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| October 15, 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
October 2007 Special Edition: IRS Employee Plan News (PDF)
2 pages; describes a new 43-page PDF document describing common 401(k) plan mistakes and how they can be corrected, which includes innovative hypertext links to other IRS publications. Also describes recent leadership changes in the Tax Exempt and Government Entities division, notes the issuance of the 2007 informational copies of Form 5500, and links to the final version of Circular 230 containing the new Enrolled Retirement Plan Agent program. (Internal Revenue Service)
New IRS 43-page Publication Includes Hypertext Links: 401(k) Plan Potential Mistakes (PDF)
43 pages. A user-friendly way to learn about the Employee Plans Compliance Resolution System, this very well-written document (PDF; to view, use the free Adobe Acrobat program) includes hypertext links that take the reader from a particular item in a chart to a detailed discussion within the document about that item. Further, the discussions include hypertext links that jump to other IRS documents on the web (if connected to the Internet), such as checklists and revenue rulings. The chart lists 11 common, potential mistakes in 401(k) plan operation and documentation. (Internal Revenue Service)
(b) News
New ETFs Target Retirement Market: First 'Lifecycle' ETFs Aimed at Long-Term Investors in 401(k) Plans
Excerpt: "In a bid to crack the 401(k) nut, TD Ameritrade Holding Corp. subsidiary Amerivest Investment Management LLC and XShares Advisors have partnered to create a family of the first 'lifecycle' ETFs. Also known as target-date funds, these offerings have been extremely popular choices in retirement plans when offered as mutual funds. The investment products are designed to provide investors with diversified exposure to bonds, U.S. stocks, foreign companies and other asset classes." (MarketWatch)
Legislator May Drop Index Fund Requirement in 401(k) Bill
Excerpt: "House Education and Labor Committee chairman George Miller (D-Calif.) is expected to remove a controversial requirement in his proposed 401(k) legislation that would mandate the inclusion of a low-cost index fund in all of the retirement plans, said an industry official." (Financial Week; free registration required)
(c) Summaries of Guidance; Filed Comments
403(b) Plan Sponsor's Guide to the New Final 403(b) Regulations: A Technical Interpretation (NEW LINK) (PDF)
(Some readers had trouble with Friday's link to this document; here's an alternate link that should work better.) 16 pages. Developed in partnership with Groom Law Group. Excerpt: "The main theme of the proposed regulations still echoes strongly through the final version and is consistent with changes in the statute over time. It is that 403(b) plans have become very much like 401(k) plans, and they must be run in a very consistent manner. And that means many plan sponsors will need to make a number of changes in how they currently manage their plans." (The Principal Financial Group)
Side-by-Side Comparison of Each Provision of the 403(b) Final Regulations and the Impact to Plan Sponsors (NEW LINK) (PDF)
(Some readers had trouble with Friday's link to this document; here's an alternate link that should work better.) 8 pages. Excerpt: "This special 403(b) final regulations guide outlines many of the clarified or modified provisions and summarizes how they may affect your organization and employees. While many of the changes are effective with tax years beginning in 2009, please use this guide to learn more about the impact on your 403(b) plan(s) and how you can best prepare to incorporate future requirements and optional designs into your strategy." (The Principal Financial Group)
Overview: Practical Implications for Plan Sponsors of the 403(b) Regulations (NEW LINK) (PDF)
(Some readers had trouble with Friday's link to this document; here's an alternate link that should work better.) 12 pages. Excerpt: "The purpose of this article is to focus primarily on the new regulations' implications for 501(c)(3) organizations sponsoring 403(b) plans. In light of the new contract exchange and plan transfer rules -- which became effective on September 24, 2007 -- particular attention will be given to the structural plan design decisions that plan sponsors will now be forced to make in order to be in compliance." (The Principal Financial Group)
Overview: IRS Guidance on Yield Curve and Segmented Interest Rates Required by PPA
Excerpt: "Under the PPA, the Secretary of the Treasury is required to produce a yield curve and simplified segment rates for investment-quality corporate bonds that are in the top three quality levels for use by private pension plans in determining their funding obligations and the amounts of lump-sum payments to retirees. In the notice, the IRS outlines the methodology used by Treasury in producing the yield curve." (Wolters Kluwer Financial Services)
Overview: Final Regulations on Abandoned 'Orphan' Plans with PPA Updates Added on October 5, 2007
Excerpt: "In the final regulations, EBSA accepted a number of the commentators' suggestions. This article was written by comparing our article of last year on the proposed version of the regulations to the final regulations. The changes made by the final regulations are noted in italics." (McKay Hochman Co., Inc.)
(d) Trends, Surveys, Research
Funds Designed to Put Retirement on Autopilot: Determine How Long You'll Need Money, and Managers Send Monthly Checks
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 introduced a set of funds designed to provide enough of a return to last someone through retirement." (The Washington Post; free registration required)
Financial Powerhouses Are Angling to Buy Retirement Plans as Employers Look for an Exit
Excerpt: "Some financial services firms are trying to clear a regulatory path that would let them buy out pension plans, freeing employers from pension obligations while potentially giving profit-driven financiers direct control over the retirement savings of millions of Americans." (The Washington Post; free registration required)
Why Would a Modern Company Offer a Pension Plan?
Excerpt: "Today's company treasurers and finance directors are numbers conscious, performance driven, cost managers. According to John P. McMorrow, an attorney in Mirick O'Connell's business and corporate law group in Worcester, they're looking around and asking, 'Do any of my competitors offer these sorts of (pension) plans?' And what they're finding is, no. No they don't." (Worcester Business Journal)
Pension Sponsors Switch Managers to Boost Performance: Researchers Say It's Often Pointless, Losing $20 Billion a Year
Excerpt: "Boston University professor Scott Stewart, a former portfolio manager, explained that institutional investors don't always add value when selecting asset classes, investment managers and investment styles. Pension plans, endowments and foundations perform a lot better than the typical retail investor, Mr. Stewart said, 'but they could be doing better.'" (Financial Week; free registration required)
San Diego City Workers with Pension Credits Should Ante Up
Excerpt: "Municipal employees who bought pension service credits should pay more for the benefit or reduce the amount of the credit, a San Diego councilwoman suggested Friday. Employees who opted for the benefit, which has been eliminated for new hires, could buy up to five years of credit toward their retirement without working for them." (The San Diego Union-Tribune)
CalPERS May Change Fee Scheme for Fund Managers
Excerpt: "The California Public Employees Retirement System (CalPERS) is considering altering its fee structure to reward external investment managers only if they outperform certain indexes, the Wall Street Journal reported [today]." (The Washington Post; free registration required)
Federal Employee Thrift Savings Plan Braces for a Retirement Tsunami
Excerpt: "The TSP has grown into a mega-retirement program, with 3.8 million participants and assets of about $225 billion. But it will undergo some stress in the next decade or so when baby boomers begin pulling their savings out of the 401(k)-type savings and investment program." (The Washington Post; free registration required)
Low-Paid Means at Risk in Retirement
Excerpt: "[G]uess which workers most often choose not to put aside money for retirement? Lower-income workers often struggle just to meet the mortgage or pay the rent. Even if they do have money to save, the incentives are not as enticing for them as for higher-income workers, said Christian E. Weller, senior economist at the Center for American Progress. Because 401(k) plans reduce taxable income, a worker in top tax bracket gets 35 cents for every dollar saved. A lower-paid worker with a marginal tax rate of 10 percent gets 10 cents." (The Washington Post; free registration required)
(e) Policy, Opinion, Advocacy
Opinion: IRS Jeopardizing Pension Security
Excerpt: "The IRS recently changed its position on the ability of companies to automatically provide employees with the 'greater of' two pension formulas. More than 1,000 companies offer this generous pension approach. If left standing, the interpretation now advocated by the IRS could have a chilling effect on already fast-declining traditional pension plan coverage now offered to about 37% of today's private sector employees, down from 84% in 1979." (Forbes.com)
Opinion: Campaigning on Pension Gold in New York
Excerpt: "Almost 20 years ago, investigators began looking into how New York's comptroller invested a huge and growing public pension fund. They came across a memo from an aide to Edward Regan, who then was the comptroller, explaining the connection between campaign donations and contracts with his office. 'Those who give,' it said, 'will get.'" (The New York Times; free registration required)
Reform Needed to Address Lower Retirement Income for Women
Excerpt: "The Government Accountability Office (GAO) has issued a report suggesting changes to social security and retirement benefit laws could help narrow the disparities between retirement income for women and men." (PLANSPONSOR.com; free registration required)
Links to Items on Executive Comp, Benefits in General
Estate Planning for Same-Sex and Unmarried Couples
Excerpt: "By planning ahead, same-sex and unmarried couples can protect their assets and employ a tax-efficient transfer of wealth, especially with the help of permanent life insurance policies and the careful creation of an irrevocable trust." (The National Underwriter Company; free registration or paid subscription required)
Milliman's Monthly Benefit News and Developments, October 2007 (PDF)
2 pages. The newsletter provides a summary of the previous month's legislative, regulatory, and judicial information on employee benefits. (Milliman)
Levin Introduces Bill to Include Stock Option Compensation Under 162(m) $1 Million Cap
Excerpt: "Sen. Carl Levin (D-MI) has introduced the 'Ending Corporate Tax Favors For Stock Options Act,' (S. 2116), which would eliminate the exemption for stock options granted to the CEO and five highest compensated executive officers under section 162(m) of the Internal Revenue Code." (HR Policy Association)
Overview of SEC Staff Observations in its Review Report of Executive Compensation and Related Disclosure (PDF)
2 pages. Excerpt: "This letter summarizes the report's observations and suggestions to improve compliance. The full report may be found at www.sec.gov/divisions/corpfin/guidance/execcompdisclosure.htm. Individual comment letters and company responses will be posted on the SEC's EDGAR website no earlier than 45 days from the date the staff completes its review of a company's filing." (Frederic W. Cook & Co., Inc.)
Federal Probes Find Improper Use of Religious Comp Time
Excerpt: "The 1978 law that created religious comp time makes no mention of taking money for unused time and expressly states that federal employees can attend religious events 'in lieu of overtime pay.' Regulations that the government created later, however, state that workers can receive money for unused portions of religious comp time when they change jobs or retire." (The Washington Post; free registration required)
Firms Could be More Creative in Benefits Offerings for Recruits
Excerpt: "While most companies include time off, health insurance, and pension plans as part of their compensation packages, there are other types of benefits some organizations are offering to attract new talent." (PLANSPONSOR.com; free registration required)
Text of S. 2044 -- ''Independent Contractor Proper Classification Act of 2007'' (PDF)
11 pages. Excerpt: "To provide procedures for the proper classification of employees and independent contractors, and for other purposes." (U.S. Senate via American Benefits Council)
Newly Posted Events
Benefits Webinar - Free
Nationwide on October 30, 2007
presented by Ogletree Deakins
Health Care Options for Your Business - Webcast
Nationwide on October 17, 2007
presented by Wells Fargo
Qualified Retirement Plan Seminar
in Wisconsin on November 14, 2007
presented by Summit Benefit & Actuarial Services, Inc.
Newly Posted Press Releases
National Save for Retirement Week October 21-27
NAGDCA (National Association of Government Defined Contribution Administrators, Inc.)
Financial Engines Signs 200th Managed Account Sponsor
Financial Engines, Inc.
UBS Global Asset Management and ACS Form Strategic Alliance to Offer End-to-End Retirement Solution for DC and DB Plans
Actuarial Systems Corporation (ASC)
Lincoln Financial Launches Small-to-Mid Size Plan Product
Lincoln Financial Group
Barclays Global Investors Introduces SponsorMatch
Barclays Global Investors
WisdomTree Launches EFT Based 401k Platform
WisdomTree Investments, Inc.
Newly Posted or Renewed Job Openings
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401(k) Client Relationship Manager
for The Douglas Group
in CA, CO, MA, NJ, NY
Retirement Plan Manager
for Capital Group Companies
in VA
Attorney Benefits / ERISA
for Constangy, Brooks & Smith, LLC
in AL
Senior Pension Administrator
for Retirement Benefit Solutions, LLC
in DC, DE, MD, NJ, PA, VA
Senior ERISA Consultant
for Charles Schwab
in OH
401(k) Plan Administrator
for Pollard & Associates, Inc.
in MD
Assistant 401(k) Administrator
for Pollard & Associates, Inc.
in MD
Software Certifier
for SunGard Relius
in FL
Support Representative
for SunGard Relius
in FL
Consulting Plan Actuary
for July Business Services
in IL
401(k) Administrator
for DR Human Resources
in NY
Pension- Technical Consultant
for Pension & Estate Planners, Inc.
in DE, NJ, PA
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