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July 9, 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] Proposed IRS Regs: Reasonable Good Faith Interpretation of Required Minimum Distribution Rules by Governmental Plans (PDF)
9 pages. Excerpt: "This document contains proposed regulations under sections 401(a)(9) and 403(b) of the Internal Revenue Code (Code) to permit a governmental plan to comply with the required minimum distribution rules by using a reasonable and good faith interpretation of the statute. These proposed regulations will affect administrators of, employers maintaining, participants in, and beneficiaries of governmental plans. . . . Section 823 of the Pension Protection Act of 2006 . . . instructs the Secretary of the Treasury to issue regulations under which, for all years to which section 401(a)(9) applies, a governmental plan, within the meaning of section 414(d), shall be treated as having complied with section 401(a)(9) if such plan complies with a reasonable good faith interpretation of section 401(a)(9)." (Internal Revenue Service)

[Official Guidance] July 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 Weighted Average Interest Rate Table Updated for July 2008
Weighted Average Interest Rate = 4.74 for July 2008 (Internal Revenue Service)

[Official Guidance] Text of EBSA Advisory Opinion 2008-05A Sent to U.S. Chamber of Commerce
Excerpt: "This is in response to your recent letter requesting guidance on whether the fiduciary rules of the Employee Retirement Income Security Act of 1974 (ERISA) prohibit the use of plan assets to promote union organizing campaigns and union goals in collective bargaining negotiations. Your inquiry was in addition to the issues the Department recently addressed in Advisory Opinion 2007-07A regarding the expenditure of plan assets by plan fiduciaries as shareholders of corporations in support of proxy resolutions." (U.S. Department of Labor)

[Guidance Overview] Pension Plan May Vary Imputed Service Based, in Part, on Age (PDF)
2 pages. Excerpt: "Justice Kennedy filed a dissenting opinion arguing that the Kentucky plan presented a 'straightforward act of discrimination on the basis of age.' Id., dissent slip op. at 3. The opinion criticized the majority for basing its decision on policy arguments that do not follow a clear rule of law. Justice Kennedy warned that '[b]y embracing the approach rejected by the en banc panel and all other Courts of Appeals that have addressed this issue, this Court creates unevenness in administration, unpredictability in litigation, and uncertainty as to employee rights once thought well settled.' Id., dissent slip op. at 2." (Sutherland)

[Guidance Overview] DOL Guidance Clarifies QDIA Rules (PDF)
3 pages. Excerpt: "On October 24, 2007, the Department of Labor (DOL) issued final rules on safe harbor default investments for participant-directed defined contribution plans subject to ERISA. In response to many comments and questions received on those rules, the DOL published clarifying guidance on April 29, 2008, in the form of technical corrections and Field Assistance Bulletin (FAB) 2008-03. This Compliance Bulletin discusses the highlights of these clarifications." (Prudential Retirement)

[Guidance Overview] IRS Composite Corporate Bond Rate Table Updated for July 2008
Corporate Bond Weighted Average Interest Rate = 6.04 for July 2008 (Internal Revenue Service)

How a Pension Plan's Funding Level Should Influence Its Investment Strategy
Excerpt: "A new white paper authored by Vanguard Investment Counseling & Research. . . discusses the primary risk factors and constraints facing sponsors of underfunded, funded, and overfunded pension plans and presents appropriate investment strategy recommendations." (The Vanguard Group, Inc.)

Pension Plan Characteristics and Framing Effects in Employee Savings Behavior (PDF)
29 pages. Excerpt: "A growing body of research suggests that savings decisions are affected by a wide range of influences that play no role in a conventional neoclassical model of savings behavior, including framing effects, default effects, and inattention. This paper contributes to the growing evidence of behavioral decision-making effects in savings outcomes using detailed micro data on the retirement savings behavior of college and university faculty." (TIAA-CREF Institute)

Official Rules Against Union Use of Plan Assets
Excerpt: "Retirement plan fiduciaries may not sacrifice plan performance when using plan assets to either help or fight unions. Robert Doyle, a director at the Employee Benefits Security Administration, comes to that conclusion in Advisory Opinion 2008-05A, which was written in response to a letter from David Chavern chief operating officer of the U.S. Chamber of Commerce, Washington." (The National Underwriter Company; free registration or paid subscription required)

Coordinating the Benefit Plan Audit and Form 5500 Preparation
Excerpt: "The auditor's responsibility for information reported in the Form 5500 does not extend beyond the financial information contained in the audit report, and the auditor is not required to verify any other data shown in the Form 5500. On the other hand, most auditors will want to see the entire Form 5500 filing to assure themselves of consistency between their understanding of the plan and that being reflected on the filing." (

Longer-Living Women Outpace Savings, According to Study
Excerpt: "Women might not earn as much as men or fly up the corporate ladder as quickly, but they get the last laugh because they live longer. Right? As it turns out, women probably aren't saving enough to bankroll those extra years in style. They invest more conservatively, start saving later and are more likely to be in and out of the workforce, according to a study released today by Hewitt Associates, a human resources consulting firm." (AP via The Journal Gazette)

Court Sides with Dell in Company Stock Suit
Excerpt: "The U.S. District Court for the Western District of Texas ruled that fiduciaries of the Dell Inc. 401(k) Plan did not violate their duties under the Employee Retirement Income Security Act (ERISA) by allowing more than 50% of the plan's assets to be invested in Dell company stock." (; free registration required)

Teacher Pension Plan a Win for West Virginia
Excerpt: "With more than 78 percent of the eligible participants selecting to transfer from a defined contribution pension plan to a defined benefit pension plan, over 15,000 teachers and school service employees will be moving into a bona fide retirement plan." (

DOL Working Hard in the Atlanta Area to Ferret Out Fiduciary Breaches (PDF)
Pages 2-3 of 6 pages. Excerpt: "[Ilene Ferenczy, an attorney in Atlanta who specializes in retirement plans writes:] We have been retained recently by a few different clients in the Atlanta area to represent them in regard to an investigation by the U.S. Department of Labor (DOL) of their retirement plans. These clients have undergone a review process spanning several months, which has resulted in a lengthy letter from the DOL investigator as to possible charges of fiduciary breach or mismanagement of the plans by the fiduciaries." (Swerdlin & Company)

[Opinion] San Diego Pension Reform Proposal Would Require Patience to See Savings
Excerpt: "The proposed plan which, among other things, reduces city employees' retirement age and significantly cuts the city's contributions to employee retirement savings, would eventually save taxpayers an estimated $22.5 million annually. The key word is eventually. Because federal laws prevent the rolling back of already-negotiated benefits, the proposed reforms would only apply to new employees hired after July 1, 2009." (

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Amending Split-Dollar Life Insurance Arrangements May Avoid Section 409A Treatment (PDF)
Page 1 of 5 pages. Excerpt: "If an SDA is subject to Code Section 409A, the next and more difficult step is determining what amendments are required to comply with Section 409A. Generally, the amended SDA should limit distributions to those events permitted under Section 409A (termination of employment, death, disability, change in control, hardship or stated time)." (Miller & Chevalier Chartered)

[Guidance Overview] Important Deadline Under Section 409A Approaching for Nonqualified Deferred Compensation Plans and Faculty Members of Academic Institutions (PDF)
3 pages. Excerpt: "This is a reminder that the deadline for compliance with the Internal Revenue Code Section 409A rules is approaching quickly. In addition, this is an alert to all academic institutions to a potential Section 409A issue affecting their faculty members that must be addressed prior to the beginning of the next academic year. It is very unlikely that either of these deadlines will be extended further. Therefore, it is important that any necessary action be taken promptly." (Womble Carlyle Sandridge & Rice, PLLC)

IRS Grants Tax Relief to Victims of Severe Weather in Nebraska, West Virginia and Illinois
Excerpt: "The IRS has announced special tax relief for taxpayers within a thirteen-county disaster area in Nebraska affected by severe storms, tornadoes and flooding on May 22, 2008; within a nine-county disaster area in West Virginia affected by severe storms, tornadoes, mudslides, landslides and flooding on June 3, 2008; and within a fourteen-county disaster area in Illinois affected by severe storms and flooding on June 1, 2008." (Wolters Kluwer)

Economic Changes Have Weakened 'Protective Value' of Insurance, Other Benefits, According to Columnist
Excerpt: "Although '[j]obs, benefits, housing, health coverage, college and retirement savings, even bought-and-paid-for insurance all played crucial roles in maintaining families' economic stability during the second half of the 20th century ... the protective value of each has been weakened over the last generation,' Peter Gosselin, national economic correspondent for the Los Angeles Times, writes in a column." (Kaiser Family Foundation)

[Opinion] Five Family Friendly Workforce Policies
Excerpt: "The most significant economic and sociological change of the past half-century has been the entry of women into the labor market. Public policies that govern the workplace have not kept pace with this demographic shift, however. For the most part, tax law, labor law and employee benefits law were designed decades ago on the assumption that the typical household would have a full-time working husband and a homemaker wife. These anachronistic public policies are not only out of step with the way most Americans are living their lives, they are causing considerable harm. To remedy these problems we need to bring public policy institutions into the 21st century." (National Center for Policy Analysis)

Newly Posted Events
(Post Yours!)

Creating and Maintaining a Domestic Partner Benefits Policy: New Laws and Recent Trends
Nationwide on September 17, 2008
presented by Lorman Education Services

Form 5500 Reporting Update
Nationwide on September 3, 2008
presented by Lorman Education Services

Same-Gender Marriage Rulings: Impacts on Employee Benefit Plans Across the Nation
Nationwide on September 17, 2008
presented by Lorman Education Services

Newly Posted Press Releases
(Post Yours!)

Lincoln Launches 401k Managed Accounts Option
Lincoln Financial Group

Ascensus Launches Plan Adoption System™ with EGTRRA Qualified Plan Documents

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401(k)/Defined Contribution Valuation Processor
for National Retirement Services, Inc.
in CA, NC

Pension Consultant
for Mercer Advisors
in CA

Qualified Plan Consultant
for The Newport Group
in FL

Supervisor, Property and Casualty Services
for Administaff
in TX

Defined Contribution Administrator
for Pension Strategies, LLC
in AZ

Benefits Analyst I
for Milliman
in WA

Business System Analyst (Health Claims TPA)
for Zenith Administrators
in WA

Manager Health Claims (TPA)
for Zenith Administrators
in WA

Sales Desk Manager
for AST Capital Trust Company
in AZ

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