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| October 3, 2007 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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(a) New Guidance Documents
(None today.)
(b) News
Request for Public Comment on H.R. 3361, a Bill to Make Technical Corrections to the 'Pension Protection Act of 2006'
Excerpt: "Congressman Charles B. Rangel (D-NY), Chairman of the Committee on Ways and Means, today announced that the Committee is requesting comments from the public on H.R. 3361, a bill that would make certain technical corrections to the 'Pension Protection Act of 2006.' The bill was introduced on August 3, 2007." (U.S. House Committee on Ways and Means)
More Victories in the Federal Courts for Cash Balance Plan Sponsors
Excerpt: "The federal courts are continuing to issue decisions validating the legality of cash balance plans and cash balance conversions under the rules in place before the Pension Protection Act (PPA) of 2006 (P.L. 109-280). The Sixth Circuit Court of Appeals recently joined the Third and Seventh Circuits in ruling that cash balance plans are not inherently age discriminatory." (Deloitte via BenefitsLink.com)
(c) Summaries of Guidance; Filed Comments
Overview: Court Permits Plan NRA Based on Service
Excerpt: "The federal district court for the northern district of Illinois recently ruled that defining normal retirement age (NRA) by years of service does not violate ERISA, thereby eliminating the need for a whipsaw calculation." (Watson Wyatt Worldwide)
It Really Can be a Crime to File an Incorrect Form 5500
Excerpt: "Friend of mine had a good question today from an accountant, who wanted to know if there is any penalty for filing Form 5500 with just a little bit of incorrect information. Congress answered this question with 28 U.S.C. 1027, and the 9th Circuit Court of Appeals provides a pretty unequivacol explanation of how this Code section applies to Form 5500." (Pension Protection Act Blog)
(d) Trends, Surveys, Research
Working Paper: The Dynamics of Lifecycle Investing in 401(k) Plans
Excerpt: "Our study of over a quarter-million participants offered [target maturity date (TM) lifecycle] funds shows that sponsor-driven menus do influence adoption patterns. Yet many participants also prove to be active decision-makers, particularly new plan entrants and seemingly less financially literate employees." (Pension Research Council; registration required to download fulltext of paper)
Managed Accounts Not Understood
Excerpt: "Financial services providers and advisors may be losing some managed account business because participants in defined-contribution plans do not have a particularly good understanding of how these investments actually work." (Spectrem Group)
Cost and Communication Issues Hinder Use of Automatic 401(k) Features
Excerpt: "Fidelity Investments recently found that, despite growth in the number of employers adopting automatic 401(k) features, overall uptake is slower than anticipated due to cost and other factors." (Employee Benefit News; free registration required)
Planners Need to Seek Innovative Ways to Help Keep Baby Boomers from Exhausting Their Nest Eggs
Excerpt: "Other than being the start of a leap year, January 1, 2008 may seem like an ordinary New Year's Day. But it will actually be one of the most momentous days in U.S. history. As the brilliantly lighted crystal ball falls in Times Square, the first of 76 million baby boomers will reach the age of 62, ushering in a long-awaited wave of retirements like nothing the nation has ever seen." (Financial Advisor)
Experts Differ on Whether Fiduciary Breach Lawsuits Will Spread or Retrench
Excerpt: "Despite the fact that fiduciaries have exited what one exec describes as the worst period in the history of the market, this is no time for rest. A knee-jerk reaction to the rise of the company-stock fiduciary breach case as well as the rumblings of yet another seam of wide-spread fiduciary malfeasance (i.e. excessive fees) may cause some advisers to reconsider their liability coverages -- fiduciary liability and errors and omissions insurance among them." (Employee Benefit Advisor; free registration required)
(e) Policy, Opinion, Advocacy
A Primer on Plan Fees & Analysis of the 401(k) Fair Disclosure for Retirement Security Act of 2007 (PDF)
6 pages. Excerpt: "[T]he fiduciary has a duty under ERISA to ensure that any expenses of operating the plan, to the extent they are paid with plan assets, are reasonable." (Profit Sharing/401k Council of America)
Opinion: Can We Turn Off Our Emotions When Investing?
Excerpt: "Having watched the way investors have behaved since the Crash of '87, I've come to believe that most human beings are simply not hard-wired to be good investors. In the 1990s, a new kind of economics arose, called behavioral economics, which tried to show that investors weren't so rational after all. . . . It turns out that there is a new discipline called neuroeconomics, which combines biology, psychology and economics and tries to understand why we make the often foolish financial decisions we make." (The New York Times; free registration required)
Opinion: Pensions and Palm-Greasing
Excerpt: "Human frailty aside, the larger lesson here is that the entire public pension model is suspect. The political reaction in New York has been to debate whether a pension 'board,' as most states have, would be more or less accountable than a sole trustee. But it's far from obvious that a board is less prone to political manipulation or self-dealing than a single trustee -- witness the problems in New Jersey, San Diego and elsewhere." (The Wall Street Journal Online)
Links to Items on Executive Comp, Benefits in General
The Supreme Court Outlook for 2007-2008 (PDF)
3 pages. Excerpt: "This term the United States Supreme Court will consider a number of cases that may impact employers and employees. These cases are briefly summarized [on the target page]." (Winston & Strawn LLP)
Overview: Action Required by Dec. 31, 2007 Despite Limited Extension for Written Compliance with Code Sec. 409A (PDF)
4 pages. Excerpt: "The failure to comply with the applicable requirements of Section 409A can result in significant income tax consequences. Generally, vested deferred amounts of the employee, director, or independent contractor will be immediately taxable and will be subject to an additional 20% tax, plus interest. The employer providing the deferred compensation could be subject to penalties if it fails to withhold taxes or report the income." (Powell Goldstein LLP)
Equilar Releases New Studies on Executive 10b5-1 Trading Plans and Clawback Policies
Excerpt: "Equilar, the market leader for executive compensation benchmarking solutions, today published its latest issue of Executive Compensation Trends. This month's issue includes studies on Rule 10b5-1 stock trading plans for executive officers at Fortune 500 companies and clawback policies at Fortune 100 companies." (Market Wire via Human Resource Executive Online; free registration required)
Fast Facts & Figures About Social Security, 2007
Excerpt: "Fast Facts & Figures answers the most frequently asked questions about the programs SSA administers. It highlights basic program data for the Social Security (retirement, survivors, and disability) and Supplemental Security Income programs." (U.S. Social Security Administration)
Bill Seeks Restrictions on COLI Policies
Excerpt: "Corporate-owned life insurance would face new restrictions under a bill sitting in a House subcommittee." (Investment News; free registration required)
Overview: SEC Guidance on Forthcoming Report on 2007 Executive Compensation Disclosures (PDF)
3 pages. Excerpt: "Benchmarks. The Staff will expect companies that benchmark executive compensation against other companies to identify, where material, the benchmark companies, how the issuer used the comparative information, and how decision-making was affected." (Dechert LLP)
Newly Posted Events
Pension Benefit Restrictions under PPA: What Do Employers Need to Know and When Must They Know It?
Nationwide on October 23, 2007
presented by ABA Joint Committee on Employee Benefits
Newly Posted Press Releases
Hewitt Offers Employees Tips to Maximize Benefit Options During Open Enrollment Season
Hewitt Associates LLC
ExpertPlan Develops Private Label 401(k) Program with Priority Pay Payroll
ExpertPlan
Nearly Three-Fourths of Employers Offer Retiree Health Benefits, New Survey Reports
International Foundation of Employee Benefit Plans
Fidelity Launches Innovative Investment Products That Make It Easier To Create Retirement Income That Can Last A Lifetime
Fidelity Investments
Wells Fargo Helps Consumers Measure Retirement Readiness with the 'Retire Secure Index'
Wells Fargo
Insider’s Guide to DOL Audits from Aspen Publishers Gives Detailed, Practical Advice
Wolters Kluwer Law & Business
Fiduciary Benchmarks Launches New Service For Retirement Plan Industry
Fiduciary Benchmarks, Inc.
AIG Employee Benefit Solutions® Launches AIG Group Limited HealthCareSM Insurance Plan
AIG American General
GM To Inject $35 Billion Into UAW Health-Care Trust
Dow Jones Newswires
Newly Posted or Renewed Job Openings
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Defined Benefits Operations Mgr
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Plan Administration Specialist
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in TX
Client Relationship Manager- Retirement Plans
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in CT, DE, MD, NJ, NY, PA, RI, WA
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in UT
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in CA
Trust Administrator - Employee Benefits
for Old Point Trust
in VA
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Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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