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November 26, 2003 - 13,525 subscribers
Today's sponsor: Natalie Choate's Life and Death Planning for Retirement Benefits

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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
ASPA Seeks Help from Firms Providing Administration or Consulting Services to Cash Balance Plans
Online survey; 11/30/03 deadline. Excerpt: "Please complete the questions below and submit your answers by November 30, 2003. Your assistance is greatly appreciated." (American Society of Pension Actuaries (ASPA))

Regulators Order Security Trust Co. to Shut Down
Excerpt: "The case is ... the first to target the third parties that process trade orders for pensions and other retirement plans. Up until now actions have been brought against mutual fund companies and hedge funds." (Reuters)

Fund Intermediaries Such as Security Trust Company Enter the Spotlight
Excerpt: "These middlemen streamline trade processing for pension plan administrators and fund companies. The middlemen collect buy and sell orders from retirement plan administrators and other customers, aggregate them and forward them to fund companies. That way, 401(k) record keepers can farm out the trading aspect of their business, and fund companies can process big, bundled trades rather than numerous smaller ones." (Los Angeles Times; one-time registration required)

Security Trust Company Focuses On Providing Stability To Customers During Shutdown
Press release. Excerpt: "Security Trust Company, N.A., (STC) announced [on Nov. 25] it will continue to cooperate with all authorities to achieve an orderly dissolution of the company by March 31, 2004. The company is focused on continuing to provide stable services to the retirement plans and other assets under its administration." (Security Trust Company via NewsAlert.com)

More Employers Allowing New Workers to Join 401(k) Plans Immediately
Excerpt: "[A] recent survey by benefit consultant Hewitt Associates found that 43 percent of big companies now allow new employees to enroll in the 401(k) right away, up from 35 percent in 2001." (Wall Street Journal via SFGate.com)

Gathering Storm of Fiduciary Liability for Some 457 and 403(b) Retirement Plan Sponsors
Excerpt: "In general, a 457 plan, as well as a 403(b) plan sponsored by a governmental entity, will not be subject to ERISA, exempted as a 'governmental plan.' However, a 403(b) plan that is not sponsored by a public governmental entity must be carefully structured to avoid ERISA's requirements ... A 403(b) plan will be subject to ERISA unless it has no employer contributions, is purely a voluntary plan, and there is minimal administrative involvement by the plan sponsor." (Attorney Jeff Robertson on 403bWise.com)

ERISA Title I Concerns in 403(b) Plans
Excerpt: "[N]ongovernmental employers need to be aware that in adopting and administering a 403(b) arrangement they may be subjecting themselves to unanticipated administrative burdens and regulatory requirements, including fiduciary liability, under ERISA." (CCH News & Information Library)

Relief Plan for Pension Funding Fails to Clear the Senate
Excerpt: "A measure that would have let the nation's businesses defer tens of billions of dollars in pension contributions over the next two years was beaten back in last-minute Senate maneuvering yesterday evening, disappointing companies that have been pushing all year for help with their depleted pension funds." (New York Times; one-time registration required)

An Unsuccessful ERISA Legal Challenge to Market-Timing Restrictions
Excerpt: "With recent market-timing allegations in the current mutual fund investigation, there has been much discussion around the practice of placing restrictions on frequent trading in 401(k) plans. Such restrictions are usually drafted into the prospectus, the Summary Plan Description ('SPD') and the plan document governing the 401(k) plan. Has anyone challenged the legality of such restrictions under ERISA? The answer is yes ..." (Attorney B. Janell Grenier on BenefitsBlog.com)

How to Report Nontaxable Dollars Paid from Plan But Rolled Over Into IRA?
Excerpt: "The instructions to the 2002 IRS Form 8606, Nondeductible IRAs, are not clear on how to report a rollover of nontaxable amounts from a qualified employer plan.... Conservatively, an IRA owner could enter his/her nontaxable rollover amount in Part 1, Line 2 of the rollover year's Form 8606 even if he/she had never filed Form 8606 in the past." (Compliance Headquarters (Bankers Systems Inc.))

At Three Michigan Companies, Employee Ownership Pays Off
Excerpt: "Firms that defy market downturns and industry woes to soar above their peers have one common creed: Investor satisfaction comes first, period.... A number of fine Michigan companies meet some of those criteria, but this year only three outstanding corporations achieved an 'A+' ranking in The Detroit News Michigan Corporate Report Card." (The Detroit News)

Employee Ownership Update for November 25, 2003
NCEO Executive Director Corey Rosen discusses FASB's clarification of when ESOP shares must show as a balance sheet liability under FAS 150; FASB's proposal to allow companies accounting for equity compensation to choose between the intrinsic value method and the fair value method; and a new bill to limit options expensing. (National Center for Employee Ownership (NCEO))

Text of Notice Containing Railroad Retirement Tier 2 Tax Rates for 2004: 13.1% for Employers (PDF)
2 pages. Excerpt: "The tier 2 tax rate on employees will remain at 4.9 percent in 2004, but the tier 2 tax rates on employers and employee representatives will decrease to 13.1 percent in 2004." (Internal Revenue Service)

Alabama State Pension Fund Has Bumpy Ride Aboard US Airways
Excerpt: "About 14 months ago, Alabama's state pension system emerged almost from nowhere to become the controlling shareholder of US Airways Group Inc., then operating under federal bankruptcy protection.... [The investment philosophy of David Bronner, chief executive officer of the pension system,] has been criticized by some pension authorities who assert that he is taking unnecessary risk in the name of Alabama's economic development." (Pittsburgh Tribune-Review)

Enforcement Stats Show Jump in DOL's Monetary Recoveries and VFC Program Submissions
Excerpt: "EBIA Comment: The increase in applications under the VFC Program may be the result of certain changes that were made last year to make it easier for employers and other fiduciaries to use the program to correct violations." (EBIA)

Probes Might Cause Changes in Some 401(k) Plans
Excerpt: "The lowdown for employees is: You need to figure out whether your company is making changes, and if so, when the changes take effect and what will happen if you do nothing. And if you haven't done so already, this might be the opportune time to rebalance, or sell overweight positions and buy into underweight ones." (AP via The Boston Globe)

Mutual Fund Outflows Could Prove Costly
Excerpt: "As regulators continue to probe mutual fund practices, many skittish investors have been opting to get out of funds accused of wrongdoing. While advisers caution against panic selling, they say continued outflows could hurt those investors who stick around - even if a fund is later vindicated." (AP via [Minneapolis] StarTribune.com)


Links to Items on Executive Comp, Benefits in General

The Wal-Mart You Don't Know
California supermarket workers are on strike over health and retirement benefits; employers say they must pass on costs to employees in order to compete with Wal-Mart. Excerpt: "The giant retailer's low prices often come with a high cost. Wal-Mart's relentless pressure can crush the companies it does business with and force them to send jobs overseas. Are we shopping our way straight to the unemployment line?" (Fast Company)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

ERISA/Employee Benefits Attorney
for Parsinen Kaplan Rosberg & Gotlieb
in MN

401(k) Plan Administrator
for Capital Investment Advisory
in FL

Jr. Administrator
for Capital Investment Advisory
in FL

Asset Allocation Specialist
for ICMA Retirement Corporation
in DC

Director Retirement Plan Marketing & Sales
for The Ganim Group, Inc.
in CT

Pension Portability Specialists
for ICMA Retirement Corporation
in DC

Investor Services Technical Specialist
for ICMA Retirement Corporation
in DC

Benefits Analyst
for Georgetown University
in DC

Health & Welfare Consultant
for Mellon
in CA
Newly Posted Events

Ask the Experts: Drug Reimportation
Nationwide on December 2, 2003
presented by Kaiser Family Foundation

Retiree Medical Care: Easing the Pain, Developing a Cure
Nationwide on September 17, 2003
presented by Hewitt Associates LLC

How to Help Employees Regain Lost 401(k) Ground
Nationwide on July 23, 2003
presented by Hewitt Associates LLC

Employer Plans for Future Retiree Health Benefits
Nationwide on February 5, 2003
presented by Hewitt Associates LLC

Creating New Health Care Behaviors Among Employees
Nationwide on November 19, 2003
presented by Hewitt Associates LLC

How Proposed Trading Regulations Could Undermine 401(k) Plans
Nationwide on December 4, 2003
presented by Hewitt Associates LLC

The Long-Term Outlook for Stock Option Plans
Nationwide on November 12, 2003
presented by Hewitt Associates LLC

Consumer Driven Care 101 and Beyond Healthcare Web Summit
Nationwide on December 8, 2003
presented by MCOL

2003 AFP Virtual Education - Fiduciary Response to Mutual Fund Trading Scandals
Nationwide on December 18, 2003
presented by Association for Financial Professionals
Newly Posted Press Releases

Labor Department Sues Houston Plan Official For Abandoning Profit Sharing Plan
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))

Treasury and IRS Simplify Reporting Requirements for U.S. Persons with Canadian Retirement Plans
(Internal Revenue Service (IRS))

Medicare Bill Contains Important Quality Reporting, Pay-For-Performance Provisions
(NCQA)


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