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October 3, 2008

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

Today's sponsor is International Foundation of Employee Benefit Plans

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Be Smart by Association with the International Foundation

Smart is not a permanent state of being. What's your maintenance plan? Take advantage of the education and information available through the International Foundation of Employee Benefit Plans, a nonprofit educational association, and find out why over 35,000 industry professionals like Ken Bradshaw, CEBS rely on the Foundation to stay informed and educated. Make sure you have the most comprehensive information on health, pension and compensation issues. Be smart by association.

[Official Guidance] Text of IRS Notice 2008-87 (Includes DOL and PBGC Guidance): Funding and Other Relief for Retirement Plans Affected by Hurricane Ike (PDF)
7 pages. (Internal Revenue Service)

[Guidance Overview] Financial Bailout Bill: Pension Plan and Executive Compensation Implications (PDF)
5 pages. Excerpt: "Subject to certain limitations, EESA defines the term 'troubled assets' generally to mean 'residential or commercial mortgages and any securities, obligations or other instruments that are based upon such mortgages.' The quoted language – especially 'any securities . . . based upon such mortgages' – seems broad enough to cover most types of mortgage-based investments traditionally held by or on behalf of pension plans." (Groom Law Group)

[Guidance Overview] DOL's Proposed Participant Fee Disclosure Rules (PDF)
3 pages. Excerpt: "To give plan sponsors an opportunity to prepare for the implementation of these new rules (whether in 2009 or 2010), we are providing a summary of the DOL's proposals. However, plan sponsors need to be aware that they cannot rely on these proposed rules. If a plan sponsor takes action now and the final rules depart from the proposals, the plan will have to change course in order to comply with those final rules." (Prudential Retirement)

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated October 1, 2008, for Retirement Plans (PDF)
3 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding retirement plans. (Hewitt Associates)

[Guidance Overview] How Does HEART Affect 415 and PPA Amendments?
Excerpt: "Among other things, [the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART)] will change the way retirement plans deal with employees in the military. This technical update will address three issues: 1. When must plans be amended to conform to HEART? 2. How does HEART affect final 415 regulation amendments? 3. How does HEART affect PPA amendments?" (SunGard)

[Guidance Overview] October 15th Last Date for Re-Characterizing, or Undoing, Roth IRA Conversion from Previous Year
Excerpt: "The greater the decline in Roth IRA values since a 2007 conversion, the more a re-characterization by Oct. 15 makes sense. This is one of the great second chances in the tax code; it is like betting on a horse race after it is over." (Investment News; free registration required)

Court Certifies Class in ERISA Breach of Fiduciary Duty 401(k) Case against R.J. Reynolds Tobacco Company
Excerpt: "Plaintiffs allege that defendants breached their fiduciary duty to the plan by forcing the liquidation of two investment funds consisting of stock of formerly affiliated companies without adequate investigation or analysis. At the time, the stock was trading at historic lows, but was widely expected to rise and investment analysts were increasing recommending that it be held or purchased." (Lewis, Feinberg, Lee, Renaker & Jackson, P.C.)

Significant Business Cases Slated for Decision in the Supreme Court Term (PDF)
See page 2 of 4 pages. Excerpt: "Employment Law: The Court has granted one Title VII case and two ERISA cases. . . . AT&T Corp. v. Hulteen, No. 07-543, presents the question of whether a company pension plan may lawfully deny service credit for pregnancy leaves taken prior to the passage of the 1978 Pregnancy Discrimination Act ('PDA') [and] Kennedy v. Plan Administrator for Dupont Savings and Investment Plan, No. 07-636, will determine what methods are valid under ERISA to waive a divorcing spouse's claims to pension benefits." (Paul, Hastings, Janofsky & Walker LLP)

How Does Modeling of Retirement Decisions at Family Level Affect Estimates of Impact of Social Security Policies on Retirement?
Excerpt: "This paper applies structural models of retirement and saving of two earner couples to explore the effects on retirement of two actuarially neutral policies, which we know from previous work can have a substantial effect on retirement if heterogeneity in time preference rates is allowed. The main question being investigated here is whether using a model that explicitly incorporates the retirement interactions of two working spouses yields a different evaluation of policies than when a much simpler model that treats the retirement decisions of the second spouse as exogenous is used." (University of Michigan Retirement Research Center)

The U.S. Retirement Market, First Quarter 2008 (PDF)
27 pages. Excerpt: "Total U.S. retirement assets fell to $17.1 trillion as of March 31, 2008, down from $18.0 trillion on December 31, 2007. Retirement savings accounted for almost 40 percent of all household financial assets in the United States." (Investment Company Institute)

Is Your Retirement Plan 404(c) and 404(a) Compliant?
Excerpt: "There are two code sections of ERISA - 404(a) and 404(c) - that deal directly with fiduciary concerns in a 401(k) plan. These sections outline requirements for the investment knowledge of the plan sponsor and the investment selection and monitoring process. Careful review and compliance with these code sections will help to ensure fulfillment of your fiduciary responsibility and lessen the chance of any potential litigation." (Employee Benefit News; free registration required)

Is the IRS Becoming Less Kind and Gentle in Audit Resolutions?
Excerpt: "This is a special edition of our Technical Update series. We are reprinting a recent 'Ferenczy Flash' sent by Ilene Ferenczy to her clients reporting on her recent experience in handling an IRS audit." (SunGard)

Younger Workers Expect to Work Longer, According to Sun Life Financial Unretirement Index
Excerpt: "New research finds dramatically different levels of optimism about when generational groups plan to retire and what they expect to rely upon in retirement. While nearly half (48%) of America's workers plan to work past the age of 67, younger generations are more often planning to retire at age 67 than their older counterparts. A full 58% of workers age 30-39 believe they will be retired at 67, compared with 45% of those aged 60 and above." (; free registration required)

Schering-Plough Stock Drop Case Gets Class Action Status
Excerpt: "A federal judge in New Jersey has declared a participant lawsuit against Schering-Plough Corp., over employee company stock investments, can be pursued as a class action. U.S. District Judge Katharine S. Hayden of the U.S. District Court for the District of New Jersey said the employees can move forward with their suit based on three of the four allegations in their suit filed under the Employee Retirement Income Security Act (ERISA)." (; free registration required)

International Paper Fee Suit Certified as Class Action
Excerpt: "The U.S. District Court for the Southern District of Illinois has granted class action certification to plaintiffs suing International Paper Co. for fiduciary breaches. . . . As for International's argument that the class lacked commonality, the court pointed out that the plaintiffs have focused their claims on the excessive fees paid by the plans and the fiduciaries' decision to maintain Company Stock Fund as an imprudent investment by forcing participants to hold company stock when the fiduciaries had dumped the stock from the pension fund. 'It is this injury, rather than direct injury to their individual accounts, that the putative class members assert." (; free registration required)

Ohio Business Owner Enters Plea on 401(k) Annual Reports Charge
Excerpt: "The owner of a Columbus, Ohio, company has pleaded guilty to not filing financial reports for the company's 401(k) plan as required by the Employee Retirement Income Security Act (ERISA). A news release from the U.S. Labor Department's Employee Benefits Security Administration (EBSA) said Jeffrey Miller of Ostrander, Ohio, pleaded guilty to one felony count that charged him with the annual reports violation in connection with the Laser Saver 401(k) employee pension benefit plan. [H]e agreed to return to the retirement plan . . . all contributions that he withheld from Laser Saver employees' paychecks since August 2003 but failed to deposit into the plan." (planadvisor)

[Opinion] Disclosure in Participant-Directed Individual Account Plans - The 'Anti-Participant Rule' (Part 2)
Excerpt: "Many of the special-interest groups and the vendors they represent that provide products and services to qualified retirement plans are no doubt quite happy with the 'anti-participant rule.' And why shouldn't they be? That rule allows them to continue hiding their high costs (if these costs weren't high, they wouldn't be hidden) from plan sponsors and, in turn, plan participants." (Morningstar)

[Opinion] Investment Advice—ERISA's Culture War
Excerpt: "The genesis of the issue comes from DOL's broad interpretation of the prohibition on self-dealing in section 406(b). DOL takes the position that a fiduciary engages in self-dealing if it uses its authority to affect the amount or timing of its compensation. This, according to DOL, is an automatic, per se violation regardless of the terms of the transaction and whether it is in the interests of plan participants." (Pension & Benefits Blog)

Sponsored by: Financial Research Associates

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The Plan Sponsor Defined Contribution Summit: For Public and Private Plan

FRA's Plan Sponsor DC Summit is truly a one-of-a-kind conference designed specifically to bring together public and private pensions who either have a defined contribution plan or are looking to add one to their benefit offerings. For the first time, private and public pensions will come together and make headway in unifying the voice of defined contribution/401k plans to drive the future of employee benefits in the right direction.

(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] Hewitt Federal Legislation Quick Guide Updated October 1, 2008, on Human Resources & Employment Law (PDF)
2 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding human resources and employment law. (Hewitt Associates)

Summary of Benefits-Related Provisions in Emergency Economic Stabilization Act of 2008
Excerpt: "Some of the benefits-related provisions in EESA passed by the Senate in addition to the executive compensation provisions . . . ." (Attorney B. Janell Grenier via

Newly Posted Events
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Debit Card Programs: Legal, Administrative, and Marketplace Update
Nationwide on October 30, 2008
presented by EBIA / Thomson Reuters

Newly Posted Press Releases
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Older Workers Worried About Promised Medicare and Social Security Benefits
Watson Wyatt

New Snapshots Examine Employer-Sponsored Health Benefits And Compensation
Kaiser Family Foundation

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Defined Contribution/401(k) Administrator
for Boyce & Associates, Inc.
in AZ

Defined Benefit Consultant / Administrator
for Boyce & Associates, Inc.
in AZ

TRS Pension Plan Operations Representative
for Transamerica Retirement Services
in CA

Retirement Education Specialist - Chicago
for MassMutual Financial Group
in IL

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