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June 2, 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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Banner ad for DATAIR Employee Benefit Systems, Inc.

Software for Retirement and Cafeteria Plan Documents

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[Guidance Overview] Peru Grants Survivor Pensions to Common-Law Partners
Excerpt: "A recent court ruling in Peru gives common-law partners the right to receive a survivor pension under the public pay-as-you-go system." (Watson Wyatt Worldwide)

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated May 28, 2008, for Retirement Plans (PDF)
10 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] Seventh Circuit Rejects 'Reasonableness' as the Standard for Excessive Fee Claims Under Section 36(b) of the 1940 Act (PDF)
Excerpt: "The Seventh Circuit, in Jones v. Harris Associates, rejected the 'reasonableness' standard, as articulated in Gartenberg v. Merrill Lynch Asset Management Inc., for evaluating excessive fee claims under Section 36(b), the Investment Company Act of 1940 ('1940 Act'). In so doing, it highlighted a split among the circuits as to the appropriate test for analyzing excessive fee claims." (Sutherland Asbill & Brennan LLP)

[Guidance Overview] DOL Amends and Supplements Qualified Default Investment Alternative Regulation
Excerpt: "The Department has unofficially stated that these proposed regulations are just weeks away from issuance. As plans implement plan design choices regarding QDIAs, EACAs, and QACAs, it is likely that we will receive further guidance from the Department on the administration of these new plan features." (Trucker Huss)

[Guidance Overview] Questions from Plan Sponsors Re 408(b)(2)
Jason C. Roberts, Esq. answers plan sponsors' questions. (PPA Fiduciary Adviser Legal and Compliance Report)

[Guidance Overview] 403(b) Annuities from Employee Organization Are Not ERISA Plans
Excerpt: "The U.S. District Court for the Western District of Washington has ruled that an employee organization legally cannot establish or maintain a 403(b) plan under the Employee Retirement Income Security Act (ERISA)." (; free registration required)

[Guidance Overview] IRS Is Chasing Down Unfiled or Late Filed Forms 5500
Excerpt: "The IRS recently sent out a spate of letters to plan sponsors referencing late or missing Forms 5500, asking for the filings to be made and threatening that late filing penalties will be levied." (The Law Offices of Ilene H. Ferenczy, LLC)

Revenue Estimates and Retirement Policy (PDF)
40 pages. Excerpt: "This report explores the problem with cash-flow accounting for estimating the revenue costs of retirement savings proposals and shows how a present-value analysis similar to what is used to evaluate federal credit programs and in the president's budget for the preparation of tax expenditure estimates might provide a more accurate estimate of the long-term revenue effect of deferral proposals." (U.S. Chamber of Commerce)

Some Pension Sponsors Hitching Investments to Actual Liabilities Rather Than to Dreams of Huge Returns
Excerpt: "For years, companies have taken their cue from bull markets, hitching pension-plan assets to Wall Street's tail. Now, however, some are resetting their investment targets to 'market-based liabilities,' says pension-investment consultant Paul Morgan, rather than 'an expected return of 8 percent' or thereabouts." (

Defined Benefit vs. 401(k) Plans: Investment Returns for 2003-2006
Excerpt: "Watson Wyatt has been comparing rates of return between defined benefit (DB) and defined contribution (DC) plans for more than 10 years. This most recent comparison finds that between 1995 and 2006, DB plans outperformed DC plans by an average of 1 percent per year. Earlier studies also found that, over time, DB plans attained higher returns than did 401(k) plans." (Watson Wyatt Worldwide)

Overtime Eligibility Decision Not Intended to Reduce Company Match
Excerpt: "A federal judge in Minnesota has cleared an employer of Employee Retirement Income Security Act (ERISA)-related wrongdoing by classifying some employees as overtime exempt." (; free registration required)

Underfunded Pension Plans Could Cause Trouble for Ford, Goodyear
Excerpt: "Although almost half of the companies in the S&P 500 have underfunded pension plans, the shortfalls of two of them pose more of a threat to the corporations' future profitability than the gaps that others face, according to a new report from UBS. The pension plans at Ford and Goodyear are underfunded by roughly $3.3 billion and $1.5 billion, respectively, the largest pension shortfalls to market value ratio among S&P 500 companies." (The Kansas City Star)

Pensions' Dollars Shorted by Hedge Funds Have History on Side
Excerpt: "Whenever pension funds, mutual funds and insurance companies decide they should own dollar assets that are out of favor with hedge funds, the hedge funds lose." (Bloomberg)

Chasing Returns, Pension Funds Have Poured Billions Into Oil Futures; 'They Are Going to Get Hurt Badly'
Excerpt: "Pension funds and other investors who rushed into oil through commodity indexes this year chasing big returns as other asset classes tanked could face steep losses if prices fall from record highs. An avalanche of cash has rolled into commodities through simple long-only indexes this year, feeding the record-setting oil rally some experts say could be a bubble that is becoming more vulnerable to shifts in supply and demand fundamentals." (Reuters via Financial Week; free registration required)

California OKs Retirement Plan for State's Workers
Excerpt: "The California Assembly has approved legislation that would allow private-sector employees to save for retirement through programs offered by CalPERS. The bill would require the California Public Employee Retirement System to offer individual accounts to private-sector employees and employers." (AP via

When a Retirement Plan Isn't a Savings Plan
Excerpt: "What's the difference between saving for retirement, on the one hand, and plain old saving, on the other? Teresa Ghilarducci, an economist at the New School, has a provocative book out, entitled 'When I'm Sixty-Four: The Plot against Pensions and the Plan to Save Them,' which forces us to ask that question very seriously." (Conde Nast)

New edition of Section 401(k) Plans and Employee Ownership
The NCEO presents excerpts from the newly released fifth edition of Section 401(k) Plans and Employee Ownership. The book discusses in detail how company stock is used in 401(k) plans, recent litigation in the post-Enron environment, securities issues, dividend deductions, administration, ESOP-401(k) combinations, converting a 401(k) plan to a combination 401(k)/ESOP, and more. (National Center for Employee Ownership)

The U.S. Sugar ESOP in Context
NCEO Executive Director Corey Rosen discusses the U.S. Sugar ESOP (employee stock ownership plan) in light of an article in the New York Times detailing a lawsuit by former U.S. Sugar employees who believe they were cashed out of the ESOP at a much lower price than they should have been. (National Center for Employee Ownership)

[Opinion] ASPPA's Outline of Issues for Public Hearing on Proposed Regs Relating to Measurement of Assets and Liabilities for Pension Funding Purposes (PDF)
4 pages. (American Society of Pension Professionals & Actuaries)

[Opinion] American Benefits Council Letter on Proposed Regulations Regarding the Measurement of Assets and Liabilities for Pension Funding Purposes (PDF)
17 pages. Excerpt: "The bulk of the letter addresses the proposed rule regarding asset smoothing. Among our members, there is broad consensus that the proposed rule would effectively repeal asset averaging, thus undoing a clear Congressional decision, and would render part of the statute meaningless." (American Benefits Council)

[Opinion] In Search of the 'Perfect' 401(k) Plan
Excerpt: "'In Search of the Perfect 401(k) Plan' represents a response to those who posed the same question to me during the recent fi360 Conference held May 7-9th 2008 in Charlotte, NC. Determining the 'perfect' plan reflects a subjective perspective based upon a set of pre-determined criteria. Through the eyes of another, the 'perfect' plan may include a different set of criteria or it may be based upon a different design. My 'perfect' 401(k) Plan is designed around the objective of maximizing fiduciary risk mitigation." (David J. Witz via Fiduciary Risk Assessment LLC)

[Opinion] The U.S. Retirement Savings System - A System That Needs to Be Retired
Excerpt: "Like many others, [Teresa] Ghilarducci points out how backward it is to design a retirement system in which the incentives to save are biggest for the highest-income individuals. Because contributions are tax-deferred, the tax break is biggest for those high earners." (The Washington Post; free registration required)

[Opinion] Public Employee Pensions Are Unfair to Taxpayers
Excerpt: "Today, public servants do not serve the public. Instead, we serve them. Government jobs are highly sought-after because they offer not only job security, but good pay at all levels (except at the top), and benefits unmatched in the private sector. And there's the problem. Those benefits are bankrupting the country." (The Morning Call)

[Opinion] Pension Debts: The Next Financial Crisis
Book review: While America Aged by Roger Lowenstein. Excerpt: "Roger Lowenstein motivates the issues surrounding pensions by telling three stories, those of General Motors, the New York City Subway, and the City of San Diego. He captures the essence of why we have pension problems in a way that anyone can appreciate. I sum it up this way: promises today, payments far in the future. Get through the present difficulty, at the price of mortgaging the future." (Seeking Alpha)

Sponsored by: ASPPA

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Banner ad for ASPPA

The Western Benefits Conference, July 13-16, 2008, Seattle, Washington

It's the best of both worlds, and should not be missed. Join the Western Pension & Benefits Conference and ASPPA for this unique conference designed with all retirement, health, welfare and benefits professionals in mind. The Western Benefits Conference offers attendees seven separate professional learning tracks with over 50 individual sessions all led by nationally renowned speakers and both national and local government representatives. Network with your peers, private sector experts, and government officials at planned events throughout the conference. Be in Seattle with over 900 of your colleagues July 13-16, 2008 and experience this conference first hand. Register NOW and don't miss out.

(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 May 28, 2008, on Human Resources & Employment Law (PDF)
10 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)

[Guidance Overview] The Impact of Same-Sex Marriage on Employee Benefit Plans
Excerpt: "Plan sponsors who have employees in California or Massachusetts should review their plan documents and insurance polices to determine whether same-sex spouses are covered. [I]t may be necessary to specify that certain plan provisions do or do not apply to a same-sex spouse. Any plan amendments should be timely communicated to participants via a new Summary Plan Description or a Summary of Material Modifications." (Trucker Huss)

[Guidance Overview] Health Plan Implications of California Ruling on Same-Gender Marriage (PDF)
2 pages. (The Segal Group, Inc.)

This Open Enrollment Period, Benefits Communications Take Center Stage
Excerpt: "Closing the 'guidance gap' between the benefits offered during Open Enrollment and employees' access to tools and information to make the decision-making process less complicated can pay strong dividends for employers. According to the MetLife survey, released today, among those workers that report having access to resources to help them make informed decisions, 82% were satisfied with their benefits offerings -- compared to half (51%) of employees who stated that they didn't get the resources they needed." (Business Wire via Human Resource Executive Online)

'Learning 401(k)s' an Innovative Way to Encourage Employees to Increase Their Knowledge
Excerpt: "[A]nnouncing a corporate learning program is hardly earth-shattering news. But in this case, IBM created its new learning initiative to give employees who have been with Big Blue more than five years a 50 percent match of up to $1,000 contributed -- to do whatever they want with the money, as long as it's used for learning. In the extreme, if an IBM employee wanted to use his or her matching dollars to take cooking lessons or learn to speak Chinese, that's perfectly fine under the program's guidelines." (Human Resource Executive Online)

Michigan Marriage Law Affects Domestic Partner Benefits
Excerpt: "The Michigan Supreme Court recently ruled that a referendum defining marriage as between a man and a woman requires public-sector employers to stop offering benefits to the domestic partners of employees. The ruling should have limited impact, however, experts say." (Human Resource Executive Online)

Employers Help with Adoptions
Excerpt: "Companies that offer adoption benefits do so out of a sense of inclusiveness, and to make themselves more competitive employers. Federal law guarantees up to 12 weeks of unpaid family leave, but little else directs private employers to accommodate adoptive parents. Laws regarding additional benefits vary from state to state." (AP via Philly Online, LLC)

Look Before Making a Relocation Leap
Excerpt: "With a fear that jobs are harder to come by, you may be tempted to pick up stakes and relocate at the first offer you encounter. But experts say that it doesn't always make sense to move for just any job. For one thing, moving isn't cheap. Many employers will pay at least part of the relocation costs, but employees should get as many details as possible about their relocation package before committing." (MarketWatch)

New Legislation Enhances 401(k) Benefits for Military Personnel, Allows Qualified Reservist Distributions from Health FSAs, and Extends MHPA
Excerpt: "For some 401(k) plans, the Act's rule requiring enhanced survivor benefits may trigger accelerated vesting of matching and profit-sharing contributions for short-service participants. While not previously mandatory, treating differential military pay as plan compensation was already available for 401(k) plans in the final regulations under Code Section 415. (And while not specifically addressed, the Act may also facilitate pre-tax cafeteria plan salary reductions from differential pay.)" (Employee Benefits Institute of America)

Employers Turn to Four-Day Work Week to Save Gas
Excerpt: "When Ohio's Kent State University offered custodial staff the option of working four days a week instead of five to cut commuting costs, most jumped at the chance, part of a U.S. trend aimed at combating soaring gasoline prices. 'We offered it to 94 employees and 78 have taken us up on it,' said university spokesman Scott Rainone." (Financial Week; free registration required)

ERISA Abroad: Extraterritorial Application of ERISA to U.S. Employees in other Countries
Excerpt: "Paul Secunda . . . has just posted on SSRN his article 'The Longest Journey, with a First Step': Bringing Coherence to Sovereignty and Jurisdictional Issues in Global Employee Benefits Law." (Workplace Prof Blog)

States Seek Delay in California Marriage Ruling
Excerpt: "Concerned about the national ramifications of same-sex marriages in California, attorneys general from 10 states have asked the California Supreme Court to stay its decision legalizing the marriages, which are set to begin on June 17." (The New York Times; free registration required)

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Understanding GINA - The Genetic Information Nondiscrimination Act of 2008
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401(k) Plan Administrator
for Pollard & Associates, Inc.
in MD

Assistant 401(k) Administrator
for Pollard & Associates, Inc.
in MD

Business Analysts
for Xcitek Consulting Services
in NJ

Retirement Plan Actuary/Consultant
for Charles Schwab
in OH

ERISA Consultant
for Charles Schwab
in TX

Tax Counsel - ERISA
for Union Pacific Railroad Company
in NE

Conversions Specialist
for The Newport Group
in NC

Director, Daily Operations
for DailyAccess Corporation
in AL

Retirement Plan Benefits Professional
for Huntington National Bank
in IN, OH, PA

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