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June 16, 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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  • FAS 132/158: Audit Letter, Worksheets, Schedules
Contact or call 1-888-DATAIR-4 (1-888-324-2474)

[Guidance Overview] A Financial Institution Asks: Can We Exercise Our Right of Setoff Against an IRA Account?
Excerpt: "We don't believe you can exercise your right of setoff against an individual retirement account (IRA), for at least three reasons. First, it would breach your fiduciary obligations as trustee or custodian of the IRA. Second, IRAs have been deemed 'special deposits' immune from setoff. And third, the Federal Tax Code provides that IRAs are not 'forfeitable'." (Wolters Kluwer)

[Guidance Overview] With EGTRRA Restatement - a Perfect Time for Plan Changes
Excerpt: "If you offer a defined contribution plan to your workers, your plan document must be restated with the IRS sometime within the next year. This is a result of the Economic Growth and Tax Relief Tax Reconciliation Act of 2001." (Employee Benefit News; free registration required)

[Guidance Overview] Correction of Elective Deferral Contribution by Ineligible Employee
Excerpt: "There is little formal guidance for this type of correction. The formal guidance that exists is in EPCRS . . . . The EPCRS process may not always be desired by the employer. Therefore, many plan documents now provide a procedure that IRS has approved to be followed." (McKay Hochman Co., Inc.)

[Guidance Overview] Two New Employer Stock Drop Cases Emphasize Advantage of Proper Plan Language
Excerpt: "[T]he cases indicate that even when the plan document requires the investment in employer securities, all relevant plan documents must be reviewed. The investment policy in particular will be important. Generalized language in terms of a fiduciary's responsibility for plan investment choices should be examined and possibly clarified with respect to the employer stock held by a plan. Plan fiduciaries must also consider whether to incorporate securities filings into the SPD." (Tax Management Inc.)

Policy Brief: Increasing Annuitization in 401(k) Plans with Automatic Trial Income (PDF)
8 pages. Excerpt: "In a paper for The Hamilton Project, a diverse group of retirement experts -- William G. Gale and J. Mark Iwry of the Brookings Institution, David C. John of The Heritage Foundation, and Lina Walker of the Retirement Security Project -- propose a strategy for expanding the role of lifetime income in 401(k) plans." (The Brookings Institution)

House Panel Backs Retirement Benefits Boost for Border Officers
Excerpt: "Rejecting a White House proposal, a House subcommittee this week approved additional funding for enhanced retirement benefits for Customs and Border Protection officers." (

Consumption Structure, Welfare Goods and Retirement Income: Linking the Ageing Puzzles
Excerpt: "While the empirical evidence tends to support some predictions of the life-cycle theory, a number of puzzles remain: an ageing-consumption, an ageing-saving and a saving-capitalisation puzzles have been put forward in the literature. This paper analyses the links between these three puzzles and develops a model relating usual life-cycle variables, social transfers (public health care expenditures and the generosity of pension systems) to the level of savings." (Social Science Research Network)

Retirement Plan Fee Bill Stalls
Excerpt: "The author of H.R. 3185, a 401(k) plan fee disclosure bill, says it is dead, but the U.S. Department of Labor is continuing to work on completing proposed disclosure regulations." (The National Underwriter Company; free registration or paid subscription required)

Retirement Income Withdrawal Mistakes to Avoid
Excerpt: "The general idea is that retirees who anticipate long payout periods should plan on lower withdrawal rates. If there are fixed rate assets in the portfolio, these increase the success for low to mid-level withdrawal rates." (The National Underwriter Company; free registration or paid subscription required)

Florida's Double Dipping Public Employees Cost Hundreds of Millions
Excerpt: "All of these employees are members of what's called the Deferred Retirement Options Plan or DROP. DROP guarantees public employees a lump sum payment, plus retirement benefits five years after enrolling in the program. New Port Richey State Senator, Mike Fasano says the DROP program was designed to weed out high paid public employees and then bring in new employees at lower salary. However Fasano says people are not doing that because they've found a loophole and are double dipping." (

'We've Been Wrongly Taught That Our Property Can Be Our Pension'
Excerpt: "[There could] be bad news not only for people looking to sell up but also for those who have been relying on the rising value of their home to provide a nest egg in retirement through the use of equity release. These schemes allow homeowners to draw down between 20 and 50 per cent of the value of their property as a lump sum or monthly income. In essence, they are lent this sum of money until they either die or go into sheltered accommodation. At that stage the house is sold and the loan, with interest, is repaid." (Black Enterprise)

South Florida Cities May Reexamine Pension Payouts
Excerpt: "City leaders throughout South Florida -- serving on the very bodies that made these payouts possible over the years -- are now taking aim at disparities like these as they grapple with big budget holes and pension payouts growing far faster than government bottom lines." (The Miami Herald)

Minority Women and Retirement Income: Pay, Social Security, Pensions, Savings and Investments (PDF)
20 pages. Excerpt: "The poverty rate for Black and Hispanic women over age 65 is twice that of older White women. This is just one of many startling statistics found in WISER's new report, published in conjunction with Mothers' Voices Georgia, and MANA, A National Latina Organization. The updated guide contains new data, reveals the many challenges minority women face when it comes to a secure retirement, and highlights the need for education and long-term planning on retirement income for minority women." (Women’s Institute for a Secure Retirement)

The Standard to Provide 403(b) Program for Large Church Organization
Excerpt: "Cooperative Baptist Fellowship, working in partnership with the Church Benefits Board (CBB) and Retirement Wealth Management LLC, announced it has selected The Standard to be the provider of its $20 million 403(b) plan." (; free registration required)

New 403(b) Rules Shake Up Market
Excerpt: "Amid the new landscape, some financial advisors and financial-services companies plan to expand, or establish, their presence in the 403(b) market. Others, unable or unwilling to comply with the greater administrative responsibilities, are expected to exit the business." (Dow Jones Newswires via

Massachusetts Pension COLA Increases Have Some Town Officials Worried
Excerpt: "The amendment, which was passed by the state Senate in late May, is attached to section 15 of the state budget and asks for an increase, from $12,000 to $16,000 of the COLA base. The increase would allow retirees to receive an annual percentage raise on their pension benefit for up to $16,000 of income, instead of the previous $12,000 cut-off." (The Winchester Star)

Arizona District Kept Misusing Retirement Plan Despite Report
Excerpt: "The Maricopa County Community College District added at least two and as many as four employees from private special interest groups to the state retirement rolls despite a 2005 report by state auditors that found such deals 'improper.'" (East Valley Tribune)

Santa Rosa County, Florida, Schools Give Workers $10,000 Retirement Incentive
Excerpt: "The Santa Rosa County School District on Friday sent letters to 278 employees offering a $10,000 retirement incentive. The employees fall into two groups: - Employees eligible for normal retirement by July 1, meaning they have completed 30 years of service or are 62 years old and have completed at least six years with the district. - Employees in the Deferred Retirement Option Program who plan to leave on or after July 1." (

A Few Final Thoughts on Planning for Retirement
Excerpt: "The new retirement landscape requires us to take on a job once handled by professionals. We now play a larger role ourselves ensuring that we will have adequate resources. That means saving and investing, often on our own, and trying to protect against such unknowables as how long we may live and what financial markets will be like in the future. I've learned a lot in the past two years, and since today's column will be my last for The Washington Post, I would like to emphasize the most important lessons." (The Washington Post; free registration required)

New York State Removes More Lawyers from Pension System
Excerpt: "Since beginning its review of attorneys improperly reported as employees to the state pension system, the comptroller's office has revoked or suspended the pensions of 13 people, four of them on Long Island. It has canceled pension credits for five people statewide, one of them on Long Island." (NewsDay)

New Jersey Political Appointees Dodge Bullet As Senate Panel OKs Pension Reforms
Excerpt: "While voting in favor of some long-term changes to the state's public pension plans, a Senate committee also rejected a proposal for a near-term revision that would have trimmed benefits for political appointees. Sen. Loretta Weinberg, D-Bergen, proposed more quickly shifting people appointed to paid positions on boards and commissions out of the traditional pension system into a new 401(k)-like plan at the end of their current terms, even if they're reappointed." (

Kentucky Pension Reform Agreement Reached
Excerpt: "An agreement between the state House and Senate on proposed reforms to the state's pension system should pass without difficulty in a special General Assembly session, said Caldwell County's state Rep. Mike Cherry, one of the proposal's chief architects." (The Times-Leader Online)

Should You Leave Retirement Funds at Old Job?
Excerpt: "Workers who get laid off must decide whether to take their retirement plan with them or leave it with their employer." (Orlando Sun-Sentinel)

To Retire Early, You'll Need $1.25 Million
Excerpt: "The cost of living in retirement depends on variables that range from where and how long you'll live (and how healthy you are) to future inflation and tax rates. But for anybody, retiring at 56 is a very expensive proposition." (NewsDay)

[Opinion] New Hampshire Legislature Flubs Pension Reform
Excerpt: " In the end, lawmakers proudly announced that their hard work had quelled the fiscal crisis. Cities and towns next year will face a 20 percent increase in cost, not the feared 50 percent. But how could that happen, you may ask, when none of the cost-containment reforms were approved? With characteristic slight of hand, the Legislature decided to raid the retirement system's COLA reserve fund for the $250 million needed to offset municipal liability for one year." (The Nashua Telegraph)

[Opinion] Book Review: While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom As the Next Financial Crisis
Excerpt: "Boiling it down to its essence on the book's final page, he concludes, 'The most effective remedy -- in pensions, health care, and even in Social Security -- is to banish the credit card. Benefits should not be charged to a future generation; they should be paid for now.'" (The Washington Post; free registration required)

[Opinion] How Can I Tell If I'll Have a Decent Pension?
Excerpt: "Last week I mused about whether people in general were saving enough for retirement. (The answer: as far as we can tell, most people are.) This week I have decided to take on a far more important question: am I saving enough for retirement? Apparently this activity is called 'retirement planning', which strikes me as a silly phrase given the imponderables involved." (Tim Harford on Undercover Economist)

[Opinion] You're Probably Saving Enough for Retirement
Excerpt: "Some people do suffer impoverished retirements, but they tend to fall into two categories: those who were poor for most of their lives, anyway, and those who unexpectedly lost their jobs or their health in their 50s. In neither case is 'more saving' the answer to the problem." (Tim Harford via Slate)

[Opinion] Investments - How to Buy and Hold
Excerpt: "When the Dow rockets 300 points or the stocks of retailers, say, get decimated, I devour the news. After all, I work at a financial-news company. But here's my admission: I'm a buy-and-hold investor, and a lazy one at that. My employer prohibits us news folks to trade equities on a short-term basis anyway, but even if it didn't, I'd still buy and hold." (Andrea Coombes via The Wall Street Journal)

Sponsored by: ASPPA

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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] Protecting Members of the Military at Work
Excerpt: "USERRA -- which relates to employer treatment of military service members -- is probably the most employee-friendly federal statute that exists. A primer for HR leaders on its requirements is included in this month's column . . . ." (Human Resource Executive Online)

[Guidance Overview] Compliance Required with Section 409A before December 31, 2008
Excerpt: "December 31, 2008, looms as a crucial deadline for employers to comply with Section 409A of the Internal Revenue Code and the final Section 409A regulations (Section 409A). Further, employers must reduce unwritten arrangements that are subject to Section 409A to written plans/agreements by December 31, 2008." (Wilson Sonsini Goodrich & Rosati)

[Guidance Overview] Top-Hat Plan: Oral Promise May Be Enforceable
2 pages. Excerpt: "A federal district court recently concluded that an executive may base a claim for top-hat plan benefits on oral, rather than written, misrepresentations. This is notable because the court distinguished top-hat plans from plans that are subject to ERISA's plan document requirement, where the court indicated that oral promises would often be unenforceable. The case is Hay Group, Inc. v. Bassick (N.D. Ill. 2008)." (Utz, Miller, Kuhn & Eickman, LLC)

CEO Pay Rose Higher in '07 Despite Economic Woes
Excerpt: "As the American economy slowed to a crawl and stockholders watched their money evaporate, CEO pay still chugged to yet more dizzying heights last year, an Associated Press analysis shows." (AP via The Washington Post; free registration required)

Bodie on Yahoo's 'Unconscionable' Employee Severance Plan
Excerpt: " Here is Matt's thoughtful post on the employee benefits angle of the Microsoft/Yahoo! take-over brouhaha . . . ." (Workplace Prof Blog)

White House Memo Ordering Regulations Cutoff Doesn't Apply to IRS, Officials Say
Excerpt: "A recent White House memorandum directing agency heads to finalize regulations by November 1, 2008 will not apply to the IRS, according to Treasury Department officials. However, the memorandum, which was issued with little fanfare or explanation, does not expressly exclude the IRS." (Wolters Kluwer)

Michigan Law Affects Domestic Benefits
Excerpt: "Pedro Ramos commented on a lawsuit dealing with a Michigan referendum that defined marriage as between a man and a woman, creating an impact on the benefit offerings of public employers in the state. . . . 'Marriage Law Affects Domestic Benefits' by Tom Starner appeared in the Human Resources Executive on June 2, 2008." (Blank Rome LLP)

A Benefits Primer for Young People Starting Their First Job
Excerpt: "[I] offer a proper primer on health insurance, taxes and retirement plans for employees starting their very first jobs." (The New York Times; free registration required)

New Jersey Lawmakers Sanction Benefit Reform Package
Excerpt: "Despite a fierce battle by Garden State unions, a New Jersey state Senate committee has approved a package of six reform proposals for pensions and health care coverage for future government workers." (; free registration required)

Newly Posted Events
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Are you ready for EGTRRA restatements?
Nationwide on June 24, 2008
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Form 5500 Refresher Course
Nationwide on June 18, 2008
presented by

Newly Posted Press Releases
(Post Yours!)

InFRE Notes Upcoming Changes for CRC Certification
International Foundation for Retirement Education (InFRE)

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Account Executive
for Cultural Insurance Services International
in CA, IL, IN, KY, MI, MO, OH, WV

401(k) / Defined Contribution Administrator
for Beyer Barber Company
in PA

Retirement Plan Specialist
for Diversified Investment Advisors
in OR

Director Corporate Counsel- - ERISA
for Prudential
in NJ

Client Services Associates
for Milliman
in TX

Strategic Communications Consultant
for New York Life Retirement Plan Services
in CA

Pension Administration Supervisor
for Padgett, Stratemann & Co., LLP
in TX

Documents Supervisor
for Associated Pension Consultants
in CA

Pension Administrator
for Benefit Systems, Inc.

Sr. Business Development Officer
for BOK Financial
in KS, MO

401(k) Department Head
for Schiller's Pension Consulting
in CA

401(k) Plan Administrator
for Schiller's Pension Consulting
in CA

Manager, Retirement Programs
for CBS Corporation
in CT, NJ, NY

Relationship Manager - Defined Contribution Plans
for Vanguard
in AZ

401k Administrator
for Vanguard
in PA

Relationship Manager - Defined Contribution Plans
for Vanguard
in PA

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