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July 23, 2008

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


Today's sponsor is www.ftwilliam.com

(Click on company name or banner to learn more.)
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Ftwilliam.com now offers a 409A plan document.

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The document is available for $275/plan or purchase our Non-Qualified Annual Subscription for $775/year and get the 457(b) and 409A.

Contact Holly Roussel for details at 800.596.0714 or via email at sales@ftwilliam.com.


[Guidance Overview] SSA's International Update on Recent Developments in Foreign Public and Private Pensions, July 2008
2 pages. (U.S. Social Security Administration)


[Guidance Overview] IRS Validates Price Protection Agreements for S Corporation ESOPs (PDF)
3 pages. Excerpt: "In Private Letter Ruling 200827008, the IRS validated a form of price protection commonly used in multistage ESOP transactions. In the letter, the IRS concluded that a floor price protection agreement -- which guaranteed a minimum repurchase price for some, but not all, of the shares held by the ESOP -- did not create a second class of stock, and thus did not adversely affect the company's S corporation status." (Morgan, Lewis & Bockius LLP)


[Guidance Overview] House Passes PPA Technical Corrections Bill with Asset Smoothing Provision
Excerpt: "The requirement under the PPA that plan assets and liabilities be smoothed over two years had raised the specter of volatility in plan contributions that smoothing was designed to neutralize. The House bill would provide that, in determining the value of a plan's asset under the averaging method, such averaging be adjusted for expected earnings as specified by the Secretary of the Treasury. Such an adjustment is in addition to the present law adjustments for contributions and distributions." (Wolters Kluwer)


[Guidance Overview] The First Circuit on ERISA Standing in Kerr et al. v. W.R. Grace, et al.
Excerpt: "Very interesting case out of the First Circuit the other day on the question of whether former employees satisfy ERISA standing requirements with regard to defined contribution plans. Short answer is they do, but the Court's analysis and discussion is an interesting open field run across a range of issues that are both explicit and implicit to any consideration of this question." (Stephen Rosenberg of The McCormack Firm, LLC)


The 2008 401(k) Benchmarking Survey (PDF)
42 pages. Excerpt: "The Survey data reflects 2007 and early 2008 401(k) plan activity, as well as in some cases, anticipated changes that plan sponsors are considering. This comprehensive poll offers both an 'into the weeds,' highly detailed examination of 401(k) policies and practices, as well as a more strategic perspective on plan sponsors' and participants' struggles to get the most mileage out of these powerful retirement savings vehicles." (Deloitte / International Foundation of Employee Benefit Plans / International Society of Certified Employee Benefit Specialists)


The U.S. Retirement Market, 2007 (PDF)
16 pages. Excerpt: "Employer-sponsored retirement plans play a key role in helping American workers accumulate retirement assets. The bulk (nearly two-thirds) of Americans' retirement assets is held in employer-sponsored retirement plans. Furthermore, a significant portion of assets held in Individual Retirement Accounts (IRAs) originated in employer plans and were then transferred (or 'rolled over') into IRAs." (Investment Company Institute)


Appendix: The U.S. Retirement Market, 2007, July 2008 (PDF)
17 pages. Excerpt: "This appendix provides supplementary tables and charts with additional detail for the July 2008 [report on the U.S. retirement market]." (Investment Company Institute)


Jacksonville, FL Police and Fire Pension Fund Underfunded for 30 Years
Excerpt: "'It's cause for concern but not for alarm.' That's how John Keane, executive director and administrator of the Police and Fire Pension Fund (PFPF), describes the current underfunding of the pension plan for Jacksonville's public safety employees who are currently enrolled in the fund. As of Sept. 30, 2007 the PFPF was underfunded (liabilities exceeded assets) by $534 million. According to figures provided by the Council Auditor's Office, that means the PFPF is underfunded by 36.5 percent." (Financial News & Daily Record)


A Discussion of the Current State of Defined Benefit Plans in the United Kingdom (PDF)
6 pages. Excerpt: "In this 'Perspectives' we share the main findings of research Towers Perrin commissioned in association with the Economist Intelligence Unit (EIU), and how it is affecting UK pension schemes." (Towers Perrin)


Class Certified in Kraft Foods 401(k) Fee Case
Excerpt: "On July 17, 2008, an Illinois district court granted the motion for class certification filed by the plaintiffs in the 401(k) fee case relating to the Kraft Foods 401(k) plan. The Kraft case is the fourth 401(k) fee case in which class certification recently has been granted. Links to our firm's summary of the Kraft decision and to the court's order can be found in the column to the right [on the target page]." (Groom Law Group)


Clarification Urged for Proposed Relaxed Retirement Plan Amendment Notice Rules
Excerpt: "According to Judith Mazo, on behalf of the National Coordinating Committee for Multiemployer Plans (NCCMP), and Kent Mason, representing the American Benefits Council, the regulations could be clearer on two counts: (1) the operation of the duplicative notice prevention rules for underfunded individual plan amendments; and (2) the duration of the 30-day notification rule for underfunded multiemployer plan amendments that reduce benefits." (Wolters Kluwer)


GASB Offers Pension Calculation Method
Excerpt: "GASB [yesterday] proposed a method to calculate any amortization adjustment to the annual required contribution to pension and other post-employment benefit plans to avoid overstatement of annual pension cost and to maintain consistency between the actuarial and accounting measurements used for financial reporting." (Pensions & Investments)


How to Deal with a 401(k) Plan with Bad Investment Choices
Excerpt: "Question: Both my husband and I have 401(k)s that are annuities backed by mutual funds. The returns, compared to our rollover IRAs in Fidelity funds, are unimpressive. What is the best strategy for dealing with a lousy 401(k)?" (CNNMoney.com)


EBSA Finishes Regulatory Package with Participant Disclosure Proposal
Excerpt: "Federal regulators on Tuesday unveiled the long-awaited final portion of their three-part plan disclosures regulatory package that calls for sponsors of employee-directed plans to supply participants with basic plan information including investment returns and expenses." (PLANSPONSOR.com; free registration required)


Defined Benefit Pension Plan Freezes Affect Millions of Participants - May Pose Retirement Income Challenges (PDF)
62 pages. Excerpt: "This report examines (1) the extent to which DB pension plans are frozen and the characteristics of frozen plans; and (2) the implications of these freezes for plan participants, plan sponsors, and the PBGC." (U.S. Government Accountability Office)


GAO Survey of Sponsors of Large Defined Benefit Pension Plans
Excerpt: "To better understand the current plan freeze environment and its significance to the DB system going forward, GAO conducted a study of sponsors of tax-qualified, single-employer, defined benefit (DB) plans that had 100 or more total participants. [There are special Instructions for Viewing This Survey.]" (U.S. Government Accountability Office)


One Fifth of Defined Benefit Plan Participants Had Plans Frozen, According to GAO
Excerpt: "The Government Accountability Office (GAO) report prompted a statement released Monday by U.S. Congressman Earl Pomeroy (D-North Dakota) calling the report 'disturbing.' The GAO report, entitled 'Defined Benefit Pensions: Plan Freezes Affect Millions of Participants and May Pose Retirement Income Challenges,' said 3.3 million Americans will have lower pension income because of the defined benefit freeze trend." (PLANSPONSOR.com; free registration required)


The Impact of the Credit Crisis on Pension Liabilities in Transactions
Excerpt: "Note that we have focused in this article on the key financial element of valuations: the discount rate. This is not to negate the importance of other issues such as mortality and inflation assumptions, but these items have not been influenced by the recent turmoil in the credit markets." (Mercer LLC)


Defined Contribution Plans in Europe
Excerpt: "In this article, we will discuss defined contribution (DC) plans across Europe and introduce some common themes as well as cultural differences that will help multinational plan sponsors find opportunities to streamline their DC plan designs and plan management practices across borders." (Mercer LLC)


Before Workers Cash Out 401(k)s, RolloverSystems Promotes a 'Cash-Out Calculator'
Excerpt: "Workers who might be tempted to cash out their 401(k) savings to cope with the down economy now can get a reality check on how their decision will impact their long-term retirement security thanks to a cash-out calculator being made available by RolloverSystems Inc. (RSI), an independent provider of rollover services." (MarketWatch)


San Diego Mayor, Unions Reach Deal on Pension Reform
Excerpt: "A tentative deal to overhaul the city's pension plan has been reached by Mayor Jerry Sanders and three city unions, officials said Tuesday. Sanders said the agreement is another step in reforming the city's pension system. He said in 20 years, the new compromise would save the city $23 million a year." (NBCSandiego.com)


DOL Pushes for Clearer Disclosure of 401(k) Fees
Excerpt: "The Labor Department on Tuesday revealed proposed rules meant to clearly lay out the fees and expenses associated with each investment option, along with any administrative costs. It proposed the regulations would be effective for plan years beginning on or after Jan. 1, 2009.' (The Wall Street Journal)



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(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] GASB 45 Standard Creates Accounting Quandary for Health Benefits in Retirement (PDF)
6 pages. Excerpt: "Differing opinions on discount rate selection under a new government accounting standard could lead local governments to unintentionally mislead creditors about their financial obligations for retiree health benefits." (American Academy of Actuaries)


[Guidance Overview] What Happens When Vested Stock is Traded for Nonvested Stock?
Excerpt: "The IRS has issued guidance on the tax consequences to an employee (or other service provider) of trading vested stock for nonvested stock. The Service did so in Revenue Ruling 2007-49." (Utz, Miller, Kuhn & Eickman, LLC)


[Guidance Overview] Understanding the Option Dating Controversies—Part IV: Best Practices
Excerpt: "Previous installments of this article series have discussed and analyzed the option backdating scandal itself and the myriad of legal and business related issues that have surfaced in its wake. These prior installments have served as a forensic study of sorts, dissecting the types of actions that have placed companies and individuals in the glaring eye of the regulators and class-action plaintiffs. As the final installment in the series, this article takes a more positive and forward-looking perspective, focusing on some of the things that companies can do, and should be doing, to minimize their exposure to backdating risks." (Employee Benefit Plan Review via Blank Rome LLP)


Employee Benefits Developments July 2008
Excerpt: "A brief look at developments in Employee Benefits law from June and July 2008, including cases, rulings, and opinions." (Hodgson Russ LLP)


More Employers Help Workers Deal with Legal Problems
Excerpt: "The number of large companies offering group legal plans rose to 33% in 2007, a 6% increase from 2006, according to the study [by work/life services provider Workplace Options]." (Employee Benefit News; free registration required)




Newly Posted Events
(Post Yours!)

401(k) Plans
in Washington on September 23, 2008
presented by EBIA / Thomson Reuters

Cafeteria Plans
in Washington on September 24, 2008
presented by EBIA / Thomson Reuters

Cash Balance Plans Workshop
Nationwide on August 22, 2008
presented by SunGard Relius

COBRA Compliance for Group Health Plans
in Washington on September 26, 2008
presented by EBIA / Thomson Reuters

Code Section 409A Workshop
Nationwide on September 12, 2008
presented by SunGard Relius

Cross-Tested Plans Workshop
Nationwide on August 21, 2008
presented by SunGard Relius

ERISA Compliance for Health & Welfare Plans
in Washington on September 25, 2008
presented by EBIA / Thomson Reuters

Estate and Distribution Planning With Qualified Plans and IRAs Webcast
Nationwide on July 25, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)

HIPAA Portability, Privacy & Security
in Washington on September 26, 2008
presented by EBIA / Thomson Reuters

HSAs, HRAs, and Consumer-Driven Health Care
in Washington on September 25, 2008
presented by EBIA / Thomson Reuters

The DOL's New Proposed Fee Disclosure Regulations
Nationwide on July 29, 2008
presented by Qualified Pension Consulting, Inc.

The DOL's New Proposed Fee Disclosure Regulations
Nationwide on July 31, 2008
presented by Qualified Pension Consulting, Inc.



Newly Posted Press Releases
(Post Yours!)

U.S. Labor Department Proposes Regulations To Improve Disclosure Of Fees And Expenses To Workers With 401(k)–Type Benefit Plans
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

DOL Proposed Disclosure Regulations Represent Practical, Straightforward Approach To Retirement Plan Fees
American Benefits Council

GASB Exposes Proposed Technical Bulletin That Would Provide Guidance Regarding the Annual Required Benefit Contribution for Postemployment Benefits
Governmental Accounting Standards Board (GASB)

New Survey Shows Young People Increasingly Living on The Financial Edge
Qvisory



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Pension Administrator
for Jordan & Andrews
in CA

Compliance Account Manager
for First Niagara Benefits Consulting Group
in NY

Pension Administrator
for Estate & Pension Advisory Board, Inc.
in PA

Retirement Plan Specialist
for SVA Retirement Plan Services, LLC
in WI

Vice President & Actuary
for Prudential Financial
in CT

Retirement Plan Specialists
for Diversified Investment Advisors
in FL




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