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September 10, 2008

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

Today's sponsor is SunGard

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EGTRRA Restatement Outsourcing Service

Do you have 300 or more defined contribution plans to restate for EGTRRA? Outsource them to us. SunGard’s expert Document Management Services (DMS) staff can work as your "invisible" back office resource to help you through the restatement process. Let us focus on your plan documents, so you can focus on growing your business. Contact Ellen Nasrallah at 800-326-7235, ext. 5968.

[Official Guidance] California Attorney General's Opinion Regarding Whether School District Can Give Preference to a 403(b) Vendor (PDF)
8 pages. Excerpt: "The Honorable Bonnie Garcia, Member Of The State Assembly, has requested an opinion on the following questions: 1. May a school district or its employees promote or give preferred status to a particular provider of Internal Revenue Code section 403(b) plans when offering such plans to the district's employees? 2. May a school district or its employees receive compensation for the promotion or sale of a particular 403(b) plan to public school employees?" (Office of the Attorney General State of California)

[Guidance Overview] REMINDER: January 1, 2009 Deadline for Compliance with New 403(b) Regulations
Excerpt: "Sponsors of 403(b) plans – subject to some notable exceptions – must be in compliance with the final Treasury regulations by January 1, 2009. Key among the new requirements is that the plan must be in writing. It must contain all the material terms and conditions for eligibility, benefits, applicable limitations, the contracts available under the plan, and the time and form under which benefit distributions will be made." (Deloitte via

[Guidance Overview] Military Retirement Benefits - Structuring Payments as Deductible Alimony
Excerpt: "To be deductible as alimony by the payer, the payment must satisfy the requirements of IRC section 71. A recent Tax Court decision involving the payment of military retirement benefits under the Uniformed Services Former Spouses' Protection Act (USFSPA) to the former spouse of a retired serviceman sheds light on the treatment of alimony payments." (The New York State Society of CPAs)

[Guidance Overview] Private Equity Fund Valuation by ERISA Plans
Excerpt: "How should a fiduciary for a retirement plan governed by the Employee Retirement Income Security Act of 1974 ('ERISA') evaluate the value of the plan's alternative investments (e.g., private equity and hedge funds)? Typically, administrators rely upon the valuation provided by the general partners of such funds. However, a recent letter from the Boston office of the Department of Labor (the 'DOL') has indicated that such an approach may constitute a breach of fiduciary duty under ERISA." (O'Melveny & Myers LLP)

[Guidance Overview] Clarification on the Protocol to Can.ada-U.S. Income Tax Convention
Excerpt: "The new rules are designed to facilitate movement of employees between Can.ada and the United States by eliminating a possible deterrent for cross-border commuters and those on temporary work assignment. These changes are discussed in more detail . . . ." (Mondaq)

Industry Braces for New 403(b) Regs
Excerpt: "As of Jan. 1, 2009, the new changes mandated by the Department of Labor and the Internal Revenue Service will significantly alter the 403(b) funding model by shifting responsibility from vendors to plan sponsors. The changes are part of an ongoing effort to make the non-profit, governmental 403(b) plans commonly used by school districts resemble the for-profit 401(k) plans used by nearly everyone else. When the IRS first began looking into 403(b) plans, regulators were shocked to find that in many instances, the plans had as many vendors as participants." (Money Management Executive via On Wall Street)

Text of Congressional Research Service Report on Pension Participation and Sponsorship: Recent Trends (PDF)
20 pages. Excerpt: "[A]mong private-sector workers aged 25 to 64 who were employed year- round, full-time: The percentage of workers whose employer sponsored a retirement plan rose from 57.2% in 2006 to 59.9% in 2007. The percentage of workers who participated in employer-sponsored retirement plans rose from 49.2% in 2006 to 52.0% in 2007. Only 25.5% of workers at firms with fewer than 25 employees participated in an employer-sponsored retirement plan in 2007, compared to 45.5% of workers at firms with 25 to 99 employees and 65.4% of workers at firms with 100 or more employees." (Congressional Research Service, U.S. Library of Congress)

The Phases of Retirement and Planning for the Unexpected: 2007 Risks and Process of Retirement Survey (PDF)
27 pages. Excerpt: "This report provides key findings from the 2007 Risks and Process of Retirement Survey . . . related to how respondents conceive retirement and how they retire. It also examines post-retirement phases, as defined by retirees' abilities and needs. Retirement phases can be defined by a number of characteristics including age, health status, extent of work, family status and capabilities." (Society of Actuaries)

Retirement Vulnerability of New Retirees: The Likelihood of Outliving Their Assets (PDF)
26 pages. Excerpt: "The analysis finds that almost three out of five middle-class new retirees can expect to outlive their financial assets if they attempt to maintain their current pre-retirement standard of living. To avoid outliving their financial assets, middle-class retirees will have to reduce their standard of living, on average, by 24 percent." (Ernst & Young LLP)

Capitol Hill briefing on Social Security, Sept. 5, 2008
Excerpt: "Following up on the national release of the Academy's recommendation to raise the Social Security retirement age, this Capitol Hill briefing provided an actuarial perspective and explained the analysis that led to the recommendation. . . . [The target page has links to the speakers' slides from the Hill briefing; the Academy's recommendation on raising the retirement age; and, more information about the recommendation." (American Academy of Actuaries)

San Diego City Attorney's Ongoing Effort to Roll Back City Retirement Benefits Lauded in WSJ Editorial
Excerpt: "'The San Diego attorney faces a tough re-election battle in November, but he's setting off an alarm that voters across America need to hear,' said the editorial. Aguirre's lawsuit to rescind increases to the city employee pension plan in 1996 and 2002 was rejected at the Superior Court level, but the case has been appealed." (San Diego Business Journal)

Chart: Nevada's Retirement Benefits Compared to Other States
Excerpt: "The pension plan, which the study said is 'among the nation's most favorable public employee retirement systems,' provides a $37,380 annual pension to general government workers earning annual salaries of $50,000 who retire today after 30 years on the job." (Las Vegas Review-Journal)

Changes Needed to Aid Phased Retirement Programs
Excerpt: "The Department of Labor, Internal Revenue Service (IRS), Congress and employers will need to work together to enable the much-needed implementation of phased retirement programmes, a senior consultant has claimed. Speaking before the ERISA Advisory Council Working Group on Phased Retirement, which is examining the need for an improved system of phased retirement opportunities . . . ." (Global Pensions)

Pension Sponsorship and Participation: Summary of Recent Trends, Updated Sept. 8, 2008 (PDF)
Excerpt: "A CRS analysis of the Current Population Survey indicates that, among private-sector workers aged 25 to 64 who were employed year-round, full-time: The percentage of workers whose employer sponsored a retirement plan rose from 57.2% in 2006 to 59.9% in 2007. The percentage of workers who participated in employer-sponsored retirement plans rose from 49.2% in 2006 to 52.0% in 2007." (U.S. Congressional Research Service via Tax Prof Blog)

House Bill Joins Effort Against 401(k) Loans
Excerpt: "A new House bill joins a Senate effort to curb the use of loans from 401(k) plans and credit cards that tap such accounts. Sponsored by Rep. Bill Foster, D-Ill., HR 6708 joins S 3278 in aiming to stop investors from depleting their retirement funds through the use of credit or debit cards . . . ." (Investment News; free registration required)

Call for Papers: Housing Wealth, Options, and Spending Issues in Retirement
Excerpt: "To expand thinking on housing issues in retirement, the Society of Actuaries' Committee on Post Retirement Needs and Risks is issuing this Call for Papers, inviting researchers, practitioners and other professionals to explore this issue from a variety of perspectives. The Committee is seeking to compile papers that represent the latest in thinking about housing issues related to retirement planning and financing. It is the goal of this effort that taken together, the chosen papers will provide a multi–disciplinary, textured analysis of the topic. Please submit an abstract or outline of your proposed paper by September 15, 2008 . . . ." (Society of Actuaries)

Trade Groups Comment on Fee Disclosure Proposal
Excerpt: "The ERISA Industry Committee (ERIC), Investment Company Institute (ICI), and the SPARK Institute all gave the Department of Labor (DoL) opinions on its recent fee disclosure proposal." (planadvisor)

[Opinion] Testimony on Behalf of the American Benefits Council before DOL ERISA Advisory Council Working Group on Phased Retirement (PDF)
5 pages. Excerpt: "[E]mployers are interested in implementing phased retirement programs -- more aptly labeled 'flexible retirement' programs -- that enable older employees, who might otherwise retire, to remain actively employed either on a part-time or full-time basis." (American Benefits Council)

[Opinion] U.S. Chamber of Commerce Comments on Proposed Rule on Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans (PDF)
6 pages. Excerpt: "The Chamber supports disclosure and transparency of information that allows participants to make informed decisions about their investments. In order to be beneficial to participants, however, such information should be useful and easily understood. Moreover, it is equally important that disclosure requirements are not unduly burdensome to the employer – particularly if they do not provide meaningful information to the participant. We believe that the proposed regulation strikes a reasonable balance between these requirements." (U.S. Chamber of Commerce)

[Opinion] U.S. Chamber of Commerce Testimony before the ERISA Advisory Council on Phased Retirement (PDF)
8 pages. Excerpt: "The barriers to phased retirement include legal, fiscal, policy, and practical issues. There are legal restrictions on when benefits can be paid out, there are fiscal concerns surrounding the costs associated with employing older workers, such as increased pension payments and perceived increases in health care costs, and there are policy and practical concerns about how accruals should be calculated during phased retirement or how to apportion the payout. Overlying all of these barriers is a concern about fiduciary responsibilities and ensuring that a phased retirement program benefits workers without creating unintended consequences or onerous liabilities for plan sponsors." (U.S. Chamber of Commerce)

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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Audio: ERISA Fiduciaries - Ways to Avoid Costly Litigation
Excerpt: "On August 26, David Levin with Gallagher Benefit Services hosting presented a webinar in which it focused on the amount of litigation under ERISA brought against employee benefit plan sponsors, administrators and fiduciaries has increased significantly and how it is more important than ever for plan fiduciaries to formulate and adopt strategies to avoid benefit plan litigation." (Drinker Biddle)

Reduced Exit Packages Urged for Ousted Fannie Mae and Freddie Mac Executives
Excerpt: "Senator Barack Obama and two other prominent Democrats urged federal housing regulators on Tuesday to cut the golden parachutes of the ousted leaders of Fannie Mae and Freddie Mac, another sign that the government bailout of those mortgage giants could reverberate through the presidential campaign." (The New York Times; free registration required)

Mortgage Giants' Employees Being Encouraged to Stay
Excerpt: "A spokeswoman for the agency said the new plan would include retention bonuses. Known as 'pay-to-stay' bonuses, these awards typically are given to about a fourth of a company's work force. Some staffers have a chance to make twice as much if they 'stick around, the company does well and you do particularly well in your role . . . .'' (The Wall Street Journal)

A White Paper on American Workers' Struggles to Attain Financial Security (PDF)
13 pages. Excerpt: "This study from Alliant Credit Union and The International Society of Certified Employee Benefit Specialists (ISCEBS) finds that American workers are struggling to get ahead financially and they're looking to their employer for help. American workers are struggling to gain control over their financial lives and many are living from paycheck to paycheck. Unfortunately, employers are not offering the kind of assistance that can aid employees with achieving financial wellness." (International Society of Certified Employee Benefit Specialists)

Experts Dispute Perils of Nation's Debt
Excerpt: "'When compared with the balance sheet of the nation,' deficits are 'minuscule,' said James Galbraith, an economist at the University of Texas who essentially ignores the $4.2 trillion in intragovernmental debt. 'Debts from one government agency to another are, of course, merely accounting,' he said. An opposing school of thought predicts dire consequences. 'National debt is growing at an alarming rate at the same time that people will begin to rely on the government for Social Security and Medicare more and more,' said Addison Wiggin, co-author of the book 'Empire of Debt' and executive producer of the documentary 'I.O.U.S.A.,' which is playing at theaters throughout the country." (The Washington Times)

Newly Posted Events
(Post Yours!)

Abandoned Plan Program Workshop
in Maryland on September 16, 2008
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Abandoned Plan Program Workshop
in Pennsylvania on September 18, 2008
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Voluntary Fiduciary Correction Program Workshop
in Maryland on September 16, 2008
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Voluntary Fiduciary Correction Program Workshop
in Pennsylvania on September 18, 2008
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Newly Posted Press Releases
(Post Yours!)

The Optical Society Uses Total Compensation Statements To Help Employees Focus On Organizational Goals
Benefit Software Inc.

Council Describes For DOL Panel The Importance Of “Win-Win” Flexible Retirement Programs
American Benefits Council

National Health Plan Collaborative Launches Online Toolkit to Assist Health Plans in Reducing Disparities
National Health Plan Collaborative

Texas Business Group on Health Releases Annual Report on the Status of Diabetes in Texas
Texas Business Group on Health

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DC Plan Administrator - Work From Home
for Qualified Plans, LLC

Pension Analyst
for OperationsInc
in NY

Senior Pension Processor (TPA/Employee Benefits)
for Zenith Administrators
in CA

Retirement Plan Administrator
for Peritus Benefits and Investments, Inc.
in MO

Senior Director of Retirement Services
for ADP TotalSource
in FL

Compliance Manager
for Vanguard
in AZ

Business Development Officer
for Strategies, LLC
in CO

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