| BenefitsLink Retirement Plans Newsletter |   |
October 8, 2004
Today's sponsor: APSCREEN, Employee Locator
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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)
Airline Plans' Underfunding Illustrates Broader Problems with Defined Benefit Pension System
13 pages. Testimony by David M. Walker, comptroller general of the United States, before the Senate Committee on Commerce, Science, and Transportation on October 7. Excerpt: "Terminating these pension plans confronts Congress with three policy issues. The most visible is the financial exposure of the [PBGC] ... Second, plan participants and beneficiaries may lose pension benefits due to limits on PBGC guarantees. Finally, airlines that terminate their plans may gain a competitive advantage ..." (U.S. Government Accountability Office)
Testimony of Bradley D. Belt before Senate Committee Regarding Recent PBGC Issues
Excerpt: "Considerable attention has been--and must be--paid to the PBGC's financial position. The Corporation's single-employer insurance fund had a record deficit at the end of the 2003 fiscal year of $11.2 billion, and we will be reporting a significantly increased deficit for the 2004 fiscal year." (Pension Benefit Guaranty Corporation)
Pension Guarantor Calls for Changes: PBGC Asks Congress for New Powers
Excerpt: "The government's pension insurance agency yesterday called on Congress to strengthen its hand in seeking to attach assets of bankrupt companies to protect those companies' pension plan participants, and also suggested that it be given more flexibility in negotiating deals with troubled pensions to keep them operating." (The Washington Post; one-time registration required)
Overview: Proposed USERRA Regulations Address Elective Deferrals, Timing of Employer Contributions
Excerpt: "The DOL has issued proposed regulations to implement the requirements of the Uniformed Services Employment and Reemployment Rights Act (USERRA). Below, we highlight some of the key provisions regarding benefits that fall within the scope of our 401(k) Plans manual." (Employee Benefits Institute of America)
Putting Your 401(k) on Autopilot: New Plans Aim to Ease the Hassle of Managing Retirement Funds
Excerpt: "A possible solution for creating more robust nest eggs is what's known as the 'autopilot' 401(k). If you sign up for one of these plans, certain decisions related to your 401(k) will be made automatically, meaning you shouldn't have to review and reassess your investment vehicles and contribution levels as often. Vendors such as Vanguard Group and Principal are already pitching autopilot accounts to employers, and others will likely follow." (BusinessWeek Online)
Overview: Final Regs on Automatic Rollovers for Cashouts and Guidance on Distributions (PDF)
4 pages. Excerpt: "The final Department of Labor regulations regarding automatic IRA rollovers become effective on March 28, 2005. .... The guidance provided by the Department of Labor in the Field Assistance Bulletin on distributions of missing participants' benefits in connection with a defined contribution plan termination is effective immediately." (Kirkpatrick & Lockhart LLP)
Overview: IRS Provides Plan Administration Guidance for 403(b) Plans and Qualified Plans (PDF)
Excerpt: "This guidance applies to both qualified defined benefit and defined contribution plans, including 401(k) plans. With the exception of the extended amendment deadline, this guidance also applies to 403(b) plans." (The Prudential Insurance Company of America via CIGNA.com)
Technical Tip: Retirement Plan Loans Require Interest Even When Payments on Loan Suspended
Excerpt: "The following question and answer were from the IRS Q&A Session at the 2003 ASPA Annual Conference: I have learned that at least one recordkeeper does not accrue interest on loans during periods of no payment (suspension of loan payments). Is this okay? Response: No, it is not okay. Interest on the outstanding loan balance must continue to accrue during the suspension period." (Reish Luftman Reicher & Cohen)
Opinion: Plan Advisory Services-- the New Business Model
Excerpt: "Open architecture and fiduciary reporting will eventually become spreadsheet items and select providers like Ceridian, DAC, BISYS, Invesmart, ABN-AMRO, GWRS, TruSource (formerly CNA Trust), MFS and others are already gearing up to support the RIA/fee-based model and open architecture. Contrastingly, many investment manager-type providers will drop their programs ..." (The Center for Due Diligence via the McHenry Group)
Vanguard Urges Fee Transparency for Plan Sponsors and Plan Participants in DOL Testimony
Excerpt: "In testimony to a Department of Labor (DOL) working group recently, two Vanguard leaders presented a picture of the impact of high plan costs and investment fees--particularly 'out-of-sight, out-of-mind' asset-based fees. Dennis Simmons, principal of Vanguard Plan Consulting Group, and Steve Utkus, who heads Vanguard's Center for Retirement Research, urged the DOL to take specific steps to make fees and costs more transparent to plan sponsors and participants." (The Vanguard Group)
Experts Give Tips on Revamping Pension Plans
Excerpt: "Experts from ProManage, Inc. and SwedishAmerican Health Systems recently gave advice with regard to ways retirement plan professionals can improve their existing pension plans, at a briefing entitled 'Enhancing the Value of Your Retirement Plan While Managing Your Fiduciary Exposure With Managed Accounts,' held at the Chicago law offices of Gardner, Carton & Douglas." (hr.cch.com)
Opinion: Social Security Election Fantasy in Kerry Campaign Study on Personal Accounts Cost
Excerpt: "Statistics and studies produced by political campaigns are notoriously unreliable. The Kerry campaign is now distributing one of the greatest whoppers of all time in regard to Social Security. The claim is that allowing personal accounts for Social Security, as President Bush proposes, would result in $940 billion in administrative fees going to private financial management firms (read Wall Street) over the next 75 years." (Peter Ferrara in The Washington Times)
Overview: Same Sex Marriages Present Challenges for Retirement Plan Sponsors (PDF)
4 pages. Excerpt: "These developments affect sponsors of and participants in qualified defined benefit and defined contribution plans, section 403(b) annuity programs, and section 457(b) plans." (The Prudential Insurance Company of America via CIGNA.com)
Links to Items on Executive Comp, Benefits in General
Court Puts Off Ruling on US Airways' Dire Straits and Court-Imposed Pay Cut Request
Excerpt: "Judge Stephen Mitchell did not rule on the 23 percent pay cut, which US Airways asked to have imposed over the next six months, or on the $110 million employee pension payment the airline skipped in September. He delayed decisions on both until next Tuesday at the earliest. The airlines' unions want the judge to deny the temporary pay cut and force the airline to make the pension payment, which was due Sept. 15." (Pittsburgh Post-Gazette)
Airline Workers See Their Security Quickly Vanish
Excerpt: "As if times were not troubled enough in the airline industry, employees at US Airways, Delta and United are facing the stark realization that the security they hoped their jobs would provide is being quickly taken away." (The New York Times; one-time registration required)
Lawyer Explains G.ay Marriage Benefits to Employers
Excerpt: "'Employers are kind of all over the place with what they want to do, what they need to do,' said Attorney Robin S. Lazarow of Worcester. Lazarow ... explained the different standards for providing health insurance and benefits to same-sex families, according to both Massachusetts and federal laws. The two governing bodies have vastly different requirements, she said, so it's important to understand how to file each type of tax form." (Sentinel & Enterprise)
Lawmakers Reach Deal on Nonqualified Deferred Compensation Reform and Enactment Is Expected (PDF)
Excerpt: "House-Senate negotiators have agreed to sweeping restrictions on nonqualified deferred compensation (NQDC) that would become effective January 1, 2005 as part of a final corporate tax bill (HR 4520). The House is expected to approve the bill tonight; the Senate will likely follow suit tomorrow, October 8. The bill would impose new restrictions on the timing of deferral elections, as well as on the timing and form of distributions under all NQDC plans." (Mercer Human Resource Consulting)
Summary for the Conference Committee Report, HR 4520, Deferred Compensation Plans - Generally (PDF)
20 pages. Excerpt: "Under the House bill, all amounts deferred under a nonqualified deferred compensation plan for all taxable years are currently includible in gross income to the extent not subject to a substantial risk of forfeiture and not previously included in gross income, unless certain requirements are satisfied." (Thomas C. Walker)
October 6, 2004, Update on Nonqualified Deferred Compensation Provisions in Corporate Tax Bill
Excerpt: "The House and Senate Conferees to the corporate/international tax bill (H.R.4520) are continuing to meet today to try to reach agreement on a final bill. Nonqualified deferred compensation provisions have not yet been brought up for amendment. .... The Chairman's 'mark,' ... is the basis for the current deliberations, made some significant revisions to the nonqualified deferred compensation provisions of earlier bills but also leaves key issues unresolved." (The ERISA Industry Committee)
Opinion: Working for a Pittance and No Perks Is Plight of 9.2 Million Working Families
Excerpt: "The study, jointly sponsored by the Annie E. Casey, Ford and Rockefeller Foundations, will show that 9.2 million working families in the United States - one out of every four - earn wages that are so low they are barely able to survive financially. 'Our data is very solid and shows that this is a much bigger problem than most people imagine,' said Brandon Roberts, one of the authors of the report, which is to be formally released on Tuesday." (BOB HERBERT in The New York Times; one-time registration required)
HR 5154 Would Clarify Differential Pay Treatment for Military Personnel
Excerpt: "Reps. Michael Turner (R-OH) and John Kline (R-MN) introduced a bill (HR 5154) to clarify that military personnel who receive differential pay from employers can continue to participate in employers' retirement plans. .... The bill would also clarify withholding, nondiscrimination, and distribution rules." (Mercer Human Resource Consulting)
Working Paper: Changing the Retirement Paradigm with Labor Force Aging and Slow Workforce Growth (PDF)
20 pages. Excerpt: "Labor market changes are driving employers, employees, and policymakers to confront the need for a new retirement paradigm. .... When labor force growth was the norm, many firms favored hiring plentiful younger workers over retaining more costly older employees. It was in that context that employers developed defined benefit (DB) plans ...." (Pension Research Council, The Wharton School, University of Pennsylvania)
Newly Posted Press Releases
Study Shows That Health Industry Waste Could Fund Health Care
(Physicians for a National Health Program)
2004 CCH Unscheduled Absence Survey
(CCH Incorporated)
U.S. Labor Department Sponsors Workshops To Help Benefit Professionals Comply With Federal Pension Law
(U.S. Department of Labor, Office of Public Affairs, Boston)
MetLife's 'MetLink' Employee Portal Wins Standard of Excellence Award from Web Marketing Association
(MetLife)
United Steelworkers of America Calls for Expanded Protection of Retiree Benefits; Federal Government Takes Control of Kaiser Pension Plan
(United Steelworkers of America (USWA))
SunGard Helps TIAA-CREF Meet Customers' Evolving Needs
(SunGard Employee Benefit Systems)
CAHI Releases 2004 Voters’ Guide
(Council for Affordable Health Insurance)
Newly Posted or Renewed Job Openings
Defined Benefit Operations Manager
for New York Life Investment Management LLC
in MA
Actuarial Specialist II
for Louis Kravitz & Associates, Inc.
in CA
Pension Account Administrator
for Alerus Retirement Solutions
in MN
Senior Client Director
for CitiStreet TBO
in FL
Sr. Benefits Analyst - Health Care Data
for Target Corp.
in MN
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