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December 11, 2008

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

Today's sponsor is IRS & AIRE, LLC

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The Enrolled Retirement Plan Agent Program is now available!

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[Guidance Overview]
Comparison of Code §403(b) and Code §401(k) Plans

Chart of features of the plans. (McKay Hochman Co., Inc.)

U.S. House of Representatives Passes the Worker, Retiree and Employer Recovery Act of 2008 by Unanimous Consent
Excerpt: "In what may well be the understatement of the year, Congressman Earl Pomeroy (D-North Dakota) said in a statement, 'It is extremely difficult to pass anything by unanimous consent of the 435 members of the House and 100 members of the Senate, particularly during the politically laden final hours of a Congressional session. On this critically important issue, we have come together to bring relief to avoid needless unemployment and massive freezing of pension plans.'" (; free registration required)

Text of the Worker, Retiree, and Employer Recovery Act (H.R. 7327) (PDF)
79 pages. (U.S. House of Representatives via American Benefits Council)

Guidance on ERISA Bonding Requirements (PDF)
4 pages. Excerpt: "On November 25, 2008, the U.S. Department of Labor (DOL) furnished new guidance concerning the bonding requirements that protect employee benefit plan assets from losses caused by the fraud or dishonesty of 'plan officials.' Field Assistance Bulletin 2008-04 provides a set of 42 questions and answers that addresses numerous aspects of the rules under ERISA Section 412, as amended by the Pension Protection Act of 2006, and its associated regulations. Topics include who must be bonded and who is exempt, the amount and type of coverage required, and who is responsible for compliance." (Pillsbury Winthrop Shaw Pittman LLP)

The Under-Pensioned: Disabled People and People from Ethnic Minorities (PDF)
92 pages. Excerpt: "This research has been commissioned by the Equality and Human Rights Commission (EHRC) to examine the likely future pension incomes of disabled people and people from ethnic minorities. Overall, it finds that disabled people and people from ethnic minorities have many of the 'alarm bell' characteristics that are associated with lower pension incomes. If current trends continue, they are likely to have lower pension incomes in future than the traditionally-employed median-earning male." (Pensions Policy Institute)

Supreme Court Justices Hear Bias Case on Maternity, Pensions and Timing
Excerpt: "The case that was argued Wednesday, AT&T v. Hulteen, No. 07-543, raised broadly similar issues [to the 2007 ruling against Lilly M. Ledbetter.]. Noreen Hulteen and three other women took pregnancy leaves from AT&T from 1968 to 1976. When the company calculated their pension benefits on their retirements decades later, it did not give them full credit for the leaves. The women and their union sued under the Pregnancy Discrimination Act of 1978, which made discrimination based on pregnancy-related conditions a form of sex discrimination." (The New York Times; free registration required)

Pensions to Strain Massachusetts Local Government Finances
Excerpt: "Massachusetts cities and towns will probably face bigger payments into pension plans that cover their workers and retirees because of this year's stock market plunge, potentially forcing communities to cut spending on police, schools, and other services. Local pension funds, which are heavily invested in financial markets, lost about 29 percent of their value through the end of November, mirroring declines in other public pension funds nationwide . . . ." (The Boston Globe)

Two Senators Introduce Proposals to Delay Enforcement of Retirement Plan Required Minimum Distribution Rules
Excerpt: "The bill by Senator Olympia J. Snowe (R-Maine) would put off RMD rule enforcement until 2010 and permit investors to 'recontribute' to their accounts the amount they were required to take out of their plans in 2008, according to a Snowe news release. . . . Meanwhile, a separate measure introduced by Senator Arlen Specter (R-Pennsylvania) would delay the distributions for 2008 and 2009. Specter also cited 'the economic situation' and 'unstable financial markets' as reasons to delay the required distributions." (; free registration required)

Institutional Retirement Income Solutions: Product Comparison Criteria Overview (PDF)
4 pages. Excerpt: "A grid highlighting the key criteria to be used when comparing retirement income products." (Institutional Retirement Income Research Council)

Institutional Retirement Income Solutions: Market Product Types and Distribution Channels (PDF)
3 pages. Excerpt: "A grid summarizing the different product types, a high level description, nature of the income generated, fee structure, and a list of product manufacturers." (Institutional Retirement Income Research Council)

Retirement Benefits Still 4.4% of Total Compensation
Excerpt: "Employers spent an average $1.28 per hour worked for retirement and savings benefits in September, according to the Department of Labor's Bureau of Labor Statistics (BLS). That amounted to 4.4% of total compensation, the same as in June . . . . Total employer costs for employee compensation for civilian workers averaged $28.87 per hour worked, a BLS news release said." (; free registration required)

Pension Bill Aims to Ease Crunch on Retirees and Companies
Excerpt: "Four members of the House of Representatives late yesterday introduced a bill that would provide relief to older Americans who have lost much of their retirement savings and to companies that have complained of stringent requirements for funding their pension plans during a market downturn. Two Democrats, Reps. George Miller (Calif.) and Charles B. Rangel (N.Y.), and two Republicans, Reps. Jim McCrery (La.) and Howard P. 'Buck' McKeon (Calif.), joined forces to propose a one-year moratorium on a law requiring retirees older than 70 1/2 to withdraw money from their 401(k) accounts and other defined contribution plans by the end of 2009. The bill also would scale back a requirement that companies immediately fully fund their pension plans if they fail to meet certain benchmarks, even if their pensions have suffered big losses." (The Washington Post; free registration required)

High Court Weighs How Maternity Leaves Affect Pensions
Excerpt: "Several Supreme Court justices questioned on Wednesday whether AT&T Corp. is discriminating against former employees by paying smaller retirement checks to women who took pregnancy leaves in the 1960s and 1970s. The court heard arguments in the case of four women who lost seniority credit when they took maternity leave before passage of a 1979 law that barred the practice of treating pregnancy leaves differently from other disability leaves. The size of retirement paychecks for thousands of women hangs in the balance as the court considers whether to credit decades-old maternity leaves in calculating pension benefits. Justice David Souter asked why payment of the lower retirement benefits now isn't an act of discrimination." (AP via Google)

Hartford Financial Services Group Inc. Has Been Hit with Two New Stock Drop Class Action Lawsuits
Excerpt: "The lawsuits allege a fiduciary breach by continuing to have company stock as a retirement plan investment option after it was no longer prudent because of the firm's subprime mortgage exposure. In the two federal court suits filed last week in Connecticut, employees Denise Jump and Joe DeSalvo claim having company stock in the plan was no longer appropriate because of the company's heavy exposure to mortgage-related assets -- including investments in the troubled Fannie Mae, Freddie Mac, Lehman Brothers Holdings, Washington Mutual, and American Insurance Group." (planadvisor)

High Court May Rule in Favor of AT&T on Pregnancy Leave
Excerpt: "The U.S. Supreme Court on Wednesday appeared likely to rule narrowly in favor of an [AT&T Corp.] policy that lowers pension benefits for female workers who took pregnancy leave prior to 1979, when a federal law was enacted barring job discrimination against pregnant women. The eventual ruling, should it favor the telecommunications company, could spark renewed furor in Congress over a 2007 Supreme Court ruling known as Ledbetter that said businesses can't be sued for years-old discrimination, even if such actions continue to harm pay or benefits to an employee." (

Pension Lobbying Group Warns Congress of Consequences of Inaction on Funding Issue
Excerpt: "Most employers will have to 'sharply reduce their work forces, freeze plans, and curtail other benefits such as 401(k) contributions, as well as other business spending' if federal lawmakers fail to approve legislation to ease pension funding requirements this year, according to a letter sent Monday, December 8, by the ERISA Industry Committee to all members of Congress." (Workforce Management; free registration required)

Helping 401(k) Participants Stay the Course in Tough Markets

Excerpt: "As fiduciaries responsible for the investment of assets on behalf of others, our duty is always to act, as required by ERISA, ' the best interests of plan participants.' The ongoing turmoil in the stock market highlights one key aspect of that duty and that is to monitor how participants are managing their balances. Are participants continuing to contribute to the plan? Are participants trading more actively? Are more participants taking out hardship withdrawals? Are loans increasing?" (Capital Directions Investment Advisors, LLC)

Institutional Retirement Income Solutions (PDF)

12 pages. Excerpt: "With defined contribution plan assets projected to be the primary source of retirement income (other than Social Security) for future retirees, pressure is building to design retirement income solutions into DC plans. It is in the best interests of plan participants, plan sponsors, and the industry as a whole to take a proactive stance on providing retirees with a secure lifetime income and discouraging government mandates." (Institutional Retirement Income Research Council)

AIRE, LLC (Sponsor)

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AIRE, LLC offers Study Supplements for ERPA Exams

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
IRS Publishes Additional 409A Reporting and Withholding Instructions

Excerpt: "According to Section 409A guidance issued Wednesday by the U.S. Treasury Department and the Internal Revenue Service (IRS), an employer is not required to report nonqualified deferred compensation plan amounts until the agencies release further instructions." (; free registration required)

[Guidance Overview]
December 31, 2008, Deadline Looms for Code Section 409A Compliance (PDF)

2 pages. Excerpt: "In this client advisory, Partner Raymond D. Sinnappan discusses the impending end of the era of 'good faith' compliance and transition relief for Section 409A of the Internal Revenue Code (Section 409A). The author details actions that employers will need to take to ensure compliance with all deferred compensation arrangements subject to Section 409A's final regulations, which become effective January 1, 2009." (Jenner & Block LLP)

Oral Argument Recap, AT&T v. Hulteen, Which Involves Service Credit for Pregnancy Leaves Taken in 70s, Which Affected Retirement Benefits
Excerpt: "[T]his case presents a number of complicated and technical questions on some very abstract issues, and it would have been great to have seen the issues put in their most basic terms. The argument was very bogged down in the technicalities, though. Counsel for AT&T began by focusing on the staleness of the claims here, presumably (although not explicitly) arguing that the plaintiffs' cause of action arose either 1. at the time of adoption of the policy that required employees to take personal leave (no service credit for seniority) for pregnancy-related leave while allowing employees to take disability leave for other disabilities (service credit); or 2. at the time that the employees took the leave. If that were true, the 180 day filing limit would have passed over 30 years ago. That made AT&T's argument flow a little strangely: first, the plaintiffs should have sued in the 1970s when they knew that something illegal had happened; but this wasn't a violation of Title VII then anyway." (Workplace Prof Blog)

Older Workers and the Recession
Excerpt: "During previous downturns, relatively few older Americans were counted as unemployed. Although many lost their jobs, they generally retired instead of looking for work. During the severe 1981-82 recession, seniors' unemployment rate grew by just 0.8 percentage points - only about one-fourth the increase for prime-age workers (25 to 54). Today, however, seniors are nearly as likely as their juniors to join unemployment lines, because pink-slipped seniors can no longer afford to put their feet up. Shrinking Social Security benefits, traditional pension plans, and 401(k) balances combine with soaring health care costs to force them to keep pounding the pavement." (Richard W. Johnson via Urban Institute)

Loosen Pension-Funding Rules, Consultants Ask Congress
Excerpt: "With the value of defined-benefit pension plan assets plummeting, a group of benefit-actuarial consulting firms sent a letter on Monday to the Senate Finance Committee asking for an emergency temporary relaxation of Pension Protection Act of 2006 funding rules. . . . The letter asks for changes to the PPA to give plan sponsors adequate time 'to address the abrupt unprecedented increase to and volatility of funding requirements.' It stresses that 'we are not suggesting any form of financial assistance or arguing that full funding of pension plans is not appropriate or expected.'" (

ESOPS Likely to Suffer First in Tribune Bankrup.tcy
Excerpt: "Chicago is NOT the place to be these days - especially if you are a corrupt politician or a financially-stressed newspaper. On the newspaper side of things - Elizabeth Dale (Florida) writes to tell us that the ESOP angle of the The Tribune Company bankrup.tcy is truly a mess. She points us to this story from the New York Times Deal Book . . . ." (Workplace Prof Blog)

How Is the Financial Crisis Affecting Retirement Savings? December 3, 2008, Update (PDF)
1 page. Excerpt: "The stock market lost 47 percent of its value between September 30, 2007 and December 2, 2008, a roughly $11 trillion drop. The loss has reduced the retirement savings of many Americans, particularly older adults. This fact sheet examines the impact of the ongoing economic turmoil on older households and presents estimates of the retirement account losses to date." (Urban Institute)

Demographic Change and Consequences for Businesses
Excerpt: "Over the past years, different publications clarified that many older employees will have to stay in the workforce because they simply cannot be replaced due to a lack of qualified, or even existing, young workers. Moreover, 'future leaders are likely to face not simply a labour shortage, but a knowledge shortage, as organisations bleed technical, scientific, and managerial know-how at unprecedented rates' (DeLong 2004: 18). It therefore is of utmost importance that businesses start emphasising special retention strategies for retaining older employees such as constant provision of good training as well as motivation and energy. The aim of this master's thesis comprises of the evaluation and comparison of different strategies to cope with demographic challenges." (Social Science Research Network)

Yahoo Changes Severance Plan in Settling Lawsuit
Excerpt: "Yahoo Inc on Wednesday revised an expensive employee and executive severance plan it had adopted following a takeover bid by Microsoft Corp, settling a lawsuit brought by shareholders. The new terms cut the potential costs to an acquirer and make clear that the sale of Yahoo's search business -- which Microsoft still covets -- would not invoke severance benefits." (Reuters via The New York Times; free registration required)

How to Obtain Employee Benefit Plan Documents from DOL
Excerpt: "You may call, write or visit the EBSA Public Disclosure Room for copies of the documents mentioned. Generally, requests made in person may be picked up on the same day. To help locate your plan documents, please provide enough information to assist EBSA in identifying the document, such as the name of the plan and the city and state in which it is located, the name of the multiple employer welfare arrangement, the approximate date of the hearing, etc., as relevant to the document. Written and phone requests are generally filled within 5 working days. Requests for documents related to more than five plans may take more time to process. SPD requests that require contact with the plan to obtain a copy may take 30 to 60 days." (U.S. Employee Benefits Security Administration)

Compensation Costs Per Hour Worked in Private Industry, September 2008
Excerpt: "In September 2008, private industry employer compensation costs averaged $27.07 per hour worked. Private industry employer wages and salaries averaged $19.14 per hour (70.7 percent), while total benefits averaged $7.93 (29.3 percent)." (U.S. Bureau of Labor Statistics)

Japanese Government Pushes to Meet Deadline for Conversion of Pension Plans
Excerpt: "The Japanese government is growing more and more concerned with the large backlog of tax-qualified pension plans (QPPs) that have yet to be converted into other types of retirement plans. Japanese legislation requires conversion of all QPPs before March 31, 2012." (Towers Perrin)

French Legislation May Impact Payouts for Retirement Indemnities
Excerpt: "Legislation adopted by lawmakers in France could lead to an increase in the minimum indemnities payable upon voluntary retirement, although the original intent was apparently to target only severance payments. The legislation was intended to make it more difficult for employers to carry out involuntary retirements. However, the text 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)

Newly Posted Events
(Post Yours!)

2009 MidWinter Tour: Advanced IRA
in Georgia on January 21, 2009
presented by Ascensus

2009 MidWinter Tour: Advanced IRA
in Minnesota on January 21, 2009
presented by Ascensus

2009 MidWinter Tour: Advanced IRA
in Wisconsin on January 28, 2009
presented by Ascensus

2009 MidWinter Tour: Advanced IRA
in Wisconsin on January 30, 2009
presented by Ascensus

2009 MidWinter Tour: IRA Essentials
in Georgia on January 20, 2009
presented by Ascensus

2009 MidWinter Tour: IRA Essentials
in Minnesota on January 20, 2009
presented by Ascensus

2009 MidWinter Tour: IRA Essentials
in Wisconsin on January 27, 2009
presented by Ascensus

2009 MidWinter Tour: IRA Essentials
in Wisconsin on January 29, 2009
presented by Ascensus

Newly Posted Press Releases
(Post Yours!)

Great-West Retirement Services® Wins Marketing and Communication Awards
Great-West Retirement Services

U.S. Workers Taking Steps To Lower Medical Costs, Watson Wyatt Survey Finds
Watson Wyatt

Hewitt Provides Recommendations on Solving Current Pension Funding Crisis
Hewitt Associates LLC

Newport Introduces More Resources for Spanish Speaking Plan Participants
Newport Group, The

Council Applauds House Passage Of Pension Relief
American Benefits Council

Economic Downturn Hitting Holiday Perks in the Office, Reveals Survey

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