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October 18, 2007

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


Today's sponsor is ASPPA

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Register for these courses now at www.asppa.org/webcourses

(a) New Guidance Documents

IRS Announces Pension Plan Limitations for 2008; 402(g) Elective Deferral Limit Still $15,500
Excerpt: "The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $225,000 to $230,000. The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $145,000 to $150,000. . . . The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $100,000 to $105,000. . . . Administrators of defined benefit or defined contribution plans that have received favorable determination letters should not request new determination letters solely because of yearly amendments to adjust maximum limitations in the plans." (Internal Revenue Service)

(b) News

New Study Finds 401(k) Investors Insufficiently Diversified
Excerpt: "The average 401(k) participant who selects his own investments tends to be under-diversified but also invests at the extremes of the risk spectrum, which leads to under performance, a new John Hancock study says." (Financial Week; free registration required)

Rangel Seeks Public Comments on PPA Technical Corrections Bill
Excerpt: "Rep. Charles B. Rangel (D-NY), Chairman of the House Ways and Means Committee, has announced that the Committee is requesting comments from the public on H.R. 3361, legislation that would make technical corrections to the Pension Protection Act of 2006 (PPA; P.L. 109-280). Comments are sought by the close of business, November 1, 2007." (Wolters Kluwer Financial Services)

French Strike a Warning Shot on Wider Pension Reform
Excerpt: "A nationwide strike by transport and energy workers [today] over a reform of their generous pensions is just the first shot in a larger battle expected over plans to review the entire French pensions system next year." (Reuters via The New York Times; free registration required)

(c) Summaries of Guidance; Filed Comments

Updated Chart Shows COLA Increases in Pension Limits, Social Security Wage Base, for 2008
Excerpt: "On October 18, the IRS issued News Release IR-2007-171, announcing the changes in pensions and benefits limits for 2008. That same day, the Social Security Administration announced the wage base (i.e., the maximum amount subject to social security taxes) for 2008. An updated chart, showing these limits for 1996 to 2008, is available at the above link. (Calhoun Law Group, P.C.)

Chart: 2008 IRS Benefit Limits, Social Security Increases
Excerpt: "[T]he Bureau of Labor Statistics released the September inflation figures (CPI-U and CPI-W) and the Social Security Administration released the 2008 benefit and wage amounts. We have calculated 2008 IRS limits on qualified retirement plan benefits and the PBGC maximum guaranteed benefit." (JPMorgan)

Overview: IRS Partial Extension of Section 409A Amendment Deadline with Compliance Still Required This Year
Excerpt: "The IRS also made clear that, following the effective date of the regulations, the good faith compliance standard would no longer apply and compensation arrangements would be required to be in full operational and documentary compliance with the final regulations as of January 1, 2008." (Kirkpatrick & Lockhart Preston Gates Ellis LLP)

Bad Benefits Estimate Not a Fiduciary Breach, According to Court
Excerpt: "A Ford Motor Company employee who contested a mistaken November 2002 pension benefits calculation lost a legal battle when a federal judge ruled for the automaker." (PLANSPONSOR.com; free registration required)

(d) Trends, Surveys, Research

What to Do When Your 401(k) Stinks
Excerpt: "If your employer's plan is stocked with Morningstar one-star specials, full of funds larded up with high management fees (or worse, 12b-1 fees), or just isn't that well-stocked with options at all, call off that job search and take heart. There are ways to make almost any plan work for you -- if you take the right approach." (The Motley Fool)

Banking Unused Vacation
Excerpt: "American workers have a reputation of all work and no play. We get less vacation time than our peers in other countries, and even then we don't always use it all. But what if you could put the cash equivalent of those unused vacation days into your 401(k)? This option has been available for many years, but never caught on with employers. But lately there's been a renewed interest, says Lisa Van Fleet, a lawyer and benefits expert with Bryan Cave LLP in St. Louis." (The Baltimore Sun; free registration required)

Overview: Proposed IRS Regulations on PPA Benefit Restrictions (PDF)
2 pages. (Milliman)

Big Law and Retirement Policies
Excerpt: "In the wake of the mulit-million dollar settlement of the Sidley Austin case involving the involuntary retirement of older partners, a trend may be starting to abandon mandatory retirement policies for partners at law firms." (Workplace Prof Blog)

Retiree Pension Raises Vary by System
Excerpt: "It's COLA season, and if you're a federal retiree, how much your pension increases depends on which retirement system you're in. Unlike Social Security recipients, who learned yesterday that they would get a cost-of-living adjustment of 2.3 percent for 2008, the government's employees are covered by a number of retirement programs, each with its own salary-based formulas to determine benefits." (The Washington Post; free registration required)

(e) Policy, Opinion, Advocacy

Comments on Miller's '401(k) Fair Disclosure for Retirement Security Act of 2007' -- H.R. 3185
Excerpt: "While it is not unusual for the courts, the Labor Department, or even Congress to focus attention on 401(k) fee issues, we are currently faced with the unique circumstance of each of them looking at precisely the same issues at exactly the same time. Trying to figure out how all of this will shake out is a little like trying to follow the bouncing ball -- and decisions by the courts or on Capitol Hill will have an impact on the Labor Department and vice versa." (PLANSPONSOR.com; free registration required)

The Economic Effects of Public Pensions -- A Compilation of Resources on the Subject
Excerpt: "Recent studies have begun to reveal that public pensions have positive effects on local and state economies. In 2006, state and local government retirement systems in the U.S. distributed over $100 billion more in benefits than they received in taxpayer-funded contributions . . . . Together with the economic multiplier effect, in these and other ways, the aggregate economic impact of public pensions is considerable and reaches every city and town of every state. The resources listed . . . are examples of this economic phenomenon." (National Association of State Retirement Administrators)

Opinion: The Greatest -- and Unrecognized -- Financial Risk for Retirees: Planning Risk (PDF)
4 pages. Excerpt: "In-depth and wide-ranging understanding of the financial realities most retirees face, the decisions they need to make, and the planning and financial resources they require to truly establish a secure retirement, have fallen outside of most providers' expertise." (Still River Retirement Planning Software, Inc.)


Links to Items on Executive Comp, Benefits in General

'Eldercare Generation' Cares About Continuing to Work: Are Companies Interested in Keeping Them?
Excerpt: "In an effort to attract and keep older employees, some employers have responded with a menu of benefits that, by law, are offered to all employees but clearly appeal to the older worker." (Wharton School of the University of Pennsylvania)

Why Employers Should Care About Their Workplace -- and Their Employees
Excerpt: "[A] growing body of research is finally proving what advocates of workplace quality have known for decades: that the human beings who execute the goals of business are more than just cogs in a wheel. Truly engaging them can have an almost magical effect on the bottom line." (The Wall Street Journal Online via Career Journal.com)

Overview: The SEC's Emerging Concerns with Rule 10b5-1 Plans (PDF)
Excerpt: "Rule 10b5-1 plans . . . are coming under increasing scrutiny from the SEC. In a nutshell, Rule 10b5-1 under the Securities Exchange Act of 1934 allows officers and directors of public companies to buy and sell their shares, even while in possession of material non-public information, as long as the purchase or sale takes place pursuant to a trading plan that was entered into with an independent broker when the insider did not possess material non-public information." (Winston & Strawn LLP)

Fact Sheet: 2008 Social Security Changes
Excerpt: "Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2006 through the third quarter of 2007, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 2.3 percent COLA for 2008." (U.S. Social Security Administration)

Opinion: Social Security Peg Is a Fix Boomers Can Embrace
Excerpt: "For the past 10 years or so, various lawmakers and Washington officials have sporadically tried to change the peg. Back in 2001, President George W. Bush appointed another Social Security commission. As it happened, that commission pushed for a serious reform of the wage peg. But the commission released its report in December of the same year and the findings got lost in the post-Sept. 11 haze. Lawmakers were thinking about Afghanistan, not pension formulas." (Bloomberg News)


Newly Posted Events

401(k) Auto Enrollment: Set-Up Strategies for Higher Employee Contributions
Nationwide on October 29, 2007
presented by HRTrainingCenter.com

Creating A Policy Manual: Your Practical Guide To What Needs To Be Included
Nationwide on October 23, 2007
presented by HRTrainingCenter.com

Flextime Strategies That Boost Productivity And Your Bottom Line
Nationwide on October 30, 2007
presented by HRTrainingCenter.com

New Frontiers for 403(b) Plans
in District of Columbia on October 24, 2007
presented by WEB (Worldwide Employee Benefits Network) Washington Chapter

Salary Discussions: Effective Compensation Communication
Nationwide on October 31, 2007
presented by HRTrainingCenter.com

Wellness Programs - They Bring Good Things to the Bottom Line!
in District of Columbia on November 6, 2007
presented by WEB (Worldwide Employee Benefits Network) Washington Chapter


Newly Posted Press Releases

Institute for Pension Plan Management Partners with ASPPA
ASPPA (American Society of Pension Professionals & Actuaries)

PBGC Protects Pensions at Werner Holding Co. Inc. (Greenville, Pennsylvania)
Pension Benefit Guaranty Corporation (PBGC)

IRS Announces Pension Plan Limitations for 2008
Internal Revenue Service (IRS)

2008 Inflation Adjustments Widen Tax Brackets, Raise IRA/401(k) Limits and Expand Tax Benefits
Internal Revenue Service (IRS)

PacificSource Health Plans Partners with Assist America for Global Emergency Medical Assistance Services
Assist America, Inc.

Administaff's Retirement Plans Top $1 Billion In Assets

ELM Income Group Offers "New to the Industry" Provisions in Its Fixed Income Annuity
ELM Income Group, Inc


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Relationship Manager
for New York Life Retirement Plans Services
in MA

Financial Services Analyst
for The Newport Group
in FL

Human Resources Division Manager I/II - Benefits Division
for County of Riverside
in CA

Client Services Manager
for NADA Retirement Administrators, Inc.
in VA

Compliance Manager
for NADA Retirement Administrators Inc
in VA

Benefits Review Specialist
for Standard Insurance Company
in OR

Pension Consultant
for Transamerica Retirement Services
in CA




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