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February 6, 2008

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

Today's sponsor is DATAIR Employee Benefit Systems, Inc.

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Banner ad for DATAIR Employee Benefit Systems, Inc.

Software for 401(k), Pension and Flex Administration

Pick and choose the software modules you need: DC/401(k) Proposals & Administration - DB Proposals & Administration - Retirement Plan Documents (Prototype and Volume Submitters) - Government Forms (5500s, 1099-Rs, 5300s) - Cafeteria Plan Administration & Documents - Participant Termination Calculations - FAS 132 Reporting

Contact or call 1-888-328-2474.

[Guidance Overview] DOL Clarifies Underwriter Exemptions (PDF)
2 pages. Excerpt: "On January 18, 2008, the Department of Labor issued Advisory Opinion 2008-01A (click here for a copy), addressing an affiliation issue under the 'Underwriters Exemptions.' Those exemptions are a consolidated group of individual ERISA prohibited transaction exemptions, most recently amended collectively by PTE 2007-05, providing relief for certain securitization transactions involving the origination and operation of asset pool investment trusts and the acquisition, holding and disposition of certain pass-through certificates representing undivided interests in specified assets." (Sutherland Asbill & Brennan LLP)

[Guidance Overview] I Think I'm a Fiduciary (PDF)
4 pages. Excerpt: "New regulations and increased scrutiny are combining to make fiduciary concerns more prevalent than ever. Some defined contribution plan sponsors may not recognize their fiduciary responsibilities. Others may not understand the full implications of being a fiduciary. This white paper helps clarify an organization's fiduciary obligations and offers key considerations for anyone offering a defined contribution plan." (Milliman)

[Guidance Overview] Field Assistance Bulletin No. 2008-01 - Collection of Delinquent Contributions
Excerpt: "[E]mployee benefit pension plans are the focus of the bulletin. Nonetheless, the bulletin provides a indication of current government concerns in investigations and, more generally, the fundamentals on when contributions become plan assets." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] Deductible Limit for Plan Contributions Not Affected by Plan Amendment Made Within Two Years
Excerpt: "A plan's deduction limit, under pre-2008 rules, is determined by reference to unfunded current liability under Code Sec. 412(l) , and the maximum amount deductible by the sponsor is not less than 150 percent of that liability. Note, that prior to enactment of the Pension Protection Act of 2006 (PPA; P.L. 109-280), the limit was not less than 100 percent of that liability." (Wolters Kluwer Financial Services)

[Guidance Overview] IRS Updates Proposed Effective Date for Certain PPA Funding Regulations
Excerpt: "For employers who choose not to follow the relevant proposed regulations for 2008 plan years, the notice provides certain specific guidelines on what will constitute a 'reasonable interpretation' of the PPA statutory provisions. The notice also provides a special transition rule for applying the PPA benefit restrictions to small plans that use the last day of the plan year as the valuation date for each of the plan years beginning in 2006, 2007, and 2008." (Deloitte via

[Guidance Overview] DOL's Proposed 408(b)(2) Regulation - Impact of Mandated Disclosures on Registered Investment Advisers (PDF)
4 pages. Excerpt: "This bulletin focuses on the likely impact of the proposed regulation on independent registered investment advisers (RIAs). (By 'independent,' we mean an RIA that is not affiliated with a broker-dealer, mutual fund management complex, recordkeeper or the like.) For purposes of this bulletin, we discuss RIAs who provide advice services, as opposed to investment management services; but this covers both advice to plan fiduciaries and advice to participants." (Reish Luftman Reicher & Cohen)

Target Date Funds Are Here to Stay
Excerpt: "In light of anticipated growth in both the number of target date funds and the assets committed to them, it is critically important that appropriate benchmarks are developed to evaluate and benchmark their performance. Moreover, appropriate benchmarks increase the likelihood that (1) investors are better served, and (2) the fiduciary responsibilities of financial advisors and plan sponsors have been fulfilled." (Financial Advisor)

Pension Fund Assets and Liabilities for 2007 (PDF)
8 pages. Excerpt: "The year 2007 was another roller coaster ride as far as the relative growth of pension assets vs. pension liabilities. Based on the static asset allocation shown [in the target document], assets underperformed liabilities by -4.63% (market) +2.51% (IRS) and -1.64% (ROA)." (Ryan ALM, Inc.)

Pension Funding Improves Again in 2007
Excerpt: "To track the latest developments, Watson Wyatt estimated the aggregate financial status of pension plans at 2007 year-end for firms that have made the FORTUNE 1000 list during the last seven years." (Watson Wyatt Worldwide)

Treasury Validates Some Pension Rollbacks
Excerpt: "Under pressure from employers, the Treasury issued a ruling that allows companies to freeze the pensions of older workers in certain cases without running afoul of laws meant to protect employees' nest eggs." (The Wall Street Journal)

In the Years Ahead, Five Key Trends Will Dominate Baby Boomers' Financial Life
Excerpt: "Don't overlook your most underrated asset... If you have an old-fashioned pension, you may have an even richer Plan B. That's because most of your benefits accrue in your final decade of service. That makes this stodgy asset, one you've probably barely thought of, surprisingly valuable at your age, especially in an era of modest returns." (

European Commission Moves to Clarify Regulations Regarding Employee Share Schemes
Excerpt: "The EU Prospectus Directive, which has been in effect in the European Union since July 2005, has been causing problems for multinational companies operating in Europe and is putting certain employee benefits such as employee share schemes -- also known as employee stock purchase plans -- at risk for EU employees." (Faegre & Benson LLP)

Retirement Expectations Survey - Results for the United States, with International Comparisons (PDF)
103 pages. Excerpt: "Working Americans would ideally like to retire at age 58. However, when it comes to predicting when they will actually be able to retire, that age rises to 64 years old, on average - considerably later than the average retirement age among retirees. Older working Americans, particularly those ages 55 and over, are most likely to have an ideal retirement age that is in sync with the expected retirement age." (AXA Equitable)

SFAS No. 158 - Effect of Pension Accounting Changes on Profitability, Leverage and Volatility
Excerpt: "SFAS 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, significantly changes the way pension plan liabilities are recognized in the plan sponsor's financial statements. The Georgia Tech Financial Analysis Lab analyzed the Forms 10-K filed by the companies comprising the Dow Jones Industrial Average to determine the impact of SFAS 158." (Deloitte via

An 'Elastic' Earliest Eligibility Age for Social Security
Excerpt: "There are . . . two important objections to an increase in the [Earliest Eligibility Age]. The primary concern is that it would create hardship for those unable to work or find employment and who lack the resources to support themselves without working until age 64. A second objection is that raising the EEA is unfair to disadvantaged groups with low life expectancy. This brief addresses these concerns by considering an 'Elastic' EEA, which gives different workers different earliest eligibility ages." (Center for Retirement Research at Boston College)

Uncle Sam Matches Some 401(k) Deposits
Excerpt: "Many workers get excited when their employers kick in a matching contribution to spur them to save in a 401(k). What few people realize is that Uncle Sam will kick back up to $1,000 to reward low-income taxpayers who save for retirement, too. The mechanism is the little-known savers credit, which is worth 50 percent of the first $2,000 taxpayers stash in a traditional IRA, Roth IRA or retirement plans at work like a 401(k)." (San Jose Mercury News)

[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)

[Official Guidance] IRS Notice 2008-24: Update for Weighted Average Interest Rates, Yield Curves and Segment Rates (PDF)
4 pages. 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, the 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)

[Opinion] Investing for 401(k) Accumulation Not the Same As Investing for Lifetime Income
Excerpt: "While most investors these days are focusing on risk in terms of the market and its effect on their account balances, Tim Burns in his blog, Fiduciary Investor, says that they should pay attention to a larger risk. It's longevity risk, or the risk of a retiree outliving his or her assets." (National Benefits Services, Inc)

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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Links to Items on Executive Comp, Benefits in General

Public Employee Retiree Obligations Cloud Fiscal Horizon
Excerpt: "Even as they grapple with budget pressures from a sagging national economy, states are being forced to make tough decisions on how they will cope with an even more severe long-term fiscal concern: a projected price tag pushing $3 trillion to pay the pensions and health insurance of retired teachers and other government employees." (Education Week)

Last Week of February 2008 Is America Saves Week
Excerpt: "During America Saves Week, individuals will be encouraged and assisted to assess their savings progress and take action to advance this progress. This encouragement and assistance will be provided by organizations and professionals with an interest in improving the financial security of individuals and families." (America Saves)

Opportunities in Overcoming the Language Barrier in the Workplace
Excerpt: "Fernando Lopez sees a large wall keeping much of the Latino workforce from enrolling in their benefits and many advisers from capitalizing on an untapped market. With his new company, Lopez breaks down misconceptions, educates employees and shows the benefits industry how to see things from both sides." (Employee Benefit News; free registration required)

Newly Posted Press Releases
(Post Yours!)

Medical Cost Increase to Accelerate Worldwide Over Next Five Years, Watson Wyatt Poll Finds
Watson Wyatt

NIPA Announces Next Steps for ERPA
National Institute of Pension Administrators

7th Annual Search for Companies with the Best Employee Benefits
Principal Financial Group

Summit Mutual Funds Added to CPI Retirement Platform
CPI Qualified Plan Consultants, Inc.

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Defined Benefit Administrator and DB/DC Combo Administrator
for Boyce & Associates, Inc.
in AZ

Actuarial Professionals, Defined Benefits/Retirement
for Aon Consulting (Northeast region)
in MA, NJ, NY, PA

Investment Sales Position
for MBM Advisors, Inc.
in TX

Plan Sponsor Desk SPOC Relationship Manager
for Transamerica Retirement Services
in CA

Health Compliance Specialist
for The Segal Co.
in AZ

Implementation Consultant
for Ceridian
in MN

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