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July 30, 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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[Official Guidance] Text of Memorandum of Understanding Between DOL and SEC Concerning Retirement Plan Investments (PDF)
3 pages. Excerpt: "To facilitate the exchange of examination-related information concerning investment advisers or other firms of mutual interest to the SEC and the DOL, the SEC grants DOL standing access to non-public examination information with respect to examinations that SEC staff determine are relevant to DOL's mission, pursuant to the following safeguards: . . . . [Further,] the agencies intend to honor each other's requests for enforcement information to the extent permitted by law and in accordance with the following procedures . . . ." (U.S. Securities and Exchange Commission; U.S. Department of Labor)


[Guidance Overview] IRA Beneficiaries Fail to Take Their Respective RMDs - What Options Are Available to Them Now?
Excerpt: "The fact that the beneficiaries failed to take an RMD in 2007 does not change their distribution option. Instead, they are subject to a 50 percent penalty tax on the amount of the RMD not taken in 2007, which they report to the IRS using IRS Form 5329." (Wolters Kluwer)


[Guidance Overview] In Chile, New Retirement Savings Vehicle Opens Another Option for Employers
Excerpt: "The recently approved pension system reform includes the creation of Collective Voluntary Pension Savings (ahorro provisional voluntario colectivo or APVC), with some characteristics that are very similar to the 401(k) retirement savings system in the United States. The new plan will allow employers to complement the savings of their employees through an external fund administrator." (Watson Wyatt Worldwide)


[Guidance Overview] DOL's Proposed New Investment Disclosure Regulation
Excerpt: "The regulations would apply to all individual accounts plans subject to ERISA which provide for participant-direction of investment. This includes most 401(k) and 403(b) plans subject to ERISA, whether or not the plan seeks fiduciary protection under ERISA §404(c)." (SunGard)


[Guidance Overview] Employer Contributions to IRAs
Excerpt: "My company has been contributing 3% annually toward our employees' SIMPLE IRA retirement accounts. For the 2007 tax year, we filed for an extension on our income tax and my accountant said we did not have to make the IRA contributions, as they are not 'due' until we file our company return. My employees are now complaining that I should have made the usual employee contributions in February instead of delaying until filing the company taxes. Am I in the wrong?" (BusinessWeek)


[Guidance Overview] FAQs on Schedule C Requirements for Reporting Service Provider Fee Information
Excerpt: "Schedule C has been modified so that, effective beginning with the 2009 plan year, service providers required to be listed will separately report direct compensation paid by the plan and indirect compensation received from sources other than the plan or the plan sponsor, such as compensation charged against investment assets." (Wolters Kluwer)


[Guidance Overview] Managing Your 403(b) Plan - Is It Like Herding Cats?
Excerpt: "Right now, the vast majority of 403(b) plans are loose financial arrangements with too many investment choices and very little, if any, employer involvement. A so-called non-employer-sponsored, or non-ERISA, plan is essentially an accommodation by employers to allow their employees to have pre-tax salary deferrals deposited into a tax-sheltered annuity or an Internal section 403(b)(7) custodial account established for them." (Chang, Ruthenberg & Long PC)


[Guidance Overview] Reasonable Good Faith Interpretation of Required Minimum Distribution Rules by Governmental Plans (PDF)
1 page. Excerpt: "These regulations are in response to Section 823 of the Pension Protection Act of 2006 which instructed the Secretary of the Treasury to issue regulations under which a governmental plan within the meaning of Code section 414(d) is treated as having complied with the required minimum distribution rules if the plan complies with a reasonable good faith interpretation of Code section 401(a)(9)." (Transamerica Center for Retirement Studies)


[Guidance Overview] Automatic Contribution Arrangements: How to Implement; Pros and Cons (PDF)
Excerpt: "The 2006 Pension Protection Act includes provisions intended to make retirement saving easier by automatically enrolling employees in 401(k) and 403(b) plans and automatically investing their contributions in suitable investment funds unless and until they choose different investments. . . . The purposes of this letter are to outline the steps an employer must take to use these alternatives, and the pros and cons of so doing." (Kelly, Hannaford & Battles P.A.)


[Guidance Overview] PBGC Does Not Guarantee Post-Bankrup.tcy Filing Date Benefits
Excerpt: "Consistent with changes made by Pension Protection Act (PPA), PBGC has proposed regulations to provide that, when a single-employer pension plan terminates during the contributing sponsor's bankrup.tcy proceedings, the bankrup.tcy filing date will be treated as the plan's termination date for purposes of determining the benefits guaranteed by PBGC. 73 FR 37390 (July 1, 2008)." (Deloitte via BenefitsLink.com)


[Guidance Overview] DOL Clarifies Compensation to Be Disclosed on New Schedule C
Excerpt: "The FAQs provide further valuable clarifications which merit examination, including the disclosure requirements applicable to 'alliance arrangements.' The guidance is clearly structured to achieve a workable approach in meeting the Schedule C reporting requirements – particularly with regard to reporting indirect compensation and utilizing the alternative reporting option." (Deloitte via BenefitsLink.com)


Updated Review of 401(k) Fee Litigation
Excerpt: "In addition to the lawsuits against plan sponsors, lawsuits have been brought against 401(k) plan service providers. These cases typically are based on allegations that the service providers are 'functional fiduciaries' under ERISA. The plaintiffs claim that, in negotiating for and receiving revenue sharing, the service providers breached fiduciary duties and engaged in 'prohibited transactions' under ERISA. [You can view the 20-page outline and the 21-page chart from the target page.]" (Groom Law Group)


Retiring in Stages: Boomers Get More Options
Excerpt: "A study released Wednesday by Hewitt Associates found 61 percent of U.S. companies have or will develop programs that let workers retire in stages. The programs are intended to hold onto the experience of baby boomers, and ease the difficulty of replacing their skills. The study included 140 mid-size and large-size companies." (AP via The New York Times; free registration required)


Pension Funding Requirements Could Be Retroactively Increased
Excerpt: "A bill that requires administrative expenses to be included when pension plan contributions are calculated could force some plan sponsors to pay higher contributions retroactively. The measure would make 'technical corrections' to the Pension Protection Act (PPA) of 2006. While it passed the House of Representatives on July 9, 2008, it is still not certain if it will become law." (Watson Wyatt Worldwide)


San Diego Mayor, City Council Compromise on New Hire Pensions
Excerpt: "The San Diego City Council on Monday affirmed a compromise deal reached between Mayor Jerry Sanders and three municipal unions on a pension plan for new hires. The San Diego Union Tribune reports that the mayor's proposal will create a hybrid pension plan for newly hired, non-public safety employees, with a traditional pension-like component and a 401(k)-type component. Pensions will be based on the highest average pay of employees over three years, rather than the worker's highest pay." (PLANSPONSOR.com; free registration required)


Research Touts Major Benefits of S-ESOPs
Excerpt: "Two university researchers assert in a new study that Subchapter S companies with an employee stock ownership plan (ESOP) have created a windfall for employers and workers alike." (PLANSPONSOR.com; free registration required)


The Annuity Puzzle and Negative Framing
Excerpt: "An experiment using negative framing found that men were more likely to buy an annuity after receiving information emphasizing the risks of an alternative investment; and both men and women were less likely to buy an annuity after receiving information emphasizing the annuity's risks." (Center for Retirement Research at Boston College)


Podcast: 'Cash Balance 101' explores and educates viewers on Cash Balance Pension Plans
Excerpt: "'We are offering the podcasts to support plan sponsors and third party intermediaries so they can have access to the very best information in plan design, implementation and administration for Cash Balance Plans,' stated Ken Guidroz, Director of New Plan Design for Kravitz." (Louis Kravitz & Associates)


When Clients Want to Raid DC Accounts
Excerpt: "The last frontier for raising cash in tough times is retirement savings. But if you are presented with the scenario in which your client needs cash and they want to raid their retirement money for a 'hardship distribution,' you need to know the rules. For active employees under age 59 1/2 there are only two ways to tap 401(k) accounts: The first is to take a loan from the plan. But keep in mind that not all plans allow loans. The second way is to take a hardship withdrawal." (Investment News; free registration required)


Boeing Seeks to Close Defined Benefit Plan to Union Employees
Excerpt: "Boeing Co. will propose dropping its defined benefit plan for new employees in contract negotiations with its two biggest unions, said spokesman Tim Healy. The Chicago-based company plans to disclose this week details of its proposed defined contribution plan for new employees represented by the International Association of Machinists and Aerospace Workers and the Society of Professional Engineering Employees in Aerospace." (Pensions & Investments)


DOL and SEC Warn About Lurking Fees, Taxes and Possible Penalties When Taking 401(k) Loans
Excerpt: "Employees who want to borrow from their 401(k) accounts should be aware that they will likely pay interest and fees, and must pay taxes if they are late in repaying the loan, the Securities and Exchange Commission and Department of Labor said in a joint advisory to investors." (Financial Week; free registration required)



Sponsored by: University Conference Services

(Click on company name or banner to learn more.)
Banner ad for University Conference Services

Can Your Retirement Plan Handle a Storm?

The climate has changed in the world of retirement and pension plan management. The Chicago Mid-Sized Retirement & Pension Plan Management Conference, October 14–17, 2008, gives you up-to-date information and real-world strategies for making sure you and your plan are protected.

(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] 409A — Plan Terminations
Excerpt: "[Code] Sec. 409A allows a company to terminate its non-qualified retirement and deferred compensation plan, and pay out benefits, under specified circumstances. Because of the complexities of 409A, the possibility of a new political party in power and rising income and social security tax rates in 2009 (maybe accelerating tax into 2008 isn't such a bad idea), and the additional risk of 409A's required six-month delay in payouts to key employees, [s]ome companies have decided to terminate their non-qualified retirement and deferred compensation plans, and pay out benefits." (Michael S. Melbinger via Winston & Strawn LLP)


In Can.ada, New Disclosure Rules Expected for Executive Compensation
Excerpt: "Requirements for disclosing companies' executive compensation policies are expected to change by the end of 2008. If approved, the new regulations would be enforceable starting in the 2009 proxy season and would require substantial changes to how executive compensation is calculated and recorded for many employers." (Watson Wyatt Worldwide)


GSA Raises Mileage Reimbursement Rate for Federal Employees
Excerpt: "The General Services Administration on Monday followed a recent Internal Revenue Service announcement by raising the mileage reimbursement rate for government employees using their personal vehicles on the job to 58.5 cents per mile." (GovernmentExecutive.com)




Newly Posted Events
(Post Yours!)

Defined Benefit Concepts for DC People
Nationwide on August 13, 2008
presented by ASPPA (American Society of Pension Professionals & Actuaries)

18th Annual National Institute on ERISA Litigation
in Illinois on November 6, 2008
presented by ABA Joint Committee on Employee Benefits

401(k) Plans
in Minnesota on October 21, 2008
presented by EBIA / Thomson Reuters

401(k) Plans
in Maryland on November 4, 2008
presented by EBIA / Thomson Reuters

401(k) Plans
in Missouri on November 11, 2008
presented by EBIA / Thomson Reuters

All Day Summer Workshop Featuring Richard Hochman
in Ohio on August 21, 2008
presented by ASPPA Benefits Council of Cleveland

Automatic Enrollment and Beyond
in New York on August 10, 2008
presented by ABA Joint Committee on Employee Benefits

Cafeteria Plans
in Minnesota on October 22, 2008
presented by EBIA / Thomson Reuters

Cafeteria Plans
in Maryland on November 5, 2008
presented by EBIA / Thomson Reuters

Cafeteria Plans
in Missouri on November 12, 2008
presented by EBIA / Thomson Reuters

COBRA Compliance for Group Health Plans
in Minnesota on October 24, 2008
presented by EBIA / Thomson Reuters

COBRA Compliance for Group Health Plans
in Maryland on November 7, 2008
presented by EBIA / Thomson Reuters

COBRA Compliance for Group Health Plans
in Missouri on November 14, 2008
presented by EBIA / Thomson Reuters

ERISA Compliance for Health & Welfare Plans
in Minnesota on October 23, 2008
presented by EBIA / Thomson Reuters

ERISA Compliance for Health & Welfare Plans
in Maryland on November 6, 2008
presented by EBIA / Thomson Reuters

ERISA Compliance for Health & Welfare Plans
in Missouri on November 13, 2008
presented by EBIA / Thomson Reuters

Health & Welfare Plan Management for Mid-Sized Employers
in Nevada on September 7, 2008
presented by University Conference Services

HIPAA Portability, Privacy & Security
in Minnesota on October 24, 2008
presented by EBIA / Thomson Reuters

HIPAA Portability, Privacy & Security
in Maryland on November 7, 2008
presented by EBIA / Thomson Reuters

HIPAA Portability, Privacy & Security
in Missouri on November 14, 2008
presented by EBIA / Thomson Reuters

HSAs, HRAs, and Consumer-Driven Health Care
in Minnesota on October 23, 2008
presented by EBIA / Thomson Reuters

HSAs, HRAs, and Consumer-Driven Health Care
in Maryland on November 6, 2008
presented by EBIA / Thomson Reuters

HSAs, HRAs, and Consumer-Driven Health Care
in Missouri on November 13, 2008
presented by EBIA / Thomson Reuters

Investments and Fees: The New Disclosure Regulation
Nationwide on August 19, 2008
presented by SunGard Relius

Mid-Sized Retirement & Pension Plan Management Conference
in Illinois on October 14, 2008
presented by University Conference Services

The Healthcare Future Is Now!
in Illinois on August 28, 2008
presented by WEB - Chicago West

Third Quarter Update
Nationwide on August 19, 2008
presented by McKay Hochman Co., Inc.



Newly Posted Press Releases
(Post Yours!)

U.S. Labor Department And SEC To Share Information Protecting Retirement And Investments Of American Workers
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

ERIC Registers Opposition to Legislation to Limit Pension Fund Investments in Commodities
ERIC (ERISA Industry Committee)

401(k) QDRO Kit Now Available
Benefit Publications, LLC



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Defined Contribution Plan Consultant
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in NY

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for The Warranty Group
in IL




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