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August 22, 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] Proposed DOL Regs on Investment Advice to Self-Directed Plan Participants by Fiduciaries Receiving Fees (PDF)
29 pages. Excerpt from DOL press release: 'The PPA amended [ERISA] by adding a new prohibited transaction exemption that allows greater flexibility for participants of 401(k) plans and IRAs to obtain investment advice. One of the ways in which investment advice may be given under the exemption is through the use of a computer model certified as unbiased, the other is through an adviser compensated on a 'level-fee' basis. Several other requirements also must be satisfied, including disclosure of fees the adviser is to receive." (Employee Benefits Security Administration, U.S. Department of Labor)

[Official Guidance] Proposed DOL Class Exemption for Investment Advice to Self-Directed Plan Participants by Fiduciaries Receiving Fees (PDF)
9 pages. Excerpt: "[T]he proposed exemption would permit the provision of investment advice described in section 3(21)(A)(ii) of the Act by a fiduciary adviser to a participant or beneficiary in an individual account plan or individual retirement accounts (and certain similar plans), the acquisition, holding or sale of a security or other property pursuant to the investment advice, and the direct or indirect receipt of fees or other compensation by the fiduciary adviser (or any employee, agent, registered representative or affiliate thereof) in connection with such transactions." (Employee Benefits Security Administration, U.S. Department of Labor)

[Guidance Overview] Assessing the Implications for Asian Plans of IASB's Preliminary Views on Changes to IAS 19 (PDF)
Excerpt: "This paper describes some of the significant implications of the [International Accounting Standards Board's] thinking for plans typically found in major Asian markets, focusing on two of the themes highlighted in the Discussion Paper -- the definition of contribution-based promises, and the measurement approaches outlined for these promises." (Towers Perrin)

[Guidance Overview] DOL's Proposed Participant Disclosure Regulations for Defined Contribution Plans (PDF)
Excerpt: "The Department of Labor recently released proposed regulations intended to increase transparency of fees and expenses to participants in self-directed individual account plans (e.g., Section 401(k) plans). The proposed regulations are part of an ongoing DOL initiative to provide plans and plan participants with sufficient information to make informed investment decisions. As proposed, the regulations would be effective for plan years beginning on or after January 1, 2009." (Buck Consultants)

[Guidance Overview] Clarifying 'Information Sharing Agreements'
Excerpt: "The new 403(b) regulations introduced a new term of art into the industry, the 'Information Sharing Agreement.' Conversations that I have had with a number of consultants, attorneys and IRS officials reveal that this is a term which is still seeking a meaning, and which is causing a bit of confusion in the marketplace. I thought I would try to bring some clarity to the term 'ISA' (or perhaps, add to the confusion). Here's what I think we've got . . . ." (Bob Toth via Baker & Daniels)

A Fifth Federal Appellate Court Upholds Cash Balance Plan Designs
Excerpt: "In a continuing trend of federal court rulings backing cash balance plans, the 9th U.S. Circuit Court of Appeals has ruled the plans do not discriminate against older workers in favor of their younger counterparts." (; free registration required)

Economists Underscore Risks of 'Age Inflation'
Excerpt: "While there has been growing talk of the aging of America, two National Bureau of Economic Research economists have now coined a term for it: 'age inflation,' The Wall Street Journal reports. The government and individuals alike will be in for a rude awakening, warn John Shoven and Gopi Shah Goda. As it stands, the number of people eligible for Social Security is going to increase by 20% by 2050, as Baby Boomers retire. But that number will actually be far higher, due to ever-increasing life expectancies." (On Wall Street)

DOL Unveils Retirement Advice Draft
Excerpt: "The U.S. Department of Labor has proposed regulations that would govern efforts to give individualized investment advice, in person or through computer programs, to individual retirement account holders and participants in employer-sponsored retirement plans. . . . A copy of the draft posted on the department Web site is available [at]." (The National Underwriter Company; free registration or paid subscription required)

The Real Reason to Invest for Your Retirement
Excerpt: "Your retirement is far more than simply no longer showing up to work. It's about having the freedom to do what you want in life, and enough control over your personal finances to enjoy that freedom. . . . The stronger your retirement nest egg, the easier it is to break free of the lifestyle trap that can otherwise handcuff you to a job you no longer love. Even better, thanks to something known as a SEPP (Substantially Equal Periodic Payments) plan, you can start withdrawing your retirement money early, without getting socked by penalties." (The Motley Fool)

Updated Long-Term Projections for Social Security, Updated August 2008
The paper presents the Potential Range of Scheduled Social Security Outlays and Revenues. The target page links to the 45-page report, the director's blog on the paper, and supplemental data. (U.S. Congressional Budget Office)

Fees Remain Elusive for Up to 25% of 401(k) Plan Sponsors, Survey Finds
Excerpt: "Another 25% of those surveyed reported that their plan vendors have not yet disclosed the amount of annual revenue sharing that they receive from the plan's investment managers to pay for administrative expenses." (Wolters Kluwer)

Ninth Circuit Rejects IRS Interpretation of ERISA's Anti-Backloading Rules
Excerpt: "'The court recognized what ERIC has long argued, plans that adopt a 'greater of' transition are more generous to participants and do not conflict with the intent of ERISA's anti-backloading provisions,' said Ugoretz. In an important ruling of first impression, the Ninth Circuit also held that 'wearaway' in cash balance conversions does not violate federal or state age discrimination rules. The court determined that in a conversion a participant's accruals may temporarily cease until the benefit under the new formula exceeds the benefit calculated under the old formula. [Links to the Ninth Circuit Decision and to the ERIC Amicus Brief are on the target page.]" (The ERISA Industry Committee)

EBSA Clarifies Investment Advice Regulations
Excerpt: "Two proposed regulations released Thursday from the Department of Labor (DoL) include a model for advisers to satisfy the fee disclosure requirement for independent retirement account (IRA) and 401(k) investment advice." (; free registration required)

Congressman Miller Slams DOL Advice Proposal
Excerpt: "The Labor Department's advice proposal drew a quick and harsh assessment from Congressman George Miller (D-California). 'For far too long, the rules of the financial services industry have been tilted in the interests of companies and consultants, not the millions of American workers who are deeply worried about saving enough for a secure retirement,' Miller said in a statement. Miller . . . said that the two rules proposed by the U.S. Department of Labor could further undermine retirement savings plans that millions of American workers depend on." (; free registration required)

DOL Proposes Rules on Investment Advice Exemption for 401(k) Plans and IRAs
Excerpt: "The U.S. Department of Labor today announced publication of two proposed rules under the Pension Protection Act (PPA) to make investment advice more accessible for millions of Americans in 401(k) type plans and individual retirement accounts (IRAs). The proposed regulation and class exemption are to be published in the Aug. 22, 2008 Federal Register." (PRNewswire-USNewswire via COMTEX via MarketWatch)

Appeals Court Affirms Cash Balance Ruling
Excerpt: "The 9th U.S. Circuit Court of Appeals on Wednesday affirmed dismissal of age-discrimination allegations against the cash balance plan of Southern California Gas Co., Los Angeles. The decision in Hurlic vs. Southern California Gas Co., also rejected a Feb. 1 ruling by the IRS that said use of 'greater-of' provisions in cash balance conversions could violate ERISA's anti-backloading provisions." (Pensions & Investments)

[Opinion] Professionals Should Not Have to Put Their Social Security Benefits at Risk When They Become Teachers
Excerpt: "Under little-known provisions of the Social Security Act, people who make mid-career switches to teaching or certain other public-sector work can lose a significant portion of their federal retirement benefits. The rules don't affect people who paid into Social Security for a full 30 years, but they do cut into the benefits of those who make the switch earlier. Even if a teacher's spouse has paid into Social Security for three decades, survivor benefits for the teacher would be reduced." (Los Angeles Times)

Links to Items on Executive Comp, Benefits in General

[Guidance Overview] EBSA Extension of Annual Reports Deadline in Ten States Affected by Natural Disasters
Excerpt: "The Employee Benefits Security Administration (EBSA) of the U. S. Department of Labor has announced an extension of the deadline for filing the Form 5500 and Form 5500-EZ annual report/return in ten states which have been affected by severe storms, tornadoes and flooding. The extension applies to plan administrators, employers and other entities located in the presidential disaster areas directly affected, as identified by the Federal Emergency Management Agency." (Wolters Kluwer)

Work and Life, Boundaries and Balance: New Book, 'The One-Life Solution,' Addresses Work-Life Balance
Excerpt: "Clinical psychologist Dr. Henry Cloud's mission: to find the right balance between work and personal time, an increasing problem for today's overscheduled workforce. . . . His latest book, 'The One-Life Solution,' was released last week. Dr. Cloud . . . spoke with the Wall Street Journal about his work and his new book." (The Wall Street Journal)

Know Your Rights under the Employee Retirement Income Security Act (ERISA)
Excerpt: "The types of claims discussed . . . are not intended to be an exclusive list of possible claims under ERISA, but rather, representative of some common claims. ERISA is a complicated area of federal law that provides very specific remedies depending on the type of violation alleged. An employee or former employee must also, in many cases, exhaust certain administrative remedies before bringing such a claim." (Hanlon Niemann)

Workers Want Time Off for Fun
Excerpt: "Though their stress levels are high, workers haven't been taking much time off from work in 2008, and many have not been using their time off as they would like, according to recent research from The Hartford Financial Services Group, Inc." (; free registration required)

Newly Posted Press Releases
(Post Yours!)

U.S. Labor Department Proposes Rules On Investment Advice Exemption For 401(k) Plans And IRAs
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

The Online 401k Announces Partnership with Mangrove
The Online 401(k)

Genesis Consolidated Services Achieves Retirement Plan Certification
Roland|Criss Fiduciary Services

National Retirement Partners Closes Another Acquisition
National Retirement Partners, Inc.

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DC Plan Administrator
for Campbell Albrecht
in CA

401(k) Pension Consultant / Administrator
for Malcolm Thompson & Associates, Inc.
in TX

Compliance Administrator
for Pension Corporation of America
in OH

Employee Benefits Account Executive 1
for Wells Fargo Insurance Services
in CA

Human Resources Benefits Manager
for 1199SEIU Family of Funds
in NY

Sales Consultant - Retirement Benefits
for Diversified Investment Advisors
in TX

National Accounts Communication Consultant - Retirement Services
for MassMutual Financial Group
in MA

Director, National Accounts Communication Consultant-Retirement Services
for MassMutual Financial Group
in MA

401(k) Administrator
for Iron Administration, LLC
in IL

Actuarial Analyst
for Frederick Bass & Co., Inc.
in TX

401(k) Administrator
for Redwood Administrators, Inc.
in NJ

Unit Manager
for DST Systems
in MO

Retirement Benefits Manager
for Selective Insurance Company of America
in NJ

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