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July 10, 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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Banner ad for DATAIR Employee Benefit Systems, Inc.

DC/401(k) Administration Software from DATAIR

DATAIRís Defined Contribution System for Valuations, Discrimination Testing, and Proposals. Handles New Comparability Plans, Sole Proprietorships, 401(k) and 403(b) plans. Live, expert support.

DATAIRís DC/401(k) System includes

  • Download links to many allocated account fund providers
  • Automated loan processing
  • Flexible data import/export
  • Interface with DATAIRís 5500/1099R system.
Contact or call 1-888-328-2474 (1-888-DATAIR-4)

[Guidance Overview] Cashed-Out Participants May Pursue ERISA Claims Over 401(k) Plan Investments
Excerpt: "Participants who had been cashed out of 401(k) plans still could pursue their claims that the plan sponsors had breached their fiduciary duties under ERISA by imprudently investing in mutual funds. This was the decision of the Fourth Circuit U.S. Court of Appeals in In re Mutual Funds Investment Litigation (No. 06-2003)." (Wolters Kluwer)

House Approves Smoothing Technique in Pension Bill
Excerpt: "Employers will be able to take into account expected future growth of their pension plan investments when calculating current contributions under a bill unanimously approved by the House of Representatives on Wednesday, July 9." (Workforce Management; free registration required)

Framing Effects in Retirement Savings (PDF)
9 pages. Excerpt: "This paper examines how supplemental retirement savings decisions of higher education faculty are influenced by the generosity and structure of an individual's primary retirement plan." (TIAA-CREF Institute)

New Ways to Make People Save: The Dartmouth Project (PDF)
17 pages. Excerpt: "Many studies have examined barriers to saving; however, little effort has been devoted to helping people who want to save but who are limited by a severe lack of knowledge. Lusardi, Keller, and Keller found that a social marketing approach can be successful in helping these people." (TIAA-CREF Institute)

The Role of Annuities in Your Retirement Portfolio (PDF)
12 pages. Excerpt: "This paper demonstrates that a life annuity is the most cost effective way of providing any given level of guaranteed income. Alternative strategies either fail to provide as much guaranteed income, or carry with them a risk that the individual may fail to sustain her living standards for the entirety of her life." (TIAA-CREF Institute)

Sen. Kohl Schedules 401(k) Debit Card Hearing
Excerpt: "The Senate Special Committee on Aging says it will hold a hearing July 16 on the challenges facing efforts to protect Americans' retirement savings. The hearing has the title 'Saving Smartly for Retirement: Are Americans Being Encouraged to Break Open the Piggy Bank?'" (The National Underwriter Company; free registration or paid subscription required)

Hewitt Research Shows Women Much Less Prepared to Retire Than Men
Excerpt: "In fact, Hewitt's study not only found that women need to save more for retirement than men, but it also highlighted that the gap between the amount women need to save and the amount they are actually saving is larger than the gap for men. Moreover, this gap will continue to grow due to lower salaries, conservative investing, longer life expectancies and higher retiree medical needs." (Hewitt Associates)

403(b) Plans: Covered by ERISA or Exempt? Considering the Pros and Cons of ERISA Compliance
Excerpt: "In light of the new IRS 403(b) regulations, many tax-exempt employers are evaluating whether to continue efforts to keep their 403(b) plans exempt from the Employee Retirement Income Security Act of 1974 (ERISA). Employers need to consider the various factors, both positive and negative, in deciding whether to subject a 403(b) plan to ERISA.' (Davis Wright Tremaine LLP)

Hearing on Multiemployer Plan Funding Proposed Regs Announced
Excerpt: "The IRS has announced that a public hearing will be held on July 31, 2008 in Washington, DC regarding proposed regulations, issued pursuant to the Pension Protection Act of 2006 (PPA; P.L. 109-280) and effective for plan years beginning after 2007, for multiemployer defined benefit plans that are in endangered or critical underfunded status . . . ." (Wolters Kluwer)

Court Dismisses Age Bias Claims Against Hybrid Plan
Excerpt: "The U.S. District Court for the District of Colorado has ruled the pension equity formula and wear-away period that are part of the Gannett Retirement Plan do not discriminate against older workers." (; free registration required)

U.S. House Passes PPA Technical Corrections Bill
Excerpt: "The U.S. House has passed legislation that clarifies lawmakers' intention that corporate pension plans can use 24-month smoothing when calculating pension liability." (; free registration required)

EBRI 2008 Recent Retirees Survey: Report of Findings (PDF)
24 pages. Excerpt: "The 2008 Recent Retirees Survey was undertaken to better understand the tools and practices that might encourage workers to postpone their retirement and remain longer with their company. . . . One of the major findings from the survey is that employers have a narrow window of up to two years in which they may be able to intervene." (Employee Benefit Research Institute)

Suit Alleges NovaStar Officials Mismanaged Employee Retirement Plan
Excerpt: "A new class-action lawsuit filed against NovaStar Financial Inc. alleges that the company and its officers mishandled their responsibilities for overseeing the employee retirement plan when they invested heavily in NovaStar's stock." (Kansas City Business Journal;; free registration required)

[Opinion] It's Time for a National Discussion on Retirement (PDF)
6 pages. Excerpt: "There are a number of elements to consider. Will the fundamental sources of income that served as the bedrock of retirement security for the past half century -- Social Security, employer-sponsored retirement plans, and individual savings and investment -- suffice in the future? How best to coordinate and deliver benefits to retirees? Finally, what needs to be on the table as part of any meaningful discussion on achieving comprehensive, fair, and efficient retirement security?" (Mark Shemtob via Contingencies)

[Opinion] ERISA Doesn't Ban 'Cash Balance' Plans; Second Circuit Joins Sisters
Excerpt: "The Second Circuit today joined the Third, Sixth, and Seventh Circuits in holding that a 'cash balance' pension plan doesn't violate the Employee Retirement and Income Security Act of 1974 despite the fact that older employees (sort of) get less bang for their buck." (Barry Barnett)

Sponsored by: ASPPA

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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] California Decision Portends Broad Changes in Spousal Eligibility (PDF)
6 pages. Excerpt: "The most common employee requests for same-sex spouse benefits are for coverage under health and dental plans and spousal survivor annuity coverage under defined benefit pension plans. When presented with a request to provide benefits to same-sex spouses under any employee benefit plan, an employer should ask the following questions . . . ." (Thompson Publishing Group Inc.)

[Guidance Overview] Tax-Effective Disaster Relief -- Direct Employer Payments to Employees (PDF)
Pages 2-3 of 5 pages. Excerpt: "Code Section 139 allows individuals to exclude from gross income (as well as from payroll taxation if they are employees, and self-employment taxes if they are independent contractors), any 'qualified disaster relief payment.'" (Miller & Chevalier Chartered)

Beware That Company Changes Can Cause Havoc on Your Plan (PDF)
Page 3 of 6 pages. Excerpt: "Any circumstance affecting ownership, the number of your employees, a change in the way your business is managed, a change in the way your product or service is sold, or a change in the way your employees are managed, may adversely affect your plan." (The ERISA Law Group, P.A.)

[Opinion] Another Potential Trap Under 409A
Excerpt: "IRS and Treasury Department officials recently discussed a trap that (in my opinion) emphasizes the absurdity of so much of Code Sec. 409A." (Michael S. Melbinger via Winston & Strawn LLP)

[Opinion] Setting the Stage for OPEB bonds
Excerpt: "It's now a 'perfect storm' for state and local governments who already face acute budgetary pressures -- just as they begin to budget money to fund their retiree medical benefits (OPEB). And many underfunded pension plans could soon see their actuarial status erode, requiring increased employer contributions." (

[Opinion] General Motors' Dubious Habit of Steadily Increasing Worker Benefits Threatens Future of Company
Excerpt: "The immediate cause of G.M.'s distress, of course, is the surging price of oil, which has put a chill on the sale of gas-guzzling sport utility vehicles and trucks. The company's failure to invest early enough in hybrids is another culprit. Years of poor car design is another. But none of G.M.'s management miscues was so damaging to its long-term fate as the rich pensions and health care that robbed General Motors of its financial flexibility and, ultimately, of its cash." (The New York Times; free registration required)

Newly Posted Events
(Post Yours!)

Employer Solutions to Rising Gas Costs and Commuting Challenges Webcast
Nationwide on July 17, 2008
presented by International Foundation of Employee Benefit Plans

Information sessions to learn about the nation's only LLM degree in Employee Benefits for attorneys and MS degree in Employee Benefits for non-attorney benefits professionals
in Illinois on July 15, 2008
presented by The Center for Tax Law and Employee Benefits at The John Marshall Law School in Chicago

New IRS Guidance on HSAs Webcast
Nationwide on July 24, 2008
presented by International Foundation of Employee Benefit Plans

SPARK Accredited Retirement Plan Consultant (ARPC) Classroom Session
in Illinois on September 18, 2008
presented by SPARK -- Society of Professional Asset-Managers and Record Keepers

Newly Posted Press Releases
(Post Yours!)

Prudential Debuts New Retirement Workbook
Prudential Financial, Inc.

Retirement Plan Sponsors Demand Certified Service Providers
Roland|Criss Fiduciary Services

EPIC Advisors, Inc. Names New Sales Consultant For Company
Venture (k) Corp.

AIFLP Announces New Free Publication: The Integrative Adviser
Association for Integrative Financial and Life Planning

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in NY

Implementation Manager for Benefits Intelligence Solutions
for OCI
in CO

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