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October 6, 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] Listing of IRS Published Guidance for January - September 2008
The target page links to guidance published by the Service relating to retirement plans: Treasury Regulations; Revenue Rulings; Revenue Procedures; Notices; and, Announcements. (Internal Revenue Service)


[Official Guidance] The IRS Employee Plans News - Fall 2008 Edition (PDF)
Excerpt: "This edition includes articles such as Weathering the Storm: Advising Clients about Loans and Hardship Withdrawals from Retirement Plans; Update on Pre-Approved Plan Program for 403(b) Plans; Relief for Hurricane Victims; Remind Your Clients to Do the Right Thing Even When Times are Tough!; Ordering the Form 5500; VCP Applications – Appendix F; DOL Corner; and PBGC Insights." (Internal Revenue Service)


[Guidance Overview] ERISA Revenue-Sharing Litigation Update (PDF)
4 pages. Excerpt: "Recently, class certification was denied in one ERISA revenue-sharing case directed against a financial service provider but granted in two such cases directed against plan sponsors. In a third plan sponsor case, a motion to dismiss was denied. Below is a summary of the decisions and a brief summary of the current state of the litigation." (Sutherland)


[Guidance Overview] LaRue v. DeWolff, Boberg & Associates, the History Behind It, and How One Case Can Clarify and Create Confusion at the Same Time (PDF)
14 pages. (Journal of Taxation of Investments via Reish Luftman Reicher & Cohen)


[Guidance Overview] Deferred Compensation Provisions to Help Fund Bailout - the Emergency Economic Stabilization Act of 2008
Excerpt: "In an effort to make the bailout package more palatable for reluctant House Republicans, on October 1, 2008, the Senate added provisions that would extend a number of the credits that expired at the end of 2007 or are scheduled to expire at the end of 2008. In addition to these so-called sweeteners, the Senate included the proposal to currently tax the deferred compensation from certain tax indifferent parties." (Pepper Hamilton LLP)


[Guidance Overview] Changes to Puerto Rico Plans Impact Annual Limits and Transfers from Dual-Qualified Plans (PDF)
3 pages. Excerpt: "Recently, the Puerto Rico legislature passed a new law increasing the pre-tax contribution limits for Puerto Rico qualified plans. This change affects both dual-qualified and solely qualified plans and increases the limit over the next five years. In addition, a recent revenue ruling issued by the Internal Revenue Service (IRS) changes the U.S. tax treatment for dual-qualified plans that spin off assets into solely qualified plans." (The Vanguard Group)


Advisers to Make Funds Transparent to Avoid Suits
Excerpt: "Since the financial crisis shined a harsh light on the viability of stable-value and money market funds, advisers who counsel employers on their 401(k) plans are taking a closer look at these investments." (Investment News; free registration required)


Is Your Defined Contribution Plan Leaking?
Excerpt: "It's in everyone's best interest for companies to keep employees from cashing out their 401(k) plans when they leave, defined-contribution specialist Lori Lucas says in this commentary." (Workforce Management; free registration required)


Health, Financial Incentives and Retirement in Spain
Excerpt: "Unlike previous literature, we find that (i) financial incentives, when measured adequately, exert a greater impact on retirement behaviour than health shocks, and (ii) initial health stock plays a more important role than health shocks in determining retirement decisions. We also perform simulations of a recently enacted reform of pension incentives and show how its expected effects compare to those of health improvements." (Tinbergen Institute via Social Science Research Network)


Who Gets Retirement Plans and Why (PDF)
36 pages. Excerpt: "As the retirement industry and policymakers try to increase coverage, it is important to understand the motives at play and why more employers do not currently sponsor plans. To that end, it is necessary to understand which workers currently have access to and participate in employer-sponsored retirement plans, and why certain employees desire and certain employers offer compensation in the form of retirement benefits. This paper examines the various factors that lead some workers to favor compensation that includes both cash compensation and retirement benefits over cash alone, and it discusses the factors that lead some employers to offer retirement benefits." (Investment Company Institute)


Supplemental Tables: Who Gets Retirement Plans and Why (PDF)
12 pages. Excerpt: "The September 2008 issue of Perspective examines the various factors that lead some workers to favor compensation that includes both cash and retirement benefits more than cash alone, and the factors that lead some employers to choose to offer compensation that includes retirement benefits. This appendix provides supplementary tables with additional detail for the September 2008 Perspective." (Investment Company Institute)


Senate Bill Offers Retirement Plan Tax Breaks to Cope with Midwestern Storms
Excerpt: "The disaster recovery and tax extenders bill passed by the Senate on September 23, 2008 contains three disaster-related retirement plan changes for participants in disaster areas in 10 Midwestern states that experienced floods and tornadoes earlier this summer." (ICMA-RC)


Money Market Mutual Funds Given Temporary Guaranty
Excerpt: "In an unprecedented effort to plug a run on money market mutual funds, the federal government has put into effect a temporary guaranty insurance program for money funds. The program, which started last week, will insure participating money market funds until Dec. 18. After that, the Treasury Department can decide whether it wants to extend the program to Sept. 18, 2009." (The Dallas Morning News)


Bailout Brings With It Diverse Perks
Excerpt: "Deposit Insurance: The Federal Deposit Insurance Corporation will back bank deposits of as much as $250,000 per account holder, up from $100,000, through the end of 2009. That means accounts held by two people would be covered up to $500,000. Retirement account coverage was held steady at $250,000." (The New York Times; free registration required)


IRS Developing Pre-Approved Plan Program for 403(b)s
Excerpt: "The Internal Revenue Service (IRS) said it is developing plan approval programs for 403(b) plans similar to the current programs offered for 401(a) tax-qualified plans. The programs include a pre-approved plan program and a determination letter program for individually drafted plans. New IRS regulations effective January 1, 2009, require all 403(b) programs to have in place a formal, written plan document." (PLANSPONSOR.com; free registration required)


A Former WaMu Employee Asks, 'What Will Happen to My WaMu Pension Plan?'
Excerpt: "The government seized Washington Mutual's banking operations and sold parts of the company to JPMorgan Chase on September 25. But the jurisdiction of employee pension benefits was a point of contention during a tumultuous week that left current employees and retirees nervously awaiting an announcement that could affect their financial future." (U.S. News & World Report)


Stock-Drop Plaintiffs Win Skirmishes in Fifth Third Case
Excerpt: "Plaintiffs in a January 2005 stock-drop and excessive fee case have won two legal skirmishes with a federal judge's rulings certifying the case as a class action and refusing a request to throw out the lawsuit. A news release from the Scott and Scott law firm said the rulings came in a suit filed by Benjamin Shirk seeking to represent participants and beneficiaries in the Fifth Third Master Profit Sharing Plan. The case charged the bank and a number of its executives with mismanaging the plan and breaching their fiduciary duties under the Employee Retirement Income Security Act (ERISA)." (planadvisor)


Average American Feels Alone in Retirement Planning
Excerpt: "Many Americans who don't have an adviser think they don't have enough money to attract an adviser, according to a survey by AARP Financial Inc." (planadvisor)


High Court to Hear Arguments on ERISA Beneficiary Designation
Excerpt: "The U.S. Supreme Court will hear arguments Tuesday regarding whether a qualified domestic relations order (QDRO) under the Employee Retirement Income Security Act trumps a woman's voluntary waiver of her ex-husband's pension benefits, an issue that has divided federal appeals courts and left divorce lawyers unsure how to advise clients." (Law.com)


Retirement Plans and the Troubled Asset Relief Program
Excerpt: "When considering which troubled assets should be purchased, the Treasury Secretary would have been required to consider, among other things, purchasing troubled assets held by or on behalf of qualified pension plans, section 457 plans, and section 403(b) plans. So, if this bill had been adopted, any plan out there holding a troubled asset would have had to consider participating in TARP." (Baker & Daniels)


Market Decline Jeopardizes Pensions
Excerpt: "Unless the market makes a miraculous recovery before year-end, the tougher federal funding requirements mandated by the Pension Protection Act of 2006 could force companies to come up with cash for their pension funds." (Pittsburgh Post-Gazette)


Supreme Court To Hear QDRO Case
Excerpt: "On Tuesday, the Court will hear argument in: . . . Kennedy v. Plan Adm. for Dupont Savings (07-636, on whether a specific ERISA provision is the only way a divorcing spouse can waive her right to receive her ex-husband's pension benefits under the Act." (Supreme Court of the United States Blog)


As Investments Plummet and Pensions Vanish, People in Their 50s and 60s Rethinking Retirement
Excerpt: "Baby boomers are rethinking retirement as they watch their investments dwindle. Plummeting home values, fading 401(k) accounts, shrinking interest on CDs and worries about their own jobs are driving the trend. Fears about the future of Social Security and defined-benefit pensions only add to anxiety for the over-50 set. 'Even people who are five years away from retirement are nervous,' . . . . More than half of people surveyed in an Associated Press-GfK poll released last week said they worry they'll have to work longer because the value of their retirement savings has declined." (PressDemocrat.com)



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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] The Emergency Economic Stabilization Act of 2008: Impact of the Historic New Law
Morgan Lewis provides a summary and practice-specific comments as useful resources on the Act. (Morgan, Lewis & Bockius LLP)


[Guidance Overview] Treasury Bailout Program Restricts Executive Pay for Participating Asset Holders
Excerpt: "Perhaps unsurprisingly, the Act seeks to limit the extent to which asset holders, or their top executives, will benefit from the federal government bailout, and to discourage those asset holders or their executives from engaging in fraud or taking on inappropriate risk. Accordingly, most asset holders that choose to participate in the program will be subject to certain limitations on executive pay." (Faegre & Benson LLP)


[Guidance Overview] Executive Compensation Limitations for Financial Institutions Participating in Troubled Assets Relief Program under the Emergency Economic Stabilization Act of 2008
Excerpt: "EESA includes direct federal restrictions and limitations, as well as new tax penalties, that will apply to executive compensation provided by financial institutions participating in TARP (collectively, the 'Compensation Provisions'). The applicable Compensation Provisions will depend on the value of the troubled assets a financial institution sells and how the sales are implemented. The Compensation Provisions apply to private as well as public companies and appear to include almost no transition relief for existing compensation arrangements." (Jones Day)




Newly Posted Events

ADA Amendments Act: Compliance Issues Await Employers Webcast
Nationwide on October 10, 2008
presented by International Foundation of Employee Benefit Plans

Impact of the Emergency Economic Stabilization Act on Executive Compensation and Benefit Plans
Nationwide on October 16, 2008
presented by ABA Joint Committee on Employee Benefits

Legislative Update
in District of Columbia on November 12, 2008
presented by Capital Chapter ISCEBS

Trick or Treat? Reduce Health Care Trend Now, Prepare for Health Care 2010 and Beyond
in District of Columbia on October 30, 2008
presented by Capital Chapter ISCEBS



Newly Posted Press Releases

PSCA Elects 2008-2009 Board of Directors
Profit Sharing/401(k) Council of America (PSCA)



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401(k) Plan Administrator
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in RI

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