Retirement Plans

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January 18, 2008

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.

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[Guidance Overview] IRS Issues Guidance for 403(b) Plan Sponsors: Model Language for Public Schools
Excerpt: "One of the most significant provisions of the regulations is the requirement that sponsoring organizations maintain written plan documents for their 403(b) plans. Another important requirement is that 403(b) plans comply in both form and operation with the requirements of the rregulations." (von Briesen & Roper, s.c.)

[Guidance Overview] DOL Advances Fee Disclosure Initiatives for ERISA Plan Service Providers
Excerpt: "The fee disclosure revisions have been incorporated into Schedule C, which generally must be attached to the Form 5500 filed by a large plan to report compensation totaling $5,000 or more received by any one service provider for plan services. As part of the revisions, Part I of Schedule C now requires direct compensation paid by a plan and indirect compensation (compensation received from sources other than the plan or plan sponsor) to be reported on separate line items." (Littler Mendelson P.C.)

[Guidance Overview] Proposed Cash Balance/Hybrid Plan Regs Issued by IRS
Excerpt: "Under the proposed regulations, a plan would not violate rules regarding a participant's accrued benefit derived from employer contributions merely because the plan determines the present value of benefits under a lump sum-based benefit formula as the amount of the hypothetical account maintained for the participant, or as the current value of the accumulated percentage of the participant's final average compensation under that formula." (Wolters Kluwer Financial Services)

[Guidance Overview] Mandatory or Voluntary? Congress Creates More Confusion on the Non-Spouse Rollover Provision in PPA 2006
Excerpt: "We must assume that the non-spouse rollover provision remains optional for company plans, since there is no official guidance stating that this provision is mandatory, even though it is clear that this was the intent of Congress. What was originally intended to be expanded protection for those who need it most -- the children of plan participants -- has now been taken away -- AGAIN!" (Ed Slott, CPA)

Rhode Island Governor's Initiative Addresses Public Pension Issues
Excerpt: "[Gov.] Carcieri's 'Municipal Fiscal Control and Responsibility Act' would force all cities and towns that are not keeping up with contributions to their self-administered pension plans to move new employees to the state Municipal Employees Retirement System. The proposal, prompted by Rhode Island's projected $450-million deficit next year, would also institute a minimum retirement age of 59 for new workers and those with less than 10 years in the state municipal system, bringing them in line with pensions of teachers and state employees whose minimum retirement ages were reinstated two years ago." (The Providence Journal)

In Bolivia, New State Pension Benefits Approved
Excerpt: "The Bolivian government has approved a plan to create a new 'Dignity Pension' to replace to the old solidarity bonus (Bonosol) the state provides to retired workers. The action is expected to improve retirement security in the country." (Watson Wyatt Worldwide)

Podcast: Pension Plans: A Top 10 Issue for Legislatures in '08
Excerpt: "Because of the large number of baby boomers expected to retire in the coming years, states have paid increasing attention to the issue of funding state pension plans. Right now, they are listed in good to excellent condition. But for retiree health care costs, however, no easy solutions present themselves. We sit down with Ron Snell (6:01) director of state services at NCSL, to talk about this issue and what solutions states are bringing to the table in 2008." (National Conference of State Legislatures)

The Relative Performance Record and Asset Allocation of Public Defined Benefit Plans (PDF)
15 pages. Excerpt: "Morningstar, Inc. and the National Conference on Public Employee Retirement Systems (NCPERS) are pleased to present this inaugural report on the unique roles, investment performance, and portfolio holdings of public sector defined benefit pension plans." (Morningstar)

Why Have Some States Introduced Defined Contribution Plans? (PDF)
16 pages. Excerpt: "In this issue brief, we learn more about the factors that have led 12 states to introduce some form of defined contribution plan and how they are structuring those plans." (Center for State and Local Government Excellence)

IRS Puts out Revised Application for Plan Qualification
Excerpt: "The Internal Revenue Service (IRS) has announced a new version of Form 4461-A, 'Application for Approval of Master or Prototype or Volume Submitter Defined Benefit Plan,' has been released and is now available online." (; free registration required)

Lawyers in Principal Revenue Sharing Case Spar over Confidentiality Issue
Excerpt: "The latest legal battle in the lawsuit over the Principal Financial Group's 401(k) revenue sharing arrangements centers around whether a federal judge in Iowa will impose sweeping restrictions on how information provided in pre-trial discovery can be used." (; free registration required)

How Do You Make a Lump Sum of Your Life's Savings Last?
Excerpt: "Boomers . . . are the first generation whose principal retirement assets will come in lump sums from 401(k)-type plans. Few have managed such enormous sums before. Yet, they'll have to make investment decisions that will determine their financial security in a retirement that could stretch for decades, the longest retirements any generation has yet experienced. The risks are high. They could succumb to unwise investments. Worse, they could fall prey to unscrupulous advisers who exploit financial naïveté." (USA TODAY)

[Official Guidance] January 2008 Pension Funding Segment Rates
Excerpt: "Generally for plan years beginning after 2007, the rates in the tables . . . apply for minimum funding requirements under section 430 of the Code." (Internal Revenue Service)

[Official Guidance] IRS Notice 2008-17: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
4 pages. Excerpt: "This notice provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007." (Internal Revenue Service)

Links to Items on Executive Comp, Benefits in General

[Opinion] Letters: Comparing Europe's Social Safety Net to America's
Excerpt: "Millions of Americans are scraping to save the amount they will need for retirement beyond Social Security, but the European retirement system is much more generous. Many Americans pay extra for child care, or self-finance their own sick leave or parental leave after a birth, but Europeans receive all of these (and more) from their taxes. When all these differences are added up, it turns out that many Americans are paying out as much as Europeans -- we just receive a lot less for our money. The 'overtaxed European' is another stereotype used to scare Americans away from the European model, so it's unfortunate that Mr. Krugman reinforced that stereotype." (The New York Times; free registration required)

[Guidance Overview] New Leaves of Absence Required in Quebec, Can.ada
Excerpt: "Quebec employers will be required to grant unpaid leave to workers who have suffered specific tragedies, such as the murder or suicide of a spouse or child, under regulations that came into force on December 18, 2007." (Watson Wyatt Worldwide)

Supreme Court May Rule on Legality of FMLA Waivers
Excerpt: "This week, the U.S. Supreme Court asked the Solicitor General to comment on a Fourth Circuit decision precluding employees from waiving their Family & Medical Leave Act rights without Labor Department supervision. A petition has been filed for review of the decision and the fact that the Court's request is a sign that review has a strong chance of being granted." (HR Policy Association)

Newly Posted Press Releases
(Post Yours!)

U.S. Department of Labor Obtains Order Requiring Restoration of More Than $500,000 to Georgia Plumbers Trade Association Health Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Gender Plays Strong Role in Receiving Annuity, Pension Income
Employee Benefit Research Institute (EBRI)

IFEBP Announces Next Certificate in Financial Planning Management
International Foundation of Employee Benefit Plans

New Center for Excellence Brief Asks: Why Have Some States Introduced Defined Contribution Plans?
Center for State and Local Government Excellence

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