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September 4, 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] Text of IRS Notice 2008-73: Expansion of Notice 2008-21 Transition Relief for Funding Rules Applicable to Small Pension Plans (PDF)
4 pages. Notice 2008-73 expands the availability of the transition relief for certain small pension plans that was originally provided in Notice 2008-21. This expanded transition relief is needed because technical corrections to the Pension Protection Act of 2006, Public Law 109-280 (PPA), have not yet been enacted. This guidance will expand the transition relief provided in Notice 2008-21 to apply to plans with end-of-year valuation dates for 2006 and 2007, regardless of the valuation date used for 2008. (Internal Revenue Service)

[Guidance Overview] Inherited IRAs--Who Gets What?
Excerpt: "In order to be a designated beneficiary, they must be a living, breathing, natural person or a group of natural persons, or a qualifying trust for the benefit of identifiable natural persons. They do not have to be identified by name, although this is usually a good idea. 'All children of this marriage to share equally' will suffice to make each child a designated beneficiary." (Morningstar)

What Can Countries in Other Regions Learn from Social Security Reform in Latin America?
Excerpt: "The experiences of Latin America . . . offer some general lessons for countries in other parts of the world. These lessons relate to changes in labor market incentives accompanying reforms and how workers react to them, government actions that have met with success in managing the transition to funded pensions, and the expectations of individuals from social security systems. Latin America's reforms suggest that the most effective approach is to keep payroll taxes low, governments solvent, and social security systems focused on providing reasonable insurance against poverty in old age." (Social Science Research Network)

Which Is Better -- the Roth 401(k) Plan or the Regular 401(k) Plan? (PDF)
15 pages. Excerpt: "This study uses ESPlanner™ financial planning software, marketed at by Economic Security Planning, Inc., to compare the benefits of contributing to a Roth or a regular 401(k) for representative married and single-parent households at different ages and income levels. All households have two children who are born when the household adults are ages 27 and 29. Both spouses work and have similar earnings." (National Center for Policy Analysis)

Borrowing from Your Retirement Plan Is a Bad Idea
Excerpt: "Given the dicey economy, says, it makes sense that workers are seeking refuge in their retirement savings, but even in extreme situations, it is best for workers to seek other sources of capital before tapping their 401(k) accounts. Otherwise, borrowers are leaving much of their potential earnings on the table, and a small loan can equal to a huge loss in future retirement security . . . ." (National Center for Policy Analysis)

Listing of IRS Published Guidance for January - August 2008
The target page links to guidance published by the Service relating to retirement plans: Treasury Regulations; Revenue Rulings; Revenue Procedures; Notices; and, Announcements. (Internal Revenue Service)

Novel Charges Stand Against Lawyer in Benefits Fraud Case
Excerpt: "A federal judge has upheld novel employee-benefits fraud charges against a lawyer, calling his argument for dismissal 'provocative' but 'fatally flawed.' Prosecutors from the Eastern District of New York U.S. Attorney's Office obtained the indictment of Steven Coren of Coren & Associates last year on charges that he helped clients divert for their own use money supposedly set aside for employee benefits." (

IRS Expands PPA Transition Relief for Certain Small Plans
Excerpt: "The Internal Revenue Services has issued Notice 2008-73 expanding transitional relief on some funding requirements for certain small pension plans. Because technical corrections to the Pension Protection Act (PPA) have not yet been enacted, the IRS said many small plans that would have otherwise retained end-of-year valuation dates will adopt beginning-of-year valuation dates for the 2008 plan year, and this change will make those plans ineligible for the transition relief set forth in Section III.B of Notice 2008-21." (; free registration required)

Canadian Employers Try to Balance Adequacy and Cost of SERPs
Excerpt: "Findings of a nationwide survey of Canadian plans by Buck Consultants show that for Supplemental Employee Retirement Plans (SERPs), sponsors' top concerns include communications, the adequacy of benefits, and the costs of the plan." (; free registration required)

SPARK Answers Questions on 403(b) Info Sharing Best Practices
Excerpt: "The SPARK Institute has announced the release of a question and answer Web page to address questions it received following the release of its 'Best Practices for 403(b) Plans Information Sharing -- Minimum and Comprehensive Data Elements' in July. 'The SPARK Institute will maintain this site and update it periodically with answers to questions it receives,' said Larry H. Goldbrum, general counsel of The SPARK Institute, in the announcement. Goldbrum encouraged 403(b) plan sponsors and providers to submit questions to, which will be reviewed and answered on the site to the extent possible. . . . The questions and answers Web page is at" (; free registration required)

Employer Cleared for 90-Day Distribution Notice for Retirement Plan
Excerpt: "A federal appellate court, agreeing with a lower court ruling, asserted that an employer was within its legal bounds when it gave pension plan participants 90 days to decide whether to accept a lump-sum distribution or defer taking benefits until retirement." (; free registration required)

Judge Turns Away Principal Revenue Sharing Case Class Action Bid
Excerpt: "Faced with overseeing a class action lawsuit that could have represented as many as 57,000 401(k) plans at the Principal Financial Group, a federal judge in Iowa has refused to certify the plaintiffs as a class." (; free registration required)

Risk and Lack of Diversification under Employee Ownership and Shared Capitalism
Excerpt: "Some analysts view risk as the Achilles Heel of employee ownership and to some extent variable pay plans such as profit sharing and gainsharing. Workers in such 'shared capitalist' firms may invest too much of their wealth in the firm, contrary to the principle of diversification. This paper addresses whether the risk in shared capitalism makes it unwise for most workers or whether the risk can be managed to limit much of the loss of utility from holding the extra risk. We create an index of financial security based on worker pay and wealth, and find that workers who feel financially insecure exhibit fewer of the positive outcomes associated with shared capitalism, and are less interested than other workers in receiving more employee ownership or even more profit sharing in their workplaces." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)

[Opinion] What Financial Services Companies Are Doing to Protect the Retirement Assets of the Baby Boomers
Excerpt: "[F]orward-thinking insurers are looking for ways to mine the power of the Internet. A great example is Axa Equitable, which just unveiled, an exciting new retiree Web portal that demonstrates the power of thinking outside the box to cement your brand with the Boomers." (LOMA)

[Opinion] American Society of Pension Professionals & Actuaries Comment Letter Requesting Clarification of Pre-Funding Restrictions on IRC §401(m) Employer Matching Contributions (PDF)
3 pages. Excerpt: "[ASPPA] recommends an additional exception to the pre-funding restrictions on IRC §401(m) employer matching contributions be provided for allocations of transferred assets which meet the requirements of IRC §4980(d)(2)." (American Society of Pension Professionals & Actuaries)

[Opinion] In West Virginia, It Is the Younger Members Switching to the Old Benefits Plans
Excerpt: "In case you missed it, there was some really good news in state government last week. The gloom of an anticipated $78 million drain predicted last winter on the state budget to balance the books for a revised pension plan for public school teachers has now turned into a 'savings' of as much as $22 million for state government. The reason for this $100 million difference, legislators learned at the monthly round of interim committee meetings last week in Charleston, is that more of the younger pension plan members, rather than the ones nearing retirement, made the switch back to the older defined benefits plan." (The Lincoln Journal)

[Opinion] Are Pension Funds Drifting Towards Disaster?
Excerpt: "Do you remember the last great pension debacle? Following the tech meltdown, many defined benefit pension plans began to accumulate large deficits because of stock market losses in 2000 through 2002. Despite a rebound in equity prices from 2003 to 2005, pension deficits continued to soar as lower interest rates dramatically increased the value of pension liabilities. Well, if you thought that was a tough period for pension funds, get ready for the disaster that will rock global pension funds in the next three years and probably even longer." (Pension Pulse)

[Opinion] Important 401(k) Fee Rulings on the Horizon
Excerpt: "Many of the lawsuits that challenge retirement plan fee practices are nearing critical decision points. After languishing for months in what were often heated procedural battles, several of these cases are fast approaching discovery cutoffs and summary judgment deadlines. Rulings on those summary judgment motions could widen the existing schism among the courts about the extent to which ERISA governs the inner workings of the 401(k) industry." (Spencer Fane Britt & Browne LLP)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Do Your Benefit Plans Comply With the HEART Act?
Excerpt: "The recently enacted Heroes Earnings Assistance and Relief Tax Act of 2008 (the 'HEART Act') provides tax relief and protections to members of the armed forces. This Act impacts a number of employee benefit plan provisions, and some provisions of the HEART Act will require employers to amend their benefit plan documents." (Poyner Spruill)

[Guidance Overview] San Francisco Will Require Employers to Offer Transportation Benefits (PDF)
2 pages. Excerpt: "San Francisco Mayor Gavin Newsom signed into law an ordinance that will require employers with at least twenty employees to offer their workers at least one of three transportation benefit options. Under the new mandate, employers must have appropriate programs in place by mid-January 2009." (Buck Consultants)

Newly Posted Events
(Post Yours!)

ASPPA's QPFC Program Informational Webcast
Nationwide on September 24, 2008
presented by American Society of Pension Professionals & Actuaries (ASPPA)

Cafeteria Plans: Complying with New IRS Regulations by 1/1/09 Mandatory Deadline Webcast
Nationwide on September 18, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)

Employee Plan Examination Priorities
in Illinois on September 19, 2008
presented by Chicago Bar Association, The

EPCRS 2008: A New Look
Nationwide on September 23, 2008
presented by SunGard Relius

Investments and Fees: The New Disclosure Regulation - A Repeat Presentation
Nationwide on September 16, 2008
presented by SunGard Relius

Second Annual Executive Compensation Institute
in Illinois on September 9, 2008
presented by Chicago Bar Association, The

The Relius 403(b) Prototype: Making It Work for You - A Special Two-Part Web Seminar
Nationwide on October 1, 2008
presented by SunGard Relius

Voluntary Insurance Products in the Workplace: Avoiding Pitfalls and Limiting Employer Obligations
Nationwide on October 2, 2008
presented by EBIA / Thomson Reuters

Newly Posted Press Releases
(Post Yours!)

The SPARK Institute Releases Answers To Technical Questions Regarding Its 403(b) Plans Information Sharing Best Practices
SPARK Institute

U.S. Institutional Investors Boost Ownership of U.S. Corporations to New Highs, Reports The Conference Board
The Conference Board

Sentinel Financial Group Partners With Evolution Benefits
Sentinel Financial Group

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Client Relationship Manager
for PensionTrend, Inc
in MI

Actuarial Analyst
for New York Life Retirement Plan Services
in MA

Plan Consultant Opportunity
for Weaver Partners, Inc.

RPSS Compliance Specialist
for Associated Bank
in WI

for Cammack LaRhette Consulting
in MA, NY

Assistant Manager
for Principal Financial Group
in DE

Account Manager, Retirement Plans
for Cammack LaRhette Consulting
in MA, NY

401(k) Pension Administrator for DC Balance Forward Plans
for Ingham Retirement Group
in FL, SC

OmniPlus Consultants
for Szymborski Sharpless & Co, PC.

Investment Advisor
for The Standard
in TX

TPA Operations Manager
for Provident Group
in NV

401(k) Pension Administrator
for Altigo Pension Services, Inc.
in NJ

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