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August 27, 2008

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

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[Guidance Overview] DOL's Proposals Under PPA Investment Advice Provisions (PDF)
8 pages. Excerpt: "DOL concluded that there are computer model programs available to IRA's that (i) utilize relevant information about the IRA beneficiary; (ii) take into account the 'full range of investments, including equities and bonds,' in recommending options for the IRA investment portfolio; and (iii) allow the IRA beneficiary sufficient flexibility in obtaining advice to evaluate and select investment options." (Sutherland)

[Guidance Overview] Is Spousal Consent Required If IRA Owner Wants to Name Person Other Than Spouse As Beneficiary?
Excerpt: "In a community/marital property state (CA, NV, AZ, NM, TX, LA, WA, ID, WI) spousal consent is required whenever an IRA owner does not name his/her spouse as sole primary beneficiary. In any other state, state beneficiary laws and/or financial organization policy should be observed." (Wolters Kluwer)

[Guidance Overview] Employee Plans' Examinations of Salary Reduction SEPs (SARSEPs) Have Revealed Error Trends
Excerpt: "The IRS advises plan sponsors to perform diligent reviews of their SARSEP plans in order to avoid these errors. Because SARSEPs were grandfathered in 1996 by the Small Business Job Protection Act, plans in existence prior to 1997 may continue, but no new SARSEPs could be established after December 31, 1996. Currently, there are an estimated 30,000 SARSEPs, according to the IRS." (Wolters Kluwer)

[Guidance Overview] Providing Services to Qualified Pension or Profit-Sharing Plans Requires Significantly Expanded Financial Disclosure
Excerpt: "The scope of this disclosure would go well beyond what most service providers currently reveal in their client contracts and disclosure documents. If you are an investment advisor, your ADV already provides much of the information covered by the new disclosure rule; even so, the proposed rule will definitely have an impact on you. If you are a broker or a rep, however, the new regimen would turn your practice upside down." (Financial Planning)

Corrected Link: 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

A Partnership with a Third-Party Administrator Offers Much More Than a Plan Administrator
Excerpt: "Yes, recordkeepers frequently are referred to as TPAs and, yes, most TPAs still provide recordkeeping services. However, plan administration has grown ever more complex, and plan sponsors increasingly are looking for a more consultative approach to plan design, compliance testing, and the like -- and there is a whole 'new' generation of TPAs ready, willing, and able to provide an expanded level of support to plans and plan advisers alike." (planadvisor)

Latest Ruling on Cash-Balance Plans Seen as Ending 'Fear of Litigation'
Excerpt: "A fifth appeals court ruling that cash-balance pension plans do not violate age discrimination law almost certainly ends years of uncertainty and costly litigation that threatened their future, legal experts say. In a unanimous decision last week, the 9th U.S. Circuit Court of Appeals in San Francisco joined four other appeals courts in ruling that the plans do not discriminate against older employees." (Workforce Management; free registration required)

How America Saves 2008: A Report on Vanguard 2007 Defined Contribution Plan Data
Excerpt: "Illustrated with numerous charts and tables, this valuable reference tool provides an analysis of savings, investing, and account activity trends in Vanguard defined contribution plans. You'll also find useful insights on a variety of contemporary issues, including automatic or default plan features, target-date funds, and company stock." (The Vanguard Group)

Heterogeneity in Health and Mortality Risk Among Early Retiree Men
Excerpt: "This paper finds substantial heterogeneity among early retirees in health and mortality risks related to the age at which they become entitled to Social Security benefits. Early retirees consist of (1) a group in extremely poor health, (2) a group with health equal to age-65 retirees, and (3) a group with health in between that of the first two groups. The majority of early retirees are in poorer health and have higher mortality risk than that of age-65 retirees, and only a minority have health and mortality risks as good as that of age-65 retirees." (U.S. Social Security Administration via Social Science Research Network)

A Guide to Starting Social Security Benefits
Excerpt: "This article explains the various factors at play in determining the optimum starting point, including: longevity considerations; spousal implications, whether for a previously employed or a previously unemployed spouse; the impact of post-retirement employment; the availability of health insurance prior to Medicare eligibility for the worker and the worker's spouse; alternative sources of retirement income, including distributions from retirement savings plan assets and lifetime liquidation of nonretirement assets (and the pertinent income tax ramifications); and anticipated investment strategies." (Social Science Research Network)

SSA's International Update, August 2008
Recent developments in foreign public and private pensions. (U.S. Social Security Administration)

Rogue Plan Administrator to Get 14 Years Under Plea Deal
Excerpt: "The former CEO of Tennessee corporate benefits administrator 1Point Solutions has reached a plea agreement with federal prosecutors that would put him in prison for a minimum of 14 years. The Tennessean reports that, according to a letter to victims dated Monday from U.S. Attorney Ed Yarbrough's office in Nashville, under the terms of the agreement, Barry Stokes would plead guilty to 29 counts of embezzlement of retirement funds . . . ." (; free registration required)

Double-Dipping Social Security
Excerpt: "A Social Security provision allows retirees to reapply for their benefits. Form 521 (Request for Withdrawal of Application) as well as IRS provisions permit an individual to: Repay the Social Security retirement benefits received with no interest charged; Claim an income tax credit for past Social Security benefit taxes paid; or Deduct the amount of the benefits that have been taxed from taxable income (if itemizing)." (National Center for Policy Analysis)

West Virginia DC to DB Migration Could Mean Big Savings for State
Excerpt: "West Virginia lawmakers were informed Monday that the movement of nearly 15,000 teachers and educational workers from a defined contribution plan to a traditional pension plan will shave about $22 million off the state's retirement benefit expenses. A Charleston Gazette news report said the estimate given to lawmakers by state actuary Harry Mandel was radically different from early statements that the DC to DB migration would actually cost the state as much as $78 million . . . ." (; free registration required)

International Study Finds Fee Disclosure Policy Needed for Defined Contribution Pension Plans
Excerpt: "A new research paper from the Rotman International Centre for Pension Management finds that a standardized international policy on fee disclosure would help pension plan participants become better informed consumers of Defined Contribution (DC) plan investment and administrative services. Each year participants in DC pension plans around the world pay billions of dollars in fees." (MarketWatch)

Don't Plan Too Far Ahead for Retirement
Excerpt: "Many financial advisers tell clients to make long-term savings estimates for retirement. In theory, this encourages workers to save and invest on a consistent basis. But a new series of studies found that you should focus on saving for next month instead of the distant future." (U.S. News & World Report)

[Opinion] Independent: What Does It Really Mean When Talking About Advisors?
Excerpt: "One of the more commonly used adjectives in the retirement plan advisory space is independent. Consultants use it to describe their practices. Brokers use it to describe their culture. Plan sponsors inherently expect it. Regulators say they favor it. The connotation is certainly positive. But what does it really mean?" (Jeb Graham via

Links to Items on Executive Comp, Benefits in General

[Guidance Overview] IRS Carves Out from Code Sections 457(f) & 409A Certain Arrangements by Public School and Other Employees to Have Salary Paid over 12 Months
Excerpt: "Under a common arrangement, public school and other employees who provide services during only a portion of the year can elect to be paid ratably over 12 months. This 'election to defer' payment can trigger the unwanted application of IRC 457(f) which governs certain deferred compensation plans of tax-exempt entities and state and local governments, and IRC 409A which otherwise governs amounts deferred under nonqualified deferred compensation plans. IRS recently issued guidance to preclude the unwanted application of IRC 457(f) & 409A to these and other similar arrangements. IRS Notice 2008-62." (Deloitte)

[Guidance Overview] 2008 Deferred Compensation Elections under Code 409A Transition Rules
Excerpt: "The final regulations under Code 409A become mandatorily effective January 1, 2009. To cover the period from 2005 (when Code 409A went into effect) through 2008 inclusive, Treasury and the IRS have issued voluminous interim and transitional guidance. Importantly, this guidance permits a participant to change an existing payment election without: i) having to comply with the very restrictive 409A change payment election rules; and ii) without violating the 409A rules prohibiting acceleration of payment." (SunGard)

Employers Get Creative to Ease Impact of Gas Prices
Excerpt: "Organizations are taking a variety of creative steps to help their employees offset the high cost of gasoline, according to Mercer's 2008 Gas Price Impact SnapShot Survey. Within the next six months, almost one in four employers (22%) are for the first time planning to offer at least some of their employees the option of a four-day work week, and 24% are planning to allow more employees to telecommute . . . ." (; free registration required)

Newly Posted Events
(Post Yours!)

Regulatory Update, Including Fee Disclosure and Plan Document Restatements, EPCRS and Plan Corrections
in Connecticut on September 17, 2008
presented by National Institute of Pension Administrators-CT Chapter

Newly Posted Press Releases
(Post Yours!)

MassMutual Retirement Services Offering In-Depth Support to Plan Sponsors and Advisors in Anticipation of New 403(b) Regulations
MassMutual Retirement Services

U.S. Labor Department Settlement Provides $5 Million In Restitution For Pennsylvania Builders Health Plan And Reforms Plan Operations
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

American Academy of Actuaries Appoints Frank Todisco as Senior Pension Fellow
American Academy of Actuaries

ThyssenKrupp Selects DailyAccess Corporation to Provide Retirement Plan Services
DailyAccess Corporation

401k Fee Benchmarking Book Released

New Study Shows Older Employees Are Healthiest, Workers in 30s Most at Risk for Illness

Local, National Organizations Turn to Life Time Fitness to Reduce Health Care Costs, Increase Employee Health and Productivity
Life Time Fitness, Inc.

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ERISA Attorney
for Potter Anderson & Corroon LLP
in DE

ERISA Senior Consultant
for Charles Schwab
in TX

Retirement Plan Conversion Team Lead
for Charles Schwab
in OH

Defined Benefits - Benefits Service & Operations Managers
for Hewitt Associates

Retirement Plan Actuary
for Charles Schwab
in AZ, OH, TX

Corporate Brokerage Services Support Manager
for Charles Schwab
in AZ

Client Services Manager, Stock Plan Services
for Charles Schwab
in CO

Trust Distribution Specialist
for Charles Schwab
in TX

Director ERISA Consultant
for Charles Schwab
in AZ

Sr. Retirement Plan Administrator
for Charles Schwab
in TX

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