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July 14, 2008

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

Today's sponsor is ASPPA

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ASPPA Annual Conference

How do the elections this fall affect you as a pension professional?
Attend the ASPPA Annual Conference in Washington, DC October 19-22 and find out. Network with over 1600 pension professionals, attend more than 60 interactive workshops and hear the latest election talk from our Keynote Speakers James Carville and Mary Matalin. Don't wait, register now and be a part of it all with ASPPA.

[Guidance Overview] PPA Does Not Eliminate All Liability Surrounding the Management of a Qualified Retirement Plan
Excerpt: "Questions, both frequent and infrequent, abound about the Department of Labor's guidance on how advisers and employers could limit their liabilities by prudently selecting and monitoring a retirement plan's investment options. Here is a sampling of some of the less frequently cited points of confusion for both employers and advisers." (Employee Benefit Advisor; free registration required)

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated July 9, 2008, for Retirement Plans (PDF)
7 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding retirement plans. (Hewitt Associates)

[Guidance Overview] PBGC Permits Appeals Board to Refer Some Appeals to Other Departments
Excerpt: "The PBGC has issued final regulations permitting its Appeals Board to refer certain appeals to Appeals Board staff or other internal departments for a written response. The amendments also include some minor clarifying and technical changes to the rules for administrative review of agency decisions." (Wolters Kluwer)

[Guidance Overview] How Early Can the Annual QDIA Notices Be Sent?
Excerpt: "Department of Labor rules govern the timing of QDIA notices. The annual notices must be delivered within a reasonable period of time, but no later than 30 days before the beginning of the plan year. The DOL rules provide guidance on the latest time the notices can be sent (30 days). However, many plan sponsors want to know when is the earliest date that the annual notices can be provided? In other words, what is a reasonable period of time for sending out the annual notices?" (Reish Luftman Reicher & Cohen)

[Guidance Overview] Every Company's Retirement Plan Must be Amended this Year
Excerpt: "Every retirement plan, including pension, profit sharing and 401(k) plans, regardless of whether the plan is a prototype, volume submitter, or individually drafted, must be amended to comply with the final Internal Revenue Code ('Code') Section 415 regulations issued by the IRS." (Reish Luftman Reicher & Cohen)

Cash-Balance Plans Not Discriminatory, Court Rules
Excerpt: "The 2nd Circuit Court of Appeals says that while the benefits provided to younger employees are worth more than the same benefits provided to older employees, that difference is the result of time and compound interest and does not constitute age discrimination." (Workforce Management; free registration required)

Funded German Pension Systems Will Be 'Beneficial' (PDF)
2 pages. Excerpt: "The German state of Lower Saxony has said it will introduce a new fund to back the pensions promises made to its civil German states to do so. A new academic study has been published this week, recommending the idea and calling for such funds to invest in stocks and real estate, as well as the traditional fixed income." (Financial News via Pension Research Council)

Proposed Legislation on Fees and Expenses
Excerpt: "The [discussion on the target page] was prepared by the House Education and Labor Committee. It is intended to support the provisions included in The 401(k) Fair Disclosure for Retirement Security Act which was recently approved by the House Education and Labor Committee . . . ." (Reish Luftman Reicher & Cohen)

Criminal Issues Regarding ERISA Title I Investment Breaches (PDF)
5 pages. Excerpt: "This article discusses the criminal liability risks presented by a plan's investment in tiered asset allocation mutual funds. [Reproduced with permission from the Tax Management Compensation Planning Journal.]" (The Bureau of National Affairs, Inc. via the Wagner Law Group)

Looking Closely at Target-Date Funds
Excerpt: "A new study has found a striking lack of consensus about how [target-date] funds should operate, leaving employees and retirees exposed to widely varying levels of risk. The fees that the funds charge vary widely, too." (The New York Times; free registration required)

Advisers See New Life for 403(b) Market with Revamped Rules
Excerpt: "They think that the rules, which will make 403(b) plans more like 401(k) plans by requiring sponsors to maintain written plan documents, will help them garner more business from the non-profit schools, religious entities and health care providers that offer the plans." (Investment News; free registration required)

Report Tags Many Target-Date Funds with Poor Grades
Excerpt: "The firm, Target Date Analytics, has released its first target-date report card, which grades dozens of mutual fund companies on their target-date offerings based on everything from the perceived risk in a target-date fund's portfolio upon retirement to the layers of fees that fund companies charge workers." (Financial Week; free registration required)

Control Your 401(k) - Invest for Your Own Future, Not the Financial Industry's
Excerpt: "[Securities attorney and investment adviser Daniel R. Solin lays out in his new book, The Smartest 401(k) Book You'll Ever Read,] how most of us are getting messed over in our 401(k) plans and 403(b) plans. It's also a blueprint for how to improve them. If they were improved, we might live to see our savings bear fruit rather than lose it to the excesses, expenses and marketing hype of the Retirement/Investment Complex." (The Dallas Morning News)

Stock Holdings in Retirement Plans May Require Special Treatment
Excerpt: "The best approach depends on a number of things, including the price the employees or company paid for the stock, the taxes that apply and whether they have the discipline to reinvest any proceeds wisely to provide for future needs, such as retirement or college. Debra Light, a principal at Moneta Group, said one strategy involves looking at the net unrealized appreciation -- the difference between the current price of the stock and the cost basis (the amount the employees or employer originally paid for the stock)." (St. Louis Post-Dispatch)

Are the Wealthy Deserving of Social Security Benefits?
Excerpt: "Sheila Reich of Boca Raton raises an interesting point in her letter to a Florida paper: 'Why are we allowing millionaires to collect Social Security checks? They certainly don't need the money. Why can't we ask them to choose not to receive their monthly check?'" (NewsDay)

Vesting Rules for Company 401(k) Match Affect Contributions
Excerpt: "Some companies have what's called 100% vesting, meaning that the employee immediately owns any contributions made by the company on his or her behalf. But other companies use 'graduated vesting,' typically turning over 20% of its contributions to the employee after one year, working up to 100% after five years, he says. Then there's 'cliff vesting,' where 'you don't own any of the contributions unless you've been there for, say, three years. Then, you own 100%.'" (The Wall Street Journal)

The Nuts and Bolts of Annuitizing from Defined Contribution Plans
Excerpt: "We have mentioned the use of annuities a few times on this blog, and we recently published an article with CCH which explained how the Qualified Plan Distributed Annuity (the 'QPDA') solves the portability problem related to distributing annuities from defined contribution plans. QPDAs are only a piece of the story. Annuitizing from DC plans also involves accumulating income guarantees within an ongoing plan." (Baker & Daniels)

Pension Option Can Pay Off - Buying Years of Service Worthwhile
Excerpt: "How do I determine if I should purchase years of service from my state pension plan? If I used $97,000 to purchase 10 years of service, I would receive a full pension of about $1,300 per month (up from about $400 a month currently) and could continue to participate in the employees' health plan." (The Hartford Courant)

Can You Still Afford to Retire? Better Re-Check Your Timetable
Excerpt: "Retirement portfolios are shrinking. Home equity is plunging. And Social Security faces an uncertain future. This trifecta of grim news means that all but the wealthiest Baby Boomers may have to review -- and possibly rethink -- whether their retirement target dates are still realistic." (USA TODAY)

New book: Questions and Answers on the Duties of ESOP Fiduciaries
The NCEO presents excerpts from its new book Questions and Answers on the Duties of ESOP Fiduciaries, authored by David Ackerman, a leading attorney in the employee stock ownership plan field. (National Center for Employee Ownership)

[Opinion] American Benefits Council Comments on Proposed Minimum Required Funding Regulations (PDF)
4 pages. Excerpt: "With respect to the proposed regulations, we request a public hearing and we request the opportunity to testify at that hearing. Kent Mason, a partner with . . . Davis & Harman, LLP will testify for the Council. Set forth below is an outline of the topics we will address (with the time devoted to each topic). I. Reasonable interpretation standard (1 minute) II. Use of funding balances to make quarterly contributions (4 minutes) III. Prefunding balance issue (2 minutes) IV. 2007 lookback year (3 minutes)" (American Benefits Council)

Sponsored by: The SPARK Institute

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Banner ad for The SPARK Institute

The SPARK Institute 403(b) Plans Issues & Answers Forums

New rules that go into effect in 2009 will require major changes to 403(b) plans. The SPARK Institute 403(b) Plans Issues and Answers Forums are must-attend meetings for anyone responsible for 403(b) plans at K-12 schools, universities, hospitals, non-profits, TPAs and financial advisors. Sessions will cover fiduciary concerns, plan documents, preparing for 2009 and beyond, information sharing best practices, working with vendors and much more.

(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] The Basics of the HEART Act
Excerpt: "AHI's Benefit Alert provides some useful information on The Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART) Act. The Act provides benefits preferences to employees who are in the National Guard and Reserves. It may also impact 401(k) plans and health flexible spending accounts (FSAs)." (Workplace Prof Blog)

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated July 9, 2008, on Human Resources & Employment Law (PDF)
9 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding human resources and employment law. (Hewitt Associates)

[Guidance Overview] Deferred Compensation for My Future? Or Take the Money Now?
Excerpt: "Rules have long been in effect regarding non-qualified deferred compensation arrangements. One of those rules provides that the amount deferred must not be constructively received by the taxpayer or it will be taxed currently. This means that the deferred amount must remain subject to claims of creditors of the employer. Depending on the financial condition of the employer, this might be a real problem for the taxpayer employee--especially if the arrangement is to continue for a long period of time." (BNA Tax Management)

Retirement Plans and Insurance Policies Offer Quick Money with Real Disadvantages
Excerpt: "While tapping these funds may seem like a convenient way to address an immediate need, such as a looming medical or tuition bill, financial advisers urge caution. They say that consumers should carefully weigh the ramifications -- the possibility of a big tax bill and far less savings in retirement, for example -- before dipping into a 401(k), Individual Retirement Account or life-insurance policy." (The Wall Street Journal)

Pensioners Battle Qwest Over Insurance Benefit
Excerpt: "Seven retirees led by Edward J. Kerber of Warrenton, near Astoria, sued Qwest in March 2007 saying the company violated pension law by reducing payouts from the life insurance program. Those retirees want a federal judge in Denver, where Qwest is headquartered, to include all retirees in their case, including about 11,300 in Oregon and Washington." (Oregon Live LLC)

Newly Posted Events
(Post Yours!)

COBRA for Rookies: Understanding the Basics to Avoid Liability
Nationwide on June 26, 2008
presented by Employee Benefits Institute of America (EBIA)/Thomson Tax & Accounting

EPCRS Workshop: Preventing and Correcting Qualified Plan Problems Webcast
Nationwide on July 22, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)

Newly Posted Press Releases
(Post Yours!)

Still River Announces 403(b) Loan & Hardship Withdrawal Software for Rev. Proc. 2007-71 Compliance
Still River Retirement Planning Software, Inc.

The SPARK Institute Releases New 403(b) Plans Best Practices Document, Announces Involvement Of DTCC In Information Sharing Effort
The SPARK Institute

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OmniPlus Consultants
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Director, Plan Services
for Diversified Investment Advisors
in NY

Client Relationship Manager
for PensionTrend, Inc
in MI

Project -Based Benefits Consultant
for Affiliated Computer Services
in NJ

Benefits Analyst/403(b) Plan Administrator
for City Colleges of Chicago
in IL

Administrative Assistant
for Wisconsin Regional TPA firm
in WI

ERISA Attorney
for Potter Anderson & Corroon LLP
in DE

Senior Account Executive
for CBIZ Benefits & Insurance Services, Inc.
in KS

Human Resource Assistant Director
for Benefit & Pension Funds
in NY

Compliance Manager
for Vanguard
in AZ

Retirement Plan Administrator
for JM Pension Advisory, Inc.
in MD

Technical Editor - Employee Benefits Plan/Taxation
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