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| December 19, 2007 |
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(a) New Guidance Documents
IRS Notice 2008-07: Extension of 2007 Transitional Relief for DC Plans Holding Publicly Traded Securities (PDF)
2 pages. Excerpt: "This notice extends the transitional guidance and transitional relief provided to certain defined contribution plans holding publicly traded employer securities under Notice 2006-107, 2006-51 I.R.B. 1114, until the regulations being issued under § 401(a)(35) of the Internal Revenue Code become effective. . . . The relief set forth in paragraph 4 of Part III.D of Notice 2006-107 [was] limited to the period prior to January 1, 2008. . . . [Pursuant to this notice,] the transitional relief provided for the period prior to January 1, 2008, in paragraph 4 of Part III.D of Notice 2006-107 will continue to apply after 2007 until the regulations go into effect." (Internal Revenue Service)
Text of Proposed DOL Regs on Civil Penalties for Failure to Provide Disclosures Required by PPA 2006 (PDF)
6 pages. Excerpt: "A notice of benefit limitations must be furnished within 30 days after a plan becomes subject to an ERISA section 206(g) funding-based restriction and at such other time as may be determined by the Secretary of the Treasury. . . . Section 502(b)(1) of the PPA amended section 101 of ERISA by adding subsection (l), under which a plan sponsor or plan administrator of a multiemployer employee benefit plan must, upon written request, furnish to any employer with an obligation to contribute to such plan, notice of potential withdrawal liability." (U.S. Department of Labor, Employee Benefits Security Administration)
(b) News
Plan Administrators to Be Fined on Disclosure Issues
Excerpt: "The U.S. Department of Labor plans to start fining defined contribution plan administrators up to $1,000 a day if they fail to disclose certain documents to participants." (Investment News; free registration required)
Morgan Stanley Target of Stock Drop Lawsuit
Excerpt: "A New York law firm has filed a lawsuit against Morgan Stanley and its 401(k) plan fiduciaries charging that participants were improperly allowed to continue investing in company stock." (PLANSPONSOR.com; free registration required)
Former Electrolux Workers' Pensions Protected
Excerpt: "The Pension Benefit Guaranty Corp. has struck a deal worth $77.5 million with Electrolux AB to protect retirement benefits for more than 2,350 former employees of the company's Greenville refrigerator plant." (AP via mlive.com)
(c) Summaries of Guidance; Filed Comments
Overview: Up-Selling to Plan Participants
Excerpt: "There is an emerging issue surrounding the efforts by plan advisers to sell additional products to plan participants (sometimes referred to as 'up-selling'). For some financial advisers, one of the attractive features of giving advice about 401(k) accounts to plan participants is the opportunity to capture the participant as a client for other services -- and products -- outside the plan. But this opportunity also raises potential liability issues for which there is, as yet, no clear-cut answer." (Reish Luftman Reicher & Cohen)
Overview of DOL Advisory Opinion 2005-23A: A Trap for Advisers?
Excerpt: "In 2005, the DOL issued a little-known advisory opinion which creates a trap for advisers to 401(k) plans ... or does it? In the advisory opinion, the DOL asked and answered three questions. RIAs and financial advisers must be aware of those questions and answers and of their implications." (Reish Luftman Reicher & Cohen)
Overview: Final Form 5500 Fee Disclosure Rules and Proposed Guidance for Contracts Between Plans and Service Providers Under ERISA 408(b)(2) (PDF)
6 pages. Excerpt: "These releases are the first two of three plan fee disclosure projects that the DOL had planned to issue. The final project concerns the disclosures by plan sponsors to participants and is expected in early 2008." (Morgan, Lewis & Bockius LLP)
Private Letter Ruling Allows Calculation of Distributions Based on Number of Months Remaining in First Year
Excerpt: "One of our IRA owners wants to begin taking substantially equal periodic payments under IRC Section 72(t) beginning in June. Can he take only seven distributions in 2008 (for June through December), or does he need to take a full year's worth of distributions for 2008?" (Wolters Kluwer Financial Services)
Overview: PBGC Proposal to Amend Regulation on Administrative Review of Agency Decisions
Excerpt: "The PBGC has proposed amending its regulation on Administrative Review of Agency Decisions (29 CFR part 4003) to clarify that the PBGC's Appeals Board may refer certain categories of appeals to other PBGC departments for a written response and to remove determinations under ERISA §4022A from the scope of part 4003." (Wolters Kluwer Financial Services)
Are Stable Value Investments 'Stable Value' Under the QDIA Regulation?
Excerpt: "Section 2250.404(c)(5) of the final regulation defines 'stable value' to mean: an investment product or fund designed to guarantee principal and a rate of return generally consistent with that earned on intermediate investment grade bonds, while providing liquidity for withdrawals by participants and beneficiaries, including transfers to other investment alternatives." (Reish Luftman Reicher & Cohen)
Overview: DOL Proposed Regulation That Would Ensure Disclosure of Plan Provider Fees and Potential Conflicts
Excerpt: "The proposed regulation would require 'reasonable' contracts or arrangements between plans and certain service providers to include provisions that will ensure the disclosure of sufficient information to assist plan fiduciaries in determining the reasonableness of service provider fees and other compensation (both direct and indirect). The proposed regulation also would require disclosure of potential conflicts of interest that may affect a service provider's performance." (Employee Benefits Institute of America)
(d) Trends, Surveys, Research
Promises with a Price: Public Sector Retirement Benefits (PDF)
73 pages. Excerpt: "This groundbreaking report, Promises with a Price, provides first-of-its-kind data about the long-term costs of public sector benefits. It highlights which states are prepared to pay the significant bill coming due, which are not, and why it matters to state lawmakers and citizens alike." (Pew Center on the States)
Public Pension Fund Shortages Create Hard Choices
Excerpt: "Almost half of the states have been underfunding their retirement plans for public workers and may have to choose in the years ahead between their pension obligations and other public programs, according to a comprehensive study to be released to the public [today]." (The New York Times; free registration required)
Overview: The Buyout Phenomenon (PDF)
4 pages. This advisory presents an overview of private equity buyout funds for plan sponsors. (The Segal Group, Inc.)
Congressional Research Service Anticipates PPA Changes to Result in Reduced Lump-Sum Distribution Amounts After 2007
Excerpt: "Congressional Research Service ('CRS'), which provides policy and legal analysis to the House and Senate, summarized key changes under the Pension Protection Act ('PPA') which are scheduled to become effective in 2008 and which will impact the value of lump sum distributions from defined benefit pension plans." (Deloitte via BenefitsLink.com)
(e) Policy, Opinion, Advocacy
Bill Would Remove Overtime from Delaware State Pension Calculations
Excerpt: "Proposed legislation would prevent overtime pay earned by state employees from being used in the calculation of their retirement pay. The pension reform legislation was filed Tuesday by Republican state Representative Greg Lavelle. If approved, overtime pay would be excluded from pension calculations for state workers hired after June 30." (AP via CBS Broadcasting Inc.)
Links to Items on Executive Comp, Benefits in General
Overview: Financial Accounting for Nonqualified Deferred Compensation Plans (PDF)
2 pages. Excerpt: "During the initial development and periodic revisions of nonqualified deferred compensation plans, often the tax consequences receive a thorough analysis, but the financial accounting treatment is forgotten and can result in unwelcome surprises. The accounting treatment is critical for all companies, but especially for publicly traded companies, those contemplating an initial public offering or companies with debt covenants." (The Cochlan Group, Inc.)
Study Sizes Up States' Substantial Retiree Benefit Costs
Excerpt: "According to a new analysis by the Pew Charitable Trusts' Center on the States, states owe employees about $2.73 trillion for pension and health-care costs, much of which is unfunded." (The Washington Post; free registration required)
Overview: SEC Shortens the Holding Periods under Rule 144 (PDF)
4 pages. Excerpt: "Shortening the holding periods for restricted securities, eliminating the manner of sale and volume limitations for nonaffiliates and relaxing those limitations for affiliates represent a significant reduction in the restrictions on resales of restricted securities." (Seyfarth Shaw LLP)
White Paper: SEC Approves Amendments to Rule 144 (PDF)
7 pages. Excerpt: "On November 15, 2007, the Securities and Exchange Commission (SEC) approved amendments to Rule 144 under the Securities Act of 1933, as amended (the Securities Act), substantially as the amendments were proposed in July. The Final Adopting Release 1 was issued on December 6, 2007, and the changes will become effective February 15, 2008." (Morgan, Lewis & Bockius LLP)
Case Study -- Executive Benefit Plans (PDF)
Excerpt: "The company had two primary concerns with the current situation. Key executives were unable to contribute a large percentage of their income to the 401(k) plan due to qualified plan contribution limitations. Many of the company's competitors had already established a nonqualified plan. As a result, the company was already losing key talent to the competition and concerned about losing others." (The Cochlan Group, Inc.)
How to Secure Your Finances When on Assignment Abroad
Excerpt: "Given that international assignments are on the rise -- almost 40% of respondents to KPMG's 2007 survey on global assignment policies and practices expect to use expatriate employees more in the next five years -- resolving those issues means more time devoted to the job at hand and less time worrying about the impact of the job on your personal finances." (CFO.com)
Newly Posted Events
Cafeteria Plan Election Changes: What's Permitted and What Isn't?
Nationwide on January 17, 2008
presented by Employee Benefits Institute of America (EBIA)/Thomson Tax & Accounting
Newly Posted Press Releases
The Principal Financial Group Announces Plans To Acquire Retirement Consulting Actuaries
Principal Financial Group
CitiStreet Expands Fiduciary Services in Rolling Out PlanFIRST
CitiStreet
BenefitsCheckUp Has Served Two Million Seniors
National Council on Aging (NCOA)
New Managing Attorney Enhances Legal Advantage's Role in Document Review Service Offerings.
Legal Advantage, LLC
Pew Study Finds States Face $2.73 Trillion Bill for Retiree Benefits
Pew Charitable Trusts
Newly Posted or Renewed Job Openings
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Trust Administrator II or III
for Associated Pension Consultants
in CA
Client Relationship Manager
for Great-West Corporate
in VA
Regional Vice President of 401(k) New Business Development
for ExpertPlan Inc., East Windsor New Jersey
in ANY STATE
Director of Business Retirement Services
for COUNTRY Insurance & Financial Services
in IL
Ancillary Benefit Product Analyst
for Administaff
in TX
Compliance Specialist
for PlanMember Securities Corporation
in CA
Regional Sales Director
for The Online 401(k) (aka Decimal, Inc.)
in ANY STATE, CT, MA, ME, NH, NY, RI
Senior Trust Administrator
for AST Capital Trust Company
in AZ
OmniPlus Consultant
for The IQ Business Group, Inc.
in ANY STATE
Benefits Analyst
for National Financial Partners
in NY
Insurance Fund Manager
for Montgomery County Office of Human Resources
in MD
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- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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