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| October 31, 2007 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
Today's sponsor is DATAIR Employee Benefit Systems, Inc.
(Click on company name or banner to learn more.)
| Software for 401(k), Pension and Flex Administration |
| Pick and choose the software modules you need:
DC/401(k) Proposals & Administration - DB Proposals & Administration - Retirement Plan Documents (Prototype and
Volume Submitters) - Government Forms (5500s, 1099-Rs, 5300s) - Cafeteria Plan Administration & Documents - Participant Termination Calculations - FAS 132 Reporting
Contact sales@datair.com or call 1-888-328-2474. |
(a) New Guidance Documents
(None today.)
(b) News
Ex-Chief of S.E.C. Says Pension Funds in Danger
Excerpt: "In remarks to pension officials from New York and several other states, Mr. Levitt, the longest-serving chairman of the Securities and Exchange Commission, said their world was fraught with problems, including conflicts of interest, opaque accounting and a tendency among elected officials to promise valuable benefits, then fail to set aside enough money to pay for them." (The New York Times; free registration required)
Pensions May Be Outsourced As Banks Look to Take Plans, and Their Assets, Off the Hands of Employers
Excerpt: "This month, Citigroup Inc. got the green light from the Federal Reserve for an unusual deal to take over the $400-million retirement plan of a British newspaper company. In exchange for getting its hands on all that cash, Citigroup will run the pension plan -- investing the money, paying the benefits and taking on the liability previously borne by Thomson Regional Newspapers. And it's eyeing similar moves stateside." (Los Angeles Times; free registration required)
Rhode Island Lawmakers Override Domestic Partner Benefits Veto
Excerpt: "Rhode Island's General Assembly has overridden the veto of legislation providing the domestic partners of public employees with the same pension and retirement benefits as spouses." (365G.ay.com)
(c) Summaries of Guidance; Filed Comments
Overview: Final Regulations on 'Qualified Default Investment Alternatives' (PDF)
6 pages. Excerpt: "On October 24, 2007, the Department of Labor issued final regulations implementing the provision of the Pension Protection Act of 2006 (PPA) that expands the relief available to plan fiduciaries under Section 404(c) of the Employee Retirement Income Security Act of 1974 (ERISA) to include relief from liability for the investment of a plan participant's assets in a 'qualified default investment alternative.'" (Pillsbury Winthrop Shaw Pittman LLP)
Overview: DOL Issues Final Rules for Qualified Default Investment Alternatives Under the PPA
Excerpt: "EBIA Comment: Fiduciaries wishing to avail themselves of the relief provided by the final regulations should review the final regulations carefully, since the conditions that must be satisfied for the fiduciary relief are quite detailed and complex. We note that while it is not necessary for a plan to be an ERISA Section 404(c) plan in order for the fiduciary to obtain the relief provided by the final regulations, there is no fiduciary relief for a participant's or beneficiary's investment direction to transfer assets out of a QDIA. To obtain relief for the non-QDIA investment, the plan would have to satisfy ERISA Section 404(c). Note that the preamble to the final regulations also addresses several transition issues, including what steps to take to ensure that a plan's current or new default investments would meet the QDIA requirements in the regulations." (Employee Benefits Institute of America)
Overview: IRS Proposed Regulations on PPA Funding-Based Benefit Limitations (PDF)
5 pages. Excerpt: "Internal Revenue Code Section 436, added by the Pension Protection Act of 2006 (PPA), limits the ability of underfunded single-employer and multiple-employer defined benefit plans to make benefit improvements, pay 'accelerated' benefits (e.g., lump sums), accrue additional benefits, or pay unpredictable contingent event benefits. These provisions are generally effective in 2008 for non-collectively bargained plans." (Buck Consultants)
Text of Law Firm's Comments on IRS Notice 2007-62 (PDF)
6 pages. The commenting law firm recommends that Treasury and the IRS reconsider whether the definition of 'substantial risk of forfeiture' described in the final regulations under Section 409A is appropriate for purposes of Section 457(f). Specifically, employees of governmental and tax-exempt organizations should not be prohibited from making elective deferrals of compensation, so long as the employee's rights to the amounts deferred are conditioned on either (i) the performance of substantial future services, or (ii) the occurrence of a condition related to a purpose of the compensation. (Polsinelli Shalton Flanigan Suelthaus pc)
Overview: New Web-Based Interactive Compliance Tool from DOL for Retirement Plan Fiduciaries
Excerpt: "EBIA Comment: We think plan sponsors and their advisors will find the Advisor a helpful tool but, as a word of caution, we quote the DOL's disclaimer: 'This Advisor provides a simplified explanation of the law and regulations regarding the scope of ERISA's fiduciary responsibility requirements for private-sector retirement plans. It is not a legal interpretation of ERISA, nor is it intended to be a substitute for the advice of a retirement plan professional.'" (Employee Benefits Institute of America)
(d) Trends, Surveys, Research
Fiduciary Warranty Protection Doesn't Cover Fee-Related Issues
Excerpt: "Although two insurance giants now offer fiduciary liability protection to help protect retirement plan sponsors in the event of a legal judgment resulting in monetary damages, employers fearing the uptick in 401(k)-related lawsuits shouldn't go out buying the warranties just yet, experts say." (Employee Benefit News; free registration required)
Do You Have a 403(b) Retirement Plan? If So, Pay Attention
Excerpt: "Saving for retirement will soon be less confusing for employees of public schools, hospitals, colleges and other not-for-profit organizations. This summer, the IRS issued new rules designed to make 403(b) savings plans for tax-exempt workplaces look more like 401(k) retirement savings plans for private sector companies. The new rules go into effect Jan. 1, 2009." (Houston Chronicle)
European Commission Aims to Protect Vested Pension Benefits
Excerpt: "The European Commission is trying again to secure agreement on a directive, the effect of which would be to protect pension benefits accrued under supplementary schemes and to encourage job mobility within Europe." (Watson Wyatt Worldwide)
Defined Contribution Fee Survey Summary of Government Administrators (PDF)
15 pages. Excerpt: "The . . . results document the information gathered from a member survey conducted by the National Association of Government Defined Contribution Administrators (NAGDCA) in October 2007 regarding board structure and reasonableness of fees in defined contribution plans." (National Association of Government Defined Contribution Administrators, Inc.)
Move Over, Mutual Funds, Here Come the Commingled Funds
Excerpt: "Commingled funds will replace mutual funds in the largest defined contribution plans within the next few years, money managers predict. The change will be the result of a tug of war between human resources and finance executives at plan sponsors -- a battle the financial executives are winning." (Pensions & Investments)
Couples Who Talk About Retirement Issues Generally Agree
Excerpt: "A new study conducted by Harris Interactive for The Wall Street Journal Online indicates men and women both feel they and their partners are on the same page about saving for retirement." (PLANSPONSOR.com; free registration required)
Automatic IRAs: Worker Attitudes and Likelihood of Participation
Excerpt: "Congressional legislation requiring certain employers to provide employees with access to Individual Retirement Account arrangements (IRAs) through regular payroll deductions was reintroduced in Congress in 2007. The legislation pertains to for-profit companies that do not offer a retirement savings plan, employ at least 10 full-time workers, and have been in business for at least two years. This survey finds that workers at companies that would be affected by the legislation favor the concept of automatic IRAs and are likely to participate." (AARP)
Brief: A Gradual Exit May Not Make for a Happier Retirement
Excerpt: "Workers who say they want to retire gradually, however, are clearly not basing their preference on personal experience. These workers have not retired both ways, concluding that retiring in stages is better. To shed light on this issue, this brief summarizes a new study comparing individuals who retired gradually with those who retired 'cold turkey' and asks which are happier in retirement. The study uses happiness as the yardstick because it measures realized quality of life . . . ." (Center for Retirement Research at Boston College)
(e) Policy, Opinion, Advocacy
Testimony: Private Pensions: Information That Sponsors and Participants Need to Understand 401(k) Plan Fees (PDF)
22 pages. Excerpt: "This testimony provides information on 401(k) plan fees that (1) sponsors need to carry out their responsibilities to the plan and (2) plan participants need to make informed investment decisions." (U.S. Government Accountability Office)
ERIC Testimony at Oct. 30 Hearing: The Appropriateness of Retirement Plan Fees (PDF)
8 pages. Excerpt: "Major employers strongly urge the Congress to defer legislative action until after the Department of Labor completes its current fee disclosure projects and the results of those efforts can be evaluated." (The ERISA Industry Committee)
Testimony on Behalf of Pension Rights Center on the Appropriateness of Retirement Plan Fees (PDF)
7 pages. Excerpt: "Our testimony today will focus on six issues: (1) the effect of fees on retirement savings in 401(k) plans; (2) disclosure of fees to participants; (3) disclosure of fees to fiduciaries; (4) the inappropriateness of charging plan administration fees to participant accounts; (5) the inappropriateness of a Department of Labor field assistance bulletin that allows a plan to charge extraordinary fees to the accounts of individual participants; and (6) the desirability of a government-sponsored, low-fee 401(k)-type service provider, which could provide an alternative to smaller businesses that often lack sufficient bargaining power to negotiate low-fee arrangements with third-party administrators." (Pension Rights Center)
The Ariel-Schwab Black Paper (PDF)
26 pages. Excerpt: "For middle-class African- Americans, the march toward financial security has been an uphill journey marked by half steps, pauses and, for some, retreat. Over the last decade, Ariel Mutual Funds and The Charles Schwab Corporation have annually commissioned research comparing the saving and investing habits among middle- and upper-income Blacks and Whites. The results consistently show that Blacks save less than Whites of similar income levels and are less comfortable with stock investing, which impedes wealth building across generations and contributes to an impending retirement crisis in the African-American community." (Ariel Mutual Funds / Charles Schwab)
Links to Items on Executive Comp, Benefits in General
Federal Employees' Union, Law Firm Partner to Pursue Reservists' Benefit Claims
Excerpt: "The American Federation of Government Employees has teamed up with a New York law firm to help federal employee reservists collect thousands of dollars in back pay. The union and Tully, Rinckey & Associates will co-represent about 10,000 AFGE members who claim they were improperly charged leave for reserve duties, even if such duties occurred on weekends, federal holidays or other days when they were not regularly scheduled to work." (GovExec.com)
2007 Director Compensation Survey of the 100 Largest U.S.-Based Companies Listed on NYSE and NASDAQ (PDF)
21 pages. Excerpt: "Over the past four years, this study has demonstrated increases in director compensation as the roles, responsibilities, and potential liability of outside directors have expanded significantly. The increases we saw in prior years, however, moderated last year. This year's study reports a plateau in compensation levels for outside directors, owing to flatter trends in cash compensation and continuation of trends in equity compensation design among NASDAQ and NYSE companies." (Frederic W. Cook & Co., Inc.)
The 2007 Top 250 Survey of Long-Term Incentive Grant Practices for Executives (PDF)
36 pages. Excerpt: "Resuming a movement from last proxy season, pension-funds, activist investors, and their advisors (ISS, Glass-Lewis, etc.) continue to use shareholder proposals and voting for equity compensation plans and compensation committee members to push back on excessive practices. In the coming months, prospective legislation introduced by Rep. Barney Frank requiring shareholder approval of executive compensation programs could also take center stage in affecting Compensation Committee decision-making processes." (Frederic W. Cook & Co., Inc.)
Newly Posted Events
Free Web Seminar: "Uncover and Manage Your Plan's 401(k) Expenses"
in California on November 7, 2007
presented by TRI-AD
PSCA QDIA Webinar - Free
Nationwide on November 9, 2007
presented by Profit Sharing/401(k) Council of America (PSCA)
What's Hot in Employment Taxes: Independent Contractor or Employee? - A Tax Talk Today Webcast
Nationwide on November 6, 2007
presented by Internal Revenue Service (IRS)
Newly Posted Press Releases
U.S. Labor Department Extends Annual Reports Deadline After Wildfires Hit California
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
The Principal Financial Group Gives Sole Proprietors A New Way to Save for Retirement
Principal Financial Group
BenefitsZoom.com Offers Innovative Consulting Service To Those That Need It Most
BenefitsZoom LLC
Newly Posted or Renewed Job Openings
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DB/DC Administrator
for Peery & Associates, Inc.
in ANY STATE
Retirement Services Facilitator
for National Life Group
in VT
Consulting Assistant
for McCready and Keene, Inc.
in IN
Data Processing Manager Position
for Hancel McCord Company
in TX
Call Center Manager, Retirement Plans
for The Newport Group
in NC
Retirement Plan Specialist
for Elliott Davis/Retirement Plan Advantage, LLC
in SC
Senior Plan Administrator
for NestEggs, Inc.
in FL
RVP/External Wholesaler
for Transamerica Retirement Services
in CA
WRS Relationship Manager I
for Wachovia
in VA
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