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December 9, 2008

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

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[Guidance Overview] Proposed Rule Would Require TPAs and Recordkeepers Doing Business in Nevada to Be Licensed Trust Companies; ASPPA Responding
Excerpt: "A Nevada state agency has proposed to require retirement plan TPAs (third-party administrators) and recordkeepers to be licensed trust companies in order to do business in that state. 'In other words, under the proposal if you have a retirement plan client located in the State of Nevada this proposal would apply to you,' according to Brian Graff, the executive director of ASPPA, the American Society of Pension Professionals & Actuaries." (

[Guidance Overview] 2008 Cumulative List of Changes in Plan Qualification Requirements for Cycle D Plans
Excerpt: "All sponsors of Cycle D plans and their advisors should carefully review the 2008 Cumulative List to ensure that their submissions address the issues the IRS has specifically identified for review in the determination letter process. While most of the 'new' items applicable to 401(k) plans relate to PPA changes that were separately listed (but not required) in prior lists, the 2008 Cumulative List adds recent PPA guidance that will need to be taken into account as well. Of course, to be qualified, plans must comply with all relevant qualification requirements, even those that are not on the list." (Employee Benefits Institute of America)

[Guidance Overview] Advance Form 5500 for 2008 Plan Year
Excerpt: "The mandatory electronic filing rules apply to plan years beginning in 2009 (for which annual reports generally are due in 2010). But for 2009 short plan year filers with due dates before January 1, 2010, the new EFAST2 system may not be available when they are required to file. According to the Instructions, the special extension for short plan year filings is being granted to encourage short plan year filers to wait to file their 2009 Form 5500s electronically under the new EFAST2 system." (Employee Benefits Institute of America)

18% of Americans Dipping into 401(k) Savings
Excerpt: "Faced with economic difficulties, almost one out of every five, or 18%, of Americans are dipping into their 401(k) savings, Bank of America found in its annual Retirement Savings Survey. . . . The No. 1 reason people gave for using 401(k) funds was to pay down credit card debt (25%), mortgage payments (22%) and recent job loss (22%)." (Money Management Executive via On Wall Street)

Summary Judgment Hearing Scheduled on Northwest Airlines Pilots' Lawsuit re: Northwest Airlines Money Purchase Plan for Pilot Employees
Excerpt: "Lewis, Feinberg, Lee, Renaker & Jackson represents a class of Northwest Airlines pilots in the lawsuit, who allege that the Northwest Airlines Money Purchase Plan for Pilot Employees, a 'targeted' defined contribution plan, violates ERISA's rules on age-based reductions in the rate of benefit allocations, as well as the Age Discrimination in Employment Act and several states' age discrimination laws. The pilots also allege that ALPA violated its duty of fair representation to older and/or senior pilots in adopting the targeted plan." (Lewis, Feinberg, Lee, Renaker, & Jackson, P.C.)

'Wrong Advice' Given to United Kingdom Investors Over Pension Transfers
Excerpt: "THOUSANDS of investors may have been wrongly advised to switch their pension arrangements, according to a report by the Financial Services Authority. There are concerns that generous commissions could have encouraged advisers to recommend pension transfers, often into plans with higher charges. The report largely concerns the sale of self-invested personal pensions, known as Sipps. These often have higher charges but allow investors far greater flexibility about where they invest their money. The FSA said it was concerned that there was often no good reason for the switch, and in some cases customers lost benefits from existing pension schemes. In many instances, customers were paying for Sipp benefits that they never use." (The Daily Telegraph via NewsEdge via Human Resource Executive Online)

Do Spouses Coordinate Their Retirement Decisions?
8 pages. Excerpt: "The evidence suggests that couples like to retire together and, since husbands tend to be older than their wives, the increased labor force participation of women may lead to later retirement of men. This brief examines retirement behavior and measures the extent to which husbands and wives appear to coordinate their retirement decisions." (Center for Retirement Research at Boston College)

More Firms Drop 401(k) Match
Excerpt: "[C]ompanies that have recently suspended the matches include, Ford Motor, real estate firm Cushman & Wakefield, and Frontier Airlines, according to the website of Business Insurance magazine. BI, in fact, points to an October survey of 248 employers that Watson Wyatt Worldwide conducted, finding that 2 percent said they had reduced or suspended either their 401(k) and 403(b) matching contributions, while 4 percent said they planned to make similar moves in the next 12 months." (

Congressional and Administration Positions Related to Pension Policy
Excerpt: "For those not already familiar with the mechanics of Washington pension policy making, we thought it would be useful to review, briefly, the key jobs that will be filled as the new Congress and new Administration transition in." (; free registration required)

[Opinion] ERIC Warns Congress about Inaction on Pension Funding Relief (PDF)
2 pages. Excerpt: "Time is of the essence. Congress must not wait to act until next April or September when the first pension contributions for 2009 are due. Chief financial officers are setting their companies' spending and retrenchment plans for next year now. Without immediate Congressional action, prudent plan sponsors will have to assume that they will be making dramatically increased pension contributions next year and will retrench to pay for or offset those contributions accordingly. Even if Congress ultimately acts by next April, it will be too late to avoid the lay-offs, 401(k) and other benefit cutbacks, and reduced business spending." (The ERISA Industry Committee)

[Opinion] Industry Groups' Letter to Key Senate Committees Refuting Administration's Pension Funding Concerns (PDF)
7 pages. Excerpt: "We understand that certain executive branch representatives have raised some concerns regarding workers' benefits and the Pension Benefit Guaranty Corporation ('PBGC') in a document entitled 'Concerns about the Pending Pension Funding Relief Bill' ('Concerns Paper'). However, it is actually because of concerns for workers and the PBGC that we strongly urge Congress to immediately pass legislation that would address the current crisis. Workers and the PBGC will only be protected if we protect companies from massive unforeseen contribution increases that can trigger plan freezes, layoffs, and, in some cases, company bankruptcies. [The same letter was also sent to Key House Committees and to the Congressional Leadership.]" (American Benefits Council)

[Opinion] Group December 8, 2008, Letter to Congress on Needed Pension Funding Reform (PDF)
7 pages. Excerpt: "On behalf of the millions of employees to whom we provide retirement benefits, the undersigned companies and organizations urge you to consider legislation that would help companies navigate the current economic crisis while minimizing adverse impacts on the defined benefit pension plans they sponsor. The drop in the value of pension plan assets coupled with the current credit crunch has placed defined benefit plan sponsors in an untenable position. No one who drafted the recently enacted defined benefit plan funding rules anticipated the worst financial crisis since the Great Depression and a once in a hundred years 'credit tsunami.'" (American Benefits Council)

[Opinion] New Jersey Pension System Reforms Go Bye-Bye
Excerpt: "Governor Corzine broke from tradition when he arrived in Trenton, pledging to be the Wall Street whiz who would bring sanity and solvency to the state Public Employee Pension systems. But almost two weeks ago, Corzine the reformer embraced a tried and true Trenton tradition: Looting the pension system for political help. In his Nov. 28 'Video Message to the People of New Jersey,' the cyber version of the fireside chat, a tie-less Corzine detailed his surprise plan to let New Jersey towns postpone paying half of their contributions to the pension system next year." (

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(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] Milliman's Monthly Benefit News and Developments, December 2008 (PDF)
2 pages. The newsletter provides a summary of the previous month's legislative, regulatory, and judicial information on employee benefits. (Milliman)

[Guidance Overview] Emergency Economic Stabilization Act Includes Employee Benefit Measures (PDF)
2 pages. Excerpt: "The Emergency Economic Stabilization Act of 2008 (EESA), enacted on October 3, 2008, contains expanded mental health and substance abuse parity rules that will affect most employer health plans that offer these benefits. Additionally, the program by the U.S. Treasury to purchase troubled assets from financial institutions may include pension plans." (Employee Benefit Plan Review via Winston & Strawn LLP)

[Guidance Overview] Sixth Circuit Opinions Applying Estoppel In ERISA Cases - An Anthology
Excerpt: "The Sixth Circuit has proven to be receptive to the incorporation of estoppel principles into the federal common law of ERISA. In this recent unpublished opinion, the Sixth Circuit panel found the requirements of estoppel met. [Smiljanich v. GMC 2008 U.S. App. LEXIS 24605 (December 5, 2008)] The Court employed a two part test to find that interim employment with other employers did not defeat the bridging of service credits." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] Executive Compensation Measures in the Emergency Economic Stabilization Act: Troubled Assets Relief Program (PDF)
5 page chart. (Winston & Strawn LLP)

[Guidance Overview] Correction Program Expansion for Section 409A Operational Errors
Excerpt: "On Friday, the IRS released a new correction program for inadvertent and unintentional Section 409A operational errors in nonqualified deferred compensation plans on and after January 1, 2009. All such plans must be properly documented by the end of 2008 to comply with Section 409A, as the correction program is not available for documentation errors." (Ballard Spahr Andrews & Ingersoll, LLP)

Silicon Valley Companies Looking to Reprice Underwater Stock Options
Excerpt: "As the trading price of many tech stocks has plummeted in recent months, thousands of Silicon Valley workers have seen the value of their employee stock options sink rapidly underwater. The cost of exercising some options is now higher than the value of the company stock for about 4,600 workers at Advanced Micro Devices -- which means those options are currently worthless. One analyst has estimated the same is true for 6,400 workers at Google. It's been a problem for 1,100 employees at VMware, which this fall offered to exchange old options for new ones with a lower strike price. 'It's a huge issue in the tech industry,' said analyst Brett Harsen of the compensation advisory firm Radford Surveys and Consulting, who noted that Silicon Valley has long relied on stock options to recruit and reward top talent and even mid-level employees. He predicted a wave of tech companies will ask shareholders for authority to address the issue by repricing or exchanging old options in coming months." (San Jose Mercury News)

What Will Happen to the ESOP in the Tribune Bankrup.tcy?
NCEO Executive Director Corey Rosen discusses the fate of the Tribune Company's ESOP and places it in context. (National Center for Employee Ownership)

[Opinion] UAW Workers Cost the Big Three Automakers $70 an Hour
Excerpt: "The United Auto Workers (UAW) wants Congress to bail out General Motors, Ford, and Chrysler to prevent their undergoing restructuring in bankrup.tcy proceedings. In bankrup.tcy, a judge could order union contracts to be renegotiated to reflect competitive realities. Many analysts have objected that hourly autoworkers at the Big Three are some of the most highly paid workers in America, costing the Big Three over $70 an hour in wages and current and future benefits. All taxpayers should not be taxed to preserve the affluence of a few." (The Heritage Foundation)

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

Newly Posted Press Releases
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Benefit Software Inc. Launches Initiative Designed to Promote “Green” Printed Total Compensation and Benefit Statements
Benefit Software Inc.

EBRI Marks 30th Anniversary of Providing Benefits Research
Employee Benefit Research Institute (EBRI)

ERIC Warns Congress about Inaction on Pension Funding Relief
ERIC (ERISA Industry Committee)

ING Realigns US Retirement Services Operations
ING Group

BioIQ and Alere to Provide At-Home Biometric Screening Tests to Employees

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in NY

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in IL, NY

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