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October 20, 2008

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

Today's sponsor is Employee Benefits Institute of America (EBIA)

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EBIA's 401(k) Plans Manuals and Seminars!

Since the enactment of the Pension Protection Act of 2006 (PPA), the IRS and DOL have been issuing significant guidance interpreting numerous PPA changes affecting 401(k) plans. EBIA's 401(k) Plans manual, written and edited by five experienced employee benefits attorneys, analyzes and explains the PPA and other new guidance and provides practical guidance on how to comply. If you are not a current subscriber, now is the time to add 401(k) Plans to your library. And don't forget to check out our popular in-person 401(k) plans seminars, which will be presented in several cities this fall.

[Guidance Overview] DOL Revises ERISA Interpretive Statements on Shareholder Rights and Economically Targeted Investments (PDF)
3 pages. Excerpt: "On October 17, 2008, the U.S. Department of Labor published in the Federal Register interpretive bulletins updating and modifying its prior bulletins on the exercise of shareholder rights, including proxy voting, and on economically targeted investments by ERISA-governed employee benefit plans. The new bulletins in part incorporate into these formal interpretive statements the positions taken by DOL in advisory opinions issued to the U.S. Chamber of Commerce in 2007 and 2008. The prior bulletins – Interpretive Bulletins 94-1 and 94-2 – are superseded, effective immediately." (Sutherland)

[Guidance Overview] What Are Your Fiduciary Duties Regarding Revenue-Sharing Arrangements?
Excerpt: "This article is based on testimony drafted by Fred Reish and Stephanie Bennett that was delivered by Fred Reish to the Department of Labor Advisory Council Working Group on Fiduciary Responsibilities and Revenue Sharing Practices on September 20, 2007." (Aspen Publishers, Inc. via Reish Luftman Reicher & Cohen)

[Guidance Overview] IRS's Priority Guidance Plan Updated; More Guidance Coming by June 30
Excerpt: "The IRS has updated its priority guidance plan. This plan lists the items on which the IRS and Treasury intend to provide guidance by June 30, 2009. There are more than 35 items affecting various retirement plan vehicles." (SunGard)

[Guidance Overview] Global Retirement Update (PDF)
2 pages. Excerpt: "Our Global Retirement Update summarizes recent legislative developments and trends related to retirement and financial management and highlights recently passed and pending legislation that may require employers to take action to comply with new rules or review existing plans." (Hewitt Associates)

Guidance Needed for Labor Department's Guidance on Pension Plan Activism
Excerpt: "The guidance largely echoes existing law, and would not affect governance proposals on things like say-on-pay, majority voting or poison pills, all of which the agency said 'are reasonably likely to affect the economic value of the plan.' Where the guidance would come into play is on social or political proposals. According to the guidance, 'the mere fact that plans are shareholders in the corporations in which they invest does not itself provide a rationale for a fiduciary to spend plan assets to pursue, support or oppose such proposals.' The guidance is vague in its wording and has been interpreted differently by groups on both sides." (Financial Week; free registration required)

Institutions Want to Educate People on How to Help with Financial Planning During This Crisis
Excerpt: "The IPFW Institute for Pension Plan Management last month launched its first seven multipart online retirement planning fundamentals courses. The pension institute is a partnership between Indiana University-Purdue University Fort Wayne and the American Society of Pension Professionals & Actuaries. The modules are the first steps in a program to prepare students to take ASPPA credentialing exams. The society's credentials demonstrate knowledge and expertise within the industry. Last week marked one year since local officials announced plans to create the pension institute, the only one of its kind." (The Journal Gazette)

IRS Tax Law Specialist Discusses 403(b) Regs
Excerpt: "Sponsors of and advisers to 403(b) plans recently got some clarification regarding compliance directly from one of the 'architects' of the new regulations. Speaking at [a 403(b) Symposium] Robert J. (Bob) Architect, Senior Tax Law Specialist, Employee Plans, Internal Revenue Service, provided some peace of mind to sponsors coming up on the January 1, 2009 compliance deadline [with his] response to those who think that if they do not have an information sharing agreement (ISA) in place with every vendor under the 403(b) plan by 1/1/2009, they will fall out of compliance. Architect told Symposium attendees that the regulations do not say that ISAs have to be in place by January 1." (; free registration required)

The Candidates and Your Savings - A Look at McCain's and Obama's Proposals
Excerpt: "Sen. Barack Obama (D-Ill.) has proposed allowing people under 59 to withdraw up to 15 percent of their IRAs or 401(k) accounts, up to a maximum of $10,000, without having to pay the 10 percent penalty for withdrawing early, though income tax still applies. The penalty waiver is good only on withdrawals made in 2008 and in 2009. Obama also wants to exempt from taxation the withdrawals required by seniors 70 1/2 and older." (The Washington Post; free registration required)

Middle-Class Americans' Retirement at Risk
Excerpt: "Of all the threats to the American middle-class standard of living, from stagnating incomes to piles of consumer debt, perhaps the least understood and among the most serious is the looming crisis in retirement. Several trends, each debilitating alone, are due to converge on the middle class over the next decade or so." (USA TODAY)

[Opinion] Views on Why, in at Least Two Respects, 401(k) Plans Are Superior to Defined Benefit Plans
Excerpt: "Within any given group, a DB plan has to cover everybody. This limits its utility to those groups where it makes sense for (almost) everybody to save. There are employees, however, who shouldn't be saving for retirement: those who are typically low-paid, with pressing needs that have a higher priority. For them, 'forced' retirement savings via a DB plan is wrong/inefficient. Here I guess I have to explain that, even where (as is typical) all DB contributions are made by the employer, those contributions are still booked to the wages of the employee -- wages that, in these circumstances, the employee would otherwise receive in cash. This feature of the DB system limits how many employers will adopt DB plans and reduces their efficiency." (; free registration required)

Sponsored by: BLAZE SSI Corp.

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GTS - the George Taylor System for combined DB /DC Plan Proposals

GTS is a fast, easy-to-use MS Excel-based interactive system designed by George Taylor. It creates plan proposals, including combined DB Cash Balance and DC New Comparability plan designs. GTS performs combined plan IRC401(a) non-discrimination testing and prepares client-ready reports. A GTS subscription includes system updates for government regulations and HelpLine Support. GTS is available exclusively from BLAZE SSI Corp.

(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] Van Pools Cut Costs, But Increase Some Risks
Excerpt: "As more businesses help their workers find lower-cost commuting options, employers need to be aware of the risks such programs can raise." (Workforce Management; free registration required)

[Guidance Overview] Strategies for Fiduciary Best Practices After LaRue and Glenn (PDF)
5 pages. Excerpt: "[T]hese cases can provide strategies to protect employers and fiduciaries, and to facilitate their proper exercise of fiduciary duties. Employers should consider making changes and acting proactively to implement these strategies now to help ensure that plan disputes are channeled through a plan committee and that the committee's decisions receive deference from the courts." (Winston & Strawn LLP)

[Guidance Overview] IRS Delay of Effective Date for Smart Card Requirements
Excerpt: "The IRS has delayed – again – the effective date of Revenue Ruling 2006-57, which confirmed that employers could use debit, credit or smart cards to deliver qualified transportation fringe benefits and outlined the required procedures for doing so. The ruling was supposed to take effect Jan. 1, 2008, but was delayed for a year to give transit systems more time to implement the required technology. Apparently some transit systems are still not ready. The revenue ruling is now slated to take effect Jan. 1, 2009, but employers and employees may rely on the ruling in the meantime." (Watson Wyatt Worldwide)

[Guidance Overview] Claims Denial Faces Stricter Review Because Sponsor Failed to Meet DOL Electronic Delivery Requirements
Excerpt: "A ruling by the 9th U.S. Circuit Court of Appeals emphasizes the importance of compliance with the U.S. Department of Labor's regulations on delivering plan documents electronically. In Gertjejansen v. Kemper Insurance Companies, Inc., the court applied a stricter standard of review to a claims denial because the employer's delivery of the summary plan description (SPD) did not meet DOL requirements." (Watson Wyatt Worldwide)

[Guidance Overview] Switching 401(k) and Other ERISA Plan Vendors—Inherent Risks for Employers and Plan Fiduciaries (PDF)
3 pages. Excerpt: "Plan fiduciaries may face risks, including personal liability, when corporate decisionmakers turn their attention to retirement and welfare plan administration as a source of savings in perilous economic times. The authors discuss some of the most notable areas for possible ERISA violations when fiduciaries face corporate cost-cutting pressures." (The Bureau of National Affairs, Inc. via Paul, Hastings, Janofsky & Walker LLP)

[Guidance Overview] New Veterans' Benefits Law Amends USERRA to Expedite Enforcement and Address Statute of Limitations Issue
Excerpt: "EBIA Comment: Whether the new deadlines imposed by the Act will actually expedite USERRA enforcement is unclear, since the Act does not include any penalty for failure to meet those deadlines. However, the Act also includes expanded reporting requirements for the enforcement process, suggesting that Congress has a keen interest in improving USERRA enforcement and that additional Congressional action might follow if the speed and quality of enforcement do not improve." (Employee Benefits Institute of America)

[Guidance Overview] New Section 457A Limits Tax Deferral for Certain Compensation Paid by Tax Indifferent Parties
Excerpt: "The new rules apply in addition to the requirements of existing Code Section 409A and any other provisions with respect to nonqualified deferred compensation, and are effective for amounts deferred that are attributable to services performed after December 31, 2008. For existing deferrals, the deferral amounts will be includible in the later of a) the year 2017, or b) the tax year in which no substantial risk of forfeiture exists concerning the rights to the deferred compensation." (Perkins Coie LLP)

[Guidance Overview] Treasury Department Issues Executive Compensation Rules under the Capital Purchase Program for U.S. Financial Institutions (PDF)
8 pages. Excerpt: "In order to participate in the program, the financial institutions must agree to four sets of compensation restrictions described in Interim Final Regulations ('Interim Regulations)' promulgated by the Treasury Department on October 14 that apply to senior executive officers ('SEOs') of participating institutions." (Frederic W. Cook & Co., Inc.)

[Guidance Overview] Code Section 162(m) – An Overview of Performance-Based Compensation (PDF)
5 pages. Excerpt: "Code Section 162(m) limits the amount of annual compensation that may be deducted by a public company for each of its top four executives to $1 million. Certain types of compensation are not subject to the limit, including compensation that is performance-based within the meaning of IRS regulations. The following summarizes the requirements for the performance-based exception." (Drinker Biddle & Reath LLP)

Vail Valley Sanitation Worker's Mortgage Is Cheaper Than Rent, Thanks to Employer's Housing Program
Excerpt: "Vail wastewater operator Jim Cliche recently bought a deed-restricted, three-bedroom house with a garage for about $300,000 in Edwards, about 15 miles away from work. He made a $3,000 down payment to close the deal under a new home-help mortgage program offered by the U.S. Department of Agriculture. Wells Fargo approved him for a loan. Cliche, 55, says his monthly mortgage payment is cheaper than rent would be on the same home in the open market." (The Denver Post)

[Opinion] Guidance on Meals, Gifts, and Entertainment Provided to ERISA Plan Fiduciaries
Excerpt: "The United States Department of Labor recently amended its 'Enforcement Manual' regarding how DoL investigators treat meals, gifts, and entertainment provided to ERISA plan fiduciaries. This amendment, which we have been working on for almost two years, directs DoL investigators to ignore noncash meals, gifts, and entertainment with an aggregate value below $250 per year. Equally important, investigators are instructed to ignore the cost of a fiduciary's participation in education conferences in certain circumstances." (; free registration required)

Newly Posted Events
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Legislative & Regulatory Updates/EPCRS Updates/Fee Disclosures
in Arizona on November 13, 2008
presented by National Institute of Pension Administrators - Phoenix, AZ

Newly Posted Press Releases
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A Chart of the 2009 Cost-of-Living Adjustments

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Pension Administrator
for Retirement Benefit Solutions, LLC
in VA

Retirement Benefits Manager
for Selective Insurance Company of America
in NJ

Technical Specialist
for Kravitz - Louis Kravitz & Associates
in CA

LVadmin Developer/System Specialist
for MassMutual Financial Group
in MA

Institutional Relationship Manager
for Great-West Retirement Services
in CO

Manager Health Claims (TPA)
for Zenith Administrators
in WA

Retirement Benefits Specialist (Temporary)
for Stanford University, Human Resources, Retirement Programs
in CA

Client Service Consultant
for The Standard
in OR

Client Service Manager (TPA/Insurance)
for Zenith Administrators
in IN

Senior Pension Sales Consultant
for Executive Benefit Design Group

Employee Benefits Attorney
for Gleaves Swearingen Potter & Scott LLP
in OR

Managing Director-Nonqualified Deferred Compensation
for Retirement Capital Group, Inc
in CA

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