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| November 27, 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
PBGC Disaster Relief Announcement 07-26: October 21 California Wildfires
Excerpt: "This Disaster Relief Announcement provides relief relating to PBGC deadlines as described below to Designated Persons. A 'Designated Person' is any person responsible for meeting a PBGC deadline (for example, a plan administrator or contributing sponsor) that . . . ." (Pension Benefit Guaranty Corporation (PBGC))
(b) News
New York Times Coverage: Justices Consider Claim for 401(k) Plan Losses
Excerpt: "[The plaintiff's attorney's] argument was bolstered by the participation of the federal government on his client's behalf. An assistant to the solicitor general, Matthew D. Roberts, representing the views of the Department of Labor, said 'the crux of the matter here is that the plan has suffered a loss' when an individual account suffers one. 'The appropriate remedy is to get the money back in the plan,' Mr. Roberts said. The money would then be allocated to the individual's account." (New York Times)
Law.com Coverage: Justices Consider Claim for 401(k) Plan Losses
Excerpt: "Justice Antonin Scalia asked [the attorney for the plaintiff] why [the plaintiff] didn't first apply for recovery against the plan instead of against the fiduciary. '[O]nly that manner of proceeding preserves the structure of ... the legislation which is that you're supposed to first apply to the plan and exhaust your remedies there before you come into court,' Scalia said." (Law.com)
Link to Oral Argument Transcript, Source Documents About LaRue Fiduciary Breach Damages Case in U.S. Supreme Court
The link to the transcript of yesterday's (!) oral argument is listed on the target page under the heading 'Oral Argument Recap." (SCOTUSwiki (sponsored by Akin Gump Strauss Hauer and Feld LLP))
Analysis of the Oral Transcript in the LaRue ERISA Case
Excerpt: "[T]he case may shine much needed light on the scope of relief available to employees under Sections 502(a)(2) and 502(a)(3) of ERISA. Below are my initial thoughts on the oral argument today in the case based upon an analysis of the oral transcript. (Full disclosure: I was one of eleven law professors who signed an amicus brief supporting LaRue's opposition to DeWolff's motion to dismiss. I hope, however, that this fact does not cloud my analysis of the oral argument). . . . I predict a 6-3 decision for LaRue . . . ." (Prof. Paul Secunda on Workplace Prof Blog)
Section 415 Violations Play Important Role in Untangling San Diego Pension Plan Problems
Excerpt: "Pension administrators have been in a voluntary program to ensure compliance with federal tax laws since their attorneys uncovered a range of violations in 2005 and reported them to the IRS in 2006. The documents [City Councilwoman Donna Frye] has received show the pension system violated Internal Revenue Code section 415 dating back to 1993." (SignOnSanDiego)
Citigroup Ordered by Federal District Judge to Change Cash Balance Payment Credits
Excerpt: "The latest ruling from U.S. District Judge Shira A. Scheindlin of the U.S. District Court for the Southern District of New York followed her order a year ago that the Citigroup cash balance program violated the Employee Retirement Income Security Act's (ERISA) anti-backloading rules . . . ." (PLANSPONSOR.com; free registration required)
(c) Summaries of Guidance; Filed Comments
Overview: Proposed IRS Regs on 401(k) Plan Automatic Contribution Arrangements
Quite detailed. (CCH Pension and Benefits)
End of an Era: The 2007 Schedule B
Excerpt: "The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) has released new 5500 forms for 2007 plan years. The new (and last) Schedule B has been updated for certain Pension Protection Act of 2006 (PPA) changes that became effective in 2007. . . . [A]ny plan that has a short plan year that begins in 2008 must wait until after the 2008 forms are released to file Form 5500 for that short plan year. However, the filing deadline, which normally ends on the last day of the seventh month after the end of the short year, is automatically extended to 90 days after the new form is released." (Watson Wyatt)
Overview: Electronic Filing of Form 5500 Again Postponed, Plus Changes to Form, Schedules, Instructions, and Regulations Finalized
Excerpt: "Most importantly, the effective date for mandatory electronic filing of Form 5500 has been postponed again and will now be applicable for plan years beginning on or after January 1, 2009. Under this effective date, the vast majority of plan filers will have until at least July 2010 to make the changes necessary to allow electronic filing (since Form 5500 is generally due by the end of the seventh month following the end of the plan year)." (Employee Benefits Institute of America)
(d) Trends, Surveys, Research
Most Employers Easing Company Stock Sale Restrictions
Excerpt: "The Hewitt Associates survey of 300 employers finds that among companies that match salary deferrals exclusively with company stock, 67 percent allow participants to diversify immediately. That's a big change from 2005 . . . ." (Workforce Management)
Rethinking the Company Match for a 401(k) Plan
Excerpt: "New research from Harvard and Yale universities provides defined-contribution plan sponsors with more food for thought. A paper titled 'The Impact of Employer Matching on Savings Plan Participation Under Automatic Enrollment' contends that the success of automatic enrollment in increasing employee participation in defined-contribution plans is only marginally dependent upon whether the company makes a matching contribution." (Workforce Management (members area; free registration required))
(e) Policy, Opinion, Advocacy
Opinion: PBGC Missed Out by Eschewing Stocks in Favor of Liability-Driven Investing
Excerpt: "[T]he PBGC, which backstops private defined benefit plans, has a 72% allocation to fixed income, and only 28% of assets in equities. For the year ended Sept. 30, the agency said its fixed-income portfolio generated a 3.4% return, while its equity portfolio returned 16.5%. The irony is that many corporate pension executives now are considering adopting similar long-duration bond portfolios to reduce volatility in their funding levels." (Pensions & Investments)
CORRECTED LINK: Social Security as a Retirement Resource for Near-Retirees, by Race and Ethnicity, Nativity, Benefit Type, and Disability Status
Excerpt: "We find that substantial differences in earnings levels and/or mortality levels among these subgroups interact with Social Security program provisions to produce sizable differences in the values of our benefit measures." (Office of Policy, Social Security Administration)
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Links to Items on Executive Comp, Benefits in General
Suit Dismissed Against Apple over Backdated Stock Options; Statute of Limitations Applied
Excerpt: "Judge Jeremy D. Fogel of Federal District Court in San Jose, Calif., said in his ruling that he dismissed the suit because it was based on statements made more than three years before the case was filed. Apple, maker of the iPod and iPhone music and video players, said last year that it backdated 6,428 stock-option grants issued from 1997 to 2002, according to the order. Changing the date on a grant can provide added gains." (Bloomberg News via New York Times)
'Yes, We Have Good Benefits, But ...' -- How Some Companies Screen for Jerks
Excerpt: "Businesses in fields where jobs are highly coveted -- or just sound like fun -- are stepping up efforts to weed out people who might have the right credentials but the wrong personality. . . . In the mating dance of job interviews, employers traditionally put their best feet forward, too, trumpeting their wonderful benefits packages while leaving out the bit about working late, eating cold pizza. Not [Lindblad, an adventure cruise company]. It sends job applicants a DVD showing not one, but two shots of a crew member cleaning toilets." (HeraldNet)
Corporate Governance Watchdog to Focus on Exec Compensation, Disclosure in 2008
Excerpt: "Investor research firm RiskMetrics plans to increase its scrutiny of poor executive compensation practices among corporations next year and for the first time focus specifically on weak disclosure of compensation." (Workforce Management)
Summary of 409A Compliance Deadline Extensions
Very nice; includes a detailed table. Excerpt: "During the past few months, the IRS has issued three notices extending the deadlines for complying with various rules under section 409A. Because the guidance has been issued piecemeal and the effective date for the final regulations has been delayed, it is difficult to reconcile all the implications. . . ." (Watson Wyatt)
Overview: SEC Issues Executive Compensation Report
Excerpt: "The SEC's official report highlights the two principal themes that emerged from the staff's review of the executive compensation disclosures. First, the SEC stated that the Compensation Discussion and Analysis often lacked sufficient analysis regarding 'how' and 'why' a company arrived at its executive compensation policies and decisions. Second, the SEC stated that companies must focus on presenting the disclosures in a way that is clear, concise and understandable to the reader." (Troutman Sanders)
Link to Application Form for Membership on IRS Committee on Tax Exempt and Government Entities (ACT)
Excerpt: "The ACT is an organized public forum for the IRS and representatives who deal with employee plans, exempt organizations, tax-exempt bonds, and federal, state, local and Indian tribal governments. The ACT allows IRS to receive regular input on administrative policy and procedures of the Tax Exempt and Government Entities Division. Applications will be accepted through December 3, 2007." (Internal Revenue Service)
List of Decisions/Actions Now Required for Deferred Compensation Plans by December 31, 2008 (PDF)
4 pages. Excerpt: "Under the new extension, employers now have until the end of 2008 to make the following major decisions about how their DCPs will operate and to reduce those decisions to writing . . . ." (Drinker Biddle & Reath LLP)
GAO Report (Full Report): Social Security Reform: Issues for Disability and Dependent Benefits
71 pages. Excerpt: "We considered several reform elements that could improve Social Security Trust Fund solvency by reducing the initial benefits received or the growth of individual benefits over time. According to our simulations, these reform elements would reduce median lifetime benefits for disabled workers by up to 27 percent (see graph) and dependents by up to 30 percent of currently scheduled levels. While the size of the benefit reduction could vary across individuals, it could be substantial for the vast majority of these beneficiaries, depending upon the reform element." (U.S. Government Accountability Office)
GAO Report (Highlights): Social Security Reform: Issues for Disability and Dependent Benefits (PDF)
Excerpt: "This report examines (1) how certain elements of Social Security reform proposals could affect disability and dependent benefits, (2) options for protecting these benefits and how they might affect disabled workers and dependents, and (3) how protecting benefits could affect the Social Security program." (U.S. Government Accountability Office)
Healthcare Costs Hurting Governmental Pension Systems
Excerpt: "The [Ohio] State Teachers Retirement System has seen its health-care bills soar from $259 million in 2001 to $490 million in 2006. Under current trends, the system will run out of money to cover health-care expenses of retired teachers around 2021." (Columbus Dispatch)
Newly Posted Events
Know Your Fiduciary Responsibilities - An Update on Pension Protection Act and Related Guidance for Practitioners - Free Webcast
Nationwide on December 6, 2007
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Newly Posted Press Releases
ExpertPlan Partners with AccountantsWorld to Launch Retirement Relief 401(k) Platform
ExpertPlan
Benefit Software Inc. Helps Emanuel Medical Center Support Healthy Employee Retention Rates with Customized Benefit Statements
Benefit Software Inc.
Automatic Features Are Driving 401(k) Plan Participation at U.S. Companies, Reveals Diversified Investment Advisors, Inc. Survey
Diversified Investment Advisors
RBC Dain Rauscher And Fi360 Announce Partnership
Fiduciary360 (fi360)
Software and IT Services Firms Combine to Offer Expanded, Cost-Effective Services for the Pension, Financial and Insurance Industries
Arrowpoint Technologies Inc.
Newly Posted or Renewed Job Openings
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Actuarial Specialist
for Kravitz - Louis Kravitz & Associates
in ANY STATE, CA
Retirement Sales Wholesaler - Inside Sales
for ExpertPlan, Inc.
in NJ
Enroller - Employee Benefits Meeting Presenter
for Total Benefit Communications
in ANY STATE
Compliance Testing Consultant
for Diversified Investment Advisors
in NY
Sr. Plan Administrator
for American National Insurance Company
in TX
Financial Services Analyst
for The Newport Group
in MO
Public Policy Analyst
for National Business Group on Health
in DC
Pension Specialist
for Nationwide Insurance
in OH
Compliance Analyst
for Leggette Actuaries, Inc.
in TX
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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