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December 4, 2008

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

Today's sponsor is National Institute of Pension Administrators (NIPA)

(Click on company name or banner to learn more.)
Banner ad for National Institute of Pension Administrators (NIPA)

Register for NIPAís 2009 Business Management Conference (2009BMC)

Learn more about the only retirement industry conference focused on the business aspects of running a TPA company. The National Institute of Pension Administratorsí 2009 Business Management Conference (2009BMC) is an exclusive venue for leading executives and professionals from third party administration firms to garner and share information and insights on the most effective business methods. Register by December 12 and save $100!

[Guidance Overview] Premature Distributions from 401(k) Plans
Excerpt: "The government, as an element of its tax policies, penalizes taxpayers who 'prematurely' take money out of qualified retirement plans. The tax penalties for premature withdrawals can make it difficult for those who wish to take early retirement. The problem is caused by the federal income tax treatment of withdrawals from a qualified retirement plan prior to the plan participant's reaching age 59 ½ . The Internal Revenue Code, in section 72(t), imposes a 10% tax penalty on the taxable portion of any withdrawals from a qualified retirement plan if the plan participant making such a withdrawal is under the age of 59 ½. There are exceptions to this tax penalty requirement, but the application of the exceptions is technical and failure to take all necessary steps to perfect the exception can cause difficulties. Moreover, a drastic downturn in the value of retirement funds as a result of a bear market can cause unforeseen problems to early retirees." (Morningstar)

[Guidance Overview] Supreme Court to Consider Pensions and Pregnancy Leave
Excerpt: "For nearly 100 years, AT&T has used a system known as the Net Credited Service to quantify each employee's seniority or term of employment. Under that system, an employee's first day on the job becomes her NCS date. The earlier the date, the better positioned an employee is for service-related decisions, such as competitive job bidding, layoff determinations, vacation time and retirement benefits. Before the PDA, AT&T classified pregnancy leaves as personal leaves, not as disability leaves. For personal leaves, employees were paid, and received service credit, for only the first 30 days of leave. For disability leaves, employees received service credit for the entire period of their paid disability leave. Today, there is no distinction." (The National Law Journal via

Congressman Proposes Redirecting Bailout to FICA and Income Tax 'Holiday' for All Americans
Excerpt: "A U.S. Congressman has proposed a unique way to spend the remaining $350 billion of that $700 billion bailout. Congressman Louie Gohmert (R-Texas) is proposing that the money be put towards a tax holiday from both personal income tax and FICA tax for Americans during January and February of 2009. In announcing the plan, he said, 'By instating a temporary tax holiday, we could electrify the American economy and provide overwhelming relief to taxpayers, all for less than the cost of the current failed Paulson-Pelosi bailout system.'" (; free registration required)

Workers Staying the Course for Retirement Savings
Excerpt: "Nine in 10 U.S. workers in their employer retirement plan have not tapped into their nest egg despite the economic downturn and 11% are actually upping their deferral amount." (; free registration required)

Bank of America Survey Says 18% Withdrew Funds from Retirement Accounts Prematurely
Excerpt: "As the economic crisis continues to hammer Americans, many are turning to desperate measures by dipping into their retirement funds to make ends meet, according to a survey released Thursday. The 2008 Bank of America (BAC, Fortune 500) Retirement Savings Survey revealed that current financial conditions forced 18% of respondents to withdraw from their retirement accounts prematurely." (

Advance Copies of 2008 Form 5500 Released with New Schedules MB and SB
Excerpt: "IRS, DOL and PBGC released advance copies of 2008 Form 5500. New Schedules MB (Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information) and SB (Single-Employer Defined Benefit Plan Actuarial Information) replace Schedule B. There are new Schedule R filing requirements for multiemployer and larger (1,000 or more participants) single-employer DB plans." (Mercer LLC)

Pension Funding Gap Increases
Excerpt: "Pension funds suffered one of their worst months on record in November, sending the funding of the largest U.S. corporations' defined-benefit plans to the lowest levels ever. Combined, the pension funds sponsored by S&P 1500 companies saw their funded status shrink by $130 billion last month, according to a new analysis released by consultants at Mercer Tuesday. That follows the $110 billion loss that these companies' pension funds posted in October, which was a record drop at the time." (Financial Week)

European Institutions for Occupational Retirement Provisions Pension Scheme Still Years Away
Excerpt: "A driver in Europe over recent years has been an attempt to create a single market in employee benefits, particularly pensions. The recent Pensions Directive (the 'IORPs Directive') and the applications of the draft new insurance directive ('Solvency II') has been part of a push to make a level playing field. The Directive grappled with a range of different pension plan structures (UK trust-based plans, Dutch wholly insured plans, German self-funded plans and French government underwritten plans, to name a few) with a view to allowing Belgian employers to employ German employees through an Irish trust based plan, if that is what is wanted." (Workplace Prof Blog)

[Opinion] MMC/Mercer Offer Analysis, Recommend Relief for Emerging Pension Contribution Crisis
17 pages. Excerpt: "A taskforce of Mercer consultants chaired by Bob Moreen, leader of Mercer's Financial Strategy Group, has tackled the impending funding issue faced by defined benefit (DB) pension plan sponsors. The recommendations from that group were submitted to US Treasury Secretary Henry Paulson by Brian Duperreault, CEO of Mercer's parent corporation, Marsh & McLennan Companies (MMC). In this Perspective, we summarize those recommendations and include the complete text of the report that was submitted on November 6, 2008." (Mercer LLC)

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 industryís leaders discuss where the trends are taking us and how to be prepared. Donít 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

[Guidance Overview] Year-End Checklist for Benefit Plan Sponsors (PDF)
3 pages. Retirement Plans, 403(b) Plans, Deferred Compensation Plans, and Health and Welfare Benefit Plans are covered on a checklist of compliance actions and design decisions that benefit plan sponsors should make before the end of the year." (Venable LLP)

[Guidance Overview] San Francisco Commuter Ordinance - Sounds Like a Good Idea? Maybe?
Excerpt: "San Francisco recently passed an ordinance (Ordinance) requiring San Francisco non-governmental employers to offer employees 'subsidized' commuting benefits. . . .This article discusses the new Ordinance as well as its interplay with [Qualified Transportation Fringe Benefits] and California laws allowing employees to cash out employers' subsidized parking for additional wages under the California Air Resources Board's 'Parking Cash-Out Program.'" (Littler Mendelson P.C.)

[Guidance Overview] The Fiduciary Exception to Attorney Client Privilege in ERISA Cases
Excerpt: "[F]or the ERISA lawyer, the question is not only avoiding waiver of the privilege, but whether there is a privilege - and that will depend on the further question of what court your case happens to be in. Tip - Communications prior to benefit decisions are more likely to be subject to the exception than subsequent communications." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] PPA May Restrict Rabbi Trust Funding (PDF)
2 pages. Excerpt: "Public companies could effectively be prohibited from funding nonqualified plan benefits for certain executives through a rabbi trust (or otherwise) under a provision in the Pension Protection Act of 2006 (the 'PPA'). Specifically, funding for top executives may need to cease if any qualified defined benefit plan in a company's controlled group is considered 'at risk' under the PPA rules. While the IRS has yet to issue any guidance on this rule under Code section 409A(b)(3), a Treasury official recently confirmed informally that companies need to be in good faith compliance with the rule at this time. We summarize below the requirements of section 409A(b)(3)." (Groom Law Group)

Worker Absenteeism Shows Up in Bottom Line
Excerpt: "The nation's 300 largest employers estimate that unscheduled absenteeism costs their businesses, on average, more than $760,000 per year in direct payroll costs - and even more when lower productivity, lost revenue and the effects of poor morale are considered, according to a 2007 survey by the research firm CCH Inc." (The Dallas Morning News)

Looking Indefinitely Into the Future, Anticipated SS and Medicare Benefits, Over and Above Expected Premiums and Dedicated Tax Revenues, Amount to $102 Trillion (PDF)
16 pages. Excerpt: "How large is the federal government's debt? The figure most likely to be reported in newspapers is the debt held by the public. This measure currently stands at $6.3 trillion and is rising. However, the debt held by the public tells only a small part of the story. How should the government account for the predicted shortfalls of Social Security and Medicare? Officially, they are considered government 'obligations,' but not 'liabilities' or 'debts.' The reason: retirees and workers do not have a contractual right to the benefits they expect to receive." (National Center for Policy Analysis)

AK Steel to Impose Cuts for Salaried Workers
Excerpt: "The steel maker said it will . . . freeze the defined benefit plan for salaried workers and replace it with a defined contribution retirement plan, and offer incentives for voluntary retirement up until Feb. 6. The company said it would also consider eliminating jobs if too few employees take the voluntary retirement option." (Business Courier of Cincinnati via; free registration required)

UAW Gives Concessions to Big Three
Excerpt: "The United Auto Workers union on Wednesday offered two major concessions to the Big Three auto makers, a day before the Detroit companies are set to make a second appeal to Congress for a bailout. Two weeks after insisting his union had already done enough to help the car makers, UAW President Ron Gettelfinger said the union would allow the companies to delay billions of dollars in payments into funds that will cover health-care costs for retired workers. The union also will suspend a controversial 'jobs bank' program under which workers continue to collect most of their wages after they are laid off." (The Wall Street Journal)

Labor Department Accused of Straying from Enforcement Function
Excerpt: "With the new administration, I think you are going to a shift from compliance assistance to pure enforcement,' said Randel K. Johnson, a vice president of the U.S. Chamber of Commerce. Labor activists say that focusing so closely on the concerns of employers shortchanges workers and that a shift in emphasis is long overdue. Under President Bush, they say, the pendulum has swung far away from enforcement, leaving workers vulnerable to dangerous workplaces and with little protection from exploitive employers." (The Washington Post; free registration required)

[Opinion] Of Ironies, ERISA & Reform: ERISA's Uncertain Future
Excerpt: "Professor Gerry W. Beyer (Wills, Trusts & Estates Prof Blog) recently posted a note about Paul Secunda's article, Sorry, No Remedy: The Grand Irony of ERISA, which is an article I have looked forward to reading. Evidently only the abstract is available on SSRN at present, but I'll update this post if I find out otherwise. Judging by the abstract, the article may be understood syllogistically as follows [on the target page]." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Opinion] Electronic Discovery and the Federal Rules
Excerpt: "Litigators who read this blog already understand my obsession with this issue; while trying cases is the joy of the work, discovery - and fights over it - is the heavy lifting that takes up much of a litigator's time and a client's money. It's a particular problem in ERISA cases, where any type of a plan with a significant number of participants is going to create a great deal of electronically stored data, almost none of it of relevance to any particular dispute yet still possibly open to discovery as things currently stand." (Stephen Rosenberg of The McCormack Firm, LLC)

Newly Posted Events
(Post Yours!)

EBSA's Proposed Guidance on Investment Advice for 401(k): Be Prepared Webcast
Nationwide on December 18, 2008
presented by International Foundation of Employee Benefit Plans

Fee Disclosure Issues: Special Considerations for Trust Organizations
Nationwide on December 11, 2008
presented by Goldleaf Partners

How to Know if Your Company is Paying More Than Other for the Same Health Insurance Coverage
Nationwide on December 4, 2008
presented by Healthy Halo

Payroll Companies . . . The New Competition in the Insurance, Employees Benefits and Financial Services Marketplace
Nationwide on December 9, 2008
presented by ABC Payroll

Newly Posted Press Releases
(Post Yours!)

Companies Step Up Workforce Planning Activity in Response to Economic Slowdown, Watson Wyatt Survey Finds
Watson Wyatt

Prudential Offers Collective Investment Trusts to Retirement Plans
Prudential Financial, Inc.

Integrated Benefits Institute Announces Availability of 2007 IBI Benchmarking Data for Employers to Evaluate Effectiveness of their Health and Productivity Programs
Integrated Benefits Institute

Nurses Reject AHIP Proposal as a 'Marshall Plan for Health Insurers'
California Nurses Association

Bloomberg TV Wins Emmy for "401k Hidden Fees" Investigative Report
Bloomberg Television

Time is Running out to Comply With 403(b) Regs
Great American Financial Resources

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Defined Benefit Pension Administration Manager
for Milliman, Inc.
in NJ

Defined Benefit Pension Administration Team Leader
for Milliman, Inc.
in NJ

Compliance Testing Consultant
for Diversified Investment Advisors
in NY

Manager, Retirement Services
for Wedbush Morgan Securities
in CA

Attorney, Employee Benefits
for Aon Consulting
in NJ

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