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November 7, 2008

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

Today's sponsor is International Foundation of Employee Benefit Plans

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[Guidance Overview] DOL's Final Regulations on the Selection of Annuity Providers for Individual Account Plans (PDF)
2 pages. Excerpt: "The Department of Labor has issued final regulations providing guidance and a safe harbor for the selection of annuity providers for individual account plans. As required under PPA, the DOL also issued a final rule limiting the application of Interpretive Bulletin 95-1 to the selection of annuity providers for defined benefit plans." (Buck Consultants)

[Guidance Overview] Coming in 2009: The Perfect Storm of Pension Plan Funding (PDF)
6 pages. Excerpt: "The global bear market, combined with the stringent new pension plan funding rules enacted by the Pension Protection Act of 2006 (PPA), has raised the specter of significantly increased funding obligations in 2009 for single-employer plans, as well as restrictions on the operation of underfunded plans and the funding of nonqualified plans. These restrictions may include: Restrictions on the payment of lump sum distributions, which will particularly affect cash balance and pension equity plans; Restrictions on any benefit increases, even pre-negotiated increases in collectively bargained plans; A prohibition on the funding of nonqualified deferred compensation plans while qualified plans are underfunded; and In extreme cases, a mandatory freeze on future benefit accruals and payment of plant closing and similar benefits." (Seyfarth Shaw LLP)

[Guidance Overview] DOL's Updated Fiduciary Guidance on Exercising Shareholder Rights and Making Economically Targeted Investments
Excerpt: "On October 17, 2008, the Department of Labor published two interpretive bulletins under Employee Retirement Income Security Act: [1st -] the Department of Labor has published an interpretive bulletin relating to exercise of shareholder rights and written statements of investment policy, including proxy voting policies or guidelines. [The target page provides] summaries of the four categories treated . . . ." (Cypen & Cypen)

[Guidance Overview] Revenue Sharing, Fees, Indemnity and Contribution: Assorted Issues Confronting Fiduciaries
Excerpt: "In the Charters case itself, it is worth noting, and important to practitioners to recognize, that the court was confronted by this issue in a case where the defendant was using indemnification as a counterclaim to ward off a breach of fiduciary duty claim against it by a trustee by trying to pass the liability back to the trustee; it may well be that the court would have reached a different conclusion if presented with a more traditional contribution/indemnification scenario, where the defendant fiduciary was not trying to use the doctrines offensively, but instead simply to spread the liability owed to the plaintiff as a result of fiduciary breaches among all fiduciaries who may have participated in the breach." (Stephen Rosenberg of The McCormack Firm, LLC)

Obama's Plans for Your Retirement
Excerpt: "The leading edge of the baby boomers will hit age 65 during Barack Obama's administration. Legislation enacted over the next four years will be key to boomers' economic security in retirement, especially as investors frantically try to recover from massive stock market losses before they retire. Here's a look at the president-elect's major retirement proposals . . . ." (U.S. News & World Report)

New Vanguard Report Analyzes Spending Down Savings
Excerpt: "Despite the increase in lump-sum payouts and a growing interest in the retirement income phase of the savings life cycle, little is known about how older Americans currently use their accumulated savings. Vanguard Center for Retirement Research (CRR) fills this gap in a new report -- Spending the Nest Egg: Retirement Income Decisions Among Older Investors -- which analyzes how older Americans spend assets just before and in the early years of retirement." (The Vanguard Group, Inc.)

Does Retirement Kill You? Evidence from Early Retirement Windows
Excerpt: "The effect that health has on the retirement decision has long been studied. We examine the reverse relationship, whether retirement has a direct impact on later-life health. To identify the causal relationship, we use early retirement window offers to instrument for retirement. We find no negative effects of early retirement on men's health, and if anything, a temporary increase in self-reported health and improvements in health of highly educated workers." (Social Science Research Network)

Estimated Retirement Benefits in the Annual Social Security Statement (PDF)
84 pages. Excerpt: "Estimated benefits are adjusted for economy-wide average wage growth from about the time of Statement issuance to about the time of retirement. In addition, the Social Security Statement uses certain assumptions about current and future individual earnings to estimate retirement benefits. This note evaluates whether the Statement's assumptions produce accurate estimates, using data from a sample of recently eligible retired workers in SSA's Modeling Income in the Near Term (MINT) microsimulation model." (U.S. Social Security Administration)

Listing of IRS Published Guidance for January - October 2008
The target page links to guidance published by the Service relating to retirement plans: Treasury Regulations; Revenue Rulings; Revenue Procedures; Notices; and, Announcements. (Internal Revenue Service)

Responses to Survey on Changes in Employer Matching Contribution
Excerpt: "This week, [PLANSPONSOR] asked readers if they had any changes in mind for their retirement plan match. The good news - most - 58% - had no changes in mind (as one reader noted, 'We have a very generous match program that our leadership believes in and does not want to change'), and another 16% - though they caveated their response by saying 'not yet' were also in that status (that's roughly three-quarters of the respondents, in total)." (; free registration required)

Exxon Mobil's Plan Most Underfunded DB Among S&P 500 Companies, Analyst Says
Excerpt: "According to a new analysis of S&P 500 companies from Citi Investment Research, companies in the energy sector had defined-benefit plans that were only slightly more than 80% funded at the beginning of this year -- the lowest funding level among any of the ten industries examined by Citi." (Financial Week)

Obama Proposals Include Retirement Plan Changes
Excerpt: "[Some] reforms Obama has supported include: Eliminating income taxes for seniors making less than $50,000 a year. . . . Creating automatic work place pensions by requiring employers who do not currently offer a retirement plan to enroll workers in a direct-deposit IRA account that is compatible with existing direct-deposit payroll systems. . . . Matching 50 percent of the first $1,000 of savings for families that earn less than $75,000 a year. . . . Regulating pensions more strictly by ensuring that bankrup.tcy courts cannot use pension funds to pay creditors ahead of some other company assets, prohibiting companies from giving executive bonuses while cutting worker pensions, and limiting the circumstances under which retiree benefits can be reduced." (AP via MSN.Money)

[Opinion] The Need for Funding Legislation: Questions and Answers (PDF)
4 pages. Excerpt: "What funding changes are needed? There are four key changes that are needed, each of which is explained further below. Consistent with Congressional intent in the PPA, asset smoothing needs to be permitted. For 2009 and 2010, asset smoothing needs to be permitted without the applicable restrictions, as a mean of easing the transition to the PPA funding rules. For 2009 and 2010, companies need the ability to choose a funding method without being compelled to continue using that method. . . . The transition to the 100% funding target needs to apply to companies both above and below the phased-in funding target. And the phase-in level for 2008 needs to apply again in 2009." (American Benefits Council)

[Opinion] Defined Benefit Plan Funding: The Effect on Plans, Plan Participants and Jobs (PDF)
Excerpt: "The unforeseen and nearly unprecedented decline in the market has affected almost all plans. This decline is exacerbated by Treasury's interpretation of the Pension Protection Act as effectively requiring plan assets to be marked to market for funding purposes. Thus, in general, every dollar of asset loss must be immediately taken into account. This dire situation could have devastating effects on jobs and the economic recovery. This document provides (1) aggregate funding data, (2) examples of shocking increases in funding obligations, (3) the effects of this situation on jobs and retirement security, (4) a solution, and (5) an explanation of why our solution needs to be enacted now." (American Benefits Council)

[Opinion] Commentary: Retirement Savings Reforms Need to Be on Obama's Radar, and Soon
Excerpt: "It's time for this country to fix how Americans save and invest for retirement, including IRAs but especially the 401(k), the employer-sponsored retirement plan of record for half of working Americans. Nearly 30 years after being introduced, the 401(k) has proven -- in some ways -- to be an abject failure and now would be as good a good time as any to overhaul it. Otherwise, Joe the average 401(k)/IRA investor is going to be in big trouble." (MarketWatch)

[Opinion] U.S. Supreme Court Focus is Amiss in Pending QDRO Dispute
Excerpt: "[In] Kennedy v. DuPont Savings Plan Administrator . . . [a] participant's estate claimed to be entitled to receive the participant's death benefits because it was his secondary beneficiary. The dispute was whether the participant's primary designation had been rendered ineffective by a domestic relations order that was not a qualified domestic relations order . . . . On October 28, 2008, the Supreme Court requested the parties brief a 'new question,' which question suggests that the Court is confused." (Workplace Prof Blog)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Dual-Role Benefit Plan Administrator Conflicts: Proceed with Caution (PDF)
6 pages. Excerpt: "The Supreme Court's ruling in Metropolitan Life Ins. Co. v. Glenn increases the likelihood of the courts overturning certain benefits decisions. Understanding the ruling and what steps to take in its wake can help companies limit that risk." (Thompson Publishing Group via Vedder Price P.C.)

Newly Posted Events
(Post Yours!)

Techniques for Designing, Hedging, and Financing Nonqualified Deferred Compensation (NQDC) Plans Webcast
Nationwide on November 19, 2008
presented by Buck Consultants, an ACS Company

Newly Posted Press Releases
(Post Yours!)

WorldatWork Announces New Board of Directors

Advanced Registration for NIPA Business Management Conference is Now Open
National Institute of Pension Administrators

FutureOffice Network Presenting Smartcast on Legislative Update: ADA, FMLA & Mental health Parity Act
Davidson Marketing Group -- FutureOffice Network

Kravitz Acquires Cash Balance Business From JPMorgan Retirement Plan Services

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Pension Administrator
for Stephen H. Rosen & Associates, Inc.
in NJ

Accountant/Employee Benefits Administrator
for McPhillips, Roberts & Deans, PLC
in VA

Qualified Plan Manager
for First Niagara Financial Group
in NY

Retirement Plan Sales/Client Relationship Manager
for The NIA Group, LLC
in NJ

Defined Contribution Plan Administrator
for Papalia Retirement Plan Services, Inc.
in PA

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