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June 11, 2008

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

Today's sponsor is SunGard

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SunGard's Document Management Services

Do you have 500 or more defined contribution plans to restate for EGTRRA? Outsource them to us. SunGardís expert Document Management Services (DMS) staff can work as your "invisible" back office resource to help you through the restatement process. Let us focus on your plan documents, so you can focus on growing your business. Contact Ellen Nasrallah at 800-326-7235, ext. 5968.

[Official Guidance] June 2008 Pension Funding Segment Rates
Generally for plan years beginning after 2007, the rates in the tables . . . apply for minimum funding requirements under section 430 of the Code. (Internal Revenue Service)

[Official Guidance] IRS Composite Corporate Bond Rate Table Updated for June 2008
Corporate Bond Weighted Average Interest Rate = 6.02 for June 2008 (Internal Revenue Service)

[Official Guidance] IRS Announcement 2008-56: Change in Reporting for ESOP Dividends (PDF)
2 pages. Beginning with distributions in 2009, the reporting of dividends on employer securities that are distributed from an employee stock ownership plan under section 404(k) of the Code must be on a Form 1099-R that does not report any other distributions. (Internal Revenue Service)

[Guidance Overview] Required Minimum Distribution from Retirement Plan - Eligible for Rollover to an IRA?
Excerpt: "While Treasury Regulation Section 1.401(a)(9)-7 clearly indicates that an RMD is not eligible for rollover, the IRS recently addressed that issue again in its Spring 2008 Retirement News for Employers. The IRS said, 'Rollovers to IRAs of required minimum distributions (RMDs) from a retirement plan are not permitted. This is true whether the RMD is made because you turned age 70Ĺ or because you retired after age 70Ĺ.'" (Wolters Kluwer)

[Guidance Overview] Treasury Security Rate Set for Computing Current Plan Liability for June 2008
Excerpt: "For pension plan years beginning in June 2008, the IRS has released the corporate bond weighted average interest rate, the permissible range of interest rates used to calculate current plan liability and to determine the required contribution under Code Sec. 412(l) for plan years through 2008, and the current corporate bond yield curve and related segment rates for the purpose of establishing a plan's funding target under Code Sec. 430(h)(2)." (CCH Incorporated)

Top 100 Corporate Plans Remain Overfunded Thanks to PPA, Rate Drop
Excerpt: "The plans had an aggregate funding surplus of $111.1 billion in 2007, based on projected benefit obligations, up from $37.3 billion in 2006. In 2005, the 100 plans were underfunded by $50.6 billion; in 2004, they were underfunded by $69.5 billion." (Pensions & Investments)

Cash Balance Plans Number Grew Dramatically from 2002 to 2006
Excerpt: "There were 1,755 new cash balance plans established during the five-year period from 2002 through 2006. This represents a 307% increase over the 571 new cash balance plans created from 1997 through 2001, according to statistics compiled by Louis Kravitz & Associates." (Wolters Kluwer)

IRS Updating Guidance to Provide Corrective Measures for 403(b) Plans, Official Says
Excerpt: "The IRS is in the process of updating its Employee Plans Compliance Resolution System (EPCRS) program and expects to issue a new revenue procedure in the next couple of months that will begin addressing the new regulatory requirements for 403(b) plans, IRS tax specialist Robert Architect said at a D.C. Bar program meeting on May 27, 2008." (Wolters Kluwer)

Working Past Retirement Age Can Pose Problems
Excerpt: "[W]hat workers with defined-benefit pensions and those who already have tapped Social Security benefits might not realize is that there are significant financial disincentives that make working into retirement age a tricky proposition." (The Wall Street Journal via The Dallas Morning News)

Law Professor's Book Examines America's Journey to a Defined Contribution Society
Excerpt: "Edward A. Zelinsky, professor of law at the Benjamin N. Cardozo School of Law of Yeshiva University, New York, in his new book points out we have been moving inescapably toward ['the ownership society'] and that its origins go back in earnest to the Employee Retirement Income Security Act of 1974's creation of the individual retirement account. The development of the defined contribution society has advanced steadily in a bipartisan fashion and far more broadly than 401(k) plans. " (Pensions & Investments)

New Jersey Lawmaker Says Early Retirements Okay If Governor Downscales Plan
Excerpt: "Lawmakers estimate a scaled-down early-retirement plan will add about $250 million to long-term pension obligations -- about half the cost of Corzine's original plan. The pension obligations will be whittled down, Buono said, by allowing workers to apply for early buyouts only after they've reached 58 years of age. Corzine's plan would have permitted workers as young as 50 to take them. It was designed to reduce the state payroll by close to 3,000 workers and produce about $136 million in immediate budget savings." (New Jersey On-Line LLC)

Kentucky Lawmakers Reach Agreement on Pension Plan
Excerpt: "Kentucky's state retirement system covers retirement benefits for more than 445,000 people. The system is facing an unfunded liability of more than $26 billion. Lawmakers have said that without swift action, the system is facing an eventual financial collapse." (

HSBC Workers Irate Over New Pension Plan
Excerpt: "HSBC workers in Britain are expressing anger over the company's announcement of a pension scheme that cuts employee benefits and adjusts the retirement age to 65." (AHN)

Unsigned Form Throws Disputed 401(k) Assets to Participant's Son
Excerpt: "A federal judge in Florida has ruled that a deceased 401(k) plan participant's girlfriend is not entitled to half the approximately $450,000 in his account because he did not sign the designation form naming her a partial beneficiary." (; free registration required)

Increasing Annuitization in 401(k) Plans with Automatic Trial Income (PDF)
24 pages. Excerpt: "Specifically, we propose that a substantial portion of assets in 401(k) and other similar plans be automatically directed (defaulted) into a two-year trial income product when retirees take distributions from their plan, unless they affirmatively choose not to participate." (The Retirement Security Project)

Few Slashing Retirement Savings as Economy Slowdown Continues
Excerpt: "The latest data from the Principal Financial Well-Being Index indicate that a scant 3% of workers have cut back on retirement savings contributions in response to rising prices amid an economic slowdown." (; free registration required)

Boomers not Following Parents' Example for Retirement Planning
Excerpt: "A new study by NAVA, the Association for Insured Retirement Solutions, reveals that baby boomers are failing to follow the retirement planning disciplines that enabled their parents to achieve a satisfying retirement." (; free registration required)

IRS Changes Reporting Requirements for Dividends on ESOP Distributions
Excerpt: "Beginning with distributions in 2009, the reporting of dividends on employer securities that are distributed from an employee stock ownership plan (ESOP) under section 404(k) of the Code must be on a Form 1099-R that does not report any other distributions." (; free registration required)

Advisers Say Exchange-Traded Funds Will Grow in 401(k)s
Excerpt: "State Street Global Advisors (SSgA), the investment management arm of State Street Corporation Knowledge@Wharton, the online business journal of The Wharton School at the University of Pennsylvania, note that two-thirds of 840 investment professionals surveyed identified exchange-traded funds (ETFs) as the most innovative investment vehicle of the last two decades." (; free registration required)

Paychex Offers Auto Enrollment Option for 401(k) Plans
Excerpt: "Paychex, Inc. has announced the addition of auto enrollment as an optional plan feature of its 401(k) offerings, which will allow employers to automatically enroll their employees in the company 401(k) and increase overall plan participation." (Business Wire)

[Opinion] What Fiduciaries Can Do About the Increasing Risk of Iitigation from Disgruntled Investors
Excerpt: "Regulatory scrutiny of fiduciaries is increasing. With changes to Internal Revenue Service Form 5500 for retirement plan reporting and proposed rules pertaining to the Employee Retirement Income Security Act Section of 1974, the Department of Labor is pressuring investment service providers to give better disclosures of compensation and conflicts of interest. These changes will make it easier for investors to identify fiduciary shortfalls." (Blaine F. Aikin via Investment News; free registration required)

Sponsored by: ASPPA

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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] California's New Hands-Free Cell Phone Law Affects Employers (PDF)
3 pages. Excerpt: "Beginning July 1, 2008, California drivers are prohibited from using hand-held cell phones while driving. Employers who have employees driving on company business -- which is nearly every company -- will need to make some changes. This is a brief summary on the new 'rules of the road' for a typical employer." (Snell & Wilmer LLP)

[Guidance Overview] General Partner Clawback Provisions in Private Equity Agreements (PDF)
4 pages. Excerpt: "Most limited partnership agreements for private equity funds have two separate clawback components: The limited partner clawback and the general partner clawback. This Investor Alert discusses the general partner clawback." (Reinhart Boerner Van Deuren s.c.)

Periodic Audits of ERISA Plans and Employment Policies and Practices Can Prevent Costly Mistakes
Excerpt: "Self-Audits are reviews that companies usually undertake with the assistance of benefits counsel to identify legal compliance gaps in their plans, policies and/or operational procedures. The audit focuses on areas that could place the company at risk for governmental fines and penalties, as well as expose the company to an increased risk of lawsuits. These audits can be done for either or both a company's employment practices and employee benefits plans." (Aiken and Aiken)

Newly Posted Events
(Post Yours!)

Executive Compensation: Strategy, Design, and Implementation
in New York on June 19, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)

Executive Compensation: Strategy, Design, and Implementation - Webcast
Nationwide on June 19, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)

Newly Posted Press Releases
(Post Yours!)

Workscape and ConnectYourCare Forge Alliance to Create Integrated Consumer-Directed Healthcare Benefits Platform for Large Employers

Warranty Group Picks New York Life Retirement Plan Services
New York Life Investment Management

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Client Relationship Manager
for Transamerica Retirement Services
in PA

Client Relationship Consultant
for Gallagher Retirement Services
in TX

Retirement Compliance Advisor
in VA

Relationship Manager
for Prudential Financial
in IA, IL, MO

Implementation Specialist
for Sentinel Financial Group
in MA

CRTFL - Customer Service Representative
for Citi
in ME

Relationship Manager
for Prudential Financial
in IL

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