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| January 22, 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] Letters of Credit Can Help Avoid Pension Fund Deficiencies in Alberta, Can.ada
Excerpt: "Pension plans now have the option of using letters of credit (LOCs) to avoid funding solvency deficiencies in the province of Alberta. Employers will have to consider both the advantages and disadvantages of this new instrument, including cost and plan member and union perceptions. This regulation was passed on November 28, 2007, through an Order in Council. In order to be considered part of a pension fund's assets, the LOC must fulfill certain requirements." (Watson Wyatt Worldwide)
[Guidance Overview] Clarification for Small Employers – Partial Terminations under Rev. Rul. 2007-43am (PDF)
3 pages. Excerpt: "[The Society] is writing to request additional clarification to the guidance on partial terminations provided in Revenue Ruling 2007-43. We applaud the Internal Revenue Service (the Service) for issuing guidance relating to partial terminations. However, we believe that the Revenue Ruling may be interpreted in a manner that is much broader that what the Service likely intended. This possible misinterpretation . . . is of particular importance to small employers." (American Society of Pension Professionals & Actuaries)
[Guidance Overview] Overview: Plan Cannot Deny Benefits Based on Retroactive Amendment to Correct Scrivener's Error
Excerpt: "EBIA Comment: Although certain courts have entertained the concept of 'scrivener's error' to correct perceived mistakes in plan documentation, the concept has been used sparingly. As this case illustrates, courts considering the doctrine must reconcile the principles of contract law, which permit correction of drafting mistakes, with the principles of ERISA, which require written plan documents so that participants receive notice of their rights and obligations under a plan." (Employee Benefits Institute of America)
[Guidance Overview] IRS Proposed Rules for Cash Balance and Other Hybrid Pension Plans (PDF)
2 pages. (Milliman)
Most Employers Will Maintain Executive Retirement Plans
Excerpt: "This finding is among the results of a survey released by Buck Consultants. Buck's study, 2007 Nonqualified Deferred Compensation Survey, was conducted after the Internal Revenue Service issued its final rules in 2007. The survey found that 95% of respondents will retain their executive defined contribution plans and 89% will continue their executive defined benefit plans." (Wolters Kluwer Financial Services)
Taking Advantage of Automatic 401(k) Enrollment Can Yield Significant Returns
Excerpt: "More than three-fourths of employers now offer a premixed portfolio option, up from 63 percent in 2005. For most workers, this investment strategy is more suitable than the more-conservative default investments used in the past." (Deseret Morning News)
4 Ways to Recession-Proof a 401(k)
Excerpt: "So how do you recession-proof your 401(k)? Here are four distinct strategies that range from helping you lose less in this downturn to helping you make more. Some can be hard to implement in a company plan with relatively few investment options. If that's your situation, use other accounts you own -- individual retirement accounts or a taxable account -- to implement the hedges." (MSN.Money.com)
Biggest Public Pension Funds Can Take Stakes in Wall Street Houses
Excerpt: "Only the biggest public funds with large internal investment operations have deep enough pockets and the investment latitude to follow the lead set by the $81.3 billion New Jersey Division of Investment. The Trenton, N.J.-based unit, which oversees $81.3 billion in state pension assets, provided capital infusions last week for Citigroup Inc. and Merrill Lynch & Co. Inc., both of which took huge write-downs because of their exposures to subprime mortgages." (Pensions & Investments)
Pension Freeze Brings Uncertainty to IBM Employees' Retirements
Excerpt: "This month might mark the moment when workers in America finally accept the idea that pensions are on their way out. IBM, a large and profitable American company whose reputation for providing blue-chip benefits was once legend, froze its pension plans on Jan. 1, saying the change would save the company $3 billion by 2010." (Gannett News Service via Burlingtonfreepress.com)
Unscrambling the Alphabet of Mutual Fund Fees
Excerpt: "WHEN stock markets climb, the fees associated with equity ownership are easy to shrug off. But with the stock market ailing in 2008 -- the Standard & Poor's 500-stock index is down 9.75 percent as of Friday -- mutual fund investors are right to wonder and worry about the costs they are paying to own their shares." (The New York Times; free registration required)
81-Year-Old Pension Cheater Gets Prison Time
Excerpt: "His mother died in 1985, but he continued to cash her federal pension checks. Now 81 years old, Joseph S. Apelman Jr. was sentenced Wednesday to three years in prison for theft of public money." (The Times-Picayune)
Fidelity Seeks New Wave of Investors for Reopened Megellan Fund
Excerpt: "With a vast majority of the fund's assets still earmarked for shareholders' retirements, Fidelity is now looking to bring in a new, ideally younger, wave of investors to offset future outflows. The good news for Fidelity regarding the launch of Magellan 2.0 is that the fund is fresh off of one of its best-performing years in recent history." (Financial Week; free registration required)
401(k) Plans Still Gorged with Company Stock
Excerpt: "A Financial Week analysis of data from sister publication Pensions & Investments found that the 65 biggest corporate defined-contribution plans for which data were available with all DC assets in a 401(k) (as opposed to, say, an ESOP) had $325 billion in combined assets, and roughly $86 billion -- or 26% -- of that was in company stock." (Financial Week; free registration required)
Pension Assets Up 12.4%, According to Survey
Excerpt: "Assets in the biggest corporate retirement plans swelled by 12.4% in 2007, with defined-contribution plans growing by 13.6% vs. an 11.4% gain for traditional defined-benefit pensions, according to an annual survey of the 1,000 largest U.S. retirement plans by Financial Week sister publication Pensions & Investments." (Financial Week; free registration required)
Even with Tax Changes, Businesses Still Offering Defined Benefit and Defined Contribution Plans for Executives
Excerpt: "Even though the IRS last year changed the way non-qualified deferred compensation plans are governed, an overwhelming majority of companies will continue to offer such retirement benefits to their top executives. In fact, 95% of employers recently polled by Buck Consultants said that they intend to retain their executive defined-contribution plans. And 89% said that they would continue offering executive defined-benefit plans as well." (Financial Week; free registration required)
[Opinion] Debate Over Market-Timing Once Again Raises Its Ugly Head - This Time Among the Participants of Federal Thrift Savings Plan
Excerpt: "Apparently, there are a couple of thousand participants (out of a universe of 3.8 million in the TSP) who are trading 'frequently' -- and the TSP is taking steps to rein them in . . . ." (PLANSPONSOR.com; free registration required)
[Opinion] If FASB Makes Companies Run Plan Assets Through Income Statements, They Can Expect Herky-Jerky Profits
Excerpt: "Nothing is official yet. But the next phase of pension-accounting rulemaking is likely to affect the income statement. That means that the Financial Accounting Standards Board is considering changing the way companies report profits. If that happens, it's sure to cause a stir." (CFO.com)
[Opinion] Who Are the 401(k) Industry's Hundred Most Influential?
A listing for 2008. (401kWire.com)
[Opinion] Early Retirement Is More Than Just a Pipe Dream
Excerpt: "Focusing on Social Security as a financial starting point for long-range retirement planning is a sound idea. Yet you will need to ask a few questions to see what's best for you. Unless your health is poor or you have sufficient assets to leave the workforce, the best advice regarding taking Social Security at 62 is to leave it alone for a while." (Bloomberg News)
Links to Items on Executive Comp, Benefits in General
[Guidance Overview] Quarantine and Isolation - Selected Legal Issues Relating to Employment (PDF)
Excerpt: "This report examines the employment-at-will doctrine, possible application of the public policy exception in the case of a potential influenza pandemic, the Family and Medical Leave Act (FMLA), and possible application of the nondiscrimination mandates of the Americans with Disabilities Act (ADA)." (U.S. Congressional Research Service)
[Guidance Overview] Third Circuit Weighs in on FICA Status of Severance Payments to Tenured Faculty
Excerpt: "The Third Circuit has determined that certain severance payments to tenured faculty and administrators constitute 'wages' for purposes of §3121, which governs employer and employee contributions under the Federal Insurance Contributions Act (FICA). In University of Pittsburgh v. U.S., No. 06-1276 (3d Cir. 11/2/07), the Third Circuit held that the relinquishment of tenure rights did not alter the payments' character as compensation for services subject to FICA taxes." (The Bureau of National Affairs, Inc.)
[Guidance Overview] Judge Tosses Fee/Commission Conspiracy Case against Workplace Insurers
Excerpt: "After declaring that none of the six major insurance providers accused in a commission conspiracy were fiduciaries under the Employee Retirement Income Security Act (ERISA) a federal judge has cleared the companies of wrongdoing." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Overview: IRS Issues 2007 Version of Publication 970, Tax Benefits for Education
Excerpt: "EBIA Comment: Qualified educational assistance programs allow employers to provide assistance to employees for a broad range of educational expenses, including expenses for graduate-level courses and for courses that are not job-related (subject to certain limitations). Under Code Section 127, amounts paid or incurred by an employer under a qualified educational assistance program are deductible by the employer and are excludable from the employees' taxable income." (Employee Benefits Institute of America)
[Guidance Overview] More on Executive Compensation for Tax-Exempt Organizations
Excerpt: "Periodically, I like to address executive compensation issues for tax-exempt organizations, because some readers work for or advise such organizations and other readers may serve on the board of directors of such organizations. Over the last ten years, the IRS has dramatically stepped up its policing of and enforcement actions against executive compensation at tax-exempt organizations." (Michael S. Melbinger via Winston & Strawn LLP)
Newly Posted Press Releases
U.S. Labor Department Reaches Agreement with Columbus, Ohio, Business to Recover Contributions to Company 401(k) Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
National Business Coalition on Health Awards Grants to 14 Coalitions for Diabetes Quality Programs
National Business Coalition on Health
Integrated Benefits Institute Study Finds National Surveys Missing Critical Productivity Data
Integrated Benefits Institute
Newly Posted or Renewed Job Openings
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in TX
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New Business Development for Employee Benefits Division
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in PA
Team Leader - New Business - Standard Retirement Services
for Standard Retirement Services
in OR
Actuarial Consultant
for Shore Tompkins Actuarial Resources
in IL
Defined Contribution Administrator
for Shore Tompkins Actuarial Resources
in IL
Retirement Plan Administrator
for Wells Thomas, LLC
in CT
Public Policy / Regulatory Analyst
for National Business Group on Health
in DC
Pension Fund Administrator
for Taft-Hartley Pension Fund
in IL
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