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March 11, 2008

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

Today's sponsor is SunGard

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[Guidance Overview] IRS Guidance on PPA Distribution-Related Provisions (PDF)
5 pages. Excerpt: "IRS Notices 2008-29 and 2008-30, scheduled to be published on March 24, 2008, clarify a number of issues relating to the distribution provisions of the Pension Protection Act of 2006 (the 'PPA')." (Sutherland Asbill & Brennan LLP)

[Guidance Overview] SEC Warns Public Pension Funds and Other Unregistered Investment Advisers on Insider Trading
Excerpt: "Last Thursday, the SEC warned public pension funds and other unregistered investment advisers on the need for vigilance and adoption of policies and procedures to address potential insider trading issues." (Morgan, Lewis & Bockius LLP)

[Guidance Overview] Liability of Plan Fiduciaries under ERISA - LaRue v. DeWolff, Boberg & Associates (PDF)
6 pages. Excerpt: "This report discusses breach of fiduciary duty claims under ERISA Section 502(a)(2) and the LaRue case, and will be updated as events warrant." (U.S. Congressional Research Service)

[Guidance Overview] Proposed Regs Would Provide 7-Day Safe Harbor for Contributions to Small Plans
Excerpt: "The Employee Benefits Security Administration (EBSA) has issued proposed regulations, applicable primarily to defined contribution plans with fewer than 100 participants, that would provide a seven-business-day safe harbor period for employers to remit contributions from participants into retirement plans." (Wolters Kluwer Financial Services)

[Guidance Overview] New York Life Paying $14 Million to End ERISA Suit
Excerpt: "A federal judge has granted final approval of a $14 million class action settlement in an ERISA suit against New York Life Insurance Co. brought by employees who claimed the company mismanaged its pension funds by exclusively investing billions in NYL's own mutual funds." (The Legal Intelligencer via

[Guidance Overview] Florida Appellate Court Upholds Public Pension Forfeiture
Excerpt: "The administrative procedures employed by the Trust during Hames's administrative forfeiture determination were sufficient for due process purposes." (Cypen & Cypen)

[Guidance Overview] A Qualified Plan Query on Adopting Automatic Enrollment Mid-Year (PDF)
Excerpt: "IRS guidance on QACAs and EACAs was issued late in 2007 in the form of proposed regulations. As a result, a number of companies that were interested in implementing automatic enrollment were not able to give the required notices prior to the start of the January 1, 2008 plan year. While some comments have been filed with the IRS requesting relief from the advance notice requirements, it remains unclear whether the IRS will respond favorably." (Miller & Chevalier Chartered)

[Guidance Overview] 3rd Circuit Stays Order for FreightCar America to Rehire Employees
Excerpt: "A federal appellate court has put on hold an order by a federal judge in Pennsylvania mandating that a Chicago-based railcar manufacturer rehire laid-off workers so they can claim their proper pension benefits." (; free registration required)

[Guidance Overview] Court Approves Settlement of New York Life Self-Dealing Case
Excerpt: "A federal judge in Pennsylvania has approved a $14 million settlement of a nine-year legal battle over allegations New York Life Insurance Co. improperly directed employees' and agents' retirement savings into its proprietary mutual funds." (; free registration required)

[Guidance Overview] Q&A Guidance on New Requirements - Gap-Period Earnings on Excess Deferrals and Rollovers to Roth IRAs
Excerpt: "This notice provides guidance, in Q&A format, on the gap-period earnings requirement that applies to distributions of excess deferrals for taxable years beginning on or after January 1, 2007. It also addresses several distribution-related provisions of the Pension Protection Act of 2006 (PPA) that are effective in 2008, the most notable of which for 401(k) plans allows pre-tax accounts to be rolled over into Roth IRAs." (Employee Benefits Institute of America)

[Guidance Overview] Failure to Disclose Revenue Sharing Not a Fiduciary Breach but May Jeopardize ERISA Section 404(c) Relief
Excerpt: "What is interesting about this case is the court's suggestion that, while nondisclosure is not a breach, it might preclude ERISA Section 404(c) relief, leaving plan fiduciaries open to liability for participants' investment losses. The court suggested that the fiduciary's liability might be limited to losses resulting from revenue sharing, but it is difficult to see how those losses would be identified. Also interesting -- and worrisome for investment advisors -- is the court's suggestion that the act of making revenue sharing payments might cause an investment advisor to acquire fiduciary status if those payments influence a plan's choice of investment options." (Employee Benefits Institute of America)

Even Simple Financial Math Stumps Future Retirees, According to Test Results
Excerpt: "What this test and others reveal is that many people are stumped by even basic financial concepts. This has serious consequences, especially for the millions of baby boomers fast approaching retirement." (The Baltimore Sun)

Pension Loophole Costly to State of Oklahoma
Excerpt: "Based on a complicated formula, the state contributes 2 percent of a state or county employee's pay for his or her retirement fund. However, if a person is elected to public office for at least six years, the state doubles the amount it contributes for the elected official. In addition, the state goes back all those years when the person was not in elective office and doubles its contribution as if the person had been an elected official for all of those years." (Tulsa World)

New Jersey High Court Defines 'Traumatic Event' for Law Officer Pensions
Excerpt: "The New Jersey Supreme Court is making it harder for law officers to collect pension payments for mental disabilities. A unanimous decision says the disability must stem from a terrifying or horrific event involving death or serious injury to the officer or another person. The court added that requirement to existing standards, which mandated that the officer be permanently and totally disabled by a specific traumatic event that happened because of their duties." (

Traditional and Roth Individual Retirement Accounts: A Primer (PDF)
18 pages. Excerpt: "This report describes the primary features of two common retirement savings accounts that are available to individuals. Both traditional and Roth IRAs offer tax incentives to encourage individuals to save for retirement. Although the accounts have many features in common, they differ in some very important aspects. This report explains the eligibility requirements, contribution limits, tax deductibility of contributions, and rules for withdrawing funds from the accounts." (U.S. Congressional Research Service)

Securities Laws and 403(b) Plans
Excerpt: "One of the most striking differences between 403(b) plans and 401(k) plans is the way in which the Securities Act of 1933 and the Security Exchange Act of 1934 apply to them. Though the new 403(b) regulations attempt to make 403(b) plans look and act almost like 401(k) plans, the application of securities laws will make that objective difficult -- if not impossible -- to achieve without wholesale revision of the securities laws." (Baker & Daniels LLP)

401(k)s Tapped to Save Homes
Excerpt: "Rather than borrow money from their 401(k) accounts, which would have to be paid back, a growing number of beleaguered families have been cashing out, plan administrators say." (USA TODAY)

SEC Warns Pension Funds About Inadequate Compliance
Excerpt: "The Securities and Exchange Commission has issued a report warning public pension funds that they need adequate compliance policies and procedures in place to prevent wrongdoing in their money management functions." (SmartPros Ltd.)

Divorce Has an Impact on Retirement Plans
Excerpt: "Anyone who is getting divorced faces a daunting array of financial decisions, but none is more important than how to divvy up the retirement assets. According to Consumer Reports' Money Adviser, in most states, retirement plans acquired during a marriage -- including pensions, annuities, 401(k)s and IRAs -- are considered marital property and will have to be included in the division of marital assets in the event of divorce." (Consumer Reports via The Morning Call)

Sponsors Considering Target-Date Funds Need to Ponder Design and Impact
Excerpt: "A new research paper suggests plan sponsors considering the addition of target-date funds need to consider the funds' glide path and whether the offerings should be actively or passively managed." (; free registration required)

SEI Addresses Implications of Recent Pension Disclosure Proposal
Excerpt: "A CFO Summary just released by SEI Global Institutional Solutions outlines the potential impact on financial executives of the recently proposed pension disclosure guidelines from the Financial Accounting Standards Board (FASB)." (; free registration required)

How to Tap Your Retirement Assets to Achieve Real Estate Dreams
Excerpt: "[A third-party administrator dedicated to the creation and administration of self-directed IRAs is] able to help real estate agents and individual investors transform their IRAs, SEPs, 401(k) plans and even defined benefit plans into self-directed investments with about as much paperwork as it took to establish their retirement plan in the first place." (RISMedia)

401(k) Loans: Lifesavers or Money Pits?
Excerpt: "A sizable withdrawal from retirement savings -- even if you pay the money back -- can mean a substantial setback to financial security in your later years when you may have even fewer options. And if you are unable to repay the loan, your retirement will take an even harder hit." (ABCNews Internet Ventures)

[Opinion] Warren Buffett's Musings Hold Economic Lessons for All of Us
Excerpt: "This year he takes aim at corporate pension accounting. He notes that 363 of the 500 companies in the S&P 500 have pension plans, and that on average they assumed an 8% annual return on pension plan investments in 2006. So, since 28% of pension plan assets are held in bonds likely to return 5% or less, the remaining 72% of assets held must achieve a rate of return of 9.2% to hit that overall 8%. As he goes on to state, during the 20th century the Dow rose from 66 to 11, 497. Comforting? Yes, but using proper compounding math gives an annualized return of 5.3%, and you can add 2% for dividends. 'It was a wonderful century,' acknowledges Buffett." (

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Massachusetts Federal Court Rules Firing Employee for Off-Premises Smoking May Violate ERISA and State Privacy Law
Excerpt: "A federal district court in Massachusetts has allowed a lawsuit to proceed that alleges the plaintiff was terminated for off-premises smoking in violation of Section 510 of the Employee Retirement Income Security Act (ERISA) and the Massachusetts Privacy Act." (Employment Practices Solutions, Inc.)

[Guidance Overview] Fringe Benefit Pointer - Newly Introduced Legislation Addresses Taxation of Cell Phones and BlackBerries (PDF)
Page 2 of 4 pages. Excerpt: "Legislation (H.R. 5450) was recently introduced in the U.S. Congress to update the tax treatment of cell phones and other mobile communication devices (such as BlackBerries) that are commonly used in today's businesses and to reduce the amount of paperwork required for companies to claim a deduction for costs associated with the business use of these devices." (Miller & Chevalier Chartered)

Shareholders Poised to Increase Their Attacks on Excessive Executive Pay
Excerpt: "Human resources executives may be in for a pounding this proxy season as shareholders become more vocal than ever about executive compensation." (Workforce Management; free registration required)

[Guidance Overview] Intelligent Design Under Code §409A
Excerpt: "[T]he primary purposes of § 409A are as follows: to make nonqualified deferred compensation (NQDC) plans available to participants (presumably executives) on a basis no more favorable than qualified deferred compensation (generally qualified retirement plans), to stop tax schemes around such NQDC plans and their funding by prohibiting funding of these plans outside the United States, to stop internal 'runs on the bank' by executives by forcing them make distribution elections well in advance of the actual distribution, and to eliminate hidden and handshake arrangements by requiring all NQDC plans to be in writing." (The Bureau of National Affairs, Inc. via JPMorgan)

Newly Posted Events
(Post Yours!)

FMLA Update: Military Family Leave and the New Proposed FMLA Regulations Webcast
Nationwide on March 20, 2008
presented by International Foundation of Employee Benefit Plans

The Dirty Dozen: Fixing the Most Common 401(k) Blunders
Nationwide on April 22, 2008
presented by SunGard Relius

Newly Posted Press Releases
(Post Yours!)

ASPPA Opposes Connecticut 401(k) Legislation
ASPPA (American Society of Pension Professionals & Actuaries)

PBGC Protects Pensions At Lock Haven Hospital
Pension Benefit Guaranty Corporation (PBGC)

Firm to Offer Enhanced 401k Consulting Services
Pilot Employee Benefits

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401(k)/Defined Contribution Valuation Processor
for National Retirement Services, Inc.
in CA, NC

Omniplus Business Analysts
for Casco Bay Benefits Group

Sr. Implementation Consultant - Institutional Services Group
for AIG Retirement (Formerly AIG VALIC)
in TX

Retirement Plan Administrator
for North Central Trust Company
in WI

Pension Design Specialist
for American National Insurance Company
in TX

Defined Contribution Team Leader
for A fast growing Employee Benefits Consulting firm in Greensboro, NC.
in NC

Defined Benefit Data Analyst
for Prudential Financial
in CT

Home Based PSC Manager
for Citi
in MI

Defined Benefits Assistant Service Delivery Manager
for Affiliated Computer Services
in NJ

Senior Plan Consultant
for July Business Services
in TX

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