February 9, 2007

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Labor Department Announces New Rule Implementing Pension Protection Act Cross-Trading Exemption
Excerpt: "Cross-trading is a transaction in which an investment manager uses its authority to sell a security on behalf of one client and to buy that same security on behalf of another client. The statutory exemption allows investment managers of plans governed by [ERISA] to execute cross-trades if certain conditions are met, including the adoption of written cross-trading policies and procedures. The interim rule establishes the requirements for the policies and procedures . . . ." (Employee Benefits Security Administration, U.S. Department of Labor)

Feds Say 401(k) Service Providers Need to Know the Law and Be Able to Explain It to Their Clients
Excerpt: "'A plan only operates as well as its weakest link,' said Wayne R. Kamenitz, executive director of the performance and reward practice at Ernst & Young. And if one of those links compromises the strength of the plan's chain of operations, not only the sponsor, but also their service providers could be exposed to liability, he said. 'It's important to identify these problems before the IRS finds them. It's a game of beat the clock,' Kamenitz said." (Financial-Planning.com)

Some Experts Disappointed/Confused by IRS Ruling on Non-Spouse Pension Beneficiaries
Excerpt: "What's the bottom line? 'In plain English, if you are the non-spouse beneficiary of a plan participant who died in 2006, take a minimum distribution in 2007 based upon the lifetime payout over the . . . beneficiary's life expectancy, and hope that the plan will permit the direct transfer to an inherited IRA,' Picker wrote in an e-mail. 'If yes, make sure the inherited IRA is properly set up as an inherited IRA. If the plan will not permit the transfer, yell like hell until they do.'" (Human Resource Executive Online; free registration required)

Overview: DOL Issues ERISA Opinions on Investment Issues (PDF)
2 pages. Excerpt: "The Department of Labor has released two advisory opinions addressing the permissibility of certain investment arrangements under the ERISA prohibited transaction rules." (Sutherland Asbill & Brennan LLP)

Top Stocks for Self-Directed Investors
Excerpt: "[I]f your employer offers SDAs, you'll be able to create a special account at the brokerage that manages your company's 401(k) plans, and through that, you'll be able to trade much as you would in a regular brokerage account." (The Motley Fool)

Overview: DOL General Guidance on Pension Benefit Statements -- FAB 2006-03 (PDF)
2 pages. Excerpt: "PPA's amendments to Section 105 require a number of significant changes to pension benefit statements for qualified defined benefit and defined contribution plans. This TCRS release [focuses] on the PPA requirements applicable to defined contribution plans." (Transamerica Center for Retirement Studies)

Chart: Summary of Defined Contribution Plan Provisions of the Pension Protection Act of 2006 (PDF)
21 pages. The chart compares prior law with the PPA. (American Benefits Council)

Opinion: Taking a Little 'Free' Advice from the DOL
Excerpt: "Last Friday, the Department of Labor issued a Field Assistance Bulletin on the 'Statutory Exemption for Investment Advice.' These FABs, which essentially are designed to give DOL personnel in 'the field' guidance on the interpretation of the law, provide incredibly valuable information for anyone who works with qualified retirement programs -- and this one is no exception." (PLANSPONSOR.com; free registration required)

Tenth Circuit Holds that Allocation of Funds Constituted Non-Fiduciary Business Decision
Excerpt: "Following the filing of Chapter 11 bankrup.tcy by their employer, State Line, employees filed suit against various officers and directors of the company, asserting claims under ERISA and the Racketeer Influenced and Corrupt Organizations Act (RICO). The district court dismissed the RICO claims, but certified the ERISA claims as a class action." (Health Plan Law blog by Attorney Roy F. Harmon III)

Spiraling Pension Payouts for Retired Public Employees Pose Threat for California
Excerpt: "Retirement costs for public workers in some of California's largest cities and dozens of others across the country are far outpacing inflation and will reach 'critical mass' in a few years unless changes are made, Wall Street analysts are warning." (Los Angeles Times; free registration required)

OPM Races to Go Digital Ahead of Federal Retirement Wave
Excerpt: "About a year from now, all federal retirement claims will be processed through the OPM's 'retirement systems modernization' program. Using the Internet, federal retirees will be able to see their retirement records and benefits, and a first wave of federal employees will be able to estimate their future pension payments." (The Washington Post; free registration required)

Pension Benefit Guaranty Corporation's Webcast Registration Page for 'My PAA Overview'
Excerpt: "[The] Webcast in February [will demonstrate] how to use PBGC's e-filing application called My Plan Administration Account (My PAA). The Webcast will cover the sign-up process (e.g., how to set-up a user ID and password) and the three premium e-filing methods: using My PAA's data entry and editing screens, importing software-prepared filings into My PAA's editing screens, and uploading software-prepared filings to PBGC." (Pension Benefit Guaranty Corporation)

Private Investment Funds Aided by Pension Reform
Excerpt: "A little-noticed section of the Pension Protection Act of 2006 could mean a big benefit for private equity funds and other investment vehicles. Effective immediately, funds that take in money from benefit plans will not be required to aggregate government pension funds and foreign funds with ERISA plan funds when applying the 25% 'significant participation' limit." (Employee Benefit News)

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Links to Items on Executive Comp, Benefits in General

Text of Compliance Resolution Program for Non-Insider Employees Taxed in 2006 Due to Sec. 409A (PDF)
12 pages. Excerpt: "The Internal Revenue Service announces a compliance resolution program (the Program) that permits employers to pay the additional taxes arising under ? 409A of the Internal Revenue Code due to the exercise of certain discounted stock options and stock appreciation rights (stock rights) in 2006. The Program provides a means to minimize the burdens of compliance on employees who are not corporate insiders, while ensuring that all applicable taxes are paid." (Internal Revenue Service)

New Program Permits Employers to Pay 409A Penalties of Employees Who Exercised Discounted Options
Excerpt: "Employees who exercised discounted stock options or stock appreciation rights (SARs) in 2006 can owe stiff tax penalties under Section 409A of the Internal Revenue Code. The Internal Revenue Service on February 8, 2007 announced a new program (Notice 2007-17) that allows employers to pay these penalties on behalf of their employees." (O'Melveny & Myers LLP)

Employers Can Satisfy Tax Obligations of Rank-and-File Employees with 'Backdated' Options
Excerpt: "Internal Revenue Service officials today announced an initiative aimed at providing relief for rank-and-file employees affected by their companies' issuance of backdated and other mispriced stock options. While the program will be available to help these employees who may be unaware that they held backdated options, the opportunity will not be available for backdated options exercised by most corporate executives or other insiders." (Internal Revenue Service)

IRS Offers a Partial Backdating Solution
Excerpt: "Internal Revenue Service officials have announced an initiative aimed at providing relief for rank-and-file employees affected by their companies' issuance of backdated and other mispriced stock options." (PLANSPONSOR.com; free registration required)

Overview and Table on SEC Amendment of Disclosure Rules for Stock and Option Grants
The table highlights differences between the final regulations and the interim final rules. (Watson Wyatt Worldwide)

Lobbyists Hope House Panel Will Keep Bill Clear of NQDC Provisions
Excerpt: "Members of the House Ways and Means Committee may keep non-qualified deferred compensation provisions out of an important package of small business tax breaks and revenue increases." (National Underwriter Life & Health; free registration or paid subscription required)

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Newly Posted Events

HIPAA and Health Laws Compliance Assistance Seminar - Free
in Ohio on March 7, 2007
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Staying Current With IRAs - An Advanced IRA Seminar
in Iowa on February 20, 2007
presented by Collin W. Fritz & Associates, Ltd.

Staying Current With IRAs - An Advanced IRA Update
in Illinois on February 27, 2007
presented by Collin W. Fritz & Associates, Ltd.

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Newly Posted Press Releases

U.S. Labor Department Settles With Accounting Firm Over Deficient Audit of Benefits Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

U.S. Labor Department Announces New Rule Implementing Pension Protection Act Cross-Trading Exemption
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

IRS Offers Opportunity for Employers to Satisfy Tax Obligations of Rank-and-File Employees with ?Backdated? Stock Options
Internal Revenue Service (IRS)

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Newly Posted or Renewed Job Openings


Pension Software Business Analyst
for Levi, Ray & Shoup, Inc.
in IL

Client Relationship Manager
for PensionTrend, Inc.
in MI

Plan Administrator
for Chicago Area Firm
in IL

Relationship Manager
for MassMutual Financial Group
in CA

Internal Sales Consultant
for T Rowe Price
in MD

Compliance Specialist
for Buck Consultant An ACS Company
in MA, NJ

Project Specialist
for Princeton Retirement Group, a subsidiary of Merrill Lynch
in NC

Pension Administrator
for Al Minor & Associates
in OH

Senior EB Recordkeeper/Tester
for Wachovia
in NC

EB Recordkeeper/Tester
for Wachovia
in NC

401k Plan Administrator/Trust Officer
for City National Bank
in CA

Senior Compensation Analyst (Ref.# JP27032-JN)
for Southern California Edison
in CA

Benefits Analyst
for JHU/Applied Physics Laboratory
in MD

Investment Professional
for Richardson Financial Group
in WI

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• Using the Web for Employee Benefits Research (hypertext article)
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