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February 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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Gearing up for the Form 5500 filing season?

Join our Form 5500 webinar with speaker Janice Wegesin.

On Tuesday, March 4th, Janice will review what's new with the DOL and IRS, how to avoid common errors, new simplified filing, changes to Form 5500EZ and more.

Also learn about's new InfoLink feature which gives you access to the content in the Form 5500 Preparers' Manual through our context sensitive help buttons.
For more details contact or call 800.596.0714.

[Guidance Overview] IRS Rules Against Qualified Long-Term Care Insurance in 401(k) Plan (PDF)
2 pages. Excerpt: "In PLR 200806013 (November 15, 2007), the IRS ruled that the payment of premiums on qualified long-term care insurance by a 401(k) plan would be treated as a taxable distribution in violation of the distribution restrictions of section 401(k)(2)(B)." (Sutherland Asbill & Brennan LLP)

[Guidance Overview] Supreme Court Allows ERISA Relief for Individual Plan Accounts (PDF)
2 pages. Excerpt: "The Court's judgment was unanimous, although two concurring opinions were filed. Justice Thomas, joined by Justice Scalia, was of the view that the Court's result followed from the text of ERISA, without any need for recourse to other bases for statutory interpretation. Chief Justice Roberts, joined by Justice Kennedy, would add that the Court's judgment leaves open the question of whether LaRue's claim properly lies only under § 502(a)(1)(b), implicating exhaustion of administrative remedies among other requirements, and not under § 502(a)(2)." (Sutherland Asbill & Brennan LLP)

[Guidance Overview] PBGC Provides Premium Guidance for Defined Benefit Plans (PDF)
4 pages. Excerpt: "These developments affect sponsors of qualified defined benefit plans that are subject to PBGC premium requirements, including cash balance plans and multiemployer plans. Governmental plans and plans sponsored by churches that do not elect to be covered by ERISA ('non-electing church plans') are not subject to these rules." (Prudential Retirement)

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated February 20, 2008, for Retirement Plans (PDF)
11 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)

[Guidance Overview] Fifth Circuit Highlights Important Preemption Boundary In Misrepresentation Case
Excerpt: "In this new Fifth Circuit Court of Appeals opinion, the Court marks off an important boundary between (1) employer representations about future corporate actions that may, in turn, affect benefit plans and, (2) in contradistinction, employer representations as to the operation of the benefit plans themselves. The distinction thus derived can be applied not only in the ERISA context, but as the case shows, in the collective bargaining context as well." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] U.S. Supreme Court Weighs In Regarding Suits for Individual Injuries Under ERISA
Excerpt: "As we mentioned in our recent post regarding the Sixth Circuit's decision in Tullis v. UMB Bank, the U. S. Supreme Court agreed to resolve a circuit split regarding the viability of ERISA lawsuits that seek damages for individual -- as opposed to plan -- injuries. [This week] the Court issued its ruling and, in so doing, endorsed the approach taken by the Sixth Circuit in Tullis." (Porter Wright Morris & Arthur LLP)

[Guidance Overview] Individuals Had Standing to Sue Fiduciary for Breach of Duty to Recover 401(k) Losses
Excerpt: "Individual participants in a defined contribution retirement plan had standing to sue a plan trustee for breach of fiduciary duty under ERISA despite seeking recoveries for their individual accounts and not the plan as a whole, according to the U.S. Court of Appeals in Cincinnati . . . ." (Wolters Kluwer Financial Services)

[Guidance Overview] U.S. Supreme Court Says 401(k) Plan Participants Can Sue
Excerpt: "On February 20, 2008, the U.S. Supreme Court issued its decision in LaRue v. DeWolff, Boberg & Associates, Inc., et al., which clarifies that individual participants in 401(k) and other retirement plans subject to federal pension laws (known as ERISA) can sue plan fiduciaries to recover investment losses from their accounts." (Ice Miller LLP)

Plan Disclosure Provisions Too Heavy, Critics Say
Excerpt: "Proposed regulations to enhance disclosures to beneficiaries of retirement plans have drawn criticism from agents, brokers and the plans themselves as burdensome. The regulations are also potentially overwhelming to those they seek to protect, critics argue." (The National Underwriter Company; free registration or paid subscription required)

Connecticut Lawmakers Propose Retirement Plan Option for Small Businesses
Excerpt: "A Connecticut state senator and the state Comptroller said they plan to sponsor legislation offering a new, lower-fee option to small businesses that want to provide a retirement plan to their employees." (; free registration required)

Ex-Mayor of a New Jersey Township Loses His Pension Over Federal Graft Conviction
Excerpt: "Former Ocean Township mayor Terrance Weldon, who started serving a 58-month federal prison sentence for corruption this month, yesterday was stripped of the entire $20,000 annual public pension he earned over a 20-year career in public office. Weldon, who pleaded guilty to accepting bribes from developers for helping them get city permits, was one of three public officials to see their retirement benefits affected by criminal cases yesterday." (The Star-Ledger)

Proposal Would Invest Public Employee Pension Funds in Minnesota Start-Ups
Excerpt: "The bill, sponsored by Rep. Ryan Winkler, DFL-Golden Valley, is relatively modest. It calls for the State Board of Investment 'to try to ensure' that at least 1 percent of the value of private-equity investments, about $26 million, goes to venture-backed companies that have the majority of their employees in Minnesota." (Star Tribune)

Deny Pension for Crooked West Virginia Official
Excerpt: "[H]is attorney's contention does bring up a concern that state legislators should address -- that of specificity in the statute regarding public employees who are to be rejected for pensions. While we contend that Weaver falls squarely under the 'related to' provision, it may be that in the future, more detail in the law regarding eligibility for pensions would be desirable." (The Intelligencer & Wheeling News-Register)

401(k) Debit Card Draws Red Flags
Excerpt: "A new debit card that lets consumers use ATMs to withdraw money from their 401(k) plans is drawing a sharp reaction from financial planners. The ReservePlus card is marketed by Reserve Solutions Inc., a New York financial firm that says it has 10,000 cardholders already." (The Washington Times)

[Opinion] LaRue Result May Cause Employers to Step Back and Reconsider Self-Direction of 401(k) Funds
Excerpt: "The headline is that retirement plan participants won a big one today. LaRue v. DeWolff, Boberg & Associates, Inc, et al. is easily the most significant ERISA case in years. Was the Supreme Court brilliant? Truthfully, any average person would have known the answer. If a participant in a self-directed 401(k) plan gives investment directions, and if a Plan fiduciary ignores the directions, the fiduciary should be liable for damages to the participant's account." (Rackemann, Sawyer & Brewster)

[Opinion] LaRue 'Supreme Court Opinion'
Excerpt: "Some follow up thoughts on the Supreme Court's opinion in LaRue, after having some time to digest it. First, the court's three opinions make for an interesting assortment of analyses of the issue, but what is most important on the front lines, down at the trial level where these issues play out in court, is the unanimous agreement that an individual 401(k) participant can sue for losses to just his or her account." (Stephen Rosenberg of The McCormack Firm, LLC)

[Opinion] CORRECTED LINK: Text of American Benefits Council Comments to DOL on Proposed Fee Disclosure Regs (PDF)
7 pages. (American Benefits Council)

Sponsored by: ASPPA

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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

[Official Guidance] Text of IRS Rev. Rul. 2008-13: Identifying Performance-Based Compensation for Purposes of Sec. 162(m) (PDF)
5 pages. Excerpt: "The ruling holds that compensation paid to an executive is not qualified performance-based compensation for purposes of § 162(m), even if the compensation is paid upon the attainment of the performance goal, if the plan agreement or contract provides for payment of compensation to an executive upon the attainment of a performance goal or for (1) termination without 'cause' or for 'good reason' or (2) voluntary retirement." (Internal Revenue Service)

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated February 20, 2008, on Human Resources & Employment Law (PDF)
15 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)

Disclosure of Incentive Pay Targets Improved in 2007
Excerpt: "Corporations are making progress in disclosing more details about how executives' bonuses are determined -- but many are still far from giving regulators and shareholders the full monty." (Workforce Management; free registration required)

[Guidance Overview] IRS Adopts Controversial Letter Ruling Position on Deductibility of Certain Executive Bonuses
Excerpt: "The revenue ruling formally adopts a controversial position taken in a recent private letter ruling (IRS Letter Ruling 200804004, TAXDAY, 2008/01/28, L. 1). The ruling apparently responds to a letter signed by 90 of the country's largest law firms, which requested clarification of the letter ruling . . . ." (CCH Incorporated)

[Guidance Overview] Law Firms Urge IRS to Clarify Controversial Private Letter Ruling on Executive Compensation
Excerpt: "The IRS must clarify its position in IRS Letter Ruling 200804004 (TAXDAY, 2008/01/28, L.1), according to 90 of the country's largest law firms. The 90 law firms wrote to the IRS on February 19 requesting that the Service immediately review IRS Letter Ruling 200804004 and explain how it intends to treat incentive awards in executive compensation arrangements. Since publication of the letter ruling in late January, benefits practitioners and their clients have been struggling to understand if the ruling signals a departure from the IRS' traditional treatment of incentive awards or not." (CCH Incorporated)

Supreme Court ERISA Docket Watch
Excerpt: "In addition to Wal Mart v. Shank, there are two other ERISA cases in which a Petition for Writ of Cert. is currently pending. Both of these other cases are scheduled for conference on Friday, 2/29." (Health Plan Law blog by Attorney Roy F. Harmon III)

U.S. Department of Labor's Office of Labor-Management Standards Announces '5,000th Indictment'
Excerpt: "In January 2008, the U.S. Department of Labor's Office of Labor-Management Standards (OLMS) marked its 5,000th indictment since recordkeeping began in 1964. During January, OLMS obtained eight convictions, nine indictments and court orders of restitution totaling $121,867." (Health Plan Law blog by Attorney Roy F. Harmon III)

Yahoo Inc. Implements Generous Severance Pay Benefits to Discourage Microsoft Takeover Attempt
Excerpt: "Yahoo Inc., owner of the most-visited U.S. website, adopted severance plans for employees that would pay as much as two years of salary to fend off a $44.6-billion bid from Microsoft Corp. . . . Yahoo's plans also entitle departing employees to health insurance, accelerated vesting of options and job-search assistance." (Bloomberg via Los Angeles Times)

[Opinion] IRS Affirms New 162(m) Position, But with Some Relief
Excerpt: "Yesterday the IRS released Revenue Ruling 2008-13, clarifying its new position under Section 162(m) for provisions that accelerate performance-based compensation upon an employee's termination for Cause, Good Reason or Retirement. This was not worth the wait." (Michael S. Melbinger via Winston & Strawn LLP)

[Opinion] How Baby Boomers Are Changing Work and Retirement
Excerpt: "The media report that you, the first wave of the giant cohort eligible for Social Security's early retirement benefits, may also be the first wave of economic fatalities as the Social Security and Medicare cupboards start getting bare. But there is cause for celebration and optimism. Baby boomers have changed the nature of work, why not the nature of retirement?" (The San Diego Union-Tribune)

[Opinion] Go on a Savings Spree
Excerpt: "For some reason, legislation to create universal investment accounts -- proposed by senators and representatives from both parties over the past decade -- has repeatedly stalled in Congress. But now the economy is in trouble, and there is general agreement that this is a time for action. President Bush has already authorized the plan to stimulate more of the spending that got us into this trouble. But it's still not too late to make the effort to create a true investor society." (The New York Times; free registration required)

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