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August 26, 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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DC/401(k) Administration Software from DATAIR

DATAIR’s Defined Contribution System for Valuations, Discrimination Testing, and Proposals. Handles New Comparability Plans, Sole Proprietorships, 401(k) and 403(b) plans. Live, expert support.

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Contact or call 1-888-328-2474 (1-888-DATAIR-4)

[Official Guidance] IRS 'Employee Plan News' Discusses Notice 2008-62 Anticipating 457(f) Regs as Applied to Certain School Employees (PDF)
Excerpt: "The use of a 12-month pay period that spans two calendar years for employees that actually only work for 9 or 10 months results in compensation earned in one year being deferred to a second year. [Notice 2008-62, issued in early July,] establishes criteria which, if met, excludes arrangements in which school employees are compensated on a 12-month pay period in lieu of the 9 or 10-month actual work period from being considered as deferred compensation and, therefore, not subject to the rules under Code §§457(f) and 409A. In fact, the notice provides that this arrangement wouldn't result in deferred compensation as long as the employee earns less than $186,000." (Internal Revenue Service)

[Guidance Overview] New DOL Proposed Fee Disclosure Rules for 401(k) Plans
Excerpt: "The latest proposed regulation establishes uniform fiduciary disclosure requirements for all participant-directed individual account plans, which must be provided on or before the date the participant becomes eligible to participate in the plan and thereafter on a periodic, ongoing basis. The information required falls into two categories: plan-related information and investment-related information." (Seyfarth Shaw)

[Guidance Overview] IRS Updates and Expands Guidance on Employee Plans Compliance Resolution System (EPCRS) for Plan Failures
8 pages; includes comments by Hewitt. (Hewitt)

[Guidance Overview] Updated EPCRS Adds New Correction Methods, Expanded Availability for Streamlined VCP, and Other Changes
Excerpt: "EBIA Comment: The various expanded EPCRS provisions and the simplified VCP procedures should be helpful to plan sponsors and their advisors in maintaining plan compliance. We note that the revisions include many changes not addressed in this article, including changes relating to the scope of a compliance statement, the IRS's ability to deny EPCRS availability in specific cases, revised requirements for submitting a determination letter request when correcting by plan amendment, new requirements to submit executed amendments in some cases, revised definitions (including updated definitions of excess amount, favorable letter, and overpayment), details on correcting excess annual additions, and a revised sample format (Appendix D) for regular VCP submissions." (Employee Benefits Institute of America)

[Guidance Overview] E.I. Dupont de Nemours & Company v. Ampthill Rayon Workers, Inc., August 25, 2008 Unpublished Decision
Excerpt: "Ampthill Rayon Workers represents about a thousand Dupont employees. Dupont changed the terms of a number of its [ERISA] plans and the union asserted that the changes to the plan violated the Collective Bargaining Agreement (CBA). The union demanded arbitration under the CBA. Dupont contends that the union's claims should not be subject to arbitration, but should be resolved 'by utilizing each plan's internal claim procedure or in the alternative, by filing a civil suit in federal court under §501(a)(1)(B) of ERISA.'" (

Timeline of DOL's Proposed Rule on Self-Directed Plan Fee Disclosure Too Aggressive, Some Say
Excerpt: "[I]ndustry officials say the rule's proposed effective date -- the comment period expires September 8 and the effective date is January 2009 -- is unrealistic, and will be costly to implement in such a short period of time." (Investment Advisor)

Fees Surpass Service as Top Reason to Switch Providers
Excerpt: "Spectrem Group announced that for the first time since it began tracking data in 1989, fees ranked as the number one reason defined contribution plan sponsors switch providers." (planadviser)

Freezes Often Precede DB Plan Terminations, GAO Study Finds
Excerpt: "For participants, while a freeze generally implies a reduction in anticipated future retirement benefits, the study indicated that this reduction may be somewhat offset by increases in replacement savings plans, such as defined contribution (DC) plans. The vast majority of sponsors with frozen plans studied (83 percent) had alternative retirement savings arrangements in place for participants affected by the freeze, it was noted. Of course, the shift to DC plans also means a shift of investment risk and responsibility for saving to employees." (Wolters Kluwer)

Pension Timebomb Ticks in Europe as Population Ages
Excerpt: "The European Union's population is set to reach 506 million by 2060, when there will be only two people of working age for every person aged 65 or more, the EU statistical office said on Tuesday." (Reuters via

Phased Retirement Encouraged by PPA, But Companies Slow to Adopt
Excerpt: "Hewitt recently surveyed more than 140 midsize to large employers and found that only 5 percent have formal phased retirement programs. While not many consider it a major need now, three times as many said it might be valuable in five years as the exodus of boomers from the workplace increases." (Martha Hamilton, published by AARP BulletinToday)

DOL's Proposed Regulations and PTE Under PPA Exemption for Eligible Investment Advice Arrangements
Excerpt: "The guidance is proposed to be effective 60 days after it is issued in final form." (Employee Benefits Institute of America)

Mid-Columbia [Oregon/Washington] Fire Board OKs Volunteer 'Retirement' - Volunteers Earn Points for Activities with Fire District
Excerpt: "A Length of Service Awards program -- in essence a retirement plan for volunteer firefighters with Mid-Columbia Fire & Rescue District -- was adopted by the board when it met Aug. 18. . . . The volunteers earn points for a variety of activities -- showing up at fires, drills, meetings, special activities, etc. -- to be eligible for the program. They have to earn 160 points to qualify and . . . volunteers with years of service would be vested up to two years of participation in the plan, which will not go into effect until next year." (The Dalles Chronicle)

Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Employee Benefits Developments, August 2008 Issue
Includes ESOP Dividends -- New Tax Reporting Rules; Mere Posting of SPD on Intranet Does Not Ensure Actual Receipt; Trilogy of IRS Guidance Regarding Health Savings Accounts; Service by Director as Interim CEO Results in Loss of Tax Deduction for Corporation; IRS Proposes Regulations Regarding 'Greater of' DB Plan Formulas; and No FICA Tax Refund On Nonqualified Deferred Comp Plan Benefits Never Received; Kentucky Retirement System Does Not Violate the ADEA. (Hodgson Russ)

[Guidance Overview] On the Interplay Between 401(k) Hardship Distribution Rules and 409A 'Unforeseeable Emergencies'
Excerpt: "The interplay between the 401(k) plan rules regarding hardship distributions and the Code Section 409A rules regarding unforeseeable emergencies can work to prevent one who participates in both plans from being able to receive a 401(k) hardship distribution or cease elective 409A plan deferrals to access cash for authorized hardship events. This possibility will be explained in this article. This article will also summarize the 401(k) plan financial hardship rules, as well as the Section 409A unforeseeable emergency rules, and demonstrate how these rules can conspire to put the executive in a Catch-22." (Chang Ruthenberg & Long PC)

[Guidance Overview] DOL Enforcement Manual Updated to Address Fiduciary Gifts & Gratuities
Excerpt: "The Enforcement Manual carves out two circumstances where investigators are generally to conclude that no violation of ERISA § 406(b)(3) has occurred: (1) $250 de minimis amount: where a fiduciary and its family members receive consideration (i.e., gifts, gratuities, meals, entertainment, other non-cash consideration, or reimbursement of expenses associated with educational conferences) of an aggregate annual value of less than $250 and their receipt does not violate any plan policy or provision; (2) Educational expenses: where the plan is reimbursed for expenses associated with a plan representative's attendance at an educational conference, provided that: . . . ." (Deloitte)

Some Firms' Options Drowning as Stock Drops Pound Fortune 500
Excerpt: "Compensation consultants say an increasing number of companies are considering dealing with their now-worthless options, either by repricing them or exchanging them for newly issued restricted stock." (Workforce Management)

A Tax Revolt Is Quietly Brewing in Some States
Excerpt: "These and other battles come at a time when many states are struggling to cope with tough economic times." (Wall Street Journal via Baltimore Sun)

[Opinion] On Estoppel and Equitable Remedies Under ERISA: It Should Be a Two-Way Street
Excerpt: "I've complained at times in the past that too many federal Circuit and District courts view ERISA's equitable remedies as a one way street. Plan fiduciaries chasing subrogation or overpayment claims have free rein to recover money from plan participants under the guise of 'appropriate equitable relief.' Yet those some courts often deny the participants any monetary recovery for violations of ERISA because recovery of money supposedly falls outside the scope of 'appropriate equitable relief.'" (Brian S. King's ERISA Law Blog)

Newly Posted Events
(Post Yours!)

HRAs and HSAs: The Basics and New Developments
Nationwide on September 25, 2008
presented by ABA Joint Committee on Employee Benefits

Proposed Fee Disclosure Regulations Overview
Nationwide on August 26, 2008
presented by Convergent Retirement Plan Solutions, LLC

Newly Posted Press Releases
(Post Yours!)

U.S. Department of Labor Sues Defunct West Chester, Pennsylvania Company To Protect Participants of Abandoned Retirement Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

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Retirement Plan Administrator
for Lebenson Actuarial Services
in NV

Manager, Corporate Retirement Plans
for COUNTRY Financial
in IL

Employee Benefits Senior Manager
for Lockheed Martin Corporation
in MD

Defined Benefit Software Support Specialist
for Actuarial Systems Corporation

Actuary / Actuarial Consultant
for Retirement Services Firm
in FL, GA, NC, SC

Retirement Plan Administrator
for CMC Interactive, LLC
in NY

Client Relations Associate
for Alliance Benefit Group of Michigan
in MI

Trusts & Estates Attorney
for Prestigious Sarasota Law Firm
in FL

Senior Advice Specialist
for Charles Schwab
in TX

Advice Services Representative
for Charles Schwab
in AZ

Education Consultant for Retirement Plans
for Charles Schwab
in TX

Specialist - Brokerage Svc Rep
for Charles Schwab
in CO

Business Development Education Consultant for Retirement Plans
for Charles Schwab
in TX

Participant Services Manager
for Charles Schwab
in AZ

Specialist - Client Svc
for Charles Schwab
in TX

Cashiering Operations Lead
for Charles Schwab
in AZ

Specialist - 401K Client Svc
for Charles Schwab
in TX

Sr. Retirement Plan Specialist
for Charles Schwab
in TX

Reporting/Statistical Analyst
for Charles Schwab
in OH

Trust Accounting Specialist
for Charles Schwab
in TX

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