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January 5, 2005
Today's sponsor: Securities Industry Association

(Click on company name or banner to learn more.)

Register now!  SIA Savings & Retirement Symposium

Retirement and education savings play a key role in building
long-term success for the securities industry.  SIA’s Savings &
Retirement Symposium attracts broker-dealers and mutual fund and
insurance partners with a variety of perspectives: marketing and
sales, legal, and operations. Sessions include Social Security
reform and SEC developments; 401(k) fiduciary issues and new tools
to enhance 401(k)s; IRA rollovers, including automatic rollovers
and asset retention strategies; and 529 updates will also be featured.

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
IRS Weighted Average Interest Rate Table Updated for January 2005
Weighted average for January 2005: 5.10% (U.S. Internal Revenue Service)

IRS Composite Corporate Bond Rate Table Updated for January 2005
Corporate Bond Weighted Average Interest Rate = 6.10 for January 2005 (U.S. Internal Revenue Service)

Overview: IRS Releases Guidance and Sample Amendment on Automatic Rollovers to an IRA
Excerpt: "EGTRRA modified Code §401(a)(31)(B) to provide that mandatory distributions (e.g., involuntary cash-outs) of more than $1,000 and not more $5,000 be automatically rolled over to an IRA if the participant fails to make an affirmative election to receive the distribution or have it rolled-over to another qualifying vehicle. The new rules were not effective until the DOL issued final regulations addressing the fiduciary issues. On September 28, 2004, the DOL issued final regulations ...." (SunGard Corbel)

Marketing Co-Fiduciary Advisory Services to Qualified Plans: Introduction and Knowledge Base
Excerpt: "This is the first part of a three-part white paper on marketing co-fiduciary advisory services to qualified plans. The marketplace is undergoing a seismic shift in how 401k services are sold and delivered, and the purpose of this paper is to help advisors become leaders under the new advisory model." (Unified Trust Company, NA)

Overview: Treasury Issues Proposed Regulations for Section 403(b) Plans
Excerpt: "This Compliance Alert discusses key changes that would be made by the proposed regulations." (The Segal Company)

Practitioner Discussion on Proposed Regs Relating to Tax-Sheltered Annuity Contracts Under §403(b)
Excerpt: "The following is the transcript of an informal discussion of employee benefit practitioners held in Washington, D.C. on December 15, 2004. The topic centers on proposed regulations relating to tax-sheltered annuity contracts under Code §403(b) issued by the IRS on November 16, 2004. Discussion Participants [are from] Buchanan Ingersoll, P.C. (including the law firm of Silverstein and Mullens), Sanders, Schnabel & Brandenburg, P.C., Deloitte Tax, LLP, [and] Davis & Harman." (BNA Tax Management)

Future Cost-of-Living Increases Included in 415(b) Calculation
Excerpt: "Private Letter Ruling 200452039 discussed the situation of a plan that provided a 3% cost-of-living adjustment to the benefits of each retired participant each year, beginning on the January 1 following the third anniversary of the participant's retirement date. The private letter ruling held, in effect, that a participant whose annual benefit beginning in 2005 was $170,000 per year, subject to a cost of living increase starting in January 2009, would be in violation of the limit." (Calhoun Law Group, P.C.)

Overview: A New Social Security Reporting Requirement for Some Public Sector Employers
Excerpt: "The Social Security Protection Act of 2004¹ contains a reporting provision relevant to public sector employers and retirement plans. The new reporting requirement affects public sector employers whose employees are not covered by Social Security. Specifically, Section 419(c) of the law requires employers whose employees are not covered by Social Security to provide in writing to individuals hired on or after January 1, 2005, a statement describing the 'maximum effect' of ...." (The Segal Company)

Commentary: Are QDROs Issued Nunc Pro Tunc Valid Under ERISA?
Excerpt: "Imagine the following scenario: Participant of a 401(k) plan obtains a divorce, and the divorce court enters a decree that the spouse will receive 50% of the increase in value of the account from the date of marriage until the date of divorce. The court directs the spouse's attorney to prepare a QDRO to effectuate the terms of the divorce decree. The spouse's attorney prepares a QDRO and submits it to the employer for processing. But before the QDRO is approved, the participant ...." (Attorney B. Janell Grenier via BenefitsBlog.com)

California State Pension Revamp Sought: Governor Set to Propose Replacing the Defined-Benefit Model
Excerpt: "Gov. Arnold Schwarzenegger will call for a dramatic overhaul of the state's public employee pension system in his State of the State speech this afternoon, administration officials confirmed Tuesday. In a move certain to trigger a major confrontation with some of the state's most powerful labor unions, Schwarzenegger aides said the governor will sponsor a package of pension bills for introduction at a special legislative session he intends to call for Thursday." (The Sacramento Bee)

Tax Cuts & Drug Benefit will Cost at Least Five Times as Much as Projected Social Security Shortfall
Excerpt: "In a statement at his press conference December 20, President Bush said his Administration had already begun tackling the long-term budgetary costs of Medicare, with the enactment of the Medicare pres.cription drug bill. The drug bill, the President implied, would ultimately reduce Medicare costs. The President's comments were made in response to a question as to why he was taking on Social Security now and not Medicare, when the budgetary pressures from Medicare will be far ...." (Center on Budget and Policy Priorities)

Bracing for Battle, Bush to Move Slowly on Social Security
Excerpt: "The Bush administration, acknowledging the struggle it faces to overhaul the politically sensitive Social Security program, plans to build support with the public and lawmakers gradually and will not rush out a proposal of its own, senior administration officials said yesterday." (The Washington Post; one-time registration required)

White House Eyes Social Security Accounts
Excerpt: "President Bush is expected to unveil his plan for a Social Security overhaul in late February, with administration officials eyeing investment accounts that would hold two-thirds of workers' annual payroll taxes. An administration official, who spoke on condition of anonymity, said the size of the private accounts could be similar to those in a proposal by Sen. Lindsey Graham, R-S.C., and the main plan from Bush's 2001 Social Security commission." (AP via The New York Times; one-time registration required)

Opinion: Confusions about Social Security in the The Economists' Voice Special Social Security Issue
11 pages. Excerpt: "There is a lot of confusion in the debate over Social Security privatization, much of it deliberate. This essay discusses the meaning of the trust fund, which privatizers declare either real or fictional at their convenience; the likely rate of return on private accounts, which has been greatly overstated; and the (ir)relevance of putative reductions in far future liabilities." (Paul Krugman via The Berkeley Electronic Press)

Opinion: Social Security and Pension Fund Investments
Excerpt: "For the last several months, The New York Times has run a series of fascinating articles on the problems that poorly funded defined-benefit pension funds are encountering across the nation. One of the more amusing articles was devoted to the investment results of two separate pension funds managed on behalf of the members of the Teamsters Union, which has long suffered from charges of rampant corruption. Well written by Mary Williams Walsh, the article described how one group of ...." (Financial Advisor)

Opinion: Universal 401(k) Would Increase Savings Far More Than Partly Privatizing Social Security
Excerpt: "If President Bush truly wants a bipartisan agreement on Social Security reform, he should recognize that he can keep the system solvent, increase savings and promote his ownership agenda without dividing Washington by carving Social Security into private accounts." (The New York Times; one-time registration required)

Opinion: The Social Security Gamble: Choose and Lose or Stand and Gain
Excerpt: "There are three arguments being made in favor of privatizing part of Social Security. First, the Social Security Trust Fund needs money and privatization will, in the long run, increase the amount of money available to retirees. Second, privatization will give people choice, and choice is good. And third, 'it's your money,' and you ought to be able to do with it as you wish." (The New York Times; one-time registration required)

Opinion: The 'Other America' May Be Coming Back with Changes in Social Security Benefit Formulas
Excerpt: "There's no great mystery to unravel here. Above all, what changed the lives of America's senior citizens were the significant increases in Social Security benefits enacted in the 1960s and '70s, and the indexing of those benefits to average wage growth. But since the Bush administration is reportedly soon to propose ending that indexing, and replacing it with a different formula that would greatly reduce benefits, it's worth taking a moment to look back at senior poverty as it ...." (The Washington Post; one-time registration required)


Links to Items on Executive Comp, Benefits in General

Changes to Current Tax Forms and Publications: New Code Z for Box 12 on the 2005 Form W-2
Scroll down target page to Code Z entry. Excerpt: "A new code (Code Z -- Income under section 409A on a nonqualified deferred compensation plan), for use in box 12 on the 2005 Form W-2, has been added to the 2005 Form W-2 and the Instructions for Forms W-2 and W-3. This code and other reporting will be used to identify income recognized due to participation in a nonqualified deferred compensation plan that fails to meet the requirements of Internal Revenue Code section 409A that was added by ...." (U.S. Internal Revenue Service)

G.ay Spouses Press Benefits Case in R.I.: Judge Set to Rule on Mass. Woman's Retirement Health Plan
Excerpt: "In a case thought to be the first of its kind in Rhode Island, a Massachusetts woman who retired from teaching in the neighboring state has asked that her health insurance benefits be extended to her same-sex spouse." (The Boston Globe)

Overview: New Deferred Compensation Guidance from Treasury (PDF)
6 pages. Excerpt: "The Treasury Department and the Internal Revenue Service have released Notice 2005-1, which provides initial guidance on new Internal Revenue Code ... Section 409A, a statute that requires major restructuring of non-qualified deferred compensation programs. The guidance provides welcome transition rules for companies to comply with Code Section 409A, and essentially designates 2005 as a transition period assuming plans are operated in good faith compliance with Code ...." (Dow, Lohnes & Albertson, PLLC)

Overview: IRS Issues Initial Guidance Under Section 409A of the Internal Revenue Code
Excerpt: "On December 20, 2004, the IRS and Treasury Department issued the first part of what is expected to be a series of guidance concerning the application of §409A of the Internal Revenue Code of 1986, as amended .... See Notice 2005-1, 2005-2 I.R.B. __. Section 409A of the Code was enacted as part of the American Jobs Creation Act of 2004, and provides that amounts deferred under a nonqualified deferred compensation plan will be includible in gross income to the extent not subject to ...." (BNA Tax Management)

Overview: New IRS Rulings Include Signing Bonuses and Cancellation of Contract Payments as 'Wages' (PDF)
3 pages. Excerpt: "On November 23, the IRS released Revenue Rulings 2004 109 and 2004-110, in which it expanded the definition of 'wages' for employment tax purposes (Federal Insurance Contributions Act (FICA), Federal Unemployment Tax Act, and Federal income tax withholding)." (Morgan Lewis)


Newly Posted Events

Advanced IRAs 2005
in Ohio on March 9, 2005
presented by BISYS Retirement Services

Advanced IRAs 2005
in Kansas on March 9, 2005
presented by BISYS Retirement Services

Advanced IRAs 2005
in Ohio on March 11, 2005
presented by BISYS Retirement Services

Advanced IRAs 2005
in Florida on March 16, 2005
presented by BISYS Retirement Services

Advanced IRAs 2005
in Arizona on March 16, 2005
presented by BISYS Retirement Services

Advanced IRAs 2005
in California on March 18, 2005
presented by BISYS Retirement Services

Advanced IRAs 2005
in Georgia on March 18, 2005
presented by BISYS Retirement Services

Basic IRAs 2005
in Ohio on March 8, 2005
presented by BISYS Retirement Services

Basic IRAs 2005
in Kansas on March 8, 2005
presented by BISYS Retirement Services

Basic IRAs 2005
in Ohio on March 10, 2005
presented by BISYS Retirement Services

Basic IRAs 2005
in Florida on March 15, 2005
presented by BISYS Retirement Services

Basic IRAs 2005
in Arizona on March 15, 2005
presented by BISYS Retirement Services

Basic IRAs 2005
in Georgia on March 17, 2005
presented by BISYS Retirement Services

Basic IRAs 2005
in California on March 17, 2005
presented by BISYS Retirement Services

IRA Online Institute
Nationwide on May 9, 2005
presented by BISYS Retirement Services

IRA Online Institute
Nationwide on September 12, 2005
presented by BISYS Retirement Services


Newly Posted Press Releases

Non-Qualified Deferred Compensation Legislation and Regulations
(Worldwide Employee Benefits Network (WEB) - NJ)

Upcoming Tax and Accounting Changes for Stock Options and Other Equity Incentives
(Waller Lansden Dortch & Davis)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Senior Counsel - Benefits Administration
for Target Corporation
in MN

Director of Life & Health Benefit Programs
for USI Consulting Group
in NY

Pension Administrator Senior DC person
for Campbells Administration Inc.
in CA

Customer Service Representative
for Leggette Actuaries, Inc.
in TX

Benefits Recordkeeper
for Small benefits consulting firm in northern New Jersey
in NJ




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