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April 8, 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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Rely on SunGard as your back office resource for EGTRRA restatements. If you have 500 or more retirement plan documents, turn to SunGard's expert DMS staff to cost-effectively create, amend and restate your plans. Outsource some or all of the processes you currently maintain in-house. Let us focus on your plan documents, so you can focus on growing your business.

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[Official Guidance] Disaster Relief Announcement 08-09 Relating to PBGC Deadlines in Response to Severe Storms, Tornadoes and Flooding in Arkansas
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the severe storms, tornadoes and flooding that occurred on March 18, 2008, in Arkansas." (Pension Benefit Guaranty Corporation)

[Official Guidance] Disaster Relief Announcement 08-08 Relating to PBGC Deadlines in Response to Severe Storms and Flooding in Missouri
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the severe storms and flooding that occurred beginning March 17, 2008, in Missouri." (Pension Benefit Guaranty Corporation)

[Official Guidance] Disaster Relief Announcement 08-07 Relating to PBGC Deadlines in Response to Severe Storms and Tornadoes in Georgia
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the severe storms and tornadoes that occurred on March 14, 2008, in Georgia." (Pension Benefit Guaranty Corporation)

[Official Guidance] Disaster Relief Announcement 08-06 Relating to PBGC Deadlines in Response to Severe Storms and Flooding in Illinois
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the severe storms and flooding that occurred on January 7, 2008, in Illinois." (Pension Benefit Guaranty Corporation)

[Guidance Overview] PBGC Issues Final 'Variable-Rate Premium' Regulations to Implement PPA Changes Effective for Plan Years after 2007
Excerpt: "The PPA did not change the variable-rate premium (VRP) rate: it continues to be $9.00 for each $1,000 (or fraction thereof) of unfunded vested benefits (UVB). However, the PPA repealed the 'full-funding exemption' and made certain other changes designed to conform the VRP to the new funding rules. These latter changes are the primary focus of the regulations." (Deloitte via

[Guidance Overview] Seventh Circuit Permits Baxter International, Inc. Plan Participants to Proceed with ERISA Action
Excerpt: "This case may reflect a trend toward an increase in ERISA litigation by plan participants seeking to hold plan administrators liable for losses based on alleged breach of fiduciary duty, especially as federal courts appear to be construing federal securities laws claims more narrowly and precluding many actions by investors under these laws." (Ford & Harrison LLP)

[Guidance Overview] Final PBGC Regulations for Calculating the Variable-Rate Premium also Revise Filing Deadlines
Excerpt: "In addition to having to pay a flat-rate, per-capita premium to the Pension Benefit Guaranty Corporation (PBGC),1 sponsors of single employer pension plans must pay a variable-rate premium (VRP), which depends on the value of their unfunded vested benefits. The Pension Protection Act of 2006 (PPA '06) changed the funding rules on which the VRP is based and eliminated the full-funding limit exemption from the VRP." (The Segal Group, Inc.)

[Guidance Overview] DOL Proposes Safe Harbor for Deposit of Small Plan Contributions and Clarification for All Plans (PDF)
2 pages. Excerpt: "The safe harbor will become effective on the date the final regulations are published in The Federal Register. However, the DOL will not assert an Employee Retirement Income Security Act (ERISA) violation prior to the effective date of the regulations so long as a small plan deposits contributions and loan repayments within the safe harbor period." (Holme Roberts & Owen LLP)

[Guidance Overview] Important Update on EGTRRA Restatements
Excerpt: "Employers who are entitled to use the 6-year cycle for pre-approved defined contribution plans must restate their plans by April 30, 2010 (See IRS Announcement 2008-23). This is also the date by which such employers need to submit their plans for determination letters, if desired. The submission of pre-approved plans is generally made using Form 5307." (SunGard Corbel LLC)

[Guidance Overview] 7th Circuit Applies Supreme Court's Decision in LaRue to Defined Contribution Overvalued Stock Lawsuit
Excerpt: "With the ink barely dry on the Supreme Court's opinion in LaRue v. DeWolff, Boberg & Associates, the 7th Circuit has applied it in deciding Rogers v. Baxter International Inc., No. 06-3241 (CA7 April 2, 2008). In Rogers, the 7th Circuit affirms the district court's denial of Baxter International's motion to dismiss, and remands the case to the district court for further action." (Pension Protection Act Blog)

[Guidance Overview] Distributing 403(b) Annuities, Part II: The 403(b) Plan Distributed Annuity
Excerpt: "[T]he new 403(b) regulations permit the distribution of a 'fully paid individual insurance annuity contract,' as a distribution option upon the termination of a 403(b) plan. We envision this as a particularly useful option in plans which are funded with individually owned annuity contracts, contracts over which the employer has little-if any-control. It gives the employer the ability to relinquish all of its obligations related to these pesky sorts of arrangements without having to actually force the distribution of funds from its terminating 403(b) plan. The regulations are silent, however, on just how these 'fully paid individual insurance annuity contracts' should be treated in the absence of an employer." (Baker & Daniels)

IASB Paper on Retirement Benefit Accounting Being Watched Around the World
Excerpt: "The IASB's decisions are being watched closely around the world as international convergence of accounting standards appears to be gaining ground in North America. This makes the future uncertain for the U.S. Financial Accounting Standards Board (FASB), and the standards they approve." (Watson Wyatt Worldwide)

Why Don't the People Insure Late Life Consumption? A Framing Explanation of the Under-Annuitization Puzzle (PDF)
12 pages. Excerpt: "Rather than attempting to rationalize the lack of annuity demand, this paper explores the idea that aversion to annuities is not a fully rational phenomenon. A large literature has documented behavioral biases in a wide range of activities that are important steps in the process of planning for retirement, including whether to participate in employer sponsored pension plans, how much to save, and how to allocate one's portfolio. To the extent that individuals exhibit biases in the wealth accumulation aspects of planning for retirement, it seems natural that similar biases might also extend to the wealth decumulation stage of retirement planning." (TIAA-CREF Institute)

As Economic Conditions Worsen on Wall Street and Main Street, Many Worry About Running Out of Money
Excerpt: "Many people who have left the work force have probably realized their fixed income investments aren't yielding as much income as they expected, and if they need to close that gap by selling other investments at lower prices they will damage their long-term wealth and worsen the problem." (Pittsburgh Post-Gazette)

'You're on Your Own,' IRA Guru Ed Slott Tells Boomers in Response to Treasury's Plan
Excerpt: "The 218-page financial makeover plan outlined Monday by Treasury Secretary Henry Paulson offered several short-, intermediate- and long-term proposals for regulatory change plus a greater role for the Federal Reserve as a sort of financial markets supercop. If there are flaws in the plan -- and critics have plenty of favorites -- Slott said one of the biggest is that the plan does not adequately encourage savers to use individual retirement accounts or other plans to make up financial shortfalls caused by expected increasingly lean pension and Social Security benefits." (The Kansas City Star)

Pension Turbulence for Airline Employees
Excerpt: "It's not just the airline industry. Across the United States, companies feeling the squeeze from low-cost foreign competition, new technology, rising oil prices, recession and changing consumer patterns -- ranging from Rust Belt steel, textile and auto parts makers to white-collar insurance giants -- have found that when they need to save money, their 'legacy' defined benefit pension plans are one of the most convenient places to cut. [This article is adapted from 'Pension Dumping: The Reasons, the Wreckage, the Stakes for Wall Street,' by Fran Hawthorne (Bloomberg Press, April 2008).]" (NewsDay)

Retirement Planning: Most People Don't Know How Nor Even Think About It (PDF)
2 pages. Excerpt: "Worldwide, individuals are being asked to make more of their own savings and investment decisions, especially for retirement. In the US and Europe, for example, there has been a switch from defined benefit pension plans . . . to defined contribution pension plans . . . . Research by Wharton insurance and risk management professor Olivia Mitchell and Singapore Management University finance professor Benedict Koh -- on cost structures of investment offerings in Singapore's Central Provident Fund -- shows, however, that people are not well-equipped to handle such investment decisions." (Singapore Management University / Wharton School of the University of Pennsylvania)

Oklahoma State Pension's Retirement Benefit Loophole Shut
Excerpt: "Members of a House committee voted Thursday to close a loophole that allows some state workers to obtain greater retirement benefits than they ever earned in monthly pay as a state employee. Senate Bill 1641 would ensure that elected officials will not receive retirement benefits 'greater than their single highest annual compensation received as a member of the Oklahoma Public Employees Retirement System.'" (

New York's 'Public Pension Bomb' Ticking Away As Municipalities Face Skyrocketing Payments to Statewide System
Excerpt: "Part of the problem, according to reform advocates, involves a system that allows many public employees to boost pensions by working vast amounts of overtime in their final year or years of service, on which their pensions are based." (The Buffalo News)

Walnut Creek, CA Part-Time Workers Have to Decide on Apple Program That Is Alternative to Social Security
Excerpt: "This month, about 175 part-time and temporary Walnut Creek employees must decide whether to continue contributing to Social Security or take an alternative retirement program. All new part-time and temporary employees who work less than 1,000 hours a year will have no choice: They will be enrolled in a deferred compensation plan that takes effect May 30." (Contra Costa Times)

Federal Judge Throws Out Part of RadioShack Stock Drop Suit
Excerpt: "A federal judge in Texas has thrown out part of case by 401(k) participants against RadioShack over whether the electronics retailer should have included company stock as a retirement plan investment option. U.S. District Judge Terry R. Means of the U.S. District Court for the Northern District of Texas ruled that participants had not put forth a strong enough case to overcome the legal presumption that it was prudent to include RadioShack stock as a 401(k) investment. However, according to the ruling, Means turned aside a demand to dismiss Employee Retirement Income Security Act (ERISA) fiduciary breach allegations over the employer selecting Putnam Funds as investment options." (; free registration required)

Those Caring for Both Parents and Children Put Off Saving
Excerpt: "Baby Boomers around the globe are being squeezed financially by simultaneously caring for their parents and their children, according to research from The Hartford Financial Services Group, Inc." (; free registration required)

New Jersey Can Skip Teacher Pension Payments
Excerpt: "The ruling by Superior Court Judge Linda Feinberg in Mercer County removes the threat that lawmakers, already grappling with a strained state budget, would have to find $2.6 billion to make up for pension contributions that have been skipped since 2003." (The Star-Ledger)

San Diego City Council Approves Pension Changes
Excerpt: "[During a 10-hour meeting, the city council] took one crucial action -- to accept pension changes that clear the way for the city retirement system to end nearly three years of tax troubles." (The San Diego Union-Tribune)

Key Insolvency Issues for Broker-Dealers, Custodial Banks and Counterparties to Repos, Swaps and Other Financial Contracts
Excerpt: "The recent volatility in the credit markets has led to many inquiries on how clients should protect their holdings with brokers and custodial banks, and how they can protect their financial contracts (repos, swaps, securities lending, etc.) in the event a counterparty becomes insolvent. This outline is provided as a general summary of the main insolvency issues involved in protecting these types of assets and contracts, but is not intended as legal advice." (Kirkpatrick & Lockhart Preston Gates Ellis LLP)

Video - Retirement Revolution
Excerpt: "Retirement Revolution is a groundbreaking two-part [PBS] documentary that takes a deep and comprehensive look at the financial challenges facing the Baby Boomer generation. The series, hosted by broadcast journalist Paula Zahn, eliminates fear, offers hope, and affirms that it's never too late to begin preparation for retirement." (Network Chicago, wttw11)

New York State Comptroller Says $500M of Pension Fund to Be Invested in 'Green' Technologies
Excerpt: "[T]he state's $154.5 billion pension fund will increase investments in 'green' technologies and renewable energy projects over the next three years." (The Business Review (Albany) via; free registration required)

Large Company Pension Plans Now Underfunded, According to a New Report from Mercer
Excerpt: "[L]arge corporations saw their pension plans lose a collective $70 billion off their combined funded status during the volatile first quarter. Adrian Hartshorn, a principal in Mercer's financial strategy group, pointed out that pension plans sponsored by S&P 1500 companies are now only 98% funded. That's down from a funded status of roughly 105% at the end of 2007." (Financial Week; free registration required)

[Opinion] Proposed State of Connecticut DC Plan Could Provide Meaningful Alternative in Small Plan Market
Excerpt: "The proposed State of CT defined contribution plan could provide a meaningfully superior alternative in the small plan market. It would offer both a 'real' competitive advantage to small businesses adopters in CT as well as benefit all small plan sponsors and participants by forcing existing plan providers to 'up their game' against a highly visible retirement plan alternative with a strong investment structure." (Fiduciary Investor)

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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

[Opinion] The Interaction of LaRue, Bruch, and MetLife v. Glenn
Excerpt: "The courts are already clogged with a myriad of litigation on countless subjects. It makes no sense to turn every benefit denial or administrative error immediately into a federal lawsuit without, at least, attempting to pursue participant rights through the administrative review process. If that process is not administered in an objective and responsible manner, then it should be reformed and its decisions will not be upheld by courts until it is." (Pension & Benefits Blog)

Benefits Interference Suit Given New Life by Federal Court
Excerpt: "A federal appellate court has reinstated an employee's lawsuit over whether his former employer fired him to avoid paying for his shoulder surgery. The 8th U.S. Circuit Court of Appeals threw out a ruling by an Arkansas federal judge dismissing Danny Fitzgerald's lawsuit against Action Inc. over an alleged violation of the Employee Retirement income Security Act (ERISA). The appellate panel sent the case back to the trial court for further proceedings." (; free registration required)

Workplace the Primary Financial Supermarket for Many
Excerpt: "A MetLife news release about its Annual Employee Benefits Trends Study, said the research found that the workplace has become the dominant starting point for building a strong financial safety net. Growing financial concerns among employees are also creating a greater interest in advice and guidance at the workplace." (; free registration required)

Newly Posted Events
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Calculating HR's Impact On The Bottom Line: Measuring Return On Investment From HR Initiatives
Nationwide on April 15, 2008
presented by

Deductibility of Performance-Based Compensation under IRS Code Section 162(m) - Webcast
Nationwide on April 10, 2008
presented by West LegalEdcenter

FMLA: Effective Strategies for Limiting Leave
Nationwide on April 23, 2008
presented by

Healthy, Wealthy and Wise?
in Vermont on April 28, 2008
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Trim the Fat and Shape Up Your Bottom Line: Weight Loss Programs that Work
Nationwide on April 28, 2008
presented by

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401(k) Plan Administrator
for Pollard & Associates, Inc.
in MD

Assistant 401(k) Administrator
for Pollard & Associates, Inc.
in MD

Retirement Plan Specialist
for Growing TPA Firm
in IL

Retirement Plan Services Administrator
for Associated Bank
in MN, WI

Trust Department Business Analyst
for New York Life Retirement Plan Services
in MA

Second Shift Retirement Plans Service Center Supervisor
for New York Life Retirement Plan Services
in MA

Client Service Consultant - Regional
for Standard Insurance Company
in CA

Client Employee Benefits Advisor
for Morgan, Lewis & Bockius LLP
in PA

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