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July 3, 2008

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

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[Official Guidance] Final PBGC Regs: Rules for Administrative Review of PBGC Decisions (PDF)
Excerpt: "Pension Benefit Guaranty Corporation (PBGC) is amending its regulation on Administrative Review of Agency Decisions to clarify that the agency's Appeals Board may refer certain categories of appeals to other PBGC departments for a written response and to remove determinations under section 4022A of [ERISA] from the scope of part 4003. The amendments also include minor clarifying and technical changes to the rules for administrative review of agency decisions. . . . Effective August 4, 2008." (Pension Benefit Guaranty Corporation)

[Guidance Overview] Expatriate Rules in HEART Act of 2008 Affect Deferred Compensation
Excerpt: "Expatriation on or after June 17, 2008, may cause an expatriate to be subject to IRC 877A, which was enacted as part of the Heroes Earnings Assistance and Relief Tax Act (HEART) Act of 2008. . . . If a deferred compensation item is not an eligible deferred compensation item (and not subject to IRC 83), an amount equal to the present value of the deferred compensation item is treated as having been received on the day before the expatriation date." (Deloitte via

[Guidance Overview] Supreme Court Narrowly Upholds State's 'Imputed Service' Formula for Disability Pensions
Excerpt: "The lynchpin of the Supreme Court's decision was its interpretation of Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), which involved a 62-year old employee who claimed he was unlawfully discharged by the employer in order to avoid the payment of pension benefits that were about to vest. In Hazen, the Supreme Court found that, without evidence of intent, a dismissal based on pension status was not a dismissal because of age." (Deloitte via

[Guidance Overview] Towers Perrin U.S. Legislative Tracking Charts -- Retirement -- Updated July 2, 2008 (PDF)
12 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)

[Guidance Overview] Massachusetts Will Tax Unincorporated Owners and Partners on 401(k)
Excerpt: "The Department of Revenue . . . just confirmed that it wants current taxes from the self-employed and partners ('Unincorporated Owners') on their 401(k) deferrals and matches. For a 50 year old who saves $20,000, that's $1,060 up front to the Commonwealth at the 5.3% rate." (

[Guidance Overview] IRS Issues Sample Plan Language for Transfer for ESOP's S Corp Shares to Prevent Nonallocation Year
Excerpt: "This plan language is designed to prevent a nonallocation year by transferring assets from the accounts of disqualified persons to the non-ESOP portion of the plan according to Treas. Reg. 1.409(p)-1(f). A nonallocation year can occur when disqualified persons, as defined in Code section 409(p)(4), own or are deemed to own 50% of the outstanding stock of an S corporation." (Pension Protection Act Blog)

Why Don't the People Insure Late Life Consumption? A Framing Explanation of the Under-Annuitization Puzzle (PDF)
12 pages. Excerpt: "Rather than attempting to rationalize the lack of annuity demand, this paper explores the idea that aversion to annuities is not a fully rational phenomenon. A large literature has documented behavioral biases in a wide range of activities that are important steps in the process of planning for retirement, including whether to participate in employer sponsored pension plans, how much to save, and how to allocate one's portfolio. To the extent that individuals exhibit biases in the wealth accumulation aspects of planning for retirement, it seems natural that similar biases might also extend to the wealth decumulation stage of retirement planning." (TIAA-CREF Institute)

Tailoring Your Allocation to the Stage You're in with Life Cycle Funds
Excerpt: "Today, life cycle mutual funds go by many names including 'strategic allocation', 'asset manager,' 'personal strategy,' 'life strategy' and 'target retirement.' However, the underlying theme of these funds is the same -- one fund that would answer the asset allocation needs of an individual at a particular stage in life. But nothing is ever easy. Although these funds were created to make things simpler for investors, the layered complexity of life cycle fund choices presents a difficult investment task." (AAII Journal via The American Association of Individual Investors)

National Save for Retirement Week Resolution Introduced in the House
Excerpt: "The House of Representatives recently passed H. Res. 1294 designating October 19-25, 2008 as National Save for Retirement Week. A sister resolution, S. Res. 601, introduced on June 25, is awaiting approval in the Senate. National Save for Retirement Week is a national campaign created to encourage American workers to build retirement security by taking advantage of their employer-sponsored retirement savings plans." (ICMA-RC)

Rep. Miller Ends Pursuit of 401(k) Fee Disclosure Legislation
Excerpt: "House Education and Labor Chairman George Miller (D-CA) recently acknowledged that his bill regarding 401(k) fee disclosure would not clear the House this session. Miller cited opposition from the House Ways and Means Committee and the White House, as well as difficulties gaining momentum for the bill in the Senate, as reasons for abandoning the legislation." (ICMA-RC)

Russell Offers Plan Sponsors Help in Selecting Target-Date Funds
Excerpt: "Russell Investments has released a paper to assist plan sponsors in evaluating and selecting target-date funds for their defined contribution plans. According to a Russell announcement, the paper outlines 12 observations about target-date funds that highlight for plan sponsors how traditional fund evaluation approaches fall short as the funds can look the same on the surface but differ dramatically in underlying investments." (; free registration required)

How to Enjoy a Scam-Free Retirement
Excerpt: "Let's face it -- there are a lot of scam artists out there itching to get their grubby hands on your hard-earned nest egg. Don't fall prey to those 'free lunch' seminars or 'retire early' frauds. Here are some common schemes to avoid and Web sites that can help you stay out of trouble." (BusinessWeek)

If Investors Dizzy from Wild First Half Can Follow These Rules, They Should Be Able to Survive Whatever Is Ahead
Excerpt: "Having a well-thought-out plan helps you avoid panicky or impulsive moves. Online 401(k) accounts make it almost too easy for investors to transfer money from one fund to another. 'When everything's headed down, shifting into cash can have the immediately gratifying effect of shielding your portfolio from losses,' Christine Benz, Morningstar's personal-finance expert, said in a recent Web posting. But the sense of relief, she added, is often short-lived, 'replaced by another nagging worry: Is it time to get back in?'" (The Wall Street Journal)

Web Site - PensionHelp America
Excerpt: "We are in the final testing phase of our online referral service. Your answers to a few short questions will not only get you to the right government agency for your particular pension issue, you'll also receive a referral to a local pension counseling project, legal services provider, retiree organization or other helpful no-cost service provider. Until PensionHelp America can do this for you, browse the pension help resources at the Pension Rights Center's website." (Pension Rights Center)

Dura Automotive's Pension Commitment Survives Bankrup.tcy
Excerpt: "[The company] sponsors four defined benefit pension plans that cover more than 4,600 participants, emerged from bankrup.tcy with those programs still intact [and] the plan of reorganization confirmed by the bankrup.tcy court provides that Dura Automotive will continue to sponsor and maintain those plans.' (; free registration required)

IRS Issues 457 Guidance on Teachers' Part-Year Compensation
Excerpt: "The Internal Revenue Service has issued a notice of the proposed treatment of recurring part-year compensation under 457(f) and 409A of the Internal Revenue Code." (; free registration required)

Senators Ask for PBGC Benefits' Calculation Probe
Excerpt: "Citing a recent situation in which the nation's private-sector pension insurer demanded repayments from retirees after the agency had miscalculated pension benefits, a group of U.S. senators called for an agency investigation." (; free registration required)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Towers Perrin U.S. Legislative Tracking Charts -- Human Resources -- Updated July 2, 2008 (PDF)
14 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)

[Guidance Overview] Ninth Circuit Links Statutory Penalty Provision to ERISA Regulations
Excerpt: "Typically, the federal courts find that the statute only reaches formal plan documents. By tying the claims regulation to the civil penalty provision, the Ninth Circuit has given ERISA claimants a discovery short cut with statutory sanctions to back up their requests." (Health Plan Law blog by Attorney Roy F. Harmon III)

UnitedHealth Settles Backdating Suit and Also Settles ERISA-Related Litigation
Excerpt: "'The settlement provides UnitedHealth Group with certainty and closure on this lawsuit, avoids potentially costly and protracted litigation and allows us to continue to focus on providing Americans with high-quality, affordable health care solutions.' Separately, UnitedHealth reached an agreement in principle to resolve the Employee Retirement Income Security Act (ERISA) class action litigation relating to the company's historical stock options practices that was originally filed June 2006, in the U.S. District Court in Minnesota against the company and certain current and former officers and directors." (

Decent Pay, Benefits, Job Security, Make Public Sector Jobs Attractive in Uneasy Economy
Excerpt: "As the nation's economy continues to suffer, schools, villages and other areas of the public sector are being viewed as good places to work with traditional pensions and lower-cost health-care benefits making up for what can be reduced annual salaries. That public-sector interest is backed up by national employment trends charted by the U.S. Department of Labor in 2007, the most recent available." (Daily Herald)

DUI Death as Accident Issue Divides Appellate Court
Excerpt: "A sharply divided federal appellate court has upheld a lower court ruling that the widow of a life insurance plan participant killed in a 2002 car accident did not deserve a benefit payout because the alcohol-related crash was not considered an accident." (; free registration required)

Changing Workforce Demographic Reflected in Employer Benefit Choices
Excerpt: "A new report from Unum lays out changing trends in voluntary benefits purchases by employers driven by a changing workforce demographic and rising health care costs, and provides employers with suggestions on how to deal with these factors." (; free registration required)

Newly Posted Events
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Background Checks: Follow The Rules, Know The Risks, Reap The Rewards
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How to Effectively Communicate with Your Participants
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Learn how to use's plan document software
Nationwide on July 10, 2008
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Protecting the Nest Egg in a Turbulent Economy
in District of Columbia on July 11, 2008
presented by Center for American Progress

Refresher Course for Plan Sponsors Considering Automatic Enrollment
Nationwide on November 20, 2008
presented by TRI-AD

Roth 401(k) - Is It Right for Your Plan?
Nationwide on July 31, 2008
presented by TRI-AD

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Benefits Consultant
for Northwestern Benefit Corporation of Georgia
in GA

Client Services Representative
for Summit Retirement Plan Services, Inc.
in OH

EGTRRA Restatement Project Contractor
for Charles Schwab
in OH

International Consulting Associate
for Towers Perrin
in IL

Compliance Analyst
for New York Life Retirement Plan Services
in MA

Retirement Services Consultant
for Administaff
in TX

Manager, Corporate Retirement Plans
for COUNTRY Financial
in IL

Senior Compliance Analyst- Kingwood, Texas (NE Houston)
for Administaff
in TX

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