| BenefitsLink Retirement Plans Newsletter |   |
January 3, 2005
Today's sponsor: The ERISA Fiduciary Guild (EFG)
(Click on company name or banner to learn more.)
The ERISA Fiduciary Guild Calls for Members The ERISA Fiduciary Guild (EFG) is now accepting applications for membership as a Master Pension Fiduciary. The EFG is a Society of individual professionals serving retirement plans as an independent fiduciary. The EFG's primary purpose is to support the work of fiduciaries by advancing the establishment of "best practices" for the profession and by defining the ethics Master Pension Fiduciaries must abide by. It will also provide resources for plan sponsors who want unbiased information and education about the duties and responsibilities of fiduciaries. Click above for more information or visit the EFG's web site at http://www.fiduciaryguild.org/ and contact one of the founders.
(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
For a No-Leak 401(k) Plan -- Allow It to Grow and Resist Cashing Out
Excerpt: "One of the key problems that continue to beset 401(k) and related retirement savings plans is what experts call 'leakage.' By that they mean the tendency of account holders, especially younger ones, to withdraw their money when they change jobs and spend it. It hasn't helped that many companies are eager to get rid of accounts with small balances and are all too ready to cut checks for departing workers and close them out." (The Washington Post; one-time registration required)
Fees Take a Bite from 401(k)s, Reducing the Return and the Tax Advantage
Excerpt: "Employees fortunate enough to have an employer-sponsored retirement savings plan now know (or should know) not to fill it up with too much stock in the company they work for. Many have also learned, some the hard way, about the benefits of diversifying where they stow their money. But the investing industry has one more curve ball to throw at workers: the fees they pay for their retirement plans." (The Washington Post; one-time registration required)
Overview: IRS Automatic Rollover Guidance Completes the Compliance Picture for Retirement Plans
Excerpt: "The DOL has issued a final regulation establishing a safe harbor under which fiduciaries will be deemed to have satisfied their fiduciary responsibilities in connection with automatic rollovers. The DOL regulation is effective for mandatory distributions made on or after March 28, 2005." (Employee Benefits Institute of America Inc.)
Overview: IRS Guidance on Automatic Rollovers of Mandatory Distributions (PDF)
3 pages. Excerpt: "The most significant aspects of the guidance are: (1) a postponement of the March 28, 2005 effective date of the automatic rollover requirement to December 31,2005 for plans that lack sufficient administrative procedures for completing automatic rollovers prior to that date; and (2) a requirement that plans be amended to reflect the automatic rollover requirement by the end of the first plan year ending on or after March 28,2005." (Kirkpatrick & Lockhart LLP)
Amendment to IAS 19 Employee Benefits: Actuarial Gains and Losses, Group Plans and Disclosures (PDF)
47 pages. Excerpt: "This amendment to IAS 19 Employee Benefits introduces an additional recognition option for actuarial gains and losses arising in post-employment defined benefit plans." (International Accounting Standards Board via Mercer Human Resource Consulting)
Overview: DOL Clarification of Fiduciary Responsibilities of Directed Trustees
Excerpt: "In this Field Assistance Bulletin (FAB), the DOL provides general guidance on the fiduciary responsibilities of a directed trustee, explaining that although a directed trustee's responsibilities under ERISA are significantly limited, a directed trustee must exercise its duties prudently and solely in the interest of plan participants and beneficiaries." (Employee Benefits Institute of America Inc.)
ASPPA's December 22, 2004, Clarification Request to IRS on Short Service Employee Memorandum
Excerpt: "On October 22, 2004 you issued a memorandum to the Directors, Employee Plans Examinations and Determinations Redesign, regarding 'short service employees and other meaningful benefit schemes and abuses.' The undersigned organizations support the continued efforts of the Service to identify and prevent abusive practices respecting qualified retirement plans." (American Society of Pension Professionals & Actuaries)
IRS Targeting Large Plan Sponsors with Expansion of Employee Plan Team Audit Program
Excerpt: "Employers with more than 2,500 employees in a retirement plan should be re-evaluating their compliance procedures as the Internal Revenue Service casts a wider auditing net, tax experts warn. The IRS is expanding a program called Employee Plan Team Audit, which was begun as a pilot program in 2003 and is aimed at both defined benefit and defined contribution plans with a large number of participants and assets." (Employee Benefit News)
Employee Plans Team Audit (EPTA) Program -- Top Ten Issues Found In EPTA Audits
Excerpt: "The following EPTA 'Top Ten' items include issues which can be identified during the planning and initial stages of an examination. 1. Termination or Partial Termination - Potential Vesting/Distribution Issues ....' (U.S. Internal Revenue Service)
U.S. Asks Bankrup.tcy Court to Deny United Airlines' Pension Plan Agreement with Pilots
Excerpt: "The government moved in bankrup.tcy court late Thursday to oppose an agreement that United Airlines recently struck with its pilots' union on the looming termination of the pilots' pension plan. In a motion filed in federal bankrup.tcy court in Chicago, the Pension Benefit Guaranty Corporation accused United of attempting to circumvent the federal pension law with the agreement, and of offering its active pilots relief 'at the expense of the federal government, its other employees ....'" (The New York Times; one-time registration required)
Opinion: The Social Security Fear Factor As Produced by the Administration
Excerpt: "If you've lent even one ear to the administration's recent comments on Social Security, you have no doubt heard President Bush and his aides asserting that a $10 trillion shortfall threatens the retirement system - and the economy itself. That $10 trillion hole is the basis of the president's claim last month that 'the [Social Security] crisis is now.' It's also the basis of the administration's claim that the cost of doing nothing to reform the system would be far greater than ...." (The New York Times; one-time registration required)
Revamping Social Security: Experts Disagree on Severity of Shortfall's Consequences
Excerpt: "In just 14 years, the nation's Social Security system is projected to reach a day of reckoning: Retiree benefits will exceed payroll tax receipts, and to pay its bills the system will have to begin redeeming billions of dollars in special Treasury bonds that have piled up in its trust fund. To redeem those bonds, which represent money taken in years when Social Security ran a surplus and used for other government operations, the federal government would likely have to cut other ...." (The Washington Post; one-time registration required)
Opinion: Generations' Support for Each Other in Peril with Changes in Social Insurance System
Excerpt: "This column has dealt with the nuts and bolts, pros and cons of the nation's social insurance structure - Medicare, Social Security and the private pension/retirement savings system that the older generations have come to know and rely on. I'll focus on the foundation of these plans today, and next week I'll have more to say about the opening of a historic national debate on Social Security." (Newsday, Inc.)
Opinion: Social Security Reform Rests on Philosophical Difference that Separates the Two Parties
Excerpt: "New year, new questions, new challenges, new debates.... This year presents not so much a fresh start as a fresh set of issues. The ironic thing is that all these issues are embedded -- the favorite word of the Bush era -- in the emerging Social Security ... showdown." (Yahoo! News)
A Big Push on Social Security Reform: Private Accounts Are Bush Priority
Excerpt: "President Bush's political allies are raising millions of dollars for an election-style campaign to promote private Social Security accounts, as Democrats and Republicans prepare for what they predict will be the most expensive and extensive public policy debate since the 1993 fight over the Clinton administration's failed health care plan." (The Washington Post; one-time registration required)
Social Security Underestimates Future Life Spans, Critics Say
Excerpt: "When the federal government assesses the long-term financial problems of Social Security, it assumes that increases in life expectancy will be slow and measured. But many population experts say they believe that Americans' life expectancy will increase rapidly in the 21st century, making the program's financial problems even worse." (The New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Valuing Employee Stock Options Using a Lattice Model
Excerpt: "The authors' objective is to provide an overview of how lattice models work and to provide insights into how lattice models can help ascertain the costs and benefits of various option-granting strategies." (The CPA Journal)
New Accounting Rules for Stock Options Worry Tech Sector
Excerpt: "A new accounting rule requiring public companies to treat as an expense the cost of the stock options they give to employees has some companies groaning about the hit they will take to their bottom lines. The Financial Accounting Standards Board announced last week that most companies will have to comply with the new rule in their accounting periods that begin after June 15, 2005." (The Business Journal of Portland via bizjournals.com; one-time registration required)
Opinion: SEC Should Follow FASB Ruling on Stock Options Expensing and Clean Up Its Own Act
Excerpt: "Now that the Financial Accounting Standards Board has finally ruled that a company's earnings must be charged for the present value of stock option grants, it's time for the U.S. Securities and Exchange Act to clean up its act." (Graef Crystal via Bloomberg News)
Overview: 409A Guidance -- Deferred Compensation Under IRS Notice 2005-1
This Alert provides a very brief summary of the topic. (Thomas C. Walker, Esq.)
Overview: Code §409A Guidance
Excerpt: "In enacting Code §409A, Congress instructed the IRS to issue guidance on the new law within 60 days. The IRS complied with this requirement by issuing Notice 2005-1. Although the guidance addresses many important questions, Notice 2005-1 leaves to subsequent guidance issues such as distributions, plan documentation and consequences of noncompliance with Code §409A. The following summary explains Notice 2005-1." (SunGard Corbel)
Overview: IRS Rings in the New Year With Transition Guidance on 409A Deferred Compensation Rules
Excerpt: "On December 20, the IRS issued Notice 2005-1, which provides guidance on the nonqualified deferred compensation legislation enacted earlier this year. New Code Section 409A significantly changes the operation and taxation of nonqualified deferred compensation arrangements for amounts that are deferred or become vested on or after January 1, 2005." (Faegre & Benson LLP)
Overview: Department of Labor Proposes New Regulations Under USERRA for Military Leave Rights
Excerpt: "On September 20, 2004, the U.S. Department of Labor (DOL) issued proposed regulations under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). Comments on the proposed regulations were due to be submitted to the DOL by November 19, 2004. Thereafter, the DOL will analyze the comments, make necessary revisions to the regulations, and issue final regulations." (Ballard Spahr Andrews & Ingersoll, LLP)
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)
Buckle Up for Bush's Second Round: Administration Initiatives Affecting Employee Benefits
Excerpt: "If President Bush gets what he wants, companies will find themselves scrambling to keep up with an array of administration initiatives, including the partial privatization of Social Security and the expansion of consumer-driven health care plans. Executives should also expect political solutions for imperiled private pension guarantees, as well as medical malpractice insurance reform and stepped-up enforcement efforts by the Labor Department's wage-discrimination cops." (Workforce Management)
Newly Posted Events
ERISA Fiduciary Governance Video Training Course
Nationwide on January 5, 2005
presented by Financial Executives International and Denali Fiduciary Management Corporation
Newly Posted Press Releases
Fact Sheet: A "Qualifying Child"
(Internal Revenue Service (IRS))
EBS Benefit Solutions, an Excellus Company, Enhances Web Offering to Plan Sponsors - Envisage Information Systems, LLC. Provides the Advantage
(Metrics Partners)
Mortgage Benefits Corp. Signs Global Mortgage, Inc. as a Preferred Provider in The Mortgage PPO™
(Mortgage Benefits Corporation)
Newly Posted or Renewed Job Openings
Pensions/401(k) ERISA Compliance Specialists
for Parker White Consultants, Inc. in Northern New Jersey
in NJ
Pension Administrator
for DC Pension Consultants, LLC
in NJ
401(k) Client Relationship Manager
for Financial Service Leader
in CT
Actuary
for The Mayer Benefits Advisory, LLC
in CT
Client Services (CST) Quality Analyst
for ICMA Retirement Corporation
in DC
Senior Compliance Analyst
for Leggette Actuaries, Inc.
in TX
Conversion Coordinator
for First Mercantile/subsidiary of SunTrust Banks, Inc
in TN
Senior Manager
for Zenith Administrators, Inc.
in CA, WA
Installation Administrator - NBI
for Transamerica
in CA
Pension Administrators
for The Pension Service, LLC
in MA
Account Executive - Client Services
for Diversified Investment Advisors
in CA
Plan Administrator
for PAi
in WI
Account Executive - Client Services
for Diversified Investment Advisors
in TX
Pension Administrator
for Alliance Pension Consultants, LLC
in IL
Retirement Plan Administrator
for Padgett, Stratemann & Co., LLP
in TX
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