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July 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.

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

5500 / PBGC / 1099-R / 5300 / FAS 158 Software from DATAIR

DATAIR Pension Reporter System. Easy to use and economical for electronic and paper filing with instant access to forms and instructions. Live, expert support included. Choose from 4 modules:
  • Annual Reporting Series: EFAST 5500-series, PBGC Premium-series, SAR, and 5500 electronic filing;
  • 1099-R Series: 1099-R and related forms, 945/945-A, and 1099 electronic filing;
  • Qualification & Termination: 5300/5310-series and PBGC 500/600-series forms.
  • FAS 132/158: Audit Letter, Worksheets, Schedules
Contact or call 1-888-DATAIR-4 (1-888-324-2474)

[Official Guidance] Text of IRS Notice 2008-62: Nonapplication of 457(f) and 409A to Certain Recurring Part-Time Compensation Arrangements (PDF)
4 pages. Excerpt: "The [upcoming proposed section 457(f)] regulations to be proposed are expected to address certain types of arrangements involving recurring part-year compensation, including common arrangements involving public school employees who provide services during a 10- month school year and elect to be paid ratably over 12 months. It is expected that the regulations would provide that if certain conditions described below are satisfied, § 457(f) would not apply to such arrangements. It is also expected that a conforming change will be proposed for regulations under § 409A, so that § 409A also will not apply to such arrangements if such conditions are met." (Internal Revenue Service)

[Guidance Overview] District Court Refuses To Dismiss ADEA Disparate ERISA Fiduciary Misrepresentation Claims Related WearAways Caused by a Cash Balance Conversion (PDF)
Page 8 of 11 pages. Excerpt: "In George v. Duke Energy Retirement Cash Balance Plan, 2008 WL 2307485 (D.S.C. 2008), the district court dismissed ERISA and ADEA age discrimination claims arising out of Duke Energy's conversion of its defined benefit plan to a cash balance plan, but allowed plaintiffs' wearaway claim under ADEA to proceed. The court also concluded that plaintiffs' fiduciary misrepresentation claim may proceed." (Proskauer Rose LLP)

[Guidance Overview] U.S. Supreme Court Rules Disability Benefit Formula That Credits Younger Workers with Additional Years of Service Does Not Violate the ADEA (PDF)
Pages 4-6 of 11 pages. Excerpt: "The Court's opinion saves the imputing of service tied to pension eligibility from being deemed per se unlawful. Because of the numerous factors and qualifications referred to in the majority opinion, it is unclear, however, how broadly its reasoning and rule may apply beyond this context." (Proskauer Rose LLP)

[Guidance Overview] Question on Nondeductible IRA Contributions Converted to Roth IRA
Excerpt: "An individual has a traditional IRA that's been funded with both deductible and nondeductible contributions. He wants to establish a new nondeductible traditional IRA, make contributions through 2010, and convert it to a Roth IRA. If he converts only the new nondeductible IRA, will he have to pay tax only on the earnings in the new one, or will he have to consider the deductible contributions and earnings in the old traditional IRA?" (Wolters Kluwer)

[Guidance Overview] IRS Provides Tips for Correcting Erroneous 401(k) Plan Hardship Distributions
Excerpt: "In order to find such a mistake, the IRS recommends that plan sponsors review: (a) the plan document to determine when distributions may occur; (b) each plan distribution and its related documentation showing the reason for the distribution; and (c) whether distributions designated as hardship distributions were made in accordance with the terms of the plan." (Wolters Kluwer)

[Guidance Overview] DOL Issues Corrections and Guidance to Qualified Default Investment Alternatives Regulation
Excerpt: "The Department of Labor recently corrected and clarified its regulation on qualified default investment alternatives published on October 24, 2007. The guidance consists of corrections to the final regulation and a Field Assistance Bulletin in question and answer format. [Reprinted from Employee Benefit Plan Review with permission from Aspen Publishers.]" (Winston & Strawn LLP)

[Guidance Overview] New Rules for 403(b) Arrangements (PDF)
8 pages. Excerpt: "These developments affect sponsors of and participants in ERISA and non-ERISA 403(b) arrangements." (Prudential Retirement)

[Guidance Overview] The IRS Employee Plans News - Special Edition - July 1, 2008 (PDF)
1 page. Excerpt: "This Special Edition provides sample plan language under Code section 409(p) for the transfer of an ESOP's S corporation shares. Also, in this edition, IRS Nationwide Tax Forums will be held across the country this summer and a new Joint Board for the Enrollment of Actuaries web page is now available." (Internal Revenue Service)

Anheuser-Busch to Cut Lump-Sum Payouts
Excerpt: "Anheuser-Busch Cos. will change the way it calculates lump-sum pension payouts that will mean a reduction in payouts of about 5 percent to 6 percent in 2009 and about 15 percent by 2012, according to an internal memo addressed to salaried employees from Tim Farrell, vice president of corporate human resources. The change will affect only salaried employees." (Workforce Management; free registration required)

How Mandatory Pensions Affect Labor Supply Decisions and Human Capital Accumulation? Options to Bridge the Gap
Excerpt: "Mandatory pension systems can have a negative impact on individual savings and labor supply decisions. In particular, defined benefit pension schemes that are not actuarially fair, can create incentives for early retirement, and therefore, reduce labor supply and the stock of human capital." (Social Science Research Network)

Income Replacement Goal for Retirement Saving Rises
Excerpt: "For years, a common projection was that workers needed to replace 70% to 90% of their pre-retirement pay to maintain the same living standard in retirement. But now, as medical costs grow, life spans lengthen and fewer retirees receive pensions, financial planners say you'll need more." (USA TODAY)

Video: The Sour Economy Has Made Retirement More Elusive Than Ever for Many Americans
3 minutes. (ABC News)

Listing of IRS Published Guidance for January - June 2008
The target page links to guidance published by the Service relating to retirement plans: Treasury Regulations; Revenue Rulings; Revenue Procedures; Notices; and, Announcements. (Internal Revenue Service)

2008 Presidential Election: Candidates Retirement and Related Economic Policies (PDF)
6 pages. Excerpt: "All of these proposals are of interest to employers. They may also be a harbinger of what the new Congress turns to when it convenes in January 2009, depending on which candidate wins the presidential election as well as the results of the elections in the U.S. Senate and House of Representatives." (Hewitt Associates)

Groups Make Available Older Worker/Elderly Scam Prevention Materials
Excerpt: "The Financial Industry Regulatory Authority (FINRA) and the International Foundation of Employee Benefit Plans are working together to get out the word about two new online resources to help companies and their older workers protect themselves from early retirement scams." (; free registration required)

Massachusetts City in a Rift with State over Pension Takeover
Excerpt: "The Massachusetts city of Methuen could soon face a court order if it does not liquidate its pension fund assets into cash to hand over to the state retirement system. . . . The city said it tried to transfer its pension assets to the state last year, but the state would not take them. The rift is over how the assets are transferred; the state says it will gladly take the assets when they are all converted to cash, but Methuen said not selling the assets would be preferable in the down market." (; free registration required)

PBGC Releases Bankrup.tcy Plan Termination Rule
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) has proposed a rule to protect the agency from liability growth during employer bankrup.tcy proceedings." (; free registration required)

[Opinion] MetLife v. Glenn: Another Push for Defined Contribution Plans
Excerpt: "Employers who sponsor and administer defined benefit plans are now on notice that, because of their conflicts of interest, their administrative decisions will generally receive less deference from the courts than will the comparable decisions of their competitors sponsoring and administering 401(k) plans who do not operate under such conflicts of interest." (Oxford University Press USA)

Sponsored by: ASPPA

(Click on company name or banner to learn more.)
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] Heroes Earning Assistance and Relief Tax Act Adds Benefits for Those in Military Service (PDF)
Pages 3- of 8 pages. Excerpt: "The HEART Act deals principally with the tax treatment of military personnel, with provisions applying to a wide range of Internal Revenue Code ('Code') provisions. This article will deal primarily with those provisions which have an effect on qualified retirement or Section 125 plans, and IRAs." (Trucker Huss)

Executive Compensation: A New View from a Long-Term Perspective, 1936-2005
Excerpt: "We analyze the long-run trends in executive compensation using a new panel dataset of top executives in large publicly-held firms from 1936 to 2005, collected from corporate reports." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)

UnitedHealth Settles Class Action Lawsuit
Excerpt: "The lawsuit filed by the California Public Employees' Retirement System in 2006, alleged that UnitedHealth's CEO and COO collectively earned over $500 million by exercising the backdated options." (RTTNews)

The IRS Targets a Popular, and Perfectly Legal, Strategy Used by Executives for Dodging the Tax Man
Excerpt: "At issue are variable prepaid forward contracts, which allow executives to get cash for their stock holdings while skirting capital gains taxes. They have served as an appealing retirement planning device for executives who want to reduce their personal financial exposure to their own companies as a result of stock option grants, although much of that diversification flies in the face of pay-for-performance demands by shareholder activists." (Financial Week; free registration required)

New edition of Model Equity Compensation Plans
The NCEO presents excerpts from the new edition of its book Model Equity Compensation Plans, which provides model stock option and employee stock purchase plan (ESPP) documents, plus brief explanations of the plan documents. (National Center for Employee Ownership)

2008 Presidential Election: Candidates' Employment Proposals (PDF)
9 pages. Excerpt: "[T]he candidates have proposed changes to employer-paid leaves of absence, the rules governing union elections, minimum wage . . . ." (Hewitt Associates)

Sun's 'Open Work' Program Sheds Light on Telecommute Savings
Excerpt: "'Not only did we find that the energy used by working in the office was about twice as much as what was used when working from home, which was a significant difference, but we also found a huge impact [from] the energy consumption used in the commute,' . . . ." (Computerworld Inc.)

A Look at the Candidates' Stands on Health Care Reform and Retirement Savings
Excerpt: "What seems certain is that political change is not only in the air, it is likely to find its way into the workplace in a significant way over the next four years." (; free registration required)

Employee Ownership Update for July 1, 2008
NCEO Executive Director Corey Rosen discusses the agreement by the State of Florida to buy U.S. Sugar, an ESOP company recently in the news due to employee complaints that they were cashed out of the ESOP at too low a price; the State of California's offer of a settlement in certain abusive ESOP transactions; and a survey showing that employee stock purchase plans (ESPPs) have become somewhat more conservative in response to accounting rule changes that became fully effective in 2006. (National Center for Employee Ownership)

Newly Posted Events
(Post Yours!)

2008 Web/Telephone Seminar: 403(b) Plans
Nationwide on August 28, 2008
presented by Ascensus

2008 Web/Telephone Seminar: Amending & Restating QPs for EGTRRA
Nationwide on August 28, 2008
presented by Ascensus

2008 Web/Telephone Seminar: Comparing Roth & Traditional IRAs
Nationwide on August 7, 2008
presented by Ascensus

2008 Web/Telephone Seminar: Coverdell Education Savings Accounts
Nationwide on August 7, 2008
presented by Ascensus

2008 Web/Telephone Seminar: IRA Beneficiary Distributions
Nationwide on August 14, 2008
presented by Ascensus

2008 Web/Telephone Seminar: IRA Required Minimum Distributions
Nationwide on August 12, 2008
presented by Ascensus

2008 Web/Telephone Seminar: Maintaining Your QRPs
Nationwide on August 19, 2008
presented by Ascensus

2008 Web/Telephone Seminar: Selecting the Best 401(k) Plan Design
Nationwide on August 26, 2008
presented by Ascensus

2008 Web/Telephone Seminar: SEP Plans
Nationwide on August 5, 2008
presented by Ascensus

2008 Web/Telephone Seminar: Traditional IRA Distributions
Nationwide on August 21, 2008
presented by Ascensus

Conference of Consulting Actuaries Annual Meeting
in Florida on October 26, 2008
presented by Conference of Consulting Actuaries

Membership Diagnostics: Analyzing Shifts and Creating High-Impact Future Strategies
in California on July 24, 2008
presented by Healthcare Web Summit

The 401k Service Training Program™
in Pennsylvania on September 10, 2008
presented by Financial Service Standards, LLC

Newly Posted Press Releases
(Post Yours!)

Russell to Plan Sponsors: Use a New Evaluation Framework to Differentiate Among Target Date Funds
Russell Investments

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Sr. Benefits Specialist
for Quest Diagnostics
in NJ

Account Manager
for Retirement Consulting Firm
in NY

ERISA Attorney #3953
for Special Counsel, formerly The Esquire Group
in MN

Paralegal - Employee Benefits/Executive Compensation
for Perkins Coie LLP
in IL

Director Retirement Plans Client Services
for Mutual of Omaha Insurance Company
in NE

Client Relationship Consultant
for Gallagher Retirement Services
in CO

Senior ERISA Consultant
for Tofias, PC
in MA

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