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January 11, 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

Listing of IRS Published Guidance for January-December 2007
The target page links to guidance published by the Service relating to retirement plans: Treasury Regulations; Revenue Rulings; Revenue Procedures; Notices; and, Announcements. (Internal Revenue Service)

Text: Description of the Tax Technical Corrections Act of 2007, as Passed by House of Representatives (PDF)
14 pages. Excerpt: "This document, prepared by the staff of the Joint Committee on Taxation, provides a description of the Tax Technical Corrections Act of 2007; this is a title of H. Res. 884, providing for the concurrence by the House in the Senate amendments to H.R. 3997, with an amendment, as passed on December 18, 2007, by the House of Representatives." (Joint Committee on Taxation)

(b) News

Employer Ordered to Pay for Failing to Monitor Plan Provider
Excerpt: "The owner and operator of a Salem, New Hampshire, business has been ordered to pay $100,000 to the company's profit sharing plan over alleged violations of the Employee Retirement Income Security Act (ERISA)." (; free registration required)

Memphis City Council Votes to Add Rule of 80 to Employees' Retirement Plan
Excerpt: "Under the Rule of 80, an employee that started working for the city at age 18, could retire at age of 49, with the requisite 39 years of service." (Memphis Democrat)

(c) Summaries of Guidance; Filed Comments

Overview: IRS Transition Relief from Diversification Requirements for Grandfathered Investments Past 2007
Excerpt: "The IRS has extended, past 2007, transitional relief provided for grandfathered investments from the diversification requirements applicable to defined contribution plans (e.g., 401(k) plans) holding publicly traded employer securities." (Wolters Kluwer Financial Services)

Overview: Private Equity Fund Has Controlled Group Liability for Underfunded Pension Plan (PDF)
3 pages. Excerpt: "In a decision having far-reaching implications, the Pension Benefit Guaranty Corporation (PBGC) Appeals Board recently held that a private equity fund ('Fund') was jointly and severally liable for a funding shortfall in a pension plan of one of its portfolio companies. While this decision only applies to the Fund at issue, it could be precedent for future action by the PBGC." (Pillsbury Winthrop Shaw Pittman LLP)

Overview: IRS Issues Proposed Regulations on Valuing Assets and Liabilities Under New Funding Rules
Excerpt: "The IRS on December 28, 2007 issued proposed guidance on measuring plan assets and liabilities under the Pension Protection Act's (PPA) new minimum funding rules for single employer defined benefit plans. This is the third in a series of proposals relating to the PPA's minimum funding requirements, which are effective for plan years beginning on and after January 1, 2008. Plan sponsors may rely on the proposed regulation until final guidance is issued." (Deloitte via

Chart: Portability Chart As of 2008
Excerpt: "What are the rollover rules after the Pension Protection Act (PPA) of 2008 . . . Updated 01/10/08" (McKay Hochman Co., Inc.)

Overview: Sudan Divestment Law Signed by President Bush
Excerpt: "The new law specifically provides the authority to require divestment from companies that State or local governments determine are conducting (or have direct investments in) business operations in Sudan that include power production activities, mineral extraction activities, oil-related activities, or the production of military equipment. Explicit exclusions are provided for companies whose business in Sudan only involves investments in the regional government of Southern Sudan; legal transactions under a license from the Office of Foreign Assets Control (OFAC) or other U.S. authorization; delivery of goods and services for marginalized populations or internationally recognized humanitarian organizations, and other similar investments." (National Council on Teacher Retirement)

Overview: Supreme Court Examines Whether 401(k) Plan Participants Can Sue for Lost Profits Caused by Fiduciary's Failure to Execute Investment Directions
Excerpt: "The U.S. Supreme Court recently heard oral arguments in LaRue v. ________ on whether a 401(k) plan participant, who suffered losses to his individual account because a plan fiduciary failed to execute his investment directions, could sue the fiduciary to recover the lost profit under ERISA §502(a)(2). The case involves the interplay between ERISA §§ 502(a)(1)(B), 502(a)(2) and 502(a)(3), and revisits the uncertain area of what constitutes 'equitable relief' available under ERISA." (Deloitte via

Overview: IRS Issues Proposed Regulations on Hybrid Plans
Excerpt: "IRS issued proposed regulations relating to new Code Sections 411(a)(13) and 411(b)(5), which were added by PPA to enable cash balance and other hybrid plans to satisfy age discrimination and certain other qualification requirements. The regulations incorporate the transitional guidance provided in Notice 2007-6, adopt new terminology to take into account situations where more than one benefit formula is utilized by a plan, and provide additional guidance, taking into account public comments received. 72 FR 73680 (December 28, 2007)." (Deloitte via

(d) Trends, Surveys, Research

Explanation of the Pros and Cons of a Roth 401(k) vs. a Regular 401(k)
Excerpt: "Let's start with one basic but often misunderstood fact. Although they're effectively mirror images of each other -with a regular 401(k) you invest pre-tax dollars and pay taxes at withdrawal, while with a Roth 401(k) you invest after-tax dollars and pay no tax at the end -in a pure economic sense there's really no difference between the two." (

Is Defined-Contribution Plan Communication and Education Dead?
Excerpt: "Now that plans can be automated to a large degree, do communication and education have roles to play? They do indeed. Getting workers into a 401(k) plan, increasing their savings rate, and improving their diversification through default mechanisms is not necessarily synonymous with financial security." (Workforce Management; free registration required)

Executive Summary of Key Findings in the Fidelity Tax-Exempt Savings Study (PDF)
5 pages. Excerpt: "This research was designed to measure tax-exempt sector workers' attitudes and behaviors toward spending, saving and investing for retirement. Fidelity Investment's survey of 1,524 defined contribution (DC) employees in the tax-exempt sectors of health care, education, government and other nonprofit organizations was conducted in November 2007 . . . ." (Fidelity Brokerage Services LLC)

2006 Comparative Study of Major Public Employee Retirement Systems (PDF)
38 pages. Excerpt: "This report compares significant features of major state and local public employee retirement systems in the United States. The report compares retirement benefits provided to general employees and teachers, rather than benefits applicable only to narrower categories of employees such as police, firefighters, or elected officials." (Wisconsin Legislative Council)

Subprime Litigation Wave Hits State Street
Excerpt: "The specific legal basis of Prudential's claim is that State Street and its investment arm violated [ERISA]. The complaint alleges that the defendants 'radically altered' the investment strategies of two bond funds, the Intermediate Bond Fund and the Government Credit Bond Fund. The complaint alleges that the funds 'took undisclosed, highly leveraged positions in mortgage-related financial derivatives' and thereby 'exposed' the funds to 'an inappropriate level of risk' that during the summer of 2007 'produced catastrophic results.'" (The D & O Diary blog)

Taxpayer Tips for the IRA Season
Excerpt: "During the first few months of the year, many taxpayers will be looking for ways to reduce their tax burden for the previous year, and also take advantage of tax benefits where possible. Receiving the maximum possible benefits requires some diligence, such as making sure any IRA contributions are made to the right type of account, and also ensuring other transactions are processed correctly. [The target page reviews] some tips that can be helpful to taxpayers." (

(e) Policy, Opinion, Advocacy

Social Security Reform: Benchmarks for Assessing Fairness and Benefit Adequacy (PDF)
19 pages. Excerpt: "This brief focuses on ways to assess the fairness of reforms and the adequacy of benefits in a financially sustainable Social Security system. The appropriate level of benefits, degree of progressivity, and distribution across generations of the financial burden associated with achieving a solvent system inherently involve value judgments that must be made in deciding how to reform Social Security. This issue brief provides a practical illustration of how to assess the implications of a potential reform plan along these important dimensions." (U.S. Department of the Treasury)

Links to Items on Executive Comp, Benefits in General

Longer Life Expectancies Have Consequences for HR and Benefits Managers
Excerpt: "Why does this matter for human resource executives? Think about your own plans: Will you actually want to retire around 65 if you are going to be healthy and active for another 20 years? And think about the effects on the overall labor force. Shoven calculates that if the additional years of life expectancy are added to the working life of men who would normally retire at 65, the size of the entire labor force in the United States will grow by an additional 10 percent between now and 2050. Still worried about that coming labor shortage?" (Human Resource Executive Online; free registration required)

Rosenberg on the Three Rules of the Tripartite Insurance Coverage Relationship
Excerpt: "Also to be considered in this conflict of interests area is the inherently conflicted state of dual role fiduciaries of employee benefit plan who must work simultaneously in the best interests of plan participants and the corporation and its shareholders." (Workplace Prof Blog)

The Elusive ERISA Standard of Review -- Conflicts, Metaphors & Reversals
Excerpt: "In a case notable for medical evidence of 'cross cutting ambiguity', the Fourth Circuit held that the district court judge failed to appreciate the requirements of the abuse of discretion standard. This case is but one of a number of recent cases that illustrate the practical difficulties that attend the Supreme Court's standard of review analysis presented in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)." (Health Plan Law blog by Attorney Roy F. Harmon III)

Vets Miss Out on Benefits, Liaisons Say
Excerpt: "Many veterans never receive the federal and state benefits to which they're entitled because they're unaware they qualify for health care, tax breaks and other compensation, local liaisons to former troops say." (USA TODAY)

Beware Calendar Cash: The Feds Look Into Stock Option Backdating Schemes
Excerpt: "This article focuses on the general treatment of stock options under federal income tax rules, tax issues involving backdated stock options, and strategies for complying with IRS inquiries during tax examinations." (Pennsylvania Institute of Certified Public Accountants)

Newly Posted Events
(Post Yours!)

An Absence Management Toolkit for Supervisors: A Grass Roots Approach
in Illinois on January 24, 2008
presented by WEB - Chicago West

Dependent Care Assistance Programs in Cafeteria Plans: Your Checklist for What Expenses Are Reimbursable in 2008
Nationwide on January 31, 2008
presented by Employee Benefits Institute of America (EBIA)/Thomson Tax & Accounting

January Web Seminar: Retirement Plans Legislative Update
Nationwide on January 24, 2008
presented by TRI-AD

Section 409A Compliance and Proxy Statements, Two-part Webcast
Nationwide on February 4, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)

Newly Posted Press Releases
(Post Yours!)

ASPPA Announces 401(k) Leadership Award Finalists
ASPPA (American Society of Pension Professionals & Actuaries)

Watson Wyatt Data Services' Newest Report Covers Latest Trends in Board of Directors Compensation Policies & Practices
Watson Wyatt

Fidelity Finds Some Tax-Exempt Sector Workers Contributing More Toward Retirement Plans, But Personal Debt Impacting Savings Progress Of Many
Fidelity Investments

On the Job, But Out of It? CCH Survey Looks At Ill Effects of Sick Employees At Work
Wolters Kluwer Law & Business

Nurses Unveil New Advertising Campaign Against Schwarzenegger-Nunez "Individual Mandate" Plan
California Nurses Association

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Vice President Actuary Team Leader-50035004
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for Wolters Kluwer
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Exciting In-House Opportunity- Employee Benefits and Consulting
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Client Service Manager
for Princeton Retirement Group, a Merrill Lynch Co.
in NC

Regional Retirement Plan Services Officer
for Fifth Third Bank
in IN

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