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January 7, 2008

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

IRS 30 Year Treasury Securities Rate Updated for December 2007
30 Year Treasury Securities Rate for December 2007: 4.53% (Internal Revenue Service)

IRS Composite Corporate Bond Rate Table Updated for January 2008
Corporate Bond Weighted Average Interest Rate = 5.92 for January 2008 (Internal Revenue Service)

(b) News

(None today.)

(c) Summaries of Guidance; Filed Comments

Current ESOP Participant Can Represent Former Participants in Suit
Excerpt: "The U.S. District Court for the Eastern District of California has determined that a current participant in an Employee Stock Ownership Plan (ESOP) can adequately represent a class that includes former, cashed-out participants in a fiduciary breach suit." (; free registration required)

Overview: DOL Issues Final Default Investment Regulations (PDF)
3 pages. Excerpt: "The U.S. Department of Labor (DOL) recently issued a final regulation addressing the selection of default investment options for defined contribution plans (29 CFR 2550.404c-5). The regulation sets out the types of products in which participant contributions can be invested in the event the participant has failed to provide investment instructions. It should provide a significant degree of certainty that will be helpful to plan sponsors and plan service providers." (Groom Law Group)

New Retirement Age Rule Does Not Change Ruling on Plan's Definition, According to Court
Excerpt: "The U.S. District Court for the Northern District of Illinois has determined that a new regulation governing the definition of normal retirement age does not change its earlier ruling that a cash balance plan did not violate the Employee Retirement Income Security Act (ERISA) by defining normal retirement age in terms of vested years of service." (; free registration required)

Overview: DOL Issues Additional Guidance on Proxy Activity by ERISA Plans (PDF)
Excerpt: "On December 21, 2007, the Labor Department issued a new advisory opinion addressing the controversial issue of proxy activity by ERISA-governed plans. In Advisory Opinion 2007-07A, issued to the U.S. Chamber of Commerce . . ., DOL considered the use of plan assets by plan fiduciaries to further public policy debates and political activities through proxy resolutions for businesses in which the plan is invested." (Sutherland Asbill & Brennan LLP)

Overview: IRS Proposed Hybrid Plan and Pension Asset Rules
Excerpt: "The notice of proposed rulemaking, which incorporates guidance previously given in IRS Notice 2007-6, implements the hybrid plan provisions of the Pension Protection Act of 2006. The rules would take effect for non-union plans in plan years starting on or after Jan. 1, 2009." (The National Underwriter Company; free registration or paid subscription required)

EBSA to Pension Funds: No Politics in Proxy Process
Excerpt: "ERISA-regulated pension funds cannot engage in politically motivated proxy activity or other shareholder activism, according to an advisory opinion by the Labor Department's Employee Benefits Security Administration." (Pensions & Investments)

Pre-Nup Pact Not an ERISA Benefits Waiver
Excerpt: "Because a 401(k) participant's widow had not yet married her husband when she signed a prenuptial agreement giving up her rights to her husband's retirement benefits, the widow was still entitled to the money." (; free registration required)

Overview: Congress Delay of Final Action on Tax and Retirement Benefits for Military Reservists
Excerpt: "The House and Senate approved separate versions of legislation to grant tax relief to members of the U.S. armed forces. The Senate's Defenders of Freedom Tax Relief Act of 2007 and the House's Heroes Earnings Assistance and Relief Tax Act have similar or identical provisions addressing retirement plan benefits, differential pay and other tax issues for workers who are called to active military duty. But, the chambers could not overcome their differences in time to wrap up the bill during the 2007 legislative session." (Watson Wyatt Worldwide)

Overview: IRS Publishes Company Stock Diversification Guidance
Excerpt: "In an effort to enact Pension Protection Act (PPA)-mandated changes, the Internal Revenue Service (IRS) has put out a proposed regulation generally barring restrictions on publicly-traded employer stock investments in defined contribution plans. Reg-136701-07 provides that a plan allowing participant company stock investments has to include provisions allowing the investor to sell off the company stock holdings and move the assets to another investment option. These rights must be provided to each participant, to each of the participant's alternate payees who has an account under the plan, and to each beneficiary of a deceased participant, the proposed regulations said." (; free registration required)

Overview: Predecessor Employer Fundamentals
Excerpt: "There a certain basics such as if the predecessor employer is a related employer, then the employer must count the service with the predecessor employer if the acquiring employer is going to maintain the predecessor's plan. This article will present some of the rules." (McKay Hochman Co., Inc.)

(d) Trends, Surveys, Research

IBM Pension Freeze Has Ripple Effects in Retirement System
Excerpt: "IBM Corp., a large and profitable American company whose reputation for providing blue chip benefits was once legend, has frozen all of its pension plans as of Jan. 1. Benefits accrued as of Dec. 31 won't be touched, but the 107,000 U.S. workers enrolled in one of IBM's pensions plans won't garner any more years of service toward their final benefit even if they spend another 20 years inventing microchips or writing software or selling services." (The Journal News)

Fee Disclosure, 401(k)s Highlight of Retirement Focus in 2008
Excerpt: "As more companies slowly begin to enroll their employees automatically in 401(k) plans, target-date funds, which can be used as a qualified-default-investment alternative, will be further propelled. Many advisers and industry insiders have pointed to a number of problems with these funds, especially their degree of equity and bond exposure in the market. Some are too risky while the investor is building wealth, but too conservative at retirement, advisers said." (Investment News; free registration required)

Debate Continues Over Whether 401(k) Can Match IBM Pensions for Retirement Income
Excerpt: "IBM is enhancing its 401(k) plan to make up for the pension benefits freeze. . . . About 15,000 non-exempt workers (secretaries, maintenance staff and other lower paid workers, etc.) enrolled in the traditional pension will receive an additional 5 percent annual contribution. This means they are eligible for an IBM contribution of as much as 15 percent of pay." (The Journal News)

Overview: IRS Proposed Regulations on Automatic Contribution Arrangements
Excerpt: "The regulations would take effect for plan years beginning on or after January 1, 2008, and sponsors may rely on the proposed regulations. If the final regulations are more restrictive than the proposed regulations, the more restrictive rules will not be made retroactive. Comments are due by February 6, 2008." (Watson Wyatt Worldwide)

Overview: SEC Adopts Rule Limiting Shareholder Access
Excerpt: "The Securities and Exchange Commission (the 'SEC') adopted an amendment to Rule 14a-8(i)(8) under the Securities Exchange Act of 1934 (the 'Exchange Act'), which effectively limits shareholders' access to a public company's proxy materials with respect to proposals related to the nomination or election of directors." (Blank Rome LLP)

Survey Finds UK Employers Bailing on Pensions
Excerpt: "A survey by the National Association of Pension Funds (NAPF) found 15% of companies which have so far kept open their defined benefit scheme expect to close it to new entrants, and 22% said they would limit their benefits to cap the cost or risk." (; free registration required)

Target Date Fund Market Still in Need of Benchmark
Excerpt: "There is little doubt, moving into the first quarter of 2008, that plan sponsors choosing investment options will continue to be faced with an often bewildering array of target-date funds from which to choose. There still is no generally accepted benchmark for the popular product category, Cerulli Associates points out in the December issue of its Cerulli Edge newsletter." (; free registration required)

(e) Policy, Opinion, Advocacy

Senator's Statement on the 401(k) Fee Disclosure Act (PDF)
3 pages. Excerpt: "One thing my bill does not do is set a limit on fees that can be charged. As I've noted, high fees can make a real difference in account balances at retirement, but so can high returns, in a more positive direction, obviously. Sometimes, it is well worth paying higher fees if a small increase in fees will have a big effect on returns. In addition, some people want to purchase insurance products so that every month, they are buying a more secure piece of retirement. That's just fine, and my bill doesn't touch that. People who fully understand the real cost of a guaranteed return at retirement are the kind of people who appreciate, and will push for, more defined benefit plans. But they can't do that if they don't know what it costs." (Sen. Tom Harkin via ICMA-RC)

Encourage Better Income Decisions for a New Generation of Retirees (PDF)
4 pages. Excerpt: "New research and better understanding of participant behavior have underlined both the importance of 'in-plan' retirement income solutions and better ways of executing guaranteed income streams. Some of the best analysis in this space comes from Professor Olivia S. Mitchell of the Department of Insurance and Risk Management at the Wharton School. . . . PLANSPONSOR interviewed Mitchell and Marc Pester, Senior Vice President of Institutional Income Innovations at Prudential Retirement, on the challenges plan sponsors and participants face in adopting retirement income solutions." ( via Pension Research Council)

Links to Items on Executive Comp, Benefits in General

Overview: Final Rule Changes to Rules 144 and 145 under the Securities Act of 1933
Excerpt: "On November 15, 2007, the Securities and Exchange Commission (the 'SEC') voted unanimously to adopt changes to Rules 144 and 145 under the Securities Act of 1933, as amended (the 'Securities Act'), including a change to shorten the holding period requirements for restricted securities. The modifications to Rules 144 and 145 will promote capital formation at lower cost and reduce reporting obligations, which will be of particular benefit to smaller public companies. " (Thelen Reid Brown Raysman & Steiner LLP)

Highlights of Results from the '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." (International Foundation of Employee Benefit Plans)

Overview: Recent DOL Actions Increase Obligations of Service Providers
Pages 1-4 of 5 pages. Excerpt: "The DOL has proposed an amendment to the regulation under Section 408(b)(2) of ERISA. Section 408(b)(2) of ERISA provides an exemption from ERISA's prohibited transaction rules for reasonable arrangements with service providers. The proposed regulation would require Plan service providers to disclose to Plan Fiduciaries detailed information regarding fees, compensation and conflicts of interest." (Goodwin Procter LLP)

Overview: Proposed Regs on Civil Penalties for Noncompliance with ERISA Disclosure Rules
Excerpt: "The Employee Benefits Security Administration (EBSA) has issued proposed regulations on the assessment of civil penalties under ERISA §502(c) (4) for the failure to disclose certain documents to participants, beneficiaries and others as required by ERISA. The proposed regulations reflect amendments to ERISA by the Pension Protection Act of 2006 (PPA; P.L. 109-280)." (Wolters Kluwer Financial Services)

Newly Posted Events
(Post Yours!)

2008 Plan Design Issues - Webcast
Nationwide on January 15, 2008
presented by ASPPA (American Society of Pension Professionals & Actuaries)

Newly Posted Press Releases
(Post Yours!)

The SPARK Institute Evaluating 403(b) Issues in Light Of New Regulations
SPARK Institute Now Retail Health Clinics Can Be Found Everywhere
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Pension Administrator
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Assistant Vice President & Counsel-50033243
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in NC

Defined Contributions/401K Consultant
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in MD

Defined Contribution Analyst II - Part Time
for Standard Retirement Services
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Sales Consultant
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401 (k) Plan Administrator-Document Specialist
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in CA

Sr. Retirement Plan Analyst
for Scripps Health
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Pension Account Technician II
for Alerus Retirement Solutions
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Investment Analyst / Investment Consultant
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Director, Disability Benefits - STD
for Standard Insurance Company
in OR

Health Care Consultant (Actuarial)
for Gabriel Roeder Smith & Company
in TX

Director of Executive Benefits
for Great-West Financial Services

Daily Operations Processor/Team Leader
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in MD

Benefits Analyst
for ICF International
in VA

Senior Calculation Specialist
for Prudential Financial
in CT

Retirement Plan Administrator I
for Southampton Bucks County Pension TPA
in PA

Pension Administration
for Stephen H. Rosen & Associates, Inc.
in NJ

Pension Analyst
for T Rowe Price
in MD

Retirement Consultant
for Towers Perrin
in CT, DC, MA, NJ, NY, PA

Benefit Administration Team Associate
for Towers Perrin
in PA

Health and Welfare Actuarial Consultant
for Towers Perrin
in CT, NJ, NY

Retirement Associate
for Towers Perrin
in CT, DC, MA, NY, PA

Health and Welfare Associate
for Towers Perrin
in NJ, NY, PA

Senior Retirement Plan Coordinator
in KY

Health and Welfare Consultant
for Towers Perrin
in GA, NJ, NY, TX

Senior Retirement Consultant
for Towers Perrin
in DC, MA, PA

DB or DC Plan Analyst
for Derby and Company, Inc.
in MA

Associate Attorney
for National Law Firm
in OH

Pension Administration Assistant
for Taylor/Webster
in TN

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