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August 18, 2004
Today's sponsor: Natalie Choate's Life and Death Planning for Retirement Benefits
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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)
United Accepts Trustee to Oversee Pensions
Excerpt: "UAL Corp.'s United Airlines agreed to appoint an independent trustee to protect the interests of participants and beneficiaries of the carrier's pension plans, the U.S. Labor Department said.' (Bloomberg News via The Oakland Tribune)
UAL Removed Pension Executives Shortly Before Announcement About Cessation of Pension Funding
Excerpt: "A month before United Airlines said it would stop funding its pension plans, it quietly removed three top executives charged with protecting employees' retirement interests and named itself the fiduciary for the plans, creating what a government official called a 'hopeless conflict of interest.'" (Chicago Tribune; one-time registration required)
Facing Bankrup.tcy, Delta Considering Pilot Concessions
Excerpt: "Delta Air Lines, in an effort to avoid filing for bankrup.tcy protection, is considering giving its pilots an equity stake in exchange for pay and benefit cuts, a Delta pilot spokeswoman said yesterday." (The Washington Post via The Seattle Times)
Update on the Use of Form 2848 (Power of Attorney)
Excerpt: "There are five (5) categories of individuals who are authorized to represent taxpayers (and thereby be appointed as a representative on the Power of Attorney). These are (1) attorneys, (2) CPAs, (3) enrolled IRS agents, (4) enrolled actuaries, and (5) 'unenrolled preparers.' An individual can only be listed as an 'unenrolled preparer' in limited situations ... The problem is that some practitioners have incorrectly been using the 'unenrolled preparer' category." (SunGard Corbel)
IRS Comments on Participant Loans, Hardship Distributions, Catch-Up Contributions, and More
Excerpt: "The Joint Committee on Employee Benefits (JCEB) of the American Bar Association (ABA) has posted on its website a report of the May 2004 informal question and answer session between JCEB representatives and officials from the IRS and Treasury Department.... Here is a summary of a few of the Q/As that affect 401(k) plans." (Employee Benefits Institute of America Inc. (EBIA))
Bookmark: Selecting an Auditor For Your Employee Benefit Plan
Excerpt: "If your employee benefit plan is required to have an audit, one of the most important duties of the plan administrator is to hire an independent qualified public accountant. ….A quality audit will help protect the assets and the financial integrity of your employee benefit plan …." (U.S. Department of Labor, Employee Benefits Security Administration)
Court: Participant Gets More Profit Sharing Contributions Because of Ambiguity in Plan Document
Excerpt: "[T]he decision demonstrates the importance of drafting eligibility requirements for purposes of contributions as well as participation. The plan document should be specific enough to leave no doubt as to the status of each employee. Second, the decision highlights that the plan administrator must apply the plan's eligibility requirements to each employee in a reasonable and defensible manner." (Employee Benefits Institute of America Inc. (EBIA))
Lawsuits Challenge Unequal Mutual Fund Fees
Excerpt: "In a series of lawsuits filed around the country, attorneys for small investors are accusing fund companies, including Fidelity and Putnam Investments, both Boston companies, of violating their fiduciary duty by making excessive profits through 'egregious price-gouging.'" (Boston Globe)
Overview: IRS Issues Final Rules on Deemed IRAs (PDF)
4 pages. (Mellon's Human Resources & Investor Solutions)
Opinion: Blatant Pension Graft at Maryland Pension Fund
Excerpt: "There was never much question that Maryland investment banker Nathan A. Chapman Jr. knew what he was doing as he defrauded the state's retirement system of nearly $5 million and looted hundreds of thousands of dollars from companies under his control. The nagging question was why his money-steering arrangements were not flagged by anyone supposedly monitoring the pension system." (Washington Post; one-time registration required)
Retired But Rehired Officials Pose Extra Cost to New York State Taxpayers
Excerpt: "Retired school superintendents [in New York state] ... can go back to work and fill temporary vacancies while still collecting their pensions. 'It doesn't make sense from a taxpayers' point of view to have a pension and still be on the public payroll,' said Marcia Van Wagner, chief economist and deputy research director of the Citizens Budget Committee, a New York City-based watchdog group." ([Binghamton NY] Press & Sun-Bulletin)
Opinion: The Pension Catastrophe
Excerpt: "CONCLUSION: The lessons are simple: Read the fine print of your pension program. Assume that your future is not guaranteed. Your past employer regards you as a liability. It is easier to create money than to create wealth. The government is not your friend." (LewRockwell.com)
Overview: Savings Plan Participants and Age-Based Lifestyle Funds
Excerpt: "Provided the information obtained through the due diligence process is satisfactory, the decision to implement an age-based approach largely depends on the attitudes of plan participants. Age-based funds best serve participants who want to be as far removed from the investment decision-making process as possible." (Aon)
Opinion: Financial Advice from Stockbrokers
Excerpt: "Beware of stockbrokers bearing investment advice. In a regulatory misadventure now five years in the running, the Securities and Exchange Commission has exempted stockbrokers from the standards faced by registered financial advisers." (New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Recent Trends in Executive Compensation
Excerpt: "As suggested by the survey results, most companies need to re-think their compensation strategies. Major companies, such as IBM, Microsoft, Intel, and General Electric, have recently established new compensation policies and protocols. Companies need to consider not only whether the pay levels are excessive for top executives, but they also need to consider the more holistic approach to total rewards." (Aon)
Overview: IRS Finalizes Reg Used to Combat Shelter Involving Compensatory Option Transfers
Excerpt: "Without change, IRS has finalized a temporary reg that it added last summer as part of its arsenal to go after (1) employees who attempt to defer income and employment taxes by transferring their nonstatutory compensatory stock options to related parties, and (2) the promoters of those schemes." (RIA Tax News)
CalPERS Trustees Target Executive Compensation Paid During Corporate Mergers or Acquisitions
Excerpt: "The California Public Employees' Retirement System is taking steps to rein in large executive compensation packages related to mergers and acquisitions, such as those included in the proposed merger of Anthem Inc. and WellPoint Health Networks Inc." (Business Insurance)
Why is Life Expectancy So Low in the United States? (PDF)
12 pages, by Alicia H. Munnell, Robert E. Hatch and James G. Lee. Excerpt: "The United States is the richest major country in the world in terms of per capita gross domestic product (GDP). Since longevity is clearly associated with income, America's older citizens must live longer than their counterparts in other large industrial nations. Right? Wrong!" (Center for Retirement Research at Boston College)
Financial Firms Hasten Their Move to Outsourcing
Excerpt: "Deloitte said the unexpectedly rapid growth rate for offshore outsourcing showed no signs of abating, despite negative publicity about job losses. Although information technology remains the dominant service, financial firms are expanding into other areas like insurance claims processing, mortgage applications, equity research and accounting." (New York Times; one-time registration required)
Why the California Supreme Court Repudiated San Francisco's Issuance of Same-Sex Marriage Licenses
Excerpt: "Overall, the court's opinion was an unusual mixture of cautious disinclination to decide certain disputed legal questions on the one hand, and broad rhetoric, reasoning and action on the other. Let us first analyze the careful aspects of the ruling." (FindLaw.com)
How Lawyers Helped Drive the Boom In Tax Shelters
Excerpt: "The proliferation of tax shelters during the 1990s boom cost the U.S. Treasury tens of billions of dollars. Much of the blame has fallen on accounting and tax-advice firms.... [L]awyers also helped drive the tax-shelter boom amid the big-money ventures that defined the decade." (Wall Street Journal via SFGate.com)
House Rpt.108-548 - Part 1 - American Jobs Creation Act of 2004
Excerpt: "Committee on Ways and Means files the report to accompany H.R. 4520, the 'American Jobs Creation Act of 2004,' on June 16, 2004" (U.S. House Committee on Ways and Means)
Tips for Plan Participants, from Prominent Plaintiffs' Law Firm
Excerpt: "It is important that you submit all possible evidence in support of your position during the plan's claim and review procedure. There are two main reasons for this. First, evidence may be difficult to obtain if it is no longer fresh (this is especially true of medical evidence supporting disability claims). Second, certain courts may refuse to look at any evidence which was not presented to the plan during the claim and review procedure. This is not always the case ..." (Lewis & Feinberg, P.C.)
Newly Posted Events
7th Annual Defined Contribution/401(k) West Coast Conference
in California on October 24, 2004
presented by Pensions & Investments and IBF*International Business Forum
Annual Fall Employee Benefits Law and Practice Update
Nationwide on November 10, 2004
presented by ALI-ABA (American Law Institute-American Bar Association)
Dealing with Fiduciary Liability & Provider Benchmarking
Nationwide on August 24, 2004
presented by PLANSPONSOR
Newly Posted Press Releases
New Hay Group Study Finds that Medical Premiums Continue Double-Digit Rise for Fifth Consecutive Year
(Hay Group)
U.S. Labor Secretary Elaine L. Chao Announces Agreement with United Airlines to Appoint Independent Fiduciary To Manage Pension Plans
(U.S. Department of Labor, Office of Public Affairs, Washington, D.C.)
Allied Pilots Association Releases Statement Regarding United Airlines Pension Deferrals
(Allied Pilots Association (APA))
Newly Posted or Renewed Job Openings
Compliance Testing Consultant
for Diversified Investment Advisors
in NY
401(k) Plan Administrator
for Northeast Planning Services, Inc.
in MA
Daily Valuation Processor/Recordkeeper
for Third Party Administrator located in the Galleria Towers in Dallas, TX
in TX
Sr. Benefits Compliance Specialist
for NRECA
in VA
Plan Administrator (Assistant)
for Small Daily Val shop in San Marco section of Jacksonville, FL
in FL
Assistant for Sales and Pension Administration
for The Senex Group
in CA
Pension Administrator
for Clark, Schaefer, Hackett & Co.
in OH
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