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[Official Guidance]
Text of IRS 'Employee Plans News' April 2009 Special Edition, Describing Proposed 403(b) Procedures (PDF)
2 pages. Excerpt: "This Special Edition contains the IRS's request for comments on drafts of a revenue procedure and sample plan language for §403(b) prototype plans and highlights of the draft revenue procedure." (Internal Revenue Service)


[Official Guidance]
Text of Draft Document by IRS: 403(b) Plan Listing of Required Modifications and Information Package (LRM) (PDF)
67 pages. Excerpt: "The Section 403(b) Prototype Program will operate generally in the same manner as the current Master and Prototype Program for plans qualified under section 401(a) of the Internal Revenue Code. A Section 403(b) Prototype Plan sponsor will submit a section 403(b) plan document to the IRS for review. . . . The DRAFT sample language is based on language previously developed for other IRS prototype plan programs . . . ." (Internal Revenue Service)


[Official Guidance]
Text of IRS Announcement 2009-34: Draft of 403(b) Prototype Document Procedure (PDF)
25 pages. Excerpt: "This announcement includes a draft revenue procedure that contains the Service's proposed procedures for issuing opinion letters as to the acceptability under § 403(b) of the form of prototype plans. The Service is simultaneously posting draft sample plan language on the irs.gov website for use in drafting § 403(b) prototype plans. The Service seeks public input before finalizing these procedures and sample plan language, and invites interested persons to submit comments." (Internal Revenue Service)


[Guidance Overview]
Appeals Court Finds LaRue Does Not Apply in Cash Balance Fiduciary Breach Case
Excerpt: "A cash balance plan participant has no fiduciary breach claim arising from the denial of a lump sum payment, the Second Circuit Court of Appeals ruled (Fisher v. Penn Traffic Co., unpublished), concluding that the Supreme Court's decision in LaRue v. DeWolff did not apply. LaRue recognized the right of a defined contribution participant to recover for individual losses due to fiduciary breach. The Second Circuit noted that a cash balance plan was not an individual account plan, so fiduciary breach remedies are available only to protect the entire plan, not the rights of one participant." (Mercer LLC)


[Guidance Overview]
IRS's Asset Valuation Guidance
Excerpt: "The IRS recently released Notice 2009-22, to provide pension plan sponsors assistance on applying new asset valuation rules introduced in the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA). Here we give background on the issues and discuss application of the new guidance." (JPMorgan Chase & Co.)


[Guidance Overview]
Safe Harbor 401(k) Plans: Eliminating the Match
Excerpt: "It seems that every day, a few more companies are reducing or eliminating their 401(k) match. For those companies who were maintaining safe harbor plans, this causes some surprising complexities. In this article, we discuss the traps and pitfalls." (JPMorgan Chase & Co.)


[Guidance Overview]
Employees Discharged Due to Plant Closing May Not Proceed With ERISA Section 510 Interference Claim
Excerpt: "EBIA Comment: In these trying economic times, many employers are facing difficult business decisions that can lead to employee layoffs. The employer in this case argued that plant closings cannot trigger ERISA Section 510 liability and that an employer's exercise of business judgment should not be second-guessed. The court concluded, however, that the case could not be summarily dismissed for either reason. The court still had to consider whether the employees had presented sufficient evidence that the employer intended to interfere with their benefits. While the employees did not need 'smoking gun' evidence to get to a jury, they apparently did need something more than the evidence of interference presented in this case." (Employee Benefits Institute of America)


[Guidance Overview]
Hecker and the Development of the Law on the 404(c) Defense
Excerpt: "One of the Seventh Circuit's most interesting tricks in its recent decision in Hecker was the extraordinary breadth it gave to the 404(c) defense. This was an aspect of the decision that raised a lot of hackles, and I noted in my own post on the case that I doubted this was the last word on the subject and that it would be interesting to see how the case law developed as other courts tackled this question. Well, here's a decision from a week or so ago out of the United States District Court for the District of New Hampshire taking a much narrower approach in interpreting the amount of protection granted to fiduciaries by section 404(c), finding that the defense does not apply to 'a fiduciary's designation of the investment options that are available to plan participants.'" (Stephen Rosenberg of The McCormack Firm, LLC)


[Guidance Overview]
IRS Releases Proposed 403(b) Prototype Document Program
Excerpt: "[The Internal Revenue Service] unveiled the next step in the tax agency's efforts to move 403(b) plans closer to their 401(k) cousins. Robert J. Architect, IRS Senior Tax Law Specialist, [said] that the tax agency considers issuance of the draft revenue procedure and sample plan language supporting it to be significant steps in the evolution of 403(b) regulations. Determination letter reviews for the prototypes could begin as soon as the first quarter of 2010." (PLANSPONSOR.com; free registration required)


[Guidance Overview]
IRS's Dirty Dozen Includes Retirement Plan Arrangements
Excerpt: "This is the week when the nation turns its attention to taxes - and the Internal Revenue Service turns its attention to tax scams. Among the so-called 'Dirty Dozen' scams identified by the Internal Revenue Service (IRS) is one involving retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs). According IR-2009-041, the IRS is looking for transactions that taxpayers are using to avoid the limitations on contributions to IRAs as well as transactions that are not properly reported as early distributions." (PLANSPONSOR.com; free registration required)


Offering Range of Funds Should Not Protect Fiduciaries in 401(k) Fee Case, DOL Asserts
Excerpt: "Offering a broad menu of funds or a brokerage window should not relieve 401(k) plan fiduciaries of the duty to prudently select investments, according to a Department of Labor (DOL) brief filed in response to a recent appellate decision rejecting claims of excessive plan fees (Hecker v. Deere). DOL took issue with the Seventh Circuit's suggestion that ERISA Section 404(c) might shield fiduciaries if a plan offers a 'sufficient range of options so that the participants have control over the risk of loss.' DOL joined participants in requesting a rehearing by the appeals court." (Mercer LLC)


Ensure Your Retirement Bliss by Working Longer
Excerpt: "Staying in the workforce helps. Several retirement systems across the world, including U.S. Social Security, will boost payments the longer you postpone leaving the workforce. . . . Working longer has a compounding effect because while you are boosting your eventual Social Security payments, you will also add to your other retirement plans and earn money on those savings. Time then works in your favor. Again, simple math makes working and saving longer a better proposition." (Bloomberg L.P.)


GM and Chrysler Retirees and Employees Could Lose $23 Billion in Pension Benefits If the Companies Terminate Retirement Plans in Bankrup.tcy
Excerpt: "Neither GM nor Chrysler plans to file for bankrup.tcy, but both are taking steps to prepare in case they are forced to do so in the coming weeks. While neither has said it plans to terminate its pension program, struggling steel companies and airlines have used bankrup.tcy to get out from under large pension obligations and turn them over to the government." (The Detroit News)


Phased Retirement Key to Coping with Teacher Brain Drain
Excerpt: "School districts around the country need to adopt phased retirement policies or they will ultimately get caught severely shorthanded after an upcoming wave of boomer-aged teacher retirements. That was the key takeaway from a recent report by an education industry group that warned that more than half the nation's teachers are now 50 and older and will be eligible for retirement over the next decade. This retirement 'tsunami' could rob schools of valuable experience, the National Commission on Teaching and America's Future (NCTAF) report asserted." (PLANSPONSOR.com; free registration required)


Nearly Half of Defined Benefit Plan Sponsors Have Closed Those Programs to New Participants, According to Survey
Excerpt: "On the defined contribution (DC) front, fewer than 10% of respondents have suspended - or plan to suspend - company contributions to DC plans. Granted, nearly one-in-five (19%) are considering the action, but nearly three-fourths of respondents have no such intentions." (PLANSPONSOR.com; free registration required)


How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices?
Excerpt: "We find no evidence that the Summary Prospectus affects portfolio choices. Our experiment sheds new light on the scope of investor confusion about sales loads. Even with a one-month investment horizon, subjects do not avoid loads. Subjects are either confused about loads, overlook them, or believe their chosen portfolio has an annualized log return that is 24 percentage points higher than the load-minimizing portfolio." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)


How Do Emotions Influence Retirement Saving Behavior?
Excerpt: "No prior research . . . has looked at the effects of emotions on retirement savings. This Issue in Brief examines how two different emotions - hope and hopefulness - affect 401(k) participation and asset allocation. The first section defines the terms. The second section describes the structure of a recent field experiment. The third section summarizes the results, which reveal that having high hope (i.e. yearning) - for a secure retirement leads to different investment behaviors than having high hopefulness (i.e. perceived likelihood). Furthermore, threats to hope and threats to hopefulness are found to have different effects on 401(k) participation and investment decisions." (Center for Retirement Research at Boston College)


New ERISA Pension Litigation Study Launched
Excerpt: "As part of its ongoing commitment to independent research, analysis and training, Pension Governance, Incorporated and its PensionLitigationData.com partner, The Michel-Shaked Group, are proud to debut a new study about pension litigation statistics for plan sponsors, their service providers, legal counsel and policy-makers, respectively. Based on over 2,400 ERISA cases filed between January 1, 2005 and August 31, 2008, 'ERISA Litigation Study - April 15, 2009' is a statistical overview of pension lawsuits by category, court and case disposition." (Pension Risk Matters)


Size of Plan, Pay-In Rates Help Lower Retirement Plan Fees, Survey Says
Excerpt: "Lower fees for defined contribution retirement plans are related to factors such as the size of the plan, higher contribution rates by employers and employees, and greater use of automatic enrollment. Those were the findings of a study released today by the Investment Company Institute and Deloitte Consulting LLP, a subsidiary of Deloitte LLP of New York." (Investment News; free registration required)


Study Says Average 401(k) Fee = 72 bps
Excerpt: "A new study of 401(k) fees finds that the median fee was 72 basis points - but also found a significant range of variance. The median fee for the 130 plans in the study of the economics of 401(k) and defined contribution retirement plans released today by the Investment Company Institute and Deloitte was 0.72 percent of assets, within a range from 0.35% (the 10th percentile) to 1.72% (the 90th percentile) of assets. The median annual plan fee per participant was $346 (for a participant with an account balance of $48,522 - the median participant average account balance among plans in the survey)." (PLANSPONSOR.com; free registration required)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
Summary of Recent Federal Employment Discrimination Law Cases Involving Employee Benefit Plans
21 pages, by attorney Andrew Stumpff. Prepared April 2009. Includes cases on age, gender, pregnancy and disability discrimination. Excerpt: "This represents a survey of recent court decisions involving the intersection of employment discrimination law and employee benefit law. Cash balance plan litigation is omitted, as are cases involving only ERISA Section 510. Case summaries are limited to only those parts of the decisions that relate to the interplay of employee benefits and employment discrimination law." (Stevenson Keppelman Associates)


[Guidance Overview]
Third Circuit Abandons 'Sliding Scale' Approach in Judicial Review of ERISA Benefit Denials
Excerpt: "In this recent Third Circuit opinion, the Court found that, in light of MetLife v. Glenn, the Court's 'sliding scale' approach was 'no longer valid.' Instead, judicial review of benefit denials under 29 U.S.C. § 1132(a)(1)(B) requires evaluation applying 'a deferential abuse of discretion standard of review across the board and consider any conflict of interest as one of several factors in considering whether the administrator or the fiduciary abused its discretion." (Roy Harmon III via Health Plan Law)


[Guidance Overview]
Repricing Underwater Stock Options
Excerpt: "In this article, we discuss the more philosophical pros and cons of re-pricing these underwater options, and to the extent that there is some sort of exchange, what techniques are available for determining the exchange methodology." (JPMorgan Chase & Co.)


Severance Pay Alive and Well Despite Downturn
Excerpt: "Employers grappling with the pressures of the economic downturn are nontheless paying stepped-up attention to outplacement and severance for departing employees. That was a key takeaway from a new survey by human resources consulting firm Lee Hecht Harrison (LHH) in Woodcliff Lake, New Jersey." (PLANSPONSOR.com; free registration required)

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Webcasts and Conferences

( Click to post your webcast or conference )

7th Annual Employee Benefits Symposium
in Illinois on April 20, 2009
presented by The Center for Tax Law and Employee Benefits at The John Marshall Law School in Chicago

A Return to Security: Emerging Deferred Compensation Strategies for Troubled Times
in California on March 19, 2009
presented by Retirement Capital Group

Executive Total Rewards: How is the Market Reacting? What's Hot and What's Not
in California on April 21, 2009
presented by Retirement Capital Group

Retirement Crisis: Now What?
in New York on April 21, 2009
presented by AXA Equitable

Retirement Crisis: Now What? - Webcast
Nationwide on April 21, 2009
presented by AXA Equitable

What to Expect -- and Require -- From 401(k) Recordkeepers (60-Minute Power Series) Webcast
Nationwide on April 28, 2009
presented by International Foundation of Employee Benefit Plans

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Press Releases

( Click to post your press release )

Ward Harris Rejoins McHenry from Rogerscasey
McHenry Consulting Group

Suspending the 401(k) Match: Look Before You Leap
Mercer

Retirement Plan Advisory Group Launches Fiduciary Fitness Program
Retirement Plan Advisory Group

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Employee Benefits Jobs

( Click to post your job opening | View all jobs | RSS feed of all jobs )

New Client Implementation Assistant
for The Pension Studio
in FL

Participant Communication Consultant
for The Standard
in OR

Conversions Specialist
for The Newport Group
in NC

Account Manager
for Fiduciary First / SagePoint Financial
in FL

Manager, Participant Communication
for The Standard
in OR

Team Leader, Retirement Plans Administration
for The Standard
in OH

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EmployeeBenefitsJobs.com (Sponsor)

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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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