| BenefitsLink Retirement Plans Newsletter |   |
November 4, 2004
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Retirement Plans Must Soon Comply With Automatic Default Rollover Rule
Excerpt: "The automatic rollover rules apply to mandatory distributions, sometimes referred to as involuntary cash-outs. Plans qualified under IRC section 401(a), 401(k), 403(a), 403(b) or 457 are subject to the requirement. Although governmental and non-electing church plans are also subject to the automatic rollover rules, the DOL safe harbor rule does not apply to these plans because they are exempt from ERISA. The IRS is also planning to publish guidance under section 401(a)(31)(B) ...." (Watson Wyatt Worldwide)
Overview: IRS Proposes New Determination Letter Procedure
Excerpt: "The vast majority of qualified plan sponsors seek IRS confirmation of their plan's tax-qualified status. The IRS delivers this approval in the form of a determination letter, which provides 'reliance' that the IRS will not retroactively challenge the plan's qualified status, even if a disqualifying defect in the plan language is discovered (as opposed to a failure to follow the terms of the plan)." (Watson Wyatt Worldwide)
Tips for Making Your 401(k) Plan Investment Choices of Mutual Funds
Excerpt: "First, though, a sad truth: Many 401(k) plans aren't assembled by folks who know much about investing. As a result, your array of options may seem random and confused; other times, the lineups might seem narrowly restricted. And while choosing an index fund is always an easy out, many 401(k) plans -- if you can believe it -- still don't afford participants that seeming no-brainer of a choice." (The Motley Fool)
Negotiating the Retirement Benefits Section of the Divorce Settlement Agreement
Excerpt: "The settlement agreement dictates the outcome of the property distribution process. While many assets can be easily identified and valued that is not always the case with retirement benefits. More often than not the biggest problem we have when requested to draft a Qualified Domestic Relations Order for an attorney is the lack of specificity in the settlement agreement. But case law is now making it harder to correct the attorney's omissions by addressing them in the QDRO we draft." (DivorceNet.com)
S Corp ESOPs: Two Topics -- Use of S Distributions & Loan Payments and the S Corporation Excise Tax (PDF)
2 pages. Excerpt: "The American Jobs Creation Act of 2004 creates an important new opportunity for leveraged ESOPs of S corporations. The new law permits an S corporation's ESOP to make loan payments using cash distributions paid on shares acquired with the proceeds of the loan, regardless of whether the shares are allocated or unallocated." (Kirkpatrick & Lockhart LLP)
IRS COLA Increases for Dollar Limitations on Benefits and Contributions -- Chart for 1999 - 2005
Excerpt: "The Economic Growth and Tax Relief Act of 2001 (EGTRRA) reset many of the statutory dollar amounts previously adjusted on an annual basis under section 415 of the Internal Revenue Code. Additionally, other new limitation amounts were added by EGTRRA." (Internal Revenue Service)
Full Text of IRS Weighted Average Interest Rate Table Updated for November 2004
Weighted average for November 2004: 5.12% (Internal Revenue Service)
IRS Composite Corporate Bond Rate Table Updated for November 2004
Excerpt: "Note: In determining whether a plan is subject to quarterly contributions under section 412(m)(1) for the plan year beginning January 1, 2004, the funded current liability percentage for 2003 may be recalculated using the corporate weighted average interest rate. However, ...." (Internal Revenue Service)
CalSTRS Considers Foreign Report Card to Evaluate Pension Fund Investments in Emerging Markets
Excerpt: "Trustees of the California State Teachers' Retirement System moved closer Wednesday toward establishing an eligibility list for investing in fast-growing foreign countries. By ranking the nations, pension fund leaders hope to seize high-performing investment opportunities and lessen the risk of putting millions into companies in volatile economies." (The Sacramento Bee)
Citigroup Liable In WorldCom Worker's Loss While Overseeing Employee Stock Plan
Excerpt: "Arbitrators have awarded $75,000 to a longtime WorldCom Inc. employee who argued that bankers contributed to her financial losses by profiting from their relationship with the struggling company and its chief executive at the same time they administered a stock-options program for WorldCom workers. A three-member arbitration panel ruled that Citigroup Inc.'s Salomon Smith Barney unit violated its fiduciary duty to the workers by granting favors to company founder ...." (The Washington Post; one-time registration required)
Links to Items on Executive Comp, Benefits in General
11 States Back Bans on G.ay Unions; Georgia, Ohio Bar Partner Benefits
Excerpt: "Voters in 11 states on Tuesday gave resounding approval to constitutional amendments banning same-sex marriage -- and in some cases, barring all cohabitating couples from receiving domestic partnership benefits. The only state that registered significant opposition to the ban was Oregon. But even there, a constitutional amendment prevailed." (Los Angeles Times; one-time registration required)
ERIC's Comments to the Treasury Department on Amendments to Law Governing NQDC Plans (PDF)
Excerpt: ERIC's November 3, 2004, letter to Treasury's William Sweetnam attaches 'comments from The ERISA Industry Committee (ERIC) regarding certain questions related to the provisions of the American Jobs Creation Act (P.L. 108-357) that amend the law governing nonqualified deferred compensation plans." (ERISA Industry Committee)
Overview: Tax-Exempt Organizations Significantly Impacted by New NQDC Legislation
Excerpt: "The penalties on deferred compensation arrangements that fail to comply with the law include a 20% tax on the deferred compensation in addition to regular income tax. The Act affects deferred compensation at both taxable and tax-exempt organizations. Given the potentially severe tax consequences, organizations should consult with tax and benefits counsel now so that necessary changes can be made by year end." (Dorsey & Whitney LLP)
Recommended Action Steps for Employers with Nonqualified Deferred Compensation Plans
Excerpt: "Every participant in a NQDCP could suffer severe tax penalties if the new rules are not met. Therefore, employers must review NQDCPs quickly and make initial decisions in the next few months on how to deal with the new rules, communicate these decisions to employees, and put the new rules into effect." (Hanson, Bridgett, Marcus, Vlahos & Rudy, LLP)
Summary of New Rules for Nonqualified Deferred Compensation Plans
Excerpt: "[The newsletter provides] a summary of key portions of the nonqualified deferred compensation rules of the American Jobs Creation Act of 2004 (the 'Act'). Please note that the IRS is working on a fast track to give guidance regarding some of these rules but may not issue critical guidance until December or even next year." (Hanson, Bridgett, Marcus, Vlahos & Rudy, LLP)
Hewitt Federal Legislation Quick Guide Updated November 2, 2004
Excerpt: "Hewitt's Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding health and welfare benefit plans, retirement plans, and human resources and employment law." (Hewitt Associates)
Bush Pledges a Broad Push Toward Market-Based Policies
Excerpt: "'For us, the challenge is pretty straightforward,' Mr. Gingrich said. 'Can we pile up enough practical, real solutions so that people think we're the natural governing party - they like our product line better.' He named three domestic priorities for Republicans: 'transforming health,' a new focus on improving high schools and the creation of personal accounts in Social Security. 'Those three would be adequately transformational,' Mr. Gingrich said with a smile." (The New York Times; one-time registration required)
Full Text of Monthly Benefit News and Developments, November 2004, Published by Milliman (PDF)
2 pages. Excerpt: "The November 2004 issue of Monthly Benefit News and Developments covers: the status of federal legislation affecting employer-provided health and retirement benefits; upcoming key dates; IRS, DOL, SSA, and EEOC regulatory guidance; the Congressional Research Service's study on automatic enrollment in 401(k) plans; the GAO's study of pres.cription drug price trends; and the Congressional Budget Office's report on disease management programs." (Milliman)
Full Text of the Accounting Roundup November 2004 Edition Published by Deloitte (PDF)
12 pages. Excerpt: "The purpose of this publication is to briefly describe key regulatory and professional developments that have recently occurred in the field of accounting and to provide links to locations where additional information can be found on each topic." (Deloitte Development LLC via Financial Executives International)
Newly Posted Events
Chicago Advanced Pension Conference
in Illinois on September 7, 2005
presented by SunGard Corbel
Third Annual Conference: Health Information Technology 2004: Improving Chronic Disease Care in California
in California on November 18, 2004
presented by California HealthCare Foundation and Center for Health Research at UC Berkeley
Newly Posted Press Releases
Introducing Online Immediate Annuity Quotes
(Dietrich & Associates, Inc.)
4myBenefits Unveils HR-Wizard
(4myBenefits, Inc.)
Individual(k) Plans Cited as One of The Most Powerful Retirement Savings Products for Growing Numbers of Owner-Only Businesses
(American Express Financial Advisors)
Newly Posted or Renewed Job Openings
Health & Welfare Consultant
for Towers Perrin
in CA, CT, NJ, NY
Health & Welfare Associate
for Towers Perrin
in CT, MA, NJ, NY
Sales Representative
for Great-West Healthcare
in ANY STATE, GA
Pension Administrator
for The Pension Alliance, Inc.
in PA
Retirement Plan Administrator
for Metavante Corporation
in WI
Programmer - Benefits Administration
for ProView
in CA
Junior Account Administrator
for Local Third Party Administration Firm
in TX
Benefits Coordinator
for The College Board
in NY
Client Relationship Manager
for Metavante Corporation
in WI
Senior Retirement Program Specialist
for Providence Health System
in WA
RFP Consultant
for Diversified Investment Advisors
in NY
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- Employee Benefits Library
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