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October 11, 2007

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.


Today's sponsor is DATAIR Employee Benefit Systems, Inc.

(Click on company name or banner to learn more.)
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(a) New Guidance Documents

IRS 30 Year Treasury Securities Rate Updated for September 2007
30 Year Treasury Securities Rate for September 2007: 4.79% (Internal Revenue Service)

IRS Composite Corporate Bond Rate Table Updated for October 2007
Corporate Bond Weighted Average Interest Rate = 5.88 for October 2007 (Internal Revenue Service)

(b) News

DOL Creates Online DFVCP Penalty Calculator
From a DOL press release: 'The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) today launched an interactive calculator that makes it easier for employers and plan administrators who are delinquent in meeting annual reporting requirements under [ERISA] to accurately compute penalties owed under the agency's Delinquent Filer Voluntary Compliance Program (DFVCP)." (U.S. Department of Labor)

DOL Releases Advance Copies of Revised Form 5500
Excerpt: "[Advance] copies of the 2007 Form 5500 Annual Return/Report of Employee Benefit Plans and related instructions were released [today] by the U.S. Department of Labor (DOL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC)." (PLANSPONSOR.com; free registration required)

Court Says No Need to Question 14,000+ 401(k) Class Action Participants
Excerpt: "Efforts by a health care products manufacturer to get details from more than 14,000 401(k) participants on their outside investments as part of an ongoing class action fiduciary breach lawsuit have been blocked by a federal judge." (PLANSPONSOR.com; free registration required)

No Help for Defined Benefit Plans from PPA, Says PBGC Study
Excerpt: "The Pension Protection Act of 2006 has not improved the security of defined benefit pension plans, the chief policy actuary of the Pension Benefit Guaranty Corp. said . . . ." (Investment News; free registration required)

(c) Summaries of Guidance; Filed Comments

Overview: New Rules for Identifying Controlled Groups of Tax-Exempt Organizations (PDF)
Excerpt: "On July 26, 2007, the IRS published guidance specifically addressing the treatment of tax-exempt entities under the controlled group rules. These rules apply for plan years beginning on and after January 1, 2009." (Prudential Financial)

Outcome: Board of Trustees of the Town of Lake Park Firefighters' Pension Plan v. Town of Lake Park, Florida
Excerpt: "In a unanimous decision dated October 3, 2007, the Florida Fourth District Court of Appeal reversed a summary judgment in favor of the Town of Lake Park against the Board of Trustees of the Town of Lake Park Firefighters' Pension Plan. In short, the trial court ruled that the Town had no obligation to make any further payment to Town of Lake Park Firefighters' Pension Plan. The decision is of such significance that we feel compelled to deal with it at length here." (Cypen & Cypen)

Measuring Assets and Liabilities Under PPA (PDF)
Pages 1, 4-5 of 8 pages. Excerpt: "Under the PPA, the method for determining the funding target is based on a present value of accrued benefits calculation (i.e., traditional unit credit method) and is valued as of the beginning of the plan year." (American Academy of Actuaries)

(d) Trends, Surveys, Research

Blacks' Retirement Security at Risk
Excerpt: "Employers have begun to discover troubling racial differences within their 401(k) retirement plans, a gap they say could leave today's black workers far less financially prepared for retirement than whites." (AP via The New York Times; free registration required)

Advisers Need to Help Clients with Form 5500
Excerpt: "Advisers are being called on to flex their compliance muscles and assist clients who are reconsidering their form 5500 filings." (Employee Benefit Advisor; free registration required)

French Law Aims to Prevent Forced Retirement
Excerpt: "A bill that is likely to be voted on before the end of the year would make more changes to France's laws on forced retirement. The issue has been the subject of many legislative efforts in recent years, as the government has attempted to reduce the number of forced retirements." (Watson Wyatt Worldwide)

Solving the Longevity Risk Problem
Excerpt: "In this article, we discuss the issue of longevity risk as it is related to retirement plans. We review several proposals made to address the issues and problems of longevity risk in relation to both defined benefit and defined contribution plans." (JPMorgan)


Links to Items on Executive Comp, Benefits in General

Overview: Limited 409A Deadline Extension (PDF)
2 pages. Excerpt: "This Law Alert contains a summary of the actions that employers must take by December 31, 2007 to bring their nonqualified plans, severance agreements, and other similar arrangements into compliance with Section 409A. Failure to comply with Section 409A can result in current taxation, interest, and a 20 percent penalty." (Porter Wright Morris & Arthur LLP)

Overview: IRS and Treasury Provision of Limited 409A Relief
Excerpt: "In this article, we review the guidance issued by IRS and Treasury in Notice 2007-78, which provides limited transition relief with respect to compliance with Code Section 409A." (JPMorgan)

'Antagonistic Interests' Raise Questions About $42.5 Million ERISA Settlement
Excerpt: "A federal appeals court in Manhattan has ordered a trial judge to reconsider his certification of a class and his approval of a $42.5 million settlement agreement in an action brought under [ERISA]. A unanimous panel of the 2nd U.S. Circuit Court of Appeals, in Central States Southeast and Southwest Areas Health and Welfare Fund v. Merck-Medco Managed Care, 04-3330, remanded the case to Southern District of New York Judge Charles L. Brieant . . . ." (Law.com)

Employment Non-Discrimination Act (ENDA): Original Version Included Both Se.xual Orientation and Gender Identity
Excerpt: "[Rep.] Frank acknowledged that the new version no longer includes a provision that would have preserved the ability of state and local laws requiring that the domestic partners of g.ay employees receive the same benefits as the spouses of straight employees. A federal ERISA law (Employee Retirement Income Security Act) sets minimum standards for the pension and health plans of many private employers. But Frank noted that it also 'preempts all state efforts to mandate employee benefits' and is 'a deeply held principle for all of the employer organizations in America.'" (Bay Windows)

First Wave of Boomers Hits Social Security
Excerpt: "The first wave of 3.2 million baby boomers turns 62 next year -- 365 an hour. About 49% of the men and 53% of the women are projected to choose early retirement and begin drawing monthly Social Security checks representing 75% of the benefit they'd be entitled to receive if they waited four more years to retire. In 2011, they'll turn 65 and be eligible for Medicare. In 2012, those who didn't take early retirement benefits will turn 66 and qualify for their full share." (USA TODAY)

Modeling Equity Compensation (PDF)
Pages 4-5 of 8 pages. Excerpt: "Companies can value their equity compensation using the Black-Scholes model, a lattice (typically a binomial) model, or a simulation model. Each offers various advantages and disadvantages, and often a trade-off must be made between ease of use and flexibility." (American Academy of Actuaries)

(e) Policy, Opinion, Advocacy
(None today.)


Newly Posted Events

Educational Seminar on The Uniform Trust Code
in Oregon on November 20, 2007
presented by Durig Capital, LLC


Newly Posted Press Releases

U.S. Labor Department Offers Online Calculator to Help Employers and Benefit Plan Administrators Compute Penalties, File Overdue Reports
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Governor Schwarzenegger's Mandatory Purchase of Private Health Insurance Doesn't Add Up for the Middle-Class, Says FTCR
Foundation for Taxpayer and Consumer Rights

CitiStreet Enhances Participant Web
CitiStreet

Blaze SSI Corp. Announces the National Release of GTS
BLAZE SSI Corp.

eHealth Initiative Releases Blueprint Representing Consensus on an Action Plan for Transforming U.S. Healthcare Using Health IT
eHealth Initiative


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Defined Benefits Senior Analyst
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AVP-Special Markets/Southeast
for John Hancock
in MA

Executive Compensation Consultant
for Deloitte Consulting LLP
in NY

Governance and Compliance Advisory Associate
for Towers Perrin
in GA

Governance and Compliance Advisory Associate
for Towers Perrin
in NY

Qualified Plan Marketing Associate
for National Life Group
in VT

Sr Account Manager-Retirement Plans
for Standard Retirement Services
in OR

Sr. Plan Administrator
for American National Insurance Company
in TX

401k Manager
for Paycor
in OH




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