| BenefitsLink Retirement Plans Newsletter |   |
December 1, 2004
Today's sponsor: Actuarial Systems Corporation
(Click on company name or banner to learn more.)
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)
Retirement Savings Reforms on Which the Left and the Right Can Agree
Excerpt: "One of the most significant reforms policymakers could adopt to boost voluntary retirement saving would be to change the 'defaults' in 401(k) plans in favor of sound retirement preparation. Evidence strongly suggests that when workers are automatically enrolled in a 401(k), participation rates are significantly higher. Yet most employers require employees to specifically opt in. Savings rates are also higher when 401(k)s commit workers to saving part of their future pay raises, ...." (National Center for Policy Analysis)
Pension Adviser Takes on United Airlines -- Wants Payment Made to United's Retirement Plans
Excerpt: "Exiting bankrup.tcy court could cost United Airlines as much as $1 billion more than expected if a judge approves a request filed ... on behalf of 95,000 workers at the airline. Such an expense would present a significant new obstacle for United, mired in bankrup.tcy reorganization .... Independent Fiduciary Services of Washington, D.C., asked the Chicago judge presiding in the case to force payment of at least $260 million, and up to $994 million, to United's retirement plans." (USA TODAY)
United's Pension Trustee Seeks Millions in Payments from Airline
Excerpt: "Hoping to salvage some lost pension money, the trustee representing employee pension funds at United Airlines sought a court order on Tuesday that the carrier be required to make up hundreds of millions of dollars in skipped contributions. The trustee, Independent Fiduciary Services, said in the motion filed in Federal Bankrup.tcy Court that it sought to collect as much as $994 million in payments that United had missed since it announced in July that it was halting pension ...." (The New York Times; one-time registration required)
Analysis: Final Regs for Required Distributions from Defined Benefit Plans and Annuity Contracts (PDF)
7 pages. Dated July 30, 2004. Excerpt: "On June 15, 2004, the IRS released final regulations for required minimum distributions related to defined benefit plans and annuity contracts purchased with account balances from qualified defined contribution plans, IRAs, 403(b) annuity contracts, and 457(b) deferred compensation plans. With certain exceptions, discussed in this research memorandum, governmental defined benefit and deferred compensation plans are subject to these new rules." (Gabriel, Roeder, Smith & Company)
What Specific Rules Provide the Necessary Qualifications for IRA Custodian/Trustees?
Excerpt: "Answer: Under IRC Section 408(a), an IRA is a trust required to be administered by a bank as defined in IRC Section 408(n) or another person that demonstrates to the IRS an ability to administer an IRA consistent with IRC Section 408. Treasury Regulation 1.408-2(d) treats a custodial account as a trust if it meets all of the other requirements of IRC Section 408(a) and the IRA assets are held by a bank." (Bankers Systems, Inc.)
Pension Fund of New York Files Suit Against Merck
Excerpt: "The main pension fund of New York State filed a federal lawsuit yesterday against Merck & Company, accusing it of misleading shareholders about the safety of its arthritis pain drug Vioxx, which has since been withdrawn. The suit, brought in United States District Court in Trenton, said that the pension fund lost about $171 million on Sept. 30, when the company, citing increased heart risks in tests of people who had used Vioxx for more than 18 months, withdrew it from the market." (The New York Times; one-time registration required)
Summary: Final Treasury/IRS Regulations for Deemed IRAs (PDF)
3 pages. Excerpt: "[T]he U.S. Treasury and IRS released final regulations for deemed IRAs. Created by federal legislation in 2001, deemed IRAs are intended to enhance employee retirement savings by allowing employees to make voluntary contributions to separate ('deemed') IRA accounts within qualified employer plans. This research memorandum summarizes the various requirements that must be met in order for the deemed IRA and sponsoring employer plan to qualify under the new regulations." (Gabriel, Roeder, Smith & Company)
Chart and Commentary on the Maximum Deferral and Threshold Limits for 2004 and 2005 (PDF)
3 pages. Excerpt: "The Internal Revenue Code specifies limits on retirement plan benefits and contributions that must be met for a plan to remain tax-qualified. This research memo describes certain key limits for 2005 and compares them with the limits applicable in 2004." (Gabriel, Roeder, Smith & Company)
Opinion: Social Security is a Bipartisanship Issue
Excerpt: "No sooner had the 2004 election ended than Washington began drawing battle lines over the next big issue -- Social Security reform. Just two days after his reelection, President Bush said that fixing Social Security would be a top priority of his second term. He pledged to spend political capital in support of his proposal to allow younger workers to privately invest a portion of their Social Security taxes through individual accounts." (Northern Virginia Journal via Cato Institute)
Opinion: a Better Fix Than Privatizing Social Security
Excerpt: "The president's determination to partially privatize Social Security stems from ideological reasons. But in fact the projected Social Security deficit is small enough - 1.89 percent of payroll, under the Social Security trustees' intermediate assumptions (neither optimistic nor pessimistic) - that a major revision to the system is not necessary. The deficit can be remedied with a few discrete changes in the program, all of which are surprisingly easy to understand and accept." (Edith U. Fierst via The Christian Science Monitor)
Three Letters to the Editor of the New York Times: Social Security Reform: Questions to Ask
Excerpt: "On this crucial issue, what the public needs aren't political ads promising simplistic panaceas, but verifiable, objective answers to some key questions: How much more borrowing would be necessary to initiate the program? What is the likelihood of cuts in future personal benefits and possible tax increases? How will the proposed reforms affect budget deficits? The likely consequences of ill-advised, Band-Aid Social Security reforms are too serious to have the proposals sold ...." (The New York Times; one-time registration required)
Opinion: a New Index for Social Security -- Switch to Price-Indexing from Wage-Indexing
Excerpt: "In all the confusion surrounding the current Social Security debate, there is one inescapable truth: Social Security is broken, and it's headed for disaster unless serious changes are made now. While President Bush's commitment to saving the program was evident during the campaign and during his press conference after the election, his plans remain too vague to be called a solution. Similarly, there is no consensus in Congress to indicate that its members are willing to attack ...." (The New York Times; one-time registration required)
Chilean Pension Model Considered a 'Great Example' for Social Security Reform in the United States
Excerpt: "During his visit here last month, President Bush pointed out that the Chilean pension model was a 'great example' for Social Security reform in the United States. For 24 years, I have championed the Chilean retirement system, which is based on ownership, choice and personal responsibility. Having discussed our reforms with Mr. Bush as long ago as 1997 when he was governor of Texas, and having spoken at the White House Summit on Social Security in 1998 during the Clinton ...." (The New York Times; one-time registration required)
Another Question is Answered in the Who's the Employer Q&A Column
We have a situation that appears to be a ASG. My question concerns the FSO, which is an LLC (a title company) wholly owned by another LLC (a home builder) in which capital is a material income-producing factor. For tax purposes, the FSO is treated as a 'disregarded entity'; its operations are included in the tax return of the parent. Because the FSO is treated like a division of the parent for tax purposes, can we so treat it in determining ASG status? (BenefitsLink.com)
Caution Advised on Use of Company Stock in Retirement Plans
Excerpt: "Employee complaints are piling up against firms that include company stock in their savings plans. When the stock goes south, especially amid allegations of corporate fraud, employers and plan fiduciaries can find themselves served with a speedy lawsuit. Recent examples include insurance broker Marsh & McLennan Cos. and pharmaceutical manufacturer Merck & Co., both of which were sued by employees in the immediate aftermath of dramatic stock declines." (Employee Benefit News)
Links to Items on Executive Comp, Benefits in General
CalPERS Trustee Takes Aim at Executive Stock Options
Excerpt: "California Treasurer Phil Angelides is working to foster a populist stance by the state's two giant pension funds. He wants them to put pressure on companies to distribute stock option grants broadly throughout their organizations, rather than to confine them to a handful of top executives. The problem is, his position seems to fly in the face of maximizing shareholder value, which, the last time I looked, was supposed to be a key goal of the two pension funds." (Graef Crystal via Bloomberg News)
2004 United States @Work Study: Redefining the Employer/Employee Relationship (PDF)
5 pages. Excerpt: "This year's United States @Work study, the ninth such study by Aon Consulting, presents an in-depth look at compensation and benefits from the employee's perspective. It compares 2004 results to studies conducted in 2001, 1998, and 1995. The 2004 study is based on responses from 2,001 randomly selected individuals." (Aon Consulting)
Vermont State Pension Funds May Join Fight for Canadian Drugs
Excerpt: "Vermont's two largest public pension funds are joining a multistate effort to pressure drug companies not to limit supplies to Canadian pharmacies that export medicines to the United States. The Vermont teachers' and state employees' pension funds will join similar funds in other states and take their fight to the 2005 annual meetings of Pfizer, Eli Lilly and Wyeth Pharmaceuticals." (AP via The Times Argus)
Newly Posted Press Releases
PERFORMAX Offers Qualified High Deductible Health Plan Designs
(PERFORMAX)
Business Takes Hit with Governor's Veto of Deferred Compensation Bill
(Pennsylvania Chamber of Business and Industry)
Newly Posted or Renewed Job Openings
DB/DC Administrator
for Metavante Corporation
in CA
ERISA Consultant
for New York Life Investment Management LLC
in MA
Retirement Services District Manager (SALES)
for ADP Retirement Services
in FL
Daily 401(k) Plan Administrator
for The Newport Group
in NC
Pension Consultant
for Transamerica
in CA
Associate Director of Employee Benefit Plans
for Western and Southern Financial Group
in OH
Vice President Business Development
for Corporate Benefit Services of America, Inc.
in ANY STATE
Vice President Medical Management National Sales
for Corporate Benefit Services of America, Inc.
in ANY STATE
Case Administrator
for Tycor Benefit Administrators, Inc.
in PA
Premium Billing Administrator
for Ceridian - Raleigh, North Carolina
in NC
Health and Welfare Lead Benefits Administrator
for Ceridian - Raleigh, North Carolina
in NC
Actuary
for Matthews Benefit Group, Inc. in St. Petersburg, FL
in FL
Client Manager
for Pentec, Inc.
in CT
Client Manager Assistant
for Pentec, Inc.
in CT
Handy Links:
- View Today's Active Message Threads
- Search BenefitsLink
- Using the Web for Employee Benefits Research
- Employee Benefits Library
Copyright 2004 BenefitsLink.com, Inc.; except that you can reprint this newsletter in full (if you also include this boilerplate part) without obtaining our permission.
Published by:
BenefitsLink.com, Inc.
https://benefitslink.com/about.html
1298 Minnesota Avenue, Suite H
Winter Park FL 32789
(407) 644-4146
Fax: (407) 644-2151
Editor and Publisher: David Rhett Baker, J.D.
Housekeeping: