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October 9, 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

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[Official Guidance] IRS 30 Year Treasury Securities Rate Updated for September 2008
30 Year Treasury Securities Rate for September 2008: 4.27% (Internal Revenue Service)


[Official Guidance] October 2008 Pension Funding Segment Rates
Generally for plan years beginning after 2007, the rates in the tables . . . apply for minimum funding requirements under section 430 of the Code. (Internal Revenue Service)


[Official Guidance] IRS Composite Corporate Bond Rate Table Updated for October 2008
Corporate Bond Weighted Average Interest Rate = 6.14 for October 2008 (Internal Revenue Service)


[Guidance Overview] Final ERISA Regulations on Annuity Selection for Defined Contribution Plans (PDF)
2 pages. Excerpt: "The final regulations take effect on December 8, 2008. DOL simultaneously finalized its amendment of Interpretive Bulletin 95-1 . . . limiting the applicability of the so-called 'safest available annuity' rule to defined benefit plans effective as of the same date. (Interim guidance published in September 2007 provided the same result effective November 13, 2007.)" (Sutherland)


[Guidance Overview] Update on 401(k) Fee Litigation
Excerpt: "Over the past several years, more than two dozen lawsuits have been filed relating to 401(k) plan fees and, more specifically, 'revenue sharing' arrangements with plan service providers. . . . In addition to the lawsuits against plan sponsors, lawsuits have been brought against 401(k) plan service providers. [The target page has links to an outline and chart of the litigation.]" (Groom Law Group)


[Guidance Overview] High Court to Hear Arguments on ERISA Beneficiary Designation
Excerpt: "The U.S. Supreme Court will hear arguments Oct. 7 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." (Texas Lawyer)


[Guidance Overview] Has Your Roth Conversion Lost Value? Nullify It by Recharacterization!
Excerpt: "The tax bill from a Roth conversion can be voided by recharacterizing the conversion. However, the recharacterization must meet certain specific requirements to be considered valid. These are: The conversion must be completed by the individual's tax filing deadline, including any extension. Individuals who file their tax return or file for an extension by the due date receive an automatic six-month extension for completing the recharacterization. For individuals who file on a calendar year, this six-month extension ends October 15. This means that individuals who completed Roth conversions last year have until October 15 of this year to recharacterize that conversion. The recharacterization must be accompanied by any net income attributable (NIA) to the conversion. The end result is that the recharacterization amount is treated as if it was never converted for tax purposes, and therefore not included in the individual's income." (RetirementDictionary.com)


Retirement Plan Investment Committee Considerations in a Time of Extraordinary Events Affecting Financial Markets
Excerpt: "These are challenging times for investment committees, with dramatic market events affecting retirement plan assets and participants. Vanguard Institutional Strategic Consulting (ISC) has released [this] bulletin, with steps that can help investment committees confidently fulfill their fiduciary responsibilities during the current turbulence. The ISC bulletin spells out what to consider in oversight and monitoring plans, and provides process suggestions fiduciaries can undertake to monitor investments during times of unusual market volatility." (The Vanguard Group)


Retirement Outlook and Policy Priorities: How the New President and Congress May Help Increase Retirement Confidence (PDF)
8 pages. Excerpt: "The Transamerica Center for Retirement Studies has conducted a special edition survey to gauge how retirement confidence has changed over the past year and to find out what Americans think the next President and Congress should focus on to help improve their ability to achieve a financially secure retirement." (Transamerica Center for Retirement Studies)


CRS Report for Congress: Income and Poverty Among Older Americans in 2007 (PDF)
31 pages. Excerpt: "Just one-third of people age 65 and older, and fewer than one-half of elderly households, received income from a private or public pension in 2007. Among individuals age 65 or older who reported income from a government pension, median pension income was $16,629. Among recipients of private pensions, the median pension received in 2007 was just $7,200." (Congressional Research Service, U.S. Library of Congress)


Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2007 (PDF)
40 pages. Excerpt: "This Issue Brief closely examines the level of participation by workers in public- and private-sector employment-based pension or retirement plans, based on the U.S. Census Bureau's March 2008 Current Population Survey (CPS), the most recent data currently available." (Employee Benefit Research Institute)


The Funding Status of Locally Administered Pension Plans (PDF)
16 pages. Excerpt: "The Center's eighth issue brief on retirement plans finds that: Local plans are at least as well funded as state plans. Funding ratio: local – 85 percent vs. state – 84 percent; Local plans have a strong track record in making their required contributions. - 69 percent do so compared with 54 percent of the states. Despite this relatively positive outlook, some jurisdictions face serious shortfalls and a deteriorating economy may produce a gloomier picture going forward." (Center for State and Local Government Excellence)


Baltimore School Officials Give Thumbs Down on 403(b) Vendor Consolidation
Excerpt: "At a time when many 403(b) plans across the country are consolidating to a single service provider to ease compliance with new IRS rules, the Baltimore County school board voted not to follow that path in light of a protest from hundreds of employees and the district's five labor groups. A Baltimore Sun news report said board members unanimously opposed the recommended contract with 403(b) provider Lincoln Financial Group, which would have moved away from the multiple vendors currently available to employees." (PLANSPONSOR.com; free registration required)


Getting a Tax Credit for Your Small Business Retirement Plan
Excerpt: "This tax credit is in addition to the tax deduction you may receive for the contributions to the plan. The tax credit may be claimed for a maximum period of three years for retirement plans established for the 2002 plan year or later." (Slate)


New Hampshire Judicial Retirement Plan Sues on Divestment Law
Excerpt: "The New Hampshire Judicial Retirement Plan has asked a Superior Court judge to decide the constitutionality of a law ordering it to sell its holdings in selective companies doing business in the Sudan. The law, passed this spring, orders the state's two public pension systems to shed any investments that support Sudan's campaign of genocide and rape in Darfur. Both plans question whether the law is constitutional, but the Judicial Retirement Plan is the first to go to court. The much larger New Hampshire Retirement System would like to join the case." (The Boston Globe)


DOL Sues Firm for Abandoning Plan Without Distributing Assets
Excerpt: "The U.S. Department of Labor sued the now-defunct People Unlimited Consulting Inc. and two of its executives for violating the Employee Retirement Income Security Act (ERISA). A DoL announcement said the executives of the Charlotte, North Carolina-based employee staffing company failed to distribute $115,589 in 401(k) assets to eligible plan participants. The company abandoned the plan, and plan participants were unable to gain access to their 401(k) funds." (planadvisor)


Web Site Opens for Enrolled Retirement Plan Agent ('ERPA') Program; Licensing Information Brochure, Study Guide Coming Soon
Potential Enrolled Retirement Plan Agents can sign up to receive email updates with news and information about the ERPA program: see www.erpaexam.org -- Soon, that site will have information about the licensing process, an ERPA Study Guide and reference materials. Registration begins October 23; the first tests are planned for January 6 through February 17, 2009. The site includes answers to 15 frequently asked questions (FAQs). Excerpt: "Who should become an ERPA? Retirement plan professionals needing to represent before the Internal Revenue Service with respect to IRS forms under the 5300 and 5500 series. (And who are not otherwise included in a category of individuals allowed to practice before the IRS)." (American Institute of Retirement Education (AIRE))


[Opinion] Pension Rights Center Comments on Proposed Regulations and Class Exemption on Investment Advice (PDF)
4 pages. Excerpt: "The Department has issued a class exemption from the prohibited transaction rules for certain investment advice that goes well beyond the statutory exemption that is the subject of the proposed regulations. The exemption permits conflicted investment advice so long as the advice is preceded by investment recommendations generated by a computer model (similar to that described in the proposed regulation). Alternatively, the exemption permits advice so long as the compensation earned by the actual person giving advice (rather than the entity employing them) does not vary depending on the basis of any investment option selected by the participant. In our view, the potential for conflicted advice is even greater in these situations than in the more circumscribed statutory exceptions interpreted by the proposed regulations." (Pension Rights Center)


[Opinion] Report on Disclosure of the Market Value of Assets and Liabilities by Public Pension Plans (PDF)
5 pages. Excerpt: "Summary and Recommendation: It is the consensus of the members of the Public Interest Committee (PIC) that it is in the public interest for retirement plans to disclose consistent measures of the economic value of plan liabilities and assets. The PIC recommends that the Academy's Board of Directors (Board) approve a resolution asking the Actuarial Standards Board to take expedited action to consider, develop and adopt appropriate standards of actuarial practice to address this issue." (American Academy of Actuaries)


[Opinion] Fiduciary Prudence Is Key in Times of Market Extremes (PDF)
Excerpt: "There are key considerations for a fiduciary to address in times like these. The first is to stick to the basics: Review your Investment Policy Statement and any other governance protocols; consider the time horizon of your plan(s); focus on your plan participants; help them understand the current situation and not to panic, and lastly document, document, document the process." (OneFiduciary Group via 401khelpcenter.com)


[Opinion] Younger Workers Hurt When Boomers Can't Afford to Retire
Excerpt: "The first wave of baby boomers is scheduled to retire in 2011 - the same year my daughter graduates from college. Will a big percentage of the 4 million college graduates wind up jobless because my generation's 3.4 million baby boomers can't afford to retire? Even if Barack Obama or John McCain convinces Congress to adopt my proposal of a mandatory 401(k) contribution at 9% of pay, it won't be enough for the baby boomers who are scheduled to head out the door." (Employee Benefit News; free registration required)



Sponsored by: ASPPA

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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] Detailed Summary of the Emergency Economic Stabilization Act of 2008 (PDF)
16 pages. Excerpt: "Section 111 – Executive Compensation and Corporate Governance. Section 111 provides that where troubled assets are purchased from an individual financial institution where no bidding process or market prices are available, and the Secretary receives a meaningful equity position in that financial institution, such financial institution must meet certain standards for executive compensation and corporate governance (additional executive compensation provisions are contained in Section 302 of the Act)." (Seyfarth Shaw LLP)


[Guidance Overview] The Present and Future of Executive Compensation Regulation
Excerpt: "Perceived excessive executive compensation is one of Congress' primary concerns as a result of the current financial crisis. The final 'bailout' or rescue legislation contains a number of provisions affecting executive compensation. Moreover, in the current environment, these provisions may signify just the beginning of a new era in executive compensation regulation." (Nixon Peabody LLP)


[Guidance Overview] Certain Tax Provisions of the Economic Emergency Stabilization Act of 2008 and IRS Guidance Relating to the Economic Crisis
Excerpt: "Specifically, the Act contains provisions that: provide special rules with respect to executive compensation paid by employers participating in the Troubled Assets Relief Program (TARP); treat certain sales of Fannie Mae or Freddie Mac preferred stock by financial institutions as giving rise to ordinary income or loss; prevent the deferral of certain compensation from 'tax indifferent' parties . . . ." (Morgan, Lewis & Bockius LLP)


[Guidance Overview] Impact of the Emergency Economic Stabilization Act of 2008 on Executive Compensation Design (PDF)
2 pages. Excerpt: "The EESA executive compensation restrictions are noteworthy in part because they restrict certain elements of executive compensation design, as opposed to just imposing federal tax consequences for certain types of compensation. The scope of the EESA executive compensation restrictions depends on how the troubled assets are sold to the Treasury: through market mechanisms such as auctions or reverse auctions, or via direct purchases. The remainder of this client alert summarizes EESA's executive compensation provisions." (Womble Carlyle Sandridge & Rice, PLLC)


New edition of Equity-Based Compensation for Multinational Corporations
The NCEO presents excerpts from the new (10th) edition of its book Equity-Based Compensation for Multinational Corporations. (National Center for Employee Ownership)




Newly Posted Events
(Post Yours!)

2008 Annual Employee Benefits Update
in Kansas on October 21, 2008
presented by Spencer Fane Britt & Browne LLP

Ask the Experts: The McCain Health Reform Proposal Webcast
Nationwide on October 16, 2008
presented by KaiserNetwork.org

Ask the Experts: The Obama Health Reform Proposal Webcast
Nationwide on October 10, 2008
presented by KaiserNetwork.org

DOL Speaks: The 2009 Employee Benefits Conference
in District of Columbia on April 29, 2009
presented by ASPPA & DOL

Great Lakes Benefits Conference
in Illinois on April 20, 2009
presented by ASPPA & IRS

Hearing On Investment Advice Proposals
in District of Columbia on October 21, 2008
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Los Angeles Benefits Conference
in California on January 29, 2009
presented by ASPPA & IRS

Mid-Atlantic Benefits Conference
in District of Columbia on April 30, 2009
presented by ASPPA & IRS

Northeast Area Benefits Conference - Boston
in Massachusetts on July 16, 2009
presented by ASPPA & IRS

Northeast Area Benefits Conference - New York
in New York on July 17, 2009
presented by ASPPA & IRS

The ASPPA Cincinnati Pension Conference
in Ohio on November 13, 2009
presented by ASPPA (American Society of Pension Professionals & Actuaries)

The Nuts and Bolts of Health Insurance for the Aspiring Health Reformer Webcast
Nationwide on October 9, 2008
presented by KaiserNetwork.org

Women’s Business Leader Forum
in Tennessee on June 18, 2009
presented by ASPPA (American Society of Pension Professionals & Actuaries)



Newly Posted Press Releases
(Post Yours!)

Treasury Expands Temporary Money Market Guarantee Program
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

U.S. Labor Department Sues Defunct Charlotte, N.C., Employee Staffing Company To Protect Participants Of 401(k) Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

As 401(k) Plan Sponsors Enter Economy-Fueled 'Termination Season,' RolloverSystems Offers 401(k) Plan Termination Services Suite
RolloverSystems

OppenheimerFunds, Inc. Retirement Services Releases White Paper by Fred Reish On The Value Of Tru(k)ourse(tm) Feature
OppenheimerFunds, Inc.

Lawmakers Consider Legislation to Reduce Obesity in the Workplace
Reality Coalition



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Retirement Plan Specialist
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Insurance Analyst - BOLI
for M Benefit Solutions
in OR

Financial Consultant - Corporate Life Insurance
for M Benefit Solutions
in OR

Financial Analyst
for M Benefit Solutions
in OR

Defined Benefit Actuary I
for The Standard
in OH

Plan Administrator
for Blue Ridge ESOP Associates
in VA

Institutional Trust Services Plan Coordinator
for M&I Wealth Management
in WI

Account Executive
for Employee Benefits Advisory and Administration Services Firm
in CA

Senior Plan Administrator/Supervisor
for CMC Retirement and Employee Benefits Specialists, Inc.
in CA




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