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| October 23, 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
DOL Issues Final QDIA Rules -- Without Stable Value
Excerpt: "Despite a fierce battle by some in the retirement services community to pressure the U.S. Department of Labor (DoL) into sanctioning stable value funds as an approved safe harbor investment default, the final regulations issued [will stop] short of that goal." (PLANSPONSOR.com; free registration required)
(c) Summaries of Guidance; Filed Comments
Overview: Rollovers from Retirement Plans to Roth IRAs
Excerpt: "Thanks to the Pension Protection Act (PPA) of 2006, assets of certain eligible retirement plans (ERPs), including plans under Internal Revenue Code (IRC) Sections 401(a), 403(a) and (b), and 457(b), will be eligible for rollover to a Roth IRA. This provision is effective January 1, 2008. Note: This article does not address rollovers of designated Roth account assets from 401(k) or 403(b) plans." (Wolters Kluwer Financial Services)
Overview: Proposed Regulations on Benefit Restrictions for Underfunded Plans
Excerpt: "For 2008, possible options for avoiding benefit restrictions include forfeiting credit balances, making voluntary contributions or, if applicable, merging the plan with another plan in the sponsor's controlled group before December 31, 2007." (Watson Wyatt Worldwide)
Presentation: A Practical Guide to Dealing with PBGC Issues (PDF)
51 pages. The presentation was presented at the ASPPA Annual Conference on October 21, 2007, in Washington, DC. (Keightley & Ashner LLP)
Overview of the 2008 Benefit Limits
Excerpt: "The IRS and the Social Security Administration have announced the cost-of-living adjustments for various benefit plan limits for 2008. Certain limits affecting retirement plans . . . and the limits for health and certain other fringe benefit plans are shown . . . ." (Kilpatrick Stockton LLP)
Hewitt's Global Retirement Update, October 2007 (PDF)
3 pages. Excerpt: "[Hewitt's] Global Retirement Update summarizes recent legislative developments and trends related to retirement and financial management and highlights recently passed and pending legislation that may require employers to take action to comply with new rules or review existing plans. It is published monthly in PDF format." (Hewitt Associates)
Overview: EBSA Extends Time for Non-Participant Directed Individual Account Plans to Provide Benefit Statements
Excerpt: "The Employee Benefits Security Administration (EBSA) has released a Field Assistance Bulletin that provides relief for profit-sharing and other non-participant directed individual account plans struggling to comply with the requirement implemented by the Pension Protection Act of 2006 (PPA; P.L. 109-280) to provide periodic benefits statements." (Wolters Kluwer Financial Services)
ERISA Litigation Advisory: New Suits Allege ERISA Breaches Resulting From Investments in Sub-Prime Mortgages (PDF)
3 pages. Excerpt: "Two new suits have been filed against State Street Bank alleging that it breached fiduciary duties under ERISA by investing retirement plan assets in sub-prime mortgage products through one or more bond funds it operates. These suits contend that State Street served as investment manager for a number of plans that invested in one or more of its bond funds, which in turn invested in mortgage-backed securities contrary to the conservative investment strategies these funds advertised." (Alston & Bird LLP)
(d) Trends, Surveys, Research
Attract Top-Notch Employees with a 401(k) Plan That Matches Your Company's Success
Excerpt: "In response to customers' requests for flexibility and advice, retirement plan providers that previously offered only bundled, all-in-one solutions have started opening their platforms to third-party administrators--local pension experts that can tailor plans to fit companies' needs." (Entrepreneur Magazine)
401(k) Plans: Frequently Asked Questions -- Updated
Excerpt: "Why is November 10, 2006, regarded as the 25th birthday of the 401(k)? Subsection (k) of Section 401 of the Internal Revenue Code-the tax code-was added in 1978. It was written to address a narrow tax issue that had pitted the Internal Revenue Service (IRS) against employers who wanted to offer tax-favored profit-sharing plans, used mainly by executives. But when the IRS issued regulations telling businesses how to use Section 401(k), the rules made it clear that ordinary workers could make contributions from their regular wages or salary. Those regulations were issued on November 10, 1981-the birthday of the 401(k) plan." (Investment Company Institute)
Making Your Savings Last: How Annuity Can Help You In Retirement
Excerpt: "Only a handful of employers have added an annuity option to their 401(k) plans, but as companies look for ways to enhance their 401(k) plans, the options could become more common, said Robyn Credico, national director for Watson Wyatt, an employee benefits consultant." (Chicago Sun Times via Insurance NewsNet)
PSCA to Conduct Benchmarking Study of IRC Sec. 403(b) Plans
Excerpt: "From Spencer's Benefits Reports: The Profit Sharing/401(k) Council of America (PSCA) has announced that it will be conducting its First Annual Non-Profit Benchmarking Study, a survey of 'best practices' among sponsors of IRC Sec. 403(b) tax-sheltered annuities. Sec. 403(b) plan sponsors can access the paper survey form at http://www.psca.org/nonprofit/questionnaire.pdf." (Wolters Kluwer Financial Services)
Overview of Improved Pension Funding and Lower Business Risk in 2006
Excerpt: "Watson Wyatt analyzed defined benefit plan funding for the FORTUNE 1000 in 2006. We measured the impact of Statement of Financial Accounting Standards No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Benefit Plans (FAS 158), on shareholders' equity using pension finance data for 2004, 2005 and 2006, and it is much less negative than many feared. We also calculated the risk plan underfunding would pose to companies' core business under a simulation of the 'perfect storm' market conditions of the early 2000s, in which both asset returns and interest rates plummeted." (Watson Wyatt Worldwide)
A Few Lessons on Saving, Courtesy of Employers
Excerpt: "As company-backed pensions are going by the wayside, many companies are starting to offer access to advice to help workers manage their own retirement savings and often their larger financial picture as well." (The New York Times; free registration required)
Portuguese Pilots Strike Over Retirement Plan
Excerpt: "About 500 pilots said they would strike on Tuesday, Thursday and Saturday to protest against government plans to increase their retirement age to 65 from 60." (The Washington Post; free registration required)
(e) Policy, Opinion, Advocacy
For Women, There Are Greater Obstacles to Retirement
Excerpt: "Women generally earn only about 80 percent of what men earn. That hurts because the formula for a traditional pension is based on income, while the lower earnings make it harder for women to put money aside in a 401(k). Yet those skimpier 401(k)'s must stretch over a longer time frame, as women outlive men by about five years, on average." (The New York Times; free registration required)
Lawmaker Proposes Penalty-Free Retirement Account Withdrawals for Mortgage Payments
Excerpt: "Minnesota Senator Norm Coleman has proposed legislation that would allow individuals who are 60 days late on their mortgage payments to dip into their 401(k) or individual retirement accounts (IRA) without paying a penalty." (PLANSPONSOR.com; free registration required)
Say-on-Pay Critics Warn of Problems: Proposed Law Could Mean Lawsuits Galore, Plus Additional Legislation
Excerpt: "Proposed legislation to give investors an advisory vote on executive pay, if passed, would lead to the unintended consequences of messy litigation and more law-making from Congress, according to Michael Oxley, vice chairman of Nasdaq and a former Republican representative from Ohio." (Financial Week; free registration required)
Links to Items on Executive Comp, Benefits in General
IRS Notice 2007-86: Additional 409A Transition Relief; 2007 Year-End Deadline Extended to 2008 Year-End (PDF)
14 pages. Excerpt: "On September 10, 2007, the Treasury Department and the IRS issued Notice 2007-78, granting certain transition relief intended to facilitate compliance with the written plan requirements set forth in the final regulations. See §1.409A-1(c). Commentators stated that although the Notice 2007-78 transition relief was helpful, the transition relief in that notice did not adequately address the need for additional time for service recipients and service providers to analyze all of their plans and make informed and reasoned decisions regarding the changes that would be necessary to bring existing arrangements into compliance with the final regulations. This notice addresses these concerns by generally extending the transition relief currently scheduled to expire on December 31, 2007 through December 31, 2008." (Internal Revenue Service)
Overview: IRS Extension of 409A Transition Relief until December 31, 2008 (PDF)
1 page. Excerpt: "The IRS and Treasury issued Notice 2007-86 [on October 22, 2007], generally providing for an extension of the Section 409A transition relief until the end of 2008. This Notice affords a much more meaningful extension than the extension previously granted in Notice 2007-78, which was modified by [this latest] guidance." (Miller & Chevalier Chartered)
Opinion: Another 409A Extension But We All Lose
Excerpt: "How do companies comply when the government can't finish rules in more than three years? Too much intellect, and not enough wisdom, has made this whole process as silly as that which surrounded the ill-fated Section 89. Old hands recall that Congress finally repealed Section 89, but not before industry had invested millions in a multi-year regulatory and compliance effort which is chillingly similar to the 409A process today." (Rackemann, Sawyer & Brewster)
New Legislation that Would Link Stock Option Accounting and Tax Rules
Excerpt: "Senator Carl Levin (D-Michigan) introduced the Ending Corporate Tax Favors for Stock Options Act (S.2116) on September 28." (Watson Wyatt Worldwide)
Ernst and Young's 2007 Aging U.S. Workforce Survey: Challenges and Responses -- An Ongoing Review (PDF)
75 pages. Excerpt: "Further evidence that companies are not prepared for the effects of the aging workforce: 68% of survey respondents said the single greatest organizational risk is retaining key employees and maintaining intellectual talent, but 15% said they did not know what percentage of their workforce would be eligible to retire in the next five years." (Ernst and Young via PLANSPONSOR.com; free registration required)
A Random Walk Down the Final Section 409A Regulations (PDF)
4 pages. Excerpt: "Slogging through the nearly 400 pages of final Section 409A regulations is like walking away from a horrible auto accident, thinking 'it could have been worse.' It certainly is an improvement over the October 2005 proposed regulations. On the positive side, a lot of ambiguity was removed and some of the more unworkable rules, such as a lack of a good reason standard for a severance plan or the definition of service provider stock for private companies, are cleaned up." (Benefits Law Journal via Kirkpatrick & Lockhart Preston Gates Ellis LLP)
District Court Imposes $179,960 ERISA Fine in Dispute Over Physician Practice's Break-Up
Excerpt: "Though it is certainly unusual to see a penalty award that is nearly 20 times the amount of the benefits at stake in an ERISA lawsuit, this case illustrates that a court confronted with an egregious set of facts may choose to use the statutory disclosure penalty as a way of punishing a breach of fiduciary duty. Obviously, other plan administrators will want to draw a cautionary lesson from this decision." (Spencer Fane Britt & Browne LLP)
Overview: Advance Form 5500 Released for Reporting on 2007 Plan Year
Excerpt: "EBIA Comment: The DOL news release cautions that advance copies of the 2007 Form 5500 cannot be used when filing Form 5500 for the 2006 plan year -- the Form 5500 for 2006 must be used for this purpose." (Employee Benefits Institute of America)
Newly Posted Events
412(i) Plans and Estate Planning - Free Audioconference
Nationwide on October 26, 2007
presented by Executive Benefits Design Group
Automatic Enrollment: Is it appropriate for your clients?
Nationwide on October 30, 2007
presented by McKay Hochman Co., Inc.
Changing the Culture and Improving Quality: Innovations in Long-Term Care - Webcast
Nationwide on October 24, 2007
presented by KaiserNetwork.org
ERISA Advisory Council November Meeting
in District of Columbia on November 6, 2007
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Mid-Sized Retirement & Pension Plan Management Conference
in Florida on January 27, 2008
presented by University Conference Services
Newly Posted Press Releases
ASPPA Develops Standards Of Practice For Recordkeepers Certification
ASPPA (American Society of Pension Professionals & Actuaries)
Companies Worldwide Struggle to Attract, Retain Workers
Watson Wyatt
PBGC Protects U.S. Pension Plans Of Varig S.A.
Pension Benefit Guaranty Corporation (PBGC)
The Principal Financial Group Picks Up the Tab On Health Savings Account Fees
Principal Financial Group
Treasury, IRS Extends Transition Relief For Deferred Compensation Plans
U.S. Treasury Department and Internal Revenue Service
Sharp Health Plan Chooses Assist America for Global Emergency Medical Assistance Services
Assist America, Inc.
CPI Opens Boston Consulting Office
CPI Qualified Plan Consultants, Inc.
Poll Finds Public Sector Employees Confident in Their Retirement Plans
ICMA-RC
John Hancock Study of 401(K) Participants Investment Outcomes Reveals Common Investing Behaviors
John Hancock Retirement Plan Services
Modest Social Security Increase Is Still Larger Than Expected, CCH Says
CCH, a Wolters Kluwer business
Newly Posted or Renewed Job Openings
(Post a Job | View All Jobs |
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Daily Valuation/Recordkeeper
for Pension Specialists, Inc
in CA
Account Executive
for MetLife
in NJ
Records Analyst
for CitiStreet
in MA
401(k) Pension Coordinator Specialist (PT 20-25 hours/week)
for John L. Scott
in AZ
Defined Contribution/401(k) Administrator
for Boyce & Associates, Inc.
in AZ
Defined Benefit Administrator and DB/DC Combo Administrator
for Boyce & Associates, Inc.
in AZ
Senior Relationship Manager -- Client Services
for Boyce & Associates, Inc.
in AZ
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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