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June 16, 2004 - 13574 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)
Administration Withdraws Pension Proposal
Excerpt: "The Bush administration retreated Tuesday on a contentious proposal that critics said would let companies skirt age discrimination laws if they change their pension plans and reduce benefits for older workers." (AP via Washington Post; one-time registration required)

Boehner, Johnson Plan to Move Forward with Solutions to Address Cash Balance Pension Plans
Excerpt: "House Workforce Committee leaders today announced plans to move forward and look at solutions to ensure cash balance pension plans remain a viable retirement security option for workers and employers." (U.S. House of Representatives Committee on Education and the Workforce)

Cash Balance Design Not Age-Biased, Says Federal District Judge
Excerpt: "In ruling on Dan C. Tootle vs. ARINC Inc. et al., Judge Catherine Blake of the U.S. District Court for the District of Maryland in Baltimore rejected arguments that cash balance plans are age discriminatory because the benefit credited to a younger employee would be worth more-- as expressed as an annuity payable at age 65-- than the same benefit credit given to an older employee." (Business Insurance)

Overview: Supreme Court Affirms Heinz Decision
Excerpt: "Affirming the Seventh Circuit, the U.S. Supreme Court has held that a multiemployer pension plan amendment, which expanded the types of disqualifying employment triggering 'suspension' of early retirement benefits, violated ERISA's 'anti-cutback' rule. The amendment had suspended the benefits of participants who had taken early retirement before the amendment was adopted." (RIA Tax News)

Overview: IRS Liberalizes Allowable Defined Benefit Annuity Options (PDF)
2 pages. Excerpt: "In a stunning reversal of former guidance, the IRS ... issued updated final rules allowing defined benefit plans to offer a broad array of annuity options that the agency had proposed to ban. The new options, including a variety of increasing annuities, variable annuities, and lump-sum death benefits, are deemed to satisfy the tax code's required minimum distribution rules. The new final rules are effective retroactively to January 1, 2003 ..." (Milliman USA)

Applicable Federal Rates for July 2004 (PDF)
3 pages. Excerpt: "Table 1 contains the short-term, mid-term, and long-term applicable federal rates (AFR) for the current month for purposes of section 1274(d) of the Internal Revenue Code." (Internal Revenue Service)

Summary of Final 401(a)(9) Minimum Distribution Regulations (June 2004) (PDF)
4 pages. Excerpt: "The final regulations apply when determining required minimum distributions for calendar years beginning on or after January 1, 2003, the same date used for regulations applicable to defined contribution plans that were issued in April 2002 (along with temporary regulations applicable to defined benefit plans). However, until 2006, plans are only required to show that they exercised good faith in complying with a reasonable interpretation of 401(a)(9)." (American Benefits Council)

Employee Ownership Update for June 15, 2004
NCEO Executive Director Corey Rosen discusses the Stock Options Accounting Reform Act, which was just passed in committee; the American Benefits Council's proposal to expand employee ownership by 50% by 2014; and a new study showing that employees and employers have not moved away from using employer stock in retirement accounts. (National Center for Employee Ownership)

Avoiding Investment Advice Hazards
Excerpt: "Plan sponsors and providers are steadily increasing the investment services for plans and participants, including investment advice. However, plan sponsors, investment advisors and providers must be careful to avoid running afoul of the nondiscrimination and prohibited transaction rules in the Internal Revenue Code and in Title I of ERISA." (Reish Luftman Reicher & Cohen)

Making Investment Committees More Effective
Excerpt: "Investment committees are in the limelight again. Why? The booms and busts in the markets, combined with a renewed focus on corporate governance and fiduciary issues, have brought these groups back to center stage." (The Vanguard Group)

Investment Committees: Vanguard's View of Best Practices
Excerpt: "This paper discusses best practices for investment committees, provides advice on how these guidelines can be incorporated into committee processes, and highlights actions that can undermine a committee and significantly reduce its probability of success." (Vanguard Investment Counseling & Research)

Improved Investment Performance for Multiemployer Funds in 2003 (PDF)
2 pages. The median investment performance of the funds surveyed, which represented total assets of over $18.4 billion as of December 31, 2003, was 17.2% over the year-- a substantial improvement over the previous year's median loss of 8.2%. (The Segal Company)

Social Security: Distribution of Benefits and Taxes Relative to Earnings Level
65 pages. Excerpt: "[GAO was asked] to address (1) how to define and describe 'progressivity,' that is, the distribution of benefits and taxes with respect to earnings level, when assessing the current Social Security system or proposed changes to it; (2) what factors influence the distributional effects of the current Social Security program; and (3) what would be the distributional effects of various reform proposals, compared with alternative solvent baselines for the current system." (U.S. General Accounting Office)

Different Sides Bolstered by Social Security Report
Excerpt: "Lawmakers and advocacy groups from different parties and perspectives all praised the agency's new report -- but for different reasons. Both parties talked up the positions they have held for years, but with the backing of a new analysis that they said supported their case." (Los Angeles Times; one-time registration required)

Links to Items on Executive Comp, Benefits in General

Update on Nonqualified Deferred Compensation Proposals in Congress
2 pages; June 11, 2004. Excerpt: "Both Houses of Congress are working, or have worked, on legislation that would change the options available to participants in employer sponsored nonqualified deferred compensation plans." (Financial Executives International)

FASB Options Expensing Limit Bill Gets Committee OK
Excerpt: "The U.S. House of Representatives Financial Services Committee approved 45-13 a bill to restrict any option expensing standard from the Financial Accounting Standards Board (FASB) to options granted to the top five officers of a company, Reuters reported. The bill would also delay implementing any standard for a year, until completion of an economic impact study by the federal departments of Labor and Commerce. Headed next for a vote in the full House ..." (PLANSPONSOR.com; one-time registration required)

Stock Option Accounting: Defying the Usual Answers
Excerpt: "The theoretical argument against expensing stock options hinges on the entity concept. This argument is presented in more detail below. Regardless of one's conclusions about stock option expenses, the debate points up a problem in applying the entity concept in its purest form: The transactions of the entity should be accounted for separately from its owners'." (The CPA Journal)

Newly Posted Events

Complete COBRA Compliance Under The New Notification Rules
Nationwide on July 14, 2004
presented by Alexander Hamilton Institute
Newly Posted Press Releases

Council Urges Congress to Validate Cash Balance Plans Following Treasury Department Regulation Withdrawal
(American Benefits Council)

U. S. Labor Department Sponsors Seminar To Help Plan Professionals Comply With Federal Pension Law
(U.S. Department of Labor, Office of Public Affairs, Boston)

MyBizBenefits.com Adds Health Savings Account Information
(MyBizBenefits)
Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Associate Manager Healthcare Sales Training
for Great-West Life & Annuity
in CO

Compliance Consultant
for Milliman, Inc.
in TX

Conversion Specialist
for BenefitStreet
in CA

Benefits Consultant
for AIG Creative Benefits
in ANY STATE

Senior Retirement Plan Consultant
for Invesmart, Inc.
in PA

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