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November 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] IRS Guidelines Regarding Rollovers as Business Startups (ROBS) (PDF)
15 pages. Excerpt: "Procedures for examination and determination agents when dealing with these transactions." (Internal Revenue Service)

[Official Guidance] Text of IRS Employee Plan News; Discussions of Filing Cycle for Governmental Plans, Rollovers as Business Startups (PDF)
Excerpt: "This Special Edition discusses the IRS modifying the filing cycle for governmental plans under the staggered remedial amendment program. In addition, this edition talks about the initial guidelines released on Rollovers as Business Startups (ROBS). Some other items of interest included in this edition are 2009 Retirement Plans Limits Announced; List of Recent Guidance that May Require Interim or Discretionary Amendments; and 403(b) Phone Forum [on] December 4, 2008." (Internal Revenue Service)

[Guidance Overview] IRS Says: Beware of ROBS - 'Rollovers as Business Startups'
Excerpt: "With a lot of baby boomers nearing retirement, some may be looking for alternatives to the stock market for investing their accumulated retirement plan assets. Some may even be approached by promoters promising that they can use their funds in their 401K, IRA, profit-sharing, or annuity plans to open a business without paying taxes on the distribution. In its most recent newsletter here, the IRS has provided a lot of helpful information on the legal pitfalls pertaining to the design of these programs. The IRS is calling these programs 'ROBS' which stands for 'Rollovers as Business Startups.'" (Attorney B. Janell Grenier via

Public Fund Survey Summary of Findings for FY 2007 (PDF)
15 pages. Excerpt: "The Public Fund Survey is an online compendium of key characteristics of most of the nation's largest public retirement systems. . . . Beginning with fiscal year 2001, the Survey contains data on public retirement systems that provide pension and other benefits for 13.2 million active (working) members and 6.5 million annuitants (those receiving a regular benefit, including retirees, disabilitants and beneficiaries). Based on the latest information published in annual financial reports, systems in the Survey hold in trust $2.79 trillion." (National Association of State Retirement Administrators)

Survey Says DC Plans With Unbundled Providers to Add Options
Excerpt: "The Spectrem Group Report also says that plans using unbundled providers are likely to add employer stock, high-yield bonds and target-date funds as new investment choices." (Workforce Management; free registration required)

Plan Sponsors Address Market Turmoil by Reviewing Plan Investment Offerings
Excerpt: "Plan sponsors are taking their fiduciary responsibilities seriously and dealing proactively with the financial crisis, suggests a new survey from Aon Consulting. Of the 100 defined contribution plan sponsors recently surveyed, 78% have reviewed their plan's core offerings to ensure they have sufficient diversification. Of the 81 defined benefit plan sponsors that responded, 62% have reviewed the current economic turmoil's impact on their pension costs, and another 33% intend to do so." (Employee Benefit Advisor; free registration required)

401(k) Plans Face Disparity Issue
Excerpt: "As cash-strapped workers curb their 401(k) contributions, more employers could be forced to limit or refund the retirement-plan contributions of higher earners to meet federal nondiscrimination rules. Federal rules require that 401(k) plans not favor highly compensated employees, those earning more than $105,000 in 2008. While some companies routinely confront this issue, more businesses are expected to encounter the problem as layoffs and higher living expenses reduce what rank-and-file workers can afford to save in their 401(k) plans." (The Wall Street Journal)

Delaware Company Cleared of Cash Balance Conversion Miscue
Excerpt: "A Newark, Delaware, power company did not have to tell workers when it converted its defined benefit pension plan to a cash balance program because the change was not expected to cut employees' benefits, a federal appellate court ruled. The 3rd U.S. Circuit Court of Appeals asserted in a decision involving a cash balance challenge against Pepco Holdings and its subsidiary, Conectiv, that the conversion did not violate the Employee Retirement Income Security Act (ERISA). The appellate panel decided that because the plan change was not 'reasonably expected to significantly reduce' employees' future benefits, ERISA Section 204(h) did not mandate an employee notice the conversion was taking place." (; free registration required)

Most UK Pension Sponsors Still not Keen on Pension Buyouts
Excerpt: "Only one-in-five (20%) large UK corporate pension plan sponsors are giving serious thought to selling off their final salary pension obligations in whole or in part, according to the results of Greenwich Associates' 2008 United Kingdom Pension Fund Study." (; free registration required)

Boston Scientific Wins Stock Drop Lawsuit
Excerpt: "A federal judge in Massachusetts has decided that two former Boston Scientific Corp. employees who sold more company stock than they purchased did not have the legal right to pursue a stock drop case against their former employer. U.S. District Judge Joseph L. Tauro of the U.S. District Court for the District of Massachusetts ruled that because the two plaintiffs' sold more stock than they purchased, they likely were not financially injured by any potential misdeed by the employer and therefore, lacked constitutional standing." (; free registration required)

The Next Wave of Asset Allocation: Stocks and Commodities Futures
Excerpt: "In this article, you will learn about the work of . . . two researchers and why their findings may be [important in the future]. You also will see why commodities futures, and exchange-traded funds (ETFs) that combine them, may hold the key to your clients' asset allocation success. Enter Erb & Harvey: The ground-breaking 2006 research study was published in the Financial Analysts Journal by Claude B. Erb, CFA and Campbell R. Harvey and titled: The Strategic and Tactical Value of Commodity Futures." (Judy Diamond Associates, Inc.)

[Opinion] Law Firm Comments on Governmental Plan Determination Letter Issues (PDF)
2 pages. Excerpt: "The IRS has indicated that it is considering changing the period during which governmental tax-qualified plans may submit determination letter applications. David Powell and David Levine have submitted comments to the IRS addressing this potential change to the determination letter process." (Groom Law Group)

[Opinion] Industry Groups Urge OMB to Ensure Fee Disclosure Regs Be Effective No Earlier Than 12 Months After Finalized (PDF)
2 pages. Excerpt: "ERIC along with several other industry groups on October 21 sent a letter to the Office of Management and Budget urging the agency to ensure that the effective date of a pending final regulation concerning service provider disclosures under ERISA section 408(b)(2) be no earlier than 12 months after the date of finalization. The pending final regulation is currently at OMB for review." (The ERISA Industry Committee)

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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] President-Elect Obama's HR-Related Proposals (PDF)
14 pages. Excerpt: "Hewitt's post-election report . . . provides specific information on President-elect Obama's positions on health care, retirement benefits, tax policy and employment practices. " (Hewitt Associates)

[Guidance Overview] Links to 2008 Q&As Submitted by Benefits Attorneys to Various Benefits-Related Federal Agencies
These links are not new, but the documents are interesting and useful enough that we wanted to be sure you know about them. Especially interesting are DOL answers about claims procedures and IRS answers about section 409A. Excerpt: "Each year, the Joint Committee on Employee Benefits (JCEB) of the American Bar Association meets with officials of federal agencies in Washington, D.C., to discuss issues of interest to employee benefits practitioners. This year the JCEB met with the IRS, DOL, SEC, PBGC, EEOC, HHS and CMS. . . . The question and answer transcripts listed below are based on these informal discussions between private sector representatives of the JCEB and agency officials." (Joint Committee on Employee Benefits, American Bar Association)

[Guidance Overview] Impact of Early EESA Guidance on Executive Pay (PDF)
5 pages. Excerpt: "[The target page] is a summary of Treasury guidance issued to date on the executive compensation restrictions that apply to financial institutions participating in the Capital Purchase Program ('CPP') under the recent 'bailout' legislation. While these rules are of immediate interest to banks and other potential participants in the CPP, many are concerned that Congress will try to impose these or similar restrictions on many more companies in the future so it may be helpful to be generally familiar with them." (Groom Law Group)

FASB Postpones Until 2009 Further Disclosure of Postretirement Benefit Plan Assets
Excerpt: "The Financial Accounting Standards Board (FASB) has agreed to postpone until 2009 the effective date of the changes it is making in Financial Accounting Statement (FAS) No. 132(R)-a, Employers' Disclosures about Postretirement Benefit Plan Assets. In coming to this decision at its September 24, 2008 board meeting, the FASB members acknowledged that their deliberations have been slower than expected." (Wolters Kluwer)

How Will Obama's Tax Plans Work in This Economy?
Excerpt: "Most of the ideas were floated before credit markets froze and the economy faltered. By the time the Obamas and their new puppy settle into the White House, things could be even worse. Pundits say this could force Obama to shelve his tax plans while he focuses on the economy. 'Most of his tax proposals will be deferred because they don't have a stimulus effect and some of them will make the economy worse,' says Roberton Williams, principal research associate with the nonpartisan Tax Policy Center." (San Francisco Chronicle)

South Carolina Voters Reject State Constitutional Amendments on Stock Investments for Government Benefits
Excerpt: "The Associated Press reported Tuesday night that with 79% of precincts reporting, 58% of voters rejected the constitutional amendment allowing the state to invest in stocks to pay for future retirees' health care and pensions. Fifty-six percent voted no on the amendment for local governments." (; free registration required)

Chart: Compensation Costs in State and Local Government, September 2008
Excerpt: "Wages and salaries for State and local government rose 1.0 percent for the June to September 2008 period, compared with 0.9 percent in the prior quarter. Benefit costs increased 0.7 percent from June to September 2008, less than the 1.1-percent increase in the previous quarter. Compensation costs (also known as employment costs) include wages, salaries, and employer costs for employee benefits." (U.S. Bureau of Labor Statistics)

Newly Posted Events
(Post Yours!)

Fee Disclosure Issues: Special Considerations for Trust Organizations
Nationwide on December 11, 2008
presented by Goldleaf Partners

Newly Posted Press Releases
(Post Yours!)

Still River Announces Updated 403(b) Loan & Hardship Withdrawal Software for Rev. Proc. 2007-71 Compliance
Still River Retirement Planning Software, Inc.

Vanguard Strategic Retirement Consulting Expands Capabilities with Hiring of Actuary
Vanguard Group, The

Peoria Unified School District Partners with Gilsbar, Inc. for 360° Benefit Plan Management®
Gilsbar, Inc.

Council Reacts To Democratic Presidential, Congressional Victories
American Benefits Council

CRR Funding Opportunity: 2009 Dissertation Fellowship Program
Center for Retirement Research at Boston College

HealthFitness Launches New Preventive Health Solution for Small Employers
Health Fitness Corporation

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