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| November 19, 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
Federal Register Version: Text of Final IRS Regs Defining 'Salary Reduction Agreement' for FICA Purposes, Including One-Time 403(b) Elections (PDF)
Excerpt: "The final regulation provides guidance to employers (public educational institutions and section 501(c)(3) organizations) purchasing annuity contracts described in section 403(b) on behalf of their employees. . . . This regulation finalizes the temporary and proposed regulation without change. The final regulation provides that the term 'salary reduction agreement' includes . . . a plan or arrangement whereby a payment will be made if the employee elects to reduce his or her compensation pursuant to a one-time irrevocable election made at or before the time of initial eligibility to participate in such plan or arrangement (or pursuant to a similar arrangement involving a one-time irrevocable election), and . . . a plan or arrangement whereby a payment will be made if the employee agrees as a condition of employment (whether such condition is set by statute, contract, or otherwise) to make a contribution that reduces the employee's compensation." (Internal Revenue Service)
IRS Retirement News for Employers (Fall 2007) (PDF)
10 pages. Contents include: Is an Automatic Contribution Feature Right for Your Plan?; Common Errors Uncovered in Audits of SEP and SIMPLE IRA Plans; Recent Guidance; Did You Receive a Form 5500 Delinquency Notice?; Form 5500 Filing Relief Due to California Wildfires; Determination Letter Program Halted for Some Defined Contribution Plans; 2008 Retirement Plan Limits Announced; Fixing Common Plan Mistakes: Correcting a Failure to Effect Employee Deferral Elections; Product Profile: 403(b) Checklist. (Internal Revenue Service)
(b) News
City of San Diego Will Absorb Cost of Pension Credit Perk: Those Who Bought Them Won't Have to Pay More
Excerpt: "For six years, the retirement system charged workers between 15 percent and 26 percent of their annual salaries for a year of credit. That changed late in 2003, when the cost soared to between 27 percent and 50 percent. Employees rushed to join before the price increased. Overall, nearly 6,000 have purchased credits." (The San Diego Union-Tribune)
Pension Funds Battle SEC Over Proxy Access
Excerpt: "Some of the largest US and UK pension funds will [today] launch a last-ditch attempt to persuade Christopher Cox, Securities and Exchange Commission chairman, to halt a vote they fear will block shareholders' ability to influence the composition of company boards." (The Financial Times Ltd. via MSNBC.com)
California Pension Commission Stumped by Dispute Over 'Spiked' Benefits
Excerpt: "A commission created to suggest changes to the state's pension system was deeply divided over how to solve the issue of 'pension spiking.' In fact, the commission could not even agree whether pension spiking exists, or if it is a problem, let alone what the solution should be." (Capitol Weekly)
Iran Divestiture Proposal Announced by NY State Comptroller
Excerpt: "New York State Comptroller Thomas P. DiNapoli last week announced a plan to divest state retirement funds from companies doing business in Iran.' (PLANSPONSOR.com; free registration required)
(c) Summaries of Guidance; Filed Comments
ASPPA Comments on Mid-Year Changes to a Safe Harbor §401(k) Plan (PDF)
4 pages. Excerpt: "Summary of Recommendations: A. ASPPA recommends that the IRS provide a list of plan modifications that may be made mid-year without affecting a plan's safe harbor status under Code §§ 401(k)(12) and 401(m)(11). In addition, ASPPA recommends that the IRS provide a list of those provisions that may NOT be modified mid-year without affecting a plan's safe harbor status. B. ASPPA recommends that the Service clarify which provisions may be amended mid-year but would require that the plan sponsor provide a supplemental notice to participants. To the extent a supplemental notice is required; ASPPA recommends that plan sponsors be permitted to provide the updated notice within 60 days of the effective date of the modified provision." (American Society of Pension Professionals & Actuaries)
Overview: Regulations on Fiduciary Safe Harbor for Qualified Default Investment Alternatives (PDF)
4 pages. Excerpt: "In order to qualify for fiduciary relief, plans must meet six conditions that are detailed in the final regulations." (Reinhart Boerner Van Deuren s.c.)
Frequently Asked Questions About QDIA Notices
Excerpt: "[Here are a few answers to] questions on QDIAs and the QDIA notice." (McKay Hochman Co., Inc.)
Overview: Legislation to Delay PPA Effective Date Proposed
Excerpt: "Representatives Earl Pomeroy (D-North Dakota) and Eric Cantor (R-Virginia) have introduced legislation (H.R.3868) to delay the effective date of certain provisions in the Pension Protection Act of 2006 (PPA). The delay would affect the single-employer minimum funding rules, the funding-based benefit restrictions, application of the new 417(e) interest rate, calculation of Pension Benefit Guaranty Corporation variable-rate/risk-based premiums and the deduction limit for multiemployer plans." (Watson Wyatt Worldwide)
Hewitt Federal Legislation Quick Guide Updated as of November 14, 2007, for Retirement Plans (PDF)
12 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding retirement plans. (Hewitt Associates)
Participant Benefit Statements: Guidance Recap
Excerpt: "Other than awaiting for final guidance and model benefit statements, where do we stand at this point?" (McKay Hochman Co., Inc.)
Overview: Long-Awaited Guidance Needed to Calculate Pension Lump Sums (PDF)
2 pages. Excerpt: "Because the new standard applies for plan years beginning after December 31, 2007, sponsors of calendar year plans have been eagerly awaiting details. In Notice 2007-81, the IRS released specifics on the yield curve. That has now been followed by Revenue Ruling 2007-67, which provides guidance on the new mortality table and related compliance details. This Bulletin summarizes the guidance and how the new calculations are likely to work." (The Segal Group, Inc.)
(d) Trends, Surveys, Research
Five Stock Funds Employees Will Want to Keep in a 401(k) Plan
Excerpt: "As part of an occasional series providing mutual-fund investing ideas for different periods of life, MarketWatch asked investment advisers how they'd help people work toward the time when they won't work. From their suggestions, we chose five no-load stock funds with proven records and low costs that you'd likely find in a 401(k) . . . ." (MarketWatch)
Target-Date Fund Winners ID'd As Lipper Ranks Families in Booming 401(k) Niche
Excerpt: "Attempting to ease the burden for both plan sponsors and investors, research firm Lipper recently studied target-date funds, setting out to rank them by past performance. T. Rowe Price, Principal Investors and Fidelity came out on top, and Wells Fargo, MassMutual and NestEgg were at the bottom of the list." (Financial Week; free registration required)
Trends in Ownership of Mutual Funds in the United States, 2007 (PDF)
12 pages. Excerpt: "Fund ownership has grown through workplace retirement plans, largely fueled by the growing popularity of defined contribution plans. In 2007, 33 million households hold mutual funds through employer-sponsored retirement accounts, an increase from 27 million in 1998." (Investment Company Institute)
Next 401(k) Suit Wave Cresting: Plan Sponsors Seen Vulnerable to Litigation
Excerpt: "The class-action lawsuits allege that plan sponsors failed to meet their fiduciary responsibilities by ignoring payments that investment managers paid to record keepers and other service providers. The suits also charge that plan executives failed to disclose these fees to participants, as required by ERISA. 'Going forward, it will not just be plan sponsors; lawsuits will be targeting more service providers,' said Michael Roche, an attorney with Winston & Strawn." (Financial Week; free registration required)
Failing to Adhere to Enrollment Form Designations -- How Should This be Fixed?
Excerpt: "Recently, a 401(k) plan trustee requested our advice regarding a failure of the plan service provider to allocate participant accounts in the manner described in participant enrollment forms. The service provider invested participant accounts in the plan's default fund, rather than in the various funds selected by the participants. This 'misdirection' of funds had been going on for a number of months. The plan trustee wanted our advice on how to fix this problem." (Reish Luftman Reicher & Cohen)
A Tepid Reception for Annuities as 401(k) Payouts
Excerpt: "Although employers will soon have protection against being dragged into court on charges that they didn't select the 'safest' annuity available doesn't mean that they'll now embrace annuities as a distribution option. The problem is that too few of the 52 million people who have defined-contribution accounts want to put their retirement savings into annuities." (Workforce Management; free registration required)
Working Paper: How Do Immigrants Fare in Retirement? (PDF)
42 pages. Excerpt: "In this paper, we examine the retirement resources available to immigrant families by examining Social Security benefits, pension coverage, and private wealth accumulation. Our results suggest that although immigrant families may be financially better-off in the U.S. than in their native countries, they do enter retirement at a significant financial disadvantage relative to native born households with similar characteristics." (University of Michigan Retirement Research Center)
The Baby Boomer's Guide to Social Security
Excerpt: "'Don't let Social Security just 'happen,' ' says Joseph Matthews, a lawyer in San Francisco and author of a guide to the program. 'There really are a number of variables that people should consider before they start.' The basics are available from the Social Security Administration. (More about that in a moment.) But to supplement your education, consider the following -- some of the most interesting, obscure, misunderstood and surprising parts of the 72-year-old program . . . ." (The Wall Street Journal Online)
(e) Policy, Opinion, Advocacy
(None today.)
Sponsored by: ASC & the ASC Institute
(Click on company name or banner to learn more.)
| Failed a discrimination test? |
| ASC Systems will automatically show you how to best pass! With ASC Software more of your plans will pass - and for the ones that don't - ASC's Budget Solving for 401(a)(4) discrimination testing will automatically crunch the numbers to find the best option for your clients. ASC automatically provides you multiple ADP/ACP corrective options - allowing you to provide creative and money saving solutions to your clients. When plan sponsors prefer not to return deferrals to the highly compensated group - ASC automatically provides other corrective options in an easy-to-read summarized format! ASC offers a full range of retirement plan automation products including DC/401(k) administration and valuation software, Defined Benefit software, Document Management and Generation (DGEM)System and much more. Learn more! Email: sales@asc-net.com |
| (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) |
Links to Items on Executive Comp, Benefits in General
Text of Aon's 2007 Year-End Checkup for Benefit Plans (PDF)
15 pages. Excerpt: "This Alert will help identify general year-end administrative and planning issues that could lead to compliance or employee relations problems if not addressed before, or early in, 2008. In addition, we have highlighted recent legislative or regulatory developments that may require plan design or documentation changes, particularly in response to the Pension Protection Act of 2006 (PPA), final Internal Revenue Code (IRC) §409A regulations, and the re-proposed IRC §125 regulations." (Aon)
Working Paper: Trends in the Labor Force Participation of Married Women (PDF)
28 pages. Excerpt: "This study seeks to quantify determinants, and costs, of the labor -- force participation of married women. We use demographic and earnings data from the Health and Retirement Study. The earnings data constitute an unusually long panel but have the defect of lacking corresponding reports on work hours. By using a highly structured model and concentrating on the participation margin, we nevertheless feel that we can make substantial progress." (University of Michigan Retirement Research Center)
Hewitt Federal Legislation Quick Guide for November 14, 2007, on Human Resources & Employment Law (PDF)
12 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding human resources and employment law. (Hewitt Associates)
Massachusetts Blue Cross Gave Chairman $16.4 Million in Retirement Pay While Still on Salary
Excerpt: "The payment was triggered when Van Faasen, 58, stepped down as chief executive, retaining his position as chairman of the state's largest health insurer with 3 million members. In addition to the retirement payout, he also earned nearly $3 million last year in salary and bonus as chairman." (The Boston Globe via The Foundation for Taxpayer & Consumer Rights)
2007 End of Year Plan Sponsor 'To Do' Lists (PDF)
22 pages. (Snell & Wilmer LLP)
Newly Posted Events
Attention Business Executives and HR Professionals. Join Us For a 401(k) Seminar You Can't Afford To Miss.
in Virginia on December 5, 2007
presented by AFS Financial Group
Newly Posted Press Releases
Struggling to Retire? Planning Size of Nest Egg is Key to Financial Security; New AARP Survey Finds People with Access to Workplace Plans Better Prepared For Retirement - Auto-enroll in 401k Would Help Many Workers
AARP
PBGC Releases Financial Results For Fiscal Year 2007
Pension Benefit Guaranty Corporation (PBGC)
Searching For The Silver Bullet, A New Study From The MetLife Mature Market Institute® Provides Innovative Aging Workforce Strategies For Employers
MetLife
ERISA Expert Joins CAPTRUST Financial Advisors Board of Advisors
CAPTRUST Financial Advisors
NFP CEO Joins CAPTRUST Financial Advisors Board of Advisors
CAPTRUST Financial Advisors
BenefitStreet's Founder and CEO Departs
PLANADVISER
ULLICO Inc. and U.S. Department of Labor Agree to Resolve 5 Year Old ERISA Investigation
ULLICO Inc.
n4a Launches National Campaign to Help Businesses and Employees Work through Costly, Stressful Caregiving Issues
National Association of Area Aging on Aging (n4a)
Newly Posted or Renewed Job Openings
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401(k)/Defined Contribution Valuation Processor
for National Retirement Services, Inc.
in CA, NC
Defined Benefit Analyst
for Vanguard
in PA
In House ERISA/Employee Benefits Counsel
for National Financial Partners
in NY
Director, Plan Services
for Diversified Investment Advisors
in NY
Account Administrator-Daily Recordkeeping
for McCready and Keene, Inc.
in IN
Trust Administrator - Employee Benefits
for Old Point Trust
in VA
401(k) Administrators
for The Dayton Group Ltd
in CT, NJ, NY
RPSS Compliance Specialist
for Associated Wealth Management
in WI
Senior Defined Benefit Consultant
for Milliman, Inc.
in WA
Conversion Specialist
for ePlan Services, Inc.
in CO
Institutional Relationship Manager
for Great-West Corporate
in CO
401(k) Plan Administrator
for Pratas, Smith & Moore CPA's
in TX
Documents Supervisor
for Associated Pension Consultants
in CA
Senior Institutional Sales Director - Business Retirement Solutions
for Bank of America
in CA, CT, GA, NJ, NY
Sr. Benefits Analyst
for Altivity Packaging
in IL
Retirement Plan Consultant CSR
for UNIFI Companies (Ameritas Life, Acacia Life, Union Central Life and affiliated companies)
in NE, OH
Implementation Project Lead
for Vanguard
in PA
Defined Benefit/Defined Contribution Administration Development Analyst
for New York Life Retirement Plan Services
in MA
Defined Benefit/Defined Contribution Administration Business Analyst
for New York Life Retirement Plan Services
in MA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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