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November 26, 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.

(Click on company name or banner to learn more.)
Banner ad for DATAIR Employee Benefit Systems, Inc.

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  • DC/401(k) Administration
  • DB Administration
  • 5500 series, 5300 series, 1099Rs
  • Documents – DC, DB plans plus Cash Balance, 403(b) and Cafeteria
  • Cafeteria and HRA Administration
*Limited time offer: 2 DATAIR systems for 1 license fee…plus 0% financing. Restrictions apply, contact DATAIR’s sales department:   (888) 328-2474

[Official Guidance] Text of Advance Copy of 2008 Form 5500
Target page has links to the form, including all schedules. The page notes that these advance copies are for informational purposes only (they cannot be used to file a 2008 Form 5500). Filers should monitor the EFAST Web site at for information on approved software vendors for completing the 2008 forms and on the availability of the official government-printed forms. (Employee Benefits Security Administration, U.S. Department of Labor)

[Official Guidance] IRS Notice 2008-108: 2008 Cumulative List of Changes in Retirement Plan Qualification Requirements (PDF)
16 pages. Excerpt: "The 2008 Cumulative List is to be used primarily by plan sponsors of individually designed plans that are in Cycle D. An individually designed plan is in Cycle D if it is a single employer plan where the last digit of the employer identification number of the plan sponsor is 4 or 9, or it is a multiemployer plan under §414(f). The list of changes in section VI of this notice does not extend the deadline by which a plan must be amended to comply with any statutory, regulatory, or guidance changes." (Internal Revenue Service)

[Official Guidance] Text of DOL EBSA Field Assistance Bulletin (FAB) 2008-04: Fidelity Bonds for ERISA-Covered Plans
EBSA investigators frequently confront fidelity bonding questions during their examinations of ERISA plans. FAB 2008-04 was developed to address these issues and is presented in a question-and-answer format consisting of 42 frequently asked questions (FAQs). The guidance in the FAB covers a variety of issues related to compliance with ERISA's fidelity bonding requirements, including, among other things: whether a bond may use an omnibus clause to name insured plans; how to calculate the bond amount when multiple plans are covered under a single bond; whether the $1 million bond maximum applies in the case of plans that hold employer securities solely as a result of investments in pooled investment funds; and whether third party service providers are subject to the bonding requirements if they handle plan funds. (Employee Benefits Security Administration, U.S. Department of Labor)

[Guidance Overview] IRS Modifies Remedial Amendment Cycle Rules for Governmental Plans (PDF)
2 pages, but they're cherce, as Spencer Tracy might say. Excerpt: "What if the plan sponsor has already filed during Cycle C? . . . . Are there any drawbacks to filing in Cycle E? . . . . Are there any benefits to filing in Cycle C?" (Pension Analyst by Prudential)

[Guidance Overview] Preparing to Disclose Fees to Defined Contribution Plan Participants who Self-Direct Investments in their Accounts
Excerpt: "Sponsors of private sector defined contribution (DC) plans that offer participant-directed investments, including Sections 401(k) and 403(b) plans, should begin to prepare for the additional transparency that will be required when the proposed regulation on participant fee disclosures that the Department of Labor (DOL) issued this past summer is made final. In addition, the DOL has issued a proposed regulation on disclosure of information to plan sponsors." (Segal Advisors)

Defined Contribution Retirement Plan Fees: Do You (or Your Plan Members) Really Know What You're Paying?
Excerpt: "A number of countries are focusing a spotlight on the billions of dollars of fees paid annually by DC plan members. The effect of fees on DC plan accounts and ultimate retirement security is not trivial -- calculations show a difference in fees of 0.5 percent per annum can add up to a 10 percent difference in account balances over 30 years. This issue of DC Connections reviews global trends in defined contribution plan fee disclosure and fee transparency, and takes a close look at how several countries are tackling this important issue." (Mercer)

Four Investment Fees You Don't Need to Pay
Excerpt: "There's no shortage of ways that financial professionals collect money from their clients. The following are just a few." (Motley Fool)

Are Baby Boomers Saving Enough for Their Retirement?
Excerpt: "[S]ome of the poorest households are best prepared because they can maintain consumption by relying almost solely on Social Security while many of the most affluent households are poorly prepared because they will experience a decline in consumption upon retiring. Nonetheless, affluent households will be able to maintain a consumption level many times that of poor households. The paper discusses whether equalization of pre- and post-retirement consumption provides a useful adequacy yardstick at all income levels." (Urban Institute)

The Advantages of Using Conventional Actuarial Approaches in Valuing Public Pension Plans
Excerpt: "The publication makes the argument that current actuarial methods for valuing assets and liabilities in public pension plan are appropriate and that requiring new disclosures are not only burdensome, but also do not provide any new insight into the health of the plan. Furthermore, the new disclosures could lead some to believe the plan is in worse shape than it actually is." (National Conference on Public Employee Retirement Systems)

Pension Reform in Mexico: Effect of Pension Fund Fees on Account Balances
2 pages. Excerpt: "We find that fees drain pension accumulations by up to 25 percent of what would have been accumulated without fees. As a result many individuals, especially of the transition generation, will receive only the minimum pension guarantee because their accumulations will not be sufficient to fund a higher pension. The extent of this happening is important to gauge the additional cost to the government. Irrespective of the accumulated pension balances the fees lower well-being during retirement, in some cases significantly so." (Research Retirement Center, University of Michigan)

The Characteristics of Social Security Beneficiaries Who Claim Benefits at the Early Entitlement Age
Excerpt: "The tabulations suggest that, overall, beneficiaries who claim benefits at age 62 are less educated, less healthy, less likely to work in management and professional occupations and more likely to work in physically demanding jobs, and have lower labor market earnings than do individuals who postpone benefit receipt." (AARP)

Public Pension Plans Might Have a Leg Up in Financial Crisis
Excerpt: "State and local pension plans may emerge from the financial crisis in better shape than other retirement plans due their investment strategies, reports the National Institute on Retirement Security." (Employee Benefit News)

Pension Obligation Bonds Could Ease Fund Losses, Moody's Says
Excerpt: "Pension obligation bonds might help shore up public pension plans in the face of a 35% loss this year from equity investments as well as big losses in hedge fund and alternative investments, according to a report issued [November 17] by Moody's Investors Service." (Pensions & Investments)

Sponsored by: ASPPA

(Click on company name or banner to learn more.)
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

[Official Guidance] Text of IRS Notice 2008-107: Determination of Housing Cost Amounts Eligible for Exclusion or Deduction in 2008 (PDF)
14 pages. Excerpt: "This notice provides adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code (Code) for specific locations for 2008. These adjustments are made on the basis of geographic differences in housing costs relative to housing costs in the United States." (Internal Revenue Service)

Employer Spending on Benefits, 2007
Excerpt: "[E]mployer spending on total compensation continues to increase, reaching almost $8 trillion at year-end 2007. That is almost 35 percent higher than seven years earlier, in 2000." (Employee Benefit Research Institute)

What to Do with Your ESPP During the Current Financial Crisis
The impacts of the ongoing financial crisis on stock options and restricted stock units are being documented daily. Some compensation consultants are predicting the end of stock options as a compensation tool, while others are touting the use of mega-grants or option exchange programs. So far we've heard very little about the effect of rapidly dropping stock prices on broad-based employee stock purchase plans (ESPPs). Dan Walter writes about the issues that arise with ESPPs. (National Center for Employee Ownership)

Newly Posted Events
(Post Yours!)

ASPPA 2008 Annual Conference DVD Webcast
Nationwide on December 3, 2008
presented by American Society of Pension Professionals & Actuaries (ASPPA)

Steps Employers Can Take to Prevent Health Care Fraud and Improve Quality Webcast
Nationwide on December 4, 2008
presented by International Foundation of Employee Benefit Plans

Newly Posted Press Releases
(Post Yours!)

Employee Benefits Security Administration Issues Guidance On Fidelity Bonding For Employee Benefit Plans
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

U.S. Labor Department Releases Advance Copies Of 2008 Form 5500 Annual Report
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

U.S. Labor Department Sues Fiduciary Of Frankfort, Ill.-Based Company To Recover 401(k) Assets
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

U.S. Department Of Labor Sues Bismarck, N.D., Company And Owners Over Delinquent 401(k) Contributions
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Employer Compensation Spending Nearly $8 Trillion In 2007
Employee Benefit Research Institute (EBRI)

43% of Employers Offer Financial Education Programs for Their Employees
International Foundation of Employee Benefit Plans

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Manager of Operations
for Walker Benefits, Inc.
in PA

Retirement Counselor-Pension
for 1199SEIU Benefit and Pension Funds
in NY

Executive Director
for Missouri Consolidated Health Care Plan
in MO

Administrative Assistant III
for Bank of Texas
in TX

401(k)/DC Admin Manager, ESG
for CUNA Mutual Group
in WI

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