| BenefitsLink Retirement Plans Newsletter |   |
November 30, 2004
Today's sponsor: Actuarial Systems Corporation
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ASC - QUALITY SOFTWARE FOR THE PENSION INDUSTRY FOR OVER 20 YEARS ASC provides complete automation for the pension office, including: DC/401(k) and DB administration and valuation systems, sophisticated Compliance Testing, DV Direct Daily Valuation, Advanced Information Manager Database (AIM), and Single-Step Processing. All ASC Technical Support Members were experienced Pension Administrators or Actuaries before joining ASC -- and most have been with ASC for over 10 years.
(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
A New Idea for California's Reform-Minded Governor -- the Public Employee Retirement System
Excerpt: "If Gov. Arnold Schwarzenegger is hoping in the coming year to fulfill his potential as a political figure willing and able to fight for difficult but necessary change in state policy, the public employee retirement system would be an excellent place to start. Pension benefits for California's state and local public sector workers are taking an increasing share of government spending, and taxpayers remain at risk for the long-term cost of benefits already awarded." (Pasadena Star News)
Analysis: the Defined Contribution Plan Market Is Going Through Big Changes (PDF)
2 pages. Excerpt from 401khelpcenter.com: 'The SEC is questioning plan providers on the practice of mutual funds sending undisclosed soft dollars back to plan providers, making it impossible for plan sponsors to fully understand plan costs. By burying plan cost in mutual fund expenses, plan participants are not just bearing the cost of the plan, but the plan cost incurred by participants are, in most cases, excessive." (SRConsultant.com)
Another Question is Answered in the Who's the Employer Q&A Column
Arthur is 100% owner of his sole proprietorship. His wife, Betty, owns 99% of Partnership A. Corporation C (wholly owned by Arthur) owns the other 1%. Arthur provides management services to Partnership A. Arthur's child by a previous marriage, Daniel, works for Partnership A. I know this is a controlled group, but is Daniel considered to be an HCE by virtue of ownership? (BenefitsLink.com)
Bush Social Security Reform Plan Would Increase Budget Deficit
Excerpt: "President George W. Bush and his congressional allies are plunging ahead with a plan to privatize part of Social Security that would pose a risk to the U.S. economy by adding hundreds of billions of dollars to federal budget deficits. Adopting such a plan would 'greatly aggravate the budget problem,' likely further reduce national savings and worsen the large U.S. current account deficit, Federal Reserve Governor Edward M. Gramlich said Nov. 17 in a speech at Hartwick College ...." (John M. Berry via Bloomberg News)
Getting 401(k) Participants to Help Themselves and Fiduciaries to Fulfill Their Responsibilities (PDF)
Excerpt: "In this paper, the author lays out steps plan sponsors and providers can take to minimize the likelihood of successful lawsuits against them for breach of fiduciary responsibility while simultaneously helping participants achieve retirement security." (Investment Horizons)
In Re Electronic Data Systems Corp. 'ERISA' Litigation Practice and Procedure Order No. 17 (PDF)
36 pages. Excerpt: "Electronic Data Systems Corporation is a world-wide information technology services provider. Plaintiffs are current and former EDS employees who are or were participants in, or beneficiaries of, EDS's 401(k) plan." (U.S. District Court, Eastern District of Texas, Tyler Division via Jenner & Block)
Measuring Defined Benefit Plan Replacement Rates With Pensync (PDF)
12 pages. Excerpt: "A synthetic pension data set created with regression and statistical matching procedures utilizes IRS data to evaluate the effectiveness of a defined benefit pension plan in meeting the income needs of retirees; the findings suggest that variations in replacement rates stem from differences in benefit formulas, earnings, years in the plan, and employment characteristics." (Monthly Labor Review)
Opinion: Social Security Reform with Personal Accounts, Not Social Security Benefit Cuts
Excerpt: "The president and many members of Congress have explicitly run on personal accounts for Social Security in the past three election cycles, and won. Polls show overwhelming support on the issue, across party lines. Republicans now have a clear mandate for such reform. But they do not have any mandate for taking an ax to future promised Social Security benefits, as some think tank warriors now urge. No one ran and won on cutting future promised Social Security benefits, and polls ...." (Peter Ferrara via The Washington Times)
Opinion: the Overhaul of Pension Rules Next Year Should Save Values That Are Vital to Many Workers
Excerpt: "Retirement plans that guarantee specific pension amounts based on each worker's earnings and years of service are headed for lists of threatened and endangered species. There are many reasons why Congress should not allow this species of retirement-security plan to spiral into extinction. By the mid-1980s, there were 112,000 private-sector guaranteed plans, covering 40 percent of U.S. workers. Now, 31,000 plans cover 20 percent of workers." (The Oregonian)
Overview: Automatic Rollover Requirement of Involuntary Distributions Springs to Life Next March
Excerpt: "The DOL safe harbor regulations become effective on March 28, 2005. EGTRRA's automatic rollover requirement, therefore, also becomes effective on that date. ... Plans that require involuntary cash outs of amounts greater than $1,000 must be amended to comply with the automatic rollover requirement. The required SPD or SMM disclosures also must be prepared. Employers also must find suitable IRA providers. Alternatively, employers may want to avoid the automatic rollover ...." (BNA Tax Management)
Overview: Proposed Section 403(b) Regulations
Excerpt: "The proposed regulations would take effect for taxable years beginning after December 31, 2005, subject to certain transition rules. The proposed regulations may not be relied upon in advance of final adoption. Written comments must be received by February 14, 2005--the proposal solicits comments on certain issues--and a public hearing is scheduled for February 15." (BNA Tax Management)
Overview: Third Party Managers for 401(k) Plans with Managed Accounts Feature Is a Growing Trend
Excerpt: "The use of an independent third party to manage 401(k) accounts is a growing trend among financial services firms in the defined contribution business. Most major firms, including Fidelity, Merrill Lynch and Charles Schwab, have turned to companies such as Ibbotson Associates, Guided Choice and Financial Engines to cater to investors who've opted for a 401(k) managed-accounts program. The different technology strategies of those vendors are playing a part in investment firms' ...." (Wall Street & Technology Online)
Pension Plan and Executive Pay Audits Could Cost Billions Unless Compliance Reviews Undertaken
Excerpt: "Companies should undertake their own comprehensive compliance reviews, say accountants, lawyers and other industry experts. The fallout of all those corporate accounting scandals has finally settled on the desk of the nation's tax collector, and companies that aren't ready to face IRS scrutiny could pay a heavy price. Since the Internal Revenue Service instituted two intense corporate audit initiatives a year ago, the agency has identified dozens of companies violating tax-code ...." (Workforce Management)
Tending the Nest Egg: Firms Gear Up to Help Manage 401(k) Accounts
Excerpt: "Financial powerhouses across the nation are jockeying for position to serve millions of workers who don't have the time - or don't want to make the time - to manage their 401(k) retirement accounts wisely. This legion of 'reluctant' or 'disengaged' 401(k) savers makes up from one-third to one-half of the 48 million workers who have 401(k)s or similar retirement accounts. They've saved $3 trillion in their accounts, yet they show little or no interest in making their holdings grow." (KNIGHT RIDDER NEWSPAPERS via Tallahassee Democrat)
U.K. to Give Employers a Tax Break for Providing Pension Advice
Excerpt: "The U.K. government has announced a tax exemption for employers that pay for their employees to receive independent advice on pension savings. Paymaster General Dawn Primarolo last week announced that the employers who give their employees access to pension advice would qualify for the exemption if the advice is generally available to all employees and costs less than £150 ($284) per employee per year. The new rules will come into force on Dec. 14." (Business Insurance)
Links to Items on Executive Comp, Benefits in General
Supreme Court Declines to Hear G.ay Marriage Case
Excerpt: "The Supreme Court on Monday sidestepped a dispute over g.ay marriages, rejecting a challenge to the nation's only law sanctioning such unions. Justices had been asked by conservative groups to overturn the year-old decision by the Massachusetts Supreme Court legalizing g.ay marriage. They declined, without comment." (AP via Yahoo! News)
Temps Lose Bargaining Rights Won in 2000: NLRB Reverses Stand Along Party Lines
Excerpt: "Temporary workers will no longer be able to bargain for job benefits as part of a unit with permanent employees, the National Labor Relations Board has ruled, reversing a Clinton-era precedent. In a 3 to 2 vote that was issued Friday, the three members appointed by President Bush -- Robert J. Battista, the chairman; Peter C. Schaumber and Ronald E. Meisburg -- said there is a difference between temporary and permanent workers." (The Washington Post; one-time registration required)
Overview: Bill with USERRA Rights Notice Requirement Awaiting President's Signature
Excerpt: "A bill that would require employers to provide a notice informing employees of their rights under the Uniform Services Employment and Reemployment Rights Act (USERRA) has been passed by both the U.S. Senate and the House of Representatives and is now awaiting the President's signature. This new federal notice requirement appears in a provision of The Veterans Benefits Improvement Bill of 2004 (S.2486)." (CCH Pension & Benefits News)
Michigan Lawmakers to Target Benefits for Same-Sex Partners
Excerpt: "A state representative said Monday he's working on a measure to oppose health benefits for g.ay partners of state employees that are in new contracts. Representative Ken Bradstreet of G.aylord says he's also asking fellow Republican Attorney General Mike Cox to issue a legal opinion on the issue." (AP via WILX 10)
Hewitt Federal Legislation Quick Guide Updated November 23, 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)
Newly Posted Events
Understanding the proposed new §403(b) regulations
Nationwide on December 2, 2004
presented by National Tax Sheltered Accounts Association
Newly Posted Press Releases
Newkirk Announces the Creation of Participant Investor Services
(Newkirk Products, Inc.)
New Internet-based Market Intelligence Search Tool Released by Industry-Leading Information Provider
(benefits information group)
Principal Financial Group Hails Introduction of DBk Legislation
(The Principal Financial Group)
U.S. Labor Department Extends Annual Reports Deadline After Severe Storms and Flooding Hit New York
(U.S. Department of Labor, Office of Public Affairs, New York, N.Y.)
Newly Posted or Renewed Job Openings
Pension Consultants/Administrators
for Northern NJ Mid-Size Pension Consulting Firm
in NJ
401k Account Executive
for BISYS Retirement Services
in PA
Supervisor, Client Services
for BISYS Retirement Services
in PA
Broker Dealer Counsel - Compliance Analyst
for ADP Retirement Services
in NJ
Enrollment Specialist
for National Automobile Dealers Association
in VA
Senior Consultant - Retirement Plan Services
for Tofias PC
in MA
Benefits Manager
for MasterBrand Cabinets, Inc.
in IN
Defined Benefit Client Account Manager
for The Senex Group, Woodland Hills, California
in CA
Pension Administrator
for C.H. Dean & Associates, Inc. Pension Consulting Division
in OH
Senior Pension Administrator/Supervisor
for Snyder Cohn
in MD
Defined Contribution Plan Administrator
for Benefit Associates Inc.
in CA
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- Employee Benefits Library
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