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June 23, 2008

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

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[Guidance Overview] PPA Funding Targets
Excerpt: "The JPMorgan PPA Funding Target exhibit describes in detail the calculation and application of the various PPA funding targets." (JPMorgan Chase & Co.)

[Guidance Overview] Penalty-Free Withdrawals for Reservists from Retirement Plans to Be Allowed
Excerpt: "President Bush recently signed into law The Heroes Earnings Assistance and Relief Tax Act of 2008, HR 6081. The law contains a provision that would permanently allow penalty-free withdrawals from retirement plans (and subsequent re-contributions to IRAs) for active-duty reservists." (ICMA-RC)

[Guidance Overview] DOL Webcast on Regulatory, Interpretive and Amicus Update, Sponsored by DOL's Employee Benefits Security Administration
Excerpt: "This third in a series of webcasts will address guidance on a series of frequently asked questions raised since publication of the final regulation on qualified default investment alternatives; guidance on the responsibilities of plan fiduciaries and trustees with respect to monitoring and collecting delinquent employer and employee contributions owed to employee benefit plans; the participant contribution safe harbor proposal; and recent amicus participation in ERISA litigation.' (U.S. Department of Labor)

[Guidance Overview] Hewitt's Global Retirement Update, June 2008 (PDF)
2 pages. Excerpt: "Our Global Retirement Update summarizes recent legislative developments and trends related to retirement and financial management and highlights recently passed and pending legislation that may require employers to take action to comply with new rules or review existing plans. It is published monthly in PDF format." (Hewitt Associates)

[Guidance Overview] Distributing Annuities from Defined Contribution Plans: The Qualified Plan Distributed Annuity (PDF)
6 pages. Excerpt: "The QPDA has languished in the background for many years, its greatest use in the past being associated with the termination of defined benefit plans. With the growing need for providing portable retirement income benefits, and with the demands forced by the new 403(b) regulations, these hybrid products will enjoy growing prominence in the retirement plan regulatory scheme. This increased focus should ultimately result in a more highly organized regulatory approach to these products." (Baker & Daniels)

[Guidance Overview] IRS Provides Tools to Assist Employers in Plan Audits
Excerpt: "In the Spring 2008 edition of its e-newsletter, Retirement News for Employers, IRS outlines the steps an employer should take if it receives a letter or phone call from IRS notifying it of a plan audit. The article, by Monika Templeman, Director of EP Examinations, highlights a number of examination related tools for employers available on the IRS's website ( These tools include the 'Top Ten Tips to Prepare for an Efficient Audit,' which is reproduced at the end of this article." (Deloitte via

401(k) Contributions Drop in Troubled Economy
Excerpt: "While workers continue to put money into their 401(k) plans during the current downturn in the economy, they are investing at a lower rate, according to a survey released Thursday, June 19, by Putnam Investments." (Workforce Management; free registration required)

Proposed Commodity Investment Ban for Pensions Panned
Excerpt: "A proposal to bar most pension funds from investing in oil and agricultural commodities could seriously undermine fund investment discretion -- and pave the way for additional investment restrictions, ERISA attorneys warned." (Pensions & Investments)

How Well Are We Handling Our 401(k)s?
Excerpt: "A new study shows that of some one million 401(k) portfolios, some 69 percent of participants have portfolios with inappropriate risk or diversification, 36 percent hold high concentrations of company stock, and 33 percent fail to contribute enough to receive the full company match. While groups of participants are taking full advantage of their 401(k) plans, participants with lower salaries, lower plan balances, and those closer to retirement tend to make the most costly mistakes." (WebCPA)

Unsteady Economy Prompts 401(k) Strategy Shifts by Participants
Excerpt: "Some are trimming back their 401(k) contributions as prices for daily staples like food and energy creep higher. Others are boosting savings to better prepare for what could be a costlier retirement. Not all retirement-savings plans have seen the strategy shift. But a number of retirement-plan providers have noticed the change, which follows an uptick in the past year in the amount of money being borrowed against 401(k)s." (The Wall Street Journal)

Bloomberg News Video: The Truth Behind Hidden Fees in 401k Plans
This special Bloomberg Television report on '401k Hidden Fees' that aired on June 19, 2008, shows how legal fees are buried in the fine print of documents or are so confusing that even financial advisors find them hard to understand. (Bloomberg)

Future Chicago City Workers Could Lose Out on Lush Pension Plan
Excerpt: "Newly hired employees would shift to the 401(k) plans favored by private industry -- instead of the 'defined benefits' enjoyed by their older co-workers -- under a plan being pushed by the head of Mayor Daley's pension reform commission." (Chicago Sun-Times)

For a Good Retirement, Find Work, or Keep Your Job
Excerpt: "Waiting, and working longer . . . is the wiser and more financially responsible choice for most people. A person who retires at 66 will pocket a monthly Social Security check that is one-third higher than if that person retired at 62." (The New York Times; free registration required)

New York Legislature Making Progress on Pensions As Session Draws to a Close
Excerpt: "The legislation, drafted by Attorney General Andrew M. Cuomo's office and introduced by lawmakers late last week, would ban the widespread and costly practice in which school districts pay lawyers who do consulting work by enrolling them in the pension system. It would also prevent retired public employees from collecting their pensions even after they are rehired, a practice known as 'double dipping.'" (The New York Times; free registration required)

New York Legislators and Attorney General Agree on Pension Reform Package
Excerpt: "State legislators and New York Attorney General Andrew Cuomo have agreed on a sweeping package of pension reforms that increase the penalties for pension fraud and close the loopholes that have allowed some retirees to collect six-figure salaries on top of six-figure public pensions." (NewsDay)

Advisers Should Help Investors Decide Whether to Move 401(k) Money Into an IRA
Excerpt: "Retirement plan rollovers are reshaping the business of financial advice. In 2008 alone, $536 billion is expected to roll out of 401(k) plans into individual retirement accounts, according to Boston-based Cerulli Associates Inc." (Investment News; free registration required)

Two Law Firms Probe Lehman Brothers 401(k) Plan Fiduciaries
Excerpt: "The law firms Milberg LLC and Liner Yankelevitz Sunshine & Regenstreif LLP separately announced they are investigating possible Employee Retirement Income Security Act (ERISA) violations by fiduciaries of the Lehman Brothers Holdings Inc. Savings Plan." (; free registration required)

IRS Aims to Preserve Tax Status of Cash-Balance Conversions
Excerpt: "Newly proposed Internal Revenue Service rules will protect hundreds of pension plans from the threat of disqualification. The proposed rules affect employers that converted traditional final average pay plans to cash balance plans and said the benefits that current employees receive would be based on the design that resulted in the greatest benefit." (Financial Week; free registration required)

IRS's Employee Plans News, Summer 2008 (PDF)
14 pages. This edition includes the following articles: Steven T. Miller, TE/GE Commissioner, Speaks at Mid-Atlantic Benefits Conference; Form 5307 Has Been Revised; Forms & Pubs; Critical Priorities...With Monika Templeman; Maintaining Electronic Records for Employee Plans Team Audit (EPTA) Plans; Form 5500 Filing Tips - Are You a Multiemployer Plan?; Things to Remember - 2007 Forms 5500/5500EZ; Employee Plans Published Guidance; PBGC Insights; Calendar of EP Benefits Conferences. (Internal Revenue Service)

The Motion Picture Industry Pension
Excerpt: "Every so often Kevin and I post about the Motion Picture Industry Health and Pension Plan. Because repetition is a blessing not a curse, here is yet another offering." (The Animation Guild)

Obama Says the Government Has to Step in to Help Americans Retire
Excerpt: "The plan is to help 78 million Americans without retirement plans to save. If the plan go through, it would cost the federal government $18.8 billion a year." (TransWorldNews)

Court Order Needed to Split Retirement Accounts in Divorce
Excerpt: "Divorcing couples can split retirement accounts and even cash them out penalty-free as part of a settlement, but it has to be executed properly, and this is what many couples fail to do . . . ." (Chicago Tribune)

[Opinion] Senate Finance Committee Considering Legislation Harmful to Pension Security (PDF)
5 pages. Excerpt: "I am writing [to express] grave concerns over the consideration that the Senate Finance Committee is giving to modifying Section 420 of the IRS Code to allow the transfer of defined benefit pension plan funds to 401(h) healthcare accounts to pay for the healthcare benefits for active employees. This action under consideration would have devastating consequences to the future pension security of 44 million active and retired workers who have earned a defined benefit pension." (National Retiree Legislative Network)

[Opinion] The Public Pension COLA Conundrum
Excerpt: "The huge problem facing public pension plans now is that we have entered a period of stagflation in which investment returns are unlikely to pay for COLAs. The 'free lunch' of strong investment returns -- in the 1990s and the middle of this past decade -- is no longer there to pay for benefits increases. If anything, many pension plans will suffer declining funding ratios as their investments fail to meet actuarial assumptions." (

[Opinion] Distinguishing among Employees Based on Pension Status
Excerpt: "To summarize and oversimplify, in Kentucky Retirement Systems the Court held that it was legal to provide lower benefits to police and firefighters who retire on disability at or near retirement age than to those who would have had to wait longer to qualify for regular retirement. Relying on Hazen Paper but moving well past it, the Court held that pension status is not a proxy for age here even though, in the Kentucky case, age is an explicit element of pension eligibility." (Pension & Benefits Blog)

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(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] Employee Not Entitled to FICA Tax Refund Where Deferred Compensation Plan Is Terminated Prior to Benefit Payment
Excerpt: "Drawing an analogy to a poor investment choice, the IRS Office of Chief Counsel has advised that an employee whose nonqualified deferred compensation plan was terminated before the benefits were fully paid is not entitled to a refund of the FICA taxes previously imposed on the unpaid benefit amounts. IRS Chief Counsel Advice Memorandum, No. 200823001 (June 6, 2008)." (Deloitte via

[Guidance Overview] The Heroes Earnings Assistance and Relief Tax Act of 2008
Excerpt: "The HEART Act addresses the treatment of payments made to individuals who are called to active military service, provides mandatory and optional changes to the treatment of reservists on active military duty under retirement plans, and permits special distributions from health flexible spending arrangements to employees who are called to active military service." (Kilpatrick Stockton LLP)

[Guidance Overview] Focus on Employee Benefits, June 19, 2008 (PDF)
6 pages. The newsletter includes items on: ERISA Litigation: Supreme Court Ruling in MetLife v. Glenn; Exec Comp Corner: Proposed Legislation Would Tax Foreign Deferred Compensation Arrangements; Income, Reporting and Employment Tax Rules for Post-Death Exercises of Nonqualified Stock Options; Offsetting Pensions of Rehired Employees; and, Vested Retiree Health Benefits. (Miller & Chevalier Chartered)

More Employers Are Offering Group Legal Plans to Employees
Excerpt: "Prompted by the national mortgage mess and myriad other legal issues that people face, an increasing number of employers are following in Fujitsu America's footsteps by offering group legal plans to employees. Under these programs, employees sign up for payroll deduction to pay the fee -- usually around $200 annually -- to have access to attorneys." (Workforce Management; free registration required)

Administrators Only Required to Provide Documents Governing Plans
Excerpt: "The U.S. District Court for the Southern District of Iowa ruled that a plan administrator was not required to provide a participant who was denied benefits under a severance plan all the documents she requested." (; free registration required)

New Jersey Teachers Protest State Pension Reform Plans
Excerpt: "On Friday night, the state Senate and Assembly budget committees approved an omnibus bill designed to limit most public employee pensions and benefits. They may be up for final votes before the full Senate and Assembly on Monday. Among other things, it would increase the retirement age of future employees from 60 to 62, require employees to earn $7,500 to qualify for the pension system and tie that figure to the consumer price index. It also would require that employees work 20 hours to qualify for health benefits and would allow employees with other health benefits to take a cash payment worth 50 percent of the benefit's value." (

[Opinion] Rethink That Executive Deferred Comp Plan Now
Excerpt: "So now is an excellent time to revisit decisions about deferred compensation. Many expect tax rates to rise by 2011, when the Bush tax cuts expire, boosting what will be owed when money is pulled from the plans. Moreover, times are tough, and if your employer runs into trouble you may not be able to recover the money in your plan. Unlike savings in a 401(k), deferred comp isn't protected from creditors in a corporate bankrup.tcy." (BusinessWeek)

Newly Posted Press Releases
(Post Yours!)

Health Coverage in America Chartbook Becomes Online Resource, Available via Kaiser Fast Facts
Kaiser Family Foundation

Kathryn Ricard Joins ERIC as Vice President Retirement Security
ERIC (ERISA Industry Committee)

Despite Economic Downturn, Employee Benefits Remain Stable in 2008
Society for Human Resource Management (SHRM)

MassMutual's Center for Behavioral Research(sm) Releases White Paper on 'Why Data Matters: Generating Value from Retirement Plan Data'

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Pension Administrator
for Pension Administration Firm located in Westchester, NY
in NY

Pension Administration
for Stephen H. Rosen & Associates, Inc.
in NJ

Marketing Representative
for Retirement Benefit Solutions, LLC
in VA

Pension Administrator
for Retirement Benefit Solutions, LLC
in VA

Retirement Plan Administrator
for Lebenson Actuarial Services
in NV

401(k) Pension Consultant / Administrator
for Malcolm Thompson & Associates, Inc.
in TX

Defined Contribution Plan Consultant
for Schloss & Co.
in NY

Health and Welfare Service Delivery Manager
for Affiliated Computer Services
in NJ

Defined Benefits Service Delivery Manager
for Affiliated Computer Services
in NJ

Client Relationship Manager - Chicago or Detroit
for Transamerica Retirement Services
in IL, MI

Cafeteria Plan Specialist
for Swerdlin and Company
in GA

Senior Benefits Associate
for New York Life Insurance Company
in NY

Manager, Retirement Plans
for Lincoln Benefits Group
in PA

Senior Benefits Analyst , (Temporary)
for Stanford University, Human Resources, Benefits Department
in CA

Sr Technical Specialist (DC Plan Tech Specialist)
for Prudential Financial
in NJ

Defined Contribution Client Account Manager
for New York Life Retirement Plan Services
in MA

Benefits Education Specialist
for Municipal Employees' Retirement System
in MI

Conversion Quality Assurance Manager
for Charles Schwab
in OH

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