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| March 31, 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] New 403(b) Regulations
Excerpt: "The complicated 403(b) market needed updating in order to be more easily managed by both school districts and the IRS. Since 1964, the 403(b) rules had been updated but had not gone through a complete overhaul. In July 2007, the IRS finalized the first comprehensive 403(b) regulations in 43 years. These new rules require a written plan that will standardize each district's 403(b) providers. While providers and employers have until Jan. 1, 2009, to be fully compliant, the changes have already begun." (Financial Planning)
[Guidance Overview] To Convert or Not to Convert - to a Roth IRA - That is the Question (PDF)
10 pages. Excerpt: "Robert Keebler weighs the considerations in whether to convert to a Roth IRA. 2010 will present an unprecedented opportunity for this planning in the right circumstances due to the elimination of the current AGI limitation and the ability to stretch the income tax due on the conversion over a two year period." (R.S. Keebler and S.J Bigge in the Journal of Retirement Planning via Ataxplan Publications)
[Guidance Overview] International Update on Social Security, February 2008
Excerpt: "International Update is a monthly publication of the Social Security Administration's Office of Policy. It reports on the latest developments in public and private pensions worldwide." (U.S. Social Security Administration)
[Guidance Overview] New Multiemployer Plan Disclosure Requirements - ERISA Section 101(k) (PDF)
Pages 5-7 of 8 pages. Excerpt: "If they haven't done so already, multiemployer pension plan administrators should start gathering actuarial and financial reports prepared for their plans in prior years so they can respond quickly to requests for such information pursuant to a new provision that became effective on January 1, 2008 for calendar year plans." (Trucker Huss)
Benefits Changes Ensure Sustainable Retirement Program at 3M
Excerpt: "While pension plans for current retirees and employees will not change, new plans for 401(k) savings and retiree medical coverage, which generally become effective next year, address several key factors driving the need for change, such as the emergence of tax-efficient savings vehicles and the development of Medicare in the marketplace. In addition, the new plans account for 3M's aging workforce and the increasing ratio of retirees as a percent of active employees." (MSN.Money)
Using Pension Funds for Buyouts
Excerpt: "Using overfunded pension money to tempt workers into retirement with lump-sum packages allows employees to defer taxes. But it can be a risky venture in today's up-and-down stock market climate." (Human Resource Executive Online)
Don't Paint Nest Eggs in Company Colors
Excerpt: "'I used to think Enron was the poster child of what not to do with company stock,' said Mike Scarborough, president of an investment advisory firm based in Annapolis, Md., referring to the energy trading company whose collapse shattered the nest eggs of employees who held so many of its shares. 'But it may ultimately turn out to be Bear Stearns, because money and investing is their business -- and it still turned out badly.'" (The New York Times; free registration required)
Worker 401(k) Fee Suits Find Friend in Labor Department
Excerpt: "The Department of Labor has sent a quiet but strong signal that it is keeping a close watch on the growing collection of 401(k) fee lawsuits -- and that it will intervene in these cases if it deems necessary. Without much fanfare, the Labor Department recently elected to formally voice its position on a ruling over a 2006 lawsuit that workers at Deere & Co. filed against the company and Fidelity Investments . . . ." (Financial Week; free registration required)
White Paper Suggests Collective Funds Next Trend in Plan Investments
Excerpt: "A whitepaper presented by AST Capital Trust with contributions from Hewitt Associates claims the grip is easing on mutual funds' reign as king of 401(k) plan investments.' (PLANSPONSOR.com; free registration required)
Long Island, NY, School Districts Improperly Reported Attorneys As Employees - an Arrangement That Allowed Them to Receive Public Pensions
Excerpt: "Twenty-three school districts - nearly one-fifth of all the school districts on Long Island - improperly reported private attorneys as employees, which helped the attorneys earn public pensions totaling more than $342,082 a year, plus health benefits worth thousands more, a Newsday review of records has found. In some cases, a town, village, library, special district or county also reported the attorneys as employees, often as full time, even though records show they did not always work full time. By being reported as employees at these other agencies while also working in private practice, they were able to enhance the size of their state pensions." (NewsDay)
Take Your 401(k) or Leave It? Understand Your Options When Leaving a Job
Excerpt: "In times of rising unemployment, workers who find themselves being laid off must decide whether to take their retirement plan with them or leave it with their employer. Knowing the advantages and disadvantages of retirement accounts, mainly 401(k) versus Individual Retirement Account, can help people decide what action is best for their retirement money in uncertain times." (MCCLATCHY-TRIBUNE NEWS SERVICE via SunHerald.com)
Connecticut Businesses Slam Brakes on Pension Bill
Excerpt: "A potentially groundbreaking bill backed by state Comptroller Nancy Wyman and the state's top Senate Democrats to create the nation's first state-run program of retirement plans for small business has the intended beneficiaries -- small businesses -- asking: 'Why bother?'" (Hartford Business Journal)
City of Tallahassee, Florida, Eyes Cuts in Retirement Benefits
Excerpt: "Today, general city employees -- the unionized fire and police employees have different benefits -- continue to earn as much as 80 percent of their salary, depending on how long they served with the city, from the day they retire to the day they die. The city pensions are funded by the employees, who put in 3.5 percent of their salary, and the city, which contributes 9.33 percent at a cost of $9.3 million for the last fiscal year. All that money goes into a big pot -- worth $1.2 billion today, including fire and police -- that also earns interest. Most private employers, except for larger, older businesses such as carmakers, don't offer pensions. Rather, they offer plans such as 401(k)s." (Tallahassee.com)
[Opinion] ASPPA Comments on Proposed Regulations Relating to Hybrid Retirement Plans under §411(a)(13) and §411(b)(5) (PDF)
13 pages. Excerpt: "The American Society of Pension Professionals & Actuaries (ASPPA) appreciates this opportunity to comment on the proposed regulations regarding the hybrid defined benefit pension plans as issued by the IRS and Treasury on December 28, 2007 (REG -104946-07) (Proposed Regulations)." (American Society of Pension Professionals & Actuaries)
[Opinion] American Benefits Council Comment Letter on Measurement of Assets and Liabilities for Pension Funding Purposes (PDF)
17 pages. Excerpt: "This letter is submitted on behalf of the American Benefits Council with respect to the proposed regulations regarding the measurement of assets and liabilities for pension funding purposes." (American Benefits Council)
[Opinion] Hearing on Reasonable Contracts or Arrangements Under Section 408(b)(2)
Links to testimony for the March 31, 2008, public hearing on Proposed Amendments to Section 408(b)(2) Regulation Reasonable Contract or Arrangement -- Fee Disclosure. (U.S. Employee Benefits Security Administration)
[Opinion] Revenue-Sharing Is Not Out in the Open
Excerpt: "The practice is pervasive -- virtually every 401(k) plan that I work with has some revenue-sharing. That's just another way of saying that the participants are being charged for some or all of the cost of the plan, including the investments and the services to the plan. Why do ERISA and the DOL care about revenue-sharing? There are two important reasons. The first is that it is impossible to evaluate the reasonableness of payments to plan providers without knowing the full amounts that they are receiving, both directly and indirectly." (Fred Reish via PLANSPONSOR.com; free registration required)
[Opinion] An Early 'Win' for Plan Sponsors - Hecker v. Deere & Co.
Excerpt: "That's the case where, last June, U.S. District Judge John Shabaz tossed 'with prejudice and costs' allegations that the plan had incurred excessive fees and had violated its fiduciary obligations by not disclosing revenue-sharing relationships to participants (see 'IMHO: Fighting Words '). It was, many experts said at the time (including this writer), a correct decision, but bad law, with Shabaz too broadly (IMHO) applying the shield of ERISA 404c to excuse an entire series of fiduciary responsibilities not encompassed by that statute." (PLANSPONSOR.com; free registration required)
[Opinion] ASPPA and Council of Independent 401(k) Recordkeepers' February 11, 2008, Comments on Proposed Revisions to Regulatory Exemption for Provision of Services to Employee Benefit Plans (PDF)
Excerpt: "ASPPA and CIKR strongly support the Department's current regulatory initiatives on improving the disclosure of compensation and fees paid by plans to the fiduciaries who are responsible for the plans. We commend the Department for the new disclosures required by the proposed revisions to DOL Regulation § 2550.408b-2 (Proposed Regulation). However, ASPPA and CIKR have a number of suggestions contained in these comments that we believe will strengthen the disclosure regimen, and we also strongly encourage the Department to provide greater clarity regarding its disclosure requirements in order to promote consistent disclosures among service providers." (American Society of Pension Professionals & Actuaries)
[Opinion] Florida's Government Should Rethink Its Generous Pay and Benefits
Excerpt: "The Legislature, still talking about cutting taxes, is ignoring a related issue. The salaries and benefits of many government workers are far too generous. Elected officials at the state and local levels won't bring public compensation into line with private-sector pay for two reasons. First, the employees and their unions exert heavy pressure during campaigns, and second, the politicians have cut themselves a big slice of the same pie." (The Tampa Tribune)
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Links to Items on Executive Comp, Benefits in General
Is the Executive Pay Model Improving? Depends on Whom You Ask
Excerpt: "Corporate directors are considerably more optimistic than institutional shareholders about the effectiveness and future of the U.S. executive pay model. Both groups think the new proxy disclosures have improved transparency but need more work. These and other findings are from a new study by Watson Wyatt Worldwide, 2008 Report on Directors' and Investors' Views on Executive Pay and Corporate Governance." (Watson Wyatt Worldwide)
NJ High Court Hears Smith Barney Company Stock Forfeiture Challenge
Excerpt: "New Jersey Supreme Court justices are considering whether a Smith Barney company stock policy in which brokers who leave the firm before two years forfeit their rights to company stock runs afoul of public policy.' (PLANSPONSOR.com; free registration required)
[Guidance Overview] Executive Compensation Update, March 28, 2008
Excerpt: "[This edition of the newsletter] features a cover story written by Mr. Melbinger titled 'IRS Reverses Long-Standing Position on Performance-Based Compensation Under Code Sec. 162(m).'" (Winston & Strawn LLP)
Employment at Older Ages and the Changing Nature of Work
Excerpt: "About 7 percent of American workers held highly physically demanding jobs in 2006, and 35 percent held highly cognitively demanding jobs. The share of the workforce in physically demanding jobs fell by about one-sixth between 1971 and 2006, while the share in cognitively demanding jobs increased by more than one-third. Stressful occupations also grew rapidly over the past 35 years. The decline in physically demanding occupations will likely improve employment prospects for older adults, but the growth in cognitive demands may limit options for some older people, especially those with limited education." (Urban Institute)
Congress in no rush to fix Medicare and Social Security
Excerpt: "Lawmakers are preparing to get serious about the long-term solvency of America's Social Security and Medicare programs -- but not until the next Congress convenes. The latest annual report on the prospects for Social Security and Medicare projects a $42.9 trillion shortfall over the next 75 years, at current levels of benefits and taxation. The message Congress is taking away from the report is that there's still time to build bipartisan consensus for reform." (The Christian Science Monitor)
Clinton, Obama Would Require Employers to Negotiate Workplace Lifestyle Demands
Excerpt: "Employers would have a legal obligation to negotiate with individual employees over changes in scheduling and location under a bill cosponsored by both Democratic presidential candidates. The 'Working Families Flexibility Act' (S. 2419), sponsored by Sen. Ted Kennedy (D-MA) would give employees a statutory right to request changes in the number of hours worked and when and where they are worked." (HR Policy Association)
Bear Stearns: Crisis and 'Rescue' for a Major Provider of Mortgage-Related Products, Updated March 26, 2008 (PDF)
12 pages. Excerpt: "This report provides an overview of Bear Stearns, examines the Fed's 'rescue plan,' and JP Morgan's subsequent agreement to acquire the firm." (Congressional Research Service)
When to Hire an ERISA/Employee Benefits Attorney
Excerpt: "This article provides a framework for understanding the proper time for a Plan Sponsor to seek the advice of an ERISA/employee benefits attorney. It discusses the legal framework involving employee benefits, the issues to be aware of, and some specific situations where the use of an attorney is appropriate and helpful." (Jeff Robertson, Barran Liebman LLP, via 401khelpcenter.com)
City of Huntington, West Virginia, Finances Are Critical Election Issue
Excerpt: "A review of city budgets and financial statements from the past 10 years by The Herald-Dispatch shows that spending for many city services has dropped significantly. . . . Yet the city's overall revenues for its day-to-day operations are up 53 percent in real dollars and 15 percent when adjusted for inflation. In 1998, the city's revenue base was $25.3 million. It's grown to $38.5 million today. When adjusted for inflation, the 1998 budget is the equivalent of $32.8 million in today's dollars. So where is all the money going? To personnel costs, primarily health insurance and police and firefighter pensions." (The Herald-Dispatch)
Employee Ownership Update for March 28, 2008
NCEO Executive Director Corey Rosen discusses Bear Stearns and employee ownership, why sharing ownership could be more painful to owners then valuable to participants, how to nominate your company for the Fortune 100 Best Companies to Work For list, and the Great Game of Business conference. (National Center for Employee Ownership)
Newly Posted Events
Eliminate Potentially Discriminatory Behavior Before It's Too Late!
Nationwide on April 9, 2008
presented by Thompson Interactive, A Division of Thompson Publishing Group
FMLA, ADA, ERISA and HIPAA and How They Impact an Employee's Requested Leave of Absence
Nationwide on April 22, 2008
presented by Thompson Interactive, A Division of Thompson Publishing Group
How to Choose a Disease Management Vendor and Measure Outcomes
Nationwide on April 17, 2008
presented by Thompson Interactive, A Division of Thompson Publishing Group
Professional Appearance in the Workplace - Expectations and Enforcement
Nationwide on April 16, 2008
presented by Thompson Interactive, A Division of Thompson Publishing Group
Newly Posted Press Releases
ERIC Urges Appeals Court to Affirm Ruling that San Francisco Ordinance is Preempted by ERISA
ERIC (ERISA Industry Committee)
Council Recommends Numerous Changes To Proposed Plan Fee Disclosure Regulations
American Benefits Council
SPARK Institute Testimony At DOL Hearings On Proposed Fee Disclosure Regulations
SPARK Institute
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Second Vice President of Defined Contribution Administration
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Client Services Retirement Expert
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in CA
EBS Benefit Plan Administrator
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