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April 10, 2003 - 13,053 subscribers
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CCH Coverage: Differing Viewpoints Surface at Hearing on Cash Balance Plan Regulations
Excerpt: "CCH Comment: Critics of the proposed regulations appear to be basing their objections on several fundamentally flawed interpretations of ERISA." (Tax.CCHGroup.com)
Newsday Coverage: Cash Balance Pensions Debated
Excerpt: "Don't let companies adopt cash balance pensions without protections for older workers, pleaded labor advocates and employees at an Internal Revenue Service and Treasury Department hearing yesterday. These pension plans slash the benefits of those nearing retirement, while saving the companies millions of dollars in pension costs, they argued." (Newsday.com)
NY Times Coverage: IRS Regs on Cash Balance Pension Conversions Attacked in Hearings
Excerpt: "Proposed regulations to govern the way companies change to a controversial type of pension plan were assailed yesterday both by workers and corporate officials at a hearing by the Treasury Department." (New York Times; one-time registration required)
Treasury Department Publishes One-Page Fact Sheet on Cash Balance Plans
Excerpt: "Since the majority of the workforce is now far more mobile, one increasingly popular retirement option is called a 'cash balance' plan.... Like a defined contribution plan (like a 401k), cash balance plans provide each employee with an 'account.' ... But like a defined benefit plan, the employer bears all the investment, or downside, risk for a cash balance plan." (U.S. Department of the Treasury)
Defined Benefit Plan Sponsors Criticize Proposed Age Discrimination Regs at IRS Hearing
Excerpt: "Proposed pension regulations that include a new interpretation of age discrimination would invalidate more than two thirds of the defined benefit plans sponsored by Fortune 100 companies." (PLANSPONSOR.com; one-time registration required)
Benefits Council Urges Continued Improvement in Cash Balance, Age Discrimination Rules
Press release. Excerpt: "[T]he most significant concerns with the proposed regulations are attributable to the adoption of overly mechanical tests for determining whether a plan is age discriminatory." (American Benefits Council)
Workers Put Their 401(k) Accounts into Disarray with Job Shifting
Excerpt: "The average American will hold 8.6 different jobs between the ages of 18 and 32, according to the Bureau of Labor Statistics. But all that job shifting may put a worker's 401(k) retirement accounts into disarray." (The [Appleton, Wisc.] Post-Crescent via NewsAlert.com)
Investment Management of Retirement Plans in Canada (PDF)
31 pages. Excerpt: "This study note reviews the management of funded registered pension plans, including public sector plans that take a form similar to private sector registered pension plans. The management of non-registered plans is beyond the scope of this study note." (Society of Actuaries, Education and Examination Committee)
Fiduciary Liability Issues for Selection of Investments (PDF)
14 pages. Excerpt: "The purpose of this study note is to acquaint the student with a few basic principles of trust law to help in the evaluation of investment strategies and selections." (Society of Actuaries, Education and Examination Committee)
Liquidity: the Hidden Risk Factor (PDF)
20 pages. Excerpt: "Liquidity has seldom been a concern to insurance companies and pension plans in the past. However, liquidity crises are often the preludes to an insolvency. How can actuaries assist in forestalling problems caused by the lack of liquidity? Where does liquidity end and insolvency begin? What can the corporate finance department do to alleviate the liquidity crisis? What effect do the commercial paper programs have on the liquidity requirements?" (Society of Actuaries, Education and Examination Committee)
Introduction to the Formation of Investment Strategy for Life Insurance Companies and Pension Plans (PDF)
36 pages. Excerpt: "The importance of developing a suitable investment strategy cannot be overstated. The impact of an additional one percent portfolio return can reduce pension costs by approximately twenty percent." (Society of Actuaries, Education and Examination Committee)
Introduction to Retirement Income Security Systems (PDF)
82 pages. Excerpt: "This study note is intended to provide a general perspective on retirement systems.... This study note is not intended to make you an expert in retirement systems, and the level of detail will not provide you sufficient background to practice as a retirement system actuary in any of the countries discussed." (Society of Actuaries, Education and Examination Committee)
An Actuarial Perspective on the 2003 Social Security Trustees Report (PDF)
8 pages. Excerpt: "This issue brief provides an actuarial perspective on the most recent report, together with sufficient background material for readers to obtain a good understanding of (1) what the trustees are saying about the future financial condition of Social Security and (2) the limitations of the trustees' assessment. The debate over Social Security's financial condition has raised many important questions." (American Academy of Actuaries)
Fiduciaries Need Not Violate Insider Trading Rules to Avoid a Breach
By attorney Tess J. Ferrera. Excerpt: "Litigation against Enron and other companies alleging that plan fiduciaries violated the Employee Retirement Income Security Act of 1974 (ERISA) when the value of company stock plummeted after disclosures of accounting irregularities are disclosed has served to highlight the tension between ERISA and federal securities laws prohibiting insider trading." (Kilpatrick Stockton LLP)
District Court: Plan Required to Use Lower PBGC Interest Rate to Calculate Lump Sum Payments
Excerpt: "A hospital could not use the lower PBGC interest rate set forth in its retirement plan to calculate lump-sum benefits, but was required to use a lower interest rate specified by the PBGC that was based on its reasonable determination of the appropriate annuity starting date, according to a U.S. District Court in Texas." (HR.CCH.com)
New Revelations About Retirement Income of Some Participants Stuns Oregon Lawmakers
Excerpt: "A small fraction of the Oregon public employees who retire today actually receive more annual income in their pensions than they did while on the job. But in 20 years, that will be commonplace for those who log a lifetime of service-- and a small group of workers could receive double their working salaries." (BendBulletin.com)
Fear and Uncertainty Over Once-Admired IRAs
Excerpt: "The thrill is gone. It was only a few years ago that everyone was excited about their IRAs and sought out the hottest mutual fund to invest in. Now, it seems that most people cringe when looking at their latest quarterly statements and wonder if investing in IRAs is still smart." (North County [Calif.] Times)
Why You Should Have Your Plan Restatements Reviewed and Submitted to IRS
Excerpt: "If your retirement plan is not an individually designed plan, but rather a prototype plan or a volume submitter plan, chances are that it has only been recently amended and restated by your document provider ... to comply with GUST and the required EGTRRA good-faith amendments.... [W]e recommend that you have your restated plan document reviewed by a qualified employee benefits attorney." (Chang, Ruthenberg & Long PC)
What the Docs Are Reading About 412(i) Plans
Excerpt: "[T]ake a look at a defined benefit arrangement called the 412(i) plan, which uses life insurance and annuities to offer a guaranteed future income. Such a plan offers a notable way to increase the tax-deductible dollars you can put away for future years. In addition, they can provide disability and death benefits." (Medscape; one-time registration required)
Overview: Final Regulations for Pension Plan Reduction of Benefits Notice Requirements
Excerpt: "Be mindful that a plan amendment subject to the notice requirements of these code sections may also be subject to additional reporting and disclosure requirements under title I of ERISA, such as the requirement to provide a summary of material modifications (SMM) describing the amendment." (Milberg Consulting LLC)
Overview: Final Regulations Issued Under IRC § 4980F and ERISA § 204
Excerpt: "The regulations incorporate the guidance in Rev. Rul. 2002-42, providing that the conversion or merger of a money purchase plan into a profit sharing plan is always treated as a significant reduction in the future rate of benefit accrual under the money purchase plan, requiring a notice under ERISA § 204(h)." (TRI Pension Services)
Experts Say Baby Boomers Aren't Saving Enough for Retirement
Excerpt: "Baby boomers are not bad savers-- in fact, they're better than their parents, according to the AARP. However, they need to be even better, because unlike their parents, most don't have pension plans, in which employers save for them." (AP via the Lansing [Mich.] State Journal)
GAO Report Analyzes Potential Use of Voluntary Individual Accounts as Social Security Reform
72 pages. Social Security Reform: Information on Using a Voluntary Approach to Individual Accounts. GAO-03-309, March 10, 2003. Excerpt: "[GAO is] reporting on (1) how voluntary plans can affect individuals, (2) how they could affect the total costs of the retirement system, and (3) the role of educational efforts relating to the participation decision. Throughout this report, GAO focuses on the issues that pertain specifically to a voluntary approach as distinct from a mandatory approach." (U.S. General Accounting Office)
Links to Items on Executive Comp, Benefits in General
IRS Regs Affect Disclosure, List Maintenance and Confidential Corporate Tax Shelter Registration
7 pages. Excerpt: "The [IRS] has released final regulations ... requiring a taxpayer to disclose a broad range of transactions on its federal income tax return if they have certain characteristics common to tax shelter transactions. [The regulations] also require certain advisors to those transactions to maintain investor lists and retain certain other information relevant to the tax structure of the transaction." (Proskauer Rose)
Benefits for Employees on Leave; Have They Really Left? How Long Do Benefits Continue?
Excerpt: "As your company and your work force have grown you have tried to provide your employees with a competitive benefits package. Now, you are faced with additional costs-- the cost to maintain benefits for employees who are out on leave. This article addresses the different types of leave and the legal and practical requirements and limitations on employee leaves of absence." (Chang, Ruthenberg & Long PC)
Military Leave: An Employer's Basic Obligations
Excerpt: "This Update restates and supplements a prior Update, addressing several frequently asked questions about USERRA. Please remember that state law may impose additional requirements." (Perkins Coie)
Senator Calls for Reducing Tax Shields for Executives
Excerpt: "Congress should tighten laws that let Enron executives shield their salaries from taxes without risk, the chairman of the Senate Finance Committee said [April 8, 2003]." (Bloomberg News via The New York Times; one-time registration required)
How Bad Business Conditions Can Affect Retirement and Welfare Plans
Excerpt: "As the post-dotcom bubble recession continues to drag on, many employers are now taking a long hard look at different ways to reduce their retirement and welfare program costs. Although some are considering discontinuing their plans altogether, most are focusing on making changes that will help them weather the storm." (Chang, Ruthenberg & Long PC)
Do You Know Where Your 457 Is? Governmental Employers and Nonqualified Deferred Compensation
Excerpt: "This article explains the principal method used by most governmental employers to provide nonqualified deferred compensation to their employees, as impacted by recent changes made by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the Job Creation and Worker Assistance Act of 2002 (JCWAA), and the proposed regulations under Code section 457 published on May 8, 2002." (Chang, Ruthenberg & Long PC)
Stock Option Repricings: Employees Benefit, But What About Investors?
Excerpt: "A paper written by Wharton accounting professor Mary Ellen Carter and Luann J. Lynch, a professor at the Darden Graduate School of Business, examines the relationship between repricing underwater stock options and retaining employees." (The Wharton School of the University of Pennsylvania)
Delta Airlines Wants to Allow Employees to Trade In Worthless Stock Options
Excerpt: "After years of watching the value of employee stock options sink, Delta Air Lines wants to make them worth something again. The Atlanta-based airline has asked shareholders meeting later this month to approve a plan that will allow most employees to trade in old stock options. In exchange, they'd get a smaller number of new options that become valuable at a much lower stock price." (The Atlanta Journal-Constitution via NewsAlert.com)
Canadian Federal Government Takes Step to Speed Resolution of Same-Sex Benefits Lawsuit
Excerpt: "The federal government is streamlining its legal battle over benefits to same-sex widows and widowers by combining all the suits into a single federal case.... Ottawa recently agreed to pay survivor benefits to gays and lesbians who lost partners within the last four years." (CBC News)
Newly Posted or Renewed Job Openings
Implementation Specialist
for ExpertPlan, Inc.
in NJ
Plan Administrator
for weaver partners, inc.
in ALL STATES
Institutional Trust Consultant III
for BB&T
in NC
Newly Posted Conferences
(Post Yours!)
Guns and Hoses 2003 - The Annual Reunion of the Nation's Police and Fire Pension Fund Leaders and Their Advisors
in CA
September 14, 2003
Institute for International Research
IRS and DOL Audit Activity/Enforcement/Compliance Programs
in NY
April 24, 2003
The New York Metropolitan Area Chapter - ISCEBS
Newly Posted Press Releases
(Post Yours!)
Mullin Consulting Gets High Marks from Clients in Benefits Consulting Satisfaction Survey
(Mullin Consulting)
U.S. Labor Secretary Appoints New Members To ERISA Advisory Council, Names Leadership
(U.S. Department of Labor, Employee Benefits Security Administration)
APRIL 14: Official End to Medical Privacy for America's Patients
(Citizens' Council on Health Care)
Quirks in Proposed Rules Would Trip Up Plans Never Questioned Before: Coalition Recommends Modifications
(Coalition to Preserve the Defined Benefit System)
CWA Presses Treasury Department on Pension Fairness
(Communications Workers of America)
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