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| November 9, 2007 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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| 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
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(a) New Guidance Documents
(None today.)
(b) News
Retirement Plan Discussion and Activity Likely to Continue Past 2008 Elections
Excerpt: "The nation's capital continues to be a beehive of retirement plan-related legislative and regulatory activity which is expected to continue through the 2008 presidential election cycle and into 2009. That was the conclusion of attorney Jamey Delaplane, a specialist in the Employee Retirement Income Security Act (ERISA), with the Washington, D.C., law firm Davis & Harman who appeared in a Thursday Webinar hosted by the Women's Pension Exchange." (PLANSPONSOR.com; free registration required)
(c) Summaries of Guidance; Filed Comments
Overview: Fiduciary Relief for Qualified Default Investment Alternatives
Excerpt: "Plan fiduciaries should immediately evaluate the current default investment option for their plan to determine whether the current default investment option qualifies as a QDIA. If a plan's current default investment option does not qualify as a QDIA, the plan fiduciaries should immediately select a default investment option which does qualify as a QDIA by December 24, 2007, in order to maximize the fiduciary relief available under the final regulation." (Kilpatrick Stockton LLP)
Overview: DOL Final Default Investment Rules
Excerpt: "All in, the final regulation is a considerable improvement over the proposal. The resolution of the stable value issue avoids, at least, the possibility of mass re-defaulting with attendant market value adjustments. And many other sponsor concerns, e.g., about sponsor management of QDIAs, notices and immediate enrollment, and the treatment of transition issues, have been addressed." (JPMorgan)
Overview: Guidance on Interest Rate and Mortality Table for Calculating Lump Sum Distributions from Defined Benefit Plans in 2008
Excerpt: "Comment: Generally it is expected that the new rules will reduce the lump sum that would otherwise be payable under present law. Although plan sponsors are not required to notify participants of the interest rate and mortality table changes, these changes may have a significant effect on the value of lump sum benefits from defined benefit pension plans and we recommend that the changes be communicated to participants in advance of the effective date." (Ballard Spahr Andrews & Ingersoll, LLP)
The Brave New World of Post-PPA Lump Sum Distributions
Excerpt: "Assuming that the implementation proceeds as planned, the transition to the new lump sum basis, during which corporate bond rates are blended with Treasury bond rates, begins in 2008 and will be complete in 2012. The mortality change will be fully effective in 2008. Participants' lump sum benefits under the new basis are expected to decline gradually over the next five years compared with what the payouts would have been under the old basis." (Watson Wyatt Worldwide)
Overview: IRS Guidance on Minimum Lump Sums Under PPA (PDF)
3 pages. Excerpt: "On November 6, the IRS issued Revenue Ruling 2007-67, which provides guidance on minimum lump sum payments after 2007 under the Pension Protection Act (PPA). This guidance includes the mandated mortality tables, and covers other implementation issues such as timing rules for interest rates." (Buck Consultants)
(d) Trends, Surveys, Research
Workers Say Small Businesses 'Obligated' to Offer 401(k)s
Excerpt: "The second annual Small Business Annual Retirement Trends survey (SBART) commissioned by ShareBuilder Advisors, LLC, found 64% of employees of small businesses said the 401(k) is an important benefit that employers should be obligated to offer." (PLANSPONSOR.com; free registration required)
Hidden Strengths in Public Pension Funds
Excerpt: "The National Association of State Retirement Administrators (NASRA) recently released a report summarizing its annual survey of the nation's largest public pension funds. It tells an interesting story of quiet improvements and important trends. In a nutshell, most public pension plans are stronger financially and recovering steadily from the last recession. If financial markets can hold their current levels or better, the funding status of most pension funds should continue to improve in the next year's report as well. What can we learn from this experience?" (Congressional Quarterly, Inc.)
Which Way to Invest Once You Retire?
Excerpt: "Traditional financial planning suggests that you should be almost entirely in bonds and other safe, income-producing investments by the time you retire. But that could be a big mistake. Your retirement could last 30 years or more -- and if it does, you'll need stocks in your portfolio. In fact, you may be surprised to hear that some financial analysts think your retirement portfolio should probably look a lot like your pre-retirement portfolio." (USA TODAY)
Guidelines for Withdrawal Rates and Portfolio Safety During Retirement
Excerpt: "The existing literature for retirement portfolio withdrawal rates suggests that a real withdrawal rate of 4 percent of the initial portfolio is 'safe.' This paper demonstrates that a blanket '4 percent withdrawal' rule may be an oversimplification of a complex set of circumstances. Risk tolerance, asset allocation, withdrawal size, and expected returns all affect the process of withdrawing from a retirement portfolio. To advance previous research, this paper uses 21 stock/bond allocations and 71 withdrawal rates, for 1,491 possible combinations. For each of these combinations, 10,000 bootstrap iterations are run for 30-year periods." (Journal of Financial Planning)
(e) Policy, Opinion, Advocacy
Statement of Behalf of ASPPA and CIKR at Hearing on Plan Fee Disclosure, October 24, 2007 (PDF)
10 pages. Statement by Michael Kiley, President/CEO of Plan Administrators, Inc. on behalf of ASPPA and CIKR; Comments Presented to the Special Committee on Aging, United States Senate, Hearing on Plan Fee Disclosure,October 24, 2007. (American Society of Pension Professionals & Actuaries)
Testimony: 'Universal 401(k): A Retirement Saving Plan for Every Worker' (PDF)
14 pages. Statement of Michael Calabrese on Behalf of New America Foundation on 'Securing Retirement Coverage for Future Generations' before the Health, Employment, Labor and Pensions Subcommittee of the Committee on Education and Labor, U.S. House of Representatives on November 8, 2007. (U.S. House Committee on Education and Labor, Subcommittee on Health, Employment, Labor & Pensions)
Testimony: Pursuing Universal Retirement Security Through Automatic IRAs (PDF)
15 pages. Statement of J. Mark Iwry on behalf of the Brookings Institution on 'Securing Retirement Coverage for Future Generations' before the Health, Employment, Labor and Pensions Subcommittee of the Committee on Education and Labor, U.S. House of Representatives on November 8, 2007. (U.S. House Committee on Education and Labor, Subcommittee on Health, Employment, Labor & Pensions)
Testimony: A Proposal of a New Idea About the Way We Deliver Life Security Benefits to Americans (PDF)
21 pages. Excerpt: "Statement of Michael Stapley on behalf of the ERIC Task Force on New Benefit Platform for Life Security on 'Securing Retirement Coverage for Future Generations' before the Health, Employment, Labor and Pensions Subcommittee of the Committee on Education and Labor, U.S. House of Representatives on November 8, 2007." (U.S. House Committee on Education and Labor, Subcommittee on Health, Employment, Labor & Pensions)
House Committee on Education and Labor Subcommittee Hearing: Securing Retirement Coverage for Future Generations
Health, Employment, Labor, and Pensions Subcommittee Hearing: 'Securing Retirement Coverage for Future Generations' Thursday, November 8, 2007; Chairman Andrews' Opening Statement and Witness Testimony available on page. (U.S. House Committee on Education and Labor, Subcommittee on Health, Employment, Labor & Pensions)
Opinion: Why Plan Sponsors Can Be Better Served by Local TPAs
Excerpt: "Local TPAs simply offer flexibility that cannot be matched by bundled providers. Additionally, most are seasoned professionals with intimate ties to the local business community. This fact gives them a clear advantage and deeper understanding of regional business trends that impact the companies and clients they serve." (401kExchange)
Testimony: Hearing on Securing Retirement Coverage for Future Generations, November 8, 2007 (PDF)
4 pages. Statement of Pamela Perun on behalf of the Aspen Institute Initiative on Financial Security on 'Securing Retirement Coverage for Future Generations' before the Health, Employment, Labor and Pensions Subcommittee of the Committee on Education and Labor, U.S. House of Representatives on November 8, 2007. (U.S. House Committee on Education and Labor, Subcommittee on Health, Employment, Labor & Pensions)
Statement on Behalf of the Conversation on Coverage on 'Securing Retirement Coverage for Future Generations' (PDF)
8 pages. Statement of Norman P. Stein on Behalf of The Conversation on Coverage on 'Securing Retirement Coverage for Future Generations' before the Health, Employment, Labor and Pensions Subcommittee of the Committee on Education and Labor, U.S. House of Representatives on November 8, 2007. (Pension Rights Center)
Brief: Working Wives Reduce Social Security Replacement Rates (PDF)
8 pages. Excerpt: "[T]o understand the role of Social Security in the nation's retirement income system, it . . . is crucial to consider the replacement rate of couples . . . and how that rate has changed over time. Indeed, the increasing labor force participation of married women has led to a significant reduction in the replacement rates for couples." (Center for Retirement Research at Boston College)
Links to Items on Executive Comp, Benefits in General
Ethics of Options Repricing and Backdating
Excerpt: "So much interest and concern over stock option backdating and repricing, evinced by so many individuals and organizations, bodes poorly for the legitimacy of the potential motives for such actions. Such actions cannot withstand examination under any ethical test and should raise concern among investors, creditors, executives, and boards of directors. Based on the outcome of the Brocade case, such concerns have permeated the minds of potential jurors and thus the wider public." (New York State Society of CPAs)
Options Backdating: Corporate Governance Remains a Challenge
Excerpt: "Perhaps more than anything else, however, the options-backdating scandal should remind investors, auditors, and analysts about the need to remain vigilant of the means by which the combination of poor corporate governance, lax regulatory oversight, and the lack of controls can result in financial shenanigans." (New York State Society of CPAs)
SEC Confirms Zions Bancorporation's ESOARS and Auction Process Meet the Measurement Objectives of FAS123R (PDF)
3 pages. Excerpt: "The SEC advised Zions Bancorporation in an October 17, 2007 letter from the SEC Chief Accountant that the SEC did not object to the Company's view that its Employee Stock Option Appreciation Rights Securities (ESOARS) were 'sufficiently designed to meet the measurement objective of Statement 123R' and that the market-clearing price of the ESOARS auctioned from May 4-7, 2007 is a 'reasonable estimate of the fair value of the underlying employee stock options granted on May 4, 2007.'" (Frederic W. Cook & Co., Inc.)
Spotlight on SERPs: More Disclosure, More Questions
Excerpt: "This Perspective looks at why companies need to better understand the competitive aspect and the terms and conditions of their SERPs, and how changes in direct compensation (base pay and bonuses) can affect the amount of SERP benefits and their integration in the total remuneration strategy." (Mercer LLC; free registration required)
IRS Seeks Applications for TE/GE Advisory Committee
Excerpt: "The Internal Revenue Service is seeking applications for vacancies on the Advisory Committee on Tax Exempt and Government Entities (ACT). The committee provides a venue for public input into critical tax administration areas. Vacancies exist in the following customer segments: Employee Plans - two vacancies, Exempt Organizations - two vacancies, Federal, State, and Local Governments - two vacancies, Indian Tribal Governments - one vacancy, and Tax Exempt Bonds - one vacancy." (Internal Revenue Service)
Bill to Change USERRA Advances in House
Excerpt: "The House Ways and Means Committee has approved new legislation making a number of changes in tax law affecting U.S Servicemembers and their families. Several apply to retirement, survivor and disability benefits, including modifications to the Uniformed Services Employment and Reemployment Rights Act (USERRA) and a new requirement that must be met if plans are to maintain their tax-qualified status." (National Council on Teacher Retirement)
Newly Posted Events
DOL Speaks: Hot Topics in ERISA Litigation - Co-Sponsored by the American Benefits Council
Nationwide on November 13, 2007
presented by Paul, Hastings, Janofsky & Walker LLP
What's Ahead for Disease Management: The Evolution From Chronic Disease Management Toward Integrated Care and Health Management - Webcast
Nationwide on December 4, 2007
presented by Health Resources Online
Newly Posted Press Releases
More Employers to Offer Workers Financial Incentives for Healthy Behavior; Top Programs Integrate Health Management With Business Objectives, Watson Wyatt/National Business Group on Health Survey Finds
Watson Wyatt
George Koklanaris Named Chief Of Staff At The PBGC
Pension Benefit Guaranty Corporation (PBGC)
Plan Now to Get Full Benefit of Saver's Credit; Tax Break Helps Low- and Moderate-Income Workers Save for Retirement
Internal Revenue Service (IRS)
The Principal Financial Group Eases Fiduciary Responsibilities for ESOP Plan Sponsors
Principal Financial Group
Sandy McCarthy Named CitiStreet President
CitiStreet
Report Reveals Differences in How Small Business Employers and Employees View the Need for 401(k)
ShareBuilder
AFS Financial Group To Offer Enhanced 401(k) Consulting Services
AFS Financial Group
Newly Posted or Renewed Job Openings
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