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April 14, 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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[Official Guidance] Text of Advisory Opinion 2008-04A: Use of 'Multinational Cross-Border Pooling Products'
Excerpt: "[DOL was asked w]hether proposed arrangements by a U.S. bank for maintaining the indicia of ownership of 'plan assets' held by foreign pooled investment funds would be in compliance with the requirements of ERISA section 404(b)." (U.S. Employee Benefits Security Administration)

[Guidance Overview] Proposed Regulations Governing Minimum Required Contributions to Single Employer Defined Benefit Plans
Excerpt: "The new regulations are proposed to be effective for plan years beginning on or after January 1, 2009, but plan sponsors may rely on them for plan years beginning in 2008." (CCH Incorporated)

[Guidance Overview] IRS Employee Plans News - Special Edition - April 2008 (PDF)
The Treasury Department and the Internal Revenue Service issued proposed regulations under section 430 of the Code that provide employers sponsoring single-employer defined benefit plans with guidance regarding the determination of minimum required contributions under the new funding rules enacted as part of the Pension Protection Act of 2006. (Internal Revenue Service)

[Guidance Overview] Cash Balance Conversions and Other 'Greater of' Formulas
Excerpt: "Guidance is expected to be issued that will allow separate testing with respect to cash balance conversions like the one analyzed in Rev. Rul. 2008-7 and other 'greater of' formulas under proposed regulations that will be effective for plan years beginning on and after January 1, 2009. Unfortunately, it is not clear what kind of 'greater of' formulas the IRS intends to approve in these regulations and it is possible that Rev. Rul. 2008-7 is a prequel to regulations that will only provide relief to 'greater of' formulas that satisfy narrow design criteria." (BNA Tax Management Inc.)

[Guidance Overview] Opening of Determination Letter Program for Employers Adopting Pre-Approved Defined Contribution Plans
Excerpt: "The IRS has advanced its cyclical determination letter program in Announcement 2008-23 by stating that it expects to begin issuing opinion and advisory letters for pre-approved defined contribution plans on March 31, 2008. Accordingly, employers relying on these pre-approved plans must adopt such plans by April 30, 2010. The Announcement also notes that the IRS will open the program to applications from employers adopting pre-approved defined contribution plans beginning on May 1, 2008." (BNA Tax Management Inc.)

[Guidance Overview] Proposed Regs on 401(k) Plan Fee Disclosure Require 'Considerably More Work,' EBSA Told
Excerpt: "In testimony at a March 31 hearing of the Department of Labor's Employee Benefits Security Administration (EBSA), Robert Chambers, a partner in the Charlotte, N.C., law firm of Helms Mulliss & Wicker, said that 'considerably more work is still required' on the proposed 401(k) plan fee disclosure regulations issued by EBSA. Mr. Chambers testified on behalf of the American Benefits Council." (Wolters Kluwer)

[Guidance Overview] DOL Weighs in on Fee Disclosure
Excerpt: "[Hecker v. John Deere, currently before the 7th Circuit on appeal from the Western District of Wisconsin] is notable not only for its speed in getting to an appellate review, but because is marks the debut of the Department of Labor's involvement as unofficial litigant in these fee disclosure cases." (Baker & Daniels)

The Retirement Consumption Puzzle: Actual Spending Change in Panel Data
Excerpt: "The simple one-good model of life-cycle consumption requires that consumption be continuous over retirement; yet prior research based on partial measures of consumption or on synthetic panels indicates that spending drops at retirement, a result that has been called the retirement-consumption puzzle. Using panel data on total spending, nondurable spending and food spending, we find that spending declines at small rates over retirement, at rates that could be explained by mechanisms such as the cessation of work-related expenses, unexpected retirement due to a health shock or by the substitution of time for spending." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full text)

Best Practices in Employee Campaigns: Helping Participants Prepare for Retirement (PDF)
7 pages. Excerpt: "One of the most effective communication tools is a targeted participant campaign. A campaign is a direct communication to a participant that asks for a specific, measurable response. Effective campaigns feature a distinct blend of art, science, imagery and text as well as a media mix that can rapidly evolve with technology. They can be conducted in person, electronically, or by mail and are most successful when they address specific behaviors and complement people's natural tendencies." (Massachusetts Mutual Life Insurance Company)

Generation X Glum on Retirement Prospects, According to Survey
Excerpt: "Baby boomers say they are worried about achieving a comfortable retirement, but a new study suggests Generation X is even more pessimistic. More than two-thirds of Americans aged 27 to 42 don't think they will ever be able to stop working, according to a survey published jointly on Monday by Scottrade and BetterInvesting." (Reuters via The New York Times; free registration required)

State of Rhode Island Would Set Municipal Workers' Pension Terms
Excerpt: "The General Assembly would set the terms of union pensions, taking negotiations away from cities and towns under a proposal set forth Friday . . . ." (WJAR - NBC 10)

Small Change in Pension Bill Could Make a Big Dollar Difference
Excerpt: "The House and Senate are trying to settle on a final bill for technical corrections to the Pension Protection Act. Most are minor, but one drawing fire centers on an accounting technique called smoothing." (Workforce Management; free registration required)

Many Veterans Missing Out on Pension Funds
Excerpt: "The Department of Veterans Affairs' Form 21-526 -- a combined application for compensation and/or pension -- has seven pages of instructions, five pages of personal information required, two pages of compensation criteria to review, three pages of dependency questions and four pages for the actual pension application. This is followed with five pages of authorization to release information forms and three pages of required online application criteria." (

AK Steel Appeals Surviving Spouses' Benefit Ruling
Excerpt: "AK Steel has appealed a ruling by a federal judge in Ohio that the company erroneously cut the pension benefits due to widows and widowers of AK Steel retirees." (; free registration required)

House Committee to Vote on Fee Disclosure Bill
Excerpt: "The House Education and Labor Committee is scheduled to vote on legislation to ensure that American workers have clear and complete information about fees that could be cutting into their 401(k)-style retirement savings on April 16." (; free registration required)

Texas Attorney General Shoots Down Plan to Shore Up Fort Worth Retirement Fund
Excerpt: "[A]ccording to Attorney General Greg Abbott's opinion, the Texas Constitution says cities cannot limit pension benefits that employees have already earned, the news report said. Therefore, the salary cap cannot be applied to employees who have already worked for the city long enough to be vested in their pensions." (; free registration required)

Northern Trust Gets Cross-Border Pooling OK from DOL
Excerpt: "Northern Trust has received an advisory opinion from the U.S. Department of Labor that it says clears the way for U.S. pension plan participation in cross-border pension pooling vehicles meeting certain requirements." (; free registration required)

Pension Lawsuit Could Cost Baltimore County $19M
Excerpt: "Baltimore County could be forced to dole out more than $19 million to pay back alleged 'excess' pension contributions to older employees, actuaries said. The estimate came in response to a federal age discrimination lawsuit filed against Baltimore County government for requiring older employees to make higher pension contributions than younger employees. The U.S. Equal Employment Opportunity Commission filed lawsuit in September claiming the county and six labor organizations discriminated against two named retired employees and others at least 40 years old." (The Examiner)

Rezko Trial Suggests Illinois Pension Fund Was Playground for Insiders
Excerpt: "Political fundraiser Antoin 'Tony' Rezko's fraud trial has thrown a spotlight on the $40 billion fund that pays the pensions of thousands of retired teachers." (AP via 2008 WorldNow and WQAD)

Chicago-Based Firm Charged with $25M in Pension Losses
Excerpt: "The U.S. Department of Labor today sued Chicago-based AA Capital Partners Inc., an investment advisory service, and its executives, accusing them of improperly causing more than $25 million in losses for five Michigan pension funds. The Labor Department alleges that the company and its executives misused plan assets to benefit themselves and charged the plans excessive investment-management fees." (Investment News; free registration required)

Bill Would Order CalPERS to Offer IRAs to All Californians Working in the Private Sector
Excerpt: "A bill in the state Assembly would require the California Public Employees' Retirement System, the mammoth pension fund for government workers, to offer individual retirement accounts for private-sector employees. The goal of the bill, AB2940, is to increase retirement savings among the vast number of people who have no plan at work and don't have the will or skill to open an IRA on their own." (San Francisco Chronicle)

A S.I.M.P.L.E. Retirement Plan
Excerpt: "The SIMPLE IRA is not expensive, it has no government testing, and can be easy to install. The SIMPLE IRA has to set up before October 1 of the current plan year. It has two basic setup options: Matching or Non-elective. These two options let each participant contribute up to $10,500 per year." (Zanesville Times Recorder)

New Jersey Law Changes Some Public Employee Retirement Benefits
Excerpt: "Last year a state retirement program similar to a 401(k) was created that will, over time, reduce the taxpayer-funded retirement cost for highly paid, elected and certain appointed public employees in New Jersey. By 2022, the state expects annual savings of $98 million in the pension system's multibillion-dollar fund." (Asbury Park Press)

[Opinion] ERIC Submits Comments on Funding Regulations
Excerpt: "ERIC submitted comments on proposed regulations regarding the measurement of assets and liabilities for pension funding purposes, highlighting primary issues on asset smoothing, ancillary disability benefits, identifying at-risk plans, publication of the full yield curve, and transition issues." (The ERISA Industry Committee)

[Opinion] The LaRue v. DeWolff, Boberg & Associates Decision: How It Affects You, What You Should Do, and Ruminations Regarding the Fractured Opinion
Excerpt: "The goal of this bulletin is to share our thoughts on what the decision means for plan sponsors and fiduciaries. At the end of the Bulletin, we offer our recommendations for plan sponsors, as well as some of our personal insights, and those of our colleagues, regarding the decision." (Reish Luftman Reicher & Cohen)

[Opinion] What Happens When ERISA and the Law of Insurance Coverage Collide?
Excerpt: "Wow, I guess this is really Seventh Circuit week here, with, I guess, a particular focus on the jurisprudence of Judge Easterbrook, whose opinion in Baxter I discussed in my last post. This time, I turn to his decision from Wednesday in Federal Insurance Co. v. Arthur Andersen, which strikes right at the intersection of the two subject areas in the title of this blog, insurance and ERISA." (Stephen Rosenberg of The McCormack Firm, LLC)

[Opinion] Stock Prices and Public Employee Pensions: A History in a Chart
Excerpt: "The chart shows the S&P 500 index for the start of March of each year, adjusted for inflation into current dollars, with some of the key pension deals over the years." (Room Eight)

Sponsored by: ASPPA

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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

Obama Wants Shareholders to Have Say in Executive Pay
Excerpt: "Democratic presidential candidate Barack Obama is prodding his populist economic message Friday by demanding that company shareholders have a say in how much executives get paid. Obama, in prepared remarks he planned to make to reporters Friday, says he wants Congress to pass legislation he has sponsored that would require corporations to have a nonbinding vote by shareholders on the compensation packages. Under Obama's legislation, shareholders could not veto a compensation package . . . ." (Associated Press WorldStream via NewsEdge Corporation via Human Resource Executive Online)

[Guidance Overview] The AMT and Stock Options: Taxpayers Continue to Lose in the Appellate Courts
Excerpt: "This 'substantially nonvested' exception to current taxation has been the subject of a substantial amount of litigation fueled by taxpayers' attempts to postpone the date of taxation so that subsequent stock losses can be recognized. One of the arguments posited by taxpayers in recent cases is that stock acquired through the exercise of stock options is 'substantially nonvested' if the company's insider trading policy prevents employees from trading the company's stock during certain blackout periods." (BNA Tax Management Inc.)

We've Had ERISA for Nearly 34 Years and DOL Has Had Mort Klevan; Interpreter of ERISA's Sometimes Ambiguous Provisions
Excerpt: "In October 1974, a month after ERISA was signed into law, he joined the DOL's Office of the Solicitor, charged with enforcing the law's fiduciary provisions. In the law's first five years, he and a handful of others wrote key regulations implementing the fledgling law. He also created the country's first course on ERISA's fiduciary rules at Georgetown University's law school, and helped educate generations of pension attorneys." (Workforce Management; free registration required)

Newly Posted Events
(Post Yours!)

"Social Security: How it Works and How to Fix it"
in Illinois on April 24, 2008
presented by The Center for Tax Law and Employee Benefits at The John Marshall Law School in Chicago

6th Annual Employee Benefits Symposium
in Illinois on April 25, 2008
presented by The Center for Tax Law and Employee Benefits at The John Marshall Law School in Chicago

Are You Ready For EGTRRA Restatements?
Nationwide on April 23, 2008
presented by

Cafeteria Plans for Rookies: Understanding the Rules and Learning to Play the Game Right
Nationwide on April 3, 2008
presented by Employee Benefits Institute of America (EBIA)/Thomson Tax & Accounting

Integrated Benefits Institute and National Business Coalition on Health's 2009 Health & Productivity Forum
in California on February 9, 2009
presented by National Business Coalition on Health

Integrated Benefits Institute and National Business Coalition on Health's 2009 Health & Productivity Forum
in California on February 9, 2009
presented by Integrated Benefits Institute

Providing Legal and Other Advice to Compensation Committees of Public Companies: Ethical and Professionalism Issues
in Illinois on April 22, 2008
presented by The Center for Tax Law and Employee Benefits at The John Marshall Law School in Chicago

The John Marshall Law School Inaugural Institute on the Ethics of Tax Law Practice
in Illinois on April 29, 2008
presented by The Center for Tax Law and Employee Benefits at The John Marshall Law School in Chicago

Newly Posted Press Releases
(Post Yours!)

RetirementWORKS,Inc. Announces New Website Offering Financial Planning for Retirees
Still River Retirement Planning Software, Inc.

The Wall Street Journal / Hay Group CEO Compensation Study Reveals New Patterns in CEO Pay
Hay Group

EBA&M Selects Benefit Informatics for Strategic Data Analysis and Reporting
Benefit Informatics

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401(k) Client Relationship Manager
for The Douglas Group
in CA, IL, NJ

401(k) Senior Plan Administrator
for Matthews Benefit Group, Inc
in FL

Vice President, Retirement Plan Services Sales, Emerging Markets
for JPMorgan Retirement Plan Services
in NY

Retirement Plan Compliance Analyst
for Paychex, Inc.
in NY

Pension Compliance Specialist
for CUNA Mutual Group
in WI

Benefits Project Specialist
for Prudential Financial
in NJ

Conversion/Installation Specialist
for Professional Capital Services
in PA

Senior Consultant / Client Services Manager
for Boyce & Associates, Inc.
in AZ

Transition Manager - Retirement Services
for MassMutual Financial Group
in MA

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