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| November 20, 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
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(a) New Guidance Documents
Rev. Rul. 2007-71: 2008 Covered Compensation Tables for Plans Using a Permitted Disparity Formula (Integration) (PDF)
5 pages. Provides covered compensation tables for the year 2008, which are for use in determining contributions to defined benefit plans and permitted disparity (integration). Excerpt: "For purposes of determining covered compensation for the 2008 year the taxable wage base is $102,000. . . . Section 1.401(l)-1(c)(7)(i) defines covered compensation for an employee as the average (without indexing) of the taxable wage bases in effect for each calendar year during the 35-year period ending with the last day of the calendar year in which the employee attains (or will attain) social security retirement age." (Internal Revenue Service)
(b) News
Union, 12 Pension Funds Want SEC to Delay a Controversial Shareholder Rights Rule
Excerpt: "The 12 pension funds -- including the nation's largest, the California Public Employees' Retirement System -- together own more than $300 billion worth of stocks in U.S. companies. Their officials wouldn't comment on possible litigation Monday but said the funds had sent 'urgent letters' to SEC Chairman Christopher Cox, a Republican, pressing him to delay the expected Nov. 28 vote until all five seats on the SEC are filled." (BusinessWeek)
Federal Thrift Savings Plan Board Approves Trading Restrictions
Excerpt: "Alarmed by a surge in stock and bond trading by a small group of government employees, the board that oversees the Thrift Savings Plan voted yesterday for a crackdown on participants who try to beat the market by jumping in and out of the plan every few days. The day traders or market timers, as these employees are popularly called, have been driving up the plan's operating costs for all TSP participants, plan officials said." (The Washington Post; free registration required)
U. S. Labor Department Proposes Expansion of Class Exemption On Settlement Of Litigation (U.S. Department of Labor, Employee Benefits Security Administration (EBSA))
(c) Summaries of Guidance; Filed Comments
Post-PPA '06 Reviews of DC Plan Investments to Ensure Safe Harbor Fiduciary Protection (PDF)
2 pages. (The Segal Group, Inc.)
Overview: Proposed Regulations for Automatic Contribution Arrangements
Excerpt: "These rules provide a new nondiscrimination safe harbor for 401(k) plans with an automatic contribution arrangement. Further, the rules provide that participants who are automatically enrolled in a 401(k) plan, a 403(b) plan or a 457(b) plan can elect a refund of their contributions within 90 days of enrollment without being subject to early distribution penalties." (Kilpatrick Stockton LLP)
Overview: New IRS Proposed Regulations on Automatic Enrollment (PDF)
6 pages. Excerpt: "The Consulting Alert Bulletin . . . describes the proposed regulations and sample notice. Qualified automatic contribution arrangements (QACAs) and eligible automatic contribution arrangements (EACAs) are discussed in detail. The Bulletin also highlights certain requirements in the proposed rules that may present challenges for employers." (Hewitt Associates)
Overview: Final 415 Regulation Amendment for Defined Contribution Plans
Excerpt: "SunGard has just released a good-faith Final 415 Regulation amendment for defined contribution plans. As indicated in the October 8, 2007 Technical Update all plans must be updated to reflect these regulations." (SunGard Corbel LLC)
Overview: The Final QDIA Regulation
Excerpt: "The final regulation is a substantial improvement over the proposed regulation. However, many of the conditions are more complex than they initially appear to be and the notice requirements are both burdensome and a trap for the unwary." (Reish Luftman Reicher & Cohen)
Overview: 401(k) Elective Deferrals May Only Be Made on Section 415(c)(3) Compensation (PDF)
Pages 11-12 of 22 pages. Excerpt: "As a general rule, amounts received following a severance from employment, such as severance pay, parachute payments under Code Section 280G, and most unfunded nonqualified deferred compensation, are not considered to be Code Section 415(c)(3) compensation." (Snell & Wilmer LLP)
Overview: Required Minimum Distribution Timing
Excerpt: "Individual Retirement Accounts (IRAs), tax sheltered annuities under Code §403(b), Eligible Deferred Compensation plans under Code §457(b) and qualified plans under Code §401(a) generally must provide for the payment of benefits to plan participants not later than the participants required beginning date." (McKay Hochman Co., Inc.)
Overview: Automatic Enrollment Guidance
Excerpt: "These regulations are proposed to be effective for plan years beginning on or after January 1, 2008. Taxpayers may rely on these proposed regulations for guidance pending the issuance of final regulations. If, and to the extent, the final regulations are more restrictive than the guidance in these proposed regulations, those provisions of the final regulations will be applied without retroactive effect." (McKay Hochman Co., Inc.)
Overview on the Administrative/Procedural Implications of the QDIA Regulations
Excerpt: "By now you have received numerous bulletins from your consultants and attorneys regarding the new qualified default investment alternative (QDIA) rules. In this ErisaALERT we will try very hard not to repeat everything you have already received, but rather focus on the practical administrative/procedural steps you should be thinking about now." (ERISAdiagnostics Inc.)
Age Concerns: How European Age Discrimination Laws Impact on Retirement and Pension Provision
Excerpt: "This Pensions client alert covers developments on the impact of European age discrimination laws on retirement and pension provision. This alert takes a look at recent developments in two cases that may further impact the UK practice. One case details a challenge at the European Court of Justice (ECJ) to legislation that permits employers to set a compulsory retirement age, and a UK employment tribunal case which considers how an employer may objectively justify age discrimination." (Baker & McKenzie)
Retirement Benefits Considerations for Employers Operating in Puerto Rico
Excerpt: "This series will review various employee benefit and employment-related issues that U.S. employers should consider when maintaining or opening operations in Puerto Rico." (Employee Benefit News; free registration required)
American Academy of Actuaries Letter to House Ways and Means Committee Requesting Technical Corrections to Pension Protection Act (PDF)
3 pages. Excerpt: "On behalf of the American Academy of Actuaries, we appreciate this opportunity to address important defined benefit pension plan matters in relation to benefit restrictions under the Pension Protection Act of 2006 (PPA). We are requesting some technical corrections that will clarify the law and alleviate unreasonable burdens on plan participants, plan administrators, and other service providers to the plan, while not affecting the intent of the law." (American Academy of Actuaries)
Overview: SEC's Proposed Summary Prospectus (PDF)
2 pages. Excerpt: "The SEC unanimously voted the week of November 15, 2007, to consider a proposed rule change to further its previously announced goal of simplifying mutual fund prospectus disclosure. The proposed rule change attempts to provide prospective investors with information that is easier to read and understand, while continuing to make more information easily available for those who want it." (Drinker Biddle & Reath LLP)
'Winding Up' Program Informs UK Trustees
Excerpt: "UK's Pensions Regulator has issued a supplementary e-learning module, published as an additional learning tool to help trustees understand the 'winding up' process." (PLANSPONSOR.com; free registration required)
Hewitt's Global Retirement Update, November 2007
3 pages. Excerpt: "[The] Global Retirement Update summarizes recent legislative developments and trends related to retirement and financial management and highlights recently passed and pending legislation that may require employers to take action to comply with new rules or review existing plans." (Hewitt Associates)
Prudent Practices for Fiduciary Advisers Under the Pension Protection Act's Title VI
Excerpt: "In defining a 'fiduciary adviser,' the PPA will have a profound impact not just on retirement advisers, but on the entire investment industry. This article, adapted from a new handbook, Prudent Practices for Fiduciary Advisers, examines what it means to be a fiduciary adviser under the new act, particularly as related to Section 601 (Title VI), and offers some of the best practices advisers should follow when delivering custom advice to plan participants." (Journal of Financial Planning)
(d) Trends, Surveys, Research
2007 Retirement Plan Trends -- A Total View (PDF)
60 pages. Excerpt: "Based on data for the 2006 calendar year, this report provides an in-depth look at retirement program trends among more than 38,600 retirement plan sponsors with services provided by The Principal and approximately 3.5 million participants across four core retirement plan designs: defined contribution, including 401(k) and 403(b); defined benefit; nonqualified; and Employee Stock Ownership Plan (ESOP)." (Principal Financial Group)
Working Paper: Life-Cycle Models - Lifetime Earnings and the Timing of Retirement (PDF)
25 pages. Excerpt: "This paper attempts to use HRS panel data to test how relatively high (or low) earnings affect male retirement ages. Our goal is to use cross -- sectional earning differences to help anticipate likely time -- series developments in coming decades. Our preliminary regression results show that higher earnings do lead to somewhat earlier retirement." (University of Michigan Retirement Research Center)
Can Your Pension Plan Afford To Give You a COLA?
Excerpt: "Over time, pensions shrink in value due to inflation, and retirees have successfully fought for cost-of-living adjustments (COLAs) to their pensions to counteract the effects of inflation. . . . If your pension plan is overfunded -- that is, its assets (the amount in the plan) are greater than its obligations (the amount it must pay in pension benefits), your plan may be able to afford a COLA. You can find out whether your plan has surplus assets by looking at the financial forms the plan is required to file with the government. These are called Form 5500s." (Pension Rights Center)
Links to Items on Executive Comp, Benefits in General
Tracking Trends: Benefits Benchmarking Data
Excerpt: "Mercer's biannual 'Spotlight on Benefits' report has been benchmarking U.S. benefits information and tracking benefits trends for 14 years, and the 2007 edition of the report highlights information from 1,000 U.S. employers, representing organizations in all regions and industries, ranging from organizations of less than 2,000 employees to those of more than 50,000." (Employee Benefit News; free registration required)
Year in Review - Benefits Pros Address 2007's Biggest Benefits Management Challenges
Excerpt: "As 2007 draws to a close, EBN is reflecting on some of the year's largest happenings in benefits management, health care and retirement. See Year in Review: A look back at consumer-driven health and Year in Review: Pension Protection Act marks one-year anniversary recapping 2007 events and research findings in consumer-driven health and our happy first-birthday wish to the Pension Protection Act." (Employee Benefit News; free registration required)
Courts Continue to Take a Narrow View of the Scope of Relief Under ERISA §502(a)(3)
Excerpt: "The Fifth Circuit Court of Appeals has just taken up the same issue in a slightly different context; in Amschwand v. ___________, No. 06-20346 (5th Cir., October 18, 2007), a beneficiary was suing a plan fiduciary for life insurance proceeds. But in spite of the sympathetic facts, the court - in keeping with precedent - denied the claim because it was not equitable in nature." (Deloitte via BenefitsLink.com)
Highlights of the IFEBP Employee Benefits Survey: U.S. and Can.ada 2007
Excerpt: "Based on member requests and need, the International Foundation has developed a broad employee benefits survey to benchmark the benefits offerings and design of four distinct employment sectors throughout the United States and Can.ada. Members of both the International Foundation and the International Society of Certified Employee Benefit Specialists were surveyed online in May, resulting in 1,233 responses from corporations, multiemployer benefit plans, professional service firms and public employers." (International Foundation of Employee Benefit Plans)
Assessing the Value of a Promise - A Primer on ERISA Estoppel Claims
Excerpt: "A recent Seventh Circuit decision sets forth a helpful overview of the narrow circumstances in which ERISA plan participants may successful state a claim based upon misrepresentations of benefits." (Health Plan Law blog by Attorney Roy F. Harmon III)
Los Angeles Workers' Costs Up 7.5% a Year, But Revenue Up Just 5.7%
Excerpt: "Salaries, pensions and benefits for Los Angeles city workers have soared in the past seven years, outstripping revenue growth and pushing the city toward a serious budget crisis, according to a Daily News study." (LA Daily News)
(e) Policy, Opinion, Advocacy
(None today.)
Newly Posted Events
Are You Present: What's Happening in Absence Management Teleweb
Nationwide on December 3, 2007
presented by International Foundation of Employee Benefit Plans
PSCA QDIA Webinar
Nationwide on November 20, 2007
presented by Financial Engines, Inc.
Newly Posted Press Releases
Hewitt Associates Launches Global Risk Services for Retirement Plans
Hewitt Associates LLC
Newly Posted or Renewed Job Openings
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Pension Administrator
for The Senex Group
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for Entertainment Company in Hollywood
in CA
Relationship Manager
for BISYS Retirement Services
in PA
Director, Rollover Services
for New York Life Retirement Plan Services
in MA
Defined Benefit Conversions Data Analyst
for New York Life Retirement Plan Services
in MA
Defined Contribution Client Account Manager
for New York Life Retirement Plan Services
in MA
Quality Development Manager in our Participant Service Center
for New York Life Retirement Plan Services
in MA
DC Plan Administrator
for PFS
in GA
Retirement Plan Specialist
for Capital Group Companies
in VA
Sales/Marketing - Pension Consultant
for Polycomp Administrative Services
in CA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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