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| September 12, 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. |
New Compliance Rules; News
Prop. DOL Regs: 'Safest Available' Standard for Annuity Provider Selection for Distributions from DC Plans (PDF)5 pages. Excerpt: "Given that the fiduciary standards in Interpretive Bulletin 95-1 would not apply to the selection of an annuity contract as an optional form of distribution from an individual account plan, the Department is proposing the adoption of this regulation that, in the form of a safe harbor, provides guidance concerning the fiduciary considerations attendant to the selection of annuity providers and contracts for purposes of benefit distributions from individual account plans." (Employee Benefits Security Administration, U.S. Department of Labor)
Final DOL Regs: 'Safest Available' Standard for Annuity Provider Selection for Distributions from DB Plans (PDF)
3 pages. Excerpt: "[T]he amendment contained in this document . . . merely serves to make clear that the standards set forth in Interpretive Bulletin 95-1 no longer apply to individual account plans, in conjunction with the review of the proposed rule, also appearing in today's Federal Register, that establishes, in the form of safe harbor, standards for the selection of annuity providers and contracts by fiduciaries of individual account plans." (Employee Benefits Security Administration, U.S. Department of Labor)
DOL Issues Annuity Provider Selection Guidance
Excerpt: "The U.S. Department of Labor (DOL) [yesterday] issued two rules under the Pension Protection Act (PPA) relating to annuity provider selection to provide plan distributions. . . . According to the DOL, the PPA required the agency to issue regulations clarifying that the selection of an annuity contract as an optional distribution from an individual account plan is not subject to the 'safest available' standard under Interpretive Bulletin 95-1, but is subject to all otherwise applicable fiduciary standards." (PLANSPONSOR.com; free registration required)
EDS Offers Retirement to 12,000 U.S. Workers - Eligible Employees to Receive an 'Enhanced' Benefit
Excerpt: "Electronic Data Systems Corp . . ., the second-largest U.S. technology services provider, said on Wednesday it offered early retirement packages to about 12,000 U.S. employees, and expected a charge of $70 million to $130 million in the fourth quarter." (Reuters)
Compliance Rule Summaries/Analysis/Filed Comments
Updated 403(b) Regulations - An In-Depth ReviewExcerpt: "The final IRC § 403(b) regulations impose a new requirement that a 403(b) plan be embodied in a written plan document as a condition for favorable tax treatment under IRC § 403(b). This requirement was one of the most controversial provisions from the proposed regulations, and its inclusion in the final regulations will have a significant impact on sponsors of 403(b) arrangements." (Deloitte via BenefitsLink.com)
Overview: IRS's Proposed Regulations on Pension Protection Act's Benefit Limitations for Underfunded Plans
Excerpt: "Specifically, these proposed regulations provide guidance on the effect of maintaining and using credit balances to offset minimum funding contributions, applying a series of benefit limitations to certain underfunded plans, and the rules for enrolled actuaries to certify a plan's funded status each year." (Deloitte via BenefitsLink.com)
Presentation: ESOPs and Government Contractors (PDF)
35 pages. (Morgan, Lewis & Bockius LLP)
ASPPA Comments Filed Regarding the Transition from the Schedule SSA to the New Form SSA (PDF)
4 pages. Excerpt: "The American Society of Pension Professionals & Actuaries (ASPPA) appreciates this opportunity to comment on Schedule SSA (Form 5500), which is used to report information concerning separated participants with deferred vested benefit rights." (American Society of Pension Professionals & Actuaries)
Trends; Surveys; Research
Perspective on Automatic 401(k) PlansCompilation of information on the issue. (Transamerica Center for Retirement Studies)
The Expected Impact of Automatic Escalation of 401(k) Contributions on Retirement Income (PDF)
Pages 1-8 of 12 pages. Excerpt: "This study by EBRI provides the first estimate of the expected impact of the automatic escalation provision in the Pension Protection Act of 2006, showing that it is likely to result in a significant increase in 401(k) accumulations, especially for low-income workers." (Employee Benefit Research Institute)
Workers Should Check Fees in Their 401(k) Retirement Funds, but They May not Like What They Find
Excerpt: "High fees can exact a heavy toll on a 401(k) plan over the course of an employee's career, but workers trying to determine their expenses are at a loss because the fees are not clearly disclosed. 'It should be criminal what's going on in this industry,' said David B. Loeper, author of the forthcoming book 'Stop the 401(k) Rip-off!' 'People are unaware of what they're paying, if anything.'" (The Pueblo Chieftain)
Corporate Pensions Working Again After Dire Straits in '02
Excerpt: "Say this much for financial crises: They never stop coming, and they never last forever. For proof, check out the U.S. pension system. A few years ago it seemed headed for a crisis. Plans sponsored by S&P 500 firms were woefully underfunded. Many plans were either frozen or in default. Things got so bad that some experts said the pension system was in worse shape than Social Security. There was talk that only a massive bailout would fix the problem. You don't hear that kind of talk anymore . . . ." (Investor's Business Daily via CNNMoney.com)
Women's Retirement Security in Jeopardy According to Report from Eighth Annual Transamerica Retirement Survey (PDF)
22 pages. Excerpt: "For the past seven years, the Transamerica Center for RetirementStudies has conducted a national survey of U.S. business employers and workers regarding their attitudes toward retirement. The research emphasizes employer-sponsored retirement plans, issues faced by small-to mid-sized companies and their employees, and the implications of legislative and regulatory changes." (Transamerica Center for Retirement Studies)
Retirees Face Certain Failure Using Lifecycle, Target Date and Balanced Funds, 10-Year Research Study Concludes
Excerpt: "Comprehensive studies by Compass Institute, a think tank dedicated to research and analysis of investment strategies, proves that retirement investment strategies that use Formulaic Asset Allocation (FAA) approaches such as Lifecycle, Target Date, Balanced Funds, Managed Accounts and Monte Carlo Simulation, will unequivocally fail to provide participants with adequate savings for retirement." (PR Newswire via Human Resource Executive Online; free registration required)
Retirement Funds Vanish as Bankruptcies Hit Tax-Deferred Scheme
Excerpt: "[Hundreds of investors] lost the proceeds of property sales because two companies went bankrupt during criminal investigations. The two were among thousands of mostly unregulated U.S. firms that hold money between commercial-property sales. Their collapse led to dozens of lawsuits and calls for regulation. The intermediaries are known as 1031 exchanges, named for a provision of U.S. tax law that defers capital gains taxes if the seller of a property buys another like it within six months." (Bloomberg News)
Using IRAs to Make Home Loans
Excerpt: "In the midst of the mortgage meltdown, some lenders are actually rooting for foreclosures: investors who make mortgage loans with their IRAs. Through a little-known tool known as a self-directed individual retirement account, individuals can pursue a wide variety of investments, from real estate to businesses. Now, at least several thousand people are trying to goose their retirement savings by using self-directed IRAs to invest in mortgages, according to companies that promote the strategy." (The Wall Street Journal Online)
Determining the Size of Your Nest Egg
Excerpt: "It is true, as proponents of do-it-yourself retirement plans such as 401(k) plans and individual retirement accounts argue, that faithful saving and investing over many years can produce a nest egg large enough to support a comfortable old age and perhaps even an inheritance. But how much is enough? Am I investing properly? Am I on track to reach my goal? These are key questions facing today's workers, and, as it turns out, even the experts cannot agree on the answers." (The Washington Post; free registration required)
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Links to Items on Executive Comp, Benefits in General
Overview: 409A Update: IRS Extends Documentary Compliance Deadline for Deferred Compensation Plans
Excerpt: "IRS Notice 2007-78, released September 10, 2007, announces several significant developments regarding Code Section 409A, covering nonqualified deferred compensation plans, broadly defined to include any arrangement that defers compensation more than 2-1/2 months after the year in which it is earned." (Thelen Reid Brown Raysman & Steiner LLP)
Overview: IRS Provides Limited Additional Relief Under IRC Section 409A (PDF)
1 page. Excerpt: "[T]he Notice announces that the IRS and Treasury anticipate establishing a limited voluntary correction program for operational errors under Code section 409A in the near future and says that the transition period regarding rules for certain funded arrangements under Code section 409A(b) will not be extended." (Sutherland Asbill & Brennan LLP)
Overview: New IRS Guidance Provides Only Limited Relief from Looming Section 409A Deadline (PDF)
2 pages. Excerpt: "Even where Notice 2007-78 provides relief -- from plan documentation requirements -- that relief is limited. Although a plan document will not be required to specify many of the details mandated by the Final Regulations until December 31, 2008, plans must still designate in writing, by December 31, 2007, a Section 409A compliant time and form of payment for deferred compensation" (Seyfarth Shaw LLP)
Overview: Deferred Compensation and Section 409A: Actions Still Required in 2007 Despite New IRS Transition Relief
Excerpt: "The Notice requires that Section 409A-compliant time and form of payment provisions must be adopted as to each nonqualified deferred compensation plan on or before December 31, 2007." (O'Melveny & Myers LLP)
Overview: IRS Provides Certain Relief Under Section 409A - Documentation Deadline Extended (PDF)
1 page. Excerpt: "The IRS has just issued Notice 2007-78, which provides transition relief and additional guidance on the application of Section 409A to nonqualified deferred compensation plans and programs." (Buck Consultants)
ERISA Advisory Council Announces Meetings for Sept. 18-20
Excerpt: "The Advisory Council on Employee Welfare and Pension Benefit Plans (also known as the ERISA Advisory Council) and its three working groups will meet September 18 through 20, 2007, at the U.S. Department of Labor, 200 Constitution Ave. NW, Room N4437 A-C, in Washington, D.C." (Wolters Kluwer Law & Business)
Overview: Extension of Section 409A Documentation Compliance Deadline
Excerpt: "[T]he extension is not available for all Section 409A amendments, and it generally does not apply to the limited Section 409A transition relief available in 2007. Employers and executives who would like to take advantage of the transition relief provisions must do so before the end of the year. In addition, irreversible design decisions and certain plan documentation amendments must still be completed in 2007." (Ballard Spahr Andrews & Ingersoll, LLP)
Without Planning, Health Care Costs Can Wreck Retirement
Excerpt: "Most of us will be covered by Medicare and not much else. And while that coverage is valuable, by itself it isn't going to protect us from the ice-cold reality of rising health-care costs. The Employee Benefit Research Institute estimates that Medicare covers only 51 percent of expenses associated with health-care services for most people, and it doesn't kick in until age 65." (The Washington Post; free registration required)
Newly Posted Events
Qualified Plan Beneficiary Rules and Issues eSeminar
Nationwide on December 11, 2007
presented by McKay Hochman Co., Inc.
Terminating 401(k) and Other Defined Contribution Plans eSeminar
Nationwide on November 28, 2007
presented by McKay Hochman Co., Inc.
The Emerging Individual, Retail Market Building Strategies and Winning Competencies to Thrive as the Health Care Market Shifts
in California on October 11, 2007
presented by Healthcare Web Summit
Newly Posted Press Releases
New Book Dispels Executive Compensation Myths
Watson Wyatt
U.S. Department of Labor Announces Rules On Selecting Annuity Providers For Benefit Distributions From Pension Plans
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
U.S. Labor Department Obtains Judgments Involving Southfield, Mich., Business 401(k) And Pension Plan Funds
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Small Business Owners Say Healthcare System Needs to Change
Wells Fargo
Mercer Launches New Global Brand Initiative Reflecting Expanded Business and Simplifies Its Name to "Mercer"
Mercer
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Handy Links:
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