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| September 18, 2007 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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New Compliance Rules; News
Doctor Assessed over $170K in Civil Penalties for not Providing Plan InfoExcerpt: "The U.S. District Court for the Middle District of Alabama assessed a civil penalty of $179,960 against a doctor whom it determined never provided pension plan information and documents to a former associate in his practice." (PLANSPONSOR.com; free registration required)
Dynegy Reaches $9.98 Million Settlement in ERISA Suit
Excerpt: "A Houston law firm said [yesterday] that Dynegy Inc. (DYN) agreed to settle a class-action lawsuit with more than 1,900 retirement plan beneficiaries and participants for $9.98 million. Law firm McClanahan & Clearman said the settlement was approved by a Houston judge Friday." (CNNMoney.com)
Compliance Rule Summaries/Analysis/Filed Comments
Overview: DOL's Proposed Regs Regarding Selection of Annuity Providers by Individual Account Plan FiduciariesExcerpt: "EBIA Comment: Sponsors and administrators of 401(k) plans and other individual account plans that offer annuities as a distribution option must keep in mind that the selection of an annuity provider is subject to ERISA's fiduciary standards. Although the regulations are only proposed at this point and overlap to some extent with the guidance in Interpretive Bulletin 95-1, fiduciaries of such plans will want to familiarize themselves with the regulations and their preamble." (Employee Benefits Institute of America)
Overview: Final Regs Affecting Sec. 403(b) Plans Covering Employees of Tax-Exempt Organizations, Public Schools and Churches (PDF)
Pages 1-3 of 7 pages. Excerpt: "As provided in the proposed regulations, the final regulations do not permit an endowment contract, or a life, health, accident, property, casualty or liability insurance contract to constitute an annuity contract for purposes of Section 403(b). However, the final regulations provide that this rule does not apply to contracts issued before September 24, 2007." (Trucker Huss)
Preparing for 2008 -- IRS Proposes PPA Benefit Restriction Rules
Excerpt: "On August 28, 2007, IRS proposed regulations detailing the application of the PPA benefit restrictions to underfunded plans. Here, we review the proposed regulations and their implications." (JPMorgan)
Recharacterization: What It Is (and What It Is Not), or, Recharacterization Made Simple
Excerpt: "The federal government actually allows taxpayers to change their minds when it comes to certain aspects of funding an IRA. How nice is that? . . . So, how do you switch from the already-funded traditional IRA to the wish-I-would-have-funded Roth IRA or vice versa? How can an IRA owner undo all or part of a conversion? You guessed it -- recharacterization." (Wolters Kluwer Law & Business)
Trends; Surveys; Research
Index Funds Play Limited Role in 401(k)sExcerpt: "Index funds are playing an increasingly limited role in many 401(k) plans -- and that may be putting a crimp in workers' retirement savings, according to new research. Most investment options added to 401(k) plans are pricier actively managed funds rather than cheaper index funds, according to a recent study by researchers at the University of Illinois at Urbana-Champaign and the Federal Reserve Board." (The Wall Street Journal Online)
Executive Summary of JPMorgan's Ready! Fire! Aim? White Paper
Excerpt: "We believe that a prudent goal for plan sponsors is to help as many participants as possible achieve retirement income security. We see this as a measurable goal, where success is defined by the proportion of responsible, real-world participants that arrive at retirement with 401(k) savings sufficient to purchase -- whether they choose to or not -- a lifetime annuity replacing roughly 40% of their working income." (JPMorgan)
How Some Target Date Fund Designs Are Missing the Mark on Providing Retirement Security to Those Most in Need
44 pages. Excerpt: "This paper presents the results of our comprehensive research on the changing obligations of plan sponsors, the savings and investment behavior and responsibilities of participants, and the expanding role of default investment programs, in particular target date retirement funds." [Here's a link to the executive summary.] (JPMorgan)
The Most Important Decade for Your Retirement
Excerpt: "There are and will always be demands on your money. And those demands make it very difficult to reliably contribute to a retirement plan throughout your entire working career. If you could carve out a very special decade of your life, though, and really make your retirement your priority for that decade, it just might provide all the savings you need. . . . That decade is your 30s." (The Motley Fool)
Boomer Retirement Affected by Financial Ties to Parents and Children
Excerpt: "Findings of Ameriprise Financial's Money Across Generations study indicate that, while financial generosity towards the younger and older generations is a hallmark of baby boomers, many fail to recognize how it impacts their ability to save for retirement." (PLANSPONSOR.com; free registration required)
Policy; Opinion; Advocacy
Tax Bills Could Harm Pension AssetsExcerpt: "The House and Senate are considering legislation that would substantially increase taxes on private equity firms -- a move that could hurt pension funds that profit from PE turnarounds." (Human Resource Executive Online; free registration required)
Links to Items on Executive Comp, Benefits in General
Hearing About Retired NFL Players Will Produce Bluster Aplenty
Excerpt: "[P]oliticians on the Senate Committee on Commerce, Science and Transportation will spend a couple of hours on Tuesday posturing and declaiming on the plight of retired NFL players, and what the league and the players union are doing for them." (ESPN.com)
Overview: IRS Provides One-Year Extension of Deadline for 409A Document Compliance
Excerpt: "Following the expression of concern by practitioners that compliance with the original deadline of December 31, 2007 would be problematic, the IRS has announced a one-year extension of the deadline for documentation compliance under Code Sec. 409A." (Wolters Kluwer Law & Business)
The Principal 10 Best Companies for Employee Financial Security -- 2007 Winners
Excerpt: "On September 17, 2007, The Principal Financial Group® announced the 2007 winners of The Principal® 10 Best Companies for Employee Financial Security. The independent panel of judges -- all experts in employee benefits -- praised the winners for their consistent, holistic approach to providing a broad range of benefits. Judges also noted increased trends toward wellness initiatives, face-to-face benefits and financial guidance at the worksite and continued commitment to auto savings tools." (Prudential Financial)
Retirement Benefits 'Pay' for Some Top CFOs
Excerpt: "It pays to stick around. At least that's what new Securities and Exchange Commission-mandated information about pension and deferred-compensation plans would suggest." (Financial Week; free registration required)
Overview: Limited Relief and Additional Guidance Under Code Section 409A (PDF)
Excerpt: "Notice 2007-78 states that taxpayers can continue to rely on a reasonable, good faith interpretation pending further guidance. The Notice also provides that as to 'grace period assets' (i.e., certain assets set aside for nonqualified deferred compensation before March 21, 2006), taxpayers still have until December 31, 2007 to bring deferred compensation plans into compliance with the rules noted above, but no additional extension of time is being granted." (Sutherland Asbill & Brennan LLP)
Overview: Limited Deferred Comp Relief - but Employers Must Still Take Some Actions by December 31, 2007
Excerpt: "Employers and other service recipients should finalize action items and timing for meeting the deadline to adopt documents that comply with Section 409A, including: identifying all plans and agreements covered by Section 409A as soon as possible; properly designating compliant payment timing and form provisions before the January 1, 2008 deadline; adopting all necessary amendments to comply with the requirements of Section 409A, the final regulations, the notice and other guidance no later than the December 31, 2008 deadline . . . ." (Perkins Coie LLP)
Overview: Extension of Section 409A Document Compliance Due Date; Action Required by December 31, 2007 (PDF)
6 pages. Excerpt: "Notice 2007-78 extends the reasonable, good-faith standard in this area until the IRS issues further guidance. However, as to grace period assets, income inclusion under section 409A will be required as of January 1, 2008 if the plan is not in conformity with a reasonable, good-faith interpretation of section 409A(b) on December 31, 2007." (Morgan, Lewis & Bockius LLP)
Overview: Limited Extension of Section 409A Compliance Deadline (PDF)
2 pages. Excerpt: "The Notice does not extend beyond December 31, 2007 the deadline for documenting or amending a Plan to specify the time and form of payments. As of December 31, 2007, all Plans must meet the written document requirements regarding times and forms of payment in accordance with the requirements of the Notice." (Haynes and Boone, LLP)
Newly Posted Events
Business and National Health Care Reform - Webcast
Nationwide on September 19, 2007
presented by KaiserNetwork.org
Nonqualified Deferred Compensation Plans After The §409A Final Regs - Seminar
in Virginia on September 26, 2007
presented by WEB (Worldwide Employee Benefits Network) Washington Chapter
Newly Posted Press Releases
McClanahan & Clearman Announces $9.975 Million Settlement in ERISA Litigation
McClanahan & Clearman, L.L.P.
As Obesity Rates Continue to Rise, Is the Workplace a Source of or Solution to Unhealthy Lifestyle Habits?; A Survey Released Today Found That 72 Percent of American Workers Eat an Unhealthy Snack at Least Once a Week While at Work
Nationwide Better Health
Merrill Lynch Develops New U.S. Pension Indices
Merrill Lynch
Newly Posted or Renewed Job Openings
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Consultant
for Kravitz - Louis Kravitz & Associates
in CA
Sales & Marketing - Vice President (VP)
for Raymond James Financial, Inc.
in FL
New Business Account Manager
for Standard Insurance Company
in PA
Senior ERISA Consultant
for Tofias PC
in MA
401(k) Plan Administrator
for Tofias PC
in MA
Benefit Analyst
for Kibble & Prentice
in WA
Retirement Plan Administrator
for Tegra Financial Partners
in GA
Defined Benefit Plan Senior Administrator/Consultant
for Tegra Financial Partners
in GA
Retirement Plan Specialist
for Diversified Investment Advisors
in VA
Administrator/Recordkeeper
for Scottsdale Pension Systems, Inc.
in AZ
Employee Benefits / ERISA Associate
for Cincinnati Law Firm
in OH
Client Service Consultant - Regional
for Standard Insurance Company
in CA
Client Service Consultant - Regional
for Standard Insurance Company
in MI
Communications Consultant
for T Rowe Price
in MD
Compliance Analyst
for T Rowe Price
in MD
Pension Analyst
for T Rowe Price
in MD
OmniPlus Users
for Casco Bay Benefits Group
in ANY STATE
Paralegal - Employee Benefits Practice
for Menke & Associates, Inc.
in CA
Client Services - Account Manager
for ExpertPlan, Inc.
in NJ
Implementation Specialist
for ExpertPlan, Inc.
in NJ
Client Relationship Manager
for PensionTrend
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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