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| March 28, 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.)
| Software for Retirement and Cafeteria Plan Documents |
| DATAIR Pre-EGTRRA sale! License our Plan Document System before 6/1/08 for a $500 discount. Choose your documents: Retirement Plans: DC/401(k), 403(b), DB, Cash Balance Cafeteria Plans: 125, HSA, HRA, 132(f) Plans Choose your formats:
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[Guidance Overview] IRS Issuance of Opinion and Advisory Letters for Pre-Approved Defined Contribution Plans (PDF)
2 pages. Excerpt: "Some employers can rely on the IRS letter to the provider of the pre-approved plan. Others need an individual determination letter. Generally, individual determination letters for pre-approved plans are requested by filing a Form 5307, Application for Determination for Adopters of Master or Prototype or Volume Submitter Plans, which is designed for these plans and requires limited additional information and documents." (Seyfarth Shaw LLP)
[Guidance Overview] ESOP Update: Deduction Disallowance Under Section 267; Section 409(p) Letter Ruling; and King & Prince Seafood Decision (PDF)
5 pages. This update covers the following: IRS Emerging Issue: S Corporation Accrued Expenses to ESOP Participants a Potential Pitfall for the Less Than 100% S Corporation ESOP; IRS Issues First Private Letter Ruling on Section 409(p) of the Code; and, U.S. District Court Opinion Rendered in King & Prince Seafood Corporation ESOP Litigation. (Morgan, Lewis & Bockius LLP)
[Guidance Overview] IRS Guidance on 2008 Law Changes
Excerpt: "The IRS has released guidance on several law changes going into effect in 2008. Of interest to defined contribution practitioners, Notice 2008-30 discusses distributions of gap period income for 402(g) corrections, rollovers of pretax plan accounts to Roth IRAs, and qualified optional survivor annuities." (SunGard Corbel LLC)
More Employers with 401(k) Plans Are 'Mapping' Their Workers Into Target-Date Funds
Excerpt: "'To choose the right target-date fund, a plan sponsor must balance the plan's investment policy with participants' needs while understanding both the key investment decisions to be made and the potential impact of target-date funds on participant portfolios,' analysts at Vanguard assert." (Employee Benefit News; free registration required)
Pilot Defined Contribution Schemes Launched for Public Employees in China
Excerpt: "A pilot defined contribution retirement plan scheme for employees of state institutions is being launched in five provinces and municipalities. The plan was approved on February 29, 2008, by the Chinese State Council, and aims to narrow the gap between the benefits retired enterprise workers receive and those received by employees of state institutions." (Watson Wyatt Worldwide)
Recent Developments Regarding Global Accounting Convergence and FASB Restructuring
Excerpt: "Global accounting standards might be adopted much sooner than anyone expected (within years versus decades). Recent events and public statements from various accounting constituencies suggest an intensified focus on convergence and an uncertain future for the U.S. Financial Accounting Standards Board (FASB)." (Watson Wyatt Worldwide)
Notice of Public Hearing by IRS on Automatic Contribution Arrangements
Excerpt: "The public hearing is being held on Monday, May 19, 2008, at 10 a.m. The IRS must receive outlines of the topics to be discussed at the hearing by Monday, April 28, 2008." (Internal Revenue Service)
Financial Gerontology, Family Aging, and Middle-Aged Boomers: Using the 'Senior Sandwich Generation' Concept in Retirement Planning (PDF)
14 pages. Excerpt: "While each [different kind] or view of aging has a direct link to the work of wealth advisors, this article focuses on Family Aging, and especially the interactions between 'sixty-year-old' children and their aging parents." (TIAA-CREF Institute)
How Much Do People Know About Economics and Finance? Financial Illiteracy and the Importance of Financial Education (PDF)
6 pages. Excerpt: "[A]s this brief will demonstrate, there is widespread financial illiteracy. Many households are unfamiliar with even the most basic economic concepts needed to make sensible saving and investment decisions. This has serious implications for saving, retirement planning, retirement, mortgage, and other financial decisions, and it highlights a role for policymakers to improve financial literacy in the population." (Michigan Retirement Research Center via Pension Research Council)
Economy Casts Shadow Over Retirement Confidence, Survey Finds
Excerpt: "Volatile market conditions, credit crises and economic uncertainty are not only taking a toll on Americans' investments, but they are also negatively impacting the way Americans prioritize their retirement savings. Working Americans' confidence in their ability to retire comfortably declined significantly in the past year, according to the Ninth Annual Transamerica Retirement Survey, a study of retirement-related attitudes and behaviors among the American workforce." (Wolters Kluwer)
Uncovering and Understanding Hidden Fees in Qualified Retirement Plans (PDF)
58 pages. Excerpt: "In this article, Matthew Hutcheson outlines four key concepts necessary for understanding hidden 401(k) fees. First, notwithstanding the obscure nature of retirement plan economics, there is a rigorous way to determine the costs of any such plan. Second, directors, officers, and executives of plan sponsors have a fiduciary duty to know, manage, and control all of the fees charged to plan assets. Third, modern fee structures are the result of mingling fiduciary and nonfiduciary philosophies. Hidden and excessive fees can be corrected by embracing an 'independent fiduciary only' approach toward plan management. Finally, there is more at stake than is generally contemplated. Correcting errant business practices in the 401(k) industry is important for participants, plan sponsors, and society as a whole." (University of Illinois Elder Law Journal via 401khelpcenter.com)
U.S. Retirement Plan Assets Doubled in Last Decade
Excerpt: "U.S. retirement plan assets have nearly doubled in value since 1997, according to Watson Wyatt Worldwide's 2008 Global Pensions Asset Study. A press release said the study found that assets in U.S. pension funds, 401(k)s, individual retirement accounts, and other retirement savings vehicles have increased from $7.9 trillion in 1997 to $15 trillion in 2007." (PLANSPONSOR.com; free registration required)
Recent Survey Shows Asset Allocation Investment Option Prevalence in Retirement Plans
Excerpt: "A Spectrem Group research report, Participant Asset Allocation Trends: Target Date and Lifestyle Funds, said of the 59% who could choose one of the immensely popular funds: 14% had access to lifestyle options, 9% could opt for target date portfolios, and 36% had both as options." (PLANSPONSOR.com; free registration required)
Deficit in New Hampshire State Pension Fund Could Hike Taxes
Excerpt: "The shortfall was discovered last year, according to speaker Maura Carroll of the Local Government Center, yet the deficit had its beginnings in the early 1990s. This was when legislation changed the funding methodology and deflated the amount of employer contributions. This was supposed to be a temporary measure, said Carroll, but it wasn't looked at until last year when the pension was found to be only 57 percent funded. It is now 63 percent funded." (Seacoastonline.com)
Maine Rejects Bid to Divest Investment
Excerpt: "Bucking a committee recommendation and a vote in the Senate, the Maine House is rejecting a bill calling for a divestiture of pension funds in companies doing business in Iran." (AP via International Business Times)
ERISA Plan Investors File Proposed Consolidated Amended Class Action Complaint Against State Street Bank
Excerpt: "A group of retirement and benefit plans have filed a motion in federal court in Manhattan for leave to file a Consolidated Amended Class Action Complaint against defendant State Street Bank and Trust Co. . . . alleging that State Street breached its fiduciary duties under the federal Employee Retirement Income and Security Act ('ERISA') from January 1, 2007 through December 31, 2007 to the plans by causing State Street's purportedly conservative fixed income bond funds to make imprudent investments in high-risk and/or highly leveraged financial instruments tied to, among other things, volatile asset-backed and subprime mortgage-backed securities." (CNNMoney.com)
International Accounting Standards Board Mulls Changing Accounting Regs for Pensions
Excerpt: "The International Accounting Standards Board today published a discussion paper on International Accounting Standard 19, on accounting for employee benefits, that sets out the board's initial views on how the accounting for some post-employment benefits, including pensions, could be improved." (Financial Week; free registration required)
[Opinion] American Benefits Council Comment Letter to Treasury/IRS on Hybrid Retirement Plans (PDF)
27 pages. Excerpt: "On behalf of the American Benefits Council [the letter contains] comments regarding the proposed regulations providing guidance with respect to cash balance plans, pension equity plans, and other hybrid defined benefit plans." (American Benefits Council)
[Opinion] The Real Scoop on Annuities
Excerpt: "Today, it's difficult to distinguish one financial institution from another as they compete for the ever-growing pool of investment dollars. Insurance companies, now publicly owned, have become am integral part of an industry that seems uninterested in protecting anything other than their obscenely paid leaders. The time-honored distinction of the annuity contract was the guaranteed retirement benefit it provided. The 'you will never outlive your income' boast could not be uttered by any other financial entity!" (MarketOracle.co.uk)
[Opinion] Opinion: A 'Floor Plan' for Protection and Partial Privatization of Social Security (PDF)
12 pages. Excerpt: "Social Security's expected future financial woes have been well publicized . . . . In response, in 2001 President Bush convened the Bipartisan Commission on the Future of Social Security. This Commission focused on three purely privatized alternatives to the present benefit structure. . . . [The following] is a creative response and a compromise solution to the issues examined by that Commission, one which is intended to meet the needs of all of the stakeholders in the national retirement system called Social Security: The Floor Plan." (Carol Caruthers, M.S.P.A., E.A. of Caruthers Benefit Systems, Inc.)
Sponsored by: Moore School of Business
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| 37th Annual Retirement and Benefits Management Seminar |
| The University of South Carolina Moore School of Business and the U.S. Department of Labor along with the Internal Revenue Service will conduct their annual seminar April 24th-25th in Charlotte, North Carolina. The program will feature experts from the legal, accounting, and the retirement industry along with government representatives in eight sessions focusing on current retirement issues and trends. |
| (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] IRS Notice 2008-42: Modifications of Split-Dollar Life Insurance Arrangement Entailing No Change to Underlying Life Insurance Contract (PDF)
4 pages. Excerpt: "This notice provides guidance regarding the application of §§ 101(j) and 264(f) of the Internal Revenue Code (Code) to life insurance contracts that are subject to split-dollar life insurance arrangements. Specifically, this notice provides that a modification of a split-dollar life insurance arrangement that does not entail any change to the life insurance contract underlying the arrangement will not be treated as a material change in the life insurance contract for purposes of §§ 101(j) and 264(f)." (Internal Revenue Service)
Adjusting Retirement Goals and Savings Behavior: The Role of Financial Education (PDF)
Excerpt: "To assist employees of colleges and universities and other nonprofit organizations achieve their retirement goals, TIAA-CREF offers financial education seminars on most college campuses. These voluntary programs offer faculty and staff the opportunity to learn more about the retirement process, income needs in retirement, investment strategies, and basic retirement programs. This paper examines the information contained in these financial education seminars offered by TIAA-CREF associates and assesses how these programs influenced individuals to modify their retirement goals and alter their retirement planning." (TIAA-CREF Institute)
[Opinion] Lock Them in a Room and Require Entitlement Reform
Excerpt: "Based on the current growth rate of entitlement costs -- $2 trillion per year under a 75-year time horizon and $12 trillion per year if measured on a permanent basis -- wouldn't it be smarter not to wait for next year's lawmakers to show up? Given the massive electoral advantages incumbents enjoy, most of them will probably be the same people, anyway. Why not lock them all up in a room this year -- let's say next Thursday -- until they can come to agreement on how to balance entitlement program finances, even if only for the next 75 years?" (American Spectator (Online) via Cato Institute)
[Opinion] Social Security - Still Alive and Kicking
Excerpt: "This year, as happens every year, when the Trustees' Report on Social Security and Medicare is released, commentators seized on the forecasts to proclaim imminent disaster and called for privatization of Social Security. In fact, the official forecasts, released yesterday, differ only marginally from those of 2007. The report underlines that we need to solve problems in these safety net programs. But there is no imminent Social Security crisis; in fact, the outlook is marginally better than it was a year ago." (Bernard Wasow via takingnote.tcf.org)
Newly Posted Events
Bank On It! A New DOL Focus On Deferral Deposits
Nationwide on April 29, 2008
presented by SunGard Relius
Disease Management - Overcoming Legal Compliance Hurdles
in California on April 16, 2008
presented by Healthcare Web Summit
HIPAA and Other Health Benefits Laws Compliance Assistance Seminar
in Georgia on April 30, 2008
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Successful Individual Market Entry: Developing sound strategies and executing to win
in California on April 10, 2008
presented by Healthcare Web Summit
Newly Posted Press Releases
U.S. Retirement Assets Grew Substantially in Last 10 Years, But Face a Challenging 2008
Watson Wyatt
U.S. Department of Labor Obtains Order Requiring Seneca, S.C., Company to Restore More Than $1.5 Million to 401(k) Profit-Sharing Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Great-West Retirement Service® Announces Managed Account Program Assets More Than Doubled In 2007
Great-West Retirement Services
The National Managed Care Leadership 2008 Directory
Healthcare Web Summit
Newly Posted or Renewed Job Openings
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Consulting/Marketing Manager
for Associated Pension Consultants
in CA
Implementation Consultant
for Ceridian
in IL
Defined Benefit Sr Analyst
for Affiliated Computer Services
in NJ
Life Insurance Administrator
for Pension Investors Corporation
in FL
Document Design Specialist
for Kidder Benefits Consultants, Inc.
in IA
Primary Administrator for Qualified Retirement Plans
for Kidder Benefits Consultants, Inc.
in AZ
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