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[Guidance Overview] Procedural Prudence Saves the Day for Bechtel 401(k) Plan Fee Defendants
Excerpt: "A federal court in California kicked the most significant 401(k) fee claims against Bechtel Corporation and its plan fiduciaries out of court on November 3, based largely on the defendants' ability to show that they engaged in a prudent process of evaluating investment fund alternatives. (Kanawi v. Bechtel, No. C 06-05566 CRB (N.D. Cal. 11/3/08))" (Spencer Fane Britt & Browne LLP)


[Guidance Overview] IRS Private Letter Ruling Makes It Easier to Qualify for Deferral of Taxes in Connection with Sale of Stock to Employee Stock Ownership Plan (PDF)
2 pages. Excerpt: "In Private Letter Ruling 200827018, the IRS ruled that for purposes of deferring tax under Section 1042 of the Internal Revenue Code (the Code), a shareholder's holding period in the company's stock includes the period during which the shareholder held membership interests in a limited liability company that was the company's predecessor." (Morgan, Lewis & Bockius LLP)


[Guidance Overview] EBSA Reinforces Position on Investment of Plan Assets and Shareholder Rights
Excerpt: "The Employee Benefits Security Administration (EBSA) has issued new guidance clarifying the obligations of plan fiduciaries concerning investments in economically targeted investments and shareholder rights. . . . The guidance, issued in the form of two interpretive bulletins, reiterates that plan fiduciaries, who are charged by law with the responsibility for operating employee benefit plans on behalf of plan participants, may never increase expenses, sacrifice investment returns, or reduce the security of plan benefits in order to promote legislative, regulatory or public policy goals that have no connection to the payment of benefits or plan administrative expenses." (Wolters Kluwer)


[Guidance Overview] Video: IRS Technical Presentation on 403(b) Final Regulations - Parts 1-10
Each part is less than 10 minutes long. (National Association of Government Defined Contribution Administrators, Inc. via YouTube, LLC)


It Takes a Plan to Ride Out Bad Times with 401(k) Savings
The article discusses some of the biggest mistakes 401(k) participants could make and offers some positive steps to take. (USA TODAY)


Employers with 401(k) Plans Should Not Take Rash Actions During These Volatile Times
Excerpt: "Right now, the best action for plan sponsors is to keep a cool head. That, for the most part, means business as usual. Are the plan's funds behaving as expected on a relative basis? Are the service providers sound? Are participants getting the right messages? Still, the current market turmoil does create a few wrinkles. For example, many plan sponsors will find that this is the first major market decline ever experienced by their target-date funds." (Workforce Management; free registration required)


Voters in Five States Voted Down Various State Constitutional Amendments Related to Investment Practices
Excerpt: "Voters in Louisiana, Montana, South Carolina, South Dakota, and Utah voiced their opinions on topics ranging from a ban on short-selling (South Dakota) to allowing state school funds to invest in the stock market (Utah). Here is a list of the five states which addressed constitutional amendments on investment-related issues for pension funds, and how the voters decided November 4." (PLANSPONSOR.com; free registration required)


Possible Candidates Floated for SEC and Top PBGC and EBSA Posts
Excerpt: "'While you would expect an Obama administration to be more friendly to consumers and labor organizations, it really comes down to who the individual appointed is,' said David Tittsworth, executive director of the Investment Adviser Association, Washington. While it's likely that President-elect Obama will name a chairman for the Securities and Exchange Commission soon, it might take longer for other pension policy posts to be filled. For one thing, nominees for Cabinet posts are named ahead of subordinate roles." (Pensions & Investments)


Professor Warns That PBGC Must Change Tactics
Excerpt: "Congress should give the Pension Benefit Guaranty Corp. the same tools private insurers have to assess risk and set premiums if the country wants to avoid another multibillion-dollar taxpayer bailout, a University of Illinois finance professor warns. . . . Jeffrey R. Brown, professor at the Urbana-Champaign school, says recent financial troubles only underscored flaws in the PBGC's design and, more importantly, show how flawed the agency's decision earlier this year was to move more assets into riskier investments." (Pensions & Investments)


State-by-State Participation in 401(k)-Type Plans (PDF)
Excerpt: "How many wage and salary workers in each state participate in 401(k)-type plans? What does that translate into on a percentage basis? This Fast Facts from EBRI, published by the nonpartisan Employee Benefit Research Institute (EBRI), provides answers to those questions. The data below are EBRI estimates from the U.S. Census Bureau's 2001 Panel of the Survey of Income and Program Participation, which contains data for 2003, the latest available with individual state-by-state data on this topic." (Employee Benefit Research Institute)


Nationwide Institutes 401(k) Auto-Enrollment, Auto-Escalation - Plan Participation Hits 95%
Excerpt: "To keep the forward momentum, the company will increase its auto-deferral rate for new hires and existing employees from 3% to 4% in April 2009; 5% in 2010; and 6% in 2011. Nationwide also in 2009 will raise the auto-escalation cap to 12%." (Employee Benefit News; free registration required)


Annuities Are Also Insurance Products
Excerpt: "There is evidence that annuities may be the oldest form of life insurance, with some historians tracing the product back to the ancient Phoenicians--nearly 5,000 years ago! Thus, it is interesting to note that annuities, whether variable, fixed, or indexed, are the most popular type of insurance product currently offered by life insurers." (Morningstar)


Hearing Produces Mixed Results in San Diego Public Pension Case
Excerpt: "A federal judge has indicated that some allegations filed by the Securities and Exchange Commission (SEC) against five former San Diego officials in connection with the city's pension crisis might have to be refiled. According to the San Diego Union-Tribune, U.S. District Judge Dana Sabraw also indicated that pleas by defense lawyers to dismiss several other civil-fraud allegations probably will be turned aside. The judge said that it is either too soon to raise those issues or that more evidence must be developed before he can make a final ruling, according to the report." (PLANSPONSOR.com; free registration required)


Illinois Teachers' Retirement System Funding Method Challenge Rebuffed
Excerpt: "An Illinois state judge has thrown out a lawsuit that challenges how the state funds the pensions of downstate and Chicago public school teachers. Cook County Circuit Judge Mary Anne Mason granted a motion filed by the Teachers' Retirement System (TRS) to dismiss the suit filed by the Chicago Board of Education in March . . . . The lawsuit charged the state's method of funding the Chicago Teachers' Pension Fund (CTPF) was unconstitutional." (PLANSPONSOR.com; free registration required)


Year-End Pension Accounting Declines Might Be Milder Than Expected
Excerpt: "Unsurprisingly, the value of pension plan assets has dropped sharply so far this year, and under Financial Accounting Standard (FAS) 158, funded status for 2008 will decline for most pension plans. However, today's higher discount rates will soften the drop considerably. Despite the dramatic drops in the stock market during early October, we project only a moderate decline in average funding status -- from 96 percent in 2007 to 88 percent in 2008." (Watson Wyatt Worldwide)


Some Companies Cut or Suspend 401(k) Matches
Excerpt: "Matching contributions average about 11 percent of a company's profit, according to a recent survey of more than 1,000 companies by the Profit Sharing/401k Council of America. Now, with the economy driving profit down, some companies are forced to cut costs and look to their 401(k) contribution as a way to eliminate millions of dollars in spending." (AP via San Francisco Chronicle)


Retirement Plan Fiduciaries Face New Risks in Historically Safe Investment Options
Excerpt: "[W]hile investors in their 20s and 30s may have time to make up even a 30% loss, a boomer retiree can suffer permanent financial damage with a 10% loss. The underlying fact is that all variable investment options, even fixed-income and cash-based options, carry market risk, and always have. Plan sponsors typically have been very concerned about lawsuits pertaining to suitability of equity investment options in their retirement plans and less concerned about the cash and fixed-income options and the holdings within those options." (Investment News; free registration required)


[Opinion] Vanguard Comments on DOL's Proposed Participant Advice Regulations
Excerpt: "Vanguard has filed a Comment Letter that expresses our support of Department of Labor (DOL) efforts to encourage flexible defined contribution participant advice programs. The letter also seeks clarification on the annual audit rules." (The Vanguard Group, Inc.)


[Opinion] Group Letter Requesting Extension for 403(b) Plan Deadline (PDF)
3 pages. On October 27, 2008, ASPPA signed onto a group letter to the IRS urging an extension of the January 1, 2009 deadline for 403(b) plan document requirements and compliance with the final 403(b) regulations. (American Society of Pension Professionals & Actuaries)


[Opinion] Balance Forward 401(k) Plans - With Today's Investment Climate, Not a Good Time to Be Part of One
Excerpt: "Balance forward is an industry term given to those defined contribution plans, e.g., 401(k) and profit sharing, in which participants' accounts are valued monthly, quarterly or annually. And after all the accounting takes place, it can be 4-8 weeks after the valuation date before participants receive statements." (National Benefit Services, Inc.)


[Opinion] Election Result of Generational Change Faces an Inter-Generational Challenge
Excerpt: "Many have commented on the generational change embodied by this week's election of Barrack Obama as the next president of the United States of America. This result and its unmistakable connection to the state of our economy has also brought renewed attention to the speed at which we are accumulating and piling on to the economic burden of future generations." (Savannah Morning News)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Section 409A: International Implications
Excerpt: "Section 409A does not contain a general exemption for foreign plans. Failure to bring these plans into compliance by December 31, 2008, means that participants who are subject to tax in the U.S. (i.e., U.S. citizens and residents working abroad and certain nonresidents working in the U.S.) may be subject to substantial Section 409A penalties. Under Section 409A, there are limited, specific exceptions that allow individuals to accrue benefits under foreign plans that do not meet the Section 409A requirements. Where no exception applies, however, companies need to amend their foreign plans to avoid the penalties under 409A for those subject to tax in the U.S." (Jones Day)


U.S. Treasury Subjects AIG to Executive Pay Curbs
Excerpt: "The U.S. Treasury said on Monday its $40 billion investment in American International Group Inc. will subject the firm to the same curbs on executive bonuses and golden parachutes as other financial institutions that receive government capital injections." (Reuters via Business Insurance)


Paper Company Executive Loses Severance Benefit Fight
Excerpt: "A federal appellate court has cleared a paper company of wrongdoing in denying severance benefits of about $300,000 from a top hat plan to its former president over allegations he was disloyal to the firm during a business deal. The 6th U.S. Circuit Court of Appeals upheld a lower court decision against plaintiff Richard Whitescarver who was fired in 2003 'for cause' -- a determination Sabin Robbins Paper Co. said precluded him from receiving benefits from its Supplemental Executive Retirement Plan." (PLANSPONSOR.com; free registration required)


A New Political Environment for Labor and Employment Issues (PDF)
4 pages. There are brief comments on Pay Discrimination, Executive Compensation, Pension Protection, and 401(k) Fiduciary Liabilities. (Morgan, Lewis & Bockius LLP)


Outlook for the 111th Congress & President-Elect Barack Obama (PDF)
35 pages. See pages 4, 18, 23, and 32 for items on taxes, employee benefits, pensions, health care, and Health Information Technology (HIT) Privacy Legislation. (Alston & Bird LLP)


[Opinion] Election Produces Little Change So Far on the Hill
Excerpt: "Despite the undeniable impact the 'change' element had in the Presidential election, as BNA reported this morning, the leadership of the key Congressional committees with jurisdiction over employee benefit matters in both the House and Senate will likely remain the same next year. At least in terms of benefits-related issues, then, it would appear that we can pretty much know what to expect." (Baker & Daniels)


[Opinion] The Real Mandate Is to Bridge the Wealth Gap
Excerpt: "The new president will have a clear mandate to redress economic inequality. During the campaign, John McCain made sure that voters clearly heard Barack Obama say 'spread the wealth around,' and they elected him anyway. Indeed, there has been a significant, decades-long trend toward greater inequality that needs to be corrected. The president-elect needs to seize the opportunity and to do something really effective to prevent inequality from getting much worse." (Robert J. Shiller via The New York Times; free registration required)

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Newly Posted Events

403(b) plan documents on ftwilliam.com
Nationwide on November 25, 2008
presented by ftwilliam.com

Are You Ready For EGTRRA Restatements?
Nationwide on November 12, 2008
presented by ftwilliam.com

Learn how to use ftwilliam.com's plan document software
Nationwide on November 11, 2008
presented by ftwilliam.com

Plan Design, Testing Techniques and Cross-Tested Plans
in Connecticut on December 3, 2008
presented by National Institute of Pension Administrators-CT Chapter

Year End Distribution Issues and 1099R Reporting Webcast
Nationwide on December 2, 2008
presented by National Institute of Pension Administrators

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Newly Posted Press Releases

Newport Appoints Two New Regional Directors
Newport Group, The

U.S. Labor Department Sues To Appoint Independent Fiduciaries To Protect Assets Of Abandoned 401(k) Plans Of Bay Area Companies
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Aon Consulting Survey Reveals Economy's Impact on Pension Funding and Expense
Aon Consulting

Metlife Resources Releases 403(b) Specimen Plan Document
MetLife

The Retirement Advantage, Inc. Acquires DML Benefits, LLC.
The Retirement Advantage (TRA)

ASPPA Sees Opportunity in Change
American Society of Pension Professionals & Actuaries (ASPPA)

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