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June 5, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy

DATAIR Employee Benefit Systems, Inc. (Advert.)

DC/401(k) Administration Software from DATAIR (clickable image)

DC/401(k) Administration Software from DATAIR

DATAIR’s DC/Win System for Allocations, Discrimination Testing, and Proposals. Handles New Comparability Plans, Sole Proprietorships, 401(k) and 403(b) plans. Use with our DB System for Cash Balance and Combo Plans. Expert support.
DC/401(k) System includes
* Downloads from many allocated account fund providers    * Automated loan processing
* Flexible data import/export    *Interface with DATAIR's 5500/1099R system.
sales@datair.com or call 1-888-328-2474


[Guidance Overview]
Safe Harbor 401(k) Chart: Factors to Consider and Key Operational Rules

Excerpt: "These are some of the basics that an employer needs to know before considering a 401(k) Safe Harbor Plan. Each employer's goals, plan design, contribution sources and demographics from a unique scenario which the employer will wish to discuss with his or her plan provider before finalizing the decision to make the plan a 401(k) Safe Harbor Plan. " (McKay Hochman Co., Inc.)


[Guidance Overview]
June 3 Disaster Relief Announcements from PBGC

Storms, floods, mudslide, landslides, tornadoes -- everything but earthquakes -- in Kentucky, Florida, West Virginia, Alabama, Arkansas, Indiana, Georgia. (Pension Benefit Guaranty Corporation)


[Guidance Overview]
Safe Harbor 401(k) Contributions Made to an ESOP

The first installment of a new online column by Nancy Dittmer at the NCEO Web site. (National Center for Employee Ownership)


Chrysler Speeds Past Legal Limits in Race to Live; Bondholders, Step Aside!
Excerpt: "Today was supposed to be the day that Chrysler LLC sold itself to Fiat and embarked on a new, government-designed chance at survival. Instead, its lawyers are arguing in a federal appeals court this afternoon to please, please let the sale go through." (James Pressley on Bloomberg.com)


Chrysler Says Indiana Pension Funds Can't Win Appeal
Excerpt: "The Indiana pension funds challenging the sale of Chrysler LLC's assets to a group led by Fiat SpA can't win, and the deal is better than liquidating the company, Chrysler lawyers said in appeals court documents filed [Thursday June 4]." (James Pressley on Bloomberg.com)


Chrysler Enters Legal Homestretch in Case Brought by Indiana Pension Funds
Excerpt: "Invoking founding father James Madison and their rights under the Constitution, the Indiana pension funds argue that the government-orchestrated sale of most of Chrysler's assets violates numerous laws." (Washington Post; free registration required)


Court of Appeals Today Hears Indiana Pension Funds' Appeal of Chrysler Deal
Various Indiana state employee pension funds are contesting their treatment as bondholders, saying unsecured creditors are being favored ahead of Chrysler's bondholders. OppenheimerFunds filed a brief in support of the pension funds. (AP via New York Times)


Registered Investment Advisors: Fiduciaries for What? (PDF)
At p. 2 or 4-page newsletter. Excerpt: "Because of these issues, advisers need to be prepared for the high cost of litigation. Of course, fiduciary liability insurance is one way to do that. As a word of warning, don't rely on your malpractice, or errors and omissions, insurance to guard you against fiduciary breaches. Most have specific exclusions from fiduciary coverage." (Reish Luftman Reicher & Cohen)


Beyond Rebalancing -- Rethinking Long-term Asset Allocation
Excerpt: "[L]ooks at the topic of rebalancing from the perspective of today's plan sponsor, challenged with managing investment decisions in an extremely uncertain environment." (JPMorgan)


Risk Management and the PBGC
Excerpt: "[The authors] provide commentary on the PBGC's asset reallocation plan. This article was written before the capital market downturn that began in Sept./Oct. 2008. Recent events do not change the questions posed or perspectives offered herein." (Society of Actuaries)


[Opinion]
Comments of American Council of Life Insurers to IRS on Proposed 403(b) Prototype Document Program and Sample Language (PDF)

9 pages. Excerpt: "Plans that Contain a Vesting Schedule Should be Permitted to Participate in the Prototype Program; The Plan Document and Contract Should be Coordinated, Rather than the Plan Document Terms Overriding the Contract in Every Case; The Provisions for Verifying Execution of Adoption Agreement and Acknowledging Receipt of Plan Amendments Should be Modified; The Minimum Required Distribution Provisions in the Sample Language Should Be Modified; [more]." (American Council of Life Insurers)


[Opinion]
Chrysler vs. Indiana: The Little Pension Fund That Could

Excerpt: "Now, the popular defense of the Indiana pension funds is that they have a fiduciary duty to their beneficiaries to maximize the value of their assets. (Hedge funds should have the same duty to their limited partners, unless I'm missing something, but let's set that aside.) There is a deal on the table worth 29 cents on the dollar. Apparently they think Chrysler can do better by finding a a higher bidder (not likely at this point), or they can get more in liquidation. But that is far from a certainty, and the value of Chrysler is deteriorating as time passes; and if they manage to drag this out past June 15, Fiat can back out of the deal. So it's not at all clear that their actions have a positive expected value for their beneficiaries." (Seeking Alpha)


[Opinion]
Time to Drop DROPs

Excerpt: "The mere existence of a DROP plan should signal that something is wrong with the pension plan. The idea of providing incentives to seniority workers to keep them in service -- because their pension plan encourages a life of leisure well before age 60-- is a signal that the pension benefit is simply too rich. But early retirement plans with full lifetime benefits are simply not sustainable in today's world of increased longevity, shrunken government budgets and underwater pension fund portfolios." (Governing.com)



AIRE LLC (Advert.)

Enrolled Retirement Plan Agent (ERPA) Exams Open (clickable image)

Enrolled Retirement Plan Agent (ERPA) Exams Open

Retirement plan practitioners who seek the new Internal Revenue Service Enrolled Retirement Plan Agent designation and who now are ineligible to act as clients agents pursuant to IRS Form 2848 may register now. Register by July 6, 2009 and take the examination up to August 31, 2009. Get valuable resources to prepare for the ERPA special enrollment examination at www.airellc.org.

Links to Items on Executive Comp, Benefits in General

[Official Guidance]
Text of IRS Notice 2009-49: Receiving Bailout Funds Doesn't Trigger Change in Control Under Sec. 409A (PDF)

Notice 2009-49 provides that, if the Treasury Department (or an entity acting on its behalf) acquires preferred stock, common stock, warrants to purchase common stock or other types of equity of a financial institution or other entity pursuant to the Emergency Economic Stabilization Act of 2008, then such acquisition is not a change in control event with respect to which a payment can be made under a nonqualified deferred compensation plan pursuant to § 409A(a)(2)(A)(v) of the Internal Revenue Code. (Internal Revenue Service)


[Guidance Overview]
Fiduciary Exception Eclipses ERISA Fiduciary's Claim of Attorney Client Privilege

Excerpt: "This opinion involves consideration of the dimensions of the fiduciary exception to attorney-client and work product privileges. The issue arose in the context of district court review of plaintiffs' objections to a magistrate judge's ruling on a motion to compel." (Attorney Roy F Harmon III in the Health Plan Law blog)


[Guidance Overview]
Updated Guidance Issued by SEC on New Executive and Directory Compensation Proxy Disclosure Rules (PDF)

6 pages. Excerpt: "The staff of the Securities and Exchange Commission (SEC) on January 24, 2007, issued interpretive guidance on the new executive and director compensation proxy disclosure rules. The guidance was updated on August 8, 2007, July 3, 2008, and further updated on May 29, 2009. The guidance is in the form of questions and answers of general applicability to the disclosure rules, as well as interpretive responses regarding particular situations. The guidance replaces staff interpretations issued in previous years, and is drafted in a manner that facilitates periodic future updates. The interpretative guidance is briefly summarized below . . . ." (Frederick W. Cook & Co., Inc.)


New 457A Tax Rules Overview: Nonqualified Deferred Compensation Plans
Excerpt: "Unlike Section 409A, Section 457A does not allow conditions relating to the purpose of the compensation (such as performance conditions) to constitute a substantial risk of forfeiture. Therefore, deferred compensation arrangements that an employer has already determined to be exempt as a 'short-term deferral' arrangement under Section 409A on the basis of a performance-based vesting condition may need to be reexamined to see whether they present issues under Section 457A." (McGuireWoods LLP)


GM Retirees Face An Uncertain Future
Excerpt: "As a last resort, pensions are somewhat guaranteed by the Pension Benefit Guaranty Corp., a federal outfit. Pensions for retirees 65 and older are guaranteed for up to $54,000 a year. Coverage is lower for younger retirees." (BusinessWeek)


Retirement When Union Pension Collapses
Excerpt: "Gregg Trunell, 43, began planning for an early retirement even before he began his career. Over the years, he and his wife put the maximum amount into their 401(k) plans, thousands more into IRAs and set 2011 as a target date for retiring. But now all bets are off. Trunell's union pension fund took a hit when the stock market plunged." (National Public Radio)



Press Releases

Great-West Launches New Target Date Funds
Great-West Retirement Services

ACLI Submits Comments To IRS On 403(b) Prototype Plan Proposal
American Council of Life Insurers

Indiana Pensioners Being "Ripped Off" in Chrysler Case
Inside INdiana Business

Equity Methods Enhances Option Navigator™
Equity Methods

(Click to post your press release)

Employee Benefits Jobs

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in KY

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