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March 5, 2008

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


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[Guidance Overview] Massachusetts May Tax Unincorporated Owners and Partners on 401(k)
Excerpt: "Starting in 2008, DOR says it will want current taxes from the self-employed and partners ('Unincorporated Owners') on their 401(k) deferrals and matches. For a 50 year old who saves $20,000, that's $1,060 to the Commonwealth at the 5.3% rate. Provided that the Unincorporated Owners keep records, they can then deduct this Massachusetts 'basis' many years later, when they eventually get paid from the plan." (theworkplace.biz)

[Guidance Overview] PPA, Auto Enrollment, and QDIA - A Tongue-in-Cheek Report to Plan Participants (PDF)
Excerpt: "This article discusses the new PPA 401(k) plan automatic enrollment, escalation and qualified default investment election rules and the hopeful impact they may have on employees' retirement security. A tongue-in-cheek 'model' employer notice to plan participants, wryly observes that those who completely ignore their long-term financial needs may wake up to a sizable nest egg upon retirement." (Benefits Law Journal via Kirkpatrick & Lockhart Preston Gates Ellis LLP)

[Guidance Overview] Summary of Proposed Cash Balance Plan Regulations (PDF)
12 pages. Excerpt: "The Proposed Regulations address the primary changes made by the PPA, including: the general age discrimination standards for hybrid plans, the requirement that hybrid plans credit interest at no more than a 'market rate of return,' the anti-'wear away' protections for plans converting to a hybrid formula after June 29, 2005, the 3-year vesting rule for hybrid plans, and the elimination of 'whipsaw' calculations for lump-sum distributions from hybrid plans." (Groom Law Group)

[Guidance Overview] PBGC Issues Proposed Regs on Annual Information Reporting for Underfunded Controlled Groups
Excerpt: "In addition to implementing the PPA changes, the PBGC proposes waiving reporting in certain cases for controlled groups with aggregate plan underfunding of $15 million or less, modifying the standards for determining which plans are exempted from the actuarial information requirements, and revising the actuarial information requirements to conform with other PPA changes. The proposed rules also clarify the use of the term 'information year,' as well as provide reporting relief for certain multiple employer plans." (Wolters Kluwer Financial Services)

[Guidance Overview] Direct Rollover to Roth IRA
Excerpt: "The Pension Protection Act of 2006 permits the direct rollover of a qualified plan distributions to a Roth IRA for the first time in 2008. We had been awaiting IRS guidance on this transaction and have found that the IRS issued guidance recently by way of Publication 575." (McKay Hochman Co., Inc.)

[Guidance Overview] IRS Issues Model 403(b) Plan and Guidance on Complying with Final 403(b) Regulations
Excerpt: "IRS issued model plan language for use by public schools in adopting a written plan, or in amending an existing plan, to comply with the final regulations under IRC § 403(b). The adoption by a public school employer of the model language on a word-for-word basis, or using language that is substantially similar in all material respects, will be treated as meeting the requirements of IRC § 403(b). IRS Revenue Procedure 2007-71." (Deloitte via BenefitsLink.com)

New Pension Plans Offered to City Employees May Save San Diego Millions
Excerpt: "Pension plans offered to new city employees would be restructured under a proposal that could save San Diego $25 million annually, Mayor Jerry Sanders said Tuesday. New hires after Dec. 31, except for police and firefighters, would no longer be eligible to collect pensions that exceed their annual salaries and would have to work longer to collect their annual benefit." (Bay City Television, Inc.)

New Employer Trends in Retirement Plans Revealed in Hewitt Survey
Excerpt: "A new study by Hewitt of 190 mid-to-large sized U.S. employers reveals that new funding rules for pensions and increased scrutiny on retirement plan operations are prompting more companies to take steps to administer their plans within a risk framework in 2008. Recent legislation and regulations are applying more pressure on employers to minimize risks and unnecessary costs associated with retirement plans, Hewitt notes." (Employee Benefit News; free registration required)

Evaluating and Implementing Target Date Portfolios: Four Key Considerations
24 pages. Excerpt: "This new Vanguard® white paper provides a road map for plan sponsors in selecting the best target date products for their participants. Authored by Vanguard Investment Counseling & Research, this paper identifies and explores four key considerations for plan sponsors when evaluating and implementing TDFs: The right asset allocation glide path for plan participants. The pros and cons of indexing versus active management. The choice between packaged and customized solutions. The impact of TDFs on participant portfolios and adoption rates." (The Vanguard Group, Inc.)

Penalties in Connecticut Pension Scandal Under Debate
Excerpt: "The $374,500 'finder's fee' was a percentage of a multimillion-dollar investment of state employee pension funds that Silvester made with Malek's Washington-based Thayer Capital Partners' 'private equity' fund. The SEC claimed that Silvester arranged for Thayer to pay DiBella the fee in exchange for DiBella's past and future favors to Silvester." (The Hartford Courant)

Financial Upheaval in U.S. Reopens Debate Over 401(k)s
Excerpt: "'The 401(k) system today in the United States has been an acknowledged failure,' said Alicia Munnell, director of the Center for Retirement Research at Boston College's Carroll School of Management. 'It transferred all the risks and responsibilities from the employer to the individual.' The decline in the market has highlighted those risks. Share indexes on Wall Street have lost 14 percent of their value since hitting a peak in October. For someone retiring now with say, $500,000 in savings, that would translate into a drop of about $70,000." (Reuters via International Herald Tribune)

WV Senate Passes Teacher Pension Merger Bill
Excerpt: "The House and Senate must resolve dueling legislation before West Virginia teachers could escape ailing 401(k)-style retirement accounts. The Senate voted 31-2 today for its version of the bill to allow Teacher Defined Contribution enrollees to join another state pension fund." (AP via The Charleston Gazette)

[Opinion] Pennsylvania's Pension System Rewards Crime
Excerpt: "The Legislature, which remains uninterested in meaningful ethics reform despite scandals and ongoing investigations, has a list of 23 specific crimes that would void a member's pension. It should not have a specific list. Rather, it should have a simple rule that any crime committed by a lawmaker in his official capacity voids his pension. It's hard to imagine a more vivid example than naming ghost employees. Changing the rule would convert pensions into incentives for honesty, rather than as reliable cushions for those who are caught." (Daily and Sunday Review)


Sponsored by: University Conference Services

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Banner ad for University Conference Services

A New Era in Plan Management

The landscape and lexicon for managing your retirement plan have changed dramatically. The Mid-Sized Retirement & Pension Plan Management Conference, May 6-9, 2008, in Boston brings you up-to-date on the issues and places you out in front of new opportunities to enable your participants to reach their retirement goals.

(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

[Guidance Overview] Form T-1 Rules Proposed by DOL
Excerpt: "The Department of Labor's Employment Standards Administration (ESA) proposes to promulgate a rule that establishes a Form T-1 to be used by labor organizations to file trust annual financial reports with ESA's Office of Labor-Management Standard's (OLMS), provides appropriate instructions, and revises relevant sections of 29 CFR Part 403 relating to such reports. The proposed changes are made pursuant to section 208 of the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C.438." (International Foundation of Employee Benefit Plans)

Executive Summaries of Benefits Quarterly, 1st Quarter, 2008, Articles on Retirement and Health Plans
The titles are: Conceptualizing the Defined Benefit Pension Promise - Implications from a Survey of Expert Opinion; The Consequences of Favoring Short-Term Budget Goals Over Long-Term Retirement Policy; Tax-Sheltered Annuities Under Code Section 403(B) New Regulations and New Obligations; Living With GASB 45: How To Manage Liabilities Associated with Retiree Medical Benefits; More Preventive Care, and Fewer Emergency Room Visits and Prescription Drugs -- Health Care Utilization in a Consumer-Driven Health Plan. (International Society of Certified Employee Benefit Specialists)

Retirement Benefits Rare Among Small Businesses in California
Excerpt: "Retirement benefits and 401(k) plans are scarce among small business owners surveyed. Only 17% offer 401(k) plans and 12% offer retirement benefits." (PLANSPONSOR.com; free registration required)


Newly Posted Events

Bank On It! - New DOL Focus on Deferral Deposits
Nationwide on March 25, 2008
presented by SunGard Relius

Benefits Boot Camp 2008
in Georgia on April 18, 2008
presented by WEB (Worldwide Employee Benefit Network) Atlanta Chapter

Employee Discrimination: What Employers Need To Know Now with Craig J. Davidson, CEBS
Nationwide on March 18, 2008
presented by Davidson Marketing Group -- FutureOffice Network

ERISA Litigation 2008 (Part 1) - Webcast
Nationwide on March 7, 2008
presented by West LegalEdcenter

Recent Notable ERISA Decisions
Nationwide on March 11, 2008
presented by Paul, Hastings, Janofsky & Walker LLP


Newly Posted Press Releases

ERIC Urges House Members to Oppose Mental Health Parity Mandate
ERIC (ERISA Industry Committee)

House Mental Health 'Parity' Bill Treats Behavioral Conditions Differently Than Other Medical And Surgical Services
American Benefits Council

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

Diamond's Retirement Study Finds Companies Ill-Prepared to Meet Baby Boomers' Health and Wealth Needs
Diamond

Georgia Association for Women Lawyers Announces Study Results from It's About Time II: Examining Flexible Work Arrangements
Georgia Association for Women Lawyers


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in AL, AR, AZ, CA, KS, MN, MO, NM, OK, OR, TN, TX

Vice President, Data Consulting
for Fidelity Investments
in NC

Benefits Attorney
for Ralcorp Holdings
in MO

Benefits Analyst
for Appleton Papers
in WI

Client Representative
for Strategic Employee Benefit Services
in NY

Consultant, Health and Benefits
for Aon Consulting
in NC

Retirement Distribution Manager - Operations
for Charles Schwab
in AZ

Health & Welfare Admin II
for Standard Insurance Company
in CA

DC/DB Project Support Analyst
for New York Life Retirement Plan Services
in MA




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