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| September 17, 2007 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
Today's sponsor is ASPPA
(Click on company name or banner to learn more.)
| 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
Pension Payouts Favor Young, Senior Delta Pilots ComplainExcerpt: "[Judson 'Jake' Holmes], who turns 60 this month and has almost 30 years with Delta, flies his last trip this week before retiring. By federal law, the mandatory retirement age for pilots is 60. He and other senior pilots argue that the formula ALPA used to divide the cash and stock awards unfairly forced them to forfeit part of their share of the Delta settlement. It requires them to give up part of their share if they turn 60 before the labor contract containing the concessions becomes due for renegotiation in 2010." (The Atlanta Journal-Constitution; free registration required)
Market Chaos Testing Pension Managers
Excerpt: "Defined-benefit pension plans have spent the last few years recovering from the collapse of the tech bubble. Now plan sponsors are watching as the credit crunch undermines not only equity prices, but also the alternative assets that many plans have piled into, like private equity and hedge funds." (Financial Week; free registration required)
Compliance Rule Summaries/Analysis/Filed Comments
PSCA Comments on HR 3185, The 401(k) Fair Disclosure for Retirement Security Act of 2007 (PDF)6 pages. Excerpt: "Unfortunately, the 401(k) Fair Disclosure for Retirement Security Act of 2007 fails to meet PSCA's criteria for simplicity, cost sensitivity, or flexibility. [W]e believe that Congress should wait to examine the DOL's final efforts before acting. In fact, Congressional action will likely result in delaying the regulatory reforms already underway at the DOL." (Profit Sharing/401(k) Council of America)
Automatic 401(k) Overview for Employers
Excerpt: "Some employers have taken over the wheel and helped their employees put their retirement plans on 'autopilot.' The simple approach is an 'automatic 401(k)' sometimes called an autopilot plan. Employers automatically enroll new employees in their 401(k) plan as soon as they become eligible while giving them the opportunity to opt out." (AARP)
Overview: Statutory Eligibility Rule and Rehires
Excerpt: "How does the statutory eligibility rule (one year and 1,000 hours of service) apply when an employee works 1,000 hours, leaves before completing 12 months of service, and is then rehired? The answer depends directly on when the individual is rehired. The [target page] fact set and examples will clarify the rules." (McKay Hochman Co., Inc.)
Overview: Final 403(b) Regulations Require Employer Action (PDF)
5 pages. Excerpt: "[T]he regulations introduce or explain a number of rules which create significant new responsibilities for employers, and which will require employers to amend and update their 403(b) plans and to establish or revise administrative procedures for complying with Section 403(b)." (Dechert LLP)
Overview of New 403(b) Transfer Rules
Excerpt: "New 403(b) regulations set to go into effect January 1, 2009 will impose new rules on the transfer of 403(b) money. 'Old style' outside-of-plan 90-24 transfers will not be permitted after September 24, 2007. Note: New regulations are still being interpreted and this story represents our best understanding of transfer rules now." (403bwise)
ICI Letter to Treasury Re: Final Regulations Under Code Section 403(b)
Excerpt: "On behalf of Institute members, who offer investments and provide services to 403(b) participants, we write to request a delayed effective date with respect to one aspect of the regulations - the elimination of transfers and exchanges made pursuant to Revenue Ruling 90-24. We also seek certain additional guidance on several issues relating to the regulations." (Investment Company Institute)
Practitioners Call for Careful Implementation to Avoid Standard Termination Timing Traps
2 pages. Click on the top link in the right-hand column of the target page. Excerpt: "The Pension Protection Act's changes to the minimum lump-sum valuation rules need to be carefully implemented in the context of standard terminations, practitioners told BNA Sept. 12. . . . Although PBGC rules permit benefit reductions based on a post-termination amendment to the extent the amendment is necessary to maintain a tax-qualified status, PBGC in a number of standard termination audits concluded that [GATT lump-sum amendments] were adopted too late for Title IV purposes, even though they were timely for plan qualification purposes." (Keightly & Ashner LLP)
Fifth Circuit Provides Guidance Regarding Application of PSLRA Scienter Pleading Standards (PDF)
3 pages. Excerpt: "The Fifth Circuit recently issued a decision applying Tellabs, Inc. v. Makor Issues & Rights, Ltd., 127 S. Ct. 2499 (2007), as to the sufficiency of scienter allegations under the pleading requirements of the Private Securities Litigation Reform Act ('PSLRA'). See Central Laborers' Pension Fund v. Integrated Electrical Services Inc., No. 06-20135 (5th Cir. Aug. 21, 2007)." (Haynes and Boone, LLP)
Before Taking Distributions from Roth 401(k) Plans, Know What the IRS Has to Say
Excerpt: "Roth 401(k) contributions are taking off, especially since the Pension Protection Act of 2006 made the accounts permanent. But once your clients have invested in Roth 401(k)s, how do they get the money out or roll it into Roth IRAs? When will distributions be qualified and tax-free? The IRS answered these questions in the final Roth 401(k) and 403(b) distribution regulations, effective April 30, 2007. These regulations generally apply to tax years beginning Jan. 1, 2007." (Financial Planning and SourceMedia, Inc.)
Preparing for 2008 -- PPA Rules Affecting DB Lump Sums
Excerpt: "In this article, we review the key PPA changes affecting DB lump sum payments, the areas where guidance is needed, and some strategies sponsors may want to consider in preparing for 2008." (JPMorgan)
Overview of GAO Investigation of Fiduciary Practices (PDF)
Page 6 of 10 pages. Excerpt: "As a part of their investigation, the GAO interviewed Fred Reish concerning his experience with plan sponsors, providers and advisers and his insights into common fiduciary practices. The discussions covered both those areas in which fiduciaries were generally doing a prudent job and those areas in which fiduciaries were less attentive." (Reish Luftman Reicher & Cohen)
Employee Ownership Update for September 14, 2007
NCEO Executive Director Corey Rosen discusses IRS Notice 2007-78, delaying compliance with certain Section 409A deferred compensation rules, which, among other things, affect various equity compensation plans; a survey finding that 15% of Inc. 5000 companies plan to sell to an ESOP; and the growth of employee ownership in South Africa. (National Center for Employee Ownership)
Trends; Surveys; Research
Streamlining Retirement Accounts - Less Can Definitely Be MoreExcerpt: "If it is common for today's work force to switch jobs voluntarily or involuntarily, what is the side effect of this cultural shift? For starters, many people find that they have retirement plan accounts and IRAs scattered among multiple custodians, such as banks, investment companies and former employers. It's challenging to keep track of assets that are so widely scattered." (TheReporter.com)
Few Alternatives to Company's Bad Retirement Plan
Excerpt: "While many companies have terrific savings plans with abundant options and outstanding funds, some cheap out and give workers the 'benefit' of a plan without providing a program that can truly benefit them." (The Philadelphia Inquirer; free registration required)
Dual-Career Couples: Who Retires When? From Financial Viewpoint, Staggered Retirement Works Best
Excerpt: "For some couples, leaving the workforce at different times offers greater financial security. It gives one spouse time to earn more and serves as a hedge against uncertain financial markets. It can also provide health insurance for the retired partner if he or she is not yet 65 and thus eligible for Medicare." (The Christian Science Monitor)
To Spend Retirement Income or the Assets?
Excerpt: "It seems simple enough. When it comes time to live off your retirement savings, it would seem to make sense to spend without chipping away at the nest egg itself. Instead, you would want to switch your portfolio to income-producing investments and live off the income. That way you would have money for expenditures and your investments would remain whole and protected. Turns out it's not that simple." (The Washington Post; free registration required)
Legal Considerations When Implementing Phased Retirement Plans
Excerpt: "In light of the legal uncertainties, employers considering a phased retirement program should consult actuaries and legal counsel. Benefit programs, particularly defined benefit plans, should be reviewed to determine what actions employers will take to comply with legal requirements and make their phased retirement program successful." (Employee Benefit News; free registration required)
Policy; Opinion; Advocacy
Senate Panel Considers How Tax Hike on Carried Interest Would Affect Pension Investment ReturnsExcerpt: "At a September 6, 2007 hearing before the Senate Finance Committee (SFC), several experts evaluated whether an increase in the way 'carried interest' is taxed would adversely affect pension plan participants." (Wolters Kluwer Law & Business)
Editorial: A Suspicious Disappearance - A Vital Piece of New York Pension Fund Evidence
Excerpt: "Anybody who knows anything about governments realizes that when one person controls a large pot of money, there is bound to be trouble. So it should come as no surprise that New York's attorney general, Andrew Cuomo, has begun a major investigation into the way the state's $154 billion pension fund was managed by former Comptroller Alan Hevesi." (The New York Times; free registration required)
Links to Items on Executive Comp, Benefits in General
Kentucky Federal Court Requires Arbitration of USERRA Claim
Excerpt: "A pair of federal district courts have held that the statutory language and legislative history of the statute indicate clearly that employees cannot be compelled to arbitrate their USERRA claims. The Fifth Circuit has held the opposite. The U.S. District Court for the Western District of Kentucky has just sided with the Fifth Circuit, holding that an optometrist deployed to Afghanistan can be compelled to arbitrate his claims that employer demoted him because of his military service." (Workplace Prof Blog)
Overview: Limited Section 409A Relief, but Action Still Required Before Year-End
Excerpt: "This Client Alert summarizes the key impacts of Notice 2007-78 and, more importantly, what Notice 2007-78 does not impact. The alert also outlines why attention to compliance with Section 409A well before December 31, 2007, is still critical." (Wilson Sonsini Goodrich & Rosati)
Remands to Plan Administrators - A List of Circuit Courts of Appeal Decisions
Excerpt: "[The target page presents] a series of notes on authorities on the question of when district court orders remanding cases to plan administrators are final and appealable. After a listing of seminal cases, a brief overview follows setting forth possible justifications for finding such orders final and appealable." (Health Plan Law blog by Attorney Roy F. Harmon III)
Overview: Limited Relief under Code Section 409A, but Some Decisions Still Must Be Made in 2007 (PDF)
3 pages. Excerpt: "As a counterweight to the . . . extension for plan amendments, Notice 2007-78 requires that each affected plan or arrangement must designate 'in writing' on or before December 31, 2007 a compliant time and form of benefit payments attributable to amounts deferred as of January 1, 2008." (Dow Lohnes PLLC)
Overview: IRS's Partial Delay of 409A Requirements
Excerpt: "In Notice 2007-78, the IRS announced an extension to December 31, 2008, to amend documents to conform to the requirements of Section 409A. The previous deadline was December 31, 2007. However, the effective date of the regulations is not extended and, therefore, full compliance with the regulations is mandatory as of January 1, 2008." (Blank Rome)
Retirement Anxiety -- Emotional Issues, Financial Issues and the Importance of Human Capital
Excerpt: "Bob Veres, publisher of Inside Information, sees retirement as a brief historical anomaly. 'The whole idea of retirement as a total secession from work -- as opposed to making work optional -- may be an artifact of a single generation. Someday we'll look back and say that this was a waste of human capital, and a very poor way to keep people active and relevant during their later years.'" (Financial Planning and SourceMedia, Inc.)
Newly Posted Events
2007 SPARK Forum
in Florida on November 4, 2007
presented by SPARK - the Society of Professional Administrators and Recordkeepers
Benefits Legislative Update
in California on October 9, 2007
presented by International Society of Certified Employee Benefit Specialists, Northern California Chapter
DB Answers with Hal Tepfer, MSPA,FSA,EA and Scott Boulay, ASA,EA, MAAA
in Massachusetts on September 26, 2007
presented by ASPPA Benefits Council (ABC) of New England
Dependent Eligibility: Consider This Before Your Next Open Enrollment Teleweb
Nationwide on September 27, 2007
presented by International Foundation of Employee Benefit Plans
Getting It Right -- Know Your Fiduciary Responsibilities - Free Seminar
in Maine on October 16, 2007
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
IRS and DOL to Present at West Virginia Bar Association Employee Benefits Conference
in West Virginia on October 4, 2004
presented by West Virginia Bar Association
New Rules for Tax-Exempt and Governmental Plans: 403(b) and Beyond
Nationwide on October 11, 2007
presented by ABA Joint Committee on Employee Benefits
Recent Employer Survey Results: New ideas, trends, benchmarking
in Maryland on October 4, 2007
presented by Worldwide Employee Benefits Network -- Baltimore chapter
Newly Posted Press Releases
PBGC FY2008-2013 Strategic Plan Available For Public Comment
Pension Benefit Guaranty Corporation (PBGC)
PBGC Assumes Union Stamping & Assembly Inc. Pension Plan
Pension Benefit Guaranty Corporation (PBGC)
ExpertPlan Opens First Regional Office
ExpertPlan
Study Says Changing Tax Treatment of Health Benefits Could Mean the End of Employment-Based Coverage
Employee Benefit Research Institute (EBRI)
Invest n Retire Adds Select Rydex ETFs to Platform
Invest n Retire, LLC
Delaware Investments Launches New Collective Trust Products
Delaware Investments
Fidelity and SunGard Enhance Integrated Trading and Custody Platform
Fidelity Investments
Steelworker Retirees to Receive Health Care Benefit Checks
United Steelworkers
"No Worry" from Humana Makes Health Care Costs Predictable for Small Businesses
Humana
A Place for Mom, Nation's Largest Senior Care Referral Service, Fills a Gap in Employee Benefits
A Place for Mom
Groom Law Group Principal William Evans to Serve as Attorney-Advisor in the Office of Benefits Tax Counsel at the U.S. Department of Treasury
Groom Law Group
Countrywide Sued Over Losses In 401k Retirement Plan
SFGate.com
Advisors Access 401k Platform Introduced
Capital Directions Investment Advisors
Newly Posted or Renewed Job Openings
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Pension Administrator
for Benefit Strategies, Inc.
in CA
OmniPlus Consultants
for Chesapeake Benefit Partners
in ANY STATE
Actuarial Testing Director - Defined Benefits
for Fidelity Investments
in NY
Staff Attorney
for Dallas Police & Fire Pension System
in TX
Employee Benefits Associate Washington Office
for Morgan, Lewis and Bockius LLP
in DC
Health and Benefits Analyst
for Mercer
in MA
Client Service Consultant - Regional
for Standard Insurance Company
in PA
Compliance Pension Administrator
for Staffing Agency
in MA, RI
Information Systems Specialist
for Access Retirement Services, LLC
in TN
Actuary - Retirement Plans
for Standard Insurance Company
in OR
National TPA Account Manager
for Transamerica Retirement Services
in GA, IL
In-House Counsel, Senior Benefits / ERISA Attorney
for Bristol-Myers Squibb Company
in NJ
Client Service Manager
for Fidelity Investments
in TX
Plan Document Specialist
for Kravitz - Louis Kravitz & Associates
in ANY STATE, CA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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