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Retirement Plans
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June 14, 2004 - 13561 subscribers
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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)
Final Minimum Distribution Rules for DB Plans, Annuity Contracts; Change to Separate Account Rules (PDF)
57 pages. Excerpt: "This document contains final regulations concerning required minimum distributions under section 401(a)(9) for defined benefit plans and annuity contracts providing benefits under qualified plans, individual retirement plans, and section 403(b) contracts. This document also contains a change to the separate account rules in the final regulations concerning required minimum distributions for defined contribution plans." (Internal Revenue Service)

Text of Final SEC Reg on Breakpoint Discount Disclosures by Mutual Funds (PDF)
10 pages. Excerpt: "Under the amendments, an open-end management investment company will be required to describe in its prospectus any arrangements that result in breakpoints in sales loads and to provide a brief summary of shareholder eligibility requirements." (U.S. Securities and Exchange Commission)

Insights on Boosting 401(k) Plan Participation and Interaction (PDF)
16 pages. Excerpt: "[The] chasm between how much workers value their 401(k) plan and how poorly they use it can both mystify and confound plan sponsors. Yet the paradox is entirely consistent with the models of behavioral finance, a discipline that combines economics and psychology to explain why perfectly rational people make investment decisions that run counter to their own self-interest." (Hewitt)

401(k) Abuses: the Mutual Fund Industry's Next Nightmare
Excerpt: "We are not concerned with mere theoretical breaches of fiduciary duty or harmless kick-backs. Rather we believe that malfeasance within defined contribution plans may significantly jeopardize the retirement security investors have in these plans." (The Benchmark Companies)

Older Americans Healthier and Wiser, But Not Wealthier
Excerpt: "More than two-thirds of older households - those headed by people 47 to 64 - had someone earning a pension in 1983. By 2001, fewer than half did. The demise of the old-fashioned pension has been much discussed, but the effect on family finances has not." (New York Times; one-time registration required)

Employers Cut 401(k) Investment Costs
Excerpt: "Considering the widespread employer worries about plan costs, however, not many companies are getting their arms around them in a comprehensive way." (CFO.com)

Despite Enron, Savers Still Use 401(k) to Hold Large Percentage of Employer Stock
Excerpt: "Apparently, the billion-dollar losses in retirement savings by employees at Enron, WorldCom and Global Crossing were not enough of a warning. Workers are still keeping an outsized portion of their nest eggs parked in their employer's stock." (AP via Washington Post; one-time registration required)

Overview: PBGC Adjusts Interest Rate Guidance
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) on Thursday made some changes to its previously issued guidance on how to report the move from the use of a 30-year Treasury Yield to a Corporate Bond Index." (PLANSPONSOR.com; one-time registration required)

IRS Says Leveraged ESOP Contributions Deductible in Addition to Other Contributions
For many years, there has been uncertainty about whether contributions to repay the principal on an ESOP loan are deductible in addition to contributions made to 401(k), profit sharing, and other defined contribution retirement plans. Now the IRS has issued a private letter ruling that states, 'Section 404(a)(9)(A) [of the Code] allows a separate deduction for contributions applied by an ESOP to the repayment of principal of a loan.' (National Center for Employee Ownership)

Opinion: Taxpayers Deserve Greater Representation on Governmental Pension Boards
Excerpt: "Simple fairness and fiscal prudence demand that the boards overseeing the generous pension plans covering Houston's firefighters, police officers and municipal employees become more accountable to taxpayers. The public is being sent incredibly large pension tabs without ever having had a say in how much it could afford to pay." (Houston Chronicle)

Controversial Pension Plan Creator Serves Only 9 Days of 60-Day Sentence
Excerpt: "The lead architect of a controversial pension plan that would have given some Milwaukee County officials lucrative payouts spent nine days of his 60-day sentence in jail. On seven of the nine days in custody, Gary Dobbert left during the day for a work release job filing papers for his criminal defense attorney, the Milwaukee Journal Sentinel reported in its Saturday edition." (AP via DuluthNewsTribune.com)

Will California Democrats Vote to Rescind Scheduled Governmental Employee Pension Expansion?
Excerpt: "The California Assembly last week took the first step to rescind a pension boost for 3,200 state workers set to go into effect July 1.... The amended bill contains provisions to repeal the 2002 pension law that gave billboard inspectors, milk testers and other state workers enhanced retirement benefits formerly reserved for police and firefighters." (Pasadena Star News)

Opinion: Retirement Plans Lack Guidance
Excerpt: "When John Hancock Financial Services surveys its clients about their financial dreams, a key question is asked of investors: At what age do they plan to retire? Since 1991, most people had optimistically answered 60 or 61. But when the results came in this year, Hancock's experts were stunned to see that number jump dramatically to age 65." (Sacramento Bee)

IRS Tax Exempt Advisory Committee Issues Third Report
Excerpt: "The third report of recommendations of the Advisory Committee on Tax Exempt and Government Entities (ACT) on five issues concerning employee retirement plans, charities and other tax-exempt organizations, tax-exempt bond issuers, and federal, state, local and Indian tribal government bodies is now available.... Of particular interest to retirement plan professionals are the reports which address Employee Plans Operational Guidance and Audit Cycle Time and Communications." (Internal Revenue Service)

Opinion: Help-- Somebody Please Get This Defined Contribution Monkey Off My Back!
Excerpt: "[T]he slang phrase 'monkey on my back' refers to a burdensome personal problem, situation, responsibility, or encumbrance. Is there a better verbal description of the impact that the dramatic change in Corporate America's retirement income strategy, from defined-benefit (DB) plans to defined contribution (DC) plans, has had on employees?" (Attorney Brooks Hamilton on 401kHelpCenter.com)

Failure to Rebalance Portfolios Can Cost Investors
Excerpt: "Inertia is an insidious threat to a portfolio. Although the idea of letting things ride, allowing market forces to operate, sometimes seems to work to an investor's advantage, the long-term effects can be harmful. Right now, investors in small-capitalization stocks may be feeling comfortable with their portfolios. But it's probably time to shake things up." (New York Times; one-time registration required)

Employers Scrutinize 401(k) Fees: Survey
Excerpt: "Sixty percent of 140 employers recently surveyed by Hewitt Associates Inc. in Lincolnshire, Ill., said they either have taken or intend to take action to reduce investment management fees, which often make up 70% to 80% of a 401(k) plan's cost." (Business Insurance)

Social Security Forecast Might Spark Political Fight
Excerpt: "An election-year duel over President Bush's proposal to revamp Social Security could flare up again Monday with a congressional report that says the giant pension program's long-term prospects may be better than previously thought." (AP via Washington Post; one-time registration required)

Links to Items on Executive Comp, Benefits in General

House Export Subsidy Repeal Bill Would Restrict Tax Advantages of Nonqualified Plans
Excerpt: "The provisions contained in the American Jobs Creation Bill of 2004 (H.R. 4520), as introduced on June 4, 2004, are substantially similar to those included in the Jumpstart Our Business Strength (JOBS) Bill (S. 1637), which was approved by the Senate on May 11, 2004." (CCH News & Information Library)

N.Y. Court Says G.ay Marriage Ban Unconstitutional
Excerpt: "A New York state court on Thursday ruled in favor of same-sex marriage because denying g.ays the right to wed goes against equal protection measures in the state's constitution." (Reuters via Yahoo! News)

Ruling Explains When Payroll Taxes On Divorce Transfers of Nonstatutory Options Are Triggered
Excerpt: "Companies should establish a system to keep track of divorce-related transfers of nonstatutory options and nonqualified deferred compensation by employees. The system could store appropriate information about the transferee including her address and social security number so that the employer will be a position to meet its reporting obligations under the above rules." (RIA Tax News)

Is Expensing the Y2K of Equity Compensation?
Barring unlikely Congressional action, in 2005, public companies will have to start showing an accounting expense for stock options. Many companies object to this, saying they will have to cut back on their plans to avoid a decline in their stock prices. However, the research indicates otherwise: expensing does not affect stock prices. Corporate leaders would be well-advised to base decisions on real, rather than perceived, costs and benefits. (National Center for Employee Ownership)

Newly Posted Events

COBRA: Conquering the New Regulations
Nationwide on July 1, 2004
presented by International Foundation of Employee Benefit Plans

Cross-Tested Plan Workshop - Explore the Possibilities
in Oregon on August 19, 2004
presented by SunGard Corbel

Cross-Tested Plan Workshop - Explore the Possibilities
in Colorado on August 19, 2004
presented by SunGard Corbel

Cross-Tested Plan Workshop - Explore the Possibilities
in California on August 19, 2004
presented by SunGard Corbel

Cross-Tested Plan Workshop - Explore the Possibilities
in New Mexico on August 25, 2004
presented by SunGard Corbel

Cross-Tested Plan Workshop - Explore the Possibilities
in Florida on August 26, 2004
presented by SunGard Corbel

Cross-Tested Plan Workshop - Explore the Possibilities
in California on August 26, 2004
presented by SunGard Corbel

Pension Seminar
in Ohio on June 24, 2004
presented by Employee Benefits Council of Northeast Ohio

Safe Harbor 401(k) Plan Workshop - Discover the Advantages
in Colorado on August 20, 2004
presented by SunGard Corbel

Safe Harbor 401(k) Plan Workshop - Discover the Advantages
in California on August 20, 2004
presented by SunGard Corbel

Safe Harbor 401(k) Plan Workshop - Discover the Advantages
in Oregon on August 20, 2004
presented by SunGard Corbel

Safe Harbor 401(k) Plan Workshop - Discover the Advantages
in New Mexico on August 26, 2004
presented by SunGard Corbel

Safe Harbor 401(k) Plan Workshop - Discover the Advantages
in Florida on August 27, 2004
presented by SunGard Corbel

Safe Harbor 401(k) Plan Workshop - Discover the Advantages
in California on August 27, 2004
presented by SunGard Corbel
Newly Posted Press Releases

Hewitt Survey Shows Employers Making Efforts to Reduce 401(k) Costs
(Hewitt Associates LLC)

Financial Accounting Foundation Trustees Issue Statement Opposing Legislative Proposals to Curb FASB Independence
(Financial Accounting Standards Board (FASB))

American Bankers Association Joins SPARK Institute On Alternative To SEC’S “Hard 4:00 P.M.” Close
(Society of Professional Administrators and Recordkeepers (SPARK))

Treasury and IRS Finalize Defined Benefit Plan and Annuity Distribution Rules
(U.S. Department of Treasury)

Launch of New Employee Benefit Statement Website by BusinessPlans, Incorporated
(BusinessPlans, Inc.)

Wachovia Insurance Services Chooses HR XCEL To Provide Benefits Administration Services For WIS Clients
(HR XCEL, Inc.)
Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Associate Attorney
for Shook Hardy & Bacon, LLP
in LA

Pension Consultant
for Small Plan Firm With DB Concentration
in IL

Business Analyst
for BISYS Retirement Services
in PA

Senior Account Service Associate
for H&R Block
in MO

Institutional Plan Conversion Manager - PA
for The Vanguard Group
in PA

Retirement Plan Administrator
for Professional South Puget Sound Retirement Plan Consulting Firm
in WA

Health Care Actuary
for Knight Ridder
in CA

Relationship Manager
for BISYS Retirement Services
in PA

Employee Benefits Associate
for Warner Norcross & Judd LLP
in MI

Benefits Analyst
for United Actuarial Services, Inc.
in IN

Cafeteria Plan Sales Consultant
for Hand Benefits & Trust, Inc.
in TX

Retirement Consultant N171-112522
for Microsoft Corporation
in WA

Account Executive Director - Retirement Services
for Principal Financial Group
in AZ

Director, Client Services - Participant Services
for BISYS Retirement Services
in MN

401(k) Retirement Plan Administrator
for Stephen Eldridge & Company, Inc.
in NH

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