BenefitsLink |   |
| September 19, 2007 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
Today's sponsor is RELIUS Education - Seminars and Conferences for Pension Professionals
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| New Fall Schedule |
| Stay on top of the pension world with Relius Education from SunGard. Learn about PPA 2006, new 409A regulations, new plan design options, final 403(b) regulations, the latest Washington buzz, and more. September - December. For more information and to register.
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New Compliance Rules; News
GM Seeks Shift to 401(k) Pensions for New EmployeesExcerpt: "General Motors Corp. would give new union members 401(k)-style retirement plans instead of traditional pensions for the first time under a proposed United Auto Workers contract, people with knowledge of the talks said. GM's push toward individual investments instead of a guaranteed monthly check means the biggest U.S. automaker wants to scale back three landmark gains by the UAW in the past half- century: a fixed pension, company-paid health care and an annual cost of living raise." (Bloomberg News)
Court Throws Out Three Cash Balance Challenges
Excerpt: "With one eye cast toward a landmark federal appellate decision declaring that cash balance plans were not age discriminatory, a district court judge has thrown out similar complaints against three such pension programs. In reaching his decision to dismiss discrimination complaints against the cash balance plans, U.S. District Judge J. Phil Gilbert of the U.S. District Court for the Southern District of Illinois said he was bound by the 7th US Circuit Court of Appeal's decision in Cooper v. IBM Personal Pension Plan . . . ." (PLANSPONSOR.com; free registration required)
Union Pension Fund Embezzlements 'Epidemic,' Analyst Says
Excerpt: "According to a report released Monday by the department's Office of Labor-Management Standards (OLMS), 84 indictments for corruption have been issued thus far in 2007, leading to the conviction of 108 union officials." (CNSNews.com)
Study Touts CalPERS' Benefit to Economy
Excerpt: "Investments by the California Public Employees' Retirement System, the nation's largest public pension fund, spurred $15.1 billion in economic activity in California in 2006, creating more than 124,000 jobs, a new study found. The study, to be released today at a California pension fund conference in Los Angeles, found that the $247-billion fund created more economic activity last year than industries including machinery manufacturing, oil and gas extraction, and amusements, gambling and recreation." (Los Angeles Times)
Second Bill on Mutual Fund Fee Disclosure Introduced in House of Representatives
Excerpt: "A second bill, The Mutual Fund Fee Reform Act, aimed at mutual fund fee disclosure rules has been introduced in the U.S. House of Representatives. The bill, sponsored by Rep. Dennis Moore (D-KS) and Rep. Mike Castle (R-DL), would direct the U.S. Securities and Exchange Commission (SEC) to revise regulations to require more detailed 12b-1 fee disclosure to fund investors." (ICMA-RC)
DROP, the Alabama Retirement Plan, Gives Big Boost to Highest Paid
Excerpt: "It was billed as a way to address teacher shortages and keep veteran educators and seasoned state employees on the job rather than take early retirement. Yet, five years after state lawmakers created DROP, the Deferred Retirement Option Plan, no one can say whether it stopped the loss of teachers and experienced principals. What is not in doubt is that DROP has resulted in big paydays for a sizable number of those who entered into the program already among the state's highest paid . . . ." (The Birmingham News; free registration required)
Compliance Rule Summaries/Analysis/Filed Comments
PSCA's Testimony Before the ERISA Advisory Council Working Group on Participant Benefit Statements (PDF)5 pages. Excerpt: "We would be amiss to talk about employee benefit statements without addressing the issue of plan fee disclosure to participants. A possible outcome of either a DOL or Congressional directive is that the benefit statement will be utilized by plan sponsors to inform participants about plan fees." (Profit Sharing/401(k) Council of America)
Should You Provide 401(k) Investment Advice?
Excerpt: "With the enactment of the Pension Protection Act of 2006 (PPA), plan sponsors were given a freedom they didn't have before. The legislation . . . enables plan sponsors to offer investment advice to employees without exposing themselves to liability for the outcome of that advice. However, in order to avoid fiduciary liability, plan sponsors still must follow rules and regulations regarding the selection of a provider/advisor." (Business & Legal Reports, Inc.)
Overview: 403(b) Funds - Tax-Free Transfers Under the Final Regulations (PDF)
3 pages. Excerpt: "After reviewing the final regulations and discovering some ambiguities under the guidance relating to the tax-free transfer rules, representatives from the NTSAA spoke with both IRS staffers and Treasury officials in an attempt to discover what they had intended with respect to the effective date of the new tax-free transfer provisions. Based on those discussions, this bulletin was prepared and outlines the changes in tax-free transfer rules exclusively, as that seems to be the area of most immediate concerns . . . ." (National Tax Sheltered Accounts Association)
Testimony Before the ERISA Advisory Council's Working Group on Automated Benefit Statements (PDF)
8 pages. Testimony of Adam C. Pozek of the Sentinel Benefits Group, Inc. before the ERISA Advisory Council's Working Group on Automated Participant Benefit Statements in Defined Contribution Plans on behalf of Sentinel Benefits Group, Inc, ASPPA and CIKR on September 18, 2007. (American Society of Pension Professionals & Actuaries)
Testimony on Behalf of American Benefits Council Before ERISA Advisory Council Working Group on Benefits Statements (PDF)
10 pages. Testimony of Kyle Brown, Retirement Counsel, Watson Wyatt Worldwide, on behalf of the American Benefits Council at the Hearing on Participant Benefit Statements held by the Working Group on Participant Benefit Statements of the ERISA Advisory Council on Employee Welfare and Pension Benefit Plans, U.S. Department of Labor, Washington, DC on September 18, 2007. (American Benefits Council)
SEC Approves FINRA's Variable Annuities Rule (PDF)
3 pages. Excerpt: "The SEC announced on Monday September 10, 2007, that is has approved a new Financial Industry Regulatory Authority (FINRA) rule designed specifically to address broker-dealers' sales practices regarding purchases and exchanges of deferred variable annuities." (Alston & Bird LLP)
Tax Deduction for ESOP Was Twice As Nice in IRS Private Letter Ruling
Excerpt: "Conventional wisdom says that a plan sponsor cannot generally deduct more that 25% of eligible compensation to a qualified retirement plan. But 'generally' means in ERISA terms that there are exceptions. And here's a very interesting one. A C corporation - let's call it 'C' for short - that sponsored an ESOP wanted to deduct more than 25% of compensation. In fact, it wanted to make three types of contribution." (The Retirement Plan Blog)
New edition of ESOPs and Corporate Governance
The NCEO presents excerpts from the new edition of its book on ESOPs and corporate governance, which now includes a chapter on the role of the board in ESOP companies as well as various updates. (National Center for Employee Ownership)
Trends; Surveys; Research
Target Date Funds Favored As Qualified Default Investment Alternatives, According to StudyExcerpt: "The QDIA most likely to be used by the survey respondents was a target date fund (70.6%), followed by a target risk fund (17.6%). Managed accounts would not be used by any of the survey respondents as a QDIA, and 11.8% had not yet decided what QDIA would be used." (Wolters Kluwer Law & Business)
The Russell Retirement Report: 401(k)s -- The Launch of Version 2.0
Excerpt: "So what does the 401(k) plan version 2.0 look like? Perhaps more like a traditional defined benefit (DB) pension plan. DC plans are leveraging some of the strong characteristics of DB plans -- like automatic participation or asset allocation set by investment professionals. This report outlines what we view as 15 key features of the 401(k) plan version 2.0." (Russell Investment Group)
Automatic IRAs Present Risks and Opportunities
Excerpt: "Uncle Sam wants you to save for retirement. And, if a new bill makes it through Congress, he's going to do his best to make sure you do. The bill, introduced in both the House and Senate, would require most employers to enroll employees in IRAs - automatically deducting money from their employees' paychecks and depositing it into a retirement account, unless workers explicitly opted out." (The Christian Science Monitor)
The Ultimate No-Brainer Way to Boost Savings
Excerpt: "Companies will soon have more reason to do something fairly simple that could boost their workers' retirement income from 401(k)s by 50 percent or more - and workers won't have to do anything but stay out of the way. Come January, certain provisions of the Pension Protection Act (PPA) will go into effect that will give employers added incentive to implement automatic enrollment and automatic 'contribution-escalation' features for their 401(k) plans." (CNNMoney.com)
Working Paper: Tax Issues and Life Care Annuities
Excerpt: "A life care annuity combines an immediate life annuity with long-term care insurance. We review empirical evidence supporting the claim that the marketing of a life care annuity will produce a lower total price for the combined product, less adverse selection in the individual annuity market, and greater availability of long-term care insurance. This paper also discusses the institutional, regulatory, and tax aspects of a life care annuity, including its future tax treatment under the recently enacted Pension Protection Act of 2006." (Pension Research Council; registration required to download fulltext of paper)
Policy; Opinion; Advocacy
Opinion: 401(k) May Not Pay Off in Long RunExcerpt: "If you're one of those millions of Americans who were forced or cajoled by employers into giving up an old-fashioned defined benefit pension plan for the excitement of a 401(k), are you enjoying the ride? 'Don't worry,' you're told by the money managers, 'you'll be all right in the long run.' But do they really know how long 'the long run' is?" (Newsday)
Links to Items on Executive Comp, Benefits in General
When Is an Extension Not an Extension? - An Update on 409A Compliance Deadline
Excerpt: "IRS Notice 2007-78 extended the document amendment deadline until December 31, 2008. However, the extension is subject to a significant pre-condition. Generally speaking, the extension will only apply to an arrangement if the time and form of payment for that arrangement are documented before 2008. In other words, employers will still have to make fundamental decisions about their deferred compensation arrangements and make sure required documentation is in place before the end of 2007." (Poyner Spruill)
Experimental Estimates of Compensation Levels/Trends for Workers in the 15 Largest Metropolitan Areas, 2004-05
Excerpt: "This article introduces experimental ECI and ECEC estimates for the 15 largest metropolitan areas in the United States, as ranked by total population in 2000." (U.S. Bureau of Labor Statistics)
Senators Seek Retirement and Health Care Reforms
Excerpt: "The U.S. Senate's top budget overseers on Tuesday joined forces to tackle escalating costs of retirement and health care programs they say threaten to bankrupt the government, but they would wait until after next year's elections for recommendations to be made public." (Reuters via The New York Times; free registration required)
Overview: Requirement for 2007 Actions for 409A Plan Despite Relief from Written Plan Requirement
Excerpt: "In Notice 2007-78, the IRS has extended the December 31, 2007, deadline for complying with the written plan requirement under the final regulations for Code §409A to December 31, 2008. Although the written plan requirement has been delayed, the Notice requires the plan to document in writing certain key 409A compliance provisions by December 31, 2007. In effect, this is a 'mini-document' requirement." (SunGard Corbel LLC)
Newly Posted Events
Coal Sales Contracts and Mining Retiree Health Benefits - Webcast
Nationwide on September 20, 2007
presented by West LegalEdcenter
Death, Old Age, Retirement and Withdrawal: A 2007 Partnership Law Update - Webcast
Nationwide on September 20, 2007
presented by West LegalEdcenter
Executive Compensation Institute: Complying with Section 409A (Part 1) - Webcast
Nationwide on September 20, 2007
presented by West LegalEdcenter
Executive Compensation Institute: Complying with Section 409A (Part 2) - Webcast
Nationwide on September 20, 2007
presented by West LegalEdcenter
Retirement, Deferred Compensation, and Welfare Plans of Tax-Exempt and Governmental Employers - Part 3 - Webcast
Nationwide on September 20, 2007
presented by West LegalEdcenter
Retirement, Deferred Compensation, and Welfare Plans of Tax-Exempt and Governmental Employers - Part 4 - Webcast
Nationwide on September 20, 2007
presented by West LegalEdcenter
Retirement, Deferred Compensation, and Welfare Plans of Tax-Exempt and Governmental Employers - Part 5 - Webcast
Nationwide on September 20, 2007
presented by West LegalEdcenter
Understanding Health FSA Reimbursements: Rules for Substantiation, Debit Cards, and Claims Procedures
Nationwide on October 18, 2007
presented by Employee Benefits Institute of America (EBIA)/Thomson Tax & Accounting
Newly Posted Press Releases
Adam Pozek Testifies On DC Benefit Statement Issues Before DOL On Behalf Of Sentinel Benefits Group, ASPPA & CIKR
ASPPA (American Society of Pension Professionals & Actuaries)
Families USA/Federation Of American Hospitals Announce "Health Care 2008: Presidential Candidate Forums"
Kaiser Family Foundation
Watson Wyatt Data Services' Newest Report Covers Latest Trends in Compensation Policies & Practices
Watson Wyatt Data Services
New BenefitStreet 401(k) Platform to Combine Exchange Traded Funds and Mutual Funds
BenefitStreet, Inc.
Segal Survey Predicts Declines In Trends for Fifth Consecutive Year
The Segal Company
Council Urges Ways and Means Subcommittee to Pass Camp Mental Health Parity Substitute
American Benefits Council
Governor Rendell Announces Plan to Save Taxpayers Money, Protect School Employee Health Benefits
Pennsylvania Office of the Governor
Wal-Mart Announces Improvements to 2008 Health Benefits Package
Wal-Mart Stores, Inc.
Don Trone to Lead Independent Foundation for Fiduciary Studies; Blaine Aikin Named CEO of fi360
Fiduciary360 (fi360)
Medical Travel Today Debuts as Premier Medical Tourism Newsletter Serving All Industry Stakeholders
CPR Strategic Marketing Communications
Newly Posted or Renewed Job Openings
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Compliance Manager, Retirement
for TRI-AD Actuaries
in CA
401(k) & DC Administrator
for Flynn, Shojinaga & Associates, Inc.
in CA
Disability Benefits Analyst
for Standard Insurance Company
in NY
Implementation Project Lead
for Vanguard
in PA
Pension Administration Services Supervisor
for Milliman, Inc.
in TX
Client Relations Manager, Philadelphia, PA
for ING, US Financial Services
in PA
Actuary Practice Leader
for MassMutual Financial Group
in MA
ERISA Compliance Administrator
for MFS/Sun Life Retirement Services
in MA
Administrative Assistant -- New Business Installation
for Transamerica Retirement Services
in CA
Daily Valuation Processor and Participant Services Representative
for Retirement Planners
in VA
401(k) Administrators
for Matthews Benefit Group Inc.
in FL
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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