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| February 21, 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.
(Click on company name or banner to learn more.)
| 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 sales@datair.com or call 1-888-328-2474. |
[Official Guidance] Technical Update 08-1 - PBGC Extension of ERISA Section 4010 Reporting Deadline
Excerpt: "The PBGC is granting an automatic one-day extension for reporting by controlled groups whose 105-day reporting period includes February 29, 2008." (Pension Benefit Guaranty Corporation)
[Official Guidance] 2008 Instructions for Forms 1099-R and 5498 (PDF)
16 pages. (Internal Revenue Service)
Supreme Court Rules Individual Retirement Plan Participants Can Sue Employers Over 401(k) Losses
Excerpt: "Previously, plan participants could only sue employers over such losses through class-action suits. The justices' decision could result in a deluge of lawsuits for plan sponsors, many observers say." (Workforce Management; free registration required)
Ruling Allows Workers to Sue on 401(k) Losses
Excerpt: "The U.S. Supreme Court unanimously upheld the right of workers to sue over losses in their 401(k) retirement-savings accounts in some circumstances, but pension-law experts said a minority opinion in the case could also bolster some defenses used by employers." (The Wall Street Journal)
Supreme Court Rules Employees Can Sue Over 401(k) Plan Management Misconduct
Excerpt: "The unanimous holding reverses a lower court decision that had barred individuals from suing over losses related to mistakes and misconduct, and thus had insulated employers from lawsuits even as more U.S. workers came to rely on the savings accounts to help fund their retirements." (The Washington Post; free registration required)
Court Rules 401(k) Participants Can Sue
Excerpt: "The Supreme Court ruled that individual participants in 401(k) retirement-savings plans can sue plan administrators in order to reclaim losses. Experts say the ruling is significant, but should not result in a flurry of frivolous lawsuits. Many questions remain, however." (Human Resource Executive Online)
Supreme Court Stokes Employers' Worries by Giving Individual 401(k) Participants the OK to Sue Plan Administrators
Excerpt: "In this case, James LaRue had sued his former employer -- management consultancy DeWolff, Boberg & Associates -- after he lost $150,000 in his 401(k) plan. He claimed that DeWolff failed to respond to his two requests to make investment changes to his account. As a result, his interest in the plan 'depleted' by thousands of dollars. He subsequently accused the firm of breaching its fiduciary duty, but his case was denied by two lower courts." (CFO.com)
Supreme Court Vacates Fourth Circuit's Decision in LaRue
Excerpt: "Distinguishing its prior holding in Massachusetts Mut. Life Ins. Co. v. Russell, 473 U. S. 134 (1985). a defined benefits case, the Supreme Court held in LaRue v. DeWolff, Boberg & Associates (06-856) that ERISA §502(a)(2) authorizes recovery for fiduciary breaches that impair the value of plan assets in a participant's individual account." (Health Plan Law blog by Attorney Roy F. Harmon III)
Top Court Allows Suit Over 401(k) Plan Mismanagement
Excerpt: "Participants in 401(k) retirement plans can sue to recover losses when their investment instructions are ignored or the account is otherwise mishandled, the Supreme Court ruled [yesterday]." (The New York Times; free registration required)
[Guidance Overview] Plans and Employers Need to Engage Counsel and Consultants on Various Issues Due to LaRue
Excerpt: "In light of LaRue, 401(k) plans and their fiduciaries should engage their counsel and consultants to limit or address potential liability by: 1. reviewing the plans' ERISA § 404(c) compliance (particularly because some plans may be only partially compliant); 2. reviewing the plans' procedures for discharging participant directions and ensuring that proper controls are in place to reduce the potential for error; 3. reviewing the adequacy of fiduciary liability insurance coverage; [more; omitted here due to space restrictions -- BenefitsLink editor] . . . . (Thompson Hine LLP)
[Guidance Overview] LaRue Wins! 502(a)(2) Again Viable for ERISA Participants
Excerpt: "Justice Stevens wrote the majority opinion (which was interestingly joined by Justice Alito). Two other concurring opinions also issue (one by Roberts which Kennedy joined and one by Thomas which Scalia joined), but a unanimous court agrees with the result of allowing these type of 502(a)(2) suits going forward." (Workplace Prof Blog)
U.S. Labor Department Unveils Online Resource to Help Americans Chart Retirement Finances
Nice! Excerpt: "The U.S. Department of Labor today released a new online resource that makes it easier for Americans to prepare for a financially secure retirement. A series of interactive worksheets were developed as a companion to a 2006 publication entitled 'Taking the Mystery Out of Retirement Planning.' Using the worksheets, individuals who are 10 to 15 years from retirement can calculate their income and savings as well as their projected expenses in retirement." (Employee Benefits Security Administration, U.S. Department of Labor)
Survey Results for 'Are You Using an Asset Allocation Solution?'
Excerpt: "[Readers were asked] if their retirement plan offered some kind of asset allocation solution - how that was working out - and if they had invested all/any of their retirement savings there? The vast majority of this week's respondents (nearly 89%) had some kind of asset allocation solution on their menu - in fact, nearly one-in-five said they offered more than one type. Roughly one-in-ten said they didn't offer the option, while roughly 2% said 'not yet.'" (PLANSPONSOR.com; free registration required)
U.S. State Pension Returns Could Be Hit by Market Volatility, According to S&P
Excerpt: "Standard & Poor's (NYSE:MHP) Ratings Services said the US state pension plans have recovered in recent years with the help of growing investment returns, but the improvement could be short-lived if recent market volatility persists and shrinks investment returns." (Thomson Financial News Limited via CNNMoney.com)
Easing Into Liability-Driven Investing: Segment Matching and Surplus Management (PDF)
Pages 1-4 of 12 pages. (Milliman)
New Developments in International Pension Accounting: Convergence and Mutual Recognition (PDF)
Pages 9-12 of 12 pages. (Milliman)
Supreme Court Lets Stand Rollover Exemption from Joint and Survivor Rules Decision
Excerpt: "The U.S. Supreme Court declined to review a case in which the 3rd U.S. Circuit Court of Appeals determined a Profit Sharing Plan was not subject to spousal consent requirements of the Employee Retirement Income Security Act (ERISA) just because it was made up of assets from other plans containing qualified joint & survivor annuity requirements." (PLANSPONSOR.com; free registration required)
Supreme Court to Decide Issue of Ex-Spouse Waiver of Benefits
Excerpt: "The U.S. Supreme Court has agreed to hear a case in which the 5th U.S. Circuit Court of Appeals found that a qualified domestic relations order (QDRO) as provided for in the Employee Retirement Income Security Act (ERISA) is the only valid way a divorced spouse can waive his or her right to the ex-spouse's pension benefits." (PLANSPONSOR.com; free registration required)
Cost Control Top Priority for Canadian DB Plan Sponsors
Excerpt: "A nationwide survey of Canadian defined benefit pension plans released by Buck Consultants found that 43% of plan sponsors identified cost containment as the most important issue they now face." (PLANSPONSOR.com; free registration required)
Associated Press Coverage: Supreme Court Allows Defined Contribution Plan Participants to Sue Over Losses
Excerpt: "The unanimous decision has implications for 50 million workers with $2.7 trillion invested in 401(k) retirement plans. James LaRue of Southlake, Texas, said the value of his stock market holdings plunged $150,000 when administrators at his retirement plan failed to follow his instructions to switch to safer investments." (AP via ABC.com)
[Opinion] Pension Rights Center's Statement on the Supreme Courts Decision in LaRue v. DeWolff
Excerpt: "Our satisfaction with the Court's decision, however, is tempered by a disturbing concurring opinion from Chief Justice Roberts . . . [who] invites lower courts to consider similar cases under a different section of ERISA - a section that might not allow for appropriate remedies in these types of situations. The Chief Justice's view might relieve the wrongdoer of responsibility, and potentially require money to be taken from other plan participants to pay for the individual's loss. If embraced by lower courts, this approach could negate the majority decision . . . " (Pension Rights Center)
[Opinion] Join Our Online Discussion of the LaRue Supreme Court Opinion
(Free registration required to post a message -- but not to read the messages -- to register, click on 'Log In' at the top of the target page.) Excerpt: "As a real world matter most DC plans will not have non allocated assets sufficient to pay a claim for lost profits. Assuming the claim is really worth $150,000 (which as yet to be determined) what happens in the likely event that the fiduciary declares bankrup.tcy after being adjudged to have breached his fiduciary duty in the amount claimed? What is the adequate remedy?" (BenefitsLink Message Boards)
[Opinion] Top Court Says Participants Can Sue, but Chief Justice Leaves an Out for Companies
Excerpt: "The Supreme Court has come down with a unanimous ruling that, at first blush, looks like a big win for employees who count on their 401(k) plans for their retirement nest eggs. It's not." (Conde Nast Inc.)
[Opinion] Reflections on the LaRue Decision
Excerpt: "Now that I have had a chance to read in some detail the Supreme Court's decision in LaRue v. DeWolff, Boberg & Associates, I am more convinced than ever that this case will go down as one of the more important ERISA remedies cases in recent memory; more important than merely its essential holding that, 'that although §502(a)(2) does not provide a remedy for individual injuries distinct from plan injuries, that provision does authorize recovery for fiduciary breaches that impair the value of plan assets in a participant's individual account.' Nevertheless, many additional issues that could have been decided were avoided or not addressed by the full court and still need to be considered in the future." (Workplace Prof Blog)
[Opinion] Stocks - The Ultimate Retirement Safety Net
Excerpt: "The PBGC is raising its target stock allocation to 45%. Why the switch? Over long periods of time, it's a higher-return, lower-risk strategy than its previous target of only keeping 15% to 25% in stocks." (The Motley Fool via MSNBC.com)
[Guidance Overview] United Kingdom's Pensions Regulator's Mortality Guidance Could Have Far-Reaching Effects
Excerpt: "A consultation document the Pensions Regulator issued on February 18, 2008, would encourage trustees and scheme sponsors to increase the assumed longevity of plan participants. If approved, this could significantly increase the funding targets for defined benefit schemes and require employers to pay in extra contributions." (Watson Wyatt Worldwide)
[Guidance Overview] In Spain, New Legislation Affects Tax Qualified Pension Plans
Excerpt: "The main vehicles employers in Spain use to fund company pensions will see considerable change under a law enacted on December 14, 2007. One of the key components of the new law will be to open greater investment options for plan participants." (Watson Wyatt Worldwide)
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Links to Items on Executive Comp, Benefits in General
Teamsters Demand Overhaul of Executive Compensation Practices at UAL
Excerpt: "The Teamsters sent a letter . . . to UAL Corporation . . . demanding that it overhaul its compensation practices. If the company makes no significant changes, the International Brotherhood of Teamsters General Fund will urge fellow shareholders to withhold votes from directors serving on the subcommittee that set UAL's exorbitant executive pay." (PR Newswire via Fox Business)
Watson Wyatt Finds Strong Executive Pay and Performance Link
Excerpt: "Chief executive officers whose companies financially outperformed their peers over a three-year period received long-term incentive award payouts that were more than 50% above their target, according to an analysis by Watson Wyatt Worldwide." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Action Plan for 'Tainted' Performance-Based Compensation (PDF)
Excerpt: "On February 14, 2008, a representative of the Internal Revenue Service (IRS) explained why the IRS recently changed its long-standing position regarding the deductibility of performance-based compensation where the compensation could be paid upon the executive's involuntary termination, without attaining the performance goal." (Holme Roberts & Owen LLP)
[Opinion] American Benefits Council Letter Regarding Private Letter Ruling Under Code Section 162(m) (PDF)
Excerpt: "As a result of the publication of PLR 20080404, many of our member companies that have established performance-based arrangements for purposes of Code section 162(m) face an immediate accounting impact. The issue is further complicated by the timing of the PLR because many public companies are in the midst of preparing proxies and compensation disclosures for spring shareholder meetings." (American Benefits Council)
Newly Posted Events
401(k) Fee Disclosures - Update on current cases and proposed legislation; Nonqualified Deferred Compensation; Overview of Final 409A Regulations; Qualified Default Investment Alternatives
in Connecticut on March 19, 2008
presented by National Institute of Pension Administrators-CT Chapter
Form 5500 Update with Janice Wegesin
Nationwide on March 4, 2008
presented by ftwilliam.com
HR Self-Audits: How To Discover (And Fix) Your Weak Spots Before A Federal Agency Does
Nationwide on March 13, 2008
presented by HRTrainingCenter.com
Qualified Medical Child Support Orders: Election Changes, Privacy, and Rights of Employees, Children, and Custodial Parents
Nationwide on February 14, 2008
presented by Employee Benefits Institute of America (EBIA)/Thomson Tax & Accounting
The COBRA Timeline: Reduce Liability, Expenses, And COBRA Participation
Nationwide on February 28, 2008
presented by HRTrainingCenter.com
Newly Posted Press Releases
Employers Using Benefits Enrollment Systems To Drive Employee Behavior Change, Watson Wyatt Survey Finds
Watson Wyatt
PBGC Issues Technical Update 08-1
Pension Benefit Guaranty Corporation (PBGC)
U.S. Labor Department Unveils Online Resource To Help Americans Chart Retirement Finances
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Towers Perrin Study Debunks Common Workforce Myths; Stress, Technology and Bosses Not Always the Enemy
Towers Perrin
ftwilliam.com Announces The Release Of InfoLink
ftwilliam.com
Newly Posted or Renewed Job Openings
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Client Relationship Consultant
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in CA
Senior Disbursement Services
for Administrative Systems, Inc.
in CA
Pension Administrator
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in PA
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