| BenefitsLink Retirement Plans Newsletter |   |
August 2, 2004
Today's sponsor: Kiplinger
(Click on company name or banner to learn more.)
Kiplinger Announces New Online 401(k) Course! Satisfy your 401(k) education requirements with one easy step! • Increase employee participation in your 401(k) plan • Reduce your fiduciary risk by providing employees with unbiased financial information • Easy-to-use, engaging interactive format for maximum effectiveness • Cost-effective tool for a geographically dispersed workforce • Attractive volume pricing options available Don't delay. Take a FREE demo!
(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
Kerry Mum on Social Security Reform
Press release. Excerpt: "The Democratic Party platform approved during this week's national convention opposes Social Security 'privatization' or any reduction in Social Security benefits, but says nothing about how the party would deal with the program's looming financial crisis, according to Michael Tanner, director of the Cato Institute's Project on Social Security Choice ..." (Cato Institute)
Delta Wants $1 Billion in Wage and Benefit Cuts From Pilots
Excerpt: "Delta Air Lines asked its pilots union [on Friday] for wage and benefit concessions worth $1.02 billion a year, including a 35 percent pay cut, and said it wanted to replace their pension plan with a more affordable version." (New York Times; one-time registration required)
For Some, Pension Guaranty Covers Much Less Than 100%
Excerpt: "One out of 10 workers whose pensions are taken over by the PBGC do not get 100 percent of the benefits once promised to them, PBGC officials in Washington say. Pension experts say the reason for this is that when the agency was created 30 years ago, it was meant to come to the rescue of blue-collar workers, not better-paid workers ..." (Chicago Tribune via Ohio.com; one-time registration required)
United Airlines Retirees Perplexed
Excerpt: "[Retiree Skip] Hillegas and his wife, Cathy, may soon face an even bigger challenge to their lifestyle. United has stopped making payments into its massively underfunded pensions and is considering terminating them. If that happens, the couple's retirement income could be more than halved, forcing them to make difficult choices." (Denver Post)
PBGC Bailout Feared if Airlines Shed Their Pensions
Excerpt: "In an echo of the savings and loan industry collapse of the 1980's, the federal agency that insures company pensions is facing a possible cascade of bankruptcies and pension defaults in the airline industry that some experts fear could lead to another multibillion-dollar taxpayer bailout." (New York Times; one-time registration required)
1st Circuit: Pension Funds, Once Distributed, Can Be Garnished for Criminal Judgment
Excerpt: "The court read ERISA Section 206(b)(1) to cover only funds held in the ERISA governed account, and not prohibiting creditors from staking a claim on pension benefits once they were no longer controlled by the administrator." (PLANSPONSOR.com; one-time registration required)
Court Rules for Xerox in 'Rehire' Case
Excerpt: "In the case, originally filed in 1999, more than a dozen Xerox employees and retirees claimed that a company policy resulted in their retirement benefits being slashed to a fraction of their original value.... The policy in question discounts pensions earned during a worker's second tenure by the value of their original pension, plus interest." ([Rochester NY] Democrat and Chronicle)
Lawyers Argue Legality of Pension Reform for State Employees in Oregon
Excerpt: "Are benefits under Oregon's pension system the equivalent of an iron-clad contract that can't be changed, no matter what? That's the $8 billion question, and it's now in the hands of the state Supreme Court." (BendBulletin.com)
Retired Teachers Work To End Social Security Pension Offset
Excerpt: "A small delegation of retired instructors from across the county will present a petition Monday to U.S. Rep. Sam Farr, D-Carmel, calling for the repeal of two obscure provisions of federal law that limit Social Security benefits for retired teachers and other public employees." (Santa Cruz [CA] Sentinel)
Deemed IRAs; Will They Soar or Bomb?
Excerpt: "Deemed IRAs, also sometimes called Sidecar IRAs, became legal on Jan. 1, 2003. They allow a worker to have an IRA account in conjunction with a 401(k) or similar employer-sponsored qualified retirement plan. That means IRA money can be withheld from a paycheck along with dollars being put into such a plan." (Milwaukee Journal-Sentinel)
IRS Income Stats Reveal IRAs for First Time
Excerpt: " The Internal Revenue Service has released the spring 2004 issue of the Statistics of Income Bulletin, which for the first time takes a detailed look at individual retirement arrangements." (SmartPros.com)
'Big Picture' Checklist for Retirement Plan Design
Excerpt: "If you haven't taken the time to evaluate your retirement plan offering, this quick checklist can provide a starting place to make sure you're getting the most out of your plan: ..." (Transamerica Center for Retirement Studies)
Will DOL Use 2002 Form 5500 as Audit Trigger?
Excerpt: "Question 4a asks whether the employer transmitted any employee deferrals to the plan beyond the time permitted in the DOL regulations ... [S]ome of our clients who answered 'yes' to Question 4a have received letters from the DOL inviting them to make a submission under VFC to correct the late deposits and receive a no-action letter. Generally, VFC is not available once a sponsor is under investigation." (Reish Luftman Reicher & Cohen)
IRS Audits Target 412(i) Plans
Excerpt: "In a nutshell, the IRS guidance attacks [certain 412(i)] arrangements by (i) eliminating the deduction for the portion of the premium in excess of what was needed to purchase insurance not in excess of the incidental benefit rules; (ii) requiring that the true fair market value of the policy be included in income at the time the policy is sold to the participant; and (iii) requiring that all participants in the plan have identical types of insurance policies." (Reish Luftman Reicher & Cohen)
Sponsors Not Offering Investment Advice Yet Say They're Looking for Liability Shield
Excerpt: "Half of the plan sponsors in a recent survey said they offered investment advice while most of those not featuring advice said they would add it if their firms were to be held harmless from fiduciary liability." (PLANSPONSOR.com; one-time registration required)
Fixing GUST Non-Amenders Under VCP
Excerpt: "Now that the GUST RAP has ended for most plans, correcting plans that failed to timely amend for GUST becomes an important issue. In this article, we examine two scenarios you may encounter with your plan or the plans you service, and suggest methods for resolving them." (Reish Luftman Reicher & Cohen)
Understanding Retirement Fees and Expenses (PDF)
16 pages. Excerpt: "As the sponsor of a retirement plan, you are helping your employees achieve a secure financial future. Sponsoring a plan, however, also means that you, or someone you appoint, will be responsible for making important decisions about the plan's management. Your decisionmaking will include selecting plan investments or investment options and plan service providers. Many of your decisions will require you to understand and evaluate the costs to the plan." (Employee Benefits Security Administration, U.S. Department of Labor)
Does Soft Dollar Brokerage Benefit Portfolio Investors? (PDF)
36 pages; draft dated March 2004. Excerpt: "Using a database of institutional money managers, we find that premium commission payments are positively related to risk-adjusted performance, suggesting that soft dollar brokerage is a solution to agency problems. Moreover, premium commissions are positively related to management fees, suggesting that labor market competition does not punish managers for using soft dollars." (Stephen M. Horan of St. Bonaventure University, D. Bruce Johnsen of Mason University)
Forcing Mutual Fund Managers to Reveal Personal Holdings
Excerpt: "In another response to the continuing fund-trading scandal, the Securities and Exchange Commission has proposed a rule that would require managers to reveal how much of their own funds they own." (Wall Street Journal via SFGate.com)
Links to Items on Executive Comp, Benefits in General
Ten Current Trends In U.S. Equity Compensation
Excerpt: "Among firms replacing lost option value, restricted stock was the primary replacement vehicle used across all employee groups." (Mercer Human Resource Consulting)
IRS and Congress Plan Investigation of Nonprofits Paying Excessive Compensation (PDF)
4 pages. Excerpt: "Last month, the IRS announced that it will begin auditing hundreds of public charities and private foundations in what the IRS calls an 'aggressive program' to scrutinize compensation arrangements paid to nonprofit executives. The IRS intends to audit charities both in-person and by mail and has already identified approximately 100 to 200 charities whose compensation arrangements exceed the $1 million mark." (Gardner Carton & Douglas)
CEO Gets $2.5 Million Salary, Benefits Behind Bars
Excerpt: "[Andrew] Wiederhorn insisted that his case is different from Enron or Stewart because he relied on the advice of attorneys and accountants to make decisions that ultimately resulted in his convictions. Unlike [Martha] Stewart, convicted of lying to federal investigators, and Enron founder Kenneth Lay, accused of fraud and conspiracy, Wiederhorn says that he was guilty only of technical violations without the criminal intent required of those felonies." (StatesmanJournal.com)
In Notice 2004-55, IRS Seeks Comments re Possible Changes to Employee Stock Purchase Plan Regs (PDF)
3 pages. Excerpt: "The Internal Revenue Service and Treasury Department have received questions concerning whether the final regulations concerning options granted under an employee stock purchase plan (ESPP) should be interpreted consistently with the proposed ISO regulations. The Service and the Treasury Department are considering whether to amend the final regulations under § 423 of the Internal Revenue Code." (Internal Revenue Service)
Overtime Compliance Guide and Audit (PDF)
21 pages. Excerpt: "The Department of Labor recently amended the regulations governing and defining the scope of the 'white collar' exemptions (those applying to executive, administrative, professional, outside sales, computer, and highly compensated employees) to the overtime provisions of the Fair Labor Standards Act. To assist compliance efforts, this audit outlines and summarizes the new FLSA regulations." (Snell & Wilmer)
Opinion: the Marriage Debate and Polygamy
Excerpt: "There is no single, wise answer as to what will serve society and citizens best in this arena. With each state free--within the state's own constitutional requirements--to have its own public debate about what serves society, and what does not, there is the possibility that there will be 50 simultaneous experiments - and that is much to be encouraged." (Marci Hamilton on FindLaw.com)
The Interplay of DOMA, ERISA and Other Federal Laws
Excerpt: "Recent events in Massachusetts regarding marriage have spawned a plethora of law firm publications on the implications of same-gender marriage as it relates to benefit plans." (Attorney B. Janell Grenier on BenefitsBlog.com)
Aon Facing Class-Action Suit Over Contingent Commissions
Excerpt: "A Chicago judge this week approved a class-action lawsuit against Aon Corp. alleging that the insurance brokerage breached its fiduciary duty by taking contingent commissions from insurers without disclosing them to policyholders.... Describing last week's ruling as 'purely procedural,' Aon said in a statement that it 'strongly disagrees' with it and will appeal. 'We believe that plaintiffs' claims are completely without merit.'" (Business Insurance)
BenefitsLink Now Hosts a Wiki; New Free Collaborative Tool for You
Did you see the Wall Street Journal article about companies using a 'wiki' to facilitate in-house collaboration among their staff? A wiki is an easy way to create web pages or edit existing pages. We're happy to roll out a free wiki for BenefitsLink readers! Bookmark the wiki's home page (https://benefitslink.com/wiki) and check it from time to time for new collaborative projects, which we'll list there. Or create a new UserPage on the wiki now and tell us a bit about yourself! (BenefitsLink.com, Inc.)
Newly Posted Events
Central and Mountain States Benefits Conference
in Colorado on September 13, 2004
presented by ASPA (American Society of Pension Actuaries)
Employee Benefits Programs at the ABA Annual Meeting
in Georgia on August 7, 2004
presented by ABA Joint Committee on Employee Benefits
ERISA Update Seminar
in Hawaii on November 16, 2004
presented by Sal Tripodi
Newly Posted Press Releases
Alliance Benefit Group Rolls Out Employer Driven Health Savings Accounts
(Alliance Benefit Group)
Stock Option Planning Specialist Announces Innovative Means of Improving ROI on Equity Compensation Programs
(Metrics Partners)
Newly Posted or Renewed Job Openings
Client Relationship Manager
for TPA Firm in Southeastern MI
in MI
Retirement Plan Specialist
for Benefit Consultants Group
in NJ
DB Calc Eng Manager
for Hewitt Associates
in CT
Regional Manager
for Great-West Healthcare
in VA
Client/Pension Services Manager
for Trinity Financial Partners
in CA
401k Internal Wholesaler
for ADP Retirement Services
in NJ
Retirement Services District Manager (East Bay)
for ADP Retirement Services
in CA
Handy Links:
- View Today's Active Message Threads
- Search BenefitsLink
- Using the Web for Employee Benefits Research
- Employee Benefits Library
Copyright 2004 BenefitsLink.com, Inc.; except that you can reprint this newsletter in full (including this boilerplate part) without obtaining our permission.
Published by:
BenefitsLink.com, Inc.
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Editor and Publisher: David Rhett Baker, J.D.
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