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August 7, 2008

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


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[Official Guidance] Full Text: IRS Press Release Providing 'Framework' for Legislation to Address Transfer of Frozen DB Plans
Excerpt: "Accompanying today's [Revenue Ruling 2008-45, to which this press release contains a link], the Administration put forth a framework of principles, as described below [in this press release], that should guide the development of legislation that could permit such transactions, in circumstances where the transaction is in the best interest of plan participants, their beneficiaries, employers, and the pension insurance system. The legislative framework was developed by the Treasury Department, the Labor Department, the Commerce Department, and the Pension Benefit Guaranty Corporation." (Internal Revenue Service)


[Official Guidance] IRS Employee Plan News - Aug. 6, 2008 Special Edition - Contract Awarded for Enrolled Retirement Plan Agent (ERPA) Exams (PDF)
1 page. Excerpt: "Generally, a person becomes an ERPA by passing a comprehensive ERPA Special Enrollment Examination relating to retirement plan matters. See www.erpaexam.org for further information on the testing process. . . . An ERPA is an individual who has earned the privilege of representing clients with respect to issues involving the following programs: the Employee Plans Determination Letter program; the Employee Plans Compliance Resolution System; and the Employee Plans Master and Prototype and Volume Submitter programs. In addition, ERPA's may represent clients with respect to 5500 and 5300 series forms, but not with respect to actuarial forms or schedules. . . . AIRE LLC, the contracted ERPA exam administrator, is a partnership formed by the American Society of Pension Professionals & Actuaries (ASPPA) and the National Institute of Pension Administrators (NIPA)." (Internal Revenue Service)


[Guidance Overview] IRS's Final Regulations on Mortality Assumptions for Funding Rules
Excerpt: "The final regulations are effective on July 31, 2008. However, the parts of the final regulations relating to generally applicable mortality tables applies to plan years beginning on and after January 1, 2008. The rules regarding substitute mortality tables apply to plan years beginning on or after January 1, 2009." (Deloitte via BenefitsLink.com)


[Guidance Overview] New ERISA Reporting and Disclosure Rules and Guidance Appear to Favor VCOC/REOC Compliance Over 25% Test Reliance (PDF)
3 pages. Excerpt: "One surprising aspect of these new rules is that they appear to apply to investment funds that rely on the '25% Test' for their exemption from ERISA, while investment funds that qualify as 'venture capital operating companies' ('VCOCs') or 'real estate operating companies' ('REOCs') are specifically exempt from these rules." (Paul, Hastings, Janofsky & Walker LLP)


[Guidance Overview] Alabama District Court Rejects Application of LaRue in ESOP Participant Suit (PDF)
3 pages. Excerpt: "In one of the first cases to consider LaRue's impact on individual ERISA claims, the U.S. District Court for the Middle District of Alabama has rejected a request to reconsider a dismissal of breach of fiduciary duty claims in a case involving an employee stock ownership plan (ESOP)." (Morgan, Lewis & Bockius LLP)


[Guidance Overview] DOL's Further Guidance on 5500 Fee Reporting Rules
Excerpt: "On July 14, 2008, the DOL published 'FAQs [frequently asked questions] About The 2009 Form 5500 Schedule C,' providing further guidance on how Form 5500 fee reporting is to work. In this article we review the FAQ guidance." (JPMorgan Chase & Co.)


[Guidance Overview] DOL's Proposed Sponsor-Participant Disclosure Regulations
Excerpt: "On July 22, 2008, the DOL released proposed regulations under section 404(a) of ERISA revising the rules for disclosure of fee and other information to participants in directed individual account plans plans in which participants choose from a menu of investment funds. The proposal requires disclosure of 'plan-related' and 'investment-related' information. In this article we review the proposal and its implications for plan administrators." (JPMorgan Chase & Co.)


IRS Ruling Prevents Certain Pension Transfers
Excerpt: "However, in conjunction with the ruling, they have announced that, with the help of the PBGC, the DOL, and the Commerce Department, they have put together 'a legislative framework of principles' that are intended to guide the development of legislation that would permit such transactions for 'frozen' plans." (Attorney B. Janell Grenier via Benefitsblog.com)


Wall Street Firms Discussing How They Could Buy Frozen Defined-Benefit Plans from Employers
Excerpt: "There are different ideas of how it could work. Under a proposal being floated by Aon Consulting, a number of financial institutions could invest in a pension management company whose purpose would be to acquire and manage pension assets. That company would manage the pension plan assets until the plan was sufficiently overfunded, at which point it could then start returning a portion of the invested money to its initial investors, says Scott Macey, senior vice president and director of government affairs at Aon." (Workforce Management; free registration required)


Treasury Department Says 'No' to Pension Fund Management by Large Banks
Excerpt: "In a joint decision, the Treasury Department and the Internal Revenue Service decided that, except in cases 'when the transfer is not connected with a transfer of significant business assets, operations, or employees,' the transmission of the pension plan is 'not permissible under current law.'" (RTTNews)


Asset Allocation Patterns in DB and DC Plans (PDF)
12 pages. Excerpt: "We examine whether the move from DB to DC plans has had an impact on the way retirement assets are invested. Individual investors, for instance, may have a shorter term investment horizon than DB plans. This raises questions about the risk exposure and investment performance of DC plans relative to DB plans. The shift from DB plans to DC plans may have reduced the supply of patient capital over time, meaning that businesses may have a harder time than in the past getting the financing for long-term productive investment projects." (National Institute on Retirement Security)


Proposed Legislation Would Restrict Investment in Commodities by Pension Plans
Excerpt: "Seeking to provide relief from rising food and energy prices, Senators Joseph Lieberman (ID-CT) and Susan Collins (R-ME) have proposed amendments to the Commodity Exchange Act that would prohibit public and private pension funds with more than $500 million in assets from investing in agricultural and energy commodities, and in passively managed index funds tied to physical commodities." (Deloitte via BenefitsLink.com)


Deciding Whether to Work While Collecting Social Security
Excerpt: "A person must make two primary decisions about receiving Social Security benefits. First, should one start receiving benefits before reaching the full retirement age? Second, if benefits are started early, should one continue working? This article examines the factors that need to be weighed in making the second decision." (New York State Society of CPAs)


Agencies Hope To Permit Pension Plan Deals
Excerpt: "The Bush administration wants Congress to let employers transfer pension plans through sales and other types of transactions. The U.S. Treasury Department, the U.S. Labor Department, the U.S. Commerce Department and the Pension Benefit Guaranty Corp. [on August 6, 2008] proposed a 'legislative framework' that Congress could use to authorize transfers of frozen pension plans." (The National Underwriter Company; free registration or paid subscription required)


IRS's Revised Form 2848 Reflecting New ERPA Designation
Excerpt: "The IRS has revised Form 2848, 'Power of Attorney and Declaration of Representative,' to reflect the new Circular 230 designation of enrolled retirement plan agent (ERPA)." (Wolters Kluwer)


Employers with Qualified Retirement Plans Getting Reprieve from New Electronic Filing Requirements
Excerpt: "Alert: New regulations relating to Form 5500, Annual Return/Report of Employee Benefit Plan, have been issued to reflect changes in the Pension Protection Act of 2006 (PPA). The electronic filing requirement mandated by the PPA has been postponed for one year. [Reprinted with permission from The Tax Strategist.]" (AccountingWEB, Inc.)


Alabama State Workers Pursuing Fiduciary Breach Lawsuit
Excerpt: "An Alabama state judge has scheduled a September hearing in a lawsuit alleging the Alabama State Employees Association received at least $3.2 million from Nationwide Life Insurance Co. while the Association was considering Nationwide as the service provider for the state's defined contribution plan." (PLANSPONSOR.com; free registration required)


DOL Goes to Court to Take Over Abandoned 401(k) Plan of Defunct New York Security Company
Excerpt: "The department wants to take over the fund once sponsored by Freedom Security Systems Inc., which went out of business two years ago. The trustee for the 401(k) stopped overseeing the plan at that time, the department said in a news release Tuesday. Because the plan is 'orphaned,' as abandoned pension plans are called, 27 former employees can't obtain information, make investments or collect retirement benefits from the nearly $400,000 fund, the department said." (NewsDay)



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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Severance Benefits - the August 6 Sixth Circuit case of Ljubisavljevic v. National City Corporation
Excerpt: "The Sixth Circuit opinion is very short, but the district court opinion provides a detailed analysis. According to the Sixth Circuit, 'the sole issue on appeal in this case is whether a negotiated provision of a merger agreement between Provident Bank and National City created a severance plan governed by ERISA.'" (ERISABoard.com)


Employee Benefits in the United States, March 2008
Excerpt: "Two-thirds of private industry and State and local government workers (defined in this survey as civilian workers) had access to retirement benefits and nearly three-quarters to medical care in March 2008, the Bureau of Labor Statistics of the U.S. Department of Labor reported today." (U.S. Bureau of Labor Statistics)


A Look at the Financial State of Gen X and Gen Y (PDF)
Excerpt: "One striking finding of this research is that many young adults have yet to align their actions with their financial values and goals. These young adults feel that they should be saving more, both in general and specifically for retirement. For example, they place high importance on workplace benefits, especially health insurance and retirement savings plans. Overwhelmingly, however, the majority believe they are not currently saving as much as they should. People in these younger generations tend to feel that assuming adult responsibilities, like purchasing a home and supporting a family, is more difficult for them than it was for prior generations. [Originally published March 2008.]" (American Savings Education Council / AARP via EBRI)


The New Workplace Perk: Gasoline
Excerpt: "Gasoline has become the new workplace perk, as employers scramble to help workers cut its use and cost. A dollar a gallon ago, things like telecommuting, shortened workweeks and Internet subsidies were ways of saving time and providing workers with a little more balance in their lives. Now they have become ways to save money and to keep workers from, well, walking." (The New York Times; free registration required)


Survey Finds that Gas Prices Influence Employer Policies for Auto-Bound Employees
Excerpt: "Jackson Lewis LLP, [a workplace law firm], recently conducted a survey of more than 100 employers in New York's metropolitan commuter areas to determine how recent unrelenting gas prices have affected the employer-employee relationship. The survey found that the sky rocketing gas prices have led employers to adjust workplace policies and programs accordingly." (PR Newswire via NewsEdge via Human Resource Executive Online)




Newly Posted Events
(Post Yours!)

Communicating Benefits to Multiple Generations Webcast
Nationwide on August 21, 2008
presented by International Foundation of Employee Benefit Plans

Creating a WOW Experience for your Clients!
Nationwide on September 16, 2008
presented by National Institute of Pension Administrators

Plan Administrator Year-end "To-Dos" for Welfare Plans Webcast
Nationwide on August 12, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)



Newly Posted Press Releases
(Post Yours!)

Jackson Lewis Finds that Gas Prices Influence Employer Policies for Auto-Bound Employees
Jackson Lewis LLP

More Banks Sell Fee-Based Products - But Still Not Enough
Bank Insurance Market Research Group



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Retirement Plan Conversion Specialist
for PSA Financial Services
in MD

Senior Plan Consultant
for Scholz, Klein & Friends Enlightened Retirement Group, Inc.
in TX

Subrogation/Third Party Liability (TPL) Recovery Specialist
for Delta Health Systems
in CA

Third Party Administration (TPA) Accountant
for BKD, LLP
in AR

Plan Analyst and Enrollment/Communications Specialist
for Pension Specialists, Inc
in CA

Retirement Plan Administration Sales/Service
for DailyAccess Corporation
in MI

Pension Assistant
for Swerdlin and Company
in GA




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