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September 16, 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

(Click on company name or banner to learn more.)
Banner ad for SunGard

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] Disaster Relief Relating to PBGC Deadlines in Response to Storms and Flooding in Texas
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the storms and flooding that occurred on July 22, 2008, in Texas." (Pension Benefit Guaranty Corporation)


[Official Guidance] Disaster Relief Relating to PBGC Deadlines in Response to Severe Storms and Flooding in Florida
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the severe storms and flooding that occurred on August 18, 2008, in Florida." (Pension Benefit Guaranty Corporation)


[Official Guidance] Disaster Relief Relating to PBGC Deadlines in Response to Hurricane Gustav in Louisiana
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to Hurricane Gustav that occurred on September 1, 2008, in Louisiana." (Pension Benefit Guaranty Corporation)


[Guidance Overview] IRS Restricts 'Pension Selling'
Excerpt: "The IRS has ruled that transferring a qualified plan to an unrelated taxpayer for any purpose other than transferring assets, operations or employees violates the exclusive benefit rule. The ruling shuts down the practice of 'selling' a company's pension and threatens certain completed transactions." (Watson Wyatt Worldwide)


[Guidance Overview] Selected State Pension and Retirement Legislation for 2008 (PDF)
45 pages. Excerpt: "Three times each year, the National Conference on Public Employee Retirement Systems publishes Selected State Pension and Retirement Legislation, a list of enacted pension legislation from across the nation. The current document provides information about legislation from the beginning of this year through July 7." (National Conference on Public Employee Retirement Systems)


[Guidance Overview] The IRS Intends to Establish a 'Meaningful Presence' in Public Retirement Plans (PDF)
2 pages. Excerpt: "In addition to encouraging government plans and retirement systems to file by January 31, 2009 for a 'determination letter', that certifies that their plan is in compliance with the Internal Revenue Code (IRC), the IRS gave notice that it will increase its oversight and examination of government plans. However, by its own admission, the IRS has relatively little experience in examining these plans." (Milliman)


[Guidance Overview] Operational Non-Compliance in ERISA Qualified Plans Can Cause Problems for Employers
Excerpt: "According to the IRS, some of the reasons employers give to explain why their plans are not operationally compliant include: Not knowing how to identify and fix any errors. Not wanting to have any unnecessary contact with the IRS. Assuming that the required annual financial audit identifies any errors that need to be addressed. Assuming that auditing the plan for operational compliance would be too expensive." (Aiken & Aiken)


[Guidance Overview] New Philippine Employee Savings Plan Approved (PDF)
2 pages. Excerpt: "The Philippine government has approved legislation that provides workers with the opportunity to establish supplementary savings with a Personal Equity and Retirement Account (PERA). Philippine President Gloria Macapagal-Arroyo signed the bill into law August 23. The new account is similar to a Roth IRA in the U.S., in that contributions are not tax-deductible, but the earnings accumulate tax-free, and distributions are tax-exempt." (Towers Perrin)


Is Retirement Different for Women?
Excerpt: "Women are more likely than men to spend their golden years in poverty. According to a report from the Women's Institute for a Secure Retirement, more than one in 10 women in retirement live on less than $10,000 a year. The reason is attributable to financial physics: Women earn less than men over their lifetimes and live longer." (FOX News Network, LLC.)


Determining Whether 401(k) Plan Fees are Reasonable: Are Disclosure Requirements Adequate?
Excerpt: "The fees of 401(k) plans can be complex, and the information on them that participants receive tends to be fragmentary and hard to understand. The unsatisfactory state of fee disclosure reflects the failure of the current regulatory framework to require plan sponsors to provide comprehensive information on fees and to require the plans' service providers to disclose needed information to sponsors. Under the circumstances, it is not surprising that most plan participants lack even a basic understanding of the fees they pay." (AARP)


Update on 401(k) Fee Litigation
Excerpt: "In addition to the lawsuits against plan sponsors, lawsuits have been brought against 401(k) plan service providers. These cases typically are based on allegations that the service providers are 'functional fiduciaries' under ERISA. The plaintiffs claim that, in negotiating for and receiving revenue sharing, the service providers breached fiduciary duties and engaged in 'prohibited transactions' under ERISA. Some of the lawsuits similarly challenge the use of actively managed mutual funds as investment options." (Groom Law Group)


Accounting for Employee Benefits: Reactions to the IASB's Preliminary Views Paper from Around the World
Excerpt: "Watson Wyatt's survey on the IASB's March 2008 discussion paper, 'Preliminary Views on Amendments to IAS19 Employee Benefits,' examines employers' reactions to the proposal, which would make significant changes to the way retirement benefits are accounted for in employer financial statements. While, if implemented, the changes would not reduce most employers' commitment to their defined benefit (DB) pension and retiree medical plans, a sizeable minority say the proposal would weaken their company's commitment to its DB plans." (Watson Wyatt Worldwide; free registration required to download paper)


PPA Technical Corrections Bill Reportedly Stalls in Congress
Excerpt: "A package of technical corrections to the Pension Protection Act of 2006 (PPA; P.L. 109-280) is unlikely to be passed by the Congress before the November elections, according to a staff member of the Senate Finance Committee. Despite the need for PPA technical corrections, the legislation has languished because of partisan squabbles, the staff member said . . . ." (Wolters Kluwer)


DOL Proposal Requires Plan Fiduciaries to Disclose Basic Information and Expenses
Excerpt: "Almost from the moment federal regulators announced they intended to beef up required plan disclosures, the message they heard most often from retirement services industry members was simple: One size disclosure does not fit all. In response, the Department of Labor's Employee Benefits Security Administration (EBSA) announced it was developing a sweeping three-part regulatory scheme addressing­ disclosures from plans to regulators and the public. The new rules also would cover disclosures from providers to plan sponsors and, finally, from plan sponsors­ to participants." (PLANSPONSOR.com; free registration required)


Fast Facts & Figures About Social Security, 2008
Excerpt: "Fast Facts & Figures answers the most frequently asked questions about the programs SSA administers. It highlights basic program data for the Social Security (retirement, survivors, and disability) and Supplemental Security Income programs." (U.S. Social Security Administration)


Tough Economic Times Have Employers Looking to Improve Retirement Benefits
Excerpt: "A new Hewitt study shows that companies are more actively managing their retirement plans this year and focusing on reducing retirement plan risk. Experts agree economic uncertainty reinforces this trend. . . . The economic climate also has employers reviewing plan designs. More than half (55%) of companies offering a defined contribution plan intend to review their fund operations, including expenses and revenue sharing." (Employee Benefit Advisor; free registration required)


Canadians Getting Retirement Financial Advice More Likely to be Optimistic about Nest Egg
Excerpt: "About two-thirds of near-retirees in Can.ada (45 to 59 years old in 2007) say they will have a big enough retirement nest egg to maintain their standard of living when they stop working. That was a key conclusion of a new research report released by Statistics Can.ada, a Canadian government agency. According to the agency, that sense of optimism about one's retirement finances was tied to whether the respondent was getting financial advice . . . ." (PLANSPONSOR.com; free registration required)


PBGC Agrees to Provide New Board and Directors with Full Disclosure of Its Financial and Management Challenges
Excerpt: "To ensure smooth sailing for the [Pension Benefit Guaranty Corporation]'s new governing board that will come with January's Presidential transition, the Government Accountability Office requested in a report released Wednesday that the PBGC prepare a full report on its financial and management challenges. The agency immediately agreed." (CFO.com)


Individual Retirement Accounts: Additional IRS Actions Could Help Taxpayers Facing Challenges in Complying with Key Tax Rules (PDF)
57 pages. Excerpt: "GAO was asked to (1) provide an overview of key rules and describe how the Internal Revenue Service (IRS) educates taxpayers about these rules, (2) describe what IRS knows about the extent of noncompliance with IRA transactions reported on taxpayer returns, and (3) describe challenges taxpayers face with key rules and some options for strengthening compliance. GAO reviewed IRS documents and compliance data. To identify challenges, GAO interviewed officials from the financial industry and advisor representatives." (U.S. Government Accountability Office)


Principal Funds Analysis Explores Relationship Between Housing Wealth and Retirement Planning
Excerpt: "For those approaching retirement age, the value of their homes accounts for a majority of total net worth. A new research paper from Principal Funds geared for financial professionals explores how the dramatic and historic decrease in housing values -- approximately $400 billion between 2007 to mid-2008 -- has significantly altered the retirement plans of many Americans." (MarketWatch)


The Impact of Diminishing Wealth on Future Consumption: How Housing Wealth Affects Retirement Planning (PDF)
Excerpt: "This paper acknowledges that the current housing problem must be considered alongside other critical issues related to retirement planning, including longevity risk, asset allocation, health care availability and costs, withdrawal rates, and inflation. Each of these factors individually warrants serious review in any retirement planning activity. The combined effect of these events, accompanied by the decrease in housing wealth, dramatically increases the instability of financial security in Retirement." (Principal Financial Services, Inc.)


[Opinion] 403(b) Plans: The Senior Management Hurdle to Compliance
Excerpt: "In the race to meet upcoming 403(b) regulations, sponsors have to clear a number of hurdles. By now you've probably overcome the hardest one: understanding what you need to do to meet the new regulations. One major hurdle for many, according to a recent survey conducted by PLANSPONSOR.com, is convincing senior management that steps need to be taken and they need to be taken now. Why the hurdle? It is likely due to the experience management has had in operating the 403(b) plan. Traditionally there have been two different 403(b) models: actively-sponsored and non-actively sponsored." (PLANSPONSOR.com; free registration required)


[Opinion] ASPPA/CIKR Filed Comments on Proposed Regulation Regarding Participant Disclosures (PDF)
Excerpt: "On September 15, 2008, ASPPA and CIKR submitted supplemental comments to the DOL on the participant fee disclosure proposed regulation, suggesting a disclosure alternative to the proposed quarterly statement requirement." (American Society of Pension Professionals & Actuaries/Council of Independent 401(k) Recordkeepers)


[Opinion] Disclosure of 401(k) Plan Expenses to Participants
Excerpt: "I recently received a question from a reader about one of my articles concerning disclosure of expenses to participants. I thought you might like to see his question and my answer. Taken together, they provide a good overview of some of the most important issues about fee disclosures to participants." (Fred Reish via PLANSPONSOR.com; free registration required)



Sponsored by: University Conference Services

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Banner ad for University Conference Services

Can Your Retirement Plan Handle a Storm?

The climate has changed in the world of retirement and pension plan management. The Chicago Mid-Sized Retirement & Pension Plan Management Conference, October 14–17, 2008, gives you up-to-date information and real-world strategies for making sure you and your plan are protected.

(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] IRS Delays Effective Date of Guidance on Using Smartcards or Debit Cards for Mass Transit Benefits until January 1, 2010
Excerpt: "The IRS cited ongoing 'technology barriers to achieving compatibility with the requirements for vouchers' as its reason for extending the effective date a second time." (Deloitte via BenefitsLink.com)


[Guidance Overview] New San Francisco & Massachusetts Guidance (PDF)
Excerpt: "New guidance or proposed revisions have been issued related to both the Massachusetts and San Francisco health care reform laws. In addition, San Francisco has established a new mandatory commuter benefit." (Groom Law Group)


No Golden Parachutes for Fannie, Freddie CEOs
Excerpt: "The Federal Housing Finance Agency announced Sunday that the former CEOs of Fannie Mae and Freddie Mac will not walk away with golden parachutes. The agency that regulates -- and now manages -- the two mortgage giants said it will not allow the former executives to walk away with multimillion-dollar severance packages." (Morning Edition via National Public Radio)


General Health Insurance System Established in Turkey
Excerpt: "A new social security and general health insurance law is expected to provide basic health services to the Turkish population. The changes will come into effect on October 1, 2008." (Watson Wyatt Worldwide)


New Employee Benefit: Access to a Financial Adviser
Excerpt: "[I]n recent years, prompted by a broad-based shift from pensions to defined-contribution plans such as 401(k)s, many employers have been providing workers with access to personalized services. The newest offerings are a free employee benefit, the companies say, and include one-on-one counseling and in-depth seminars provided by contracted professional advisory firms." (The Wall Street Journal)


Workers Want Better Benefits Selection Information
Excerpt: "Workers want personalized guidance from their employers, and welcome more interactive information sources, a new survey found. A MetLife news release said its 2008 Open Enrollment survey found employees are seeking more resources from employers to help them make the right decisions. Increasingly, employees are indicating that they would like greater access to benefits information, guidance and personalized support, which could allow them to conduct thorough research." (PLANSPONSOR.com; free registration required)


Employee Ownership Update for September 15, 2008
NCEO Executive Director Corey Rosen discusses the results of a new NCEO equity compensation survey (on stock options, etc.) that gathered responses from 80 non-ESOP companies and 54 ESOP companies, plus a bill to exclude employer stock received as part of a qualifying distribution from a defined contribution plan and then held for at least 10 years and sample 409(p) ESOP plan language from the IRS. (National Center for Employee Ownership)




Newly Posted Events
(Post Yours!)

2008 Fall Tour: Beyond the Essentials
in Minnesota on September 24, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in Wisconsin on September 26, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in Wisconsin on October 1, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in Wisconsin on October 3, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in Arizona on October 16, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in Kansas on October 22, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in District of Columbia on October 22, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in Kansas on October 24, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in Maryland on October 24, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in Pennsylvania on October 29, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in California on October 29, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in Wisconsin on October 29, 2008
presented by Ascensus

2008 Fall Tour: Beyond the Essentials
in Massachusetts on October 31, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Minnesota on September 23, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Wisconsin on September 25, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Wisconsin on September 30, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Wisconsin on October 2, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Arizona on October 15, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Kansas on October 21, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in District of Columbia on October 21, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Maryland on October 23, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Kansas on October 23, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in California on October 28, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Wisconsin on October 28, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Pennsylvania on October 28, 2008
presented by Ascensus

2008 Fall Tour: IRA Essentials
in Massachusetts on October 30, 2008
presented by Ascensus

2008 Web/Telephone Seminar: Basic IRAs
Nationwide on October 2, 2008
presented by Ascensus

2008 Web/Telephone Seminar: Individual(k)Plans
Nationwide on October 9, 2008
presented by Ascensus

2008 Web/Telephone Seminar: IRA Excess Contributions
Nationwide on October 2, 2008
presented by Ascensus

Selected Hot Topics in Executive Compensation and under Section 409A
in California on October 16, 2008
presented by Western Pension & Benefits Conference - Orange County Chapter



Newly Posted Press Releases
(Post Yours!)

Stillwater Mining Company Engages Employees By Outsourcing Total Compensation Statements To Benefit Software Inc. (BSI)
Benefit Software Inc.

Costs for Prescription Drugs Under PBGH Plan Climb Less Than 6 Percent
Pittsburgh Business Group on Health

Equifax to Change U.S. Retirement Plan and Offer Enhanced 401(k) Plan
Equifax



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