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October 24, 2008

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

Today's sponsor is DATAIR Employee Benefit Systems, Inc.

(Click on company name or banner to learn more.)
Banner ad for DATAIR Employee Benefit Systems, Inc.

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[Guidance Overview] The Demise of Defined Benefit Plans for Private Employers (PDF)
25 pages. Excerpt: "[T]he author analyzes the new minimum pension funding rules and the new restricted benefit rules (which also affect a defined benefit plan's qualification status) enacted by PPA '06, effective beginning in 2008. As noted in a recent report by the Government Accountability Office, many employers are responding to these rules by freezing benefit accruals for existing and/or new entrants under the plan. Coupled with these new rules, the Financial Accounting Standards Board has introduced a new accounting reporting requirement that will have important financial effects for plan sponsors of underfunded single-employer defined benefit plans. Attorneys and actuaries alike are responding to these challenges by offering a variety of strategies for plan sponsors. These requirements and the responding strategies have been summarized at the end of this article." (Prof. Kathryn Kennedy of the John Marshall Law School)

[Guidance Overview] Climate Change and the Pension Protection Act (PDF)
11 pages. Excerpt: "It is important for 401(k) plan sponsors to understand default investing under the Pension Protection Act in order to, as required by law, eliminate vendors who engage in self-dealing or fail to follow prudent procedures. This paper is presented in three sections. First, we review the basics of managed investing under the PPA. How did we get here? What were the architects of the PPA trying to accomplish? What are the approved discretionary investments under the statute? Next, we present, in a questions and answers format, the basics a plan fiduciary or advisor may ask about QDIAs. Finally, we ask the infrequently asked questions that a party in interest may not want to answer while marketing a lifecycle collective or mutual fund." (Avatar Associates)

[Guidance Overview] Section 415 Amendments Require Careful Consideration (PDF)
4 pages. Excerpt: "The accompanying chart summarizes the amendments required by Section 415, the optional amendments that are available, and the default provisions that apply." (Employee Benefit Plan Review via Winston & Strawn LLP)

[Guidance Overview] IRS Considering Modifying Determination Letter Process for Governmental Plans (PDF)
2 pages. Excerpt: "In 2005, the IRS revised its determination letter process to implement a staggered 'cycle system' under which the deadline for filing an IRS determination letter application generally varies based on the last digit of an employer's employer identification number (EIN). One exception to this EIN-based system was that governmental tax-qualified plans were all assigned to Cycle C, which is currently scheduled to end January 31, 2009. In recent months, significant concerns have been raised about governmental plans' ability to comply with the January 31, 2009 Cycle C determination letter deadline." (Groom Law Group)

[Guidance Overview] EBSA Final Rules Implement PPA's Cross-Trading Provisions
Excerpt: "Final regulations have been issued by the Employee Benefits Security Administration (EBSA) that implement the content requirements for the written cross-trading policies and procedures required under ERISA §408(b)(19)(H). The EBSA final regulation on cross trading addresses the content of the policies and procedures which must be adopted by an investment manager before engaging in cross trades of securities between clients, including employee benefit plans." (Wolters Kluwer)

2009 ERPA Study Guide Available from American Institute of Retirement Education ($35)
Excerpt: "[The Study Guide is a] downloadable PDF which serves as a guide and directs the candidate to the specific information that should be studied for the ERPA-SEE. The ERPA Study guide is divided by topics and each topic contains learning objectives, examination topic weightings, recommended reading with cite references to The ERISA Outline Book, test taking tips and sample topic test questions." (American Institute of Retirement Education)

Text of 2009 Syllabus for Examination to Qualify as Enrolled Retirement Plan Agent (PDF)
8 pages. Excerpt: "The syllabus for Part I . . . outlines issues affecting compliance and operation. These issues include participation, coverage, vesting, contributions, allocation and accruals, limits, nondiscrimination testing (including ADP and ACP), top-heavy, related employer issues, elective deferrals and deductibility. Part I also includes the legal framework under which retirement plans operate. . . . The syllabus for Part II . . . includes plan documents and governmental filings, rollovers and distributions, consent issues and participant loans. Topics also cover a practitioner's interaction with the IRS though plan audits and correction programs. The test also includes questions on ethics and professional responsibility issues. " (American Institute of Retirement Education)

Registration Now Underway for Enrolled Retirement Plan Agent (ERPA) Examination
The registration deadline is January 5, 2009 for the first examination window that occurs from January 6, 2009 through February 17, 2009. The American Institute of Retirement Education is a partnership of ASPPA and NIPA. The ERPA designation will enable persons to communicate with the IRS on their customers' determination letter requests and audits (i.e., be shown as an authorized representative on IRS Form 2848). Attorneys, certified public accountants, actuaries, appraisers and enrolled agents are already able to do so, and hence do not need the ERPA designation. (American Institute of Retirement Education)

ERISA Misrepresentation and Nondisclosure Claims: Securities Litigation under the Guise of ERISA?
49 pages. Excerpt: "In the wake of recent corporate scandals and dramatic market downturns, many employees whose retirement savings plans were heavily invested in the stock of their employer have seen their account balances substantially depleted. To recover for their losses, plan participants have filed lawsuits under the Employee Retirement Income Security Act (ERISA) alleging that plan fiduciaries made misrepresentations or failed to disclose material information about the suitability of investing in the company stock. These suits are generally derivative or companion cases to securities class actions based on the same allegations of misrepresentations or nondisclosures. Even though there is a significant overlap between the ERISA and the securities suit, the procedural and substantive rules governing the two actions are substantially different. This Article responds to the substantial need to identify these differences side by side and to examine whether ERISA fiduciary misrepresentation and nondisclosure claims amount to securities litigation in disguise, and if so, whether these claims should be allowed to proceed in the absence of the procedural safeguards imposed by the Private Securities Litigation Reform Act (PSLRA)." (Georgetown Law)

How Do Disabilities Affect Future Retirement Benefits?
Excerpt: "One-quarter of workers ages 51 to 55 develop work disabilities before age 62. Disabilities often force people to curtail their work hours, derailing retirement preparations. However, protections built into Social Security, including disability and spouse benefits and the system's tilt toward workers with low lifetime earnings, cushion the impact of midlife health problems. After other factors are controlled for, the onset of health-related work limitations between ages 51 and 61 reduces Social Security retirement benefits at ages 63 to 67 by only about 2 percent, much less than the impact on other retirement savings." (The Urban Institute)

International Update: Recent Developments in Foreign Public and Private Pensions (PDF)
3 pages. Excerpt: "International Update is a monthly publication of the Social Security Administration's (SSA's) Office of Retirement and Disability Policy. It reports on the latest developments in public and private pensions worldwide." (U.S. Social Security Administration)

Argentine Lawmakers to Limit State Use of Pensions
Excerpt: "The Argentine government's plans to nationalize US$30 billion in private pension fund assets ran into stiff opposition Thursday from lawmakers who want to make sure the money is spent exclusively on retirees -- not public works projects or debt payments." (AP via The New York Times; free registration required)

Canadian Plans Surviving but Sponsors Fretting
Excerpt: "New research from Pyramis Global Advisors, Fidelity Investments' institutional asset manager, reflects that while Canadian pension plans are surviving market volatility, there is substantial concern about how they can continue generating returns in a low-return environment." (; free registration required)

State Pension Benefits Improved in United Kingdom
Excerpt: "Women aged 53 to 60 will soon be able to pay a further six years worth of national insurance (NI) contributions to boost their state pensions. It raises to 12 the number of extra years of contributions that can be topped up, going back to 1975. The government's decision is included in an amendment to the Pensions Bill currently going through Parliament. The change is aimed at helping some women who left the workforce to raise families or care for other relatives." (BBC News)

DOL Puts Fiduciary Training Condition on Plan Officials Associated with 401(k) Plan Settlement
Excerpt: "In a company stock suit, the U.S. Department of Labor has obtained a settlement restoring $8,590,000 to participants of the Agway Inc. 401(k) plan. The settlement also bars plan officials and the board of directors from service to employee benefit plans for one to two years 'unless they complete fiduciary training,' according to a DOL press release. The defendants also agreed to pay a civil penalty of $859,000 plus interest to the DOL." (; free registration required)

The Canadian Safety Net for the Elderly (PDF)
15 pages. Excerpt: "Can.ada's Public Pensions System is widely applauded for reducing poverty among the elderly. This article reviews benefits provided to Can.ada's older people and compares the Canadian system to the U.S. Supplemental Security Income program. Although Can.ada's system would probably be judged prohibitively expensive for the United States, the authors argue that there are nevertheless lessons to be learned from the Canadian experience." (U.S. Social Security Administration)

Chile's Next Generation Pension Reform (PDF)
16 pages. Excerpt: "Since its inception in 1981, Chile's system of mandatory individual retirement accounts has become a model for pension reformers around the world. A March 2008 comprehensive pension reform law made major changes that address some key policy challenges including worker coverage, gender equity, pension adequacy, and administrative fees. The cornerstone of the new law sets up a basic universal pension as a supplement to the individual accounts system." (U.S. Social Security Administration)

401(k)s Take on Traits of Old Pensions
Excerpt: "Now 401(k) plans are morphing in the direction of traditional pension plans. Huge differences remain between the two types of retirement programs. But 401(k)s are taking on some of traditional pension plans' leave-the-driving-to-us features. . . . 'Defined benefit and defined contribution are definitely not alike,' said David Wray, president of the Profit Sharing/401(k) Council of America. 'But there's no question that more of the 401(k) system is being managed in a way that lets employees not have to make decisions if they don't want to.' The big changes that pushed this evolution further along include automatic enrollment rules that took effect late last year. That package of rules also let plans put workers into certain types of investments, unless they opted out." (Investor's Business Daily via

With Big Funding Gaps Likely, Employers Seek Easing of Pension Rules
Excerpt: "An employer benefit lobbying group Wednesday urged federal legislators to take a series of steps, including easing pension plan funding rules, to avoid widespread benefit freezes and damage to the nation's economy. As part of a 10-point plan, the Washington-based American Benefit Council recommends delaying requirements in a 2006 federal law that gradually require employers over the next few years to fully fund their pension plans, up from a prior 90% funded target." (Financial Week; free registration required)

PBGC Has Lost Money, But Appears Healthy Enough to Backstop Any Market Losses by Traditional Corporate Plans
Excerpt: "If you are one of the 1.3 million people whose employer has gone bankrupt and your plan has been taken over by the PBGC, you might find that $3 billion figure disconcerting. But 'people shouldn't be worried,' says Jeffrey Spiker, a spokesman for the agency. The PBGC has assets of $68 billion, plenty to pay current obligations. Although it has lost money on its equity portfolio, the agency has made money on bonds, where its investments traditionally have been focused." (BusinessWeek)

[Opinion] Why 401(k) Plans Are Failing and the Cure to Save Them (PDF)
15 pages. Excerpt: "It is an unfortunate irony . . ., that the majority of this country's retirement-plan assets have now been placed - squarely and intentionally - in the hands of those same individual investors who the Dalbar study shows dramatically under-perform the market. This 'tyranny of choice' is a burden the average 401(k) participant never wanted in the first place. And as benefits consultant Brooks Hamilton noted in a May 2006 PBS documentary, 'They're running their money into the ground.'" (Capital Directions, LLC)

Sponsored by: IRS & AIRE, LLC

(Click on company name or banner to learn more.)
Banner ad for IRS & AIRE, LLC

The Enrolled Retirement Plan Agent Program is now available!

Earn the privilege of practicing before the IRS with the new Enrolled Retirement Plan
Agent (ERPA) designation. The initial exam window opens on January 6, 2009.
Be prepared and register NOW!

(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] Recent Legislation Alters Executive/Deferred Compensation and Mental Health Parity Rules (PDF)
6 pages. Excerpt: "The Emergency Economic Stabilization Act of 2008 (the 'Act' or 'EESA'), which was signed into law on October 3, 2008, makes a number of changes to the federal income taxation of deferred compensation arrangements, provides new federal tax rules for executive compensation of financial institutions participating in the new relief programs authorized by such legislation, and adopts a new Mental Health Parity rule. The [target page] is a summary of those provisions." (Miller & Chevalier Chartered)

[Opinion] Text of Answers by Barack Obama; 2008 Presidential Candidate Employee Benefit Questionnaire (PDF)
11 pages; 14 questions from the American Society of Pension Professionals and Actuaries, the National Small Business Association, the Employers Council on Flexible Compensation, the United States Chamber of Commerce, the National Association for the Self-Employed, the American Academy of Actuaries' Pension Practice Council, the National Association of Women Business Owners, the Society of Professional Benefit Administrators, the National Retail Foundation, the National Institute of Pension Administrators, the Profit Sharing/401k Council of America, the Small Business Council of America, Pensions & Investments Magazine, and the Pension Forum. (American Society of Pension Professionals and Actuaries (ASPPA); Other Organizations)

[Opinion] Text of Answers by John McCain; 2008 Presidential Candidate Employee Benefit Questionnaire (PDF)
12 pages; 14 questions from the American Society of Pension Professionals and Actuaries, the National Small Business Association, the Employers Council on Flexible Compensation, the United States Chamber of Commerce, the National Association for the Self-Employed, the American Academy of Actuaries' Pension Practice Council, the National Association of Women Business Owners, the Society of Professional Benefit Administrators, the National Retail Foundation, the National Institute of Pension Administrators, the Profit Sharing/401k Council of America, the Small Business Council of America, Pensions & Investments Magazine, and the Pension Forum. (American Society of Pension Professionals and Actuaries (ASPPA); Other Organizations)

[Opinion] Impact of the 2008 Election on Health Care and Retirement Policy
Symposium Sessions Recording. Length: 1 Hour 51 Minutes 28 Seconds. Excerpt: "Panelists Jim Klein, Jamey DeLaPlane, and Dean Rosen discussed the upcoming election and the impact it would have on the American society. Moderator Mike Jensen made the observation that in his four decades as a correspondent, he could not recall more unpredictable time for the markets and for the overall economy. Calling it a 'perfect storm,' he noted that the presidential campaign was too close to call, markets are extremely volatile, and the economy is on the edge. He noted that amid the turmoil, two issues are always on the front burner: health care and retirement." (International Society of Certified Employee Benefit Specialists)

Newly Posted Events
(Post Yours!)

Health and Welfare Roundup 2008: This Year's New Laws and How They Affect You
Nationwide on December 4, 2008
presented by EBIA / Thomson Reuters

HRAs and HSAs for Rookies: Basic Training in Consumer-Driven Health Care
Nationwide on October 16, 2008
presented by EBIA / Thomson Reuters

Medicare Secondary Payer Mandatory Reporting: Managing the Complexities and Finding the Silver Lining
in Illinois on October 30, 2008
presented by Neal, Gerber & Eisenberg LLP

Medicare Secondary Payer Mandatory Reporting: Managing the Complexities and Finding the Silver Lining Webcast
Nationwide on October 30, 2008
presented by Neal, Gerber & Eisenberg LLP

Newly Posted Press Releases
(Post Yours!)

Claymore Securities Selects ExpertPlan for 401k Product

U.S. Labor Department Sues California Investment Advisor And Executives To Recover Losses And Hidden Fees Charged To Employee Benefit Plans
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Great-West Retirement Services® Appoints Daniel Schatz To National Accounts Staff
Great-West Retirement Services

New FAS 123R-Related Capabilities Define Latest Release Of Two Step Software's Stock Plan Management Tool
Two-Step Software, Inc.

Retirement Software Firm Announces New Director of Sales

We're one of the top 350 employment sites on the web!Newly Posted or Renewed Job Openings
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401(k) Pension Consultant / Administrator
for Malcolm Thompson & Associates, Inc.
in TX

Retirement Services Client Relationship Consultant
for Gallagher Retirement Services
in FL

Participant Recordkeeping Associate
for Marshall & Ilsley Trust Company
in WI

for HPnorthwest
in OR

Retirement Plan Administrator
for FGMK Financial Services, LLC
in IL

Pension Administrator
for Valley Forge Consulting Corporation
in PA

Part Time Participant Service Representatives
for Sentinel Financial Group
in MA

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