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February 4, 2008

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

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[Official Guidance] Text of Field Assistance Bulletin 2008-1: Responsibilities of Fiduciaries for the Collection of Delinquent Employer and Employee Contributions
Excerpt: "The responsibility for collecting contributions is a trustee responsibility. If a plan has two or more trustees, the duty may be allocated to a single trustee. A plan may also provide that a named fiduciary may direct a trustee as to this responsibility or may appoint an investment manager to take on this duty. To the extent the nature and scope of the trustee's responsibilities are specifically limited in the plan documents or trust agreement, it is generally the responsibility of the named fiduciary with the authority to hire and monitor trustees to assure that all trustee responsibilities with respect to the management and control of the plan's assets (including collecting delinquent contributions) have been properly assigned to a trustee or investment manager." (Employee Benefits Security Administration, U.S. Department of Labor)

[Official Guidance] Listing of IRS Published Guidance for January 2008
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)

[Guidance Overview] Judge Rejects Federal Workers' Pension Suit
Excerpt: "A lawsuit by federal workers in Hawai'i and Alaska seeking to increase their pension benefits has been dismissed by a visiting federal judge, who ruled that the issue should be resolved by Congress." (The Honolulu Advertiser)

[Guidance Overview] Department of Labor Guidance on 401(k) Plan Fees
Excerpt: "Entitled 'Proposed Regulation Relating to Service Provider Disclosures Under ERISA Section 408(b)(2),' the newly proposed rule follows on the heels of a solicitation by the Department for comments from interested parties relating to what levels of disclosure might be appropriate. The responses to the Department's solicitation were voluminous and fell into two, predictable camps . . . ." (Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C.)

[Guidance Overview] Sixth Circuit Permits Individuals to Sue for 'Damages' for Fiduciary Breach
Excerpt: "The Sixth Circuit [found] that an individual plan participant can seek recovery of losses due to fiduciary breach. In so doing, the Sixth Circuit disagreed with the district court's reasoning, which relied heavily on the Fourth Circuit's logic in LaRue v. Dewolff, 450 F.3d 570 (4th Cir. 2006), a case currently pending before the U.S. Supreme Court." (Employer Law Report blog)

[Guidance Overview] Back-to-Basics: Average Deferral Percentage Test
Excerpt: "Both the coverage test and the ADP test use mathematical techniques to compare the participation and contribution rates of the HCEs to the nonhighly compensated employees (NHCEs) to determine whether the plan is discriminating in favor of the HCEs." (McKay Hochman Co., Inc.)

[Guidance Overview] DOL Officials Say Investment-Only Funds Must Reveal Fees
Excerpt: "Previously, it was thought that only those mutual fund companies that provide record-keeping or other services to 401(k) plans would be required to track and disclose compensation arrangements with their vendors under the proposed rule. But Labor Department officials dropped a bombshell at a Jan. 28 meeting between government officials and pension industry lobbyists. Regulators then said the rule also would affect mutual funds that provide investment-only services for a 401(k) or other ERISA plan." (Pensions & Investments)

[Guidance Overview] EBSA Says Responsibility for Collecting Contributions Must be Properly Assigned
Excerpt: "Federal regulators have released new guidance that asserts that a named or functional fiduciary that has authority to appoint a plan's trustee(s) must make sure the proper party has been assigned the obligation to collect plan contributions." (; free registration required)

[Guidance Overview] Beck v. Pace - The Supreme Court Misses Chance to Rule on ERISA Fiduciary Issues
Excerpt: "As part of implementing a decision to terminate a pension plan, does a plan sponsor have a fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) to consider accomplishing the termination through a plan merger, as opposed to a standard termination and purchase of annuity contracts for the participants? This was the issue the U.S. Supreme Court considered in Beck v. PACE International Union, U.S., No. 05-1448 (6/11/07)." (Thompson Publishing Group Inc.)

[Guidance Overview] IRS Posts FAQs on Pre-Approved and Individually Designed Retirement Plans
Excerpt: "EBIA Comment: This set of Retirement Plans FAQs, like the others posted on the IRS website, provides practical tips to employers that maintain retirement plans and to the advisors who help them keep their plan documents timely amended and filed with the IRS. The FAQs bring home -- in plain English and with the aid of several helpful examples -- many important points from Revenue Procedure 2007-44 and more recent guidance that otherwise might have been missed." (Employee Benefits Institute of America)

Hewitt Federal Legislation Quick Guide Updated as of January 30, 2007, for Retirement Plans (PDF)
12 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding retirement plans. (Hewitt Associates)

[Opinion] The Case for Stock in Pension Funds (PDF)
4 pages. Excerpt: "The primary goal of this article is to show that stock investments are justified when the cash flows contain economic risk. Moreover, the appropriate discount rate is the expected rate of return of a cash-flow-matching portfolio rather than the risk-free rate." (Contingencies)

Investments by Governmental Pension Plans in Private Equity Funds
Excerpt: "Just as a governmental plan seeks to address its own concerns, the general partner seeks to address its own concerns when admitting a governmental plan as a limited partner. A primary concern of a general partner is whether the governmental plan is subject to state laws similar to ERISA. Although governmental plans are exempt from ERISA's fiduciary and plan asset rules, state statutes can have similar rules." (The Metropolitan Corporate Counsel, Inc.)

Judge OKs GM 401(k) Stock Drop Settlement
Excerpt: "A federal judge has tentatively approved a settlement in a suit over the investment of General Motors stock in the automaker's 401(k) plan." (; free registration required)

PBGC Applauds Dana Corp's Bankrup.tcy End
Excerpt: "A PBGC news release said that during Dana's bankrup.tcy, the company continued to make its legally required funding contributions and consolidated 34 defined benefit plans into seven pension funds. The changes reduced Dana's minimum funding contributions by $60 million through the year 2012." (; free registration required)

401(k) and Profit Sharing Plan Eligibility Survey 2007 (PDF)
11 pages. Excerpt: "This is the tenth year that PSCA has collected defined contribution plan eligibility data. The changes over time have been significant. In 1998, only 24 percent of plans allowed employees to begin contributing to their 401(k) plans immediately upon employment. This percentage more than doubled by 2007." (Profit Sharing/401(k) Council of America)

Survey Finds 401(k) Eligibility Gains
Excerpt: "More employers are allowing workers to join their 401(k) plan earlier, a new Profit Sharing/401k Council of America (PSCA) minisurvey shows." (; free registration required)

Investment Policy Saves You from Yourself
Excerpt: "There's one big problem with individual investment policies. No one wants to sell stocks when they're going up. You let them become an ever larger portion of your portfolio. As a result, your asset allocation plan is imaginary. You've put yourself into the hands of chance." (The Washington Post; free registration required)

[Opinion] American Benefits Council Statement for Senate HELP Committee Hearing Record Regarding Fair Pay Restoration Act, S. 1843 (PDF)
2 pages. Excerpt: "We wish to express our continued concern regarding proposed legislation (S. 1843, The Fair Pay Restoration Act) to overrule the Supreme Court's Ledbetter v. Goodyear Tire and Rubber Co. decision. The Council's area of expertise is in the employee benefit area, and accordingly we limit our letter to the possible effect of the proposed legislation on benefit programs." (American Benefits Council)

[Opinion] Where Is the Outrage Over Retirement Prospects?
Excerpt: "For all of the passion that employers, lawmakers, media outlets, presidential candidates and consumers infuse into the national debate on health care - and rightfully so - I still can't help but wonder why there isn't a similar hue and cry about Americans' lack of retirement readiness." (Employee Benefit News; free registration required)

Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Federal Court Permits Dividend Deduction for Stock Redeemed from ESOP (PDF)
3 pages. Excerpt: "A corporation that is interested in claiming a tax deduction for costs associated with redeeming shares from an ESOP should consult with legal counsel with expertise in this area and proceed cautiously. The IRS has clearly stated its position as evidenced by its issuance of final regulations specifically disallowing the deduction after the General Mills ruling. This suggests that one district court decision will not, in itself, change the IRS's enforcement position or prevent disallowance of the deduction in other court jurisdictions." (Morgan, Lewis & Bockius LLP)

[Guidance Overview] Plan Insurers and Brokers Were Not Fiduciaries With Respect to Undisclosed Fees and Commissions Paid to Brokers
Excerpt: "EBIA Comment: This is one battle in a continuing war about insurance company payments to brokers that may lead to conflicts of interest. The DOL weighed in on the issue with Advisory Opinion 2005-02A, instructing that insurance company fees and commissions reportable on Schedule A include a wide range of payments, considerably more than simple 'sales commissions' on individual policies or contracts. Most recently, the DOL has proposed comprehensive regulations requiring disclosure of service provider fees, which would also apply to commissions and other payments made by insurers to brokers . . . ." (Employee Benefits Institute of America)

Strategic Issues in Executive Pay
Excerpt: "Because the compensation system is such a significant component of an organization's overall financial structure, almost by definition it is strategic in nature. Nowhere is the strategic nature of the compensation system more evident than in the design of executive long-term incentive (LTI) programs." (Hay Group)

Study Finds Employee Ownership Improves Performance of Newly Privatized Businesses
Excerpt: "The authors' conclusion? Privatization per se is not a 'magic bullet.' Where profits and sales efficiency increased for privatized firms, it was due in large part 'to successful training and development programs that were implemented and because employees and managers were urged to gain a more vested interest after gaining options to buy shares in their enterprises.'" (The Beyster Institute)

U.S. Judge Allows G.ay Couples to Register for Domestic Partnerships in Oregon
Excerpt: "A state law allowing Oregon's g.ay couples to register as domestic partners belatedly took effect after a federal judge ruled the state's process of disqualifying petition signatures was consistent enough to be valid. The state quickly announced Friday that the domestic partnership applications were available online, and jubilant g.ay-rights activists predicted hundreds of couples would line up on Monday morning at county offices to register." (PlanetOut Inc.)

Hewitt Federal Legislation Quick Guide for January 30, 2007, on Human Resources & Employment Law (PDF)
16 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding human resources and employment law. (Hewitt Associates)

Compensation Costs in Private Industry Up 3.0 Percent in 2007
Excerpt: "Wages and salaries for private industry workers increased 3.3 percent for the 12-month period ended December 2007. Benefit costs increased 2.4 percent." (U.S. Bureau of Labor Statistics)

Ohio Governor to Approve Law on School Benefits Changes
Excerpt: "Ohio Governor Ted Strickland is expected to sign legislation next week that would raise the retirement age for bus drivers, custodians, and attendance clerks - and would cut benefits for early retirees." (; free registration required)

Newly Posted Events
(Post Yours!)

Ask the Experts: Individual Mandates - Webcast
Nationwide on February 5, 2008
presented by

Executive Compensation Update: Challenges Ahead and Practical Realities
in Ohio on February 12, 2008
presented by ASPPA Benefits Council of Cleveland

Getting to Universal Health Insurance Coverage Conference - Webcast
Nationwide on February 5, 2008
presented by

New FMLA Rules: What Employers Should Know Now with Craig J. Davidson, CEBS
Nationwide on February 19, 2008
presented by Davidson Marketing Group -- FutureOffice Network

Take the Mystery out of the RFP Process
in District of Columbia on March 27, 2008
presented by Capital Chapter ISCEBS

Newly Posted Press Releases
(Post Yours!)

Employee Benefits Security Administration Releases Field Assistance Bulletin on Collection of Delinquent Contributions
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Social Security Is Worth $225,000 for a Typical Retiree
National Academy of Social Insurance

Newport Group Appoints Alan Valenca as New Northeastern Regional Director
Newport Group, The

ERISA "Wrap" Plan Forms Now Available
Benefit Publications, LLC

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Pension Attorney/Paralegal/Specialist
for J.P. Schlachter & Associates, Inc.
in OH

Compliance Testing Consultant
for Diversified Investment Advisors
in NY

401(k) Plan Administrator
for Pollard & Associates, Inc.
in MD

Assistant 401(k) Administrator
for Pollard & Associates, Inc.
in MD

401(K)/DC Plan Administrator
for Schloss & Company
in NY

409A Plan Administrator / 409A Senior Plan Administrator
for Pen-Cal Administrators
in CA

Benefits Administrator
for King County- Finance & Business Operations Division
in WA

Retirement Plan Consultant
for Freedom One Financial Group
in MI

Plan Administrator
for JRN Benefits, Inc.
in CA

Sr Analyst HR Benefits
for Philip Morris USA
in VA

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