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[Guidance Overview]
New IRS Ruling Regarding Taxation of ESOP Distributions (PDF)
4 pages. Excerpt: "The national office of the Internal Revenue Service (IRS) has issued a new Technical Advice Memorandum (TAM) regarding distributions from an Employee Stock Ownership Plan (ESOP) to terminated plan participants. TAM 200841042. This TAM is important for all ESOP companies that allow or require terminated participants who receive distributions of company stock to sell that stock back to the company. The issue presented in the TAM related to a recent case involving the proper tax treatment of distributions of employer stock to a group of terminated employees who elected to sell the shares allocated to their accounts back to the company immediately upon distribution of their benefits." (Morgan, Lewis & Bockius LLP)


[Guidance Overview]
404(c) No Defense in Stock Fund Fiduciary Suit, According to District Court
Excerpt: "The U.S. District Court for the District of New Hampshire has determined that Tyco International Ltd. cannot use Employee Retirement Income Security Act Section 404(c) protection in its defense against participants' fiduciary claims regarding its retirement plan company stock fund offering. U.S. District Judge Paul Barbadoro said in his opinion that several factors led him to his conclusion, including that section 404(c) is unclear as to whether it can be used to bar a claim based on a fiduciary's designation of investment options." (PLANSPONSOR.com; free registration required)


[Guidance Overview]
IRS's Proposed 403(b) Prototype Plan Procedures and Model 403(b) Plan Language (PDF)
4 pages. Excerpt: "These long-awaited pieces of proposed guidance establish a proposed framework for a prototype plan design, approval and adoption process that generally parallels the opinion letter program for master and prototype tax-qualified defined benefit and defined contribution plans." (Groom Law Group)


[Guidance Overview]
Plan Fiduciaries Cannot Use ERISA Section 404(c) to Defend Against Claims Regarding Employer Stock Fund
Excerpt: "EBIA Comment: Most courts faced with this issue appear to have accepted the DOL's position that ERISA Section 404(c) does not protect plan fiduciaries against claims based on the selection and maintenance of a designated investment fund. . . . The Fifth Circuit, in rejecting the DOL's position, saw the losses in a case of this type as resulting from both the fiduciaries' fund designation and the participants' decision to invest in the fund, and it read the statute to require only that participants' choices be one of the causes. But the DOL's position has not wavered and, except for the Fifth Circuit, the message is clear: Plan fiduciaries should not assume they will get any benefit from Section 404(c) for breaches arising from their fund selection and monitoring obligations." (Employee Benefits Institute of America)


Divorce and Retirement: How to Take Control of Retirement Benefits (PDF)
Excerpt: "When you're in the midst of a divorce, you have to juggle so many things. . . . One practical issue that women often overlook is getting a fair share of retirement assets. Retirement funds may be among the biggest assets you have as a couple. It's important to know that these funds are not automatically split in a divorce." (The Women's Institute for a Secure Retirement)


Restoring 401(k) Match Would Be Smart Business Move
Excerpt: "In a recent column, I talked about the chances of employers reinstating the 401(k) matching contributions they've suspended or reduced to save money[.] Here's Part 2 of my push to remind employers of how important the matches are to their workers and what's in it for companies if they restore them." (Pamela Yip via The Dallas Morning News)


Tips on Managing Investment-Related Risks
Excerpt: "In the wake of the current economic downturn, we are receiving more and more calls from plan sponsors asking for tips on how to deal with unhappy participants and how to mitigate and/or transfer the risk of liability for investment-related losses in participant accounts. Most claims arise from either investment-related activities or the lack of prudent administrative processes and procedures. This article discusses methods of shifting or mitigating liability for investment losses as well as how to ensure that you are meeting your fiduciary duties in doing so." (Reish Luftman Reicher & Cohen)


Group Decision-Making: Implications for Investment Committees (PDF)
16 pages. Excerpt: "The decisions investment committees make are often based on quantitative measures of portfolio performance. However, the precision conveyed by these measures can overshadow an important fact, which is that groups, by their nature, make decisions that are susceptible to behavioral and psychological biases. These biases can lead to unwise decisions by investment committees, which can affect portfolios' performance and increase exposure to fiduciary risk. What can committees do to avoid these biases?" (The Vanguard Group, Inc.)


Target-Date Funds Could Fall Under ERISA
Excerpt: "Avatar Associates LLC is asking the Department of Labor for an advisory opinion that could, for the first time, subject mutual fund companies offering target-date funds to ERISA. While some attorneys say the chances that the DOL will buy Avatar's argument are slim, they acknowledge the stakes are huge. A ruling in Avatar's favor could expose mutual fund companies that offer target-date funds to fiduciary lawsuits under the Employee Retirement Income Security Act." (Pensions & Investments)


Best Retirement Plan Investment Committees Are Five to 10 Members
Excerpt: "An employer's retirement plan investment committee will be at its best when it is big enough but not too unwieldy, according to a new study. In its new review of how group decisionmaking theory applies to the operation of a typical plan investment panel, Vanguard Investment Counseling and Research said investment committee's are best at five to 10 members. First advantage: a properly sized group can take advantage of the power of a vigorous discussion and disagreement without getting bogged down with too many opinions." (PLANSPONSOR.com; free registration required)


Looking at Fiduciary Performance from the Vantage Point of a Plan Participant
Excerpt: "[The idea behind BrightScope is] to collect independently verifiable data on fees, costs and performance variables behind the 401(k) statements given to participants, and use that data to create a defensible, industry wide benchmark allowing fees, costs and performance to be compared across plans. When you reach that goal, done to a level of mathematical sophistication and defensible data sufficient to allow its use as evidence in a courtroom or as a foundational piece for expert testimony on how a particular plan's fees, costs or performance compare to the broader universe, you have the linchpin on which you can turn analysis and the standards for fiduciary conduct in this area from the practices by which a 401(k) plan was run to the outcomes for the participants." (Stephen Rosenberg of The McCormack Firm, LLC)


In New York State Pension Inquiry, a Scandal Snowballs
Excerpt: "The inquiry into corruption at the New York State pension fund started simply enough. Alan G. Hevesi, the former comptroller, was accused of using state workers as chauffeurs for his ailing wife. But by the time Mr. Hevesi resigned his office in late 2006, investigators for the Albany County district attorney's office were examining a more troubling problem: allegations that Mr. Hevesi's associates had sold access to the state's $122 billion pension fund, using one of the world's largest pools of assets to reward friends, pay back political favors and reap millions of dollars in cash rewards for themselves." (The New York Times; free registration required)


Small-Business Employers Still Like 401(k) Plans
Excerpt: "Despite generally acknowledging the importance of retirement plans, almost 40% of responding small-business employers do not offer one, according to a survey by SunTrust Bank. They cited the following as potential roadblocks, according to a release of the survey results: affordability (90%); ease of use once the program is implemented (89%); ease of setting up a program (87%); fee transparency (87%); quality and range of investment alternatives available (87%)." (planadvisor)


Three Pensacola, FL, Pension Funds' Snowballing Costs Could Threaten Day-to-Day Services
Excerpt: "The city's three pension funds -- one for firefighters, one for police officers and one for general city employees -- offer benefits far more generous than in the private sector. And the funds' snowballing costs soon will outstrip the city's ability to pay if the city is going to maintain basic services for taxpayers. The city cannot legally change the pensions of 800 retired employees, City Manager Al Coby said. But it could alter benefits for the 600 employees paying into the plans. Some 290 other employees enrolled in the state retirement system aren't affected." (Pensacola News-Journal)


Signs There's Something Wrong with Your 401(k)
Excerpt: "Protecting your retirement nest egg is a top priority of the Department of Labor, or DOL. The agency issued warning signs to help employees discover whether their 401(k) contributions are being misused. These are the department's top warning signs that something is amiss." (The Seattle Times)


A Personal Bailout Plan for Retirement
Excerpt: "[T]here is a way out of this mess. In essence, you have to create your own personal bailout plan. It won't be fun. It involves making some serious late-stage changes to your plan, and committing to do more in the years you have remaining in your career: save more, work longer and invest more carefully." (CBS News)


[Opinion]
Misuse of Pension Dollars Is Increasing, and Inevitable That It Would Lead to Pay-to-Play Schemes
Excerpt: "President Obama's auto fix-it man, Steven Rattner, is in the news as one of the Wall Street financiers hit up for big money as part of New York state's unfolding pension-kickback scandal. The White House says he's done nothing wrong, and there's no public evidence that he broke any laws. But Mr. Rattner's high profile is nonetheless useful in drawing attention to the real story here, which is the growing evidence of corruption by officials who use their power over public pension funds to shake down private companies." (The Wall Street Journal)


[Opinion]
ERISA's 404(c) Has Long Been Held Out by Some As Something of a Magic Talisman
Excerpt: "Comply with its strictures, they claim, and you have an iron-clad defense against participant lawsuits -- and, IMHO, the implication is a defense against ALL participant lawsuits. Of course, any number of ERISA experts will tell you that it is nearly impossible to satisfy those strictures, certainly not for every transaction (and mind you, 404(c) is transactional protection) -- not that seems to dissuade plan fiduciaries from trying, nor plan advisers from purporting to help them achieve that end. Nor are plan fiduciaries, or the participants and beneficiaries they support, ill-served by those efforts." (planadvisor)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
Are Nonqualified Deferred Compensation Plans Still Viable? (PDF)
5 pages. (Milliman)


ERISA Litigation Study, April 15, 2009 (PDF)
21 pages. (Pension Governance, Inc. and The Michel-Shaked Group via McGuireWoods LLP)

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Webcasts and Conferences

( Click to post your webcast or conference )

"What You Don't Know About HCEs and Key Employees" Web Seminar
Nationwide on April 28, 2009
presented by SunGard Relius

Form 5500 Updates: Achieving Full Compliance Webcast
Nationwide on May 7, 2009
presented by AccountingWEB.com

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Press Releases

( Click to post your press release )

Health Care Plans: Impact of the Financial Crisis
International Foundation of Employee Benefit Plans

SunTrust Offering New Online 401k for Small Businesses
SunTrust Banks, Inc.

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Employee Benefits Jobs

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

Actuary "Small Plan"
for National Retirement Services, Inc.
in NC

Relationship Manager Associate
for Benefit Funding Services Group
in CA

Treasury Director/Chief Investment Officer
for Marshfield Clinic
in WI

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EmployeeBenefitsJobs.com (Sponsor)

(Click on banner to learn more.)

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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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