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August 14, 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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[Guidance Overview] With the Second Circuit's Recent Cash Balance Decision in Favor of Plan Sponsors, It's All In The Family On Foley Square
Excerpt: "The 2nd Circuit just resolved a family squabble among its district court judges . . . involving an age discrimination issue that has had the pension community across the country in a tumult for 5 years. The appeals court affirmed the judgments of two courts of the Southern District of New York that had ruled that the cash balance plans at issue were not age discriminatory . . . ." (Alvin D. Lurie, Esq.)

[Guidance Overview] The 2009 Form 5500
Excerpt: "The 2009 Form 5500 . . . brings to reality mandatory electronic filing of all reports. In November 2007, the Department of Labor's (DOL) Employee Benefit Security Administration (EBSA) posted final regulations that included the 2009 forms and schedules, except for the actuarial Schedules SB and MB. As of this writing, little information is available about the electronic filing process. The EFAST2 system developer is expected to release some details later this year." (

[Guidance Overview] Towers Perrin U.S. Legislative Tracking Charts -- Retirement -- Updated August 12, 2008 (PDF)
12 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)

[Guidance Overview] The Eleventh Circuit in Lanfear v. Home Depot
Excerpt: "While the decision makes clear that the claim asserted by the participants was a breach of duty causing losses to the plan that allegedly diminished participant accounts, just as in Graden, the court says definitively it is claim for benefits, not damages. This view certainly supports the eccentric Eleventh Circuit view that there must be exhaustion of administrative remedies in fiduciary breach claims, though it is a mystery how such procedures can afford relief against plan fiduciaries, but it does nothing to advance understanding." (Pension & Benefits Blog)

[Guidance Overview] 403(b) Retirement Plan Will Get a 401(k)-Like Makeover
Excerpt: "Q: What are the 'major' changes going into effect Jan. 1 on the 403(b) program that the IRS and U.S. Labor Department are implementing? A: On July 23, 2007, the Internal Revenue Service finalized new regulations for 403(b) retirement plans -- savings plans for tax-exempt workplaces -- to make them look more like their cousins, 401(k) retirement plans sponsored by private-sector companies." (Houston Chronicle)

[Guidance Overview] Posthumous QDROs
Excerpt: "Over the years a series of cases have held, for various reasons, that a domestic relations order (DRO) assigning benefits to an intended alternate payee could not qualify as a QDRO if the order was entered after the participant's death. Many practitioners concluded that this was the law, although more recent cases have held to the contrary. PPA section 1001 is a wake up call: it is not too late to get a QDRO after the participant has died!" (Chang, Ruthenberg & Long PC)

[Guidance Overview] Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans
Excerpt: "There are three pieces of DOL guidance that Plan Sponsors should have on their list of 'to dos'. Two are in the form of proposed guidance with the third in final form. Why should you have this on your 'to do' list? Because they all have the same effective date January 1, 2009!! If that is not enough, they all deal with a much publicized issue fee transparency. This ErisaALERT will be the first in a series dealing with the guidance and their implications for Plan Sponsors." (ERISAdiagnostics, Inc.)

[Guidance Overview] ERISA Provisions Governing Vesting and Non-Alienability of Surviving Spouse Benefit Rights
Excerpt: "PROCEDURAL POSTURE: Appellant second wife, individually, and in her capacity as personal representative, appealed from the entry of summary judgment for respondent first wife by the Aiken County Circuit Court (South Carolina) in the second wife's suit concerning the proper distribution of the decedent's pension." (South Carolina Slip and Fall Blog)

[Guidance Overview] Another Question is Answered in the 401(k) Plans Q&A Column
What is a "traditional IRA"? (

DOL and SEC Collaborate on Retirement
Excerpt: "A recent agreement allowing for greater collaboration between the federal agencies could spell good news for retirement investors -- and increase enforcement efforts. It may also impact fee-disclosure transparency requirements." (Human Resource Executive Online)

Texas State Lawmaker Proposes Teacher Pay Be Tied to Legislative Benefits
Excerpt: "A state lawmaker says he has a plan that would raise the pay of Texas classroom teachers to the national average. Kelly Fero, chief strategist for State Representative Hubert Vo of Houston, says the plan proposed by Vo would change the way legislative retirement benefits are calculated, 'and link those benefit calculations to the average pay of Texas classroom teachers.'" (Emmis Austin Radio Broadcasting Company, Lp)

Distributional Effects of Increasing the Benefit Computation Period Used in the Calculation of Social Security Benefits (PDF)
6 pages. Excerpt: "The brief compares two policy options discussed by the Social Security Advisory Board; one extends the 35-year computation period 3 years (38 years) and the second one extends it 5 years (40 years). The distributional results presented here were estimated using MINT model projections of current and future Social Security beneficiaries." (U.S. Social Security Administration)

Social Security and the 2008 Presidential Candidates
Excerpt: "Both candidates agree that adjustments to the Social Security formula are necessary because the trust fund, though in surplus now, will begin showing a deficit around 2018, according to actuarial forecasts. Some project that the fund will be exhausted shortly after 2040; others, using less pessimistic calculations of economic and population growth, say that would occur decades later." (The New York Times; free registration required)

A Better Bang for the Buck: The Economic Efficiencies of Defined Benefit Plans
Excerpt: "[S]ome have proposed replacing traditional defined benefit (DB) pensions with 401(k)-type defined contribution (DC) retirement savings plans in an effort to save money. But decision-makers would be wise to look before they leap. To deliver the same level of retirement benefits, a DB plan can do the job at almost half the cost of a DC plan. [At the target page, you can download the full report in PDF, the Report Fact Sheet, Frequently Asked Questions, and a PowerPoint presentation.]" (National Institute on Retirement Security)

H.R. 6500, The Thrift Savings Plan Enhancement Act of 2008 (PDF)
6 pages. Excerpt: "On July 16, 2008, the House Committee on Oversight and Government Reform approved H.R. 6500, the Thrift Savings Plan Enhancement Act of 2008, by voice vote. [This report describes the legislation.]" (U.S. Congressional Research Service)

Practitioners Criticize Proposed Rules on Multiemployer Plans in Critical Status
Excerpt: "Witnesses at a July 31, 2008 hearing expressed dissatisfaction with recent IRS proposed regulations implementing provisions of the Pension Protection Act of 2006 (PPA; P.L. 109-280) affecting multiemployer plans . . . . The proposed regulations, issued in March 2008, implement Code Sec. 432 for multiemployer plans that are endangered or in critical status." (Wolters Kluwer)

Fifth Third Bancorp Slapped with Stock-Drop Participant Lawsuit
Excerpt: "Fifth Third Bancorp has joined the ranks of plan sponsors hit with a participant stock-drop lawsuit with a new case filed this week alleging bank officials imprudently kept a stock fund in their plan." (; free registration required)

Fidelity Says Downturn Doesn't Stop Retirement Savings
Excerpt: "Most workers are not reducing their retirement contributions even though higher fuel and food prices have prompted them to cut spending in many areas, a leading retirement investment firm said Wednesday. Boston-based Fidelity Investments, the largest retirement plan administrator in the U.S., said an analysis of 16,723 corporate retirement plans indicated that contributions actually increased in the first half of this year." (BusinessWeek)

[Opinion] Why Today's Young Workers Should Be Confident About the Social Security Program's Future
Excerpt: "The bottom line is that Social Security is in good shape -- we should all be so lucky at age 73. Changes to shore up the program's financing and make it more progressive are warranted, but there is no crisis, and certainly no need to rush to dramatic reform." (The Economic Policy Institute)

[Opinion] DOL Takes a Good First Step on Disclosure for Our 401(k)s
Excerpt: "The [Labor Department] proposal is a big deal, mainly because 65 million Americans now invest through 401(k)s and similar plans. A standardized fee-and-performance table should help workers make more intelligent investment decisions. Listing the administrative fee on each quarterly statement will help workers understand that the 401(k) isn't a free benefit." (St. Louis Post-Dispatch)

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Links to Items on Executive Comp, Benefits in General

[Official Guidance] Correction to IRS Proposed Regs on Information Reporting of Statutory Stock Options per Code Section 6039 (PDF)
1 page; seems to be insignificant grammar corrections only although one correction eliminates a potentially confusing incorrect statutory reference. (Internal Revenue Service)

[Guidance Overview] Towers Perrin U.S. Legislative Tracking Charts -- Human Resources -- Updated August 12, 2008 (PDF)
15 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)

[Guidance Overview] ERISA Release Enforceable
Excerpt: "Frommert v. Conkright, ___F.3d___(2d Cir. July 24, 2008), is an interesting case. The 2d reversed the lower court and held that release forms signed by employees in exchange for their receipt of severance barred them from asserting ERISA claims. Despite acknowledging the broad language of the release, the lower court held that the releases did not bar litigation because of the lack of clarity in the release." (Adjunct Law Prof Blog)

San Francisco Transit Break Would Reduce Payroll Taxes
Excerpt: "San Francisco employers are likely to face new legislation requiring them to provide employees with the opportunity to use pretax earnings to pay for passes on public transportation." (Workforce Management; free registration required)

Beach Erosion on the ERISA Waterfront
Excerpt: "These are interesting times for those who contend for clients along the Maginot Line of ERISA's preemption provisions. Never a particularly easy line to follow, the perimeter has become increasingly uneven on several fronts. [These include provider reimbursement cases, equitable or promissory estoppel, state prohibitions on discretionary clauses, and state law actions against service providers.]" (Health Plan Law blog by Attorney Roy F. Harmon III)

Newly Posted Events
(Post Yours!)

2008 Chicago Advanced Pension Conference - Early Registration Discount Extended to 8/15/08.
in Illinois on September 3, 2008
presented by SunGard Relius

Newly Posted Press Releases
(Post Yours!)

NTSAA Names Ron Wilson As Executive Director
National Tax Sheltered Accounts Association

Survey: Most Companies Pay for Employee Tuition, Professional Development

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International Consulting Associate
for Towers Perrin
in IL

Client Service Representative - Consultative
for Unifi Companies - Union Central Life, Ameritas Life, and Acacia Life
in OH

Senior Compensation Analyst
for ESPN, Inc.
in CT

Director, Defined Contribution Solutions
for ULLICO Inc.
in DC

Benefits Administrator
for Randstad, on-site at Discovery Communications
in MD

Compliance Analyst
for Wachovia
in MN

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