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November 11, 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.

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[Official Guidance] Text of IRS Notice 2008-105: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
4 pages. Excerpt: "This notice contains updates for interest rates for funding requirements under sections 412(b)(5)(B) and 430(h)(2) of the Code applicable for November 2008, and updates for interest rates for minimum present value determinations under 417(e)(3) of the Code for October 2008." (Internal Revenue Service)


[Official Guidance] Disaster Relief Announcement 08-29 Relating to PBGC Deadlines in Response to Severe Storms and Flooding in Indiana
Excerpt: "This Disaster Relief Announcement does not cover every situation in which PBGC disaster relief may be warranted. For example, it does not capture every person that might experience difficulty in meeting a PBGC deadline for reasons relating to the severe storms and flooding that occurred on September 12, 2008, in Indiana. It also does not grant specific disaster relief for all filings." (Pension Benefit Guaranty Corporation)


[Official Guidance] Disaster Relief Announcement 08-30 Relating to PBGC Deadlines in Response to Hurricane Gustav in Mississippi
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to Hurricane Gustav that occurred on August 28, 2008, in Mississippi." (Pension Benefit Guaranty Corporation)


[Official Guidance] Disaster Relief Announcement 08-31 Relating to PBGC Deadlines in Response to Severe Storms and Flooding in Puerto Rico
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the severe storms and flooding that occurred on October 1, 2008, in Puerto Rico." (Pension Benefit Guaranty Corporation)


[Official Guidance] Disaster Relief Announcement 08-32 Relating to PBGC Deadlines in Response to Severe Storms and Flooding in Illinois
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the severe storms and flooding that occurred on September 13, 2008, in Illinois." (Pension Benefit Guaranty Corporation)


[Guidance Overview] Your Defined Benefit Pension Plan's Liability May Be Overstated (PDF)
2 pages. Excerpt: "If you have a defined benefit pension plan, its net liability on the balance sheet is probably overstated by between 3% and 10%, assuming it is 80% to 95% funded. Its annual cost reflected on your bottom line is probably overstated by 1% to 2%. In total, pension liabilities in the United States are probably overstated on balance sheets by roughly $25B. Essentially, most actuaries have used a good answer to the wrong question, but this actuary proposes asking a better question." (Findley Davies, Inc.)


[Guidance Overview] DOL's Proposed ERISA Exemptions to Facilitate Liquidity for Retirement Plans Holding Auction Rate Securities (PDF)
2 pages. Excerpt: "On November 7, 2008, the Department of Labor proposed four individual prohibited transaction exemptions, requested by broker-dealers, that would facilitate liquidity for ERISA plans or IRAs holding auction rate securities (ARS) for which the Dutch auction process has failed." (Sutherland)


The Financial Crisis and State/Local Defined Benefit Plans
Excerpt: "This brief explores what a loss of roughly $1 trillion of state and local defined benefit equity assets means for the individual participants and for the taxpayers of the sponsoring entities." (Center for Retirement Research at Boston College)


Social Security: Calculation and History of Taxing Benefits, Updated Oct. 21, 2008 (PDF)
19 pages. Excerpt: "In the 110th Congress, legislation has been introduced that would impact the taxation of Social Security benefits, including H.R. 2, H.R. 191, H.R. 192, H.R. 1349, H.R. 2158, H.R. 2507, H.R. 6677, and S.Con.Res. 21. This report will be updated as warranted by legislative activity." (U.S. Congressional Research Service)


With Democratic Win, What Happens Now With Retirement Plans, Social Security?
Excerpt: "The next few years in employee benefits will be shaped by a Democratic President and a Democratic Congress. Even if President-elect Barack Obama follows through on all of his benefits proposals, as outlined . . ., those proposals must be championed by members of Congress and then passed in both the House and the Senate. Mr. Obama's policy statements during the election campaign provide a guide to the direction of employee benefits legislation in the next few years, and the following provides some suggestions for the future in retirement plan legislation." (Wolters Kluwer)


Market Woes Impact Retirement Confidence of Many Americans
Excerpt: "The recent Wall Street turmoil appears to have made a significant impact on some Americans' confidence they can last through retirement with money still in the bank. A Thrivent Financial for Lutherans news release about its recent survey said 58% of respondents were at least somewhat doubtful their financial nest egg will be big enough." (PLANSPONSOR.com; free registration required)


IRS Modification of Governmental Plan Filing Cycle
Excerpt: "[T]his is a onetime modification and the determination letter for a governmental plan filed during Cycle E will expire at the end of the next Cycle C (January 31, 2014)." (International Foundation of Employee Benefit Plans)


R.H. Donnelley to Freeze Pension Plans - Replacing Retirement Coverage with Enhanced 401(k)
Excerpt: "According to R.H. Donnelley's annual report for 2007, the company had expected to contribute $15.8 million to its pension plans in 2008. . . . Essentially, R.H. Donnelley's pension freeze means that workers' benefits will no longer accrue. When they retire, workers will get what they were entitled to as of Jan. 1, 2009, but no more. As part of its pension freeze, however, Donnelley will enhance its current 401(k) retirement programs." (Triangle Business Journal via bizjournals.com; free registration required)


The Hartford 401(k) Draws Stock Drop Scrutiny
Excerpt: "The law firm of Milberg LLP said it is investigating 'possible illegal conduct by Hartford Financial Services Group Inc. and certain fiduciaries' of The Hartford Investment and Savings Plan. In a press release announcing the 'investigation' . . . Milberg says it is investigating 'whether certain fiduciaries of the Plan may have violated the Employee Retirement Income Security Act of 1974 (ERISA).' In this particular case, the law firm says that such violations may have occurred in at least two ways: by continuing to offer Hartford common stock as a plan investment when it was imprudent to do so; by maintaining the plan's investment in Hartford stock in the Plan when it was imprudent to do so." (planadvisor)


[Opinion] Time for a Universal Mandatory Pension System
Excerpt: "The simplest design for a mandatory universal pension system would be to piggyback a system of individual retirement savings accounts onto the existing Social Security withholding system. How big that add-on pension system should be (3% of payroll or 6% or more); how to distribute the financing (employee only, employee plus employer, plus subsidies from government); how to tax contributions, investment earnings and withdrawals; how to arrange account administration (pooled, federally administered or private, individually administered); and what age or conditions to set on withdrawals are all major design issues." (Pensions & Investments)


[Opinion] The 'Anti-Participant Rule' - Requirement for 'Disclosure' of Certain Costs and Fees Associated with Qualified Retirement Plans Such As 401(k) Plans
Excerpt: "Some of the special-interest groups involved in what I termed, in last month's column, the 'charade' of the Department of Labor's 408(b)(2) cost-disclosure project would be more than glad to see the demise of the 'anti-participant rule' if that should come to pass. These groups just don't want any comprehensive disclosure of costs in retirement plans. But as an Aesop's fable warns, be careful what you wish for. In the new Congress that will convene in January, the groups may have a difficult time resisting implementation of H.R. 3185, which really does require a truly comprehensive disclosure of costs in retirement plans." (W. Scott Simon via Morningstar)



Sponsored by: ASPPA

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Banner ad for ASPPA

The ASPPA 401(k) SUMMIT, March 22- 24, 2009

Register now and be a part of this unique forum for retirement sales and investment professionals in the 401(k) arena. Hear Arthur Laffer discuss the condition of our new global economy, participate in interactive networking activities and specialized education tracks, and listen to our industry’s leaders discuss where the trends are taking us and how to be prepared. Don’t miss out on the longest running event dedicated solely to the sales and investment segment of our industry, 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

Know Your Severance Rights and Risks
Excerpt: "[Don't have an employment agreement specifying severance terms.] Don't assume you will get anything, employment attorneys say. That is not to say it's impossible; in some cases even if there is no preexisting agreement, the company might offer severance to restrict the employee from competing with it for a period of time, notes Kenneth Raskin, a compensation and employment partner at White & Case. But the employer, not the employee, owns that right. Merely asking the firm to provide you with a guarantee of severance in the event of termination without cause is very unlikely to work." (CFO.com)


If Current Economic Situation Continues, Most HR Officials Say They Would Consider Providing More Financial Planning Information to Help Employees Cope
Excerpt: "A news release by the Society for Human Resource Management (SHRM) said 83% of poll respondents reported that their response could well include financial educational literature and/or workshops by investment specialists. Another 21% said they might revise investment policies for 401(k) plans and other savings programs." (PLANSPONSOR.com; free registration required)




Newly Posted Events
(Post Yours!)

Health Benefits Laws Compliance in Texas - Webcast
Nationwide on November 13, 2008
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Highlights of the ASPPA Annual Conference
in Massachusetts on November 19, 2008
presented by ASPPA Benefits Council (ABC) of New England

Massachusetts Health Reform: A Giant Step Toward Universal Coverage? - Webcast
Nationwide on November 12, 2008
presented by KaiserNetwork.org

The Business of Health Reform: Measuring the Pulse of the Employer - Webcast
Nationwide on November 12, 2008
presented by KaiserNetwork.org

The Final FMLA Regulations: What They Mean and How to Prepare your Organization for the Changes
Nationwide on December 9, 2008
presented by Spencer Fane Britt & Browne LLP



Newly Posted Press Releases
(Post Yours!)

National Business Coalition on Health Honors Leaders in Health System Reform
National Business Coalition on Health

NBCH Recognizes Health Plans for Ground-breaking Programs for Improving Health and Health Care
National Business Coalition on Health

Health Reform and Quality Improvement Leader, Bruce E. Bradley, Honored with Lifetime Achievement Award from NBCH
National Business Coalition on Health

Employees Wrongly Think "You Get What You Pay For" In Health Care
Midwest Business Group on Health

MSN Money Launches Educational Webisodes to Help Protect Military Service Members From Financial Fraud
Microsoft

Kansas City Employers Launch National Effort to Promote Employee Health and Wellness and Manage Longer-Term Health Care Costs
Mid-America Coalition on Health Care

Kansas City Employers Launch National Effort to Promote Employee Health and Wellness and Manage Longer-Term Health Care Costs
Mid-America Coalition on Health Care



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Defined Contribution and Small Plans Unit Leader
for Southern California Pipe Trades Administrative Corporation
in CA

401(k) and Pension Manager
for TPA in Colorado region
in CO

Director of Congressional Affairs
for ASPPA
in VA

Director of Regulatory Affairs
for ASPPA
in DC, VA

Pension Analyst
for Long Island Employee Benefits Group, Ltd.
in NY

Chairman of Administration Services for TPA Firm
for Dana Consulting Group, Ltd.
in IL




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