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| October 30, 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
Proposed IRS Regs: User Fee for Becoming an Enrolled Actuary or Renewed Enrollment (PDF)
8 pages. Excerpt: "This document contains proposed regulations relating to user fees for the initial and renewed enrollment to become an enrolled actuary." (Internal Revenue Service)
PBGC Announces Maximum Insurance Benefit for 2008
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) today announced that the maximum insurance benefit for participants in underfunded pension plans terminating in 2008 is $51,750 per year for those who retire at age 65, up from $49,500 for 2007." (Pension Benefit Guaranty Corporation)
Present Law and Background Relating to Qualified Retirement Plan Fees (PDF)
22 pages. Excerpt: "This document . . . provides background and economic data relating to fees charged in connection with qualified defined contribution plans, a description of present law rules in the Internal Revenue Code . . . that relate to the amount and disclosure of such fees, and a discussion of issues and analysis relating to such fees." (U.S. Joint Committee on Taxation)
(b) News
NY Life Suit Approaches End with $14M Settlement Pact
Excerpt: "New York Life Insurance Company has agreed to a $14-million settlement of a long-running legal battle with an employee group over the management of its retirement savings programs. Attorney Eli Gottesdiener, a plaintiffs' lawyer in the 2000 lawsuit, said in a news release that the agreement covers four plans: a defined benefit program for agents, a defined benefit plan for employees and 401(k) plans for agents and employees." (PLANSPONSOR.com; free registration required)
Citigroup Hit with 401(k) Suit over ERISA Violations
Excerpt: "Citigroup has been hit with a lawsuit alleging the financial services giant committed a variety of fiduciary breaches in improperly having its 401(k) plan do business with its affiliates and subsidiaries." (PLANSPONSOR.com; free registration required)
TIAA-CREF Battles with Connecticut Officials Over Annuities Research
Excerpt: "Hammond, of TIAA-CREF, said the study is flawed because it uses 10 years of data to imply 20-year returns. He said researchers also left out 'two of TIAA-CREF's most popular and important options: TIAA Traditional and the TIAA Real Estate Account.'" (AP via MSNBC.com)
(c) Summaries of Guidance; Filed Comments
Overview: New Regulations Providing Safe Harbor for Default Investment Options (PDF)
5 pages. Excerpt: "Plan Sponsors Should Issue Notices before November 24, 2007 for Maximum Fiduciary Protection Under Final Qualified Default Investment Alternatives Regulations" (Seyfarth Shaw LLP)
Overview: Final QDIA Guidance
Excerpt: "Nothing in the rule limits the application of the relief for a QDIA to automatic enrollment arrangements. Other examples include the failure to designate an investment after enrolling, after the elimination of an investment arrangement, and following a rollover to the plan." (Profit Sharing/401(k) Council of America)
Overview: Final QDIA Rules
Excerpt: "The Pension Protection Act of 2006 (PPA) created the Qualified Default Investment Alternative (QDIA) largely to promote the offering of automatic enrollment 401(k) plans. The QDIA provides employers a safe harbor from fiduciary risk when selecting an investment for a participant or beneficiary who fails to elect his or her own investment." (McKay Hochman Co., Inc.)
Overview: Additional Guidance on Pension Benefit Statements for Non-Participant Directed Defined Contribution Plans (PDF)
1 page. Excerpt: "On October 12, 2007, the Department of Labor issued Field Assistance Bulletin (FAB) 2007-03 providing guidance on the deadline for furnishing benefit statements by defined contribution plans that do not permit participants to direct the investment of their accounts." (Transamerica Center for Retirement Studies)
Overview: Asset and Stock Sales and Qualified Plans
Excerpt: "When a company is acquired or sold, one of the first questions to ask about the handling of the qualified plan is 'Was this an asset or stock sale?' Although each transaction may be somewhat unique, there are some general rules regarding these business transactions." (McKay Hochman Co., Inc.)
Deere Ruling Affirms Fee Disclosure Not Required
Excerpt: "Deere & Co., Moline, Ill., is not obligated to disclose the revenue-sharing agreements in its $2.5 billion 401(k) plan, according to a ruling by the U.S. District Court in Madison, Wis. Three Deere employees asked the court to review its June decision in their class-action suit that no violation of ERISA had occurred." (Pensions & Investments)
(d) Trends, Surveys, Research
A Primer on Plan Fees (PDF)
3 pages. Excerpt: "[The target document summarizes] data from surveys conducted by various organizations that monitor and analyze plan fees. The studies reflect, in particular, the impact of plan size and average account balances on fees . . . ." (Profit Sharing/401(k) Council of America)
Cracks Showing in Target-Date Funds
Excerpt: "[S]ome consultants argue the high equity exposures of target-date funds leave participants open to too much risk. Ultimately, they say, plan sponsors could be left holding the bag if participants' accounts are decimated by poor performance." (Pensions & Investments)
Hewitt's 'Trends and Experience in 401(k) Plans' Survey
Excerpt: "Hewitt said its latest survey found that 34% of companies automatically enrolled employees in their 401(k) plans in 2007, up from 19% in 2005. Of those, more than 77% defaulted employees into a diversified portfolio, such as target- risk, target-maturity or balanced funds - a drastic hike from the 39% in 2005." (PLANSPONSOR.com; free registration required)
Teacher Retirement Plans More Limited and Confusing
Excerpt: "[R]ules governing 403(b) plans are undergoing the first major overhaul since the early 1960s to make them look more like 401(k)s. Officials with the Internal Revenue Service said the regulations governing 403(b)s were 'way, way overdue' for an overhaul. But experts say the new rules could limit investment choices for 403(b) participants and will be confusing for employees." (The Dallas Morning News; free registration required)
Employee Ownership Update for October 29, 2007
NCEO Executive Director Corey Rosen reports on the extension of the date for complying with the Section 409A deferred compensation rules; a proposal to tax synthetic equity in S corporation ESOPs; a survey finding 19% of fast-growing companies plan ESOPs as a business transition strategy; and a new study finding that large stock option grants to CEOs appear to hurt investors. (National Center for Employee Ownership)
(e) Policy, Opinion, Advocacy
American Benefits Council Testimony on the Appropriateness of Retirement Plan Fees (PDF)
13 pages. Testimony given before the House Committee on Ways and Means hearing held October 30, 2007. (American Benefits Council)
Committee on Ways and Means Hearing on the Appropriateness of Retirement Plan Fees
Hearing held October 30, 2007; target page has links to witness testimony. (U.S. House Committee on Ways and Means)
Legislative Language of ESOP Proposal Revealed (PDF)
1 page. Excerpt: "Section 3701 of HR 3970, by Congressman Charles Rangel, is the ESOP S Corp provision . . . . Please note, the provision defines as an option any interest that is the same as what is defined as synthetic equity in IRC 409(p)(6)(C). The new tax provision would apply to options granted after the date of enactment. There is strong opposition to the entire bill, and enactment would be no earlier than some time in 2008, or perhaps even later, if ever." (ESOP Association)
American Benefits Council Comments on the PPA Technical Corrections Bills (PDF)
3 pages. Excerpt: "The Council has previously submitted lists of technical corrections that are needed with respect to the PPA. Certain of those technical corrections were included in the technical corrections bills noted above. . . . A number of critical technical corrections, however, were not included in the bills. In this document, we highlight our top priorities among those items that were not addressed. We continue to support all the technical corrections included in our prior lists, but the following are our highest priorities, listed in order of priority." (American Benefits Council)
Links to Items on Executive Comp, Benefits in General
Chrysler Chairman Wants to Offer Employees Stock Options
Excerpt: "Speaking with an interviewer at the Magazine Publishers of America conference in Boca Raton, Florida, Nardelli said he would like to see Chrysler offer stock options to employees. 'We're going to move options down pretty significantly into the organization,' Nardelli told Dennis Kneale, CNBC media and technology editor, during a webcast of the event Monday, October 29. 'It is important to give them a piece of the action.'" (Workforce Management; free registration required)
DOL's Office of Labor-Management Standards Posts FAQs on Form LM-10
Excerpt: "The Department of Labor, Office of Labor-Management Standards (OLMS) posted three new or expanded Form LM-10 FAQs to its web site. The OLMS expanded FAQ 7(A), discussing when a service provider is considered to be an agent of a labor organization." (International Foundation of Employee Benefit Plans)
Employees Desire 'People Like Me' Benefits Information, According to Trends Survey
Excerpt: "Employees are interested in receiving information geared toward their life stage--i.e. 'people like me'--on what kinds of benefits to select during their company's open enrollment period, according to MetLife's 2007 Open Enrollment Trends Survey. Six out of 10 (59 percent) employees would like their employer to suggest benefits that would be appropriate for someone in their life stage." (Wolters Kluwer Financial Services)
Newly Posted Events
Care Management Web Summit
in California on November 15, 2007
presented by Healthcare Web Summit
Consumer-Driven Healthcare: Key Drivers and Future Market Adoption - Webcast
Nationwide on October 31, 2007
presented by Health Resources Online
Final QDIA Regulations
Nationwide on November 8, 2007
presented by Convergent Retirement Plan Solutions, LLC
Newly Posted Press Releases
ASPPA And CIKR Support Uniform Fee Disclosure Requirements
ASPPA (American Society of Pension Professionals & Actuaries)
BISYS Retirement Services Becomes Ascensus
BISYS Retirement Services
PBGC Announces Maximum Insurance Benefit for 2008
Pension Benefit Guaranty Corporation (PBGC)
ERIC Urges Congress to Wait for DOL to Finish Work Before Moving New Fee Disclosure Legislation
ERIC (ERISA Industry Committee)
HighRoads Enables Compliance in Summary Plan Description Process
HighRoads, Inc.
New Survey Reveals Connection Between Mental Health and Productivity in the Workplace
Meritain Health
Newly Posted or Renewed Job Openings
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CDG Operations Manager
for Hewitt Associates
in IL
Primary Administrator for Qualified Retirement Plans
for Kidder Benefits Consultants, Inc.
in IA
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- Using the Web for Employee Benefits Research (hypertext article)
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