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February 1, 2008

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


Today's sponsor is International Foundation of Employee Benefit Plans

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Be Smart by Association with the International Foundation

Smart is not a permanent state of being. What's your maintenance plan? Take advantage of the education and information available through the International Foundation of Employee Benefit Plans, a nonprofit educational association, and find out why over 35,000 industry professionals like Larry Beebe rely on the Foundation to stay informed and educated. Make sure you have the most comprehensive information on health, pension and compensation issues. Be smart by association. www.ifebp.org/memberkit

[Official Guidance] IRS Rev. Rul. 2008-07: Backloading Rules as Applied to Traditional DB Plan Converting to Cash Balance Plan Prior to PPA '06 (PDF)
Analyzes a hypothetical traditional pension plan that was converted into a cash balance pension plan prior to the effective date of the new conversion requirements under the Pension Protection Act of 2006. In the ruling participants had their pensions determined using the greater of (1) the benefit under a continuation of the pre-conversion plan formula for a limited number of years after the conversion date and (2) the benefit under the new cash balance formula. The ruling illustrates how, under the current regulations, the backloading rules apply to this scenario. The ruling provides relief to ensure that plans that have requested or received a determination letter from the IRS and certain other plans will not be disqualified for plan years beginning before January 1, 2009 solely because the plan provides benefits based on the greatest of two or more formulas. Treasury and the IRS anticipate proposing amendments to the regulations that will allow separate testing of backloading with respect to the scenario under the revenue ruling and other 'greater of' formulas. The regulations will be proposed to be effective for plan years beginning on or after January 1, 2009. (Internal Revenue Service)

[Official Guidance] Text of IRS Notice 2008-21: Transition Guidance for New Funding Rules and Funding-Related Benefit Limitations Under PPA '06 (PDF)
6 pages. Excerpt: [W]hen regulations proposed under § 1.430(f)-1 (regarding maintenance of certain funding balances) and § 1.430(h)(3)-2 (regarding substitute mortality tables) are finalized, those final regulations will not apply to plan years beginning before January 1, 2009. . . . Taking into account the items with respect to which guidance is provided in this Part III(A), the Service will not challenge a reasonable interpretation of an applicable statutory provision under § 430 or 436 for plan years beginning during 2008." (Internal Revenue Service)

[Guidance Overview] IRS, Treasury Single-Employer Plan Funding and Benefit Transitional Guidance
Excerpt: "It is anticipated that technical corrections may be made to Code Sec. 436 that would authorize the Secretary of the Treasury to prescribe additional funding and benefit limitation rules. If such authority is granted, the IRS and Treasury Department are considering incorporating rules substantially similar to the transition guidance into the final regulations." (CCH Incorporated)

[Guidance Overview] IRS Delays Effective Date for New DB Funding Calculations
Excerpt: "The Treasury Department and the Internal Revenue Service (IRS) announced that, when proposed regulations regarding maintenance of certain funding balances and regarding substitute mortality tables to be used in defined benefit plan funding calculations are finalized, the final regulations will not apply to plan years beginning before January 1, 2009." (PLANSPONSOR.com; free registration required)

[Guidance Overview] Final DOL Rules Define Qualified Default Investment Alternatives (PDF)
2 pages. Excerpt: "The final DOL regulations on QDIAs create the following issues for plan sponsors to consider: Selecting and monitoring QDIAs. Complying with the DOL regulations. Drafting and designing the required participant notices and material relating to QDIAs." (The Segal Group, Inc.)

[Guidance Overview] Fiduciary Use of ERISA Plan Assets to Promote Political Positions Through Proxy Resolutions Risks Violating ERISA (PDF)
2 pages. Excerpt: "On December 21, 2007, the Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL) issued an advisory opinion (2007-07A) stating that plan fiduciaries risk violating ERISA by utilizing pension plan assets to promote political positions through proxy resolutions that have no connection to improving the value of the plan's investment in a company." (Morgan, Lewis & Bockius LLP)

[Guidance Overview] Contractual Limitation Period Defeats Indemnification Provision Claim
Excerpt: "Contractual limitation periods have often presented obstacles to plan participants. These limitation periods, though often enforced by the courts, can impose a high standard of vigilance on the parties. . . . In this recent Eighth Circuit opinion, The Court enforced a contractual limitations period included in an asset purchase agreement against a corporate plaintiff." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] PBGC Ends Publication of Certain Interest Rates in Federal Register
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) has announced that it will cease publishing certain monthly interest rates and assumptions, including the variable rate premium, in the Federal Register and instead rely on web site publication." (Wolters Kluwer Financial Services)

[Guidance Overview] 403(b) Interests Excluded from Bankrup.tcy Turnover
Excerpt: "The U.S. Bankrup.tcy Court for the Southern District of Ohio has ruled the interests of seven debtors in Employee Retirement Income Security Act (ERISA) Section 403(b) plans did not have to be turned over to the Chapter 7 trustees of the debtors' estates.' (PLANSPONSOR.com; free registration required)

New Paradigm of Pension Investing (PDF)
3 pages. Excerpt: "The article describes how some companies are responding to the strict legal and accounting standards for funding defined benefit pension plans with increased investment in fixed income securities. While such 'liability-driven' investment strategies should minimize the effect of market changes on the new funding requirements imposed by the Pension Protection Act, it also can lead to investment underperformance. The article explores how excessive government regulation is leading some employers to adopt this investment approach." (Benefits Law Journal via Kirkpatrick & Lockhart Preston Gates Ellis LLP)

Plan Sponsors Show Growing Interest In Retirement Plan Automated Investment Features
Excerpt: "From Spencer's Benefits Reports: According to the latest installment in the Survey & Sample Series issued by the International Foundation of Employee Benefit Plans (IFEBP), there is growing interest in the use of automated investment features in the administration of both defined benefit plans and defined contribution plans." (Wolters Kluwer Financial Services)

At the Office of Personnel Management, Improvements Needed to Ensure Successful Retirement Systems Modernization (PDF)
68 pages. Excerpt: "GAO was asked to (1) determine whether OPM is effectively managing the RSM program to ensure that system components perform as intended and (2) evaluate the risks, cost, and progress of the RSM program. To meet these objectives, GAO analyzed program documentation against relevant plans, policies, and practices." (U.S. Government Accountability Office)

[Opinion] Replicating Australia's Retirement System Could Fill America's Empty Nest Eggs
Excerpt: "A report issued in July 2007 by a firm managing Australian retirement funds notes that Australians 'on average will eventually retire with total superannuation [Australia's version of our 401(k) plan] and other assets of $535,036.'" (Employee Benefit News; free registration required)


Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Ex-Mellon Employee Eligible for Displacement Benefits
Excerpt: "An employee of an HR consulting firm fired as part of a corporate merger won a legal battle when a federal judge ruled that he was due benefits under a displacement program. U.S. District Judge Faith S. Hochberg of the U.S. District Court for the District of New Jersey ruled that plaintiff Robert Howley was never given a bona fide job offer at the acquiring company because a decision had been made before the sale that Howley was to be part of a planned reduction in force." (PLANSPONSOR.com; free registration required)

[Guidance Overview] Executive Employment Agreement Causes Loss of Bonus Deduction (PDF)
2 pages. Excerpt: "A recent private letter ruling by the Internal Revenue Service illustrates the importance of considering the ways in which executive employment agreements can interact with the company's incentive plans to affect the tax treatment of the executive's compensation." (Seyfarth Shaw LLP)

[Guidance Overview] Application of Code Section 409A to Employment Relationships (PDF)
9 pages. (Compensation & Benefits Review via Dow Lohnes PLLC)

[Guidance Overview] SEC Exemptions from Registration under Section 12(g) of the Securities Exchange Act of 1934 for Compensatory Employee Stock Options
Excerpt: "The purpose of the exemptions is to provide both reporting companies and private, non-reporting companies guidance and certainty in their compensation decisions and to prevent private, non-reporting companies from becoming subject to the registration and reporting requirements of the Exchange Act prior to the time they have public shareholders. Both exemptions are self-executing if the necessary requirements are met." (Bllank Rome LLP)

[Guidance Overview] Elective Nonqualified Deferred Compensation Plans - A Primer
Excerpt: "This article addresses elective deferred compensation plans that enable an executive to defer payment of a portion of his or her compensation to a future date, and, specifically, elective deferred compensation plans maintained by for-profit companies." (Hay Group)

Adult Day-Care Facilities, Medical Leave Policies and Empathy Are Helping Stressed-Out Workers Be Caregivers
Excerpt: "[T]he majority of those who care for an elderly family member are also full-time employees -- about 25 percent of the U.S. work force. The total estimated annual cost to employers of full-time workers with intense care-giving responsibilities is $33.6 billion, according to a MetLife Care-giving Cost Study. The average cost per employee is $2,441 -- because of lost productivity." (IndyStar.com)

Campaign 2008: Facts on Benefits Issues
Excerpt: "Health and retirement issues are being raised as the 2008 election campaign heats up. To help provide a factual basis of reference for reporters and others involved in these campaign issues, EBRI is providing . . . questions and answers about major employee health and retirement benefits. Hotlinks to relevant tables and charts of data are provided at the end of each answer." (Employee Benefit Research Institute)

Social Security - An Essential Asset and Insurance Protection for All (PDF)
48 pages. Excerpt: "The report is a synthesis of findings of twelve organizations supported by the Ford Foundation to carry out research and outreach activities to help low-income people understand their stake in Social Security and add their voices to discussions about its future." (National Academy of Social Insurance)

Robert Ball, Architect of Medicare, Dies in Maryland
Excerpt: "Robert Ball -- a 'chief architect' of Medicare who administered the program for its first seven years -- died at age 93 on Tuesday at Collington Episcopal Life Care Community in Mitchellville, Md., the Washington Post reports." (Kaiser Family Foundation)

Social Security Advocate Bob Ball is Dead at 93
Excerpt: "You probably don't know his name. And you probably won't see any news of his passing outside of the obit section. But Bob Ball, who died last night at the age of 93, probably played a greater role in expanding and defending Social Security than anyone in the second half of the 20th century." (Talking Points Memo)


Newly Posted Events
(Post Yours!)

Benefits Selling Expo
in Georgia on April 2, 2008
presented by Benefits Selling

New FMLA Leave Rules for Soldiers' Relatives: What Employers Need to Know - Webcast
Nationwide on February 27, 2008
presented by HRTrainingCenter.com


Newly Posted Press Releases
(Post Yours!)

PBGC Hails Continuation Of Dana Corp. Pension Plans After Reorganization
Pension Benefit Guaranty Corporation (PBGC)

Campaign 2008: Reporters' Guide to Key Health, Retirement Issues
Employee Benefit Research Institute (EBRI)

Nationwide Couples Mutual Fund Window with Target-Date Funds
Nationwide Financial

Treasury, IRS Provide Transition Guidance on Pension Protection Act Funding Rules
U.S. Treasury Department and Internal Revenue Service

Key to Attracting and Retaining Quality Employees: Benefits
Benefit Sources & Solutions

Fidelity Opens 401k Program to Outside Funds
American Banker


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Director Benefits and Compensation Accounting, MMBMI
for MassMutual Financial Group
in MA

Director Family Market Development
for MassMutual Financial Group
in MA

AVP Product Leader
for MassMutual Financial Group
in MA

Retirement Communications Officer
for SDCERA - San Diego County Employees Retirement Association
in CA

Customer Service Specialist, Retirement Plan Services
for Digital Retirement Solutions, Inc.
in CO

Administrator - Retirement Plans
for Benefit Resources, Inc.
in CA

Manager - Regional TPA
for Benetech, Inc.
in CT, DC, DE, FL, IN, KY, MA, MD, ME, MI, MO, NC, NH, NJ, OH, PA, RI, SC, TN, VT, WV




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