's ready to start the 'second phase' of its efforts to 'improve and ultimately converge employers' accounting for pensions and other post-retirement benefits.' Based on FASB's August 29 announcement, it's clear they're going to make the most sweeping improvements possible. So, prepare yourself for the ultimate benefit 'solution': the eradication of the private U.S. pension plan." (Corey Sherman via Employee Benefit News; free registration required)
Links to Items on Executive Comp, Benefits in General
CRS Report for Congress: Older Workers -- Employment and Retirement Trends (Updated Sept. 7, 2007) (PDF)
19 pages. Excerpt: "Several approaches to phased retirement -- job sharing, reduced work schedules, and rehiring retired workers on a part-time or temporary basis -- can be accommodated under current law. Under the recently enacted Pension Protection Act, a pension plan can begin to pay benefits to workers who have not yet separated from the employer at the earlier of age 62 or the pension plan's normal retirement age, which in most plans is 65. Some employers would like to be able to pay partial pension distributions to workers who have reached the pension plan's early retirement age. This would require a change in federal law." (Congressional Research Service, U.S. Library of Congress)
De Facto Plan Administrator Theory Does Not Apply to TPAs
Excerpt: "EBIA Comment: Other circuit courts have flatly rejected the de facto plan administrator theory and will strictly adhere to the plan document's designation of which person or entity serves as plan administrator. But even in the circuits where the de facto theory is viable, the courts have not extended the theory to TPAs or other ERISA plan service providers." (Employee Benefits Institute of America)
Social Security May Hit Red by 2017
Excerpt: "Rumors of the death of Social Security have not been exaggerated, Charles Blahous, special assistant to the president for economic policy said . . . ." (Investment News; free registration required)
Newly Posted Events
Free Workshop In Aurora, Colo., For Licensed Brokers, Agents, ERISA Consultants And Third-party Administrators
in Colorado on September 11, 2007
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Newly Posted Press Releases
Mercer HR Services and Financial Engines Expand Alliance
Mercer Human Resource Consulting
Reliance Trust to Provide Custodian Services for BenefitStreet's ETF 401k Platform
BenefitStreet, Inc.
U.S. Labor Department Wins Summary Judgment Against Framingham, Massachusetts, Employer, Requiring Him To Restore Funds To Company 401(k) Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
U.S. Labor Department Obtains Appointment Of Independent Fiduciary For Abandoned 401(k) Plan Of New York City Company
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Victory Capital Management Launches New Retirement Plan Share Class
Victory Capital Management
Teamsters Applaud Spitzer Executive Order to Stop Employee Misclassification
International Brotherhood of Teamsters
Fidelity Launches Online Retirement Income Planning Tool For Financial Advisors
Fidelity Investments
Now Available From ArmadaCare In Partnership With Transamerica Affinity Services: A Revolutionary, New Executive Medical Reimbursement Program That Coordinates With Any Underlying Health Plan
ArmadaCare
Next Generation Medical Reimbursement Now Available In The State of New York
ArmadaCare
New York Appellate Court to Hear Precedent-Setting Case on Interstate Recognition of Same-Sex Spousal Unions
Gibson, Dunn & Crutcher LLP
Another Firm Drops Traditional Pension Plan in Favor of 401k
Boston Globe
Newly Posted or Renewed Job Openings
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Pension Administrator
for Primark Benefits
in CA
Employee Benefits Administration
for Primary Consulting, Inc.
in ANY STATE
Pension/ Calc Engine Analyst Role
for Hewitt Associates
in FL
Compensation Analyst
for Administaff
in TX
401(k) Administrator
for Retirement System Group Inc.
in NY
Pension Consultants - "DB" or DB / DC
for Defined Benefit Administrators, Inc.
in NY
Client Service Manager
for Princeton Retirement Group, a Merrill Lynch Company
in SC
Health and Welfare Benefits Compliance Manager
for Publix Super Markets, Inc.
in FL
Vice President, Health and Welfare Product Management
for Fidelity Investments
in ANY STATE
Team Leader - Retirement Plans - Regional Svc Teams
for Standard Insurance Company
in OR
Participant Svcs Rep
for Standard Insurance Company
in OR
Client Data Management Processor
for Milliman, Inc.
in WA
Defined Contribution Plan Administrator
for Alliance Benefit Group of Michigan, Inc.
in MI
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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