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April 11, 2008

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.

Today's sponsor is International Foundation of Employee Benefit Plans

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Be Smart by Association with the International Foundation

Smart is not a permanent state of being. What's your maintenance plan? Take advantage of the education and information available through the International Foundation of Employee Benefit Plans, a nonprofit educational association, and find out why over 35,000 industry professionals like Larry Beebe rely on the Foundation to stay informed and educated. Make sure you have the most comprehensive information on health, pension and compensation issues. Be smart by association.

[Official Guidance] Text of Proposed IRS Regs on Determination of Minimum Required Pension Contributions for Single-Employer DB Plans (PDF)
70 pages. More regulations pursuant to Code section 430, enacted as part of PPA '06. From an IRS press release: 'The proposed regulations, together with three earlier sets of proposed regulations, enable plan sponsors to determine the contribution requirements that apply to their defined benefit plans under the new funding regime, including the application of the quarterly contribution requirements. Although the new funding rules are generally effective for plan years beginning on or after January 1, 2008, these regulations are proposed to be effective for plan years beginning on or after January 1, 2009. Plan sponsors, however, can rely on the proposed regulations for purposes of satisfying the minimum funding requirements for plan years beginning in 2008." (Internal Revenue Service)

[Guidance Overview] Should Nonprofits Switch from a 403(b) Plan to a 401(k) Plan Because of the Final 403(b) Regulations?
Excerpt: "With the new requirement for a 403(b) plan document starting in 2009, some nonprofits may be considering switching to a 401(k). 403(b) plans may be sponsored by nonprofits, public schools, or ministers. States, local governments and ministers do not have the ability to sponsor 401(k) plan in addition to a 403(b). This article is, therefore, directed at nonprofits that are not an agent or instrumentality of a state or local government and not created for the benefit of a minister." (Fort William LLC)

[Guidance Overview] With Active Participant Status -- Can You Deduct Your IRA Contribution?
Excerpt: "[I]f the individual is an active participant or married to an active participant, his eligibility for deducting a traditional IRA contribution depends on his modified adjusted gross income (MAGI) and tax filing status. The MAGI limits as they apply to the different tax filing statuses are [in the chart on the target page]." (

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated April 9, 2008, for Retirement Plans (PDF)
12 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding retirement plans. (Hewitt Associates)

[Guidance Overview] Who is Responsible for Collecting Delinquent Contributions?
Excerpt: "Recent Department of Labor (DOL) investigations have revealed agreements which attempt to relieve financial institutions acting as plan trustees of any responsibility for collecting delinquent employer and employee contributions. The investigations also revealed plan and trust document which are silent or ambiguous as to the responsibility for collecting delinquent contributions. In response to these findings, the DOL issued a Field Assistance Bulletin (FAB) 2008-01 in which it explained the DOL's position regarding the fiduciary responsibility for the collection of delinquent contributions." (SunGard Corbel LLC)

[Guidance Overview] New Multiemployer Pension Plan Funding Rules Begin Impacting Employers in April 2008
Excerpt: "Employers that contribute to a multiemployer pension plan should watch the mail for an important new notice that the plan's trustees will send if the plan's funded status is low enough to be considered 'endangered' or 'critical.' The notice is required by the Pension Protection Act of 2006 (PPA), 26 U.S.C. §432 and 29 U.S.C. §305, as supplemented by regulations the United States Department of Labor (DOL) proposed in late March, 2008, 73 Fed. Reg. 14417 and 15688. This e-alert briefly explains why the notice is being sent and the new obligations that the PPA imposes on employers, unions, and trustees who are involved with multiemployer pension plans in 'endangered' or 'critical' status." (Buchanan Ingersoll & Rooney PC)

DOL Sees 401(k) Fees and Fiduciary Compliance As Unfinished Business
Excerpt: "'The cost of investments and plan administration expenses can directly affect, in a dramatic way, retirement savings,' . . . . Fiduciaries and plan sponsors have also told the agency that, in some cases, they fully understand what they need to do to stay compliant, but service providers are sometimes reluctant to provide compliance information." (Employee Benefit News; free registration required)

The Evolution of Japanese Employer-Sponsored Retirement Plans (PDF)
16 pages. Excerpt: "This article examines the development of Japanese voluntary employer-sponsored retirement plans with an emphasis on recent trends. Before 2001, companies in Japan offered retirement benefits as lump-sum severance payments and/or benefits from one of two types of defined benefit (DB) pension plans. . . . Landmark laws passed in 2001 introduced a new generation of occupational retirement plans to employers and employees, creating three new DB plan designs and two new defined contribution types of plans." (U.S. Social Security Administration)

Effective Retirement Savings Programs: Design Features and Financial Education (PDF)
20 pages. Excerpt: "This article provides an overview of the literature on best practices for designing retirement savings plans and providing financial education in the workplace. These two elements are critically important considerations for plan providers. Both must be carefully constructed to maximize the effectiveness of an employer-sponsored retirement savings program in helping participants build adequate funds for when their working career ends." (U.S. Social Security Administration)

Close Program Allowing Pay and Pension, San Diego's Mayor Says
Excerpt: "A San Diego program that allows workers to collect pay and pension checks at the same time could close under a new legal strategy that Mayor Jerry Sanders hopes will save the city $8 million a year. The program would continue for 1,045 workers who already get the benefit, which allows their pension to be paid into a holding account with 8 percent interest guaranteed." (The San Diego Union-Tribune)

Critics Blast Boston Transportation Authority's Costly Pension Plan
Excerpt: "[MBTA] employees are allowed to retire after only 23 years of service, with full health insurance, and work elsewhere - including for the state - with no restrictions. Most state employees can't retire until they are 65 and are limited to where they can work afterwards. 'It appears to be the richest retirement program in America,' said Michael Widmer, president of the Massachusetts Taxpayer Foundation. 'There's no way we can afford the pension and health care benefits.'" (Boston Herald and Herald Media)

GAO Survey of Plan Sponsors on Fees and Other Plan Practices
Excerpt: "Given the increased congressional interest in 401(k) plan oversight, the U.S. Government Accountability Office (GAO), an agency of the Congress, is offering an opportunity to plan sponsors to provide input for a congressional study on 401(k) plan sponsor practices. . . . You can participate by logging in using a username and password of your choosing. Responses to this survey will not be associated with individual or company names, and no names will be used in any GAO report. However, after initially logging in, you will be prompted for your name and email address. A computer generated email confirming your username and password will be sent to the email address you provide. You will also be given the opportunity to discuss these issues with GAO in more detail if you so desire. You can fill out the survey or get more information by going to the Web site at" (; free registration required)

California Assembly Panel Passes State-Run IRA Proposal
Excerpt: "The bill envisions the Employment Development Department using its existing automated system for collecting payroll taxes to allow workers to have contributions deducted from their paychecks. CalPERS is renowned for its investing prowess, supporters say, and could use a contractor to service the accounts, such as mailing statements and maintaining a Web site. If the retirement system tapped into a large market, the big pool of investors would create economies of scale." (The Sacramento Bee)

Issue on the Way Knox County, TN Reported - or Failed to Report - Pension Contributions for Years
Excerpt: "[T]he county Finance Department, at the behest of pension board attorneys, began reporting employee pension contributions to the Internal Revenue Service as of July 1, 2007. . . . The change made county employees' mandatory 6 percent salary deductions for retirement subject to federal FICA taxes for the first time since the current defined contribution plan began in 1991. Essentially, it means that the pension payments now are counted as income, and taxed, for Social Security and Medicare benefits. The contributions are not subject to federal income tax." (Knoxville News Sentinel &

Critics Speak Against Pennsylvania Pension Calculation Proposal
Excerpt: "There appears to be little support for legislation that would exclude overtime pay from pension calculations for state employees hired after June 30. . . . Critics say any cost savings from the legislation would be insignificant. And they say the bill would penalize prison guards, nurses and other workers who work mandatory overtime." (AP via CBS Broadcasting Inc.)

[Opinion] ERIC Urges Solicitor General to Recommend Certiorari in AT&T Corp. v. Hulteen
Excerpt: "ERIC counsel John Vine of Covington & Burling LLP submitted April 9 a letter urging the Solicitor General of the United States, Paul Clement, to recommend the Supreme Court grant certiorari in AT&T Corp. v. Hulteen. The letter argues that Hulteen creates an important circuit split. The Ninth Circuit decision being appealed would require pension plans that did not provide for seniority and service credits prior to the enactment of the Pregnancy Discrimination Act (PDA) to retroactively apply such credits when calculating benefits." (The ERISA Industry Committee)

[Opinion] Triple-Dipping? Florida Retirement System Fatally Flawed
Excerpt: "Florida has no limit on the number of state pensions someone can get. And unlike states where it is illegal to receive a pension and return to the same public job and pay, Florida has no such law. Unlike states where it is illegal to work in the public sector in the same retirement system without giving up a pension, Florida has no such law. And prospects for the enactment of such a law appear dim in this legislative session. It looks like good old boys favoring good old boys." (Bradenton Herald)

Sponsored by: DATAIR Employee Benefit Systems, Inc.

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(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] Hewitt Federal Legislation Quick Guide Updated April 9, 2008, on Human Resources & Employment Law (PDF)
13 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding human resources and employment law. (Hewitt Associates)

S&P 500 Chiefs Get Big Boost in Pension Benefits
Excerpt: "Declines in annual performance-based bonuses and stock-option awards have cut into the rate of growth in CEO pay, according to a new report -- but pension benefits were up more than 25%." (; free registration required)

New York's Cuomo Broadens Pension Scam Inquiry
Excerpt: "Attorney General Andrew M. Cuomo has expanded his investigation into an alleged pension fraud scheme to include scores of lawyers and school districts accused of having bilked the state out of tens of millions of dollars in benefits." (The New York Times; free registration required)

The Human Rights Campaign Offers New Employer Resources on Pension Benefits for Same-Sex Partners
Excerpt: "The Human Rights Campaign Foundation's Workplace Project [] has released a new set of resources for employers to make their qualified retirement plans more inclusive for employees with same-sex partners or spouses. The group also released a sample proposal for organizations to use when advocating for 'grossing up,' a method by which an employer can increase employees' wages to offset the additional tax burden of enrolling a domestic partner for health insurance." (; free registration required)

Employee Ownership Update for April 10, 2008
NCEO Executive Director Corey Rosen discusses AECOM Technology Corp., a publicly traded company with a global employee ownership program; the impact of small ideas on a company; and the question of whether ESOP-owned companies can qualify for minority ownership status for federal Section 8(a) contract preferences if most of the beneficial ownership goes to qualifying minority employees. (National Center for Employee Ownership)

[Opinion] The Federal Taxpayers' Subsidy of Bill Clinton
Excerpt: "The Clintons' tax returns raise [an issue which] requires public discussion: The federal subsidy the Clintons have received over the last seven years while earning in excess of $100 million. Mr. Clinton's aggressive pursuit of post-presidential income is incompatible with the extensive public support he has received from federal taxpayers since leaving office. That public support was designed to preclude the nation's chief executives from facing financial hardship after their terms of office. It was not intended to subsidize the aggressive pursuit of a post-presidential fortune." (Oxford University Press USA blog)

Newly Posted Events
(Post Yours!)

Midwest Regional Conference
in Illinois on April 17, 2008
presented by Profit Sharing/401(k) Council of America (PSCA)

New Technology for HR Service Delivery and Communications Webcast
Nationwide on April 17, 2008
presented by International Foundation of Employee Benefit Plans

Washington Update by Brian Graff, Esp., APM
in Ohio on April 22, 2008
presented by ASPPA Benefits Council of Cleveland

Newly Posted Press Releases
(Post Yours!)

ERISA Advisory Council to Hold First Meeting of 2008
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Treasury, IRS Issue Funding Guidance for Single-Employer Defined Benefit Plans
U.S. Treasury Department and Internal Revenue Service

Who Does the Work When Employees Take FMLA Leave?
Society for Human Resource Management (SHRM)

I-Pension Announces Affordable 401k Investment Advice Service

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Defined Contribution/401(k) Administrator
for Boyce & Associates, Inc.
in AZ

Defined Benefit Consultant / Administrator
for Boyce & Associates, Inc.
in AZ

Retirement Plan Administrator
for Third-Party Administration and Consulting Firm, Northside Indianapolis
in IN

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