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[Official Guidance]
Text of DOL (EBSA) Proposed Regs on Civil Penalty Rules for Multiemployer Defined Benefit Pension Plans That Fail to Take Corrective Funding Action (PDF)
19 pages. A typeset version will be published in the September 4, 2009 Federal Register. The attached version was submitted today at 8:45 a.m. by the EBSA to the Electronic Public Inspection Desk of the National Archives. (Employee Benefits Security Administration, U.S. Department of Labor)


[Guidance Overview]
EBSA Proposes Regulations on Civil Penalty Rules for Multiemployer Defined Benefit Pension Plans That Fail to Take Corrective Funding Action
Excerpt: "The PPA amended ERISA and the Internal Revenue Code to require those plans certified to be in endangered or critical status to adopt a funding improvement plan or a rehabilitation plan within 240 days from the required date of the certification. PPA also gave the Labor Department authority to assess civil monetary penalties of up to $1,100 per day against plan sponsors that fail to timely adopt funding improvement or rehabilitation plans. The proposed regulation sets forth the administrative procedures for assessing and contesting such penalties." (Employee Benefits Security Administration, U.S. Department of Labor)


[Guidance Overview]
Recharacterization Opportunity for Converted Plan or Traditional IRA Funds to Roth in 2008 has Deadline of Oct. 15, 2009
Excerpt: "The market free fall of 2008 was relentless. Many clients who did a Roth conversion last year have seen their account values decline, some drastically so. These clients now have a tax bill on value that they no longer have. For example, in early 2008, assume Allen converted $100,000 to a Roth IRA at a 25% effective marginal bracket, generating a $25,000 tax bill for the conversion. If Allen's account is worth only $30,000 today, he now must pay income tax on $70,000 of account value that no longer exists. Fortunately, though, in one of the great breaks provided by the tax code, clients like Allen can recharacterize their Roth accounts and eliminate the tax liability on the lost account value. Simply stated, a Roth recharacterization is the process of undoing a Roth conversion by transferring the converted funds back to an IRA. Anyone can do a recharacterization for any reason. After the recharacterization, the funds are treated as if they never left the IRA." (Financial Planning and SourceMedia, Inc.)


Exchange-Traded Funds in Defined Contribution Plans
Excerpt: "With their low expense ratios, ETFs seem like a particularly cost-effective way to offer index exposure in defined contribution (DC) plans. But expense ratios are only part of the costs of offering these funds in a DC plan. A new publication from Vanguard Center for Retirement Research examines all of the cost elements of offering ETFs as a plan investment option, and notes that ETFs may not be as cost-effective as traditional index funds when a full accounting of all relevant costs is made." (The Vanguard Group, Inc.)


A Reluctance to Retire Means Fewer Job Openings
Excerpt: "To the long list of reasons American companies aren't hiring -- business losses, tight credit, consumer retrenchment -- add the fact that many of their older workers are unable, or afraid, to retire. In other parts of the developed world, people are retiring as planned, because of relatively flush state and corporate pensions that await them. But here in the United States, financial security in old age rests increasingly on private savings, which have taken a beating in the last year. Prospective retirees are clinging to their jobs despite some cherished life plans." (The New York Times; free registration required)


Stable Value Funds: Performance from 1973 Through 2008
Excerpt: "There is a paucity of academic literature on stable value funds, although they occupy such a prominent place among retirement investment vehicles. They are offered in roughly one half of all defined contribution plans in the USA, with over $640 billion dollars worth of assets under management. This paper is the first to rigorously examine their performance throughout the entire period their inception in 1973." (Social Science Research Network)


Alabama Bank Hit with Stock Drop Charges
Excerpt: "Montgomery, Alabama-based Colonial Bank, closed by authorities in August, has been hit with a stock drop lawsuit by a retirement plan participant. Lora McKay claims the bank violated its Employee Retirement Income Security Act (ERISA) fiduciary responsibilities by having company stock as a plan option despite suffering major losses from the nation's mortgage crisis. The suit charges that because of the fiduciary breach, bank employees lost $50 million in retirement assets after the bank's stock gave up 99.7% of its value. McKay alleges the ERISA breach took place from April 18, 2007, to the present and requests that the suit be certified as a class action to represent other employees with company stock investments." (PLANSPONSOR.com; free registration required)


The World Economic Forum Partnership with Mercer and the OECD
Excerpt: "This is a two-year partnership to research new ways for employers, governments and providers to improve the productivity and retirement security of the world's workforce in a rapidly ageing and less healthy world. Our research findings and insights can be accessed from this website." (Mercer LLC)


Alabama Attorney General Takes Over 457 Plan Fee Probe
Excerpt: "Alabama Attorney General Troy King has taken over a probe into at least $10 million in fees paid [to] the Alabama State Employees Association from the 457 Plan accounts of current and retired state workers. Forbes reported that King has already asked Alabama Securities Commission (ASC) Executive Director Joe Borg to delay any further work on the commission's ongoing investigation of Nationwide's involvement with the state's 457 program, but Borg then opted to pull the ASC out of the picture in favor of King's broader investigative authority." (PLANSPONSOR.com; free registration required)


With Pension Fund Losses, Ohio Public Workers Might Have to Contribute More, and Retirees Could See Benefits Cut
Excerpt: "Ohio's five public pension systems have lost billions since the end of 2007, forcing them to consider painful changes, such as cutting the benefits of retirees and requiring those still working to pay more. These changes, if implemented, aren't expected to go over well with the state's 1.7 million working and retired public employees and their beneficiaries.'Nobody wants to have less tomorrow than they have today,' said William Estabrook, executive director of the Ohio Police & Fire Pension Fund. 'But we're not going to invest our way out of this, and the two key components are contributions and benefits.'" (The Columbus Dispatch)


Ledbetter Act Revives Pension Accrual Age Discrimination Claim
Excerpt: "In 2004, Wayne Tomlinson and other employees brought a class action against their employer, El Paso Corp., for age discrimination caused by changes made to accrual rules when the company switched from a defined benefit plan to a cash balance plan in 1997. Tomlinson alleged that the company selectively froze the pension benefits of workers 40 and older. He alleges that he didn't know enough about the changes to file his action until 2004. The action was originally dismissed in January of this year as untimely, but plaintiffs' attorneys filed a motion to reconsider after the Ledbetter Act was signed into law." (Workplace Prof Blog)


US Airline Pilots Association Sues Pension Benefit Guaranty Corporation
Excerpt: "The US Airline Pilots Association (USAPA) today filed a lawsuit against the Pension Benefit Guaranty Corp. (PBGC) in federal court seeking the removal of the PBGC as trustee of US Airways pilots` pension plan and requesting the immediate appointment of a temporary trustee to perform the investigatory functions that the PBGC has refused to perform on behalf of pension plan beneficiaries since 2003. USAPA asserts that the PBGC breached its fiduciary duty to the fund and its thousands of beneficiaries by failing to comply with its duties required under the Employee Retirement Income Security Act of 1974 (ERISA)." (Reuters)


Executive Pay Overshadows Pension Funding
Excerpt: "More details are out on which companies spent more in 2008 on executive stock grants than on employee pensions, and other important expenses. The study in The Analyst's Accounting Observer . . . has now been released to the press, and with it much more detail on the companies which prioritize options and restricted stock grants over other promises. The idea behind the report, its author writes, is partly to shed light on what is being put into stock compensation versus other obligations (like pensions) and opportunities." (BusinessWeek)


[Opinion]
Practice Note on Preparing a Certification of the Adjusted Funding Target Attainment Percentage for a Pension Plan (PDF)
12 pages. Excerpt: "This practice note was prepared by the Pension Committee of the American Academy of Actuaries to offer information to actuaries on current and emerging practices in the preparation of the certification of a U.S. tax-qualified pension plan's adjusted funding target attainment percentage (AFTAP), as required under the benefit-restriction provisions of the Pension Protection Act of 2006 (PPA) and associated proposed regulations. This practice note is intended to be illustrative and spur professional discussion on this topic. Other reasonable approaches currently exist and new ones likely will evolve in the future." (American Academy of Actuaries)

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
Severance Plans as Regulated by the Internal Revenue Code and ERISA (PDF)
Pages 5- of 10 pages. Excerpt: "Many companies have implemented severance plans due to the current economic situation. While companies typically consider the employment law implications of severance plans (such as the Age Discrimination in Employment Act), many have not considered how these plans are governed by the Internal Revenue Code of 1986, as amended (the'Code') and the Employee Retirement Income Security Act of 1974, as amended ('ERISA'). This article briefly summarizes how the Code and ERISA govern severance plans." (Trucker Huss)


[Guidance Overview]
Employer Practice of Payments in Exchange for Releases Does Not Constitute ERISA Plan
Excerpt: "The Second Circuit recently addressed an important issue that can arise in the context of employment termination. In this case, the plaintiff, on behalf of herself and similarly situated employees, alleged that her employer had an ongoing practice of offering payments in exchange for a release of claims. The key issue: was this practice, in effect, an employee welfare benefit plan? This is a issue frequently overlooked. While an ERISA plan is required to be described in a written document, an ERISA plan can be created through pattern and practice even though not described in a written document. This fact creates substantial risk that a course of payments on termination of employment may give rise to a severance pay plan. That is essentially what the plaintiff alleged in Kawski." (Roy Harmon III via Health Plan Law)


[Guidance Overview]
SEC's Interpretive Guidance on New Executive Compensation Disclosure Rules (PDF)
6 pages. Excerpt: "The guidance is in the form of questions and answers of general applicability to the disclosure rules, as well as interpretive responses regarding particular situations. The guidance replaces staff interpretations issued in previous years, and is drafted in a manner that facilitates periodic future updates. The interpretative guidance is briefly summarized [in the target document] with the August 14, 2009 guidance presented in italics. [Originally published January 29, 2007.]" (Frederic W. Cook & Co., Inc.)


[Guidance Overview]
Accounting for Stock Compensation Under FASB ASC Topic 718 (PDF)
13 pages. Excerpt: "The SEC staff In Section 718-10-S99 further provides that companies may disclose the amount of non-cash equity compensation cost included in specific line items in financial statements, footnotes, or within MD&A. In addition, companies may disclose non-GAAP financial measures such as net income excluding equity compensation cost within MD&A, provided they are accompanied with appropriate descriptive disclosures. However, pro forma presentations excluding equity compensation cost are prohibited. [Originally published April 29, 2005.]" (Frederic W. Cook & Co., Inc.)


California Court Strikes Down Furloughs for Compensation Insurance Fund Employees
Excerpt: "A San Francisco Superior Court judge overturned unpaid furlough days that were ordered for more than 6,000 employees of the State Compensation Insurance Fund. The National Law Journal reports that the Service Employees International Union Local 1000, the state's largest union of public employees, argued that insurance fund employees were exempt from furloughs under the California Insurance Code. The court agreed, pointing to a section of the code that exempts the employees from 'any hiring freezes and staff cutbacks otherwise required by law.'" (PLANSPONSOR.com; free registration required)


San Francisco Judge Rules California Compensation Insurance Fund Furloughs Illegal
Excerpt: "Gov. Arnold Schwarzenegger illegally furloughed 7,400 employees of the State Compensation Insurance Fund this year, a San Francisco judge ruled Tuesday in a case that may help workers in other state agencies challenge their unpaid leaves. Superior Court Judge Charlotte Woolard affirmed a tentative ruling she had issued Monday that the governor had no authority to cut the staff of the insurance fund. The fund, based in San Francisco, sells workers' compensation insurance to employers and uses the proceeds to run its operations, with no support from the state treasury. Woolard's tentative decision came in a suit by the Service Employees International Union, which represents the fund's nearly 6,300 clerical workers, claims adjusters and support staff. She granted the fund's request Tuesday to extend the ruling to another 1,100 employees not represented by the union. Schwarzenegger will appeal the ruling, said spokesman Mike Naple." (San Francisco Chronicle)


New Book: Equity Compensation for Limited Liability Companies (LLCs)
For many years, the most common advice on sharing equity with employees in a limited liability company (LLC) has been 'switch to S corporation status instead.' The argument was that it was too complicated to share equity in an LLC. Yet many LLC leaders want to share equity with employees and have very good reasons for retaining their company's status as an LLC. This book is the only detailed exploration of equity compensation in LLCs available. It includes a model plan on the accompanying CD. (National Center for Employee Ownership (NCEO))

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Webcasts and Conferences

2009 Fall Tour: Advanced IRAs: Compliance Issues
in Minnesota on September 17, 2009
presented by Ascensus

2009 Fall Tour: Advanced IRAs: Compliance Issues
in Wisconsin on September 18, 2009
presented by Ascensus

2009 Fall Tour: Advanced IRAs: Compliance Issues
in California on September 23, 2009
presented by Ascensus

2009 Fall Tour: Advanced IRAs: Compliance Issues
in Minnesota on September 24, 2009
presented by Ascensus

2009 Fall Tour: Advanced IRAs: Compliance Issues
in California on September 25, 2009
presented by Ascensus

2009 Fall Tour: Advanced IRAs: Compliance Issues
Nationwide on September 30, 2009
presented by Ascensus

2009 Fall Tour: IRA Essentials
in Wisconsin on September 15, 2009
presented by Ascensus

2009 Fall Tour: IRA Essentials
in Minnesota on September 16, 2009
presented by Ascensus

2009 Fall Tour: IRA Essentials
in Wisconsin on September 16, 2009
presented by Ascensus

2009 Fall Tour: IRA Essentials
in Wisconsin on September 17, 2009
presented by Ascensus

2009 Fall Tour: IRA Essentials
in California on September 22, 2009
presented by Ascensus

2009 Fall Tour: IRA Essentials
in Minnesota on September 23, 2009
presented by Ascensus

2009 Fall Tour: IRA Essentials
in California on September 24, 2009
presented by Ascensus

2009 Fall Tour: IRA Essentials
in Arizona on September 29, 2009
presented by Ascensus

2009 Web/Telephone Seminar: 72(t) Payments
Nationwide on December 10, 2009
presented by Ascensus

2009 Web/Telephone Seminar: Direct Rollovers and Other Portability Issues
Nationwide on December 8, 2009
presented by Ascensus

2009 Web/Telephone Seminar: Establishing and Amending IRAs
Nationwide on November 10, 2009
presented by Ascensus

2009 Web/Telephone Seminar: HSA Basics
Nationwide on October 22, 2009
presented by Ascensus

2009 Web/Telephone Seminar: Introduction to 401(k) Plans
Nationwide on October 27, 2009
presented by Ascensus

2009 Web/Telephone Seminar: IRA Beneficiary Distributions
Nationwide on November 5, 2009
presented by Ascensus

2009 Web/Telephone Seminar: IRA Frontline Fundamentals ?Part 2
Nationwide on October 20, 2009
presented by Ascensus

2009 Web/Telephone Seminar: IRA Reporting
Nationwide on November 3, 2009
presented by Ascensus

2009 Web/Telephone Seminar: IRA Reporting
Nationwide on November 19, 2009
presented by Ascensus

2009 Web/Telephone Seminar: IRA Required Minimum Distributions
Nationwide on December 3, 2009
presented by Ascensus

2009 Web/Telephone Seminar: Roth 401(k)/403(b) Provision
Nationwide on December 1, 2009
presented by Ascensus

2009 Web/Telephone Seminar: Roth IRA Distributions
Nationwide on November 17, 2009
presented by Ascensus

2009 Web/Telephone Seminar: IRA Frontline Fundamentals ? Part 1
Nationwide on October 15, 2009
presented by Ascensus

COBRA Compliance Checkup: Administrative Challenges and Strategies
Nationwide on October 1, 2009
presented by EBIA / Thomson Reuters

HIPAA Privacy Breach Notification Regulation Requirements
Nationwide on September 2, 2009
presented by Gallagher Benefit Services, Inc.

( Click to post your webcast or conference )

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Press Releases

Watson Wyatt Data Services Releases 2009/2010 Survey Report on Human Resources Personnel Compensation
Watson Wyatt Data Services

U.S. Labor Department Proposes Civil Penalty Rules for Multiemployer Defined Benefit Pension Plans That Fail to Take Corrective Funding Action
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Great-West Retirement Services Rolls Out Program To Help Companies Promote Retirement Savings On ?401(k) Day?
Great-West Retirement Services

CPI Selected For LPL Financial Retirement Plus Program
CPI Qualified Plan Consultants, Inc.

A Simple Solution to Reduce Retirement Plan Costs
Penchecks, Inc.

MassMutual Achieves Highest Q2 and YTD 401k Sales Increases
MassMutual

World Economic Forum and Mercer Offer Strategies to Address the Challenge of Financing Retirement and Health Care in an Ageing World
Mercer

( Click to post your press release )

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Employee Benefits Jobs

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for Alliance Benefit Group of Michigan
in MI

Actuarial Compliance Leader
for Polycomp Administrative Services
in CA

Pension Administrator
for Primark Benefits
in CA

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Handy Links:

• View Today's Active Message Threads
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