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April 2, 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] Overview for Participants: Benefit Cutbacks in Multiemployer Plans
Excerpt: "The Pension Protection Act of 2006 permits certain underfunded multiemployer plans to eliminate subsidized early retirement, subsidized joint and survivor, lump sum and other benefits. . . . Prior to the PPA, plans could only change the rules for the future. Workers could still count on getting the portion of the 'subsidized' benefits earned up until the rule changed as long as they met the requirements for these benefits after the rules were changed. Under the PPA, multiemployer plans that are significantly underfunded are given an exception to the anti-cutback rule's protection for already-earned subsidized early retirement and survivors benefits." (Pension Rights Center)


[Guidance Overview] Overview for Participants: Benefit Cutbacks in Single Employer Plans
Excerpt: "Starting in 2008 some underfunded pension plans sponsored by a single employer will be subject to restrictions on benefits. These benefit restrictions were implemented by the Pension Protection Act of 2006 (PPA), which Congress passed to shore up the funding of traditional private sector defined benefit pension plans. This fact sheet explains the four basic benefit restrictions under the PPA for single employer plans and the underfunding levels that trigger each restriction." (Pension Rights Center)


[Guidance Overview] EBSA Model Notice for Multiemployer Plans in Critical Status
Excerpt: "The Employee Benefits Security Administration (EBSA) has issued a proposed regulation providing a model notice for use by multiemployer defined benefit pension plans to notify plan participants and others that their plan is in critical funding status and of the possibility that adjustable benefits may be reduced or eliminated." (Wolters Kluwer)


[Guidance Overview] A 401(k) Tax Break That's Often No Break
Excerpt: "Withdrawing company stock from a 401(k) to take advantage of a tax break called net unrealized appreciation (NUA) sounds like a no-lose proposition, and most advisers tell their eligible clients to go for it. But there's just one big problem: When you run the numbers, this maneuver often doesn't pay off." (American Institute of Certified Public Accountants)


Workers, Employers Adjust to Phased Retirement
Excerpt: "[O]nly about one-quarter of companies allow all or most workers to phase into retirement. There are tax questions and challenges around retirement benefits. For example, for employees who are phasing out, how much do they need to work? When can they start drawing on their retirement benefits while still working? How much can they take out? Do they have to leave the company and then come back as a temporary employee?" (Morning Edition via National Public Radio)


Retirement Plan Mistakes to Avoid
Excerpt: "It is fairly common knowledge that if you leave your employer, you have several choices available to help you postpone taxation on your retirement plan balance: Leave it where it is, if your former employer permits it. Roll the balance into your new employer's plan, if the plan permits it. Roll the balance into an IRA within 60 days of distribution. Even if you choose one of the above options, two common situations can generate unintended consequences." (Seacoast Media Group)


Proposal Would Change Postretirement Benefit Accounting
Excerpt: "The International Accounting Standards Board (IASB) has published a discussion paper that would make a number of changes to the way postretirement benefits are accounted for on financial statements. The Board is now accepting comments on the changes, which could give rise to a higher assessment of liabilities and increased volatility in financial statements." (Watson Wyatt Worldwide)


U.K. Recommendations Could Have Significant Effects on Pension Accounting Worldwide
Excerpt: "Recent recommendations by the U.K. Accounting Standards Board (ASB) could have significant effects on pension accounting worldwide if the International Accounting Standards Board (IASB) and U.S. Financial Accounting Standards Board (FASB) follow the same line of reasoning. The ASB's recommendations would substantially increase the reported pension liabilities that appear on the balance sheet." (Watson Wyatt Worldwide)


Fact Sheet on Benefit Cutbacks in Single Employer Plans
Excerpt: "Starting in 2008 some underfunded pension plans sponsored by a single employer will be subject to restrictions on benefits. These benefit restrictions were implemented by the Pension Protection Act of 2006 (PPA), which Congress passed to shore up the funding of traditional private sector defined benefit pension plans. This fact sheet explains the four basic benefit restrictions under the PPA for single employer plans and the underfunding levels that trigger each restriction." (Pension Rights Center)


Fact Sheet on Benefit Cutbacks in Multiemployer Plans
Excerpt: "Under the PPA, multiemployer plans that are significantly underfunded are given an exception to the anti-cutback rule's protection for already-earned subsidized early retirement and survivors benefits. If certain procedures are followed, plans in 'critical status', can eliminate the entire subsidized early retirement benefit (and/or subsidized survivors benefits) for workers who have not yet retired. Workers will still get all earned benefits if they wait to collect the pension until normal retirement age, usually age 62 or 65, but the pension will be reduced (typically by 6 percent a year) if collected at an earlier retirement age." (Pension Rights Center)


How to Determine Whether a Pension Plan Is in Trouble
Excerpt: "The information for each plan comes from the most recent annual report -- Form 5500 -- filed with the Department of Labor. These forms are free and available to the public on www.freeERISA.com. . . . We analyzed Form 5500 data for the 20 largest single employer plans (company plans) and the 16 largest multiemployer plans (union plans), as listed by a major financial magazine." (Know Your Pension)


Overview of The Wall Street Journal's Retirement-Planning Guide
Excerpt: "This guidebook is . . . a blueprint for building a successful retirement. We'll show you how the various pieces -- retirement savings, Social Security, relocation, new careers, volunteer work, estate planning, health care, leisure and more -- come together as you create your plan for a personally fulfilling retirement." (The Wall Street Journal)


The Trajectory of Wealth in Retirement (PDF)
Excerpt: "As the baby boomers begin to retire, a great deal remains unknown about the evolution of wealth toward the end of life. In this paper, we develop a new measure of household resources that converts total financial, nonfinancial, and annuitized assets into an expected annual amount of wealth per person. We use this measure, which we call 'annualized comprehensive wealth' to investigate spend-down behavior among older households in the Health and Retirement Study." (David A. Love, Michael G. Palumbo, and Paul A. Smith via Center for Retirement Research at Boston College)


The Florida Teachers' 'Model Retirement Plan' Deserves Praise
4 pages. Excerpt: "All Florida school districts must change their tax-deferred retirement plans by Jan. 1, 2009. That requirement created a window of opportunity to solve a long-standing problem and ensure that teachers get a far better deal on retirement funds than they are currently getting. . . . Now, for the first time, the collective purchasing power of the state's 350,000 school workers has been brought to bear to drive down fees and get educators a better deal." (Tallahassee.com)


Defined Benefit Notice Suit Survives Challenge
Excerpt: "A federal judge in Texas has ruled that the statute of limitations clock has not expired for defined benefit plan participants' assertions relating to the required plan amendment notice." (PLANSPONSOR.com; free registration required)


Michigan Appellate Court Throws Out 401(k) Distribution Injunction
Excerpt: "A Michigan company fighting to block a 401(k) distribution to the firm's former purchasing agent accused in a corporate embezzlement scheme has lost a battle before a state appellate court." (PLANSPONSOR.com; free registration required)


Bankrup.tcy Appellate Panel Limits 401(k) Loan Deduction
Excerpt: "A 401(k) participant now seeking Chapter 13 bankrup.tcy protection may only deduct the balance she owes on two plan loans from her bankrup.tcy estate." (PLANSPONSOR.com; free registration required)


[Opinion] Employee Ownership: It's Good for Business -- and for the Soul
Excerpt: "Study after study has confirmed the fact that employee ownership helps companies be more productive, more competitive, and more profitable. In short, employee ownership is good for business. And that's a great thing. But there is something more that is at work in employee ownership companies. In the way they operate, and by their very nature, these companies tap into the universal human hunger for meaning, for the pursuit of a higher purpose -- one that transcends the drive for personal benefit. These companies generate outsized returns not only for the pocketbook, but for the soul." (The Beyster Institute)


[Opinion] Text of ICI Testimony Before Labor Department Regarding 401(k) Service Provider Proposal, April 2008
Excerpt: "ICI strongly supports disclosure rules for the 401(k) marketplace that will help assure that plan fiduciaries have all the information they need to make the decisions entrusted to them under ERISA. My testimony will address the features of the proposal that the Department should retain, and the features of the regulation that should be revised to achieve a more workable and useful disclosure regime." (Investment Company Institute)


[Opinion] Text of ASPPA Comments on Proposed Regulations Relating to Measurement of Assets and Liabilities for Pension Funding Purposes (PDF)
13 pages. Excerpt: "The American Society of Pension Professionals & Actuaries (ASPPA) appreciates this opportunity to comment on the proposed regulations regarding the measurement of assets and liabilities for pension funding purposes under Internal Revenue Code (Code) §430 as issued by the IRS and Treasury on December 31, 2007 (REG -139236-07) (Proposed Regulations)." (American Society of Pension Professionals & Actuaries)


[Opinion] How Immigrants Saved Social Security
Excerpt: "Immigration is good for the financial health of Social Security because more workers mean more tax revenue. Illegal immigration, it turns out, is even better than legal immigration. In the fine print of the 2008 annual report on Social Security, released last week, the program's trustees noted that growing numbers of 'other than legal' workers are expected to bolster the program over the coming decades. One reason is that many undocumented workers pay taxes during their work lives but don't collect benefits later." (The New York Times; free registration required)


[Opinion] Testimony of SPARK Institute before DOL Hearing on Proposed 408(b)(2) Regulations (PDF)
4 pages. Excerpt: "[F]ee disclosure in the retirement plan and investment industries is extremely complex due to the diversity of investment products, the diversity of service provider business models, the demands of plan sponsors to shift the administrative costs of their plans to participants, and the costs associated with gathering and presenting the information. We urge the Department to continue to take the lead in resolving these issues and to take deliberate and measured steps as it develops new rules and regulations." (The SPARK Institute)



Sponsored by: International Foundation of Employee Benefit Plans

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Banner ad for International Foundation of Employee Benefit Plans

Celebrate National Employee Benefits Day on April 2, 2008!

The International Foundation of Employee Benefit Plans is once again leading the celebrations for National Employee Benefits Day. This year the day has a special focus on health care literacy. The Foundation is encouraging those who are involved in employee benefits to use the day to educate themselves and their plan participants. Visit www.ifebp.org/benefitsday for free informational resources to help you plan your celebration!

(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] The International Implications of IRC §409A
Excerpt: "Deferred compensation arrangements issued by foreign-owned operations or by US companies with operations abroad were not originally exempt from the application of Internal Revenue Code §409A. However, under proposed and now final regulations issued by the Internal Revenue Service ('IRS'), there are exemptions that apply which are geared towards limiting the effect of §409A on non-resident aliens and US citizens or residents who participate in non-US plans." (Faegre & Benson LLP)


[Guidance Overview] Valuing Employee Stock Options for Closely Held Companies
Excerpt: "Until recently, non-public companies that granted options, warrants or other types of stock-based compensation to their employees were not typically required to determine values for these complex derivative instruments. Current financial reporting standards such as FASB Statement no. 123(R), Share-Based Payment, as well as recent federal tax law changes (IRC § 409A) are compelling companies to value these financial instruments using stock option valuation models developed for publicly traded stock options." (American Institute of Certified Public Accountants)


Some Companies Rethink Telecommuting Trend
Excerpt: "A few big promoters of home-based and mobile-office work arrangements, including AT&T, Intel, Hewlett-Packard and parts of the federal government, have called some home-based workers back to the office, causing some to quit. The callbacks are small and don't reflect a full retrenchment, but the factors at work - a push to consolidate operations, and the notion that teamwork improves when people work face-to-face - suggest other employers might follow suit as recession clouds loom." (The Wall Street Journal via The Maryland Gazette)




Newly Posted Events
(Post Yours!)

Written 403(b) Plans and How They Affect Contract Transfers - Webcast
Nationwide on April 16, 2008
presented by ASPPA and NTSAA



Newly Posted Press Releases
(Post Yours!)

PBGC Protects Pensions At Austin Company
Pension Benefit Guaranty Corporation (PBGC)

Schwab Sees More Employers Offering Roth 401k
Charles Schwab & Co., Inc.

ASPPA & CIKR Recommend Changes in Proposed 408(b)(2) DOL Regs
American Society of Pension Professionals & Actuaries (ASPPA)

401k Producer Services Attracts 200th Firm to Its Advisor Family
401k Advisors

Small Firm Workers Pick Large Firm Benefits; Couples Use Health Coverage Of Large-Firm Employed Spouse
Office of Advocacy of the U.S. Small Business Administration

401k to Replace Pension Plan at 3M
3M



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Retirement Compliance Specialist
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in CA

DC Implementation Manager
for Milliman
in TX

Pension Administration Assistant
for Taylor/Webster
in TN

Client Service Consultant
for Standard Insurance Company
in TX

DC Implementation Analyst
for Milliman
in TX

Human Resource Assistant Director
for 1199SEIU Benefit & Pension Funds
in NY

Retirement Plan Specialist (FT or PT)
for Diversified Investment Advisors
in DC, MD




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