| BenefitsLink Retirement Plans Newsletter |   |
December 2, 2004
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Managing 401(k) Accounts: Financial Firms Are Gearing Up to Help Participants
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 time, to manage their 401(k) retirement accounts wisely. This legion of 'reluctant' or 'disengaged' 401(k) savers constitute 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 growing their holdings for profit." (San Jose Mercury News via The Arizona Republic)
A Lesson for Social Security: Many Already Mismanage Their 401(k)s
Excerpt: "For a look at the challenges that [the President's Social Security reform] plan could present, consider Americans' experience with do-it-yourself 401(k) retirement plans. In the 23 years since 401(k) plans were first created, many people have made obvious mistakes in investing their money, such as putting too much money into low-yield savings accounts or betting the house on their own company's stock. Many also don't put as much money into the plans as they could, forgoing big ...." (Wall Street Journal via SFGate.com)
ERISA Lawsuit Filed Against American International Group Alleges Bid Rigging
Excerpt: "A lawsuit seeking class action status has been filed against American International Group Inc. for alleged violations of the Employee Retirement Income Security Act related to a loss of value of AIG stock caused by its alleged involvement in bid-rigging activities. The New York-based law firm of Wolf Popper L.L.P. filed the lawsuit ... in the U.S. District Court for the Southern District of New York on behalf of present and former employees of AIG participating in the company's ...." (Business Insurance)
403bcompare.com Launched As Information Source for California 403(b) Participants
Excerpt: "California 403(b) participants can now get clear 403(b) vendor, fee and surrender charge information at 403bcompare.com, a web-based data bank that launched November 30, 2004. The site is a result of AB 2506 which called for vendors offering 403(b) retirement investment products to employees of local school districts, community college districts and county offices of education in California to register with the state and disclose all fees and surrender charges." (403bwise)
Supreme Court Considers the Question: Do IRAs Have Protection in Bankrup.tcy Proceeding?
Excerpt: "People who seek bankrup.tcy lose many of their assets to creditors, but not their Social Security benefits, their company pensions or their 401(k) plans, which are all shielded by law. The question before the Supreme Court on Wednesday was whether the same protection extends to individual retirement accounts, the principal supplement to Social Security for millions of retirees. The bankrup.tcy law, drafted in the 1970's before I.R.A.'s became such an important vehicle for ...." (The New York Times; one-time registration required)
Call for Papers - the Future of Pension Plan Funding and Disclosure: Envisioning a Better System
Excerpt: "The SOA's Pension Section Research Committee is interested in taking a fresh look at the issues related to funding for pension plans and how funded status is reported to plan stakeholders, particularly plan participants, guaranty agencies and regulators. This Call for Papers is being issued to encourage a deeper exploration of these issues without regard to current rules and regulatory constraints governing funding and disclosure in the U.S. and Can.ada." (Society of Actuaries)
CalPERS Ouster of President Puts Focus on How Funds Wield Power Over Corporations
Excerpt: "The ouster of the president of California's public pension fund has raised questions about whether pension funds, endowments and other big activist investors will be able to keep wielding influence in corporate governance campaigns. The change at the top of America's largest pension fund also underscores a growing awareness of the political and economic power lying largely untapped in the nation's retirement money - roughly $6 trillion - and an escalating dispute over how that ...." (The New York Times; one-time registration required)
Fidelity Analyzes Pension Performance in Study: Fully Funded Plans Outperform Underfunded Ones
Excerpt: "Pension plans whose current assets match or exceed their future liabilities perform better on average than their underfunded brethren, according to a study released Wednesday by Fidelity Investments, the biggest U.S. mutual fund company. Of 120 defined benefit pension plans responding to the survey, 43, or 36 percent, were overfunded, .... If applied to all U.S. pension plans, that 36 percent would translate to 2,635 out of 7,320 plans, ...." (CBS MarketWatch)
Bank of America Pension Plan Unusual: Workers Directing Their Virtual Accounts Considered Uncommon
Excerpt: "The Bank of America Corp. pension plan targeted in a class-action lawsuit and a federal audit is unlike plans at most other companies, benefits experts say. The Charlotte company's cash-balance pension plan has an unusual feature that allows participants to put part of their money in hypothetical investments that rise and fall with the market. In most cash-balance plans, participants receive an interest credit tied to inflation or another benchmark." (The Charlotte Observer)
IRS Issues Updated Guidance on Reportable Transactions
Excerpt: "Under Reg. Section 1.6011-4(b), there are six categories of reportable transactions, one of which, Reg. Section 1.6011-4(b)(6), involves transactions with a 'significant book-tax difference'. In the guidance, the IRS lists several items which are not taken into account in determining whether a transaction has a significant book-tax difference, such as compensation of employees and independent contractors (whether or not they are individuals), including stock options, pension, ...." (CCH Pension & Benefits News)
Questions and Answers About Social Security Reform with Personal Accounts
Excerpt: "At the top of President Bush ...'s legislative agenda for next year is an overhaul of Social Security .... He wants to let younger workers divert some of their Social Security payroll taxes into personal investment accounts similar to a 401(k). .... Here, in question and answer form, is a look at the issue ...." (AP via Yahoo! News)
Social Security Reform Mulled -- White House May Be Considering Larger Personal Accounts
Excerpt: "The White House is considering larger Social Security personal investment accounts than the 2 percent plans often linked to President Bush's proposals to overhaul the New Deal era retirement system, according to advisers who have attended administration briefings. In the weeks since Mr. Bush's re-election, White House officials have been holding a steady stream of meetings with Social Security reform advocates from the Cato Institute, the Heritage Foundation, and leading business ...." (The Washington Times)
Links to Items on Executive Comp, Benefits in General
Congress Fixes 'Dependent' Definition: Tax Law Change Raises Issues for Plan Sponsors (PDF)
3 pages. Excerpt: "Though not the monumental benefits administration headache it first seemed, the new tax code definition of 'dependent' could require many employers to modify their dependent care assistance plans, 401(k) plans and other benefit programs that use the tax code definition. .... The legislation with the new definition -- the little-noticed Working Families Tax Relief Act ('WFTRA') -- was signed into law shortly before the November elections and is effective for tax years ...." (Gardner Carton & Douglas)
Value-Added Service with Benefit Statements and Web Site Is Key to Writing Benefits Business
Excerpt: "Having access to the administrative services provides a solid defense against bigger competitors, .... 'The key selling proposition for many of the big brokers is their ability to provide additional services and consulting. They really don't compete exceptionally well on price alone. By being able to provide benefits statements and other services, we can take away their leverage with our clients. ....'" (The Rough Notes Magazine)
Comments: Common Law Marriage Abolished in Pennsylvania--Again
Excerpt: "All of this means that employers who have employees in Pennsylvania will have to be on the alert for issues relating to common law marriage, probably for years to come. The issue could have serious repercussions for employers that fail to assess the important implications of the development. For instance, if an employee truly has a 'common law spouse' under Pennsylvania law, that spouse could be entitled to certain spousal benefits under ERISA." (Attorney B. Janell Grenier via BenefitsBlog.com)
Overview on Choosing Your Trustees When Involved in Estate Planning (PDF)
3 pages. Excerpt: "If you've done focused estate planning – something other than a simple Will to name guardians for the kids – you may have found it a confusing process. Tax worries, complicated legal language, insurance planning, investment strategies and so on had to be sifted through and decisions had to be made. But how much time did you spend really thinking about how your estate plan would impact the people involved -- you and your beneficiaries?" (von Briesen & Roper, s.c.)
American Jobs Creation Act Restricts Tax Advantages of Nonqualified Deferred Compensation Plans (PDF)
Pages 1-3 of 4 pages. Excerpt: "On October 22, 2004, President Bush signed into law the American Jobs Creation Act of 2004 (H.R. 4520), providing $145 billion in tax reductions for U.S. manufacturers, multinational firms, agriculture, and energy firms. In addition, the Act significantly restricts the tax advantages available to nonqualified deferred compensation (NQDC) plans, effective for amounts deferred after December 31, 2004." (Gabriel, Roeder, Smith & Company)
Hewitt Federal Legislation Quick Guide Updated November 30, 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)
Insurance Company Probes May Lead to More Fee Disclosure
Excerpt: "Canadian insurance regulators are reviewing insurance compensation arrangements too, but it is unclear if they will focus heavily on employee benefits. However, investigators with Spitzer's office have anonymously told news outlets that overrides - which many top benefit consulting firms accept as a standard part of doing business - are a target of the probe. Overrides, also known as contingency fees, are based on the volume and profitability of business that brokerages and ...." (Employee Benefit News)
Overview: Broad-Based Equity: a Vital Vehicle or Bygone Benefit? (PDF)
6 pages. Excerpt: "Consternation about the future of equity is not limited to executive pay. Less than five years ago, employers favored equity rewards to reinforce employee ownership and long-term success. But in the face of FASB's long-anticipated stock option expensing rules and shareholder concerns about the dilutive effect of options, companies have begun to reexamine the value and affordability of these rewards." (Mercer Human Resource Consulting)
SEC Issues Exemptive Order Granting 45-Day Internal Controls Implementation Delay for Some Filers
Excerpt: "On November 30, 2004, the SEC issued an exemptive order to grant certain accelerated filers an additional 45 days to file their management report (and the related auditor attestation) on internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. The relief offered by the exemptive order is available to accelerated filers having a fiscal year ending between and including November 15, 2004 and February 28, 2005, and having a public equity float ...." (Faegre & Benson LLP)
U.S. Labor Department Extends Annual Reports Deadline After Severe Storms and Flooding Hit New York
Excerpt: "The U. S. Department of Labor's Employee Benefits Security Administration (EBSA) ... announced an extension of the deadline for filing Form 5500 and Form 5500 EZ annual report/returns due to extensive damage from severe storms and flooding in New York. President Bush has declared a major disaster in 14 counties in the State of New York due to the damage caused by the storms. The extension applies to plan administrators, employers and other entities located in areas directly ...." (U.S. Department of Labor via BenefitsLink.com)
Newly Posted Events
Estate and Income Tax Planning for Qualified Plans and IRAs
in California on January 20, 2005
presented by SunGard Corbel
Estate and Income Tax Planning for Qualified Plans and IRAs
in Washington on January 21, 2005
presented by SunGard Corbel
Estate and Income Tax Planning for Qualified Plans and IRAs
in California on January 21, 2005
presented by SunGard Corbel
Estate and Income Tax Planning for Qualified Plans and IRAs
in District of Columbia on January 27, 2005
presented by SunGard Corbel
Estate and Income Tax Planning for Qualified Plans and IRAs
in New York on January 28, 2005
presented by SunGard Corbel
Newly Posted Press Releases
Employee Satisfaction With Health Benefits Remains Surprisingly High, Watson Wyatt Survey Finds
(Watson Wyatt)
Newkirk/McKay Hochman Redesign Retirement Plan News Publication
(Newkirk)
Newkirk/McKay Hochman Redesign Retirement Plan News Publication
(McKay Hochman Co., Inc.)
myCafeteriaPlan still accepting FSA and HRA plans for January 1, 2005 start date
(BusinessPlans, Inc. - myCafeteriaPlan.com)
Newly Posted or Renewed Job Openings
401(k) Account Manager
for BISYS Retirement Services
in PA
Pensions/401(k) ERISA Compliance Specialists
for Parker White Consultants, Inc. in Northern New Jersey
in NJ
Director of Product Marketing
for ADP
in GA
Pension Administrators
for Associated Pension Consultants
in CA
Daily Valuation Manager / Supervisor
for The Weiss Group, Inc.
in IL
Pension Administrators
for Primary Consulting, Inc.
in ANY STATE
Plan Manager - Recordkeeper
for TPA - Atlanta, Georgia/Non-Qualified Benefit Administration
in GA
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