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October 26, 2004
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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)
IRS to Issue Guidance on RASD and Automatic Rollover Amendments
Excerpt: "Plan sponsors will have until the end of a plan's EGTRRA remedial amendment period to adopt amendments for the retroactive annuity starting date (RASD) rules, according to an announcement in the IRS Employee Plans Newsletter. Apparently, the IRS won't issue any model RASD amendments in the interim. In contrast, the IRS intends to publish model amendments to help employers implement the new automatic rollover provisions, and provide other guidance on the rollover rules." (Mercer Human Resource Consulting)

SEC Probes Mutual Fund Payments to Pension Planners
Excerpt: "The SEC, ramping up scrutiny of potential financial-services industry conflicts, in December launched a broad examination of retirement-fund consulting to determine whether consulting firms and money-management companies engaged in quid pro quo arrangements and whether clients were informed of any financial relationships between their consultants and the management companies they recommend." (Wall Street Journal via SFGate.com)

Shame and Scandal in the Florida Public Pension Community?
Excerpt: "Public pensions throughout Florida are being defrauded by brokers registered with Wall Street powerhouses who hold themselves out as pension experts. Over the past year we have met with trustees of many of these funds advising them of our preliminary findings, as well as reviewing investment performance reports prepared by their broker-consultants. The performance of the funds is generally dismal." (The Benchmark Companies)

Overview: Final Rules on Automatic Rollovers (PDF)
2 pages. Excerpt: "Compliance with the final automatic rollover rules is mandatory. Under the final rules, if the conditions of the safe harbor automatic rollover are satisfied, plan fiduciaries will be protected from claims of breach of fiduciary duty under the Employee Retirement Income Security Act of 1974, as amended (ERISA), for the selection of an institution to provide the individual retirement plan and the selection of investments for such plans." (Transamerica Center for Retirement Studies)

When Is Compensation Considered Earned Income for Retirement Plan Participation Purposes?
Excerpt: "When your business initiates a company-sponsored retirement plan, the way in which you choose to be compensated will affect your ability to actively participate by making annual contributions to the plan. In fact, you must have current year earned income in order to make current year tax-favored contributions to a company-sponsored retirement plan, such as a Simple IRA, a SEP (Simplified Employee Pension), a 401(k) or a KEOGH." (Entrepreneur.com)

Data Mining Helps 401(k) Plan Sponsors Custom-Tailor Communication and Education Programs
Excerpt: "Margaret Dugan may not be a marketing professional, but she thinks like one. Each year before she goes on the road to promote her company's 401(k) plans to fellow employees, the director of stock plans for energy services provider KeySpan Corp. in Brooklyn, New York, does what any good marketing executive would do: She studies her customer base. She reviews comments and questions the company has received from plan participants over the preceding 12 months." (PLANSPONSOR.com; one-time registration required)

Cash Balance Plan Sixth Circuit Court Ruling Leaves Ambiguity in Its Wake
Excerpt: "The Sixth Circuit Court of Appeals has overturned the district court's ruling in Crosby v. Bowater. In that case, the district court had ruled that, in a cash balance plan where accrued benefits are payable as a death benefit, a pre-retirement mortality discount should not be figured into the lump sum payment amount." (Watson Wyatt Worldwide)

Insulating Your Company from a New Genre of Class Action Litigation Involving ERISA
Excerpt: "ERISA turned 30 last month, and the folks celebrating will doubtless include class action attorneys. 'There's been a change in the attitude of the employee,' opines Lynn Sarko, head of the ERISA group at Seattle-based law firm Keller Rohrback. 'It used to be that participants assumed fiduciaries were doing their job. [Now they are] starting to second-guess what plan fiduciaries are doing and holding their feet to the fire.'" (PLANSPONSOR.com; one-time registration required)

New Directions and the 2004 Self-Directed Brokerage Account Buyer's Guide
Excerpt: "A decade ago, the ability to support a self-directed brokerage account (SDBA) capability was a widely utilized means of winnowing the field in a 401(k) search. Though the option for participants to make investment choices outside the standard retirement plan menu was not widely utilized, mastery of the technology and operational wherewithal associated with an SDBA capability was seen as a proof statement of long-term commitment to the recordkeeping business." (PLANSPONSOR.com; one-time registration required)

Lifestyle Funds Provide Asset Allocation of Investments Based on Retirement Date Goal
Excerpt: "Thanks to the growing popularity of lifecycle funds--funds that automatically rebalance their asset allocations as participants approach retirement--it is now easier than ever to build a well-diversified investment portfolio, even for people who cannot tell a stock from a bond. In some plans, participants need only pick the one with the retirement date in its name that most closely matches their own ...." (PLANSPONSOR.com; one-time registration required)

Links to Items on Executive Comp, Benefits in General

Tax Bill Makes Changes to ESOPs, ISOs, ESPPs, and Deferred Compensation Plans
In his Employee Ownership Update for October 8, 2004, NCEO Executive Director Corey Rosen discusses the effects of the American Jobs Creation Act on equity plans, ranging from S corporation ESOPs to employee stock purchase plans and incentive stock options. (National Center for Employee Ownership)

Overview: New Nonqualified Deferred Compensation Legislation (PDF)
3 pages. Excerpt: "On October 11, 2004, the Senate gave final approval to the American Jobs Creation Act (the 'AJCA') which was passed by the House of Representatives on October 7, 2004. [A]ll sponsors of nonqualified deferred compensation should review their existing arrangements before year end because the AJCA applies to compensation deferred after December 31, 2004, and compensation deferred under a plan or arrangement that is materially modified after October 3, 2004." (Powell Goldstein LLP)

Overview: New Deferred Compensation Tax Legislation Casts a Wide Net
Excerpt: "On Friday, October 22, the President signed the American Jobs Creation Act of 2004, which added a new section 409A to the Internal Revenue Code. The new law significantly changes the operation and taxation of nonqualified deferred compensation arrangements for amounts that are deferred or become vested on or after January 1, 2005." (Faegre & Benson LLP)

Overview: New Rules Ahead for Nonqualified Plans
Excerpt: "President Bush has signed the American Jobs Creation Act (H.R.4520) into law. The act makes sweeping changes to the rules governing nonqualified plans, including expanding the definition of nonqualified deferred compensation plans to include nonqualified pension plans, bonus deferral programs, many stock-based arrangements and other plans." (Watson Wyatt Worldwide)

Full Text: October 2004 Issue, Current Developments in Employee Benefits Published by Ballard Spahr (PDF)
10 pages. The edition includes: New COBRA Notice Requirements, DOL Publishes Final Regulations on Automatic Rollover Safe Harbor, Deadline Looms for Compliance with HIPAA Security Rules, Taxation of Domestic Partner Health Coverage under the New Jersey Domestic Partnership Act, New York City Equal Benefits Law Enacted, IRS Issues Model Amendments for Governmental Section 457(b) Deferred Compensation Plans, and IRS Finalizes Incentive Stock Option Regulations. (Ballard Spahr)

Election 2004: What's Ahead for Health Care and Retirement Issues?
Excerpt: "Election Day is approaching, and President Bush and Senator Kerry are entering the final stages of their presidential campaigns. Health care reform has been a popular campaign topic. Both candidates have plans for increasing access to health care coverage, controlling pres.cription drug costs, improving health information technology and otherwise reforming the U.S. health care system." (Watson Wyatt Worldwide)

FASB Works toward Finalizing Exposure Draft on Expensing Stock Options
Excerpt: "On March 31, 2004, the Financial Accounting Standards Board (FASB) released Share-Based Payment, its exposure draft (ED) on share-based payment transactions, which would require companies to expense their stock options." (Watson Wyatt Worldwide)

Newly Posted Events

Legislative Update: Health and Welfare and Retirement Plans
in California on October 28, 2004
presented by International Society of Certified Employee Benefit Specialists, Northern California Chapter
Newly Posted Press Releases

Benefit Software Provides Personalized Employee Benefit Statement Service for TK Holdings Inc.
(Benefit Software Inc.)

Director Named To Policy and Research Office Of Federal Employee Benefits Agency
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))
Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Pension Administrator
for The Nolan Company
in KS

Inside Sales Representative
for BISYS Retirement Services
in PA

Director, Client Services
for BISYS Retirement Services
in PA

Technician, Settlement Operations
for Transamerica
in CA

Vice President - Relationship Management
for BISYS Retirement Services
in PA

Relationship Manager
for BISYS Retirement Services
in PA

Pension Administrator
for Benetech, Inc.
in CA, CO, GA, VA

Retirement Plan Service & Sales Support
for Pinnacle Financial Group
in MA

Retirement Plans Sales Specialist
for Waddell & Reed Financial
in KS, MO

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