| BenefitsLink Retirement Plans Newsletter |   |
September 13, 2004
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Updated: Talking Points on Hybrid Benefit Plans
Excerpt: "Many hybrid plan critics point to the case in the Southern District of Illinois in Cooper v. IBM as evidence that the plan design is per se discriminatory against older workers. That court's reading of the law is incorrect and is out of step with other courts. In June 2004, a district court in Maryland in the case of Tootle v. ARINC found that hybrid plan conversions do not violate age discrimination prohibitions." (American Benefits Council)
The Gail Weiss / McHenry Report on Retirement Plan Fund Trading (PDF)
13 pages. Excerpt: "The ... report highlights some of the more objective elements of information we have found, with an eye to the unique challenges of administrators of mutual fund-based 401(k), 457, 403(b) and 401(a) retirement plans." (McHenry Consulting Group)
401(k) Complement: Annuities Ride Wave of Retirement Concerns
Excerpt: "With pension plans on the wane, thousands of employees are eyeing their coming golden years with more trepidation than confidence. To assuage these fears, industry experts are beginning to direct more people toward annuities as part of their comprehensive retirement savings plan." (Employee Benefit News)
Investment Report: 401(k) vs. SIMPLE: Is it Really That Simple?
Excerpt: "The Savings and Incentive Match Plan for Employers, or 'SIMPLE' plan, is similar to a standard 401(k) plan in that it allows for the deposit of employee elective salary deferrals and employer contributions into an account that grows on a tax deferred basis until withdrawn; but, the SIMPLE has fewer administrative requirements than the 401(k) plan." (Joseph W. Mazurkiewicz in the Silver City Daily Press)
ESOPs Are No Fables-- They're One Tool to Spur Worker Involvement
Excerpt: "Question: Business has been great the past two years, and as a way to thank my loyal employees, and keep them around, I would like to begin some sort of retirement plan. How do I do that and what are my options? Roy, Kent, Ohio" (Steve Strauss in USA TODAY)
Teachers' 403(b) Plan Nonvirtues 'Extolled'
Excerpt: "Maybe it's good that our teachers are stretched thin. This way, they don't have much time to think about their lousy retirement plans. What I'm specifically talking about is a strange bird called the 403(b) plan." (Lynn O’Shaughnessy in The San Diego Union-Tribune)
Pension Pain for Multinationals
Excerpt: "European governments ... are looking to private employers, including U.S.-based multinationals, to assume more responsibility for retirement costs. Consultants warn that the demographic time bomb in Europe may increase labor costs to the point where it could become difficult to do business in some countries at all." (Workforce.com)
Humor: Pensions Are My Business (PDF)
4 pages. Excerpt: "I met my Treasury pal at a gin joint on the wrong side of the tracks. No danger of accidentally bumping into an IRS agent or a member of the Academy of Actuaries there." (Contingencies Magazine)
US Airways Tries to Reorganize for a Second Time
Excerpt: "US Airways filed for bankrup.tcy protection yesterday for a second time after workers refused to grant $800 million in cuts it had sought to reduce its costs to the level of low-fare airlines. Nothing will change for US Airways customers right away, but few airlines have survived a second trip into bankrup.tcy court. The airline expressed confidence yesterday that it could reorganize under Chapter 11, but it is hobbled by limitations on its ability to find financing." (The New York Times; one-time registration required)
US Airways Files for Chapter 11 Bankrup.tcy
Excerpt: "US Airways Group Inc., squeezed severely by low-cost rivals and soaring fuel prices and failing in its drive for new labor concessions, entered bankrup.tcy protection on Sunday [September 12] for the second time in two years." (Reuters via The Washington Post; one-time registration required)
Overview: Terminating Plan Required to Value Lump-Sums Using Distribution Date as 'Annuity Starting Date'
Excerpt: "The Fifth Circuit deferred to PBGC's determination that a terminating plan offering lump-sum distributions was required to comply with Code rules in valuing benefits, and upheld PBGC's order to distribute additional benefits based on an appropriate valuation." (RIA Tax News)
Participant Lacked Standing to Challenge Company President's Questionable DC Plan Withdrawals
Excerpt: "A defined contribution plan participant was not entitled to proceed with his claim that his company's president violated ERISA's anti-inurement provisions when he removed or borrowed money from the plan because the plan provided individual, separate accounts for each participant, according to the U.S. Court of Appeals in Denver (CA-10)." (CCH Pension & Benefits News)
Coordinating Retirement Becomes More Complex for Married Couples
Excerpt: "Retirement plans, like the television remote, in the not-so-distant past were most likely to be controlled by the man of the house. 'A generation ago, when few married women spent many years in the labor force, it was relatively simple for spouses to coordinate their retirement decisions,' writes Richard Johnson, a senior research associate at the Urban Institute." (Diane Lade and Humberto Cruz in the South Florida Sun-Sentinel)
Pension Sponsorship and Participation: Summary of Recent Trends Report Is Updated
Excerpt: "The Congressional Research Service (CRS) has updated its report titled 'Pension Sponsorship and Participation: Summary of Recent Trends.' In a summary of the report the CRS noted that the number of workers in the private sector whose employer sponsored a retirement plan was essentially unchanged from 2002 to 2003. You may download the compete report at this URL: www.401khelpcenter.com/pdf/RL30122_Oct_04.pdf." (401khelpcenter.com)
Support For Annuities Growing, But Concerns Remain
Excerpt: "Mention the word 'annuities' and many people's eyes will glaze over with boredom. Others might think of complicated financial products sold by fast-talking salesmen." (The Dallas Morning News; one-time registration required)
View on Mutual Fund Company Voting on Corporate Governance Issues Is Ugly
Excerpt: "Remember how bitterly most mutual fund companies - especially Fidelity and Vanguard - fought the Securities and Exchange Commission idea to make them disclose how they voted on board elections, executive pay and other corporate governance issues? Now that rule is in force, and investors can see for themselves why some funds were reluctant to let the sun shine in." (The New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Stealth Compensation via Retirement Benefits
Working paper. Excerpt: "This paper analyzes an important form of 'stealth compensation' provided to managers of public companies. We show how boards have been able to camouflage large amount of executive compensation through the use of retirement benefits and payments. Our study highlights the significant role that camouflage and stealth compensation play in the design of compensation arrangements." (Lucian Arye Bebchuk and Jesse M. Fried, via National Bureau of Economic Research)
Louisiana Vote Won't End G.ay Marriage Debate: Amendment May Face Legal Challenges
Excerpt: "Voters across the state will decide ... whether to add a ban on same-sex marriage to the Louisiana Constitution, but almost no one believes that the emotional debate will end there." (The Times-Picayune)
Lobbyists Line Up on Overtime Pay: Business, Labor Groups Both Vow to Keep Up Pressure
Excerpt: "Intensive lobbying in the fight to stop the Bush administration's eligibility rules for overtime pay will continue unabated, despite doubt on both sides that legislation on the issue can pass this year." (The Washington Post; one-time registration required)
VEBAs-- Little-Known Tax-Deferred Plan Offers Asset Protection and Big Deductions
Excerpt: "Would you like to set aside a large amount of tax-deferred income every year -- in addition to your current retirement plan? Provide financial security without paying estate or income taxes? Protect your assets from the claims of creditors? If the answer is 'yes' to one of these questions, you should consider participating in a voluntary employee's beneficiary association (VEBA)." (Matthew J. Dicken in Business First via bizjournals.com; one-time registration required)
Financial Accounting Standards Board Adds Employee Stock Purchase Plans ‘Safe Harbor' Treatment
Excerpt: "Employee Stock Purchase Plans (ESPP) will not be charged as a corporate compensation cost under a new 'safe harbor' provision approved by the Financial Accounting Standards Board (FASB). .... A copy of FASB's pre-hearing handout, which includes the proposals for the tax treatment of ESPPs to be considered, is available at http://www.fasb.org/board_handouts/09-08-04.pdf" (PLANSPONSOR.com; one-time registration required)
Newly Posted Events
ASPA Examination Weekend Review Classes
in Pennsylvania on October 16, 2004
presented by Transamerica Retirement Services
ERISA Workshop
Nationwide on November 17, 2004
presented by SunGard Corbel
Newly Posted Press Releases
Will the Presidential Candidates Ever Talk About Insurance Company Profits?
(Foundation for Taxpayer and Consumer Rights)
Newly Posted or Renewed Job Openings
Actuarial Associate- Retirement
for Towers Perrin
in CT, DC, GA, MA, NJ, NY, PA
Sr. Benefits Specialist
for APL, Ltd.
in CA
ERISA Compliance Officer
for City National Bank
in CA
Assistant Plan Administrator
for Susquehanna Wealth Management
in PA
Internal Sales Consultant
for New York Life Investment Management LLC
in MA
Pension Consultant/Administrator
for Third Party Administrators, Inc.
in NH
Marketing Representative
for PENSCO Trust Company
in NH
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