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December 2, 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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[Guidance Overview] The 2008 Form 5500
Excerpt: "On November 25, 2008, the IRS and DOL posted the 2008 Form 5500 series reports and official instructions at As of this writing, the instructions to 2008 Form 5500-EZ have not been released, but no substantive changes are expected. The majority of the changes to the 2008 forms package focus on reporting changes required on account of new PPA funding rules, and so primarily affects defined benefit plans. However, certain guidance affects all plans." (

[Guidance Overview] Speakers' Presentations to the 2008 Conference of the Public Pension Financial Forum
Topics include 'IRS Roundtable on Voluntary Compliance,' 'The Future of Public Sector Retirement Plans,' and '[Investment] Performance Calculations 101.'" (Public Pension Financial Forum)

[Guidance Overview] Technical Questions and Answers Regarding The SPARK Institute's 403(b) Plans Information Sharing - Minimum and Comprehensive Data Elements, Updated December 1, 2008
Excerpt: "Following the release of Version 1.01 of The SPARK Institute's Information Sharing - Minimum and Comprehensive Data Elements . . ., The SPARK Institute received a number of technical questions. The SPARK Institute has formed a standing panel, made up of representatives from various member companies that played a significant role in developing the Data Elements. The SPARK Institute and the panel reviewed the questions and developed answers which are posted below. This information is being made widely available in order to assist all others that are adhering to the Data Elements Best Practices. The SPARK Institute will maintain this site and update it periodically with answers to questions it receives." (The SPARK Institute)

[Guidance Overview] Does the IRS Require a Universal Availability Notice for 403(b) Plans?
Excerpt: "Although a 403(b) plan could provide a universal availability notice, the code and regulations do not require such a notice. A practitioner choosing to impose a notice requirement on its employer clients faces unanswered questions relating to the notice content, deadlines and consequences, all without the benefit of any guidance. 403(b) practitioners should be cautious about saddling plans with another 'requirement.'" (SunGard)

[Guidance Overview] Multiemployer Plans May Request Extension of Unfunded Liability Amortization for Up to 10 Years
Excerpt: "The request for an extension of an amortization period must be submitted to IRS in the form of a letter ruling, along with appropriate authorization, certification by the plan's actuary, and a user fee. Notice must be provided to each employee organization representing employees covered by the plan, to each contributing employer, and to each participant, beneficiary, and alternate payee of the plan within 14 days prior to the date of submission of the request. Appendix A of the revenue procedure contains a Model Notice that will allow sponsors to comply with the notice requirement." (Wolters Kluwer)

[Guidance Overview] In France, Legislation May Impact Payouts for Retirement Indemnities (PDF)
1 page. Excerpt: "Recent legislative changes in France could lead to an increase in the minimum indemnities payable upon voluntary retirement, although the original intent of lawmakers was apparently to target only severance payments. The revised approach would also have an accounting impact on company financial statements. The changes were intended to make it more difficult for employers to carry out involuntary retirements. However, the text of the latest revisions was vaguely written, leading some companies and industries to take the view that the higher severance indemnities are required for voluntary retirements as well." (Towers Perrin)

Investment Policy Statement Scarcity Spells Opportunities for Advisers
Excerpt: "There is a large supply of potential prospects. According to PlanSponsor's defined contribution survey, 29.5% of plans without advisers do not have an IPS and 25.6% of plans that use advisers are without one." (Employee Benefit Advisor; free registration required)

Study Shows 401(k) Saving Down as Account Values Plunge
Excerpt: "U.S. employees' savings rates into 401(k) plans was 7.8 percent for the first 10 months of the year, down from 8 percent in 2007, despite the average account balance dropping 14 percent to $68,000, according to a new Hewitt Associates study. Participants lost 18 percent of their account value in September and October alone." (Workforce Management; free registration required)

Pension Benefit Guaranty Corp. Reports $2.4 Billion Improvement from Last Year's $13.1 Billion Deficit
Excerpt: "The single-employer program had assets of $61.6 billion and liabilities of $72.3 billion as of September 30. The multiemployer insurance program had a deficit of $473 million, down from $955 million for fiscal year 2007. The PBGC's separate insurance program for multiemployer pension plans has about $1.3 billion in assets to cover about $1.8 billion in liabilities. The PBGC does not become trustee of multiemployer plans, but instead offers financial assistance to insolvent plans." (Workforce Management; free registration required)

The IRA - Tax Benefit or Tax Nightmare?
Excerpt: "The stretching of the tax deferment is not difficult. You must simply designate a beneficiary to your IRA account. The younger the beneficiary, the longer the tax deferred compounding. This beneficiary form should be reviewed periodically, and updated as necessary. The reality is that most people do not name a beneficiary and lose this very valuable planning tool. If you have significant assets in retirement accounts, please consider reviewing and updating your beneficiary form. This can be the difference between making your grandchildren or Uncle Sam wealthy." (The Boston Globe)

Converting Retirement Savings into Income: Annuities and Periodic Withdrawals (PDF)
39 pages; CRS Report for Congress. Excerpt: "There are many reasons for the low demand for annuities, but one of the most important has been that many potential annuity purchasers do not value the longevity insurance provided by annuities at its market price. Retirees who choose not to purchase life annuities must decide how much to withdraw from their retirement accounts each year." (Congressional Research Service, U.S. Library of Congress)

Treasurer's Consolidation Plan a Winner for State of Illinois Retirees
Excerpt: "State Treasurer Alexi Giannoulias has proposed a reform to the state-funded pension system that will save more than $80 million a year in fees and costs that come directly out of the pockets of more than a quarter million state employees. The plan is to consolidate the investment management decisions of five large pension funds into one organization, called ILPERS, for Illinois Public Employees Retirement System." (Chicago Sun-Times)

Plan Sponsors Need Redirected Focus on Target-Date Fund Evaluation
Excerpt: "Three-fourths of financial advisers polled in a new JPMorgan Funds-sponsored survey said that when evaluating target-date fund options, plan sponsors lack clear and objective criteria for selecting the most appropriate fund." (; free registration required)

Illinois Teachers' Retirement System Rejects Combining Pension Investment Boards
Excerpt: "The Teachers' Retirement System of the State of Illinois (TRS) announced it is opposed to Governor Rod Blagojevich's proposal to combine the investment functions of the five state pension plans." (; free registration required)

Advisers Increasingly Embracing ERISA Plan Fiduciary Status: Why They're Doing It, and How to Prevent Problems
Excerpt: "The issue is not that few plan advisers serve as ERISA fiduciaries now, sources interviewed for this article say -- it is that most of them do, but many do not know it, or know it but do not acknowledge it. 'I find that there are many advisers who are effectively investment-advice fiduciaries, and they do not seem to realize that they are fiduciaries,' says Marcia Wagner, President at Boston-based The Wagner Law Group, a law firm specializing in ERISA and employer benefits. 'They are not holding themselves out as fiduciaries. The question is, are people being willfully blind? There is a lot of the ostrich mentality out there now.'" (planadvisor)

What Advisers See When Looking for a DC Recordkeeper Partner
Excerpt: "When it comes to picking a defined contribution (DC) provider, a consistent theme emerges. Those that 'work as a partner with us not against us,' or let the adviser 'work hand-in-hand with them' are best, according to respondents in PLANADVISER's third annual survey of advisers about DC plan recordkeepers. However, what constitutes that cooperative, facilitating spirit can be as unique as the individual advisory firm -- and even for providers that offer significant support services, our survey once again finds that retirement plan advisers can be tough customers." (planadvisor)

Illinois Treasurer Wants Consolidated Pension System
Excerpt: "Illinois Treasurer Alexi Giannoulias today said he can save the state's long-troubled pension system up to $80-million a year. The state pensions have been a point of controversy for some time now. Politicians have drained some of its funding for other projects and not replaced the cash. It was also front and center at the corruption trial of political insider Tony Rezko earlier this year. So Giannoulias is giving an old plan some new life to change the way pensions are funded. He wants to combine the investment boards of the different pension systems into one." (Chicago Public Radio)

Assessing Potential Retirement Plan Reforms for the U.S. Military
Excerpt: "Military compensation is a composite of current pay and allowances, special and incentive pays, health benefits, disability benefits, retirement benefits, and other benefits. . . . [T]his monograph presents an in-depth examination of the mix and structure of the U.S. military's current retirement-benefit system and several policy alternatives." (RAND)

New edition of An Introduction to ESOPs
The NCEO presents excerpts from the new edition of its most popular publication, An Introduction to ESOPs. This edition, the ninth, now features a chapter on valuation as well as various other changes and, for the first time, an index. (National Center for Employee Ownership)

Employee Ownership Update for December 1
NCEO Executive Director Corey Rosen discusses a new online tool for comparing the financials of closely held companies; a possible employee ownership candidate in the U.K.; the issue of falling ESOP company valuations in the economic downturn; and political prospects for employee ownership. (National Center for Employee Ownership)

[Opinion] What Does the Economic Downturn Mean for Employee-Owned Companies?
Excerpt: "For most companies, this won't be an easy time. There will be pain. In these difficult conditions, leaders must strike the right balance between involving employees in determining how to go forward, and taking responsibility for some of the hard decisions. Where sales levels will simply no longer support the existing payroll, for example, something will have to be done. Leaders should solicit ideas and preferences from the employee-owners as to what exactly should be done to deal with that reality. People may be open to cutting salaries for all in lieu of laying off some - or individuals may volunteer to reduce their hours to a part time role. At some employee-owned companies, young single employees have even volunteered for layoff where necessary to keep a family breadwinner on the payroll. All such creative measures should be considered. Still, there will be circumstances in which hard decisions - even unpopular ones - will be required. Employees may be uncomfortable with the notion of suggesting that colleagues should lose their jobs. Final decisions, therefore, must be the responsibility of management, who may sometimes best serve the company by being the 'bad guy.'" (The Beyster Institute)

[Opinion] Why Pension Funds Don't Buy Munis, and How They Could
Excerpt: "Congress could amend the Internal Revenue Code to reflect [the] two distinct features of a single municipal bond by permitting a tax-exempt organization like a pension fund to purchase a municipal bond and hold the first feature, the below-market cashflow, but to sell the second feature, the tax benefit, to a U.S. taxpayer, one with an appetite for the deduction, exclusion, or exemption. This would resemble the sale of the tax benefits of depreciation, without that program's complex disadvantages." (The Bond Buyer via On Wall Street)

[Opinion] Qualified Retirement Plan Warning on Disclosures
Excerpt: "A qualified plan -- such as a 401(k) plan - must provide plan participants with a form of Summary Plan Description (SPD), which meets the specific requirements set forth in ERISA. Additionally, a qualified plan that offers Company Stock as an investment must provide plan participants with certain information in the form of a 10(a) Prospectus. However, you should not incorporate by reference any of the Company's SEC filings." (Michael S. Melbinger via Winston & Strawn LLP)

[Opinion] Speaking Out Against the Annuity Industry Raiding Nest Eggs
Excerpt: "In a previous column, I warned HR/benefits professionals to be wary of allowing employees who are near retirement age with inadequate 401(k) balances to be misled by the annuity industry. Unfortunately, the annuity industry has been able to convince some members of Congress to make it easier to mislead people into believing annuities can fill empty nest eggs. The inaccurately named Retirement Security for Life Act of 2007 would amend the Internal Revenue Code to give favorable tax treatment to annuity income. For the average retiree, the tax break could approximate $5,000." (Jane White via Employee Benefit News; free registration required)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Planning Guidelines for Employers Giving Gifts to Employees
Excerpt: "Unfortunately, gifts that employers give to their employees are generally treated as supplemental wages, and thus subject to both payroll and income taxes. This means that the value of the gift must be included in the employee's W-2 at year end and included in a payroll period for purposes of income tax withholding and payroll taxes.' (Littler Mendelson P.C.)

[Guidance Overview] The TARP Capital Purchase Program - A Summary of Executive Compensation Requirements
Excerpt: "Limitation on deductions. The financial institution must agree that it will not claim a federal income tax deduction for executive compensation in excess of $500,000 for each [Senior Executive Officer] during the CPP period." (Troutman Sanders LLP)

Executive Pay Bill Picks Up Congressional Support
Excerpt: "A bill that would limit a corporation's ability to write off executive compensation as a business expense has picked up some support in the House. HR 3876, which would cap the deductibility of such compensation to 25 times the pay of that company's lowest-paid worker, now has the backing of 27 members of Congress." (Investment News; free registration required)

Selecting and Measuring a Top Benefits Management System
Excerpt: "A competitive employee benefits program is crucial to attract and retain skilled workers, but the ability to manage such programs is getting increasingly difficult, according to data from the Aberdeen Group benchmark report, 'Taming the Benefits Management Beast: Driving Costs Down and Satisfaction Up,' published in July. The primary reason should come as no surprise: the rapidly rising cost of providing health care and related coverage to workers." (Employee Benefit News; free registration required)

10 Benefits Employers Will Cut Next Year
Excerpt: "Many employers will frantically ax jobs in the coming months in an effort to improve their bottom lines. Other companies will wield a scalpel to whittle out cost savings from employee perks. A whopping 86 percent of companies expect recent financial market changes to affect employee benefits in the next year, according to a recent survey. Here's a look at the where employers are likely to make cuts." (U.S. News & World Report)

Autoworkers Worry More Givebacks Necessary to Help Companies
Excerpt: "[A]ny collective plans from Detroit, if they are to win over Congress, may require additional cost-saving concessions from the U.A.W. While the union has not agreed to reopen contracts at General Motors, Ford and Chrysler, industry analysts say it seems inevitable that it will have to do so, and that some of the U.A.W.'s hardest-fought gains may shrink, if not completely disappear." (The New York Times; free registration required)

Newly Posted Events
(Post Yours!)

403(b) Terminations, Transfers and Exchanges
Nationwide on December 11, 2008
presented by SunGard Relius

Rollovers As Business Startups: Too Good To Be True?
Nationwide on December 16, 2008
presented by SunGard Relius

SEC Executive Compensation Disclosure In 2009: EESA, The CD&A, And More
Nationwide on December 3, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)

The 409A Hammer Strikes: Are You Ready for 2009?
Nationwide on December 9, 2008
presented by SunGard Relius

Newly Posted Press Releases
(Post Yours!)

Securities Lending Loses Its Shine
Watson Wyatt

Compensation Committees Adjusting CEO Pay Programs Prior to Financial Crisis, Watson Wyatt Survey Finds
Watson Wyatt

The SPARK Institute Answers More Technical Questions Regarding 403(b) Plans Information Sharing
SPARK Institute

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Senior Pension Sales Consultant
for Executive Benefit Design Group

Vice President of Sales
for Sentinel Financial Group
in MA

Director of Benefits
for Associated Bank
in WI

Relationship Manager - Pacific North West
for MassMutual Financial Group
in CA, OR, WA

401(k) New Business Consultant
for TRA
in IL

Development Analyst
for Diversified Investment Advisors, Inc.
in MA

Client Data Management Administrator
for The Online 401k (aka Decimal, Inc.)
in CA

Regional Vice President of Sales
for ING, US Financial Services
in WA

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