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February 3, 2004 - 13,655 subscribers
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Bush Proposal Would Change Pension Rules, Retirement Accounts
Excerpt: "The Bush administration yesterday rolled out an array of tax cuts, savings incentives, loophole closers and collection initiatives that officials said would encourage investment, promote trade, combat abuse and simplify the tax laws. The proposal, outlined by Treasury Department officials, would also make it easier for companies that operate traditional pension plans to convert them to 'cash balance' plans ..." (Washington Post)
AP Coverage: Bush Budget Has Tax Incentives for Saving
Excerpt: "Another major change, proposed in a similar form last year, would allow individuals to save as much as $5,000 every year in each of two tax-free investment accounts, one dedicated to retirement and the other without restrictions. A working, married couple could save as much as $20,000 in the accounts each year." (AP via Washington Post)
Explanation of Administration's Retirement Savings Proposals (PDF)
11 pages. Excerpt is courtesy of the American Benefits Council. (Office of Management and Budget, The Executive Office of the President)
ASPA Summarizes Administration's Revised Savings Proposals
Excerpt: "On February 2, the Secretary of Treasury unveiled a new version of the LSA/RSA/ERSA proposals. ASPA's Government Affairs Committee has met with senior Administration officials on numerous occasions ... Significantly, many of the revisions to the proposals were made in response to the concerns raised by ASPA. In response to the changes made by Treasury, ASPA no longer opposes the proposals as outlined in Treasury's budget proposal." (ASPA-- The Retirement Plan Professionals)
Opinion: Administration's Savings Proposals Would Frustrate Long-Term Savers
Excerpt: "Although promoted to 'make saving simple for everyone and for every purpose' ... new savings proposals ... won't create pension plans for the 70 million Americans who don't have them. The proposed restriction-free 'lifetime savings account' (LSA) may even reduce long-term savings and divert funds earmarked for 529 college savings accounts, variable annuities, and 401(k)-type plans and help pave the way for Social Security privatization.'" (John Wasik on Bloomberg.com)
Administration Releases Cash Balance Legislative Proposal
Excerpt: "Today, the Treasury Department proposed legislation ... The proposal would impose a 5-year 'hold harmless' period after each conversion. During this period, the benefits earned by any worker under the cash balance plan would have to be at least as valuable as the benefits the worker would have earned under the traditional plan if the conversion had not occurred. The proposal would ban any 'wear-away' of retirement benefits ..." (Internal Revenue Service)
Explanation of Administration's Cash Balance Plan Proposal (PDF)
Excerpt is courtesy of the American Benefits Council. (Office of Management and Budget, The Executive Office of the President)
Summary of Administration's Proposal for Legislation on Cash Balance Plans (PDF)
3 pages. Excerpt: "The Treasury legislative proposal is divided into three parts: (1) transition requirements for employers converting from traditional defined benefit plans to cash balance plans, (2) clarification of the status of hybrid designs under the age discrimination statutes, and (3) resolution of the so-called whipsaw issue, which under a number of court cases has required employers to pay departing employees higher benefits than the balances in their cash balance accounts." (Benefits Group of Davis and Hartman LLP for the American Benefits Council)
American Benefits Council: Cash Balance Proposal Has Both Good News, Cause for Concern
Excerpt: "[American Benefits Council President James A. Klein said] the Administration is to be commended for validating that these important retirement plans are not inherently age discriminatory, as some have falsely charged.... On the other hand, the proposal leaves many employers that previously converted to a hybrid design in a continued state of suspended animation about the legitimacy of their plans, particularly in light of recent litigation ...'" (American Benefits Council)
Overview: Senate Passes Pension Funding Relief
Excerpt: "The major provisions of the Senate bill, which passed by a vote of 86 to 9, would ... [r]eplace the interest rate for 30-year Treasuries with a rate based on corporate bond indices as the benchmark for key funding and related requirements, for a two-year period ..." (The Segal Company)
Ninth Circuit Rejects Attempt to Find Elapsed-Time Service Method Illegal Under ERISA (PDF)
19 pages. Excerpt: "The employees argue that the elapsed-time regulation violates the minimum standard, the vesting, and the benefit accrual provisions of ERISA because it fails to require the counting of hours of service.... Other courts have addressed the question ... We agree with the Second Circuit[,] the Seventh Circuit[,] and the Eighth Circuit ... and hold that the elapsed-time regulation does not violate ERISA." (U.S. Court of Appeals for the Ninth Circuit, via FindLaw.com)
Overview: New Legislation Clarifies Rule on Plan Loans to Servicemembers (PDF)
Excerpt: "On December 19, 2003, President Bush signed the Servicemembers Civil Relief Act (the 'SCRA') which restates, clarifies, revises and renames the Soldiers' and Sailors' Civil Relief Act of 1940." (Trucker Huss)
Opinion: Alabama Should Drop the DROP Law
Excerpt: "The DROP law provides that a public employee with 25 years of service can sign up for retirement benefits when he or she reaches age 55, but can continue working for another three to five years. During those years, the retirement funds are put into a special account which the person can claim in a lump sum when he or she actually retires." (Mike Kilgore on AL.com)
401(k) Fees: Devil in the Nest Egg
Excerpt: "Figuring out how much a 401(k) costs can be difficult not only for participants, but also for plan administrators." (Bankrate.com)
Links to Items on Executive Comp, Benefits in General
Bookmark: 'Listed Transactions' for Employee Benefit Plans
Excerpt: "The IRS had identified the following transactions involving employee benefit plans as listed transactions: 401(k) Accelerated Deductions; S Corporation ESOP Abuse of Delayed Effective Date for Section 409(p); Collectively Bargained Welfare Benefit Funds under Section 419A(f)(5); Certain Trust Arrangements Seeking to Qualify for Exemption from Section 419; Abusive Roth IRA Transactions; S Corporation ESOP Abuses: Certain Business Structures Held to Violate Code Section 409(p)" (Internal Revenue Service)
Senate Finance Committee Passes COLI Reform Bill
Press release. Excerpt: "The legislation would, among other things ... Require companies to obtain the consent of all individuals before enrolling them in a COLI plan. This provision codifies into federal law current business practice and the National Association of Insurance Commissioners' Model Regulation on consent. At least 43 states already have consent requirements." (American Council of Life Insurers)
Attorney Michael S. Gordon Dies
We are sad to report that Washington, D.C. ERISA attorney Michael S. Gordon died unexpectedly on February 1. Services are to be held on February 4 at Washington Hebrew Congregation. We'll link to an obituary as soon as one appears in the Washington Post or other newspapers. He was an attorney for the Senate Labor subcommittee during the drafting of ERISA, and had been chairman of the board of directors of the Pension Rights Center for 19 years. (Michael S. Gordon's Testimony at Recent House Hearing)
Newly Posted Press Releases
Preserving Cash Balance Plans for Workers: Treasury Proposes Legislation to Protect Defined Benefit Plans and Ensure Fair Treatment of Older Workers in Cash Balance Conversions
(Internal Revenue Service (IRS))
Sales Tool Vital for Client-Centered Retirement Planning
(Metrics Partners)
ASPA Applauds Changes to Bush Administration Savings Initiatives; Revised Proposals Will Now Promote Small Business Retirement Plan Coverage
(ASPA—The Retirement Plan Professionals)
BenefitMall Completes Acquisition Of Colorado Group Services
(BenefitMall)
Newly Posted or Renewed Job Openings
Defined Contribution Plan Administrators
for Growing Third Party Administrator on Fifth Avenue in Manhattan
in NY
Pension Sales Representative
for Standard Insurance Company - Retirement Plans Division
in CA
Benefits Administrator
for Independent Benefit Services
in MD
EB Trust Administrator
for BB&T/Stanley Hunt DuPree & Rhine
in SC
Consulting Actuary
for Stanley Benefit Services
in NC
Retirement Plan Manager
for Gensler
in CA
Human Resource Generalist
for Gensler
in CA
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