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October 2, 2008

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

Today's sponsor is

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Switching to just got easier.

The IRS is now accepting applications for opinion/advisory letters for sponsors who are word-for-word adopters of mass submitter plans. This means that you may obtain a letter in your firm's name even if you missed the earlier filing deadlines - all you pay is the $200 IRS filing fee. Already filed for a DB letter? Now you can switch your application to

Contact Holly Roussel-Godfrey for details at or call us at 800.596.0714.

[Guidance Overview] Age-Weighted Plans Made Simple (PDF)
2 pages. (BDS Actuarial Services via

School Districts and New Federal Duties in Overseeing Workers' 403(b) Supplemental Retirement Accounts
Excerpt: "The changes represent dramatic new responsibilities in oversight and administration that had been 'virtually nonexistent' for district business officials, said John Kevin, the investment officer for the 139,000-student Montgomery County, Md., school system. The impact of the new IRS rules, which became final in July 2007, will be felt far beyond district business offices. Teachers and other employees may find their investment choices limited as their districts, for simplicity's sake, seek to scale down the number of investment companies allowed to offer their plans." (Education Week)

Stock Losses Take Heavy Toll on Retirement Savings
Excerpt: "The financial crisis that toppled major Wall Street banks and snarled credit markets around the world has also taken a toll on nest eggs, forcing people to rethink when -- and even if -- their savings will allow them to retire. More than half of people surveyed in an Associated Press-GfK poll released Wednesday said they worry that they will have to work longer because the value of their retirement savings has declined." (AP via The New York Times; free registration required)

Is Your 401(k) Any Good? See How Your Company's Plan Stacks Up in 11 Areas
Excerpt: "What are the features of the best 401(k) plans? What is best in breed? The questions were posed to some of the nation's leading pension and employee-benefit consultants. Here's what they emphasized . . . ." (MSM.Money)

The Evolution of Public Sector Pension Plans in the United States
Excerpt: "After reviewing [the history of public sector plans], we employ data from all 50 states to estimate a pension benefit equation for hypothetical workers and explain differences in the generosity of plans across states and types of workers covered. We show that population growth, plan funding, union representation, and participation in Social Security influenced the generosity of the plans." (Pension Research Council; registration required to download fulltext of paper)

Defined Contribution Pension Plans in the Public Sector: A Benchmark Analysis
Excerpt: "This chapter assesses best practice benchmarks for the design of defined contribution plans in the public sector, where such plans are the primary, or core, employment-based retirement benefit. These benchmarks rely on the notion that providing an adequate and secure retirement income for participants is the primary plan objective." (Pension Research Council; registration required to download fulltext of paper)

Administrative Costs of State Defined Benefit and Defined Contribution Systems
Excerpt: "This chapter compares the administrative costs of public sector defined benefit and defined contribution systems offered by the Federal government and many states. Administrative expenses are presented as percentages of both income and assets, and we discuss how administrative expenses might enter into the decision by a public sector employer as to whether to establish a defined contribution plan." (Pension Research Council; registration required to download fulltext of paper)

The Housing Bubble and Retirement Security
Excerpt: "The question is whether the housing boom made people better or worse prepared for retirement. If they extracted the equity from their home through some form of housing-related debt and consumed all their borrowings, they will be left with additional debt and no additional assets and probably will be worse off in retirement. If they did not borrow and consume their equity, they will have more housing wealth to tap in retirement and will be better off." (Center for Retirement Research at Boston College)

Senate Passes the Emergency Economic Stabilization Act of 2008
Excerpt: "The bill appears to contain the same reference to retirement plans as did the House bill . . . ." (Attorney B. Janell Grenier via

New York State Comptroller Takes Aim at Pension Cheats with New Rules and a Compliance Unit
Excerpt: "The new rules require local governments statewide to pass resolutions establishing a minimum workday of no less than six hours. The regulations also call for appointed and elected officials and professionals contracted to perform certain services to keep a 90-day activity log and make public the maximum number of days reported to the system each month." (Newsday)

401(k) Hardship Withdrawals and Borrowing Rise
Excerpt: "For Americans just scraping by, the only savings they've salted away are in a 401(k). That was fine in a growing economy. But now that it's slumping, inflation is up and layoffs are spreading, a small but increasing number of people are tapping those accounts. T. Rowe Price says 401(k) withdrawals rose 19 percent last year through June 2008. Vanguard reports its hardship 401(k) withdrawals rose 22% in 2007. Though just representing 1.5% of all plan holders -- these numbers are nonetheless troubling. Moreover, withdrawals aren't the only threat to the 401(k) assets of 44 million American workers." (Treasury & Risk)

Boeing 401(k) Fee Case Sanctioned as Class Action
Excerpt: "A federal judge in Illinois has sanctioned an excessive 401(k) fee lawsuit against Boeing Co. as a class action. U.S. District Chief Judge, David R. Herndon, of the U.S. District Court for the Southern District of Illinois said the class action litigation would be made up of nearly 190,000 plan participants." (; free registration required)

[Opinion] American Academy of Actuaries Comments on Proposed Regs on Accrual Rule (PDF)
4 pages. Excerpt: "On behalf of the American Academy of Actuaries /1/ Pension Committee, I respectfully request your consideration of its comments regarding the proposed regulations providing guidance on the application of the accrual rule for defined benefit plans under section 411(b)(1)(B) of the Internal Revenue Code in cases where plan benefits are determined on the basis of the greatest of two or more separate formulas." (American Academy of Actuaries)

[Opinion] American Benefits Council Statement on 401(k) Fee Disclosure (PDF)
3 pages. Excerpt: "The Council supports fee transparency as a critical means of assisting participants in this regard. In the same time, we all must bear in mind that unnecessary burdens and costs imposed on these plans will reduce participants' benefits, thus undermining the very purpose of the plans. In addition, our voluntary retirement plan system depends on the willingness of employers to maintain plans; excessive burdens on employers will undercut their commitment to a system that millions of Americans rely on for their retirement security." (American Benefits Council)

[Opinion] IRS Survey Seeks Information About Governmental Plans (PDF)
Page 2 of 4 pages. Excerpt: "The IRS is concerned that it has not dedicated the time and effort to the governmental plans area that our size and importance warrant. It wants to make amends by ensuring that governmental plans have the tools they need to comply with the law, and that worker retirement benefits are protected. The agency is worried, however, that it doesn't know enough about public plans to draw any conclusions as to plan concerns or needs. It, therefore, has decided to conduct a survey . . . ." (National Council on Teacher Retirement)

Sponsored by: SPARK and The SPARK Institute

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Register Now for the 2008 SPARK Forum, Nov. 2-4 at The Breakers

The 2008 SPARK Forum is the retirement plan industry’s premier event for executives, managers, and professionals to increase their knowledge, network with peers and enjoy golf, fishing and other events at the beautiful Breakers Resort in Palm Beach, Florida. In more than a dozen sessions, you’ll gain insights into the latest business, marketing and sales strategies, market trends, and legal issues. Special sessions have been planned for TPAs and financial advisors. You’ll also hear from TV finance commentator and author Terry Savage, and learn valuable selling techniques from author Paul Karasik.

(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] Reminder on Re-Approval of 162(m) Plans
Excerpt: "[I] wanted to remind you of a requirement that a few companies seem to miss each year -- the need to seek and receive shareholder approval of compensation plans under Code Sec. 162(m). As a reminder, Code Sec. 162(m) includes an exception to the $1 million cap on the annual compensation that a public company may pay and deduct. To qualify for the performance-based compensation exception, the company and the compensation must meet four requirements . . . ." (Michael S. Melbinger via Winston & Strawn LLP)

The 2008 Director Compensation Survey: NASDAQ 100 vs. NYSE 100 (PDF)
23 pages. Excerpt: "For the past several years, this study has documented increases in director compensation in conjunction with the expanding roles and responsibilities of outside directors. Last year's study found compensation levels for outside directors stabilizing. Again this year, we report a moderate change to compensation levels for non-employee directors due to the slower growth in cash compensation and to the broadening of trends in equity compensation design, analogous to the trends reported in the prior year's report." (Frederic W. Cook & Co., Inc.)

Older Workers Worried About Promised Medicare and Social Security Benefits
Excerpt: "A new study has found that many older workers, and particularly those without employer-sponsored retirement plans or other financial resources, do not expect to receive their full Social Security or Medicare payments after they retire. Confidence is particularly low among those who are younger, female or have a lower level of education, according to a recent survey." (Watson Wyatt Worldwide)

Employee Benefit Plans – Why Manage Globally?
Excerpt: "Multinational companies often struggle to find the time to effectively manage the plethora of insured employee benefit plans that they have around the world. This article argues for taking a more centralized approach to the management of insured employee benefits and better leveraging the network of brokers and consultants through the consolidation of providers." (Mercer LLC)

Employee Benefits Developments September 2008
The newsletter covers recent IRS/DOL Rulings, Opinions, etc. and Cases. (Hodgson Russ LLP)

[Opinion] The Present and Future of Executive Compensation Regulation in Light of Proposed Bailout Bill
Excerpt: "In anticipation of future legislation and/or regulation, companies should now review their compensation practices and procedures for executives. In particular, boards of directors and compensation committees should examine closely existing arrangements for incentive forms of compensation, caps on total compensation, and levels of severance and change of control benefits." (Nixon Peabody LLP)

Newly Posted Press Releases
(Post Yours!)

Owner Of Columbus Business Pleads Guilty To Violating Employee Retirement Income Security Act
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Over 100,000 Companies Trust Two Step Software With Their Capitalization Information
Two-Step Software, Inc.

Dreyfus Mutual Funds Added to CPI Retirement Platform
CPI Qualified Plan Consultants, Inc.

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