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September 23, 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] Correcting ERISA 401(k) Plan Failures When Employee Contributions Are Not Remitted in a Timely Manner
Excerpt: "If contributions are not remitted in a timely manner, the failure could be held to be a prohibited transaction, a fiduciary breach or both. There are significant Department of Labor (DOL) penalties for both of these violations. Additionally, if there is a breach of fiduciary duty, then the plan's fiduciary could be held personally liable." (Aiken & Aiken)

[Official Guidance] Text of IRS Notice 2008-81: Federal Government to Support Money Market Funds for September 19 Assets (PDF)
2 pages. Excerpt: "In general, under the Program, the Treasury Department plans to make available its Exchange Stabilization Fund on a temporary basis to assist participating money market funds in maintaining $1.00 per share net asset values and in paying their shareholders $1.00 per share upon liquidation of shares. The Program will be limited to assets in money market funds as of the close of business on September 19, 2008, and to investors of record as of that date. Participating money market funds are required to make premium payments to participate in the Program." (Internal Revenue Service)

[Guidance Overview] Rules on New Pre-Approved Plan Submissions
Excerpt: "The IRS issued guidance (Revenue Procedure 2008-56) which changes the rules regarding the submission of pre-approved plans. Ever since the IRS updated the staggered remedial amendment period (RAP) program (Revenue Procedure 2007-44), many plan document providers, including SunGard, had requested that the IRS moderate the rules relating to off-cycle submissions of pre-approved plans. Revenue Procedure 2008-56 was issued in response to these concerns." (SunGard)

[Guidance Overview] Participant Contribution Timing Rules for Small Plans and Trustee Role for Late Transmittal of Contributions (PDF)
2 pages. Excerpt: "The safe harbor rules are proposed to become effective on the date the final regulations are published. However, in the interim, small plans may rely on the safe harbor rule and will be treated as being in compliance with the general contribution timing rules if employee contributions and loan repayments are transmitted to the plan within the seven-day safe harbor period." (Prudential Retirement)

[Guidance Overview] Practical Pointers for Plan Fiduciaries in Uncertain Economic Times
Excerpt: "Under the Employee Retirement Income Security Act (ERISA), a plan fiduciary is not a guarantor of positive investment performance. However, ERISA does require a plan fiduciary to follow a prudent process in selecting and monitoring investment options. In light of recent market developments, plan fiduciaries should keep in mind that, while the recent market conditions may be rocky, plan investments generally are designed to be held over the long term. In the meantime, consider the following steps . . . ." (Faegre & Benson LLP)

[Guidance Overview] Key Congressional Leaders Call for Oversight of Pension Investments in Hedge Funds
Excerpt: "Congressional leaders are calling for guidance from the Department of Labor (DOL) on the use of alternative investments by pension plans, following a Government Accountability Office (GAO) recommendation that the DOL provide plan fiduciaries with guidance, specifically designed for qualified plans under ERISA, regarding plan investments in hedge funds and private equity." (Wolters Kluwer)

IRS Plan Could Eliminate Public Employee Early Retirement Options
Excerpt: "A major change proposed by the IRS for public pension plans, including Nevada's public employee retirement system, could eliminate early retirement pay for government employees in less than two years. A new regulation the agency is pursuing would prohibit most public pension plans from allowing participants to retire and collect benefits earlier than age 55, with a preferred retirement age of 62. This would cover everyone from teachers to police to city and state workers in Nevada and across the country." (Las Vegas Review-Journal)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
The quarterly financial report of the National Railroad Retirement Investment Trust report (March 31, 2008) shows investments in JP Morgan and Lehman Brothers. How concerned should railroad employees be in regards to their Tier II benefits? Should a employee who is near retirement (3 years away) postpone retirement? (

Baby Boomer Retirements May Create Labor Crunch
Excerpt: "The labor supply may experience shortages in coming years as more Baby Boomers retire, according to a study by KPMG. The firm found there is a lack of Generation Y workers to replace those who are expected to retire in the years ahead. That could lead to a lack of consumer spending and a contraction in the tax base." ( via On Wall Street)

Older Americans with Investments Among Hardest Hit by Financial Markets' Turmoil
Excerpt: "Today's retirees have less money in savings, longer life expectancies and greater exposure to market risk than any retirees since World War II. Even before the last week of turmoil, 39 percent of retirees said they expected to outlive their savings, up from 29 percent in 2007 . . . ." (The New York Times; free registration required)

The Intergenerational Transfer of Public Pension Promises
Excerpt: "The value of pension promises already made by US state governments will grow to approximately $7.9 trillion in 15 years. We study investment strategies of state pension plans and estimate the distribution of future funding outcomes. We conservatively predict a 50% chance of aggregate underfunding greater than $750 billion and a 25% chance of at least $1.75 trillion (in 2005 dollars). Adjusting for risk, the true intergenerational transfer is substantially larger." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)

Pension Plan Actuarial Information Search
Excerpt: "The U.S. Department of Labor's Employee Benefits Security Administration [has posted] on its Web site actuarial information of pension plans filed with the Form 5500 annual reports. That site provides 'user friendly ways' for workers and plan officials to search for plan information by such categories as plan name, employer identification number or date, according to the announcement. The site is located at[.]" (; free registration required)

DOL Tool Makes It Easier to Pay Fines
Excerpt: "The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) has unveiled new online tools for employers and for workers. Plan sponsors and plan administrators will now find it easier to pay online civil penalties for delinquent filings of annual reports under the agency's Delinquent Filer Voluntary Compliance Program (DFVCP). . . . Employers and plan administrators can access the new feature that allows them to electronically pay civil penalties at" (; free registration required)

Biggest Pension Monthly Payout Not Always Best Choice
Excerpt: "Assuming you have made the decision to take your pension as an annuity instead of a lump sum, or you don't have the option of a lump sum, most likely there will be little or no difference in your pension options from an actuarial standpoint. But your health history and overall financial picture could make one option significantly better." (Newsday)

10 Secrets to a Financially Secure Retirement
The article details five ways to boost your income and five ways to reduce expenses and debts. (USA TODAY)

Survey Reveals Family Savings Concerns
Excerpt: "A recent online survey from Disney reveals 91% of parents say the U.S. economy is an extremely/very important issue for their families. According to a press release, 46% of parents surveyed say they are not able to save for their children's college education or have not yet started saving, expecting their child to get student loans or earn scholarships. In addition, 61% of respondents indicated they are nervous about retirement." (; free registration required)

Details Emerge about Government Money-Market Fund Insurance Program
Excerpt: "More details became available Monday about the federal government's plan to shore up U.S. money market funds so they can maintain their traditional $1 per share net asset value." (; free registration required)

Collected Wisdomô - The ERISA Advisory Council Working Group Final Reports Related to 401(k) Plans
Excerpt: These final reports can provide both valuable information and insight into issues studied. This Collected Wisdomô is a catalog of those reports of concern to or focused on 401k plans. [The collection includes links to reports from 1997, 2004, 2006, 2007, and 2008.]" (

To Retire Comfortably - It All Boils Down to Time
Excerpt: "T. Rowe Price researchers examined what it would take for a 62-year-old to turbocharge his eventual retirement purchasing power from his own savings and Social Security. If he managed to save 25% of his paycheck each year, he could boost his annual retirement income by 8.2% for every year that he continued his herculean savings. So if he quit work at age 65 rather than at 62, his retirement purchasing power would jump nearly 25%. . . . That savings regimen would strike most people as extreme . . . . But it doesn't have to be painful . . . . How come? Because even if a worker doesn't save a dollar more after passing up early retirement at age 62, she could retire with roughly the same 25% boost of income just by working till age 66 -- just one year longer than the aggressive saver." (USA TODAY)

Teamsters Again Reject Contract Containing Retirement Plan Change
Excerpt: "For the second time in three days, Waste Management Inc. workers represented by Teamsters Local 200 rejected the company's contract proposal . . . . Waste Management officials had said the proposal would boost worker wages and benefits and replace a failing pension plan with a 401(k) plan. 'Our members have made clear with these last two votes that they will not approve a proposal that replaces their retirement's defined benefit program with a 401(k) plan,' Millonzi said." (The Business Journal of Milwaukee via; free registration required)

9th Circuit Stands with Other Courts on Ex-Participant Lawsuit Ruling
Excerpt: "Another court ruled that participants who have cashed our of their defined contribution plan can still pursue fiduciary breach lawsuits. The 9th U.S. Circuit Court of Appeals became the seventh appellate panel to rule that way. The court overturned a lower court ruling by holding that allowing former participants to pursue fiduciary claims under the Employee Retirement Income Security Act (ERISA) to recover their losses fit with the true meaning of the federal benefits rights law. . . . [The case is Vaughn v. Bay Environmental Management Inc., 9th Cir., No. 05-17100, 9/19/08.]" (planadvisor)

[Opinion] Does Anyone Still Want to Privatize Social Security?
Excerpt: "[Dean] Baker of the Center for Economic and Policy Research reports that 'according to a recent World Bank analysis, the financial industry pocketed 15-20 percent of the money paid into the privatized Social Security system in Chile, which has often been held up as a model by privatizers in the United States. Given the losses that the millionaire Wall Street bozos have incurred with the housing crash,' it is clear that privatization would help those 'very rich needy.'" (The Century Foundation)

[Opinion] American Benefits Council Letter to Senate Leadership Urging Passage of PPA Technical Corrections Legislation (PDF)
2 pages. Excerpt: "While there are many important provisions in the technical corrections bill, one urgently needed correction concerns so-called 'asset smoothing'. It is critical that the provision in the House-passed bill to clarify the asset smoothing rules for defined benefit pension plan funding be enacted as soon as possible, in the technical correction bill or any other legislation that is moving." (American Benefits Council)

[Opinion] Disclosure of Expenses to Participants - Response to Question from a Reader
Excerpt: "My response focuses primarily on two issues. The first is that there is a way to disclose that is both meaningful and understandable. The second is that there is no 'universal' participant; that is, the 401(k) world is made up of participants of all sizes and shapes." (Fred Reish via; free registration required)

[Opinion] Joshua Itzoe on Fixing the 401(k)
Excerpt: "In an odd coincidence, at the same time Wall Street has been imploding, laying bare valuation and other problems with investments in retirement plans and elsewhere, I happen to have been reading independent fiduciary/401(k) advisor Joshua Itzoe's book, Fixing the 401(k), which is premised on the idea that 401(k) plans are compromised by inherent, systemic problems, ranging from issues in plan design to the significant impact of fees charged against plan assets . . . ." (Stephen Rosenberg of The McCormack Firm, LLC)

[Opinion] Wall Street Collapse = ERISA Stock Drop Litigation
Excerpt: "I have written abut this type of stock drop litigation before. The issues at the forefront are how ERISA is overtaking securities law as the litigation vehicle of choice by plaintiffs who suffer stock losses and how these cases almost never make it to trial because the firms being sued are forced to settle if certification of the class is granted by the court." (Paul M. Secunda viz Marquette University Law School Faculty Blog)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] The Conundrum of ERISA Remands & Reinstatements
Excerpt: "Pannebecker provides helpful analysis on the point of what should follow should the circumstances of a benefit denial necessitate 'remand' to the plan administrator. In Pannebecker, the Ninth Circuit agreed with the district court that the plan administrator was justified in denying disability benefits on the view that the claimant could perform sedentary job duties. In other words, the plan administrator 'won'." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] Global Handcuffs and Claw-Backs: Getting Tough with Cross-Border Loyalty Protections (PDF)
4 pages. Excerpt: "Smart compensation structures can provide 'gold' that encourages long-term loyalty (hence the term golden handcuff). The potential to recoup cash bonuses and stock awards from disloyal or corrupt employees can give rise to a 'claw-back' threat for enforcing loyalty and key business protections." ( via Paul, Hastings, Janofsky & Walker LLP)

[Guidance Overview] Section 409A Deferred Compensation Compliance Deadline
Excerpt: "The deadline is fast approaching to amend nonqualified deferred compensation arrangements to comply with Section 409A of the Internal Revenue Code. By December 31, 2008, arrangements that are subject to Section 409A must be amended to comply with final IRS regulations. If arrangements do not comply with Section 409A, the participants can be subject to substantial tax penalties." (Nixon Peabody LLP)

Some Texas Companies Helping Employees Cope with Higher Transportation Costs
Excerpt: "Employees are not the only ones worried about high gasoline prices and the effect on their pocketbooks. Employers are, too. Some companies are coming up with ways to help employees cope with high gas prices and transportation costs, including offering four-day workweeks and setting up van pools, according to a recent study by Mercer, a benefits consulting company." (Star-Telegram)

The 2008 100 Best Companies for Working Moms
Excerpt: "We've hit the working-mother lode this year with our 100 Best Companies. From flextime and telecommuting to backup child care and parental leave, these winners are expanding the concept of family-friendly benefits to make sure they cover adoptive parents, fathers and grandparents as well as working mothers -- even as the economy stumbles." (Working Mother)

What Happens to Your Benefits After Bankrup.tcy
The article examines considerations of your retirement plan(s) and health insurance if your company is facing the possibility of bankrup.tcy. (The Wall Street Journal)

CEO Pay Pressure Builds Due to Wall Street Bailout
Excerpt: "The [Institute for Policy Studies] wants Congress to require companies seeking assistance under the rescue plan to cap executive pay at 25 times that of the lowest-paid employee. If a firm's lowest-paid worker earns $30,000, the ceiling for the top-paid executive would be $750,000 -- still far more than the $400,000 annual salary of the U.S. president, the group said." (Reuters via The New York Times; free registration required)

Democrats Push for Executive Compensation Limits in Financial Industry Bailout
Excerpt: "Congressional Democrats are seeking to curb executive compensation as part of a $700 billion bill that would bail out the reeling financial industry. They may get some Republican support in the Senate, but are meeting resistance from the Bush administration and Senate GOP leadership." (Workforce Management; free registration required)

Newly Posted Events
(Post Yours!)

401(k) Autoenrollment Dos and Doníts (60-Minute Power Series)
Nationwide on October 14, 2008
presented by International Foundation of Employee Benefit Plans

Dealing with the Conflict of Partnerís Retirement and Retention at Law Firms - Webcast
Nationwide on September 25, 2008
presented by Retirement Capital Group

Electronic Personal Health Records: What's the Impact for Employers and Employees Webcast
Nationwide on October 16, 2008
presented by International Foundation of Employee Benefit Plans

Safe Harbor 401(k) Plan Design Web Seminar
Nationwide on October 16, 2008
presented by SunGard Relius

Seven Deadly Mistakes in 401(k) Plans (60-Minute Power Series)
Nationwide on October 7, 2008
presented by International Foundation of Employee Benefit Plans

Ten Steps to an Effective RFP (60-Minute Power Series)
Nationwide on October 21, 2008
presented by International Foundation of Employee Benefit Plans

The Next Step in Wellness and Consumer-Driven Health Care: Biometrics Webcast
Nationwide on October 23, 2008
presented by International Foundation of Employee Benefit Plans

The Roth Factor
Nationwide on October 28, 2008
presented by Convergent Retirement Plan Solutions, LLC

Newly Posted Press Releases
(Post Yours!)

Hewitt Data Reveals Little Change in U.S. Health Care Cost Increases for 2009
Hewitt Associates LLC

U.S. Department Of Labor Sues Executive Of Defunct Minneapolis Company To Protect Participants Of Abandoned Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

U.S. Labor Department Extends Annual Reports Deadline After Hurricane Hits Texas And Louisiana
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

U.S. Labor Department Announces New Online Tools For Workers And Plan Administrators
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Underwater Stock Option Repricings Resurge As Shareholder- Friendly Exchange Programs Evolve, Says Aon Consulting's Radford Surveys + Consulting
Aon Consulting

Retiree Health Plans: A National Assessment
Center for State and Local Government Excellence

Mercer Introduces Life, Accident, Disability (LAD) Specialty Consulting for Large Employers

Fiduciary Benchmarks Launches New Service For Retirement Plan Industry
Fiduciary Benchmarks, Inc.

Non-Profit Coalition Aims to Improve Financial Dignity for Boomers
Partnership for Retirement Education and Planning (PREP)

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