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| October 10, 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
IRS Notice 2007-81: Interest Rates for Use in Computing Funding and Minimum Present Values (PDF)
9 pages. Excerpt: "Section 430 of the Code, added by section 112 of PPA, specifies the minimum funding requirements that apply to single employer plans pursuant to § 412 of the Code. . . . Section 430(h)(2) specifies the interest rates that must be used to determine a plan's target normal cost and funding target. Under this provision, present value is generally determined using three interest rates ('segment rates'), each of which applies to cash flows during specified periods. . . . Generally, section 302(b) of PPA amends § 417(e)(3) of the Code to provide that the interest rates used for the determination of minimum present values are segment rates as computed under § 430(h)(2) . . . ." (Internal Revenue Service)
ERISA Fiduciary Advisor -- Another DOL elaws Advisor Website
Excerpt: "The ERISA Fiduciary Advisor provides information and answers to a variety of questions about who is a fiduciary and their responsibilities under the Employee Retirement Income Security Act (ERISA). This Advisor was developed by the Employee Benefits Security Administration (EBSA) in its continuing effort to increase awareness and understanding about basic fiduciary responsibilities when operating a retirement plan." (U.S. Department of Labor)
(b) News
Please Take Survey by IRS Advisory Group: Improving the Employee Plans Compliance Resolution System
Are an attorney, accountant, actuary, consultant, third-party administrator, financial services provider, or other kind of retirement plan practitioner? Please help an official IRS advisory group supply the IRS with ideas for improving the Employee Plans Compliance Resolution System, by completing this online survey or emailing your response to the group. The deadline is the end of next week (October 19). These recommendations will address, but not be limited to, the directive to the Secretary of the Treasury under the Pension Protection Act of 2006 to continue updating and improving EPCRS. (IRS Advisory Committee (ACT) on Tax Exempt and Government Entities)
IRS Issues Guidance on Yield Curve to be Used for PPA Funding Rules
Excerpt: "The Treasury Department and the Internal Revenue Service (IRS) [yesterday] issued a notice providing guidance on the corporate bond yield curve and associated segment rates to be used under the enhanced pension funding rules enacted by the Pension Protection Act of 2006 (PPA)." (PLANSPONSOR.com; free registration required)
Erie, Penn., Told to Restore Its Deferred Retirement Option Plan
Excerpt: "An arbitrator has ruled the city must restore a controversial lump-sum retirement program to Erie police. The program, called the Deferred Retirement Option Program, was implemented in 2004 for police and firefighters. Council eliminated the D.R.O.P. for both police and firefighters in December. The program has resulted in millions of dollars of pension payouts and also in an adverse finding by the Pennsylvania Auditor General's office that requires the city to repay $900,000 -- and possibly more -- in state aid." (Erie Times-News)
(c) Summaries of Guidance; Filed Comments
Overview: Excess Deferral Distributions Must Include Gap Period Income (PDF)
Excerpt: "On April 30, 2007, the IRS issued final Roth rules to provide guidance on the taxation, rollover, and reporting of distributions from designated Roth accounts. In addition to the Roth guidance, the final rules included a provision that applies to 401(k) plans and 403(b) arrangements, even if they do not offer Roth contributions." (Prudential Financial)
Social Security Offsets: Policies Public Employees Love to Hate and Don't Understand
Excerpt: "Do you administer a public pension for employees not covered by Social Security? If so, you may be aware of two laws that can offset, or perhaps eliminate, Social Security benefits employees may have earned on the side or may be due from a spouse. Questions are understandable, given the complexity of these laws: the windfall elimination provision and the government pension offset. This article intends to clarify these government offsets." (National Association of Government Defined Contribution Administrators, Inc.)
Overview: IRS Final Circular 230 Regs Permit 'Enrolled Retirement Plan Agents' to Represent Plans
Excerpt: "The IRS has released final Circular 230 regulations which, among other things, establish an 'enrolled retirement plan agent' designation to represent plans before the IRS. Proposed rules, issued contemporaneously, affect the standards applicable to practitioner conduct, misconduct, sanctions, and disciplinary proceedings before the IRS." (Wolters Kluwer Financial Services)
IRS Highlights Common Problems Found in Cycle A Determination Letter Applications
Excerpt: "EBIA Comment: As we have noted previously regarding the new cyclical submission system, plan sponsors and their advisors must pay careful attention to deadlines and requirements in order to avoid processing delays and resubmissions. The IRS newsletter encourages plan sponsors to submit their determination letter applications early within their cycles and to respond quickly when the IRS returns a submission to avoid having it placed in the 'off-cycle' category." (Employee Benefits Institute of America)
(d) Trends, Surveys, Research
ETFs in 401(k) Plans: The Technology Is Here
Excerpt: "We spoke with Darwin Abrahamson, the CEO of Invest n Retire, and asked him about why ETFs should be in 401(k) plans and what his firm is doing to make it happen." (ETFtrends)
Annuities for 401(k)s Meet Resistance: Some Advisers Say Products Are Confusing, Expensive, Lack Portability
Excerpt: "Advisers are . . . arguing that 401(k) plans should be used solely for the accumulation of assets and that it is too confusing to have income products inside these plans. Also, some advisers say, the products lack portability, and they are expensive." (Investment News; free registration required)
Retirement Funds That Operate Like an Annuity and Pay Out a Steady Distribution Carry No Guarantee
Excerpt: "Investors who use target-date funds to put their investments on cruise control until retirement face a common question: How will I manage my money so it holds out once I've stopped working? A new type of mutual fund could appeal to some investors asking this question. Fidelity Investments, the nation's largest fund manager, this month rolled out a set of funds designed to provide enough of a return to last someone through retirement." (The Washington Post; free registration required)
The Re-Invention of Annuities -- for 401(k) Funds
Excerpt: "Sponsors need to incorporate more nonbiased education about annuities into their 401(k) communications, says Kelli Hueler, CEO of Minneapolis-based Hueler Companies. 'Until that information is squarely front and center -- until this is a part of normal, everyday communications -- the take-up rate will not reflect the need,' she says. 'Plan sponsors need to recognize that there are wolves out there preying on people who walk out the door with a check in their hand." (PLANSPONSOR.com; free registration required)
The Truth Behind 401(k) Plans and Financial Planning
Excerpt: "Obviously one of the largest downsides of 401(k) plans is the immediate loss of additional income. Even though the money is being saved for retirement, some people who are having troubles making ends meet financially might shy away from setting aside yet more money." (The Post-Journal)
Study by Credit Agency Debunks Defined Benefit Plan Funding Myths
Excerpt: "According to the DBRS study of 536 predominately North American pension plans (381 in the United States, 80 in Can.ada and 75 in other countries), public perception of a serious problem in the funding of DB plans is a myth in over 90% of reviewed plans." (Employee Benefit News; free registration required)
Louisiana State Retirement System Goes Multimedia
Excerpt: "The Louisiana State Employees' Retirement System has gone interactive and multimedia. The system, also known as LASERS, has started operating a blog, and has developed a video explaining its plan provisions which is available from Google Video." (Public Pension News)
Automatic Enrollment and Qualified Default Investment Alternatives: Are They Right for Your Plan?
Excerpt: "[T]his issue of Focus on 457 addresses three questions: Is Automatic Enrollment a good idea? Which Qualified Default Investment Alternative (QDIA) has the greatest chance of helping participants in the long run? Should you change your default investment option even if you do not offer Automatic Enrollment?" (National Association of Government Defined Contribution Administrators, Inc.)
Looking at Things Differently Gives More Understanding of Defined Contribution Plan Issues
Excerpt: "'Retirement' is no longer an appropriate word to denote when workers begin to receive distributions from their 401(k) plans. 'We retire debt,' Mr. [David] Wray told the 60th annual conference of the PSCA, but individuals go through life stages." (Wolters Kluwer Financial Services)
(e) Policy, Opinion, Advocacy
Opinion: The Details of Fee disclosure for 401(k) plan participants
Excerpt: "The testimony presented at last week's hearing by the House Education and Labor Committee on the issue of 401(k) fees was remarkably consistent, . . . certainly compared with the last time the Committee took up the issue. At a minimum, we seem to have moved past the question of whether more fee disclosure is needed to what kind of disclosures are needed, and how we can make them." (PLANSPONSOR.com; free registration required)
401(k) Plans As Pensions Slammed at International Conference
Excerpt: "The US 401(k) pension provision system has been heavily criticized at an ABP conference in the Netherlands. Speaking at its Pension Diversity and Solidarity in Europe conference, Roderick Munster, chief investment officer at ABP, slammed the system, saying: 'The US pension system is a mess.'" (Global Pensions)
Senator Hillary Clinton Proposes Government 401(k) Matches
Excerpt: "On a campaign stop in Iowa on Tuesday, Senator Hillary Rodham Clinton proposed legislation that would ensure a dollar-for-dollar government match on the first $1,000 of employee 401(k) contributions." (PLANSPONSOR.com; free registration required)
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Links to Items on Executive Comp, Benefits in General
Roth Might Be Coming Soon to 457(b) Plans
Excerpt: "This year, a provision about to be included within one of the appropriations bills, is the American Infrastructure Investment and Improvement Act. Included within this provision is authorization to permit 457(b) plans to include a qualified Roth contribution program, effective for taxable years beginning after December 31, 2007. Under such a program, participants would be permitted to designate elective deferrals as Roth contributions." (Pension Protection Act Blog)
Opinion: FASB in Stock Option Redux
Excerpt: "The first time the accounting mandarins tried to fix the rules for employee stock-option compensation, it almost killed them. The second time, they barely escaped with all their teeth. Now, they're coming back for more. The U.S. Financial Accounting Standards Board is preparing to rewrite its rules for stock-option pay . . . ." (Bloomberg News)
Proposed Regs on Entertainment Use of Company Aircraft: Still Tough IRS Line, but Notice 2005-45 Is Eased (PDF)
Excerpt: "The passage of two years since the issuance of Notice 2005-45 has not significantly dampened the enthusiasm of the Internal Revenue Service in its mission to stamp out executives' entertainment use of company aircraft." (Miller & Chevalier Chartered)
Employer's Notice of Plan Amendment Did Not Satisfy Reasonableness Requirement in SPD
Excerpt: "EBIA Comment: By adding a reasonable-notice standard to its SPD without further defining the term 'reasonable,' the employer in this case opened the door to having the provision construed against it by a court. But even where plan documents do not include a separate timing rule, there are times . . . when it's advisable to provide written notice of a plan amendment prior to the expiration of ERISA's deadline. Mere compliance with the statutory disclosure deadline will not always serve as a defense to claims based on breach of fiduciary duty." (Employee Benefits Institute of America)
Executive Compensation Disclosure Eyed by SEC
Excerpt: "Companies should provide more focused disclosure explaining how and why they make executive-compensation decisions, according to the Securities and Exchange Commission. The commission today released a report regarding how effectively 350 public companies complied with rules adopted in late 2006 regarding executive- compensation disclosure." (Investment News; free registration required)
What Makes a Company a Great Place to Work Today
Excerpt: "From Working Mother magazine's '100 Best Companies' to Business Week's 'Best Places to Launch a Career,' judges are sizing up employers' flexible scheduling and other perks as criteria for coveted top-employer rankings. And family-friendly companies are looking very different today than they did a few years ago. The waning of boomers with their uptight ways, and the rise of the we-want-it-all millennials, are spurring major shifts in employer programs." (The Wall Street Journal Online via Career Journal.com)
Newly Posted Events
Planning for Tomorrow: New Approaches to Employee Retirement Planning and Education - Webcast
Nationwide on October 31, 2007
presented by HREOnline.com
The Basics of 401(k) Plans
in California on November 7, 2007
presented by National Institute of Pension Administrators
Newly Posted Press Releases
PSCA To Conduct Benchmarking Study To Identify 403(b) Plan Best Practices
Profit Sharing/401(k) Council of America (PSCA)
PSCA Announces the 2007 Signature Award Winners
Profit Sharing/401(k) Council of America (PSCA)
PBGC Protects Pensions At Brownsville General Hospital
Pension Benefit Guaranty Corporation (PBGC)
U.S. Labor Department Launches Interactive Web Tool to Help Employers Comply With Retirement Laws
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
U.S. Labor Department Obtains Settlement to Distribute 401(k) Funds to Former Employees of Kropf Orchards and Appletree Farms
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
U. S. Labor Department Releases Advance Copies of 2007 Form 5500 Annual Report
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Treasury, IRS Issue Pension Protection Act Guidance
U.S. Treasury Department and Internal Revenue Service
Transamerica Enhances Wirehouse Financial Adviser Support
Transamerica Retirement Services
Survey of Iowa Voters Reveals Surprising Results and Attitudes Toward America's Health Care Crisis
International Foundation of Employee Benefit Plans
TransitCenter, Inc. Corrects Finding of 2007 Commuter Impact Survey
TransitCenter
Buck Consultants Reports Wellness Programs Are Truly Global; Objectives Vary by Region
Buck Consultants, an ACS Company
CCH Survey Finds Most Employees Call in "Sick" for Reasons Other Than Illness
CCH, a Wolters Kluwer business
New Guardian Research Examines Views on Retirement Planning
Guardian
First Mercantile Appoints Two New Regional Sales Directors
First Mercantile
Spherion Study Shows Less Than Half of U.S. Workers Are Satisfied With Their Jobs; Benefits and Compensation Inadequate to Retain Employees
Spherion
LifeSecure and Women's Institute for a Secure Retirement Team to Help Women Face the Many Challenges of Caregiving
LifeSecure Insurance Company
TDAX Funds Launches Target Date ETFs
TDAX Funds, Inc.
Newly Posted or Renewed Job Openings
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New Business Project Manager
for National Retirement Plan Services Firm
in
Marketing Strategy
for Merrill Lynch
in NJ
401(k) Senior Plan Administrator
for Matthews Benefit Group, Inc
in FL
Senior Director, Employee Benefits and Analysis
for MTA- New York City Transit
in NY
401(k) Plan Administrator for DC Balance Forward Plans
for Ingham Group, a premier full service Tier One firm
in FL
Benefits Consultant
for Northwestern Benefit Corporation of Georgia
in GA
401(k) Plan Administrator for DC Balance Forward Plans
for Ingham Group, a premier full service Tier One TPA
in SC
Participant Svcs Rep
for Standard Insurance Company
in OR
Account Mgr-RP
for Standard Insurance Company
in OR
Sr. Counsel
for Diversified Financial Services Organization
in IN, NC, PA
Defined Contribution Analyst I, II, Senior
for Standard Insurance Company
in OR
Enrolled Actuary
for TPA, Southeast
in AL
Defined Contribution / 401-K Plan Administrator
for Pension Actuarial Consulting Firm
in NY
Consultant, Pension Administration
for Buck Consultants
in IN
Government Relations Specialist (WAS0008O)
for Mercer Human Resource Consulting
in DC
Client Data Management Administrator/Conversion Specialist
for Decimal, Inc. - TheOnline401k
in CA
Handy Links:
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- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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