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| October 29, 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
Chart: Pension Protection Act of 2006 Sorted by IRC/ERISA Code Section (PDF)
15 pages. Pension Protection Act of 2006, Sorted by IRC/ERISA Section,Guidance/Other Information available as of 9/30/07 (Internal Revenue Service)
Chart: Pension Protection Act of 2006 Guidance from DOL, IRS, PBGC (PDF)
11 pages. Chart of the Pension Protection Act of 2006 Sorted by Topic with Guidance/Other Information available as of 9/30/07 (Internal Revenue Service)
Lively v. Dynegy -- Amicus Brief of Import Filed by the DOL Office of the Solicitor (PDF)
39 pages. Brief Of The Secretary Of Labor, Elaine L. Chao, As Amicus Curiae In Support Of Plaintiffs-Appellees' Claim Alleging That The Defendants' Imprudence With Regard To The Company Stock Fund Caused Plan Losses Is A Derivative Claim On Behalf Of The Plan Under ERISA Sections 409 and 502(a)(2) (U.S. Department of Labor)
(b) News
Judge Refuses Reconsideration Request on Deere Fee Suit Dismissal
Excerpt: "Sticking to his earlier contention that Deere & Co. was not obligated to disclose the revenue sharing arrangements in its 401(k) plan, a federal judge has refused to reconsider his earlier ruling, clearing the company of fiduciary breach allegations." (PLANSPONSOR.com; free registration required)
(c) Summaries of Guidance; Filed Comments
Overview: Final Regulations on Defined Contribution Plan Default Investment Vehicles
Excerpt: "If prudent default investment alternatives are in place and the rules set forth in the regulations are followed, plan fiduciaries will be able to afford themselves of the protections afforded by ERISA section 404(c) with respect to these investments. The regulation sets forth specific categories of investment alternatives that can be used for the default investments . . . ." (Littler Mendelson P.C.)
Using a QDRO as a Settlement Tool
Excerpt: "QDRO distributions can be very flexible. The portion necessary to pay off marital debt can be paid directly to the non-participant spouse and another portion used to equalize marital assets can be paid with a trustee-to-trustee transfer with no taxes incurred by either party. The non-participant spouse simply has to set up an I.R.A. to receive the non-taxable portion. The plan must be advised accordingly. The specific instructions can be included in the QDRO to insure plan compliance." (www.divorcenet.com)
Disability Pensions and How They Are Treated
Excerpt: "A few States do not consider disability pensions marital property, while most others do. The U.S. Military will not allow the use of a Uniformed Service Former Spouses Protection Act order (military QDRO) on any portion of the pension which is deemed to be attributable to a disability (a military member can have his pension apportioned to consider any injuries incurred during his or her tour of duty and receive that portion tax-free)." (www.divorcenet.com)
COLAs for 2008 Affect IRA Deductions, Roth IRA Eligibility, Savers Credit, More
Excerpt: "The IRS issued Revenue Procedure 2007-66 and IR-2007-171, in which they provide plan limits for 2008." (Appleby Consulting Inc)
(d) Trends, Surveys, Research
Retirement Plan Fees Receive Increased Scrutiny
Excerpt: "Clearly, expense ratios do not include all of the costs associated with a 401(k), notes David Loeper, CEO of Financeware Inc., and author of the new book, 'Stop the 401(k) Rip-off!' In fact, he says, there are other costs that aren't easy to find, but employees are probably paying them." (The Christian Science Monitor)
Defeat on 401(k) Default Investments Seen As Having Limited Impact
Excerpt: "Specifically, the final regulation published in The Federal Register by the Department of Labor says the appropriate default investments will be investment products that include equities, including mutual fund products such as lifecycle funds. Stable value funds, also known as Guaranteed Investment Contracts, or 'GICs,' can be used for new participants in 401(k) plans, but only for their first 120 days of participation." (The National Underwriter Company; free registration or paid subscription required)
401(k) Rule to Spark Risk-Return Scramble As Conservative Vehicles Out As Default Options
Excerpt: "The Department of Labor ruled that qualified default investment alternatives for 401(k) plans can include balanced funds, lifecycle funds and managed accounts. Stable-value funds and money-market funds did not make the cut, which could mean big changes for some companies." (Financial Week; free registration required)
Small Plans Slower to Join Lifecycle Fund Trend (PDF)
4 pages. Excerpt: "Lifecycle funds -- target-date funds in particular -- have found their way into the majority of mid-size and large defined contribution plan investment menus. Small plans, however, have been a bit slower on the uptake, new research shows." (PLANSPONSOR.com; free registration required)
2007 Strategic Initiatives in Retirement Plans Survey (PDF)
28 pages. Excerpt: "Following passage of the Pension Protection Act in August 2006, it is appropriate that this year's survey analysis focus on the steps employers are taking to strengthen employees' retirement readiness and to prepare for the most significant Pension Protection Act changes, which become effective for plan years beginning on or after January 1, 2008." (Wells Fargo & Company)
Future Beneficiary Expectations of the Returns to Delayed Social Security Benefit Claiming and Choice Behavior (PDF)
29 pages. Excerpt: "We report on our preliminary findings from an innovative module of survey questions in the RAND American Life Panel designed to measure willingness to delay take-up of Social Security benefits. Among respondents who expect to stop working full time prior to turning age 62, almost two-thirds report that they expect to start claiming Social Security benefits after they turn 63 -- that is, they expect to delay claiming. In contrast, among those who expect to stop full-time work sometime from age 62 to age 70, only about one-quarter expect to delay claiming beyond the retirement age." (University of Michigan Retirement Research Center)
Working Paper: The Role of Governance in Retirement Investments: Evidence from Variable Annuities (PDF)
40 pages. Excerpt: "We study the relative importance of market governance and non-market governance in retirement investments using a sample of variable annuities. Variable annuity investors are significantly less sensitive to performance and fees than mutual fund investors. Consistent with a complementary role of market and non-market governance, other governance mechanisms play a stronger role for variable annuity funds. Variable annuity sponsors add alternative investment options and replace advisors on behalf of their investors after poor performance and high fees." (Center for Retirement Research at Boston College)
Longevity's Evil Twin: Inflation
Excerpt: "Moshe A. Milevsky, a finance professor at York University in Toronto and an expert in financial risk management, makes the point that inflation risk is also highly individual. Maybe, he said, we need to calculate a CPI-ME for individuals. 'Depending on where you live, how you spend your money, how old you are and even your gender, inflation is different,' he said. Even among the elderly, defined by the Bureau of Labor Statistics as households in which an individual householder or at least one of two householders is 62 or older, spending patterns differ over time, with medical expenses typically rising with age." (The Washington Post; free registration required)
(e) Policy, Opinion, Advocacy
Father of 401(k) Says Intent Was Different
Excerpt: "Ted Benna changed retirement almost 30 years ago when he founded the 401(k) plan. On Friday, Benna shared his insight with about 50 people at a breakfast sponsored by Omega Bank's Wealth Management Division. 'Things have changed pretty significantly,' Benna said. It all started with Benna's unique interpretation of the Internal Revenue Service Code -- section 401, paragraph K to be exact -- which is different than the legislation originally intended, he said. 'One piece of legislation that was intended to save the pension system is helping (to) lead to the demise of that system,' he said." (The Centre Daily Times via Human Resource Executive Online; free registration required)
American Benefits Council Talking Points on 401(k) Plan Fees (PDF)
4 pages. Excerpt: "With the decline of defined benefit plans, 401(k) plans have become the primary retirement plan for millions of Americans. Accordingly, it is more important than ever to take appropriate steps to ensure that 401(k) plans provide Americans with retirement security. The goal of the American Benefits Council is an effective 401(k) system that functions in a transparent manner and provides meaningful benefits at reasonable fee levels. At the same time, we must bear in mind that unnecessary burdens and costs imposed on these plans will slow their growth and reduce participants' benefits." (American Benefits Council)
Opinion: A Social Security Fix for 2008
Excerpt: "In the Oct. 19 editorial ' Mr. Giuliani's No-Tax Pledge,' The Post stated: 'It's no more responsible for Republicans to rule out tax increases [to strengthen Social Security] than it is for Democrats to insist on no benefit cuts.' The Post praised, as a 'bipartisan blend,' President Ronald Reagan's acceptance of a 1983 fix that included both. I take exception. It's the essence of responsibility, in my view, to insist on no benefit cuts." (Robert M. Ball via The Washington Post; free registration required)
Edwards Demands Corporate Responsibility through Retirement Security
Excerpt: "Democrat John Edwards on Friday released a plan he said would increase corporate responsibility, including limits on executive compensation packages and requirements that big businesses operate more openly. The presidential candidate said his plan would also restore retirement security for the middle class through tax reforms and savings help, allowing more people to put aside money and purchase stock from companies. He said those companies would perform better for regular workers under his corporate reform proposals." (The Washington Post; free registration required)
Candidate Edwards Offers Savings Plan
Excerpt: "Former Senator John Edwards proposed yesterday that rules governing retirement savings be revised by creating new 401(k)-type accounts that employees could carry from job to job, and that the government match workers' contributions to the accounts, dollar for dollar, up to $500 a year." (The New York Times; free registration required)
Links to Items on Executive Comp, Benefits in General
Why the Law Firm Pillsbury Eliminated Mandatory Retirement (PDF)
3 pages. (Law.com via Pillsbury Winthrop Shaw Pittman LLP)
Presentation: Fiscal, Health, and Retirement Challenges (PDF)
44 pages. Presentation by the Comptroller General David M. Walker, before the Conference of Consulting Actuaries' annual conference, in San Antonio, Texas, on October 22. (U.S. Government Accountability Office)
New York Adjusts Stock Option Allocation Rules for Part-year Residents
Excerpt: "The New York State Department of Taxation and Finance has modified amended rules for the tax treatment of stock option grants for non-residents and part-year residents." (PLANSPONSOR.com; free registration required)
Newly Posted Events
Follow the Money: How to Handle Cafeteria Plan Salary Reductions
Nationwide on November 8, 2007
presented by Employee Benefits Institute of America (EBIA)/Thomson Tax & Accounting
Understanding Health FSA Reimbursements: Rules for Substantiation, Debit Cards, and Claims Procedures
Nationwide on October 18, 2007
presented by Employee Benefits Institute of America (EBIA)/Thomson Tax & Accounting
Newly Posted Press Releases
U.S. Labor Department Obtains Restitution For Pension Plans Of Defunct Tennessee Company
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
AMF Bowling Selects Great-West Retirement to Manage 401k Plan
Great-West Retirement Services
House Ways and Means Committee Proposes Cutback in Benefits of Stock Options in S ESOP Companies
ESOP Association
42.8% of Corporations Offer Some Type of Consumer-Driven Health Care Option, New survey looks at employee benefits offered in several employment sectors
International Foundation of Employee Benefit Plans
ftwilliam.com Announces The Development Of A Defined Contribution Plan Testing Module
ftwilliam.com
Pharmacy Benefit Management Institute Research Confirms Employers' Drug Cost Increases Remain in Single Digits
Pharmacy Benefit Management Institute (PBMI)
BHCO Capital Management Inc. Is Certified For Fiduciary Excellence
Centre for Fiduciary Excellence (CEFEX)
Rogers Capital Management, Inc. Is Certified For Fiduciary Excellence
Centre for Fiduciary Excellence (CEFEX)
Legal Advantage, LLC Appoints Regional Sales Director – Boston, MA
Legal Advantage, LLC
Newly Posted or Renewed Job Openings
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Pension Administrator
for Preferred Pension Planning Corporation
in NJ
Account Manager II - Retirement Plans
for Standard Retirement Services
in TX
Defined Contribution Analyst I
for Standard Retirement Services
in PA
401(k) Client Service Account Executive
for BISYS Retirement Services
in PA
Account Relationship Manager
for Beneco, Inc.
in AZ, NY
Human Resource Assistant Director
for 1199 Benefit & Pension Funds
in NY
Second Vice President, DC Administration
for New York Life Retirement Plan Services
in MA
Writer
for The Capital Group Companies
in CA
Consulting Senior Plan Administrator
for The Allocation Company, Inc.
in TX
Pension Administrator/TPA
for Block Consulting Actuaries, Inc.
in CA
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