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March 13, 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.)
Banner ad for DATAIR Employee Benefit Systems, Inc.

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 or call 1-888-328-2474.

[Guidance Overview] Holding Real Estate, Limited Partnerships and Other Exotic Investments in IRAs (PDF)
12 pages. Excerpt: "This article will first address general rules that apply to unique assets in IRAs (e.g., valuation of assets, prohibited transactions, unrelated business taxable income, etc.), then provide more detail on specific types of IRA assets." (John N. Singletary Jr. in ABA Trust & Investments)

[Guidance Overview] ERISA § 404(c) Issues Raised Under SEC's 'Notice and Access' Proxy Statement Rules (PDF)
1 page. Excerpt: "Before using the Notice and Access model, companies with 404(c) plans containing company stock should consider ERISA's electronic disclosure requirements as they prepare their annual proxy materials. Companies using the SEC's Notice and Access model are still required to obtain participant consent or distribute of paper copies to comply with ERISA § 404(c)." (Haynes and Boone, LLP)

[Guidance Overview] Distributions from Escrow Account Entitled to Same Qualified Treatment As Distributions Directly from Plan
Excerpt: "Distributions from an escrow account, funded as the result of the settlement of a class action lawsuit brought by plan participants who had alleged that previous lump-sum distributions to them from the plan had been inaccurately calculated, would be treated as if they were distributions directly from the plan, according to an IRS private letter ruling." (Wolters Kluwer Financial Services)

[Guidance Overview] Securities Laws and 403(b) Plans - Prospectus Delivery, Free Transferability, Rule 22c-2, and Other Things
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)

California Organization Focuses on Reducing Costs of Public Employee Retirements
Excerpt: "A pension reform organization focused on reducing the cost of public employee retirements has recommended that Vallejo follow Orange County's lead in pursuing a lawsuit to cut its unfunded liability in police and fire benefits. Based on a review of Vallejo's certified year-end financial audits and reports by the state controller, The nonprofit California Foundation for Fiscal Responsibility (CFFR) issued a report March 2 suggesting Vallejo could save $5 million in future years if it successfully sued to reverse what the organization called 'illegal' retroactive pension increases OK'd by the City Council eight years ago. It based its findings on a review of Vallejo's year-end financial audits and state controller reports." (

Executive Summary of Survey on Retirement Plan Design: Past, Present and Future
Excerpt: "Watson Wyatt surveyed large plan sponsors to explore trends in employers' retirement plan strategies and to provide insight into their decisions, motivations and plans for the future. Retirement Plan Design: Past, Present and Future illustrates how many plan sponsors have adapted to meet the need for more portable and, in general, lower-risk and lower-cost retirement savings vehicles while staying committed to a DB approach." (Watson Wyatt Worldwide)

Judge OKs Settlement in New York Life ERISA Lawsuit
Excerpt: "After nearly eight years of litigation, a federal judge granted final approval of a $14 million class-action settlement in an ERISA lawsuit against New York Life Insurance Co. that was filed by employees alleging that the insurer mismanaged its pension funds by exclusively investing in its own mutual funds." (Workforce Management; free registration required)

State Divestment Legislation
Excerpt: "Growing concern over genocide in Sudan and countries that sponsor terrorism has prompted state legislatures to consider actions to limit or eliminate state investments in firms doing business with such countries. Legislation includes total divestment of the states interests in firms doing business in targeted divestment focused on specific firms and shareholder engagement strategies. The . . . charts summarize enacted legislation from 2005 and 2006 and bills introduced in the 2007 and 2008 legislative sessions." (National Conference of State Legislatures)

Retirement Planning: Myths and Misconceptions About Life in Retirement
Excerpt: "Discussions with seasoned retirees indicate that there are many myths and misconceptions about retirement. Often you will hear these myths stated as fact. Here are some of the most common ones." (The American Association of Individual Investors)

NEFE Sponsors Think Tank on Retirement Income Decumulation
Pages 1-3 of 8 pages. Excerpt: "Because retirees can make uninformed, unwise decisions that can affect their financial well-being and standard of living in retirement, the National Endowment for Financial Education® (NEFE®) organized a landmark Retirement Income Decumulation Think Tank December 10-12, 2007. Twenty leading national authorities participated." (National Endowment for Financial Education)

Text of Pension Protection Technical Corrections Act, H.R. 3361 (PDF)
54 pages. (U.S. House of Representatives via American Benefits Council)

House Ways and Means Committee Description of the Pension Protection Technical Corrections Act, H.R. 3361 (PDF)
19 pages. (U.S. House Ways and Means Committee via American Benefits Council)

Auto Enrollment Makes 401(k)s Easy, but Experts Say it's Not Enough
Excerpt: "Michael Doshier, vice president of marketing for Fidelity Retirement Services said the number of employees who drop out of automatically enrolled 401(k) plans is between 1% and 9%. Of all the starting deferral rates, more people increase their deferral rates as a next step when 6% is selected as the default compared to a 3% default. Since increasing contribution rates seems to have a positive impact on the amount of employee participation, it's unclear why employers would be reluctant to raise default contribution rates." (SmartMoney via

Kentucky Senate Unveils Its Public Pension Reform Plan
Excerpt: "Requires 'double-dippers' -- workers who retire and then are rehired in government -- to take a 12-month break before returning to service and makes them ineligible to draw a second pension. Currently a six-month break is required. The governor's plan calls for a one-month break with no second pension." (The Courier-Journal)

Chicago Schools to Sue State Over Pensions
Excerpt: "The Chicago Board of Education is filing a lawsuit today to try to upend a state funding system that resulted in school officials diverting more than $130 million from classrooms this year - and hundreds of millions of dollars more in the years to come. The lawsuit challenges the constitutionality of how the state provides money to the Chicago teachers pension fund compared with how it supports the pension fund that covers all other public school teachers in Illinois, the Teachers' Retirement System." (

Check Out the Health of Your Pension Plan
Excerpt: "The Great American Pension has been in decline in recent years. But if you're among the fortunate ones who lay claim to a defined benefit pension, 2008 is a good year to pay close attention. New federal rules could affect your benefits, depending on the financial health of your fund. At minimum, the changes, which are kicking in this year, create greater transparency that will help you understand how your plan is doing." (Casa Grande Valley Newspapers Inc.)

Americans to Delay Retirement, Survey Says
Excerpt: "Of those surveyed between the ages of 35 and 54, half said they anticipate having to delay retiring to allow more time to save and 76% indicated they are still planning to earn income when their full-time working years draw to a close, according to the poll . . . ." (Investment News; free registration required)

Death of Defined Benefit Plans Greatly Exaggerated, Survey Finds
Excerpt: "[N]ew research from Watson Wyatt -- in which the consulting firm polled 300 employers about their retirement plans -- showing that over roughly the last decade, 22% of plan sponsors closed their defined-benefit plans to new employees, 16% froze these plans, and only 1% actually terminated their defined-benefit plans altogether. The freezings and terminations peaked in 2006, according to the study, and have since slowed." (Financial Week; free registration required)

NEC Electronics Reveals Early Retirement Plan
Excerpt: "Seeking to cut costs, Japan's NEC Electronics Corp. announced plans to implement an ''enhanced'' early retirement program. The company also recently disclosed details of its fab consolidation plan. At present, there are 685 applicants for the early retirement plan. Eligible employees include workers 40 years of age and older who will have worked five consecutive years or more within the NEC Electronics Group as of March 31, 2008." (ee times via TechInsights)

Kentucky Senate Panel Clears Overhauled Pension Proposal
Excerpt: "A plan lawmakers say will keep the state's pension system from financial disaster cleared a Senate panel Wednesday. The measure, which was expected to come for a vote before the full Senate later in the day, would apply primarily to future employees. Among other things, the plan would require all future state employees to work longer before retiring with full benefits and to contribute to an annuity savings account." (

[Opinion] American Benefits Council Letter Urging Asset Smoothing Clarification with PPA Technical Corrections (PDF)
2 pages. Excerpt: "I am writing on behalf of the members of the American Benefits Council (Council) regarding legislation to clarify the 'asset smoothing' rules for defined benefit pension plan funding, since such legislation may be considered with the Pension Protection Act of 2006 (PPA) technical correction bill (H.R. 3361) this week." (American Benefits Council)

Sponsored by: ASPPA

(Click on company name or banner to learn more.)
Banner ad for ASPPA

The ERISA Outline Book

Stay current with The ERISA Outline Book, 2008 Edition, by Sal Tripodi, J.D., LL.M. only from ASPPA. Available in both print or on CD, this one of a kind resource has become the must have for anyone working in the pension industry today. Fully updated with the latest guidance on a variety of PPA 2006 items, the 2008 Edition also includes automatic enrollment guidance including QACAs, final regulations on QDIA's, guidance on benefit restrictions and much more. Stay current and order your copy today.

(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] Summary of FASB Statement 123R Share-Based Payment - Revised 3/10/2008 (PDF)
14 pages. Excerpt: "Statement 123R creates a more 'level playing field' for equity incentive design that is expected to result in the increased prevalence of full-value and performance-vesting awards, and a corresponding decline in plain-vanilla, tax qualified, and reload stock options, and employee stock purchase plans. The remainder of this paper summarizes the most pertinent provisions of Statement 123R and related staff guidance provided by the FASB and the Securities and Exchange Commission (SEC)." (Frederic W. Cook & Co., Inc.)

Employer Costs for Employee Compensation, December 2007 - Summary
Excerpt: "Employer costs for insurance benefits -- life, health, and disability -- averaged $2.34 per hour (8.3 percent of total compensation). Paid leave benefits (vacations, holidays, sick leave, and other leave) averaged $1.96 (7.0 percent); retirement and savings averaged $1.24 (4.4 percent); and supplemental pay averaged 72 cents (2.6 percent) per hour worked." (U.S. Bureau of Labor Statistics)

[Opinion] Executive Pay - A Proposal to Protect Core Pay-for-Performance Programs
Excerpt: "The U.S. executive pay-for-performance model is not only viable, it is essential to the continued success of corporations and the U.S. economy. That may not be what critics of the system want to hear, but the numbers tell a compelling story. Watson Wyatt's multi-year studies at 1,000 large U.S. companies find a consistently strong, positive relationship between realizable pay (i.e., pay earned for the year, including equity value appreciation) and performance." ( via Watson Wyatt Worldwide)

[Opinion] Social Security's Problems Haven't Gone Away
Excerpt: "Social Security is the largest government program in the world, accounting for 23 percent of the federal budget. The Social Security tax is the largest tax that the average American family pays. Nearly 80 percent of Americans pay more in Social Security taxes than they do in federal income tax. Millions of seniors depend on social Security for their retirement income, yet the program is unsustainable. It cannot pay future benefits without drowning our children and grandchildren in a sea of debt and taxes. Perhaps the candidates could spare a few minutes to tell us what they would do about that." ( via Cato Institute)

[Opinion] Does Religious Observance and the Workplace Mix?
Excerpt: "I argue strongly in a recent paper that it is inappropriate for employers to provide workplace chaplains in the workplace for their employees . . . ." (Workplace Prof Blog)

Newly Posted Events
(Post Yours!)

DOL Speaks: The 2008 Employee Benefits Conference
in District of Columbia on May 21, 2008
presented by ASPPA & DOL

Great Lakes Benefit Conference
in Illinois on April 3, 2008
presented by ASPPA & IRS

Health & Welfare Web Seminar: COBRA 101- What You Need to Know About COBRA, and COBRA-Related Legal and Regulatory Updates
Nationwide on April 24, 2008
presented by TRI-AD

Health & Welfare Web Seminar: FLEX 101- What You Need to Know About Flexible Spending Accounts and Section 125 Plus Regulatory Updates
Nationwide on May 29, 2008
presented by TRI-AD

Retirement Web Seminar: Using the Best of Defined Benefit Plan Philosophy to Enhance Your 401(k) Plan
Nationwide on May 22, 2008
presented by TRI-AD

Taming The Benefits Beast: 9 Proven Strategies For Reducing Your Employee Benefits Costs in 2008 and Beyond
Nationwide on March 20, 2008
presented by

Western Benefits Conference
in Colorado on June 28, 2009
presented by ASPPA and WP&BC

Women Business Leaders Forum
in Georgia on June 19, 2008
presented by ASPPA (American Society of Pension Professionals & Actuaries)

Newly Posted Press Releases
(Post Yours!)

New ASPPA Women Business Leaders Forum Slated
ASPPA (American Society of Pension Professionals & Actuaries)

More Companies, Workers Adopt Consumer-Directed Health Plans
Watson Wyatt

White Plains, N.Y., Employer And Company President Ordered To Restore $1.5 Million To Retirement Plan To Resolve U.S. Labor Department Lawsuit
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

New Study Debunks Old Myth; Coping With Change Eases With Age ... Boomers Confident They Can Handle Retirement Transition
Transamerica Retirement Services

Diversified Investment Advisors Launches Plan SponsorDIRECT
Diversified Investment Advisors

Few Americans Aware of Retirement "Saver's Credit"; Transamerica Center Applauds IRS Efforts to Generate Awareness and Increase Use
Transamerica Center for Retirement Studies

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Client Service Manager - Health and Welfare
for TRI-AD
in CA

ERISA/Employee Benefits Associate
for Greensfelder, Hemker & Gale, P.C.
in MO

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