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December 29, 2004
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Text of Final IRS Regs on 401(k) and 401(m) Plans (PDF)
59 pages. (Internal Revenue Service)

Text of IRS Guidance on Automatic Rollover Rules for Qualified Plans (PDF)
Notice 2005-5; 7 pages, in question-and-answer format. Excerpt: "This notice provides guidance relating to automatic rollover provisions under § 401(a)(31)(B) of the Internal Revenue Code ('Code') as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107-16 ('EGTRRA')." (Internal Revenue Service)

401(k) Rule Changes Issued: Regulations Designed to Simplify Operation of Plans
Excerpt: "The government yesterday issued a comprehensive new set of rules to govern the operation of 401(k) and similar retirement savings plans, generally making them easier for employers to run and more attractive to higher-paid workers. The rules announced by the Treasury Department and Internal Revenue Service implement more than a decade's worth of legislative changes, many meant to address employer complaints that anti-discrimination laws, enacted during the 1980s, made the plans ...." (The Washington Post; one-time registration required)

Overview: Fiduciary Duties with Respect to Missing Participants in Terminated DC Plans (PDF)
Pages 1-3 of 6 pages. Excerpt: "The problem of missing participants is particularly acute in terminated defined contribution plans. Upontermination of a defined contribution plan, all affected participants immediately become fully vested in their account balances. In order to 'wind up' the plan and complete the termination, all plan assets must be distributed as soon as administratively practicable after the date of termination." (Trucker Huss)

Overview: The IRS Proposed 403(b) Rules
Excerpt: "The IRS has proposed the first comprehensive guidance under section 403(b) in 40 years. 403(b) plans involve retirement annuity contracts and mutual fund custodial accounts for employees of 501(c)(3) tax-exempt organizations and public educational organizations, and retirement income accounts established or maintained by churches or church-affiliated organizations." (Watson Wyatt Worldwide)

Opinion: Companies or Taxpayers Will Foot the Bill for Broken Pension Promises
Excerpt: "Somebody's got to pay to save the U.S. pension system. Perhaps the companies that have promised retirement payments for their employees will come up with the cash, and the stock market will zoom, and a gap estimated at $450 billion will close. Perhaps deeply troubled companies such as United Airlines will honor their pension plans instead of forcing obligations on the national Pension Benefit Guaranty Corp." (Rocky Mountain News)

Overview: The IRS Proposed Phased Retirement Regulations
Excerpt: "The IRS has proposed regulations permitting phased retirement arrangements in qualified defined benefit or money purchase pension plans under specified conditions. After the rules become final, these plans will be able -- for the first time -- to provide in-service distributions to participants younger than normal retirement age. Although the proposed regulations offer meaningful flexibility for employers that wish to offer phased retirement, they would impose considerable ...." (Watson Wyatt Worldwide)

35% of Massachusetts Firms to Offer Same-Sex Retirement Benefits
Excerpt: "Just one in three Massachusetts employers plan to extend the same retirement benefits to spouses of g.ay and les.bian employees now available to other employees, according to a survey of benefit policies conducted after a state court ruling legalized g.ay marriage." (The Boston Globe)

Military Veterans Sign Over Pensions When Needing Cash
Excerpt: "Federal law prohibits retired military people from signing over their future pension payments to others. The companies offering these deals say they are arranged to avoid that restriction. But two federal bankrup.tcy judges ruled this year that deals like Mr. Jones's, in which veterans in need of quick cash give up their future pensions for a small fraction of their value, do in fact violate that law." (The New York Times; one-time registration required)

Chart of 2005 Qualified Plan Limits
Excerpt: "Download printable pocket limit card (cut and fold). This document is in a PDF. You will need Acrobat Reader to view and print." (Swerdlin & Company)

Overview: Cash Balance Litigation Trend Continues
Excerpt: "The wave of litigation against cash balance plans continues. A new lawsuit against the Bank of America's (BoA) cash balance plan alleges age discrimination and makes a variety of other claims based on the plan's unique design and features. And an appellate court has ruled that, in Cigna's conversion to a cash balance plan, Cigna violated ERISA's anti-cutback rule by adopting a plan amendment near the end of the plan year that became effective as of the beginning of the plan year." (Watson Wyatt Worldwide)

Opinion: Elitists Protest Investment of Social Security Funds in Personal Accounts
Excerpt: "New York Times columnist Daniel Altman wrote about 'Taxes and Consequences' after the election, fearing all prospective changes in the status quo. His complaints with allowing young workers to put part of their Social Security tax into personal savings accounts were stupendously supercilious. He demanded to know 'who would choose where workers could put their money?' The elitism here is obvious." (Cato Institute)

Links to Items on Executive Comp, Benefits in General

Analysis: Treasury and IRS Transition Guidance on Nonqualified Deferred Compensation Requirements (PDF)
9 pages. Excerpt: "On December 20, 2004 the Treasury Department and IRS released Notice 2005-1, which is the first guidance with respect to the application of the new Section 409A of the Internal Revenue Code of 1986. Section 409A, which was added to the Code by the American Jobs Creation Act of 2004, significantly changes the rules for the taxation of nonqualified deferred compensation arrangements, effective for deferrals of amounts earned and vested on and after January 1, 2005." (Pillsbury Winthrop LLP)

Overview: Internal Revenue Service Notice on Nonqualified Deferred Compensation Plan Guidance (PDF)
5 pages. Excerpt: "This Alert summarizes the most significant aspects of the notice. The Notice addresses a number of issues left unresolvedin the Act, including pressing transition issues raised by theJanuary 1, 2005 effective date of the Act." (Kirkpatrick & Lockhart LLP)

SEC's Beller's Perspective on Role of Compensation Committee and Proxy Disclosure Requirements
Excerpt: "Alan L. Beller, director of the U.S. Securities and Exchange Commission's (SEC) Division of Corporation Finance, recently shared his views on how companies should go about disclosing executive compensation on their proxies and how compensation committees can ensure that executive compensation serves the interests of shareholders." (Watson Wyatt Worldwide)

2004 Legislative Session Saw Active Benefits-Related Discussions and Legislation
Excerpt: "The 2004 session of Congress continued into December, but benefits-related discussions were wrapped up in November. The 108th Congress had a busy legislative agenda, enacting legislation on hybrid pension plans, defined benefit funding and nonqualified deferred compensation. Pres.cription drug importation was a key topic on the health care agenda, as lawmakers debated the safety of imported pres.cription drugs and whether importation could help rein in pres.cription drug costs." (Watson Wyatt Worldwide)

Overview of Benefits Issues After the 2004 Elections
Excerpt: "Election Day has come and gone, but the effects on benefits-related issues are likely to be significant and long-lasting. President Bush is expected to stay the course on health care and to move toward Social Security reform. He will push to reform the tax code and to make the temporary tax cuts that were enacted during his first term permanent. Republican gains in the Senate and the House of Representatives should help President Bush advance his agenda." (Watson Wyatt Worldwide)

USERRA Update on Proposed Regulations and the Veterans Benefits Improvement Act of 2004
Excerpt: "These proposed regulations (the 'Proposed Regulations') are the first issued since USERRA's passage in 1994. According to the news release accompanying these regulations, they 'will spell out the rights of our returning service men and women and the responsibilities of employers to honor their service' and, as promised in the news release, they are drafted in a plain language question and answer format." (Trucker Huss)

Newly Posted Events

Know When To Hold 'Em, Know When To Fold 'Em
in New York on February 2, 2005
presented by Eisner Retirement Solutions LLC

Newly Posted Press Releases

Treasury and IRS Issue Guidance on New Automatic Rollovers From Qualified Retirement Plans
(U.S. Treasury Department and Internal Revenue Service)

Treasury and IRS Finalize Comprehensive Rules for 401(k) Plans
(U.S. Treasury Department and Internal Revenue Service)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Director, Client Services
for BISYS Retirement Services
in PA

Defined Benefit Conversion Specialist
for New York Life Investment Management RPS
in MA

Consultant
for Fidelity Investments
in MA

Retirement Plan Consultant - Harrisburg, PA
for Invesmart, Inc.
in PA

Sr. Specialist Health and Wellness
for Phelps Dodge
in AZ

Benefits Manager
for O'Charley's - Established Casual Dining Restaurant Chain
in TN

Pension Administrator/DB Experience
for Central New Jersey Benefits Consulting Firm
in NJ

Pension Administrator
for Oxford Associates, LLP (Member of the BST Advisory Network, LLC)
in NY

Compliance Analyst – Retirement Services
for Transamerica
in CA

Retirement Account Executive
for UBS Financial Services, Inc.
in IL

Plan Administrator
for Walker Benefits, Inc.
in PA

Defined Benefit Pension Plan Administrator
for The ANGELL Pension Group, Inc.
in RI

401K Administrator (45-55K)
for Praxis Search (Search Firm)
in NJ

Tax Senior - Employee Benefits
for Deloitte & Touche
in PA



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