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February 19, 2009

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


Today's sponsor is ASPPA

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Banner ad for ASPPA

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[Guidance Overview]
Annual Funding Notice for Defined Benefit Plans Required as Early as April 30, 2009 (PDF)

3 pages. Excerpt: "The DOL guidance provides insight on information that must be included in the notice, such as: The plan's funding status for three plan years; Information regarding the plan's assets and liabilities for three plan years; Counts of three categories of participants (active, terminated and receiving benefits, and terminated and entitled to future benefits); A statement of the plan's funding policy; A description of how the plan's assets are invested as of specific dates . . . ." (Drinker Biddle & Reath LLP)


[Guidance Overview]
Corporation Not Entitled to 404(k) Deduction for Redemption of Stock Used to Satisfy ESOP Distribution Obligations

Excerpt: "A corporation was not entitled to a deduction under Code Sec. 404(k)(1) for the proceeds from a stock redemption that were used to provide for cash distributions made by an ESOP trust to terminated employees, the U.S. Court of Appeals at St. Louis (CA-8) has ruled in General Mills, Inc. & Subsidiaries v. United States." (Wolters Kluwer)


[Guidance Overview]
Defined Benefit Pension Plans with Short 2008 Plan Year May Face March 10 Form 5500 Filing Deadline

Excerpt: "Defined benefit plans with a short 2008 plan year must file their 2008 Form 5500, with Schedule SB or MB, by March 10, 2009 (90 days after the forms' release date) or, if later, the normal due date seven months after the short year ends. To get Schedule SB (for single-employer or multiple employer plans) or Schedule MB (for multiemployer plans), filers must either contact an approved software developer or go to the IRS for copies that can be completed by hand. Filers relying on the extension must check box D of Form 5500, Part I and attach a statement labeled with the basis for the extension." (Mercer LLC)


Pension Fund and Trust Costs on the Way Up
Excerpt: "The total cost of doing business for pension funds and trusts has increased by 14% over the last four years, from an average of 41.5 basis points of fund assets in 2004 to 47 basis points in 2008, according to a new study. The rise is largely attributable to increased investment management fees and larger allocations to higher fee investments, according to a research report from Callan Investments Institute." (PLANSPONSOR.com; free registration required)


Participants Don't Know Where Retirement Income Will Come From
Excerpt: "A new Spectrem Group report suggests most retirement plan participants really don't understand how they will finance their retirement. Spectrem surveyed 400 active retirement plan participants online during September and October 2008 and found that two-thirds of participants age 50 or over plan to work until age 65 or longer - with the largest proportion indicating they will retire when they reach the age where they qualify for full Social Security benefits." (PLANSPONSOR.com; free registration required)


Audio and Text: Stocks Weigh Down U.S. Pension Funds
Excerpt: "A new study, U.S. Pension Reform: Lessons From Other Countries, commissioned by the Ford Foundation to look at how U.S. pension funds stack up to their counterparts overseas reveals that the equity weighting -- or the percentage of a funds' monies devoted to stocks -- is much higher in American funds. That means your nest egg is more fragile than you imagined. The problem, says the study's co-author Jacob Kirkegaard, a research fellow at the Peterson Institute for International Economics, is that 'the risk appetite of these plans has been going up in the last couple of decades, despite the fact that we know that the average age of people in these plans went up.'" (National Public Radio)


[Opinion]
Buck Consultants' Comments to the IRS on Proposed 430 Funding Regulations (PDF)

Excerpt: "We are submitting this letter as a supplement to our March 31, 2008 letter to provide further comments on the proposed regulations regarding determination of minimum required contributions for single-employer defined benefit plans. . . . The recent economic downturn has put enormous financial pressures on companies, including pressures related to defined benefit plan funding obligations. These pressures have led to increased scrutiny of the proposed regulations. That scrutiny has, in turn, resulted in the identification of one key issue that was largely overlooked earlier. The issue relates to the election of the full corporate bond yield curve under Code section 430(h)(2)(D)(ii)." (Buck Consultants)


[Opinion]
ASPPA and CIKR Comments on Proposal to Extend Effective and Applicability Date on the Final Investment Advice Regulation (PDF)

2 pages. Excerpt: "On February 18, 2009, [The American Society of Pension Professionals & Actuaries (ASPPA) and the Council of Independent 401(k) Recordkeepers (CIKR)] submitted comments requesting that the DOL extend the effective and applicability date of the final investment regulation by 60 days given the lack of certainty over the ultimate status of the regulation's final outcome." (American Society of Pension Professionals & Actuaries)


[Opinion]
Another Verdict on Those Infamous Revenue-Sharing Lawsuits Last Week

Excerpt: "Not a verdict in the sense of a Perry Mason trial, perhaps - but we did have two sides presenting their case to a judge who, once again, basically felt that the plaintiffs didn't make their case. Personally, I find this entire class of revenue-sharing lawsuits abhorrent. Not that I don't think there are some real issues to be had with regard to how some plans are being charged, and how some of those revenue-sharing arrangements are perhaps being abused. Rather, I resent them because, in large part, I think the cases brought to date -- at least as I understand the facts -- are probably not where the real problems lie." (PLANSPONSOR.com; free registration required)



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Links to Items on Executive Comp, Benefits in General



[Guidance Overview]
American Recovery and Reinvestment Act of 2009 Summary of Executive Compensation Requirements

Excerpt: "The Act provides that during the TARP period, TARP recipients will be subject to the executive compensation standards established the Treasury, including the required standards contained in Section 111 of EESA . . ., and the applicable provisions of Section 162(m)(5) of the Internal Revenue Code which limit the deductibility for Federal income tax purposes to $500,000 for each SEO during the TARP period. " (Troutman Sanders LLP)


[Guidance Overview]
New Executive Compensation Limitations Under The American Recovery And Reinvestment Act

Excerpt: "This brings together into one final summary, all of my previous Blogs on the executive compensation provisions of the Emergency Economic Stabilization Act (EESA), the Troubled Assets Relief Program (TARP) and the American Recovery and Reinvestment Act (ARRA) signed by President Obama on February 17, 2009. Friday, we will start talking about all the unanswered questions and the impact of the new executive compensation provisions on companies other than financial institutions." (Michael S. Melbinger via Winston & Strawn LLP)


[Guidance Overview]
American Recovery and Reinvestment Act of 2009 Expansion of Executive Compensation Restrictions

Excerpt: "The most significant executive compensation restriction in the 2009 Recovery Act limits the amount and timing of incentive compensation and retention bonuses that may be paid by TARP recipients to their executives before satisfying all obligations arising from financial assistance provided under the TARP. Up to 25 executives may be limited by this restriction depending upon the amount of TARP financial assistance. The 2009 Recovery Act also prohibits severance benefits that may be paid to named executive officers and the five next most highly compensated employees of a TARP recipient, and limits amounts that may be deducted for executive compensation." (McDermott Will & Emery)


[Guidance Overview]
Stimulus Package Adds Tight Limits on Executive Pay for Banks Receiving Federal Financial Aid

Excerpt: "The new restrictions under ARRA apply to all entities that have received or will receive financial assistance under TARP ('TARP-Recipients'), including participants in Treasury's Capital Purchase Program. The new restrictions will continue to apply as long as any obligation under TARP remains outstanding. However, the new law does allow any TARP-Recipient to repay any government assistance (after consultation with the appropriate banking regulator) and, thereby, avoid the new limitations." (Kilpatrick Stockton LLP)


[Guidance Overview]
Congressional Expansion of Restrictions on Executive Compensation for Financial Institutions under Troubled Asset Relief Program (PDF)

4 pages. Excerpt: "The revised restrictions that apply to companies receiving TARP assistance are: Prohibition on certain bonus, retention and incentive compensation for senior executive officers (SEOs)2 and up to 20 other employees; Prohibition on golden parachute payments to SEOs and the 5 next most highly-compensated employees; Required adoption of a company-wide policy on excessive or luxury expenditures; Mandated 'say on pay' shareholder vote on the compensation of executives . . . ." (Frederic W. Cook & Co., Inc.)


[Guidance Overview]
Stimulus Legislation Imposes Broader Executive Compensation Restrictions on Financial Institutions Participating in TARP (PDF)

4 pages. Excerpt: "The enactment of ARRA should be viewed as part of an evolving set of standards, rather than the final word, on executive compensation that can be paid by TARP recipients. Indeed, even before ARRA was signed into law by the President, the administration publicly expressed its concern that certain aspects of the new law may be counterproductive and that further work on these standards can be expected." (Dewey & LeBoeuf LLP)




Newly Posted Events



Financial Literacy in Times of Turmoil and Retirement Insecurity Conference
in District of Columbia on March 20, 2009
presented by Retirement Security Project

The New COBRA Premium Assistance Law: What You Need to Do to Comply Now
Nationwide on February 24, 2009
presented by EBIA / Thomson Reuters



Newly Posted Press Releases



U.S. Department of Labor Sues Former Cookeville, Tennessee, Firm to Give 401(k) Participants Access to Retirement Funds
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

PLANSPONSOR Announces 2009 Finalists for Retirement Plan Sponsor of the Year
PLANSPONSOR

Survey: Most Companies Taking Action to Boost Employee Morale
Accountemps

ADP Selects GuidedChoice for Plan Participants Investment Advice
ADP

Nearly 40 Percent of Employers Plan to Trim Benefits and Office Perks This Year, Finds New CareerBuilder.com Survey
CareerBuilder.com

U.S. Retirement Partners Acquires Group of Five Florida Firms
U.S. Retirement Partners



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