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Today's sponsor is DATAIR Employee Benefit Systems, Inc.

(Click on company name or banner to learn more.)

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(a) New Authority

Treasury Confirms Exception to Anti-Cutback Rule Where Net Result of Plan Amendments Does Not Involve Cutback
Excerpt: "Eric Solomon, Treasury Assistant Secretary (Tax Policy), has confirmed that the IRS will not challenge as a prohibited cutback under Reg. §411(d)(6) an amendment that reduces participants' accrued benefits, provided it has the same applicable effective date as another amendment and the net result of the amendments is not a cutback in protected benefits." (Wolters Kluwer Financial Services)

(b) News

401(k) Fee Disclosure Proposal Draws Industry Criticism at Committee Hearing
Excerpt: " A legislative proposal calling for greater disclosure of 401(k) fees was lambasted in a hearing . . . in the U.S. House Education and Labor Committee by retirement industry groups who say the proposal's breadth of disclosure would be too overwhelming for everyone involved including participants." (PLANSPONSOR.com; free registration required)

Lawyer Sues Macy's Over Retirement Plan Stock
Excerpt: "Cincinnati lawyer Stephen Imm has filed a class-action lawsuit on behalf of participants and beneficiaries of Macy's Inc.'s 401(k) and May Department Stores' retirement plans." (Business Courier of Cincinnati via bizjournals.com; free registration required)

High Court's Fraud Case Widely Seen as Stand-In for Enron
Excerpt: "[Robert Van Der Volgen,] whose pension fund invests the retirement savings of 750,000 teachers, says the outcome of a dispute to be heard by the Supreme Court on Tuesday will help determine nothing less than the integrity of the financial system. 'The security of our members really depends in a large part on having some honesty as to the statements being made by large corporations,' said Van Der Volgen, a lawyer at the California State Teachers Retirement System." (The Washington Post; free registration required)

Rhode Island Legislative Leader Announces Pension Study Panel
Excerpt: "Rhode Island state House Speaker William J. Murphy has announced he will create a legislative study commission to look into whether to move new state employees to a defined contribution plan from the current defined benefit arrangement." (PLANSPONSOR.com; free registration required)

(c) Summaries of Guidance; Filed Comments

Nationwide Wins One, Loses One in Fee Litigation: Troubling Definition of 'Plan Assets' Survives
Excerpt: "After nearly 18 months of inactivity, the court in Haddock v. Nationwide (September 25, 2007), one of the most closely watched lawsuits challenging 401(k) fee practices, has rejected another attempt to derail the plaintiffs' claims. Even more importantly, this most recent ruling leaves standing a controversial earlier decision that so-called 'revenue sharing' payments may constitute ERISA plan assets." (Spencer Fane Britt & Browne LLP)

Comments on the Application of the 133-1/3% Anti-backloading Test to Multiple Benefit Formulas (PDF)
2 pages. Excerpt: "The American Academy of Actuaries Pension Committee appreciates this opportunity to address a very important defined benefit plan matter. Several of our members are aware of situations in which the Internal Revenue Service (IRS), with the support of the Department of Treasury, has said that they will disqualify certain cash balance plan sponsors because of purported violations of the 133-1/3% anti-backloading test of IRC 411(b)(1)(B) caused by the transition provisions included in the plan conversions." (American Academy of Actuaries)

Hewitt Federal Legislation Quick Guide Updated as of October 3, 2007, for Retirement Plans (PDF)
7 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding retirement plans. (Hewitt Associates)

(d) Trends, Surveys, Research

67% of Vanguard Funds Use Age-Based Funds As the Default Investment; Company Stock Declines
Excerpt: "From Spencer's Benefits Reports: As of June 2007, nearly 90% of the 401(k) plans in the Vanguard Group, Inc., data base used a default fund that is either an age-based targeted maturity fund (67%) or a balanced fund (22%). The remaining 11% of the funds used a money market or stable value fund." (Wolters Kluwer Financial Services)

Summary of The Defined Contribution Plan Fee Transparency Act of 2007, by Rep. Richard Neal (PDF)
2 pages. Excerpt: "New Expanded Disclosures to Retirement Plan Participants. The bill requires employers to provide employees with two separate disclosures regarding plan investments and fees - at enrollment and annually." (American Benefits Council)

Plan Sponsors Add Income Replacement Funds to Meet a Demand for Simplifying 401(k) Choices
Excerpt: "Now that workers have large amounts in 401(k) and 403(b) defined contribution pension plans, plan sponsors want employees to draw a stable source of retirement income from them. But it's a daunting task to manage a portfolio of mutual funds while withdrawing money, based on government-mandated minimum distribution rules. A few plan sponsors already have begun adding income replacement funds to solve this problem." (Financial Advisor)

New 403(b) Rules May Offer Opportunities for Advisers to Have 'a Client Touch'
Excerpt: "[P]lan advisers with 403(b) clients should not have to reach for the aspirin because of final Internal Revenue Service (IRS) regulations and a Department of Labor (DOL) guidance bulletin issued in late July. In fact, the two documents about 403(b) plans -- generally available to not-for-profit and tax-exempt entities -- could represent a real boon to advisers, offering ample opportunity for important client contact to help plan sponsors decide how they are affected by the rapidly changing regulatory environment." (planadvisor Magazine)

In Turbulent Times -- Like These -- the 'Rules' for Asset Allocation Often Go Out the Window
Excerpt: "Dear investor, provided your head has stopped spinning from these tortuous few months, let's talk for a bit about asset allocation. You know, adjusting the holdings in your 401(k), Individual Retirement Account, or personal portfolio so you don't end up with all your money in the same place at the same time. As you also know, you're supposed to keep rebalancing that portfolio according to your age, goals, and tolerance for risk." (BusinessWeek)

(e) Policy, Opinion, Advocacy

Written Testimony from Labor Department on 401(k) Plan Fees -- Transparency and Disclosure
Excerpt: "[T]he Department began a series of regulatory initiatives last year to expand disclosure requirements in three distinct areas: Disclosures by plans to participants to assist in making investment decisions; Disclosures by service providers to plan fiduciaries to assist in assessing the reasonableness of provider compensation and potential conflicts of interest; and More efficient, expanded fee and compensation disclosures to the government and the public through a substantially revised, electronically filed Form 5500 Annual Report." (U.S. Department of Labor)

Full Committee Hearing: 'H.R. 3185, the 401(k) Fair Disclosure for Retirement Security Act of 2007'
The target page has links to the webcast of the hearing and to written statements and testimonies. (U.S. House Committee on Education and Labor)

Text: 'Defined Contribution Plan Fee Transparency Act of 2007' (PDF)
Excerpt: "To amend the Internal Revenue Code of 1986 to provide transparency with respect to fees and expenses charged to participant-directed defined contribution plans.'''Defined Contribution (U.S. House of Representatives via American Benefits Council)

Comments at Hearing on H.R. 3185, the 401(k) Fair Disclosure for Retirement Security Act of 2007 (PDF)
9 pages. Excerpt: "[W]e all must bear in mind that unnecessary burdens and cost imposed on these plans will slow their growth and reduce participants' benefits, thus undermining the very purpose of the plans. It is in this spirit that the American Benefits Council . . ., the American Council of Life Insurers . . ., and the Investment Company Institute . . . submit this statement with respect to H.R. 3185, the 401(k) Fair Disclosure for Retirement Security Act of 2007." (American Benefits Council)

Bill Would Require Better 401(k) Fee Disclosure - Critics Warn of Higher Costs and Investor Confusion
Excerpt: "Consumer advocates say better disclosure of fees for 401(k) plans would lead to bigger retirement nest eggs for millions of Americans. But business groups Thursday made clear they would fight legislation that would mandate a comprehensive listing of all such expenses." (Los Angeles Times; free registration required)

Proposed 401(k) Rules Could Expose Plan Sponsors/Service Providers to New Types of Frivolous, Costly Lawsuits
Excerpt: "Legislation meant to demystify 401(k) fees and remove conflicts of interest between mutual fund companies and plan sponsors has prompted concern within retirement circles that more information for plan participants actually may thwart retirement savings efforts and hike administrative costs." (PLANSPONSOR.com; free registration required)

United Taking a Flier with Pensions
Excerpt: "Back in 2005, United Airlines . . . terminated its employee pension plans, creating the single largest corporate pension default in U.S. history. . . . It seems, though, that the unions, shareholders, creditors, government -- and, most importantly, the retirees -- got hoodwinked. United had an asset on its books that could have paid for the entire cost of the pension obligations -- and then some -- but according to the financial statements at the time, it was a negative asset, a cost." (The Motley Fool)

A New Model for Retirement Education and Counseling (PDF)
33 pages. Excerpt: "This paper discusses research from multiple sources on the subject of retirement planning combined with original research . . . that was part of the InFRE® Retirement Readiness Project [and] provides information about the current state of retirement readiness and why workers' perceptions about their retirement futures are generally not matching their actions. The purpose of this is to demonstrate the changes that are needed to the current approach to retirement education . . . ." (International Foundation for Retirement Education)

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Links to Items on Executive Comp, Benefits in General

Is This the End for Patenting ERISA Strategies?
Excerpt: "I have written before about the particular question of whether ERISA strategies should be subject to patent, and, as I discussed in a BNA article on the subject, I don't run with those who think business method patents should be pushed that far. The Wall Street Journal law blog has an interesting post . . . that touches on all of this, in particular on a new appellate decision concerning business method patents that may well drive the final nail in the coffin on the idea of patenting ERISA strategies." (Stephen D. Rosenberg via Boston ERISA Law Blog)

Hewitt Federal Legislation Quick Guide for October 3, 2007, on Human Resources & Employment Law (PDF)
10 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding human resources and employment law. (Hewitt Associates)

Employers, Employees View Employee Benefits As 'Strategically Important,' While Struggling with Cost Control
Excerpt: "From Spencer's Benefits Reports: Benefit plan sponsors continue to view employee benefits as 'strategically important,' and their top objective over the next five years continues to be to manage benefits costs, according to Prudential's recently released Study of Employee Benefits: 2007 and Beyond." (Wolters Kluwer Financial Services)

Broad Definition of Deferred Compensation Arrangements Creates Potential Pitfalls for Employers
Excerpt: "Voluminous final Treasury regulations were issued April 10 under Section 409A of the Internal Revenue Code. The section governs nonqualified deferred compensation arrangements -- a term that is broad in its reach. In addition to regulating traditional executive compensation and equity compensation arrangements, Section 409A also regulates compensation devices that many employers have not typically considered as deferred compensation." (Workforce Management; free registration required)

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Newly Posted Events

Are You Being Overcharged For Your Retirement Plan? Most Plan Sponsors Are! with Roger Rovell and Steve Gissiner
in Florida on November 8, 2007
presented by Investech Retirement Plan Services

Deferred Compensation Arrangements Under Internal Revenue Code Section 409A - Webcast
Nationwide on October 9, 2007
presented by Seyfarth Shaw LLP

ERISA Litigation
in Arizona on February 14, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)

ERISA Litigation - Webcast
Nationwide on February 14, 2008
presented by ALI-ABA (American Law Institute-American Bar Association)

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Newly Posted Press Releases

ASPPA and CIKR Support Uniform Fee Disclosure Requirements
ASPPA (American Society of Pension Professionals & Actuaries)

PBGC Assumes Best Manufacturing Inc. Pension Plan
Pension Benefit Guaranty Corporation (PBGC)

Mosse & Mosse's Philip Grisafi Elected President of the International Society of Certified Employee Benefits Specialists
International Society of Certified Employee Benefit Specialists (ISCEBS)

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Newly Posted or Renewed Job Openings
( Post a Job | View All Jobs | RSS Feed )

Asset Transfer Administrator
for Vanguard
in PA

Sr. ERISA Consultant/Business Development
for The Meyers Group
in MA

Benefit Analyst (Defined Benefits)
for MassMutual Financial Group
in

Client Services Manager
for AST Capital Trust Company
in AZ

Retirement Services Education Specialist
for MassMutual Financial Group
in GA

National Accounts Communication Consultant
for MassMutual Financial Group
in MA

Fund Accountant
for AST Capital Trust Company
in AZ

Client Services Coordinator (Relationship Manager)
for AST Capital Trust Company
in AZ

Medical Consultant
for MassMutual Financial Group
in CT

401(k) Retirement Plan Administrator
for Medical-Dental Consultants, Inc.
in RI

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Handy Links:

• View Today's Active Message Threads
• Using the Web for Employee Benefits Research (hypertext article)
• Employee Benefits Library

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