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April 23 - 26, 2004 - 13494 subscribers
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Overview: Automatic Salary Reductions for 401(k) and 403(b) Plans (PDF)
2 pages. Excerpt: "The newly issued general information letter clarifies that the automatic enrollment feature may use any amount or percentage up to the plan or statutory maximums. The plan may establish an automatic compensation reduction amount that exceeds the amount eligible for employer matching contributions." (Milliman USA)

L.A. Times: Firms Can 'Impose' 401(k)s on Their Workers
Excerpt: "The ruling, made in what the IRS calls a 'general information letter,' allows companies to automatically enroll employees in a 401(k) plan and even hike their contribution levels over the years or when workers get raises or bonuses. Such power may strike many workers as paternalistic or worse, especially among those who need all of their paycheck just to get by." (Los Angeles Times; one-time registration required)

Overview: Complying with New "Relative Value" Disclosure Rules
Excerpt: "We suspect that many plan sponsors will even want to consider changing their plans' actuarial assumptions for calculating optional forms, in order to ease calculation and disclosure obligations. We also suspect that many plan sponsors will be looking to their service providers for guidance on how to comply with the new rules. These new regulations apply to distributions beginning October 1 of this year." (Groom Law Group)

Employee Ownership Update for April 23, 2004
NCEO Executive Director Corey Rosen reports on new pro-ESOP legislation introduced in the Senate (S. 2298); an analysis by the Congressional Budget Office finding that stock option expensing would not significantly affect stock prices or the economy; and the progress of a bill (H.R. 3574) to limit stock option expensing. (National Center for Employee Ownership)

Failure to Retain Teachers' Deferred Retirement Program Pushes Older Teachers Out
Excerpt: "For the past four years, [Brian Hunt has] been employed under a state program that allows veteran teachers and principals to 'retire' but still keep working. Many collect their full salaries and pensions, an arrangement intended to help fill the state's classrooms amid a national teacher shortage. But the Maryland General Assembly ended its session this month without renewing the program ..." (Washington Post; one-time registration required)

Overview: IRS Proposes Changes to Determination Letter Program and Pre-Approved Plan Programs
Excerpt: "The announcements, which had been expected, reflect research performed by the IRS over the past several years. The IRS is expected to implement the proposed changes as part of the process of updating plans for EGTRRA. However, the IRS has not yet determined when EGTRRA updates will take place." (SunGard Corbel)

Coming Soon from IRS: 'Retirement News for Employers' Newsletter
Excerpt: "The Retirement News for Employers is a periodic newsletter with retirement plan information for employers and business owners from Employee Plans (Tax Exempt and Government Entities (TE/GE) at the IRS)." (Internal Revenue Service)

Bookmark: IRS Web Site Provides 'Retirement Source for Plan Sponsors/Employers'
Handy page linking to pages on the IRS web site that are likely to be more useful to plan sponsors (employers) than to plan service-providers. (Internal Revenue Service)

Text of ASPA Comments on Mandatory Redemption Fees for Redeemable Fund Securities
Excerpt: "ASPA recognizes that any measures adopted by the Commission to address abusive short-term trading must extend to transactions directed by participants of participant-directed plans. However, the imposition of inconsistent mandatory redemption fees under the current version of the proposed rule will create substantial confusion for plan participants." (American Society of Pension Actuaries)

Opinion: the Great Mutual Fund Clean Up That Almost Happened
Excerpt: "The great mutual fund clean up appears to be petering out. Increasingly it appears that industry efforts to frustrate reform initiatives will be successful. We predict the legislature will ultimately defer to the SEC and the SEC will resume its ineffectual regulation of the industry." (The Benchmark Companies)

Maine Takes a Cautious Path on Its Pensions
Excerpt: "After being hammered in the financial markets for the last few years, many pension funds are turning to riskier investments, hoping that hedge funds, venture capital and the like will fuel returns and cover recent losses. But Maine has drawn a different lesson from the recent pension woes." (New York Times; one-time registration required)

Links to Items on Executive Comp, Benefits in General

Rulings Show How IRS Intends to Pursue Intermediate Sanctions Cases (PDF)
3 pages. Excerpt: "These rulings illustrate how the IRS finds weak points in an exempt organization's support for compensation paid to an executive, and then exploits that weakness to conclude that the compensation was excessive. Exempt organizations can learn several lessons from these rulings about how to build a stronger defense against intermediate sanctions risk for their executive compensation arrangements." (Gardner Carton & Douglas)

Overview: Mellon's Survey of Year-End 2003 Global U.S. GAAP Assumptions (PDF)
2 pages. Excerpt: "Mellon's Human Resources & Investor Solutions has released a survey of the year-end 2003 accounting assumptions for benefit plans that were used for U.S. GAAP disclosures by their clients. This For Your Information highlights the results of this survey." (Mellon's Human Resources & Investor Solutions)

Hewitt Federal Legislation Quick Guide Updated April 20, 2004
Excerpt: "Hewitt's Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law, regarding health and welfare benefit plans, retirement plans, and human resources and employment law. Click on the links below to learn more about pending legislation in each area. These files were updated on April 20, 2004." (Hewitt)

Overview: DOL Finally Issues Final Rule on White Collar Exemptions (PDF)
Excerpt: "On April 20, 2004, the U.S. Department of Labor ('DOL' or 'the department') issued its long-awaited final rule amending the regulations defining the 'white collar' exemptions under the federal Fair Labor Standards Act ('FLSA'), the law requiring the payment of minimum wages and overtime. The new regulations will be effective 120 days after their publication in the Federal Register, or mid- to late August, 2004. The new regulations make significant changes to the existing rules." (Jenkens & Gilchrist)

Overview: Department of Labor Issues First Major Overhaul of FLSA Rules in 50 Years
Excerpt: "These changes will take effect 120 days from the publication of the regulations in the Federal Register on April 23. Virtually all employers will need to review their existing job classifications and wage levels to ensure compliance with the new rules." (Hewitt)

Summary of Recent Senate Hearing on FASB Stock Option Proposals
Excerpt: "On April 20, a hearing was held in the Senate Governmental Affairs Subcommittee on Financial Management, the Budget, and International Security to consider the importance of FASB as an independent entity and to examine the economic and financial reporting consequences of expensing employee stock options." (American Benefits Council)

Summary of Recent House Hearing on FASB Stock Option Proposals (PDF)
3 pages. (American Benefits Council)

Newly Posted Events

An Overview of the Voluntary Fiduciary Correction Program and Delinquent Filer Voluntary Compliance Program
in Massachusetts on June 7, 2004
presented by International Society of CEBS - Greater Boston Chapter

Domestic Partner Benefits: Issues and Implications
Nationwide on April 29, 2004
presented by International Foundation of Employee Benefit Plans

Introduction to Flexible Benefits Plan Design & Administration Audio Conference
Nationwide on May 12, 2004
presented by Thompson Interactive, A Division of Thompson Publishing Group
Newly Posted Press Releases

Bull Market Boosts 401(k) Assets To Record Level, Reversing 3-Year Decline, Says New Spark Report
(RG Wuelfing & Associates)

ERIC Applauds EEOC Approval of Rule to Exempt Retiree Health Benefits from ADEA
(ERIC (ERISA Industry Committee))
Newly Posted or Renewed Job Openings
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in MI

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Associate Attorney
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Employee Benefits Paralegal
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ERISA Pension Analyst / Paralegal / Plan Administrator
for Retirement Plan Administration and ERISA Specialists
in IL

Director of Investment Services
for The Federal Retirement Thrift Investment Board
in DC

Director of Financial Services
for The Federal Retirement Thrift Investment Board
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Director of Participant Services
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in CO

Insurance Services Program Manager
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