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April 25, 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.

[Guidance Overview] IRC Section 409(p) Anti-Abuse Testing, History of Regulations, and Private Letter Ruling (PLR) 200804023
Excerpt: "PLR 200804023 was published on January 25, 2008 and is the first 409(p) anti-abuse private letter ruling." (The One-Stop ESOP Blog)

[Guidance Overview] Overview: PBGC Implements Variable-Rate Premium Changes
Excerpt: "On March 21, 2008, PBGC published a final rule . . . that, among other things, implements the statutory changes to the variable-rate premium (VRP) that go into effect starting with the 2008 plan year. The final rule, according to PBGC, is 'nearly the same' as the proposed rule published May 31, 2007 . . . . This article briefly summarizes key provisions of the final rule . . . ." (Keightley & Ashner LLP)

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated April 23, 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] ERISA for Money Managers: A Practical Workshop (PDF)
13 pages. The target document is a presentation on Fiduciary Duty and Status, presented at the ERISA for Money Managers Workshop, April 17, New York. (Morgan, Lewis & Bockius LLP)

[Guidance Overview] ERISA - Erroneous Pension Estimates
Excerpt: "Where a plaintiff brought suit under the Employee Retirement Income Security Act, arguing that the defendant employer must pay him the amount of the erroneous benefit estimates he received before he left the defendant's employ instead of the lesser amount he was entitled to under the defendant's employee benefit plan, a judgment for the defendant must be affirmed because of the plaintiff's failure to show any fiduciary breach." (Lawyers Weekly, Inc.)

Participant Reaction and the Performance of Funds Offered by 401(k) Plans (PDF)
44 pages. Excerpt: "This is the first study to examine both how well plan administrators select funds and how participants react to plan administrator decisions. We find that on average administrators select funds that outperform randomly selected funds of the same type. When administrators change offerings, they choose funds that did well in the past, but after the change deleted funds do better than added funds. Plan participants react strongly to past performance in their allocation decisions. This accentuates the changes in allocation caused by returns. Participant allocations do no better than naive allocation rules such as equal investment in each offering." (Reish Luftman Reicher & Cohen)

Report on DOL Audit Activity
Excerpt: "I have always thought that it would be a great idea if someone could keep track of practitioners' 'war stories' about DOL and IRS audit activity in order to keep plan sponsors apprised of developments. Ilene Ferenczy has provided some great information about DOL audit activity going on in the Atlanta region in this email update entitled 'DOL Working Hard in the Atlanta Area to Ferret out Fiduciary Breaches.'" (Attorney B. Janell Grenier via

The 5% Guaranteed Minimum Withdrawal Benefit: Paying Something for Nothing? (PDF)
18 pages. Excerpt: "Retirees want products that insure they will not outlive income, have some inflation protection, and at the same time maintain flexibility and control. Annuities can offer such benefits, but individuals are often reluctant to annuitize assets. Two of the risks inherent in variable annuities -- the inability to leave an estate and the potential for low income led to the creation of a new product, the 5% Guaranteed Minimum Withdrawal Benefit (GMWB.) The GMWB product seems to offer everything that retirees are looking for." (TIAA-CREF Institute)

Defined Contribution Pension Plans in the Public Sector: A Best Practice Benchmark Analysis (PDF)
46 pages. Excerpt: "The purpose of this paper is to examine best practices for the design of public sector defined contribution pension plans that are intended to be the primary or core source of retirement benefits. The best practices are established from the perspective of providing adequate and secure retirement income as the appropriate primary objective of these plans." (TIAA-CREF Institute)

Table on Pension Sponsorship and Participation, 1979-2006
Microsoft Excel Worksheet. (Center for Retirement Research at Boston College)

Reform Options for Social Security
Excerpt: "The most prominent options for improving Social Security's financial picture are described in this AARP Public Policy Institute Insight on the Issues, with a focus on improving the funding status of Social Security over the next 75 years. The 14 reform proposals fall into three broad categories: raising revenues, reducing benefits, and investing part of the trust fund assets in equities or corporate bonds." (AARP)

Connecticut Senate Passes Universal 401(k) Bill
Excerpt: "The Senate Democrats' universal 401(k) retirement savings plan is advancing through the legislature, despite unanimous opposition from Senate Republicans who say the bill is flawed. The legislation passed on a 22-11 vote Thursday. It now awaits a vote in the House of Representatives. The bill authorizes the state comptroller to seek a third party to establish the first-in-the-nation, state sponsored 410(k) plan for small businesses." (NewsDay)

The Struggle to Determine the Best Way to Benchmark Asset Allocation Funds
Excerpt: "Panel members at PLANSPONSOR's 2008 Future of Asset Allocated Funds Conference in Newport Beach, California, offered suggestions sponsors can use for building and maintaining workable benchmarks for their asset allocation solutions. [Audio file of panel discussion is available on the target page.]" (; free registration required)

TIAA-CREF Publishes 403(b) Guide for Plan Sponsors
Excerpt: "TIAA-CREF has released a guide to new 403(b) regulations. A news release said the publication, '403(b) Plan Fundamentals - Your Guide to Compliance,' includes: At a Glance - An overview of new rules, plan sponsors' responsibilities, and a checklist for compliance; The Details - In-depth information about plan documents, non-discrimination requirements, loans and distributions, information sharing agreements, plan documents, contribution limits, Form 5500 and the Employee Retirement Income Security Act (ERISA), and fiduciary liability; and Resources -- Frequently Asked Questions, a glossary, and reference materials.' (; free registration required)

One-Fourth of Americans Have Dipped into Retirement Savings Prematurely
Excerpt: "A new Wall Street Journal Online/Harris Interactive Personal Finance Poll indicates about one-quarter of adults who are actively planning for their retirement have prematurely withdrawn money from their retirement savings. According to a press release on the survey results, the most common reasons for premature withdrawals from retirement investment products are a family member losing a job and a down payment on a home." (; free registration required)

[Opinion] Are We Professionals Ruining Defined Contribution Plans?
Excerpt: "Even when some of us tried to find out the true cost of our plans, we were met by an industry response that it was [none] of our business or that the prospectus contained everything we needed to know. Until what we all knew was going on privately became public, it was all business as usual." (Pension & Benefits Blog)

[Opinion] CBO's Letter on Investment Policy Recently Adopted by the Pension Benefit Guaranty Corporation (PDF)
6 pages. Excerpt: "The effect on taxpayers of the change in PBGC's investment strategy depends on assumptions about future premiums and benefits and expectations about the government's ultimate responsibility to covered retirees." (U.S. Congressional Budget Office)

[Opinion] CBO Director's Blog on April 24 Letter Issued on Pension Benefit Guaranty Corporation
Excerpt: "CBO issued a letter today reviewing a new investment policy recently adopted by the Pension Benefit Guaranty Corporation (PBGC). As part of its analysis, CBO reviewed the assumptions underlying PBGC's decision and assessed the revised policy's potential for affecting the corporation's ability to meet its obligation to retirees and for increasing costs to taxpayers." (U.S. Congressional Budget Office)

Sponsored by: SunGard

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Banner ad for SunGard

SunGard's Document Management Services (DMS)

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.

Call today. 800-326-7235, ext. 1100, or visit

(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 23, 2008, on Human Resources & Employment Law (PDF)
15 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)

Text of Corporate Executive Compensation Accountability and Transparency Act, S. 2866 (PDF)
24 pages. Excerpt: "To require greater disclosure of senior corporate officer compensation, to empower shareholders and investors to protect themselves from fraud, to limit conflicts of interest in determining senior corporate officer compensation, to ensure integrity in Federal contracting, to close corporate tax loopholes utilized to subsidize senior corporate officer compensation, and for other purposes." (American Benefits Council)

SSA's Annual Statistical Supplement, 2007
Printed copies of this document are scheduled for release in mid-May 2008. (U.S. Social Security Administration)

When Does an Employer Have an ERISA Plan?
Excerpt: "Many employers might assume that an ERISA plan is not created until they actually set up a plan, write a plan document and take formalized steps to create a plan. However, this is not necessarily the case. Employers need to be cautious when establishing an employee benefits program as they can inadvertently create an ERISA plan or find themselves in a situation where a common 'ongoing administrative scheme' can be construed to be an ERISA-governed benefits plan." (Aiken & Aiken)

Newly Posted Events
(Post Yours!)

Ask the Experts: A Public Plan Option Under Health Reform - Webcast
Nationwide on May 1, 2008
presented by Kaiser Family Foundation

Fixing the Most Common 401(k) Blunders: The Dirty Dozen
Nationwide on May 15, 2008
presented by SunGard Relius

Newly Posted Press Releases
(Post Yours!)

American Academy of Actuaries Appoints Grace Hinchman as New Executive Director
American Academy of Actuaries

A New Interactive Study Finds One Quarter of U.S. Adults Prematurely Withdraws Funds from Retirement Investment
Harris Interactive for the Wall Street Journal

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Flexible Benefits (Cafeteria) Plan Administrator
for Pension Planning Consultants, Inc.
in NM

Pension Plans Analyst
for Illinois Tool Works Inc. (ITW)
in IL

Pension Consultant/Administrator
for Third Party Administrators, Inc.
in NH

Institutional Services Employee Benefit Operations Administration Analyst II
for BB&T
in NC

Actuary - ASA
for MassMutual Financial Group
in CT

Enrolled Actuary
for Laiken Associates, Inc.
in NY

Retirement Plan Senior Relationship Representative
for Nollenberger Capital Partners
in CA

Senior Retirement Plan Administrator
for First Midwest Financial Services
in IL

Retirement Services Education & Enrollment Specialist
for Prudential Financial
in CT

Manager, Health and Welfare Operations
for Kindred Healthcare
in KY

Benefits Specialist
for St. Joseph's Healthcare System
in NJ

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