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April 30, 2008

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


Today's sponsor is DATAIR Employee Benefit Systems, Inc.

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[Guidance Overview] In the Qualified Plan Industry, What Is a QOSA?
Excerpt: "Effective for plan years starting on January 1, 2008 and thereafter, the Pension Protection Act of 2006 has amended the joint and survivor annuity rules to require that a plan subject to such annuity requirements also offer a qualified optional survivor annuity (QOSA) to participants. The plan must also provide participants with a written explanation of the terms and conditions of the QOSA." (McKay Hochman Co., Inc.)


[Guidance Overview] Section 403(b) Plans for Tax-Exempt Employers - the Collective Bargaining Dilemma
Excerpt: "The 403(b) Regulations repeal a nondiscrimination safe harbor which was made available under Notice 89-23 to provide temporary relief with respect to the imposition of the qualified retirement plan nondiscrimination rules on all employer contributions (other than elective deferrals) and after tax contributions to 403(b) plans. As a result of such repeal, 403(b) plans will now be fully subject to minimum coverage testing under §410(b) and employer contributions to them will be subject to testing under §401(a)(4), or in the case of employer matching contributions, §401(m)." (Tax Management Inc.)


[Guidance Overview] Arthur Andersen Loses $25 Million in Insurance Coverage
Excerpt: "One-time accounting giant Arthur Andersen cannot recover $25 million in insurance coverage for its freelance settlement of $231 million with retirees who lost pensions in the firm's demise, a federal appeals court has ruled. The 7th U.S. Circuit Court of Appeals decision puts companies on notice that they cannot assume an insurer will consent to settlements, or that insurance policies covering fiduciary breaches can be stretched to cover a contract dispute." (Law.com)


[Guidance Overview] Guidance and Technical Corrections to the Default Investment Alternatives Regulations
Excerpt: "The U.S. Department of Labor's Employee Benefits Security Administration today announced publication of technical corrections to the final regulation on qualified default investment alternatives along with guidance to clarify the scope and meaning of the final rule." (ERISA Rules and Regulations)


Boeing's Labor Talks May Include DC Plan for New Employees
Excerpt: "Boeing Co. could drop defined benefit plan coverage for new employees represented by the International Association of Machinists and Aerospace Workers and possibly other unions, said Todd Blecher, a Boeing spokesman. The new IAMAW employees would be placed into a 401(k) or other type of defined contribution plan under a proposal that Boeing executives are considering in contract talks with the union." (Pensions & Investments)


Who Prefers Annuities? Observations About Retirement Decisions
Excerpt: "To find out [why most people do not choose annuities], Watson Wyatt Worldwide asked a national panel of older workers and recent retirees about their payout and risk preferences, retirement decisions and related issues. Our observations are based on the 2007 U.S. Surveys of Older Employees' and Retirees' Attitudes Toward Lump Sum and Annuity Distributions From Retirement Plans." (Watson Wyatt Worldwide)


Piercing the Monte Carlo Mystique in Retirement Income Planning (PDF)
6 pages. Excerpt: "This paper explains that the inherent, conceptual problems with Monte Carlo and other stochastic models that presuppose events are random, future probabilities can be known, and probabilities of success can be calculated, are not only inadequate for retirement income planning, but are possibly dangerous. It goes on to show that alternative approaches that are based on risk reduction and contingency planning are far more appropriate for this market." (Still River Retirement Planning Software, Inc.)


Presentation: Plan Litigation and Latest Trends in Equity Compensation
Presented at the NCEO/Beyster Institute Joint Annual Employee Ownership Conference in Chicago, Illinois, April 3, 2008. (Janich Law Group)


5 Mistakes That Will Sink Your Retirement
Excerpt: "If you're getting close to retirement, or are already retired, the right asset allocation is more important than ever. Sagging markets, combined with pulling funds out for living expenses, can really wreak havoc on your portfolio. At age 65, it's probably smart to put half your holdings in stocks or equity funds and the rest in cash and bonds, then slowly reduce equities to a third of your portfolio by the time you are in your 80s." (U.S. News & World Report)


Reliant Wins 2nd Stock Drop Case Ruling
Excerpt: "A federal judge was correct in dismissing a 401(k) participant's company stock suit because the plaintiff had not put on a strong enough case that a Houston energy firm had violated its fiduciary duties in handling the company stock fund, an appellate court has ruled." (PLANSPONSOR.com; free registration required)


ERISA Lawyers Likely to Seek More Fiduciary Breach Clarification
Excerpt: "In the months after the U.S. Supreme Court's ruling sanctioning fiduciary breach lawsuits by individual participants, lawyers are likely to turn their attention to defining the type of allowable recoverable losses and settling the issue of what are considered a participant's administrative remedies." (PLANSPONSOR.com; free registration required)


Lousy 401(k)? Lousy Economy? Get a Roth!
Excerpt: "From a pure tax standpoint, a Roth IRA is usually a better choice if you expect to be in a higher tax bracket when the time comes to make withdrawals. A pretax vehicle like a 401(k) or traditional IRA is a better option if you expect to be in a lower tax bracket when you retire. But if you've got a lousy 401(k) plan, the Roth IRA wins hands down, no matter how your tax situation is likely to shake out." (Money via CNNMoney.com)


Barclays' Retirement Forecast - Gloomy
Excerpt: "After revisiting the data from which many economists extracted a relatively benign retirement forecast for most Americans, Barclays Global Investors has come up with a grimmer prediction. 'Half of Americans will be one-quarter less well off in retirement than they realize,' said Matthew Scanlan, managing director and head of Americas Institutional Business at San Francisco-based Barclays Global Investors." (Investment News; free registration required)


[Opinion] Your Fiduciary Legacy (PDF)
4 pages. Excerpt: "In this latest piece, [Brooks Hamilton] admonishes plan fiduciaries to consider the legacy that they will leave, and provides some excellent suggestions for radiating 'caring conduct and honorable stewardship'." (Brooks Hamilton via MJM401k)


[Opinion] ASPPA Comments on Proposed Regulations Relating to Definition of 'Plan Assets' -- Participant Contributions (PDF)
5 pages. Excerpt: "The American Society of Pension Professionals & Actuaries (ASPPA) appreciates this opportunity to comment on the proposed amendments to the regulation defining when contributions that are made by participants in an employee benefit plan are 'plan assets' for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA) (the Proposed Regulation)." (American Society of Pension Professionals & Actuaries)


[Opinion] Financial Literacy and Post-Retirement Risks: An Actuary Speaks Out (PDF)
3 pages. Excerpt: "I hope that the readers of this article will work to bring stakeholders together to improve the post-retirement system. I would love to see workers improve their awareness of the variability of life spans and gain a general understanding of the options for timing of retirement and the implications." (Anna M. Rappaport via Contingencies)


[Opinion] The Real Truth About Defined Benefit Plans (PDF)
3 pages. Excerpt: "Consider, for example, the following 'surprising' statements: First, DB plans are more efficient (and, therefore, less costly) than DC plans in providing covered employees with comparable levels of retirement income. There are two components to the cost of any benefit program. By far, the largest component is the cost of the benefits themselves. The other is the cost of administration." (Eric Cerling via Contingencies)


[Opinion] American Benefits Council/ICI Comment Letter on Participant Contribution Regulation Safe Harbor (PDF)
3 pages. (American Benefits Council)



Sponsored by: ASPPA

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Banner ad for ASPPA

DOL Speaks: The 2008 Employee Benefits Conference

Do you represent plan sponsors, participants or possible both in today's retirement marketplace? If so, join colleagues and employees from the Department of Labor at this unique event designed to facilitate the open discussion of employee benefit issues facing our industry today. With its focus on current topics such as QDIA's, Investment Advice and Participant Disclosure, you do not want to miss your opportunity to be a part of this once a year collaborative event. Get additional information or register now.

(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] Severance Pay Under Section 415
Excerpt: "One of the major changes in the Regulations related to the necessity to include certain post severance compensation in the definition of Code §415 Compensation. Apparently, some plan documents (not McKay Hochman's) had previously been drafted to state that any amounts paid after separation of service (termination of employment), even regular pay, would be disregarded for all plan purposes. While this language was not wrong, the IRS/Treasury became concerned that some amounts of compensation that were actually earned during the participant's period of employment would be disregarded." (McKay Hochman Co., Inc.)


New Accounting Rules in Spain Introduce a Spanish Set of Generally Accepted Accounting Principles
Excerpt: "New accounting rules take effect for accounting periods beginning on or after January 1, 2008. While the rules for long-term employee benefits liabilities may on the surface seem similar to international standards, a few differences could force employers to explore whether their accounts will qualify as equivalent under the new rules and could affect the valuation and accounting of their defined benefit pension liabilities." (Watson Wyatt Worldwide)


Hearing on Leading by Example: Making Government a Role Model for Hiring and Retaining Older Workers
The page provides links to the Witness Testimony of Barbara Bovbjerg, Director, Education, Workforce and Income Security Issues, US Government Accountability Office; Robert Goldenkoff, Director, Strategic Issues, US Government Accountability Office; Nancy Kichak, Associate Director, Strategic Human Resources Policy, Office of Personnel Management; Thomas Dowd, Administrator, Office of Policy Development and Research, Employment and Training Administration, US Department of Labor; Max Stier, President and CEO, Partnership for Public Service; and, Chai Feldblum, Co-Director, Workplace Flexibility 2010. (U.S. Senate, Special Committee on Aging)


Flex-Time and Telecommuting on Par with Total Compensation in Weighing Job Offers
Excerpt: "Ft. Lauderdale-based IT search and staffing specialist, PROTECH, released the results of its fourth annual IT Professionals Survey in which flex-time and telecommuting tied total compensation as deciding factors in accepting a job offer from a prospective employer. The recent survey of technology professionals in Florida's Broward, Miami-Dade and Palm Beach counties had 544 respondents." (Business Wire via NewsEdge via Human Resource Executive Online)


House Passes Taxpayer Rights Bill, Including Provisions on IRAs and HSAs
Excerpt: "The House on April 15, 2008, passed H.R. 5719, The Taxpayer Assistance and Simplification Bill of 2008, this year's version of taxpayer rights legislation. Among the items included in the legislation are provisions affecting IRAs and health savings accounts (HSAs)." (Wolters Kluwer)


Australia Will Recognize Same-Sex Couples in Tax, Pension Laws
Excerpt: "The Australian government said today it plans to remove discrimination against same-sex couples from about 100 laws covering taxation, welfare and employment entitlements . . . ." (Bloomberg)




Newly Posted Press Releases

Newkirk "Profiler" Simplifies Targeting Participants
Newkirk

Rebecca Anne Batts Appointed PBGC Inspector General
Pension Benefit Guaranty Corporation (PBGC)

ExpertPlan Acquires Trust Service Company, Inc. (TSCI)
ExpertPlan

MetLife Launches New Patent-Pending Online Social Security Decision Tool to Simplify the Decision of When to Take Social Security Benefits
MetLife



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