Retirement Plans

To BenefitsLink home page Fill your job openings fast on!
Search Earlier Newsletters:

Sort by date
Sort by closest match

November 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 Employee Benefits Institute of America (EBIA)

(Click on company name or banner to learn more.)
Banner ad for Employee Benefits Institute of America (EBIA)

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.

[Official Guidance] PBGC Announces Maximum Insurance Benefit for 2009
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) today announced that the maximum insurance benefit for participants in underfunded pension plans terminating in 2009 is $54,000 per year for those who retire at age 65, up from $51,750 for 2008. The amount is higher for those who retire later and lower for those who retire earlier or elect survivor benefits . . . ." (Pension Benefit Guaranty Corporation)

[Guidance Overview] How IRS Correction Program Updates Affect You
Excerpt: "The IRS recently updated the Employee Plans Compliance Resolution System (EPCRS) correction program for plan sponsors. . . . EPCRS allows plan sponsors to correct certain errors in employee retirement plans, in some instances without having to notify the IRS. Correcting plans in this manner affords you certain advantages, including maintaining tax-favored status and protecting your employees' and retirees' retirement benefits. This Regulatory Brief can help you realize those advantages, as well as implement practices and procedures to help ensure that your plan complies with the laws and regulations." (The Vanguard Group, Inc.)

[Guidance Overview] New York State Pension Reforms Signed Into Law by Governor Paterson
Excerpt: "On October 10, 2008, Governor Paterson signed into law legislation designed to drastically reform the state pension system in light of numerous widely published reports of abuses within school districts and other municipal entities. The impetus for the legislation stems from the discovery of attorneys who were being paid as both an employee and independent contractor of school districts and other municipal entities as well as abuses of the pension system by recent retirees who received waivers which allowed them to work and get paid a salary for essentially the same positions for which they were simultaneously collecting pensions." (Bond, Schoeneck & King, PLLC)

Retirees Seek Quick Relief from Mandatory Withdrawals
Excerpt: "The reason behind the MRD law is that it allows the IRS to collect taxes that were deferred when the money was put into savings. But thanks to the decline in the market, older Americans will have to take withdrawals that were calculated based on last year's higher values. For example, a 75-year-old who has to withdraw $4,366.81 from an IRA that was worth $100,000 on Dec. 31, 2007, now has to take that same amount from an account possibly worth only $60,000 -- or face a high tax penalty." (AARP)

U.K. Government Tax Raid on Every Private Pension As Value of Cushy Public Sector Schemes Soars to £1trillion
Excerpt: "Gordon Brown's tax raid on pension funds has snatched £17,000 from every worker's retirement pot, research says today. Yet the value of public sector schemes - funded by taxpayers - has soared to an astonishing £1trillion. Opposition MPs, business chiefs and campaigners demanded an investigation into the growing 'pensions apartheid'." (Daily Mail)

Setting Up an Effective Strategy Around Lifecycle Funds
Excerpt: "A customized approach provides the opportunity to include higher-risk and alternative asset classes in a lifecycle vehicle. This can be more appropriate than having these asset classes as a standalone option, and their risk can be minimized, since the lifecycle vehicle will be highly diversified. Plan sponsors should consider the additional costs associated with creating and managing a custom lifecycle-funds program, compared to an off-the-shelf product." (Employee Benefit News; free registration required)

FASB Approves Stricter Pension Asset Valuation Rules
Excerpt: "The Financial Accounting Standards Board (FASB) has voted to require that employers provide extensive information about the fair value of assets in pension plans, in a move that runs counter to a staff recommendation. According to a news report posted on Markets Media Online, FASB decided this week that the final staff position will be effective for fiscal years ending after December 15, 2009, a year later than originally anticipated. At initial adoption, asset values would not be required for earlier periods that are presented for comparative purposes in an employer's financial documents." (; free registration required)

Kentucky Group Studied Putting State Workers in 401(k)-Type Plan
Excerpt: "A working group appointed by Gov. Steve Beshear to study the state's public pension system declined to recommend moving new state workers into a 401(k)-type retirement plan. A subcommittee that has been studying individual retirement accounts said in a report to Beshear last week that ongoing volatility in the financial markets gave 'extra weight' to the concerns of the group about changing to a 401(k)-type of program." (The Courier-Journal)

The Role of Retirement Personality Type in Motivating Women to Plan for Retirement (PDF)
33 pages. Excerpt: "This two phase study examined how to motivate women to plan and save for retirement. The first phase determined the Retirement Personality Type, risk tolerance, and retirement preparation actions of a sample of baby boomer women. Planners, Savers, and Impulsives are significantly more risk tolerant than Strugglers and Deniers but even these highly educated women were very risk averse. While most of the women scored adequate or good on Retirement Readiness, one-third are poorly prepared for retirement." (TIAA-CREF Institute)

ERISA Fiduciaries May Have Obligations to Seek Recovery of Portfolio Losses
Excerpt: "When a plan suffers a significant loss (realized or unrealized), ERISA trustees must weight the potential benefits and burdens of various possible courses of action, and make informed decisions. Once a loss is identified, the need to make such decisions is ongoing, and the number and complexity of such decisions can be overwhelming. Among the many decisions that confront ERISA trustees are: Whether the plan has a viable cause of action to recover a loss; Identification of the potential defendants and likelihood of recovery from each; Whether to participate in an already-filed lawsuit or initiate a lawsuit . . . ." (Investment Fraud Lawyer Blog)

Beware of Congress's Threat to Tax 401(k)s
Excerpt: "Some Democrats in Congress have held hearings that included discussions of new proposals to tax 401K money. Specifically, the idea would be to eliminate most of the $80 bn in annual tax breaks that 401(k) investors receive. Which means a nearly $80 bn tax hike." (FOX News Network, LLC)

401(k) Losses: Older Investors' Retirement Funds Hit Hard
Excerpt: "Older Americans are watching their retirement savings evaporate as the economy slumps and the stock market falters. . . . Today, 401(k) plans are the major source of retirement income for millions of Americans. The bear market underscores their risks. 'We're seeing that those funds were never guaranteed, that the stock market can go down and stay down and that the fees can erode earnings and contributions so that people end up with less than they put in,' says Teresa Ghilarducci, professor of economics at the New School for Social Research in New York." (USA TODAY)

U.S. Judge Orders Freeze on Argentine Pension Investments
Excerpt: "A U.S. judge ordered the freezing of Argentine pension fund investments in the United States to satisfy a prior $554 million judgment against the South American country on behalf of holders of its defaulted sovereign debt. . . . The judgment applies to 10 private pension fund management companies in Argentina that hold more than $1.4 billion in foreign assets including investments in the United States." (Reuters via Pamplin Media Group)

Argentina Pension Funds Try to Avoid Nationalization
Excerpt: "Argentina's private pension funds will propose a series of reforms as an alternative to the government's bid to nationalize the system, newspaper La Nacion quoted a top sector official as saying on Sunday." (Reuters)

Retirement Investment Blows Are Smaller for Lawmakers As Treasury Backs Their Pension Plan
Excerpt: "Along with the rest of America, Representative George Miller has watched the value of his retirement investments plummet in recent weeks.'I've lost 30 percent like everybody else. This hits home with the Miller family, too,' the California Democrat said in a recent interview. But the blow is softer for members of Congress than for most. Although lawmakers have lost value in their thrift savings plans - the government's version of a 401(k) - they are also offered a defined-benefit pension plan backed by the US Treasury and largely insulated from Wall Street fluctuations." (AP via The Boston Globe)

Executives' Supplemental Bennies to Get Hit If Workers' Plan Funding Falls Below 60%
Excerpt: "As large corporate pension plans plunge deeper into the red, there's more on the line than just retirement benefits for rank-and-file workers. Pension benefits for top executives may soon be in jeopardy too, thanks to regulations put in place a few years ago. Tucked into the Pension Protection Act of 2006 -- which was designed to shore up the funding levels of corporate pension plans, among other things -- is a provision that says companies with defined-benefit plans that are funded only 60% or less may not set aside money for non-qualified pension plans for executives, including supplemental executive retirement plans, or SERPs." (Financial Week)

Despite Falling Assets of Ohio's Public Pension Funds, Investment Managers Still Draw Six-Figure Perks
Excerpt: "The turmoil on Wall Street has sucked billions of dollars out of Ohio public-pension systems, but many of the pension employees who are paid to invest retirees' money still will reap tens of thousands of dollars in bonuses. This year, 10 investment officers for the State Teachers Retirement System pulled in bonuses of $200,000 or more, and two crossed the half-million mark in combined salaries and bonuses." (The Columbus Dispatch)

[Opinion] Financial Advisors Remind Us of 'Treat' Available in Buying in Down Market - Rock-Bottom Prices
Excerpt: "Financial experts point out that by making steady contributions to a 401(k) plan out of each paycheck, employees can take advantage of a process called 'dollar cost averaging.' In other words, regularly saving means buying more shares when stock prices are cheap, and buying fewer shares when stock prices are higher. If you can keep it up consistently, dollar-cost averaging works pretty well as an approach to investing. But the problem is, workers don't always get to take full advantage of dollar cost averaging in their 401(k) plans. In tough times like these, many families are finding that they need to cut back on their contributions to pay for gas, food, or other necessities, or because another member of the family has lost a job or had their hours reduced." (National Institute on Retirement Security)

[Opinion] Group Letter to House Education and Labor Committee on Needed Pension Funding Reform (PDF)
3 pages. Excerpt: "On behalf of the thousands of employers that we represent and their millions of employees, the undersigned organizations urge you to consider legislation that would help companies navigate the current economic crisis while minimizing adverse impacts on the pension benefit plans they sponsor." (American Benefits Council)

[Opinion] Should Feds Rescue Retirement System, Too?
Excerpt: "Even before the recent collapse of investment values, the paltry sums in private retirement accounts caused concern if not alarm among pension and retirement experts. Now, the wolf is not only at the door but in the room, and is devouring what little remains of the financial future of millions of Americans. Pretty much all of Washington is shoveling hundreds of billions of dollars to shore up the nation's financial system and restore liquidity to the global credit system. And there is growing if belated support for providing direct aid to millions of homeowners who otherwise can't afford to stay in their homes. But while these concerns are front and center, there's been little but hand-wringing when it comes to the huge losses suffered by individual retirement accounts, what's left of traditional private defined benefit pensions, and state and local retirement programs." (U.S. News & World Report)

[Opinion] Maintaining Standards in Unusual Times: Diversification Is a Way to Achieve a Goal, Not an End in Itself
Excerpt: "The problem for fiduciaries is that they have a duty to diversify unless it is clearly prudent not to do so (Metzler v. Graham, 5th U.S. Circuit Court of Appeals, 1997). In the Metzler case, the court reasoned that although no statute or regulation specifies what constitutes 'diversification,' ERISA's legislative history provides some guidance, noting: 'The degree of investment concentration that would violate this requirement to diversify cannot be stated as a fixed percentage, because a fiduciary must consider the facts and circumstances of each case.'' (Investment News; free registration required)

Sponsored by: BLAZE SSI Corp.

(Click on company name or banner to learn more.)
Banner ad for BLAZE SSI Corp.

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] Recent Developments Related to the Emergency Economic Stabilization Act of 2008 (PDF)
13 pages. Excerpt: "On October 6, 2008, Seyfarth Shaw LLP provided a Management Alert to clients and friends of the firm detailing generally the provisions of the Act (the 'Original Alert'). Since such time, there have been a number of developments that have reshaped or clarified the way in which certain provisions of the Act will be implemented. For your convenience, set forth below is a summary of these recent developments and this Alert acts as a supplement to the Original Alert." (Seyfarth Shaw LLP)

60 Minutes Report on USERRA
Excerpt: "A primary focus was on USERRA's costs to employers given the frequent and long tours of active duty that many Reservists now face in Iraq. There's the normal share of simply bad employers, but also an example of an employer that continually went beyond the call of duty in supporting its employees who were called up. That employer, while continuing that support, was frank about the growing burdens on losing its employees so frequently and for unknown periods of time." (Workplace Prof Blog)

Federal Labor Law Compliance by Size of Company
Excerpt: "Companies are required to comply with Federal, State and Local Labor Laws. Our most recent 'Human Capital' show discussed labor law compliance by size of company. I thought you might want to have this handy list of labor legislation by company size in case you were wondering what regulations applied to your business." (Birchtree-HR, LLC)

[Opinion] Suddenly it Seems to be All TARP – All the Time
Excerpt: "Now, flooding the press are reports of outrage and threats of Congressional action over the possibility of financial institutions paying bonuses to employees shortly after accepting TARP funding. The Wall Street Journal alone had three separate articles on this topic this morning. Congress' renewed focus on executive compensation suggests that it the limits imposed by TARP are only the beginning of its legislative meddling in this area. Next stop: the rest of corporate America. Now THAT is really scary. Obviously, we will have to monitor the political developments very carefully. However, in the meantime, among the important issues we are facing under TARP are the following . . . ." (Winston & Strawn LLP)

Newly Posted Events
(Post Yours!)

5th HR Shared Services Summit
in Georgia on December 8, 2008
presented by IQPC

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

Health Benefits Laws Compliance in Texas - Webcast
Nationwide on November 6, 2008
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Newly Posted Press Releases
(Post Yours!)

PBGC Announces Maximum Insurance Benefit for 2009
Pension Benefit Guaranty Corporation (PBGC)

Employers “Vote” on Presidential Candidates’ Health Care Platforms: Prefer Middle Ground Between the Two Approaches
Buck Consultants, an ACS Company

We're one of the top 350 employment sites on the web!Newly Posted or Renewed Job Openings
(Post a Job | View All Jobs | RSS feed for jobs RSS Feed )

DC Plan Administrator
for Campbell Albrecht
in CA

DC / 401(k) Administrator
for TPA Company
in OK

Health and Welfare Senior Consultant
for Towers Perrin
in NY

Health and Welfare Senior Actuarial Consultant
for Towers Perrin
in NY

Data Management Analyst
for MassMutual Financial Group
in MA

Virtual Group Medical Specialist / Consultant
for Healthy Halo Insurance Services

Account Manager/Sales Representative
for Westchester Risk Management/Benefits Consulting Firm
in NY

Actuarial Consultant
for Hewitt Associates
in IL, MA, NC, OH, TX

Handy Links:

Subscribe to the BenefitsLink Health & Welfare Plans Newsletter, Too!

Sign-up form is at (free).

This newsletter is sent to you each workday except federal holidays.

This email has been published by:, Inc.
1298 Minnesota Avenue, Suite H
Winter Park FL 32789
(407) 644-4146
Fax: (407) 644-2151

David Rhett Baker, J.D., Editor

Copyright 2008, Inc.; except that you can forward this email in full (including this boilerplate part) or otherwise reprint this email in full (including this boilerplate part) without obtaining our permission.

Anyone can receive these emails; just have them sign up at this web page:

Other useful links: