Retirement Plans

To BenefitsLink home page Fill your job openings fast on!
Search Earlier Newsletters:

Sort by date
Sort by closest match

May 1, 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.

(Click on company name or banner to learn more.)
Banner ad for DATAIR Employee Benefit Systems, Inc.

PPA '06 Defined Benefit Software from DATAIR

DATAIR's Defined Benefit System for Valuations, Discrimination Testing, and Proposals. Includes 412(e)(3) insured plans, Cash Balance Plans, DB/DC combos and Sole Proprietors. Live, expert support.

DATAIR's PPA '06 DB System includes

  • Funding Target & Target Normal Cost (3 Rate Segments)
  • Effective Interest Rate
  • Section 430 Minimum Contributions
  • Section 404(o) Cushion Amount
  • Shortfall Amortization Bases and Amounts
  • Funding Target Attainment Percentages (FTAPS)
Contact or call 1-888-328-2474 (1-888-DATAIR-4)

[Guidance Overview] Contribution Timing and Collection Responsibility, a Q&A
Excerpt: "When must 401k deposits be made? Who's responsible when contributions are not made? The Department of Labor is flexing its regulatory and advisory muscle to clarify any misunderstanding that may exist and at the same time is asking the benefit's community to suggest alternative solutions." (James Farley via

[Guidance Overview] Use of Credit Balance to Satisfy Quarterly Contribution Requirements May Have Unintended Consequences
Excerpt: "The IRS's proposed regulations require the plan sponsor to elect to use the credit balance to satisfy a quarterly contribution requirement. The preamble to the proposed regulations asks for comments on whether rules should be provided under which a plan sponsor is deemed to make an election to use a credit balance to the extent available to avoid a failure to make a required quarterly contribution." (Deloitte via

Pennsylvania State Employees' Pension Hikes Could Cost Taxpayers $10 Billion
Excerpt: "A multibillion-dollar bill to increase pension benefits for some 250,000 retired state workers and teachers advanced out of a Pennsylvania House committee on Tuesday. The State Government Committee voted unanimously to send to the floor a bill that would provide increases ranging from about 2.7 percent for the most recently retired to 25 percent for those who retired before July 1990. The estimated cost is $10.4 billion over 20 years, but an actuarial analysis should produce a more precise figure." (AP via Pittsburgh Tribune-Review)

Bonds Making Comeback, As States and Cities Bet They Can Use the Proceeds to Help Fill Deficits in Retirement Funds
Excerpt: "With the economy slowing and states facing budget deficits that Standard & Poor's says will top $30 billion next year, officials are turning to the quick fix of borrowing even though the $50 billion of pension bonds sold produced mixed results for taxpayers. New Jersey sold $2.8 billion of the debt in 1997 and its pension gap has since ballooned to 10 times that amount. 'It's the dumbest idea I ever heard,' said New Jersey Governor Jon Corzine, the Democrat and former chairman of investment bank Goldman, Sachs & Co. `'It's speculating the way I would have speculated in my bond position at Goldman Sachs.'" (Bloomberg)

Study Shows Tougher Retirement Road for Middle Class
Excerpt: "Despite recent academic studies suggesting the vast majority of Americans will have adequate retirement income, BGI officials found a broad swath of American employees face significant cuts in their expected retirement income once adjustments for health care and the value of home equity are made." (Workforce Management; free registration required)

Text of ''Incentives for Older Workers Act'' (PDF)
14 pages. Excerpt: "To improve the employability of older Americans." (U.S. Senate via American Benefits Council)

Official Summary of 'Incentives for Older Workers Act' (PDF)
2 pages. Excerpt: "Under this proposal, the average compensation taken into account under a defined benefit plan may not be reduced by reason of a participant's phased retirement. More specifically, the proposal would apply to any participant in a defined benefit plan (1) who has attained age 50 or 30 years of service, (2) who begins working on a reduced schedule or with modified responsibilities, and (3) whose compensation is reduced by reason of such reduced schedule or modified responsibilities." (U.S. Senate via American Benefits Council)

Federal Thrift Savings Plan Wants Agencies to Automatically Enroll New Employees
Excerpt: "The board, which oversees the TSP, is proposing legislation that would permit the automatic enrollment of new employees, with 3 percent of their basic pay deducted for investment in the savings program." (The Washington Post; free registration required)

Gold May Glitter, but It Doesn't Stack up as a Long-term Investment
Excerpt: "Although it dipped to just under $900 late in April, it has had a tremendous run, up from $350 five years ago. What has driven these price gains? What does gold tell us about the economy's future? Should ordinary investors buy it? In fact, gold has not been a good long-term investment. The previous peak was about $850 an ounce in 1980. Anyone who had squirreled some gold coins or jewelry away in a safety deposit box back then would have made next to nothing over 28 years. Indeed, with inflation factored in, gold has lost value over that period." (Wharton School of the University of Pennsylvania)

Author Roger Lowenstein Says Aging Boomers Plus Paltry Savings Make for a Coming Crisis
Excerpt: "In his latest book, While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego and Loom as the Next Financial Crisis, journalist Roger Lowenstein explores America's deeply flawed retirement system. He talked with U.S. News about solving this major economic conundrum." (U.S. News & World Report)

Senate Aviation Policy Debate Begins With Scrap Over Airline Pension Benefits
Excerpt: "Majority Whip Richard J. Durbin , D-Ill., and Texas Republican Kay Bailey Hutchison were trying to delete a provision in the Senate bill that would prohibit airlines from continuing to count past contributions when calculating compliance with a requirement to fund defined-benefit plans at 80 percent of their future payout obligations." (Congressional Quarterly Inc.)

Twenty States Have Passed, or Are Considering, Divestment Laws, for Pension Funds
Excerpt: "Divestments will, however, hurt U.S. taxpayers if Iran-tainted stocks are sold at depressed prices. Fund managers at CalSTRS predict that its substitute non-Iranian stocks will yield $200 million a year less in returns. This year, from the 20 states enacting legislation, $8 billion in total divestment can be expected with $70 million in transaction costs. Any losses will be borne by taxpayers, who are on the hook for public employee pensions." (

New Hampshire Retirement Rescue Plan Fast-Tracked
Excerpt: "The Senate version of the House's reform bill will give annual 2.5 percent cost-of-living adjustments (COLAs) to all New Hampshire Retirement System retirees on July 1. The increase would apply only to their first $30,000 in annual pension payments. Retired workers who make more than $30,000, about one third of all NHRS pensioners, would see a $750 increase next year." (Union Leader)

West Virginia Teacher and School Employee Groups Want Extension on Pension Change
Excerpt: "Judy Hale, president of the West Virginia Federation of Teachers, said the groups need additional time to counter confusion and misinformation about the transfer election. 'We wanted to impress upon the governor all the issues that are out there, which are why people are so hesitant and reluctant to go ahead,' she said. Her group and the West Virginia School Service Personnel Association asked Manchin for a two-week extension on the May 12 deadline for Teachers Defined Contribution participants to decide whether to switch to the Teachers Retirement System." (The Charleston Gazette)

In Debate Over 401(k) Fee Disclosure, Some Say Retirement Savers Are Being Sold Short
Excerpt: "What is known is this: Many want a law that strikes a balance between the cost and benefits of disclosing administrative, investment, transaction and other types of fees to the 50 million workers who are contributing to a 401(k) plan. The law must be crafted, experts say, such that the fee disclosure is not onerous for employers, yet is still meaningful for workers." (MarketWatch)

The Future Shock of Retirement - Picture Bleaker Than Suggested by Recent Research (PDF)
24 pages. Excerpt: "Specifically, the surprisingly benign outlook for American retirement stability depicted in some recent academic literature is predicated on an assumption that current costs and benefits remain stable in the future. We find this assumption unrealistic based on our survey of the state of American retirement as represented by government programs, corporate pensions, and personal savings. [This article is forthcoming in the Fall 2008 issue of The Journal of Investing, printed here with permission from Institutional Investor Journals.]" (Barclays Global Investing)

Economy Slowing Down 401(k) Contributions
Excerpt: "Due to the current economic climate, 8% of investors have halted or reduced their contributions in 401(k) plans in recent months, according a study to be released next week. The study from Cogent Research LLC of Cambridge, Mass. showed that 57% of respondents are worried about maintaining their current standard of living." (Investment News; free registration required)

[Opinion] The Great Disconnect in the ERISA Statutory Scheme
Excerpt: "A highly disturbing fact is that many plan sponsors fail to discharge their ERISA section 404(a)(1)(A) duties because they don't know about--much less understand--the total economic impact that the hodgepodge of both 'visible' costs (e.g., the annual expense ratio of mutual funds) and 'invisible' costs (e.g., the bid-ask spreads of mutual funds) can have on the account balances of the participants in the plans provided to them by the sponsors." (Morningstar)

Sponsored by: ASPPA

(Click on company name or banner to learn more.)
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

[Official Guidance] IRS Announcement 2008-44: No Penalty for Withdrawing Stimulus Payment That Was Deposited Directly Into IRA, HSA or Similar Accounts (PDF)
4 pages. Excerpt: "The account specified by the taxpayer could be a checking or saving account, or an account that is given favorable tax treatment under the Code, such as an IRA, a health savings account (HSA), an Archer MSA, a Coverdell education savings account (CESA), or a qualified tuition program account (QTP or section 529 program) . . . . An individual may withdraw from a tax-favored account an amount less than or equal to the amount of the Economic Stimulus Payment directly deposited into such account, notwithstanding any restrictions in the Code. To the extent that the withdrawal is made no later than the time for filing the taxpayer's income tax return for 2008, plus extensions (or in the case of a CESA, the later of May 31, 2009, or the time for filing the taxpayer's income tax return for 2008, plus extensions), the amount withdrawn is treated as neither contributed to nor distributed from the account. Thus, the amount withdrawn will not be subject to regular federal income tax nor to any additional tax or penalty under the Code." (Internal Revenue Service)

[Guidance Overview] DOL Guidance on Compliance for Wellness Programs and Safe Harbor for Deposit of Employee Contributions
Excerpt: "The Department of Labor recently issued guidance on two issues that will help many employers navigate its regulations." (Winston & Strawn LLP)

[Guidance Overview] Economic Stimulus Payments to IRAs/Health Savings Accounts Can Be Withdrawn
Excerpt: "According to Announcement 2008-44, if the taxpayer withdraws the payment 'no later than the time for filing the taxpayer's income tax return for 2008, plus extensions,' the amount withdrawn will be treated as 'neither contributed to nor distributed from the account.' Therefore, according to the IRS, 'the amount withdrawn will not be subject to regular federal income tax nor to any additional tax or penalty under the Code.'" (Attorney B. Janell Grenier via

[Guidance Overview] IRS Guidance on Deduction for Leased Employees' Meals and Incidental Expenses -- and Dismissal of 'Common Law Employee' Relevance
Excerpt: "The most recent travel and entertainment expense issue involves deductions for meals and incidental expenses as covered in IRC §274(d)(1). That provision dictates the substantiation required to use that deduction and IRC 274(n) generally limits that deduction to only 50 percent of meals and incidental expenses (M&IE) actually incurred . . . ." (Deloitte via

SEC Sees Monster-ous Backdating Scheme
Excerpt: "The Securities and Exchange Commission today charged two former Monster Worldwide Inc. senior executives for their alleged participation in a scheme to secretly backdate stock options granted to thousands of company officers, directors and employees." (Investment News; free registration required)

[Guidance Overview] IRS Changes the Rules for Performance-Based Compensation
Excerpt: "Recent changes to the way in which the Internal Revenue Service (IRS) interprets 'performance-based compensation' under Internal Revenue Code (IRC) Section 162(m) have narrowed the types of arrangements that may be classified as performance-based and will require publicly-held companies to reexamine these arrangements or jeopardize the financial soundness of current tax and financial planning methodologies." (Littler Mendelson P.C.)

[Guidance Overview] Understanding the Option Dating Controversies
Excerpt: "The world of options, and equity compensation in general, operates within a number of different and often esoteric spheres of law, including corporate, securities, and tax law. Unfortunately, the rhetoric generated by this controversy has, in some cases, melded, obfuscated, or even obscured completely the applicable legal and practical issues. This article, one in a series, will attempt to explain the legal underpinnings of the option dating controversy, highlight a number of legal and practical issues faced by employers generally, and suggest best practices for ongoing equity compensation plans.' (International Foundation of Employee Benefit Plans via Blank Rome LLP)

Employee Ownership Update for May 1, 2008
NCEO Executive Director Corey Rosen discusses the NCEO's new survey of equity compensation practices in private companies and invites private companies to participate. He also recommends six principles for making messages stick (for example, in communicating an ESOP to employees). Finally, he addresses the impact of the ESOP repurchase obligation on valuation. (National Center for Employee Ownership)

Few States Hold All the Assets They Should to Pay for Future Retirement and Health Care Benefits
Excerpt: "Very few states hold all the assets they should have on hand to prepare for future retirement benefits. All states invest in order to meet future obligations, but even allowing for future investment return, some state trust funds hold less than half what they should. And a substantial number are below the 80 percent figure that the public retirement community regards as adequate. The Pew Center on the States recently estimated that state pension systems (not including locally run systems) are about $360 billion short of the assets they should ideally hold for future retirees." (State Legislatures Magazine)

Employers Lax in Managing Flexible Work Programs
Excerpt: "Employers are embracing flexible work arrangements as a way to meet the needs of a diverse workforce, but most have not structured their programs to maximize the benefits, Hewitt Associates found." (; free registration required)

[Opinion] Social Security and Medicare Projections: 2008
Excerpt: "The 2008 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached $101.7 trillion in today's dollars! That is more than seven times the size of the U.S. economy and 10 times the size of the outstanding national debt. The unfunded liability is the difference between the benefits that have been promised to retirees and what will be collected in dedicated taxes and Medicare premiums." (National Center for Policy Analysis)

[Opinion] Who, if Not Immigrants, Will Pay for the Baby Boomers' Retirement?
Excerpt: "Lost in the developed world's heated debate over immigration is a stark demographic reality: As their populations age over the coming decades, the United States, Western Europe, and vast swaths of Asia will grow increasingly dependent upon immigrants to join their workforces, prop up their economies, and help fund social welfare programs." (RAND)

Newly Posted Events
(Post Yours!)

2008 Web/Telephone Seminar: Conducting Your Own Compliance Audit
Nationwide on June 19, 2008
presented by Ascensus

2008 Web/Telephone Seminar: IRA Beneficiary Distributions
Nationwide on June 12, 2008
presented by Ascensus

2008 Web/Telephone Seminar: PPA Update
Nationwide on June 10, 2008
presented by Ascensus

2008 Web/Telephone Seminar: QRP Nonspouse Beneficiary Rollovers to Inherited IRAs
Nationwide on June 17, 2008
presented by Ascensus

2008 Web/Telephone Seminar: Roth 401(k)/403(b) Provisions
Nationwide on June 12, 2008
presented by Ascensus

401(k) Employee Communications and Enrollment Education
in Georgia on May 15, 2008
presented by WEB (Worldwide Employee Benefit Network) Atlanta Chapter

Consumer Driven Healthcare -- Is It Working?
in Illinois on May 22, 2008
presented by WEB - Chicago West

Newly Posted Press Releases
(Post Yours!)

Friedman Named General Counsel For The Segal Company
The Segal Company

U.S. Department of Labor Obtains Judgment Barring D.C. Attorney from Advising or Serving Employee Benefit Plans
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Relief for Stimulus Payments Withdrawn from IRAs and Tax-Favored Accounts
Internal Revenue Service (IRS)

For First Time, Participation in UnitedHealthcare Health Savings Accounts Exceeds Health Reimbursement Accounts
UnitedHealth Group

Investing In Turbulent Times: Alliance For Investor Education Highlights Eight Resources For Wary Savers and Investors
Alliance for Investor Education

Dave Thomas Foundation for Adoption Announces Top 100 Adoption-Friendly Workplaces in America
Dave Thomas Foundation for Adoption

America Saves Week Reaches Millions with Wealth-Building Messages
America Saves

UAL Shareholders to Vote on Executive Compensation
Association of Flight Attendants-CWA

We're one of the top 350 employment sites on the web!Newly Posted or Renewed Job Openings
(Post a Job | View All Jobs | RSS feed for jobs RSS Feed )

Manager of Compliance, Testing, & 5500
for Retirement Alliance, Inc.
in NH

Director, Client Interface Group
for Diversified Investment Advisors, Inc.
in MA

Field Account Manager
for Lincoln Financial Group
in IA, IL, KS, MN, MO

Senior Defined Benefit Calculation Analyst
for Constantin Control Associates
in NJ

Project Manager, Product Management
for Prudential Financial
in CT

Retirement Plan Administrator
for MidAmerica Administrative & Retirement Solutions, Inc.
in FL

Consultant TPA - Southeast
for Towers Perrin
in GA

for Swerdlin and Company
in GA

RPSS Compliance Specialist
for Associated Bank
in WI

Administrative Assistant/Trust Accountant
for The Nolan Company
in KS

Handy Links:

Subscribe to the BenefitsLink Health & Welfare Plans Newsletter, Too!

Sign-up form is at (free).

This newsletter is sent to you each workday except federal holidays.

This email has been published by:, Inc.
1298 Minnesota Avenue, Suite H
Winter Park FL 32789
(407) 644-4146
Fax: (407) 644-2151

David Rhett Baker, J.D., Editor

Copyright 2008, Inc.; except that you can forward this email in full (including this boilerplate part) or otherwise reprint this email in full (including this boilerplate part) without obtaining our permission.

Anyone can receive these emails; just have them sign up at this web page:

Other useful links: