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March 12, 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] District Court Refuses to Dismiss Suit Alleging Breach of Fiduciary Duty for Failing to Control 401(k) Plan Expenses Even Though the Plan Made Required Disclosures
Excerpt: "The United States District Court for the Western District of Missouri recently permitted a class action lawsuit concerning expenses paid by a 401(k) plan to proceed. The court rejected the employer's argument that it was immune from liability because it satisfied all disclosure requirements under the Employee Retirement Income Security Act ('ERISA') and federal regulations. The court also rejected the plan administrator's and investment manager's arguments regarding the excessiveness of the fees and their status as fiduciaries. The court's decision is another indication that the recent wave of litigation against defined contribution retirement plans, such as 401(k) plans, for failing to control plan expenses will continue." (Ross, Dixon & Bell, LLP)

[Guidance Overview] Multiemployer Funding Rules After PPA (PDF)
Pages 4, 8 of 8 pages. Excerpt: "[T]he PPA created a new playing field for funding multiemployer defined benefit plans. While the traditional credit balance and funding standard account still exist and the actuary still has significant control over the assumptions, the PPA introduced many changes to funding rules effective for plan years beginning after 2007. Though a separate set of special funding rules applies to underfunded plans, the following are some key changes the PPA made to the general multiemployer funding rules." (American Academy of Actuaries)

[Guidance Overview] What Is the Definition of an Active Participant?
Excerpt: "An individual is an active participant if: The individual or his/her employer contributes or the employer is required to contribute to the employer's defined contribution plan Benefits accrue on that individual's behalf in his/her employer's pension or defined benefit plan." (Wolters Kluwer Financial Services)

[Guidance Overview] Qualified Default Investment Alternatives - Summary and Commentary of DOL's Final Regulation (PDF)
12 pages. Excerpt: "Following the passage of the PPA in August 2006, this long-awaited QDIA regulation by the Department of Labor provides welcome clarification to the implementation of QDIAs, giving plan sponsors comfort as well as guidance in improving plan design. The impact of the legislation is likely to be better diversified defined contribution investments and increased employee participation in DC plans." (Callan Investments Institute)

[Guidance Overview] Department of Labor Proposed Amendment to Plan Asset Regulation (PDF)
2 pages. Excerpt: "The DOL contemplates making the safe harbor effective on the date the final regulation is published in the Federal Register. In the meantime, the DOL is inviting comments from the public regarding the effective date of the safe harbor amendment. Those interested in submitting comments may send an e-mail to Comments may also be submitted by mail to Commissioner for Trademarks, P.O. Box 1451 Alexandria, VA 22313-1451, attention Mary Hannon. The DOL prefers comments via e-mail. The deadline for submitting comments is April 29, 2008 to ensure consideration." (Transamerica Center for Retirement Studies)

[Guidance Overview] Applying the 2-1/2 Month Date for Corrective Distributions
Excerpt: "As March 15 approaches, questions have arisen regarding whether plan administrators have until Monday, March 17, 2008, to complete corrective distributions of excess contributions and excess aggregate contributions, in order to avoid the application of the 10% excise tax under Code §4979(a), since March 15 falls on a Saturday." (SunGard Corbel LLC)

[Guidance Overview] Department of Labor Proposes '7-Business Day Safe Harbor' for Depositing Contributions to Small ERISA Plans
Excerpt: "The safe harbor offers much needed certainty for eligible employers and their plan fiduciaries who seek to comply with the timing requirement for depositing participant contributions. Given the potential liability facing employers and fiduciaries for 'guessing wrong' under the general rule, the Department of Labor seems justified in its conclusion that a substantial number of eligible employers will seek to use the safe harbor." (Deloitte via

New Defined Benefits Funding Rules Mean HR Needs To Do Its Homework Now
Excerpt: "The IRS's April 1 deadline for employers to have defined-benefit plans certified by actuaries is less than a month away, and HR executives at companies with underfunded plans should be preparing." (Workforce Management; free registration required)

DOL Hearing on Reasonable Contracts or Arrangements Under Section 408(b)(2) - Fee Disclosure
Excerpt: "The DOL announced the rescheduling of the Hearing on Reasonable Contracts or Arrangements Under Section 408(b)(2)--Fee Disclosure to March 31 and April 1." (ERISA Rules and Regulations)

Employers Offer Retirement Advice
Excerpt: "Several studies have found that workers who have access to financial advice are more confident about their finances and better prepared for retirement, a message employers are hearing loud and clear. According to human-resources consulting firm Hewitt Associates, 40 percent of companies that sponsor retirement plans offered outside investment advice to employees in 2007, compared with 28 percent in 2003." (Star Tribune via

Hedge Funds Attracting Pensions
Excerpt: "Hedge funds globally are attracting more pension funds, foundations and college endowments that seek to diversify assets and boost returns, said Masa Yanagisawa, director at Merrill Lynch & Co. in Tokyo." (Bloomberg News)

ASPPA Opposes Connecticut 401(k) Legislation
Excerpt: "The American Society of Pension Professionals & Actuaries (ASPPA) opposes legislation in Connecticut that would create a state 401(k) plan for small businesses. Michael E. Callahan, a past ASPPA president and founder of Pentec, one of the largest pension firms in the state, said legislators should not kill a robust 401(k) system in Connecticut by creating an expensive state bureaucracy." (

Institutional Investors Fuel Surge in Socially Responsible Investing
Excerpt: "The growth in socially conscious investing -- now comprising $1 of every $11 invested -- is being driven both by 'growing institutional investor demand and by a host of factors driving retail investor demand,' said Cheryl Smith, executive vice president at Trillium Asset Management. Institutional investors have acquired the largest slice of the socially screened assets. The $1.9 trillion in institutional assets was up 27% from 2006, when the last bi-annual report was released." (Financial Week; free registration required)

W.R. Grace Cleared on Pension Payments
Excerpt: "Chemical company W.R. Grace & Co. has won bankrup.tcy court approval to make $17.8 million in contributions to the defined benefit pension plans that cover its U.S. workers." (AP via

Report of Results from Segal's Survey of Multiemployer Pension Plans' Anticipated Zone Status and Funded Percentage under PPA '06 (PDF)
2 pages. Excerpt: "This survey, which updates a survey . . . published last year, reports good news about fewer anticipated red-zone plans and more anticipated green-zone plans. (In the spring, we will report on calendar-year plans' actual zone status. A fall report will present the actual zone status for additional plans.)" (The Segal Group, Inc.)

March 11, 2008 Issue of IRS 'Employee Plans Bulletin' -- Info About Governmental Plans Roundtable (PDF)
1 page. Describes a meeting on April 22 in Washington; space is limited to 52 participants. (Internal Revenue Service)

[Opinion] No Pension Plan Left Behind - A Discussion on Investment Policies (PDF)
Page 5 of 8 pages. Excerpt: "The promises made by defined benefit (DB) pension plans are long-term in nature. An ongoing plan generates obligations to pay benefits for up to 75 years, or even longer. This fact in itself indicates one flaw in the immunization strategy, since bonds extending beyond 30 years are essentially unavailable." (James Kenney via American Academy of Actuaries)

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Links to Items on Executive Comp, Benefits in General

[Official Guidance] Text of Rev. Proc. 2008-25: Safe Harbor for Deducting Payroll Taxes by Accrual-Method Taxpayers (PDF)
Excerpt: "Revenue Procedure 2008-25 provides a safe harbor method of accounting for taxpayers using an accrual method of accounting that incur FICA tax and FUTA tax (payroll tax) liabilities for compensation (including bonuses and vacation pay), and also provides procedures for taxpayers to obtain the automatic consent of the Commissioner of Internal Revenue to change to the safe harbor method of accounting." (Internal Revenue Service)

[Guidance Overview] IRS Provides Safe Harbor for Deducting Payroll Taxes by Accrual-Method Taxpayers
Excerpt: "The IRS has provided a safe harbor method for accrual-method taxpayers to use to account for their FICA and FUTA tax ('payroll tax') liabilities and has set forth procedures to follow for making automatic changes to the safe harbor method. Under the safe harbor method, a taxpayer will be treated as satisfying the recurring item exception to the economic performance rule of Reg. §1.461-5(b)(1)(i) for its payroll tax liability in the same tax year in which: (1) all events have occurred that establish the existence of the liability for the related compensation, and (2) the amount of the liability for the related compensation can be determined with reasonable accuracy." (CCH Incorporated)

[Guidance Overview] Monthly Benefit News & Developments, March 2008 (PDF)
2 pages. A review of recent legislative and regulatory activity. (Milliman)

[Guidance Overview] Federal Circuit Rules Supplemental Unemployment Benefits
Excerpt: "The Federal Circuit on March 6, 2008 judged that payments qualifying as supplemental unemployment benefits (SUB) are wages for FICA purposes. This reversed the Court of Federal Claims ruling that certain termination payments were not subject to FICA because such payments were supplemental unemployment compensation as defined in IRC § 3402(o)." (Deloitte via

EBSA ERISA Enforcement Efforts - Jan - Feb 2008
Excerpt: "The U.S. Department of Labor, Employee Benefit Security Administration, reports the following enforcement results for the period January 1, 2008 - February 29, 2008 . . . ." (Health Plan Law blog by Attorney Roy F. Harmon III)

FASB to Propose Increased Disclosure of Pension Plan Asset Classes and Value Assumptions
Excerpt: "The Financial Accounting Standards Board (FASB) has instructed its staff to issue an FASB Staff Position (FSP) paper that proposes to improve disclosures about postretirement benefit plan assets now required by Financial Accounting Statement (FAS) No. 132(R), Employers' Disclosures about Pensions and Other Postretirement Benefits." (Wolters Kluwer Financial Services)

Newly Posted Events
(Post Yours!)

401(k) Plan Workshop
in Pennsylvania on April 18, 2008
presented by SunGard Relius

401(k) Plan Workshop
in Texas on April 18, 2008
presented by SunGard Relius

401(k) Plan Workshop
in Alabama on April 18, 2008
presented by SunGard Relius

Employee Benefits Conference
in New York on May 28, 2008
presented by Foundation for Accounting Education

Form 5500 Workshop
in Texas on April 17, 2008
presented by SunGard Relius

Form 5500 Workshop
in Alabama on April 17, 2008
presented by SunGard Relius

Form 5500 Workshop
in Pennsylvania on April 17, 2008
presented by SunGard Relius

Self-Correction of Certain 409A Operational Errors: Snatching Your Bacon Out of the Fire - Webcast
Nationwide on March 19, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)

SWBA/IRS 403(b) Tax Sheltered Annuity Conference
in Texas on April 4, 2008
presented by Internal Revenue Service (IRS)

Newly Posted Press Releases
(Post Yours!)

Employers Enhancing 401(k)s To Compensate for Retirement Plan Changes, Watson Wyatt Finds
Watson Wyatt

Hewitt Strengthens Health Care Benefit Capabilities for Mid-Size Companies
Hewitt Associates LLC

ING Releases Plan Documents to Help Public Schools Meet New IRS Retirement Plan Laws
ING Group

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Delinquency and Collective Bargaining Agreement Assistant
for Laborers' National Pension Funds
in DC

Sales Consultant
for Gallagher Retirement Services
in FL

Retirement Plan Actuary/Consultant
for Charles Schwab
in OH

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