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July 15, 2008

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

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[Guidance Overview] 403(b) Plans - Compliance Issues
Excerpt: "Attendees of a panel discussion at PLANSPONSOR's first-ever 403(b) Summit got a bird's-eye view of the enormous amount of work that lies ahead. That is because, panelists told plan sponsors, providers, lawyers, and other professionals at PLANSPONSOR's 403(b) Summit, 403(b) sponsors have until January 1, 2009, to get their regulatory house in order on many important issues." (; free registration required)

[Guidance Overview] IRS Issues Minimum Required Contribution Rules for Defined Benefit Plans (PDF)
5 pages. Excerpt: "WHO'S AFFECTED These developments affect sponsors of qualified single-employer, multiple employer and multiemployer defined benefit plans. They do not affect governmental plans or church plans that do not elect to be covered by ERISA ('non-electing church plans')." (Prudential Retirement)

[Guidance Overview] Communicating 403(b) Changes to Your Employees
Excerpt: "Be sure to develop a 403(b) communications strategy for employees which explains: 403(b) sponsors must comply with these new IRS rules to keep employees' 403(b) retirement benefit tax deferred; these new IRS rules will mean that there are new 403(b) plan do's and don'ts, including greater employer oversight over participant transactions; and as plan sponsor, you are committed to communicating these changes to your employees to facilitate a painless and seamless transition to operate under the new IRS rules." (; free registration required)

[Guidance Overview] 2nd Circuit Finds Cash Balance Plans Do Not Offend ERISA Bias Rules
Excerpt: "The trial court judges, Judge Alvin Hellerstein in Hirt v. The Equitable Retirement Plan for Employers, Managers and Agents, 06-4757-cv and 06-5190-cv, and Judge Denny Chin in Bryerton v. Verizon Communications Inc., 07-1680-cv, decided in favor of companies accused of violating the rule against age bias." (New York Law Journal)

[Guidance Overview] FAQs About the 2009 Form 5500 Schedule C
Excerpt: "On November 16, 2007, the Department of Labor's Employee Benefits Security Administration (EBSA) published final form revisions and a final regulation, generally effective for plan years beginning on or after January 1, 2009, providing new requirements for reporting service provider fees and other compensation on the Schedule C of the 2009 Form 5500 Annual Return/Report of Employee Benefit Plan." (U.S. Department of Labor)

'Greater of' Formulas and the IRS Backloading Position
Excerpt: "In September 2007 we discussed the Wheeler v. Boeing decision, in which a federal district court rejected the IRS's application of defined benefit plan 'backloading' or accrual rules to a 'greater of' formula in a cash balance plan conversion. Since then, the IRS issued Revenue Ruling 2008-7 and has now proposed regulations providing relief from the application of its anti-backloading analysis in the case of multiple formulas." (JPMorgan Chase & Co.)

Summary of Recent EBRI Policy Forum: Defined Contribution Plans in a Post-PPA Environment (PDF)
Pages 1-8 of 12 pages. Excerpt: "[EBRI] devoted its May 2008 policy forum to an examination of defined contribution plans in the wake of the Pension Protection Act of 2006 (PPA), which had far-reaching effects on 401(k)-type retirement savings plans. Early results indicate PPA is, in fact, beginning to achieve the growth in automatic 401(k) enrollment and savings that its sponsors predicted. [The document contains active links to referenced sources and to the EBRI Policy Forum Presentations.]" (Employee Benefit Research Institute)

The Current Series of Revenue-Sharing Lawsuits and Other ERISA Litigation
Excerpt: "While suits over the excess/improperly disclosed fee issue have generated a good deal of retirement services industry buzz in recent months (the Deere case is but one of more than a dozen similar suits filed since September 2006 by the St. Louis-based law firm of Schlichter, Bogard & Denton), they are only part of a much broader web of potential ERISA legal hazards that plan sponsors must navigate." (; free registration required)

DC Plan Statistical Supplement & Industry Forecast
Excerpt: "The CFDD's exclusive statistical supplement covering the DC plan marketplace is now available. [The [17 page] supplement has been posted to the Retirement Plan Statistics area of the website at []" (Center for Due Diligence)

Retirement Vulnerability of New Retirees: The Likelihood of Outliving Their Assets (PDF)
26 pages. Excerpt: "Many studies have focused on the inadequacy of American families' savings. Other studies have documented other risks that could result in households outliving their assets: longevity, volatile investment returns and high inflation. This report is the first to combine all of these factors to determine the likelihood of middle-income Americans – including those who are near retirement and those who have recently retired – outliving their financial assets." (Americans for Secure Retirement)

West Virginia to Give Loans for Teachers to Pay Retirement Buy-In
Excerpt: "Teachers who opt to switch back into the Teachers Retirement System from the Teachers Defined Contribution Plan will have the opportunity to take out a loan to help cover their buy-in costs. The law requires the state to offer the loan to all teachers who choose to switch their retirement plans." (Charleston Daily Mail)

Pension Benefit Guaranty Corporation: A More Strategic Approach Could Improve Human Capital Management (PDF)
61 pages. Excerpt: "GAO was asked to report on (1) PBGC's recent experience in hiring and retaining key staff and how it compares to other federal agencies and (2) the actions PBGC has taken to strategically hire and retain key staff and what additional steps, if any, can be taken." (U.S. Government Accountability Office)

The SPARK Institute Releases a 'Non-ERISA-Covered 403(b) Plans Request for Proposal Guide'
Excerpt: "The free guide for sponsors will aid with the vendor search prompted by 403(b) plans regulations issued by the Internal Revenue Service (IRS), according to a release. SPARK said the guide will help simplify the vendor selection process and can be used with both single and multiple vendor searches. [Registration required to access the document.]" (planadvisor)

DOL Unveils Fee Reporting Guidance
Excerpt: "The Department of Labor today announced long-awaited guidance for reporting fees and compensation arrangements of plan service providers on the agency's new annual 5500 reporting forms." (Pensions & Investments)

[Opinion] The Problem with (Very Expensive) Financial Incentives for Low-Paid Employee Retirement Savings
Excerpt: "I've always been troubled by the fact that the folks worried­ most that workers aren't saving enough and that retirement­ savings­ are 'leaking out' of the system are financial profes­sionals­. Retirement security is not the point of life . . . ." (Michael Barry via; free registration required)

[Opinion] Target-Date Funds and 'Glideance' Counseling
Excerpt: "While the positive aspects of target date funds have been well publicized, plan fiduciaries may be unknowingly gliding into an area of risk not yet considered. If a participant in a target date fund were going to bring legal action against a plan sponsor for an inadequate accumulation of their savings account, what would the likely culprit be? Under performing investments that make up the target date funds? Maybe. Unreasonable costs? Perhaps the portfolio was made up of all proprietary funds that had higher than appropriate expenses." (Jeb Graham via

[Opinion] Investing in a Home As Part of Your Retirement Plan
Excerpt: "[H]ouses are consumer products and not investments. If you are buying a house on the hope that it will go up, you are speculating. If you are speculating, you should be prepared for the price to go down instead of up. Don't blame anyone else when your house price goes down." (American Chronicle)

[Opinion] What's a DB Plan Administrator/Advisor to Do?
Excerpt: "My question to this forum is, what have you been doing in 2008 when dealing with your defined benefit plans, especially in two areas: where no proposed regulations have been issued and where musings in preambles and in open forums by government representatives are disagreed with by practitioners?" (Pension & Benefits Blog)

[Opinion] PPA Amendment Giving Plan Sponsors Protection from Fiduciary Liability in Default Investments
Excerpt: "[S]ome employers have begun to ask whether they can take advantage of the new rules to 'nudge' employees periodically­ to take stock of their prior investment elections. One idea that has garnered significant attention is the concept of a periodic­ plan 'reset' or 'refresh' transaction." (; free registration required)

[Opinion] The Payroll IRA Plan of S. 1141 and H.R. 2167: It's PIP – Or Is It?
Excerpt: "An idea that has been wafting about in legislative halls and hearing rooms, in print and electronic media, and in assorted other venues for several years is to make employers in small businesses set up a payroll deduction facility for their employees not covered by employer-sponsored retirement plans, for the purpose of easing the making of contributions to an IRA established by or on behalf of the employee. . . . The PIP is more than just an idea. It has been embodied in several federal legislative proposals . . . . H.R. 2167 was one of the main topics discussed at a recent hearing on IRAs by the Ways & Means Committee's subcommittee on Select Revenue Measures, which has moved the legislation into the spotlight." (Alvin D. Lurie, Esq.)

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Links to Items on Executive Comp, Benefits in General

Technical Issues Related to Accelerated Vesting of Restricted Stock Units at Retirement (PDF)
4 pages. Excerpt: "The accelerated vesting of RSUs can make them a form of nonqualified deferred compensation, subject to a variety of tax issues. This letter discusses three tax issues arising from the accelerated vesting of RSUs of which employers should be aware." (Frederic W. Cook & Co., Inc.)

Newly Posted Press Releases
(Post Yours!)

U.S. Department of Labor Issues Guidance on Schedule C Reporting for 2009 Form 5500
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Ernst & Young Study Finds Most Middle Class Retirees Will Outlive Retirement Savings
Americans for Secure Retirement (ASR)

Mark Iwry Named One Of The “100 Most Influential People In Finance”
Retirement Security Project

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