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November 12, 2008

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


Today's sponsor is ASC & The ASC Institute

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Banner ad for ASC & The ASC Institute

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GM Doesn't Foresee Required Pension Contributions
Excerpt: "General Motors Corp. does not expect to have to make any pension contributions to meet minimum funding requirements in the next three to four years, even though its funded status declined in the first nine months of 2008 because of negative investment returns and recent employee-related cutbacks, according to its third-quarter financial report Friday, November 7." (Workforce Management; free registration required)


CalPERS Head Defends Public Pensions
Excerpt: "CalPERS board president Rob Feckner has hit back at critics of government pension plans, claiming they continue to provide a good deal for taxpayers despite current difficulties. . . . '[Traditional pension plans] are an extremely cost-effective way of providing decent retirement benefits to public employees, with three out of four dollars paid in CalPERS benefits coming from investment earnings, not taxpayers." (Global Pensions)


Companies Push Congress for Pension Funding Relief
Excerpt: "With pension funds facing billions of dollars in shortfalls as markets plunge, a range of companies from Ford to Verizon are pushing Congress to suspend portions of a two-year old law they say could force them to make job cuts as they shift scarce money into ailing retirement pools. The lobbying effort aims to change a 2006 pension reform law as part of any economic stimulus plan in a lame-duck session of Congress that begins next week. Companies warn the current law could force them to tie up large sums of cash they desperately need in the face of a global recession." (AP via The New York Times; free registration required)


Some Small Firms Suspend Their 401(k) Match
Excerpt: "As the economy worsens, a growing number of small businesses are suspending their 401(k) match, and, in some instances, closing the retirement plans altogether. While only about 15% to 20% of small businesses offer a 401(k) plan, many added them in recent years to attract and retain workers and to help business owners save for retirement. But the economic downturn and higher health-insurance costs are forcing companies to cut back on retirement benefits." (The Wall Street Journal)


No ERISA Breach Where Fees not Paid by Plan, According to District Court
Excerpt: "The U.S. District Court for the Northern District of California has ruled that a 401(k) plan sponsor did not engage in a prohibited transaction under Sec. 406 of the Employee Retirement Income Security Act (ERISA) because investment manager fees were not paid using assets of the plan. According to the opinion, since fees for the plan's investment manager were paid directly by the plan sponsor, there was neither a transaction with a 'party in interest' that would be prohibited by ERISA Sec. 406(a) nor a self-dealing transaction that would be prohibited by Sec. 406(b)." (PLANSPONSOR.com; free registration required)


Will Pension Funding Relief Be Part of Any New Economic Stimulus Package?
Excerpt: "[Some] might question whether relief is needed at this time. The effects of declining asset values have been partially offset by the recent dramatic rise in discount rates and corresponding drop in liabilities. This could change between now and January 1, 2009, the valuation date large calendar year plans must use for funding purposes. Some might favor waiting until then to get a better picture of the funding problem and determine what, if any, relief is needed." (Deloitte via BenefitsLink.com)


FICA Applies to 403(b) Contributions Made As Condition of Employment, Seventh Circuit Rules
Excerpt: "Salary reduction 403(b) plan contributions are subject to FICA taxes even if made as a condition of employment, the US Court of Appeals for the Seventh Circuit has ruled (Univ. of Chicago v. US). Congress intended the FICA wage base to include annuity purchases funded by salary reduction agreement, whether voluntary or mandatory, the court found." (Mercer LLC)


Phased Retirement and Older Workers: Keeping Talent on Board
16 pages. Excerpt: "In this Perspective, we look at the combination of challenges and opportunities faced by employers as they try to retain these veteran workers and meet their business goals. Changes to the workforce profile are inevitable, and the question is how will you respond?" (Mercer LLC)


University of California Employees to Resume Contributing to Pension Plan After 18-Year Hiatus
Excerpt: "Participants in the University of California Retirement Plan will begin making contributions next year, after an 18-year 'contribution holiday' to offset the losses amid the financial crisis. Contributions from both the university and employees will be required to maintain the long-term financial health of the retirement plan, UC President Mark Yudof wrote in a letter Monday to UC employees." (San Francisco Business Times via bizjournals.com; free registration required)


New Web Site: Institutional Retirement Income Research Council
Excerpt: "The purpose of this group is to advance the interests of retirement savings plan participants, plan sponsors, and plan advisers and consultants by: Introducing innovative approaches to in-plan retirement income solutions; Creating acceptable best practices and evaluation tools to supplement the RFP process; Discussing and identifying regulatory, legislative and fiduciary issues pertinent to institutional income solutions; and Producing and publishing relevant findings through various media outlets." (Institutional Retirement Income Research Council)


[Opinion] The Past, Present, and Future of Private Pensions (PDF)
6 pages. Excerpt: "A look back in time shows that the rise and fall of private pensions has been determined by the interests of management, the power of unions, and pressure from government. While history doesn't necessarily predict the future, it does indicate that changes in one or more of these three areas are necessary to restore retirement security. It seems there are three possible ways for defined benefit pensions to grow again . . . ." (Contingencies)



Sponsored by: IRS & AIRE, LLC

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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] ERISA Litigation Chapter - 2007 Annual Review of Developments in Business and Corporate Litigation (PDF)
65 pages. (Jones Day)


[Guidance Overview] Bicycle Commuter Benefits as Qualified Transportation Fringe Benefit (PDF)
2 pages. Excerpt: "An employee may be reimbursed on a tax-free basis for reasonable expenses incurred by the employee during the calendar year for the purchase of a bicycle, bicycle improvements, repair, and storage, provided the bicycle is regularly used to travel between the employee's residence and the place of employment.' (Groom Law Group)


[Guidance Overview] Chart: Troubled Asset Relief Program Summary Review: Executive Compensation Issues (PDF)
4 pages. Excerpt: "Winston & Strawn has created this summary review chart relating to the implementation of the Troubled Asset Relief Program (TARP) by the U.S. Treasury Department, the Federal Deposit Insurance Corporation and the Federal Reserve board. This chart covers executive compensation issues." (Winston & Strawn LLP)


Podcast: HR-Related Issues Obama Plans to Address
Excerpt: "Hear Hewitt's Washington expert Frank McArdle discuss the HR-related issues the Obama administration plans to address. . . . Running time for this podcast is 6 minutes 36 seconds; file size is 6 MB." (Hewitt Associates)


Companies Consider Captives to Fund Employee Benefits
Excerpt: "Sixty percent of organizations with captive insurance facilities are considering or have considered using their captives to fund employee benefits, according to the Captive Best Practices Survey by Spring Consulting Group, LLC. The survey results captives are playing an increasingly strategic role in assertively managing insurance and employee benefit costs, according to a press release." (PLANSPONSOR.com; free registration required)


Tax Policy Related to Compensation and Benefits in the New World
Excerpt: "[T]he current economic climate will make tax increases and spending cuts in the near term more difficult and, perhaps, less advisable. The new administration and Congress will hesitate in taking any action that can be seen as further suppressing economic activity. In addition, they may wish to undertake new spending to stimulate the economy and will find that safety-net spending by the federal government for unemployment and other benefits rises automatically as the economy weakens." (Deloitte via BenefitsLink.com)


[Opinion] New Best Practices for Compensation Committees?
Excerpt: "Will the new risk review and expanded clawback requirements of EESA become best practices for board compensation committees -- outside the world of financial institutions participating in TARP? As a famous politician once said: You betcha. I will explain why I believe that these new rules will become best practices - and how to implement them -- in separate Blogs over the next several days." (Winston & Strawn LLP)




Newly Posted Events

Take HEART: The Heroes' Earning Assistance & Relief Tax Act Webcast
Nationwide on November 20, 2008
presented by International Foundation of Employee Benefit Plans

Webinar - Medical Tourism & US Health Insurance Plans
Nationwide on December 2, 2008
presented by Global Media Dynamics



Newly Posted Press Releases

Lincoln Director Retirement Program to Offer Managed Accounts Services
Lincoln Financial Group

Charles Schwab Unveils Eight-Step Plan To Help Prioritize Americans’ Savings Goals
Charles Schwab Corporation



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in MO




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