| BenefitsLink Retirement Plans Newsletter |   |
December 16, 2004
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Text of Proposed Regulations on Prohibited ESOP Allocations of Securities in an S Corporation (PDF)
55 pages. Effective December 17, 2004. (Internal Revenue Service)
Innovative Trends in 401(k) Plans: Plans Are Adding Personal Financial Advice for Employees
Excerpt: "The DOL 404(c) regulations may limit fiduciary liability with regards to investment performance if four conditions are met: 1) Participants have the opportunity to choose from a broad selection of investment options; 2) Participants have access to their accounts at least quarterly (most plans allow daily access); 3) Participants have the opportunity to transfer their account balances at least quarterly among the investment options (most plans allow daily transfers); and, 4) ...." (Financial Advisor)
Gender Effects on Employee Participation and Investment Behavior with 401(k) Retirement Plans (PDF)
37 pages. Excerpt: "This study uses the economic theory of asset allocations and the life-cycle theory of savings and investment to examine the gender effects on employee investment and savings behavior with defined contribution retirement plans. .... The data indicate that women are more risk averse than men in making asset allocations with their retirement plans, which is consistent with economic theory predictions." (TIAA-CREF Institute)
IRS Issues Settlement Guidelines on Accelerated 401(k) Grace Period Contributions
Excerpt: "Following its recent issuance of a Coordinated Issue Paper (CIP) on grace period contributions to 401(k) plans (CCH Pension Plan Guide ¶17,203K), the IRS has released Appeals Settlement Guidelines (ASG) on the issue. These update a previous CIP and ASG issued in 1995 and 1996 respectively, and are in response to a proliferation of tax shelter activity related to grace period contributions, according to the IRS." (CCH Pension & Benefits News)
Delta Air Lines Seeks Legislation to Delay Contributions to Pension Funds
Excerpt: "Delta Air Lines Inc., the third-largest U.S. carrier, is seeking legislation that would allow airlines to delay contributions to employee pension plans, easing costs amid industry losses. Delta is working with members of Congress on the measure, Chief Executive Officer Gerald Grinstein said Wednesday in a lunch address to a New York aviation club. The Atlanta-based company also met with the federal pension insurer, the Pension Benefit Guaranty Corp., he said." (Bloomberg News via Sun-Sentinel)
Pension Benefit Guaranty Corporation Facing Growing Burden
Excerpt: "Zvi Bodie, a professor of economics and finance at Boston University, discusses some of the problems the agency faces in an article entitled 'Straight Talk about Government Pension Insurance,' which will appear in the next issue of The Milken Institute Review." (The New York Times; one-time registration required)
Comments: Working Group on Plan Fees Recommends Increased Disclosure to Participants
Excerpt: "The DOL has posted on its website the 'Report of the Working Group on Fee and Related Disclosures to Participants.' The consensus of the working group (which was appointed by the Advisory Council on Employee Welfare and Pension Benefit Plans to study 'fee and related disclosures to participants in defined contribution plans') is for 'additional disclosure of fees in defined contribution plans that seek the protections of ERISA section 404(c).'" (Attorney B. Janell Grenier via BenefitsBlog.com)
Employee Ownership Update for December 15, 2004
NCEO Executive Director Corey Rosen discusses how manufacturing companies still dominate a list of majority ESOP-owned companies; the SEC's approval of a program in which Comcast employees will tender (mostly underwater) options to the company, which will cancel the options and in turn sell equivalent options to JPMorgan and then pay the employees with the cash received; and two new studies by Watson Wyatt on the patterns of employee stock option exercises. (National Center for Employee Ownership)
Monitoring 401(k) Investments: Past, Present and Future
Excerpt: "By now, it is well accepted that plan sponsors--usually through plan committees--must, in their role as investment fiduciaries, prudently select and monitor their 401(k) investment options ... and, if necessary, remove and replace inferior investments. .... However, this article is not about the removal of investments; instead, the purpose is to focus on the process for monitoring." (Reish Luftman Reicher & Cohen)
New York State Pension Fund Invests $25 Million in Hispanic Fund
Excerpt: "The state public pension fund has invested $25 million in a Hispanic private equity fund, a move Comptroller Alan Hevesi described as a nod to rapidly increasing Hispanic buying power. The fund, Palladium Equity Partners, invests in companies that are owned by or serve Hispanics." (Newsday.com)
CalPERS Votes to Oppose Privatizing Social Security
Excerpt: "The nation's largest public pension fund voted Wednesday to oppose the Bush Administration's plans to privatize part of the Social Security retirement system. The California Public Employees Retirement System said such a plan would contribute to the national deficit, cost retirees more in management costs and potentially risk their retirement savings." (AP via The Mercury News)
Executive Summary: Retirement Plan Intermediaries -- Third Party Administrator Survey (PDF)
2 pages. Excerpt: "Retirement plans are primarily sold by intermediary advisors. These include independent (not owned by a financial services company) firms that provide plan administrative and/or recordkeeping services. McHenry surveyed these third party administrators (TPAs) to find out how they are involved with the investments that are selected for their plans and what additional services they might want." (McHenry Consulting)
Discussion on Filing the Form SSA and Missing Participant Benefits
Excerpt: "A plan sponsor recently asked us about the Form SSA and the consequences of filing that form. The sponsor had filed a Form SSA for an employee who left the service of the company several years ago. Recently, when the former employee applied for Social Security benefits, he received a notice from the Social Security Administration that he had benefits in our client's plan. The plan sponsor believed that the distribution had been made after the filing of the Form SSA, but could not ...." (Reish Luftman Reicher & Cohen)
Executive Summary: Retirement Plan Intermediaries -- Retirement Advisor Survey (PDF)
2 pages. Excerpt: "Retirement plans are primarily sold by intermediary advisors. These may include individuals registered either/both as investment advisors and/or securities salespersons. McHenry surveyed these advisors to find out what type of investments they presently recommend to their clients and what they might recommend if provided sufficient information." (McHenry Consulting)
A Q & A with MFS's Robert Pozen on Reforming the Retirement Landscape
Excerpt: "American retirees could have a brighter future than the one that is usually painted for them, despite dismal Social Security projections and our own stingy savings rates. But it will take some determination and finesse, both politically and personally, Robert C. Pozen, chairman of the $137 billion Boston-based MFS Investment Management, told us recently in a frank session on what the future holds for America's retirees." (Financial Advisor)
Investments to Kick Off Social Security Discussion; Critics Hope to Block Private Accounts
Excerpt: "Under the presidential commission's 'Model 2,' younger workers, perhaps those under 55, would be allowed -- but not required -- to divert up to $1,000 of their annual payroll taxes into private accounts. Their investment options would be limited to diversified mutual funds containing mainly stocks and bonds." (Los Angeles Times; one-time registration required)
Formal Copy of The ERISA Industry Committee's Consensus Position on Hybrid Plan Legislation (PDF)
4 pages. "Summary of Consensus -- Legislative Proposals Affecting Hybrid Pension Plans -- August 10, 2004." (The ERISA Industry Committee)
Expectations for Retirement: A Survey of Retirement Investors
Link to 20 page PDF. Excerpt: "This new survey of retirement investors reveals that, while most are aware of the risks they face as they approach retirement, their expectations often are not matched with economic reality. Many retirement investors have trouble translating awareness into concrete savings plans, and need help establishing specific asset and savings targets." (The Vanguard Center for Retirement Research)
Bush Puts Social Security Reform at Top of Economic Conference
Excerpt: "Kicking off a televised two-day conference packed with like-minded economists and business executives, Mr. Bush's economic team laid out arguments for shifting responsibility from the government to individuals and for borrowing as much as $2 trillion to cover upfront costs. .... And in a separate forum on Wednesday, a top White House official ruled out the last lingering suspicion that Mr. Bush might pay for his plan by raising payroll taxes." (The New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Overview: Mellon's HR & IS Issues Survey on Nontraditional Family Benefit Coverage (PDF)
1 page. Excerpt: "Mellon's Human Resources & Investor Solutions has released a new survey examining the extent to which employers provide benefits to nontraditional family members. The survey, which includes responses from 576 organizations nationwide, also asked companies if and how they are responding to recent same-sex marriage developments." (Mellon’s Human Resources & Investor Solutions)
IRS Official Reports 'Steady Progress' on Deferred Compensation Guidance Under 2004 Jobs Act
Excerpt: "Nicholas J. DeNovio, Deputy Chief Counsel (Technical), reports that nonqualified deferred compensation guidance with respect to the requirements of Code Sec. 409A implemented by the American Jobs Creation Act of 2004 (P.L. 108-357) remains on track to be issued on time and by its December 21, 2004 statutory deadline. According to DeNovio, who provided an update on December 6 at IRS headquarters in Washington, 'steady progress is being made' on the first wave of guidance." (CCH Pension & Benefits News)
Overview: Bush Signs Veterans Law –- New Employer Responsibilities (PDF)
2 pages. Excerpt: "President Bush signed the Veterans Benefits Improvement Act of 2004 into law on December 10, 2004. Among the many provisions that expand the rights and benefits of veterans are a few that impact employers. The new law requires employers to post a notice of affected employees' rights and obligations under the Uniform Services Employment and Reemployment Rights Act of 1994. It also expands the period for which employers must offer employees called to active military ...." (Mellon Financial Corporation)
From the ERISA Report for Plan Sponsors, December 2004 -- 'What's Next for Employee Benefits?'
Excerpt: "[W]e have asked Bruce [Ashton] to comment on his view of the next five years-from the vantage of his recent position as ASPPA's president. How does the benefits world look with the added perspective of heading a national organization of plan providers? Bruce's thoughts are in the article ....' (Reish Luftman Reicher & Cohen)
BLS Report on Employer Costs for Employee Compensation - September 2004
Excerpt: "Employer costs for employee compensation averaged $25.36 per hour worked in September 2004, the U.S. Department of Labor's Bureau of Labor Statistics reported today. Wages and salaries, which averaged $17.96, accounted for 70.8 percent of these costs, while benefits, which averaged $7.40, accounted for the remaining 29.2 percent." (U.S. Bureau of Labor Statistics)
Newly Posted Events
401(k) Plans
in Washington on March 29, 2005
presented by Employee Benefits Institute of America Inc. (EBIA)
Cafeteria Plans
in Washington on March 30, 2005
presented by Employee Benefits Institute of America Inc. (EBIA)
HSAs, HRAs & Consumer-Driven Health Care
in Washington on March 31, 2005
presented by Employee Benefits Institute of America Inc. (EBIA)
The ABCs of Making 401(k) Plans Work Better: From Do-It-Yourself to Automated Solutions
in Ohio on January 13, 2005
presented by Worldwide Employee Benefits Network (WEB) - Cleveland Chapter
Newly Posted Press Releases
www.ftwilliam.com announces the availability of 2004 DOL-approved 5500 Forms
(ftwilliam.com)
Newly Posted or Renewed Job Openings
Associate Attorney
for Kraw & Kraw
in CA
Multi Process HRO HR Specialist
for Hewitt Associates
in TX
Pension/401 (k) Administrator in San Diego
for Polycomp Administrative Services, Inc., a leading TPA firm with 3 offices.
in CA
Plan Specialist
for Transamerica
in CA
Account Executive – Cleveland, OH
for Transamerica
in OH
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