BenefitsLink |
 |
 |
| October 25, 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
(Click on company name or banner to learn more.)
| ASPPA Webcourses -- Available NOW! |
| Taking ASPPA exams this fall? Supplement your credentialing course material with our new webcourses. On-line and easy to access, these fabulous new tools are now available for RPF-1, RPF-2, PFC-1, PFC-2, DC-1 and DC-2 exams. Not the only one at your firm taking the same courses? Corporate discounts are available for every webcourse we offer. Take every opportunity to learn on your timetable. Register for these courses now at www.asppa.org/webcourses |
(a) New Guidance Documents
(None today.)
(b) News
401(k) Decision Is Blow to 'Stable Value' Funds
Excerpt: "The Labor Department said Tuesday that it wouldn't endorse the use of so-called stable-value funds as a default investment for 401(k) participants who don't decide how to allocate their retirement-plan portfolios. The decision is a blow to the insurance industry, which markets stable-value funds." (Los Angeles Times; free registration required)
Kohl to Introduce Bill to Require 401(k) Fee Disclosures
Excerpt: "[Sen. Herb] Kohl and Sen. Tom Harkin (D-Iowa) will introduce the Defined Contribution Fee Disclosure Act of 2007 this week. The bill would require complete transparency of 401(k) fees to both employers and participants. The legislation also will enable employers to negotiate with pension fund managers in order to obtain the lowest possible fees for their employees." (Small Business Times via bizjournals.com; free registration required)
Proposed Legislation Allows 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." (planadvisor)
Let Small Firms Join Multi-Employer Retirement Plans, Say Executives at Hearing
Excerpt: "'Multiple employer plans would provide very standard plan terms, and therefore, employers that want plan design flexibility, such as by offering a more robust investment menu, would continue to offer their own plans,' . . . . Links to the written versions of the witnesses' testimony are available [from the target page]." (The National Underwriter Company; free registration or paid subscription required)
Labor Department says Delphi Should Pay Workers for Retirement Fund Investment Mistake
Excerpt: "The Labor Department says auto-parts supplier Delphi Corp. should pay more than $3 million to compensate 11,000 workers who've lost millions because their retirement funds were incorrectly invested in a General Motors Corp. stock fund." (AP via Forbes.com)
DOL Says Delphi Owes Employees $3M
Excerpt: "The U.S. Department of Labor says Delphi Corp. did not do what it could to repay employees who lost money in their retirement plan because of an investment slip made by the company that resulted in $3 million in unrealized gains." (PLANSPONSOR.com; free registration required)
(c) Summaries of Guidance; Filed Comments
Chart: Elective Deferral Limits for 2008 for Employees of Non-Profit and Governmental Employers (PDF)
Excerpt: "The Internal Revenue Code sets limits on elective contributions made under retirement plans offered to employees of non-profit and governmental employers. Some non-profit and governmental employers can choose to offer one or more plans, including 403(b), 401(k), and section 457(b) plans. Generally, contributions made to 403(b) and 401(k) plans are aggregated when applying the contribution limits, while those made to section 457(b) plans are subject to separate limits." (Prudential Financial)
Overview: DOL Issues Final Default Investment Regulations (PDF)
6 pages. Excerpt: "In scope, this relief is intended to be the same as that provided under an ERISA §404(c) plan, although plans that do not qualify under §404(c)(1) may nonetheless take advantage of the default investment relief." (Sutherland Asbill & Brennan LLP)
Overview: New IRS Compliance Tool for 401(k) Plans Now Available
Excerpt: "It isn't often that someone refers to a compliance tool as 'cool,' but that is how the IRS describes its new web-based tool designed to help 401(k) plan sponsors avoid, identify, and fix common errors. That may not be everyone's assessment of '401(k) Plan Potential Mistakes,' but most probably will find the new tool helpful with keeping their 401(k) plans in compliance with the tax-qualification rules." (Deloitte via BenefitsLink.com)
Brief Overview: ERISA New Default-Investment Rule (PDF)
4 pages. Excerpt: "For an employer working with a calendar-year plan or enrollment, a realistic goal would be to improve procedures and notices to get protection for default investments after January 1, 2008. Because the required notice usually must be delivered at least 30 days before the first QDIA investments (or the first day of a plan year), plan fiduciaries might want to implement improved procedures in November 2007." (Fiduciary Guidance Counsel)
(d) Trends, Surveys, Research
Many Employees Face New Decisions on 401(k) Choices
Excerpt: "A second problem for active 401(k) participants relates to what happens when an employer changes a 401(k) service provider. Under current practice, the employer 'maps' the type of funds selected by the employee and matches them to similar funds offered by the new provider. As long as the employee is informed of the change, the money shifts seamlessly without the employee asking to maintain the type of fund selected. But Ian Kopelman, a Chicago lawyer who specializes in retirement issues, said his reading of the new regulation suggests the employee must act." (Chicago Tribune)
Working Paper: Optimal Life-Cycle Strategies in the Presence of Interest Rate and Inflation Risk
Excerpt: "The worldwide shift from public pay-as-you-go pension systems to privately funded pension schemes is accompanied by a huge increase in the households capital stock mounting to trillions of dollars worldwide which pour into defined contribution pension plans. In order to assess how these funds should be optimally invested, we derive the optimal time-dependent portfolio allocation strategy taking into account long-term stock market, term structure, and inflation risk." (Pension Research Council; registration required to download fulltext of paper)
Working Paper: Rational and Behavioral Perspectives on the Role of Annuities in Retirement Planning
Excerpt: "This paper discusses the role of annuities in retirement planning. It begins by explaining the basic theory underlying the individual welfare gains available from annuitizing resources in retirement. It then contrasts these findings with the empirical findings that so few consumers behave in a manner that is consistent with them placing a high value on annuities." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)
Survey Finds More Sponsors Planning Defined Benefit Plan Changes
Excerpt: "A new national survey from Wells Fargo & Company's employee benefits consulting group, BPS&M, indicates almost a quarter of employers with ongoing pension plans intend to close or freeze their plans and many are searching for ways to deal with recent legislative and regulatory changes." (PLANSPONSOR.com; free registration required)
Working Paper: What Makes Retirees Happier: A Gradual or 'Cold Turkey' Retirement?
Excerpt: "Using longitudinal data from the Health and Retirement Study, this study explores what shapes the change in happiness between the last wave of full employment and the first wave of full retirement. Results suggest that what really matters is not the type of transition (gradual retirement or cold turkey), but whether people perceive the transition as chosen or forced." (Center for Retirement Research at Boston College)
(e) Policy, Opinion, Advocacy
Overview: Bill Introduced to Delay Effective Dates for Certain PPA Funding Provisions
Excerpt: "So far there has been no indication from House Ways and Means Committee Chairman Charlie Rangel (D-NY) or other House leaders about whether or when to expect action on H.R. 3868. To date no companion bill has been introduced in the Senate." (Deloitte via BenefitsLink.com)
GAO Testimony: Private Pensions: 401(k) Plan Participants and Sponsors Need Better Information on Fees (PDF)
24 pages. Excerpt: "This testimony provides information about the way fee information could be disclosed to benefit 401(k) participants and sponsors, focusing on 1) the information on fees that could be most useful for plan participants and plan sponsors and 2) how such information could be effectively presented." (U.S. Government Accountability Office)
Hearing: Hidden 401(k) Fees: How Disclosure Can Increase Retirement Security, October 24, 2007
The target page has links to the statements of committee members Senator Herb Kohl (D-WI), Chairman, and Senator Gordon H. Smith (R-OR), Ranking Member, and the witness testimony of representatives from the GAO, DOL, AARP, American Benefits Council, and others. (U.S. Senate Special Committee on Aging)
Perspectives on Retirement Planning and Consumption
Excerpt: "[There is] an ongoing dialogue on a model of personal investing known as the Life-Cycle Model of Investing and Saving. To gain additional insight into the model and its implications for retirement planning, the SOA's Committee on Post Retirement Needs and Risks (CPRNR) recently gathered a panel of leading experts for a roundtable discussion on the model with the hope of providing a lively forum to exchange ideas. We were not disappointed." (Society of Acturaries)
Working Paper: A New Approach to Raising Social Security's Earliest Eligibility Age
Excerpt: "While Social Security's Normal Retirement Age (NRA) is increasing to 67, the Earliest Eligibility Age (EEA) remains at 62. Similar plans to increase the EEA raise concerns that they would create excessive hardship on workers that are worn-out or in bad health. One simple rule to increase the EEA is to tie an increase to the number of quarters of covered earnings. Such a provision would allow those with long worklives -- presumably the less educated and lower paid -- to quit earlier. We provide evidence that this simple rule would not satisfy the goal of preventing undue hardship on certain workers." (Center for Retirement Research at Boston College)
Links to Items on Executive Comp, Benefits in General
Essays on the History of ERISA Preemption
Excerpt: "James Wooten (Buffalo) has just posted on SSRN two essays on the history of ERISA preemption. [They are 'A Legislative and Political History of ERISA Preemption, Part I' and 'A Legislative and Political History of ERISA Preemption, Part II.' Links to the essays are on the target page.]" (Workplace Prof Blog)
Overview: IRS Again Extends Section 409A Transition Period (PDF)
3 pages. Excerpt: "The [memo] summarizes the key portions of the new Notice and its impact on employers and employees. [It] also addresses another IRS Notice issued on October 23rd which grants relief from certain 409A reporting requirements on 2007 Forms W-2." (Groom Law Group)
State/Local Govt Retiree Benefits: Current Status of Benefit Structures, Protections, and Fiscal Outlook for Funding Future (PDF)
76 pages. Excerpt: "For this overview, GAO obtained data from various organizations, used our model that simulates the fiscal outlook for the state and local sector, and conducted site visits to three states that illustrate a range of benefit structures, protections, and fiscal outlooks.' (U.S. Government Accountability Office)
Newly Posted Press Releases
Still River Announces 403(b) Software Fully Compliant with IRS Final Regulations
Still River Retirement Planning Software, Inc.
U.S. Labor Department Testifies Before Senate Special Committee on Aging on 401(k) Fee Disclosure
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Work & Family Benefits, Inc. Names James F. McCann Vice President of Business Development
Work & Family Benefits Inc.
The SPARK Institute Commends DOL On Clarified QDIA Rules
SPARK -- Society of Professional Asset-Managers and Record Keepers
Newly Posted or Renewed Job Openings
(Post a Job | View All Jobs |
RSS Feed )
Health and Welfare Benefits Compliance Manager
for Publix Super Markets, Inc.
in FL
Accountant
for Transamerica Retirement Services
in CA
Retirement Plan Specialist
for New York Life Retirement Plan Services
in MA
401(k) Plan Administrator
for Plan Design Consultants, Inc.
in CA
Account Manager-Retirement Plans
for Standard Retirement Services, Inc.
in MA
Employee Benefit Specialist
for Principal Financial Group
in WA
Administrator
for BMI
in MO
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
Subscribe to the BenefitsLink Health & Welfare Plans Newsletter, Too!
Sign-up form is at https://benefitslink.com/newsletter (free).
This newsletter is sent to you each workday except federal holidays.
This email has been published by:
BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park FL 32789
(407) 644-4146
Fax: (407) 644-2151
David Rhett Baker, J.D., Editor
Copyright 2007 BenefitsLink.com, Inc.; except that you can forward this email in full (including this boilerplate part) or otherwise reprint this email in full (including this boilerplate part) without obtaining our permission.
Anyone can receive these emails; just have them sign up at this web page: https://benefitslink.com/newsletter/
Other useful links: