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November 5, 2004
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2004 & 2005 Calendar Plan Year "Safe Harbor" 401(k) Notice Requirements
Excerpt: "The deadlines for the 2004 supplemental 'Safe Harbor' notice and the 2005 calendar plan year 'Safe Harbor' notice to eligible plan participants vary based on the nature of the notice and the plan status ...." (Milberg Consulting LLP)
IRS Questions Plans Using Short Service Employees in Nondiscrimination Tests (PDF)
1 page. Excerpt: "On October 22, Carol Gold, the Director of Employee Plans, issued a directive to EP staff regarding certain schemes which use employees with short periods of service to insure that most, or all, of the benefits paid under a retirement plan go to the employer's highly compensated employees (HCEs). The directive states that these schemes may violate the nondiscrimination rules of Code section 401(a)(4) ...." (Internal Revenue Service)
Comments: Employers Get Creative in Boosting 401(k) Participation Through Computer Games
Excerpt: "A good article from Workforce magazine on 'New Tactics to Boost 401(k) Interest.' The article mentions a new site devised by Starbucks called 'Futureroast.com' which features interactive computer games to educate employees about investing and saving for retirement. Unfortunately, you can't play unless you are an employee of Starbucks.) The article describes the site ...." (Attorney B. Janell Grenier via BenefitsBlog.com)
Overview: DOL's Safe Harbor for Automatic Rollovers of Mandatory Distributions from Plans (PDF)
2 pages. Excerpt: "The Department of Labor (DOL) has issued final regulations establishing a 'safe harbor' for retirement plan fiduciaries when transferring amounts to an individual retirement arrangement (IRA) pursuant to the tax code's rules governing mandatory distributions. The final rules, which are effective for distributions on or after March 28, 2005, apply not only to the amounts subject to the 'automatic rollover' requirements ... but also, if the plan so provides, to lesser amounts." (Milliman)
Tapping Your 401(k) With Plastic: Ultra-Easy Borrowing Via Credit Card from Retirement Savings
Excerpt: "Tapping into your 401(k) funds could soon become as easy as slapping down some plastic at the checkout. A controversial plan to create a kind of 401(k) credit card -- you would use it like ordinary plastic, but the money would come out of your 401(k) account in the form of a loan -- is gaining some momentum. As crazy as it sounds, however, legitimate reasons exist for eventually adding such a service to their 401(k) plans.' (BusinessWeek Online)
Text of Notice 2004-77: Weighted Average Interest Rates Update for November 2004 (PDF)
6.17% is the corporate bond weighted average interest rate, for use by plans having plan years that begin in November 2004. (Internal Revenue Service)
W.R. Grace Workers Sue, Alleging $40 Million in Lost Profits
Excerpt: "Employees of bankrupt chemical company W.R. Grace and Co. ... sued the company for $40 million in potential stock profits lost from their retirement accounts ... In a class action lawsuit, employees claimed that Grace and its investment advisors forced them to sell their Grace stock at a distressed price of $3.50 per share ... They estimated that 6,000-8,000 employees were included in the suit. Soon after the sale, the stock value tripled but the employees got nothing ..." (Reuters via MSN Money)
Bank of America Employees Sue, Alleging Self-Dealing and Breach of Fiduciary Duty
Excerpt: "The debate over whether and how companies can use their employees' pension plans as profit centers seems unlikely to end soon. Employees of Bank of America Corp. are suing ... over its cash-balance pension plan, which they say the company used as part of an 'arbitrage scheme' to enrich itself at the expense of participants. According to the suit, employees were required to invest their pension assets in hypothetical portfolios tracking the returns of in-house mutual funds ..." (Wall Street Journal via SFGate.com)
NCPERS Responds to Negative October 4 P&I Editorial on Public Sector Defined Benefit Plans (PDF)
2 pages. Excerpt: "NCPERS responds to October 4 editorial in Pensions & Investments that is negative on public sector defined benefit plans. NCPERS' response was published in the November 1 issue. NCPERS states that the editorial was 'misleading and factually incorrect with regard to public pension plan and the public.'" (National Conference on Public Employee Retirement Systems)
Back-to-Basics: Defining Compensation for Qualified Retirement Plan Purposes
Excerpt: "Are you familiar with the differences between withholding compensation, W-2 compensation, and 415 compensation? Compensation is used for multiple purposes under qualified retirement plans. First, it determines the amount of contributions that the employee and employer can make to the plan and how those contributions are allocated. Secondly, it is a key factor in the performance of the annual qualification and nondiscrimination tests imposed under the Internal Revenue Code." (McKay Hochman Co., Inc.)
Retirement Perspective: Retirement Plan Governance: What's a Fiduciary to Do?
Excerpt: "Are retirement plan fiduciaries safe if they are well intentioned? Regrettably, no. Amidst intensified scrutiny of retirement plan governance, there are pitfalls and liability risks even for the most well-intentioned fiduciaries. Enron and WorldCom headlines have created a mistaken but understandable impression that only blatant or intentional fraud can get a plan fiduciary in trouble." (Mercer Human Resource Consulting)
Overview: U.K. Pensions Commission on Adequacy of Pension Provision and Saving in the UK
Excerpt: "In December 2002, the Government established the Pensions Commission to assess the adequacy of private pension provision in the UK and advise on appropriate policy changes, including whether there is a case for moving beyond the current 'voluntarist approach'. On 12 October 2004, the Commission published ... 'Pensions: Challenges and Choices', setting out the results of its research findings." (U.K. Pensions Commission Consultation via Watson Wyatt Worldwide)
Links to Items on Executive Comp, Benefits in General
United Seeks an Additional $2 Billion in Cost Cuts Including Pension Terminations and More Wage Cuts
Excerpt: "United Airlines, trying to restructure after nearly two years in bankrup.tcy protection, told its unions last night that it wanted to terminate its four employee pension plans and seek additional wage and benefit cuts, as part of a plan to cut another $2 billion a year in costs. Termination of the pension plans would require approval from the Federal Bankrup.tcy Court in Chicago, where United sought protection in December 2002." (The New York Times; one-time registration required)
Relief Provided in Connection with Certain Employee Benefit Plans Because of Florida Storm Damage (PDF)
Excerpt: "The Internal Revenue Service, the Department of Labor's Employee Benefits Security Administration ('EBSA') and the Pension Benefit Guaranty Corporation ('PBGC') are providing relief in connection with certain employee benefit plans because of damage in Florida caused by Tropical Storm Bonnie, Hurricane Charley and Hurricane Frances ('Florida Storms'). The relief provided by this notice is in addition to the relief already provided by the Service to victims of the Florida Storms." (Internal Revenue Service)
New State Marriage Laws Raise Domestic Partner Benefits Concerns
Excerpt: "After 11 states approved constitutional bans on g.ay marriages in Tuesday's vote, national employer groups said the effects could challenge domestic-partner benefits for same-sex couples. 'I think there's a very real chance,' said David Namura, manager of state affairs at the Society for Human Resource Management, the Virginia-based association of about 175,000 human resources professionals nationwide. Minneapolis employment attorney Rick Nelson disagrees." (Star Tribune; one-time registration required)
Blue Cross Blue Shield of Montana Executive Defends Salary, Perks, and Dog-Sitting Allowance
Excerpt: "Peter Babin, the embattled president of Blue Cross and Blue Shield of Montana, on Thursday defended his pay and perks to company employees, blasted some press coverage as petty and told workers if they are ashamed of working for the company, they ought to quit. Babin ... told hundreds of employees the company has come up with a new health insurance plan for them that eased somewhat the added financial costs an earlier plan would have imposed on them." (The Billings Gazette)
Bush Likely to Emphasize 'Ownership Society' in Second Term; Newspapers Predict Social Agenda
Excerpt: "According to the New York Times, Bush's 'broad domestic agenda' will focus on his 'vision of an 'ownership society'' and will 'extend his conservative, market-oriented proposals' for health care and other issues. Along with proposals to reform Social Security and the federal tax code, Bush 'is expected to keep pushing the idea of health savings accounts as a way to create savvier consumers who shop around for the best deals in medical care,' ...." (The National Journal Group, Limited via BlueCross BlueShield Association)
Bush Agenda Includes Extension of Tax Relief and Renewed Push for Private Savings Accounts
Excerpt: "While much of the campaign focused on war and terrorism, President Bush has a full agenda of domestic priorities and his re-election is certain to shape, and in some cases perhaps reshape, Americans' tax-planning, health-care and savings strategies. During his second term, Mr. Bush is likely to push some issues, such as privatizing parts of Social Security, ... -- as well as extend many of the proposals on health care ... that he introduced during his first four years." (Wall Street Journal Via Factiva)
Full Text of HR 1779: Senate Bill with Amendments Affecting Military Differential Pay (PDF)
8 pages. Excerpt: "Resolved, That the bill from the House of Representatives (H.R. 1779) entitled `An Act to amend the Internal Revenue Code of 1986 to allow penalty-free withdrawals from retirement plans during the period that a military reservist or national guardsman is called to active duty for an extended period, and for other purposes.', do pass with the following ...." (U.S. Senate via The ERISA Industry Committee)
Newly Posted Events
Fall 2004 Quarterly Meeting
in Montana on November 17, 2004
presented by Western Pension & Benefits Conference - Montana Chapter
Newly Posted Press Releases
Deferred Compensation Legislation
(Proskauer Rose LLP)
Newly Posted or Renewed Job Openings
Installation Administrator
for Transamerica
in CA
Business Development Manager
for National Financial Services Firm
in CA
FSA/HRA Administration, Manager
for Oxford Associates of Maryland, Inc.
in MD
Pension Administrator
for Cremen, Clements and Associates Pension Administration, Inc.
in MD
Account Executive Director- Recruitment Services
for Principal Financial Group
in PA
H&W Quality Assurance Manager
for Hewitt Associates LLC
in IL
Retirement Plan Sales Executive
for Ceridian
in CA
Field Sales Coordinator
for Transamerica
in CA
401(k) Account Executive
for DC Pension Consultants, LLC
in NJ
Defined Benefit Conversion Specialist
for New York Life Investment Management RPS
in MA
401k Plan Transition Administrator
for ADP Retirement Services
in NJ
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