| BenefitsLink Retirement Plans Newsletter |   |
October 20, 2004
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Text of IRS Announcement of Pension Plan Limits for 2005
Excerpt: "Many of the pension plan limitations will change for 2005. For most of the limitations, the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. Furthermore, several limitations, set by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), are scheduled to increase at the beginning of 2005." (Internal Revenue Service)
2005 Retirement Plan Limits Determined; 415(c) to be $42,000, Maximum Elective Deferral at $14,000 (PDF)
Excerpt: "This Bulletin reports new numbers for 2005 that are of interest to sponsors of benefit plans. These new limits and rates are determined using the September 2004 consumer price index (CPI-W), which was released on October 19, 2004." (The Segal Company)
2005 Social Security Changes Compared to 2004 in Chart
Excerpt: "Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2003 through the third quarter of 2004, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 2.7 percent COLA for 2005. Other important 2005 Social Security information is' contained in the fact chart. (Social Security Administration)
Social Security Benefit Payments Will Increase, as Will Medicare Premium
Excerpt: "Social Security benefits for more than 47 million Americans will increase 2.7 percent next year, the government announced Tuesday. But higher Medicare premiums will take nearly half of the increase for a typical beneficiary. .... The increase in Medicare premiums will thus take 46 percent of the increase in the average Social Security benefit for retired workers." (The New York Times; one-time registration required)
Preserving Your Portfolio: Baby Boomers Nearing Retirement Need to Shift Their Investing Gears
Excerpt: "The average 60-something has around 60 percent in stocks. Investors have a strange tendency to be 'overly aggressive until the day they retire,' says Mike Scarborough, president of the Scarborough Group, .... 'Then they become overly conservative. It's like a light switch.' But financial planners suggest that instead of flipping a switch to go from almost all stocks to almost all bonds, boomers should consider gradually dimming their exposure to equities. Doing so won't be easy." (U.S.News & World Report)
Kotlikoff Proposes to Replace Social Security Payroll Tax With National Sales Tax
Excerpt: "The three-part plan, which has been endorsed by more than 150 top U.S. academic economists, is titled the Personal Security System. Part 1 replaces Social Security's payroll tax with a federal retail sales tax. Part 2 eliminates any further Social Security benefit accrual, paying (with the sales tax receipts) only the benefits now owed current retirees and current workers. Part 3 sets up an individual account system, but one Democrats as well as Republicans can support." (Laurence J. Kotlikoff via FortWayne.com)
Lucent Retirees Ask SEC for Help Finding Answers on Pension Fund Asset Losses
Excerpt: "Looking to the investigative and enforcement powers of the Securities and Exchange Commission, the Lucent Retirees Organization has requested the agency include Lucent Technologies in its examination of financial transactions of corporate pension plans. 'The SEC is the only authority capable of unraveling the mystery of what has happened to Lucent's pension plan and to issue corrections for needed change,' said Ken Raschke, LRO president." (News Wire Feed via Light Reading, Inc.)
Links to Items on Executive Comp, Benefits in General
SEC Regulators Are Investigating How Some Companies Tinker With Retiree Benefits Accounting
Excerpt: "Telecom giant SBC Communications Inc. ... last year reported a stunning $2.2 billion plunge in operating income, and the company's explanation probably seemed arcane to many investors. SBC's number-crunchers, the company said, had lowered the expected return on retirement funds by a mere percentage point. Likewise, they raised their assumption of health-care cost inflation by a single point. And they shaved their estimate of future interest rates by just 0.75 percentage points." (BusinessWeek Online)
S.E.C. Inquires Into Pension Fund Accounting and Retiree Health Benefits at Ford and General Motors
Excerpt: "The General Motors Corporation and the Ford Motor Company said yesterday that the federal government had asked them to provide information about how they account for their pension funds and retiree medical benefits, suggesting that a new inquiry into an area of accounting that has long troubled both investors and pension-rights advocates will cast a broad net." (The New York Times; one-time registration required)
Results of the 2004 Annual FASAC Survey on FASB Priorities (PDF)
126 pages. Excerpt: "FASAC's annual survey on the priorities of the FASB provides valuable perspectives and observations about the Board's process and direction. The 2004 survey asked Council members, Board members, and other interested constituents to provide their views about the FASB's priorities, future financial reporting issues, international convergence, differential accounting standards for certain entities, and the priority of a codification of U.S. GAAP." (Financial Accounting Standards Board)
Overview: Congress Passes Sweeping Changes for Deferred Comp Plans; Employers Must Act Quickly (PDF)
3 pages. Excerpt: "The Act requires that a covered NDCP must comply with new Section 409A ... If a covered plan does not comply with Section 409A, amounts deferred under the plan are subject to income taxes, interest and penalties ... to the extent not subject to a substantial risk of forfeiture. If a plan contains a substantial risk of forfeiture provision but does not comply with Section 409A, the income taxes, interest and penalties will apply when the risk of forfeiture lapses." (von Briesen & Roper, s.c.)
Legislation May Require Extensive Changes for New & Existing Executive Compensation Arrangements
Excerpt: "[T]his legislation will make significant changes to rules relating to deferred compensation arrangements, and will affect a ... number of programs that have been established to benefit corporate executives. Although the Act principally impacts deferred compensation plans, it may also impact SERPs, 'excess' plans, certain equity compensation arrangements, severance arrangements, 457(f) plans ... and other 'non-qualified' vehicles which provide a mechanism for the deferral of income." (Littler Mendelson)
Overview: Section 409A: Future Shock for Nonqualified Deferred Compensation (PDF)
Excerpt: "This Legal Alert reviews section 409A, which was included as a revenue offset in the American Jobs Creation Act of 2004, a bill that has passed both the House and Senate and that is expected to become law. The Alert begins by outlining key features of section 409A, it then reviews section 409A's immediate implications for important categories of compensation, and it closes by highlighting particularly sensitive calls that Treasury will need to make in the near future." (Kilpatrick Stockton)
Rules Governing Deferred Compensation Overhauled Affecting Nonqualified Retirement Plans & More (PDF)
Excerpt: "In enacting the American Jobs Creation Act (AJCA), Congress has made it significantly harder for companies to provide nonqualified deferred compensation (NQDC) to executives and managers and has imposed draconian penalties for failures to satisfy the new rules. The far-reaching law expands the definition of NQDC plans to include arrangements such as supplemental executive retirement plans (SERPs), and also imposes new requirements that will affect many stock-based plans, bonuses ...." (Milliman)
Newly Posted Events
Executive Edge Seminar: Pensions, Benefits, & Healthcare
in Florida on November 17, 2004
presented by National Association of Professional Employer Organizations (NAPEO)
Health & Welfare Plans Making Your Sick?
in New York on November 4, 2004
presented by Eisner Retirement Solutions LLC
Legislative Update: Health and Welfare and Retirement Plans
in California on October 28, 2004
presented by No. Calif. Chapter of Certified Employee Benefits Specialists (ISCEBS)
Newly Posted Press Releases
IRS Announces Pension Plan Limitations for 2005 (Corrected)
(Internal Revenue Service (IRS))
Labor Department Extends Annual Reports Deadline After Severe Storms and Flooding Hit Minnesota
(U.S. Department of Labor, Office of Public Affairs, Chicago)
Labor Department Extends Annual Reports Deadline After Tropical Depression Ivan Hits New Jersey
(U.S. Department of Labor, Office of Public Affairs, Chicago)
Labor Department Extends Annual Reports Deadline After Tropical Storm Frances Hits South Carolina
(U.S. Department of Labor, Office of Public Affairs, Atlanta)
Labor Department Extends Annual Reports Deadline After Tropical Depression Ivan Hits New York
(U.S. Department of Labor, Office of Public Affairs, New York, N.Y.)
Modern Woodmen Of America Selects PAi To Provide Turnkey Co-Branded Services For Modern Woodmen 401(k) Plans
(PAi)
Newly Posted or Renewed Job Openings
401(k) Administrator
for Co-Advantage Resources, Inc.
in FL
In House Counsel - Legal Consulting Practice
for UnumProvident Corporation
in ME, TN
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