If you'd like to STOP this newsletter, just click on this link: STOP sending this newsletter to me
BenefitsLink
Retirement Plans
Newsletter		To BenefitsLink home page Fill your job openings fast by advertising on BenefitsLink

January 24, 2005
Today's sponsor: PenChecks, Inc.

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

New Federal Regulations Go Into Effect March 28,2005!
We have the solution for Missing Participants, Automatic/Default
Rollover IRA Programs...Simple, Affordable, Efficient.
PenChecks, Inc. is the industry leader in Benefit Distributions,
Missing Participant, and Automatic/Default Rollover IRA Programs.
We consistently solve industry-wide problems regarding Missing
Participants and Automatic/Default Rollover IRAs, as well as the
complexities of processing Benefit Distributions.
For more information Click Above or call 800-541-3938

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
Text of Final Regulations on Elimination of Optional Forms of Distribution in DC Plans (PDF)
10 pages. Excerpt: "This document contains final regulations that would modify the circumstances under which certain forms of distribution previously available are permitted to be eliminated from qualified defined contribution plans.... These regulations are effective January 25, 2005." (Internal Revenue Service)

Employer 401(k) Skimming Costs U.S. Workers Millions in Investment Earnings
Excerpt: "In an age of instantaneous electronic fund transfers, many U.S. companies are capitalizing on an outdated law that allows them to earn money off their employees' 401(k) deductions. [M]illions of U.S. employees still wait several days or longer for 401(k) deductions to hit their accounts, costing them tens of millions of dollars each year." (MarketWatch.com, Inc. via Investor's Business Daily)

Target-Date Funds Deliver an All-in-One Retirement Investing Strategy
Excerpt: "Q. I am 33 years old. I have the option of investing in target retirement funds in my company 401(k) plan. What kind of track record do these funds have? Are they a sensible choice for retirement investing?" (Chicago Tribune; one-time registration required)

Government's Pension Insurance System May Dump Billions of Dollars in Debt in the Laps of Taxpayers
Excerpt: "Battered by the collapse of several steel companies and other corporate goliaths, the Pension Benefit Guaranty Corp.'s shortfall more than doubled -- from $11.5 billion in 2003 to $23.5 billion last year. That includes $9 billion in pension obligations the federal agency claims United and US Airways are attempting to shift to it. Although the amount of United's pension shortfall is in dispute, federal officials are worried." (The Mercury News; one-time registration required)

Ensuring that Early Retirement Packages Meet the Letter of the Law
Excerpt: "Firms often provide early retirement incentives or severance packages to save money and usher in a younger generation of workers. To reduce liability exposure, legal experts say that companies should carefully consider the eligibility criteria for such plans as well as the timing of communications about them." (Employee Benefit News)

Overview: Maximum Benefit Limitations for 2005 and Relief for 2004 (PDF)
2 pages. Excerpt: "The Pension Funding Equity Act of 2004 (PFEA), signed by the President in April, 2004, imposed special restrictions on the maximum lump sum, or the maximum amount of certain other forms of benefit, that could be paid from a qualified defined benefit pension plan in 2004 and 2005. Plan sponsors need to ensure that appropriate procedures are in place for benefits commencing in 2005." (Mellon Financial Corporation)

Follow-Up Letter: Value of Life Insurance Contracts When Distributed from Qualified Retirement Plan
Excerpt: "The American Society of Pension Professionals & Actuaries (ASPPA) appreciates the opportunity to provide further comment on the Internal Revenue Code (IRC) Section 412(i) guidance proposed by the IRS and the Treasury on February 13, 2004 (Proposed Regulations). ASPPA provided initial comments to the IRS and the Treasury on May 17, 2004. This letter is intended to augment some of the previously provided comments in regard to certain technical issues." (American Society of Pension Professionals & Actuaries)

The Immediate Annuity: An Annuity With a Twist -- Pay Just Once, Then Collect
Excerpt: "Imagine how new retirees might respond if, in return for a lump-sum payment, a reputable insurance company promised to send them a sizable check every month for the rest of their lives. It would come with a yield that was better than prevailing market interest rates, and, as an option, retirees could guarantee that their initial payment was returned entirely, either to them or their heirs. Better yet, there would be no direct sales commission." (The New York Times; one-time registration required)

Can a Highly Compensated Employee Decline Participation in Qualified Pension or Profit Sharing Plan?
Excerpt: "Technical Tip 137: The ... question and answer were from the IRS Q&A Session at the 2003 ASPPA Annual Conference: .... Response: A plan may exclude from participation designated classifications of highly compensated employees, but an employee can elect only once to not be covered, and the plan must offer the election when the employee is first eligible to participate." (Reish Luftman Reicher & Cohen)

CalPERS Sets Up Pension Debate Information Center
Excerpt: "The California Public Employees' Retirement System (CalPERS) announced this week a special Web resource on proposals to privatize State and public agency pensions. 'The Pension Debate Information Center' is intended to educate CalPERS members on existing programs and possible changes." (AccountingWEB.com)

30-and-Out Retirement Plan Introduced Again in Pennsylvania
Excerpt: "State Rep. Peter J. Daley, D-49, announced he plans to re-introduce his '30-and-out' retirement measure, coupled with another bill that would implement a permanent cost-of-living increase for retired state employees and teachers. The 30-and-out bill would provide separate two-year windows for state employees and teachers who have accumulated 30 years of service to retire early with no penalty." (The News Item)

Schwarzenegger Plan Vote on State Pension System May Foretell Public Opinion on SS Reform
Excerpt: "Gov. Arnold Schwarzenegger, echoing language used by those who claim Social Security is headed for a crisis, contends that California can no longer afford a generous traditional pension plan for state employees and teachers and should force all new workers into a 401(k)-style plan of private accounts." (The New York Times; one-time registration required)

Rethinking Social Security: The Age Dividend: We're Shelving Experience too Early
Excerpt: "Viewed through the prism of the current Social Security debate, the private triumph of Americans living longer and healthier lives looks like an economic disaster. That's because as people hit retirement age, we move them over to the liability side of the national ledger. We don't give much attention to the potential asset side -- to the talent and experience that are being prematurely shelved at great economic and personal cost." (The Washington Post; one-time registration required)

Clarification Request to IRS on Short Service Employee Memorandum
Excerpt: "Specifically, we have concerns with the language beginning with the second paragraph on page four of the memorandum that provides, '[i]n the absence of questionable hiring practices, a violation may also occur where the employer uses a plan design to limit benefits to a select group of highly compensated employees and to the lowest paid of the non-highly compensated employees.'" (American Society of Pension Professionals & Actuaries)

Defined Benefit Pension Plans Should Learn from Recent Troubles and Take Remedial Steps
Excerpt: "The erosion of the financial strength of the nation's defined benefit system will continue until pension sponsors learn some important lessons from the road we've just been down. While the stock market's nose-dive that began nearly five years ago was the most conspicuous cause of the deterioration in the funded position of so many pension plans, there's a lot more to the story, with important implications for immediate action." (Employee Benefit News)

SBC Dropping Cash Balance Pension Plan in Favor of a Traditional Plan Design
Excerpt: "[SBC] Communications Inc. ... set up a cash balance plan in 1997 for its management employees. .... But SBC is ending the cash balance plan design, with management employees now earning benefits through a more traditional plan design that better rewards long-term service than a cash balance plan would. SBC's action is an unusual one. Indeed, the trend has otherwise exclusively gone in the direction away from traditional plan design." (Business Insurance)

Social Security Debate
Excerpt: "The discussion over possible Social Security changes has sparked more furor in the general press than any employee benefits subject since the discussion in the middle 1990s about President Bill Clinton's health care proposals. With concrete proposals for changing Social Security likely to appear within the next few weeks, the editors of Spencer Benefits Reports begin a periodic summary of the controversies and progress to date. Here is the first report." (Spencer Benefits Reports)

Opinion: Neglecting to Save or to Contribute to a 401(k) Spells Retirement Ruin
Excerpt: "Just as President Bush and other Republicans are plowing ahead with plans for personal Social Security accounts and other individualized investment vehicles, employers operating 401(k)s and similar plans are becoming increasingly fearful that their workers aren't up to the job of managing those accounts." (The Washington Post; one-time registration required)

Opinion: Bush Makes False Claims about Social Security
Excerpt: "President George W. Bush's assertions that Social Security faces a crisis and is 'flat bust, bankrupt' are patently false. Bush and other administration officials are greatly exaggerating potential problems facing the program to push through changes that would undermine the most successful social insurance program in the nation's history. The system is so far from crisis or bankrup.tcy that the truly prudent course at this point most certainly would be to make no changes in ...." (Bloomberg News)

Opinion: Getting Bush's Social Security Reform Back on Track
Excerpt: "Alas, the Social Security reform debate is not going well for George Bush. House Ways and Means Committee Chairman Bill Thomas ruffled White House feathers last week by declaring the Bush Social Security proposal a 'dead horse.' Mr. Thomas shot these arrows even though he supports private accounts. The bigger problem for reformers is that a growing number of liberal-leaning Republicans, ..., are having second thoughts about the political wisdom of tackling the issue at all." (The Washington Times)

Audio: Analyzing Private Retirement Account Investments for Social Security Funds
Excerpt: "Debate has raged over the idea of allowing Americans to invest part of their Social Security contributions in private funds. NPR's Jim Zarroli takes a look at the performance of some of the funds in question." (All Things Considered via National Public Radio)

Snowe Wary over Social Security: Moderate GOP Senator Voices Doubts about Bush's Plans
Excerpt: "Sen. Olympia J. Snowe of Maine, a moderate on the Finance Committee who will be at the center of negotiations over Social Security legislation, yesterday became the latest Republican to express reservations about President Bush's plans, saying that voters are leery and Congress must act cautiously. 'There is a lot of fear among seniors,' Snowe said on CNN's 'Inside Politics Sunday.'" (The Washington Post; one-time registration required)

Social Security: Questions and Answers to Help Interpret Whether the System Will Face Future Trouble
Excerpt: "Understanding the situation seems as straightforward as managing your household budget, a simple matter of looking at income, expenses and savings. What Social Security takes in, what it expends and what it has accrued are matters of public record and not in dispute. But it turns out that economists and other experts interpreting those facts sound like the six blind men describing the elephant: Everyone has a different perception." (San Francisco Chronicle)

Semantics Shape SS Debate: Democrats Assail 'Crisis' While GOP Turns 'Privatization' to 'Personal'
Excerpt: "The battle over the vocabulary of restructuring Social Security is the latest example of the lengths to which politicians and their consultants go to test and refine wording in an era when so many voters are influenced by the sound bites in television newscasts. Both sides have commissioned expensive research to guide their word choice as they prepare their cases." (The Washington Post; one-time registration required)

Rethinking Social Security: What Crisis? It Ain't Broke, So No Need to Fix It
Excerpt: "The latest Social Security trustees' report, whose numbers even the White House uses, predicts that the Social Security program can pay all promised benefits for the next 38 years -- with no changes at all. The June 2004 estimate from the nonpartisan Congressional Budget Office projects that Social Security can pay all promised benefits without changes for even longer, until 2052. That's nearly half a century." (The Washington Post; one-time registration required)

Life before Social Security: 'A Great Calamity Has Come Upon Us'
Excerpt: "By 1934, it was not hard to make the case for Social Security. The Great Depression had devastated employment, pensions, the stock market and savings. Many older Americans, and their beleaguered children with families of their own, found themselves suddenly and shockingly in economic freefall." (The New York Times; one-time registration required)

Links to Items on Executive Comp, Benefits in General

Overview: IRS Issues Proposed Regulations Regarding Withholding on Supplemental Wages (PDF)
2 pages. Excerpt: "The American Jobs Creation Act of 2004 (AJCA) created a new rule on withholding for supplemental wages in excess of one million dollars received by an employee in a calendar year, effective for payments made after December 31, 2004. .... The IRS has now released proposed regulations that, among other things, clarify the definition of supplemental wages." (Mellon Financial Corporation)

Life Insurers Fighting Major Bush Initiative -- Lifetime Savings Accounts
Excerpt: "[T]he White House plan, which is coveted by the mutual fund industry as a potential bonanza, so far has faltered largely because of the opposition of the American Council of Life Insurers, which fears the idea could cost it billions of dollars of business. Vice President Cheney vowed just before Election Day the administration would revive it if the Republican ticket won reelection, setting off a new flurry of lobbying." (The Boston Globe)

Newly Posted Events

Recent Legal Decisions
in Florida on February 17, 2005
presented by International Society of Certified Employee Benefit Specialists - Orlando Chapter

The Future of the Determination Letter Program Webcast
Nationwide on February 17, 2005
presented by ASPPA (American Society of Pension Professionals & Actuaries)

Newly Posted Press Releases

American Benefits Council Commends HHS for Medicare Prescription Drug Benefit Regulations
(American Benefits Council)

Education & Enrollment Kit Upstart Gets 2005 Off to a Quick Start
(Metrics Partners)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

401k Account Executive
for BISYS Retirement Services
in PA

ERISA Attorney/ Consultant
for Towers Perrin
in MA

Chief of Pension Education
for ASPPA
in DC

Daily 401(k) Plan Administrator
for The Newport Group
in NC

Implementation Specialist
for ADP TotalSource
in MA, NH

Retirement Plan Administrator
for MGKS, Inc.
in AZ

Client Relationship Manager
for Great-West Financial Services
in FL, NJ, WA

VP, Corporate Counsel
for Prudential Financial
in NJ

Pension Technical Specialist
for Louis Kravitz & Associates, Inc.
in CA

Pension and Retirement Plan Service Representative
for CBIZ Actuarial & Benefit Consultants
in CA



Handy Links:
Copyright 2005 BenefitsLink.com, Inc.; except that you may reprint this newsletter in full (including this sentence) without obtaining our permission.

Published by:

BenefitsLink.com, Inc.
https://benefitslink.com/about.html
1298 Minnesota Avenue, Suite H
Winter Park FL 32789
(407) 644-4146
Fax: (407) 644-2151

Editor and Publisher: David Rhett Baker, J.D.

Housekeeping: