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July 21, 2008

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

Today's sponsor is International Foundation of Employee Benefit Plans

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Smart is not a permanent state of being. What's your maintenance plan? Take advantage of the education and information available through the International Foundation of Employee Benefit Plans, a nonprofit educational association, and find out why over 35,000 industry professionals like Cindy Conway rely on the Foundation to stay informed and educated. Make sure you have the most comprehensive information on health, pension and compensation issues. Be smart by association.

[Guidance Overview] The Model Portfolio: Investor Information or Investment Advice? (PDF)
Excerpt: "When managing a client's retirement investments, understanding the difference between advising and informing is crucial. The difference is defined by the answer to a simple question: Who is responsible for the consequences of investment actions undertaken on the basis of either information or advice? We explore the distinction and the fiduciary ramifications in this Milliman white paper." (Milliman)

[Guidance Overview] Meeting PPA Minimum Funding Requirements on a Budget: Case Study of One Organization's Path
Excerpt: "The plan sponsors expressed two goals: They wanted to hit PPA's early targets in order to qualify for the law's transition rules and preferred a level payment schedule through the 2014 plan year that did not require any large funding jumps from year to year." (Milliman)

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated July 16, 2008, for Retirement Plans (PDF)
6 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] Towers Perrin United Kingdom Retirement Plan Monitor (PDF)
8 pages. (Towers Perrin)

[Guidance Overview] Failure to Meet Technical Requirements and to Timely Submit Divorce Decree Prevent Recognition as QDRO
Excerpt: "Although this case did not involve a 401(k) plan, it raises two issues of significant interest to 401(k) plan sponsors and administrators. First, the case serves as a reminder that even though the DOL has suggested that perfect compliance with the QDRO technicalities is not necessary, those requirements cannot be ignored." (Employee Benefits Institute of America)

In Turkey, Retirement Age Increased and Early Retirement Cut Back
Excerpt: "The minimum retirement age will increase gradually and some early retirement schemes will be eliminated under recent reforms that will take effect on October 1, 2008. The government's objective is to ensure the financial sustainability of the social security system." (Watson Wyatt Worldwide)

Raiding the Retirement Stash
Excerpt: "The increase in 401(k) loans is so high because this money is so easy to borrow. If your plan allows such a loan, you can borrow $50,000 or one-half of the vested balance from your retirement account, whichever is lower. The loan has to be repaid in five years or less, except for loans that have been taken out for the first-time purchase of a home. That loan can be repaid over a period of up to 15 years." (The Washington Post; free registration required)

Update on New Proposed Legislation on 401(k) Debit Cards
Excerpt: "[The target page contains] transcripts of conversations I had about the issues surrounding the card [Reserve Solutions issues that allows customers to access their loan via a debit card at an A.T.M. or any merchant that accepts Visa] with both Senator Schumer and Bruce R. Bent, the founder and chairman of Reserve Solutions's parent company, The Reserve." (The New York Times; free registration required)

'Working Longer: The Solution to the Retirement Income Challenge'
Excerpt: "[The authors] define succinctly the problem faced by baby boomers, and for that matter, by all Americans who aspire to retire now or in the near future. They note that the nation's retirement system, as embodied by Social Security and Medicare in the public sector and I.R.A.'s and 401(k) plans in the private sector, is contracting in its ability to replace workers' lost income -- even as life expectancy is increasing." (The New York Times; free registration required)

NH Retirement Systems Must Divest Sudan-Related Holdings
Excerpt: "Under a bill signed into law by New Hampshire Governor John Lynch, the state retirement system board of trustees and the judicial retirement plan board of trustees must divest assets relating to Sudan." (; free registration required)

Companies Gradually Adopting Pan-European Pensions
Excerpt: "Although rules adopted in the last few years have paved the way to offering pan-European pension schemes, the number of employers implementing such plans is growing only at a gradual pace. However, the issue still bears watching for employers, as some developments in the marketplace could speed adoption of such plans." (Watson Wyatt Worldwide)

House Panel Passes Thrift Savings Plan Automatic Features Bill
Excerpt: "A House Committee has approved a measure to auto enroll new federal workers in the Thrift Savings Plan with a 3% deferral. The bill okayed by the House Oversight and Government Reform Committee would also designate the TSP's Government Securities Fund, known as the G Fund, as the default investment option. As is typically the case in auto enrollment, federal workers would have the opportunity to opt out of the plan." (; free registration required)

Investment Company Institute Urges DOL to Provide More Access to Advice/Education About Managing Assets/Income in Retirement
Excerpt: "ICI testified before a working group of the DoL's ERISA Advisory Council, highlighting its research that retirees often consult financial advisers, written and online information, and financial software tools when deciding how to manage their defined-contribution plans at retirement, according to statement from the ICI." (planadvisor)

Debit Card That Taps 401(k) Retirement Savings Is Easy to Use -- and Abuse
Excerpt: "The rub is that employees evidently like the ability to borrow; studies show it actually makes them more likely to contribute to a retirement plan. Most 401(k) participants have access to loans and about 20% have gone through hoops and hassles to get one. Yet employers seem to be drawing the line with the debit card. Though the product has been around for several years, few companies offer it -- and probably won't." (MarketWatch)

Wal-Mart Slams Lawsuit Claiming Its 401(k) Fees Are Over the Top
Excerpt: "Like many of the roughly dozen other lawsuits filed against large plan sponsors since late 2006, the suit accuses the company of violating its duty as a fiduciary by offering 'costly' funds in its 401(k)." (Workforce Management; free registration required)

DOL Issues 40-FAQs About IRS Form 5500 Schedule C
Excerpt: "EBSA released 40 frequently asked questions (FAQs) developed in response to questions from the employee benefit community on the new Schedule C requirements. The FAQs cover such issues as the alternative reporting option for eligible indirect compensation, electronic disclosure of fee information by service providers, fee reporting for brokerage window options in participant directed plans, and reporting on gifts, entertainment and other non-monetary compensation." (ERISA Rules and Regulations)

[Opinion] American Benefits Council Amicus Brief in McCullough v. Aegon (PDF)
30 pages. Excerpt: "Any rejection or narrowing of the eminently sensible Eighth Circuit rule would have severely adverse effects on the defined benefit plan system. Plan sponsors, as fiduciaries, would be exposed to enormous additional liabilities and litigation, further accelerating the decline of the defined benefit system. And the same plan sponsors would face a major disincentive to contribute more to their defined benefit plans than the minimum amount required." (American Benefits Council)

[Opinion] Questioning DOL's New Thinking on Schedule C
Excerpt: "We suspect there are many other questions raised by the FAQs, and other questions about the Form 5500 yet to be asked to the DOL. The 2009 reporting year is shaping up to be an interesting and active year." (Baker & Daniels)

[Opinion] Pension Governance: The Need for Independent Performance and Operational Audits
Excerpt: "This post is somewhat lengthy but important. Why is pension governance important? Well just look at the financial debacle going on in the United States and elsewhere and ask yourself a few simple questions like who is governing these financial institutions and how did they escape the watchful eye of federal and state regulators? When public pension plans suffer material losses, plan sponsors and beneficiaries are impacted and all too often, taxpayers end up footing the bill." (Leo Kolivakis)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated July 16, 2008, on Human Resources & Employment Law (PDF)
8 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] Netherlands Government Backs New Taxes on Executive Pensions (PDF)
2 pages. (Towers Perrin)

New Features on the Redesigned BLS Web Site As of July 2008
Excerpt: "[Some features of the redesigned site:] Fresh content will appear on the BLS homepage every business day. Improved Navigation - User-tested menus will enable fast and efficient browsing. Improved Search Engine - BLS will be upgrading to a new search engine which will be a major improvement over the existing one." (U.S. Bureau of Labor Statistics)

ERISA Preemption - What We Have Here Is a Failure to Communicate
Excerpt: "Stephen Rosenberg observed this week that ERISA's preemption provisions were 'a legitimate policy choice by the Congress that passed ERISA to maintain one consistent federal policy and body of law for purposes of employee benefits.' He makes the point that Congress, not the judiciary, is responsible for the statute's preemptive reach." (Health Plan Law blog by Attorney Roy F. Harmon III)

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Office Administrator
for Employee Benefits Management Group
in NC

Client Service Consultant
for The Standard
in TX

Benefits Coordinator
for Paramount Agriculture Companies
in CA

Defined Contribution Administrator
for Merit Benefits Group, Inc.
in IL

Senior Manager Retirement Programs
for A&R Consulting
in CA

401(k) / Defined Contribution Recordkeeper
for USI Consulting Group, Inc. (USICG)
in CT

Defined Contribution-Senior Client Service Officer
for AllianceBernstein
in NY

Defined Contribution-Client Service Officer
for AllianceBernstein
in NY

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