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January 28, 2005
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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
Text of Prop. Regs on Disclosure of Values of Optional Forms of Benefit, from Today's Fed. Register
A pdf version is available at https://benefitslink.com/taxregs/05-1553.pdf (4 pages). (Internal Revenue Service)

Overview: IRS Issues Comprehensive Final Regulations for 401(k) Plans (PDF)
4 pages. Excerpt: "[The regulations] are primarily a consolidation and restatement of already existing rules. However, they also contain several changes and clarifications to the existing rules. This alert contains a summary of the most significant changes and clarifications, broken down into the following categories: (1) general nondiscrimination testing issues; (2) safe harbor plan issues; (3) hardship withdrawal rules; and (4) other miscellaneous issues." (Dechert LLP)

401(k) Plans and Women: A 'Good News/Bad News' Story (PDF)
5 pages. Excerpt: "For women, the shift from defined benefit to 401(k) plans is a 'good news/ bad news' story. When women are employed and accruing retirement income benefits, the news is good. 401(k) plans are better for short-tenured workers, and women are more likely than men to have short tenures. Therefore, more women are likely to end up with more benefits and their benefits are likely to be larger when they have a 401(k) plan rather than a traditional defined benefit plan." (Center for Retirement Research at Boston College)

Should Your Retirement Plan Go with You When You Switch Jobs?
Excerpt: "One option available to employees is to cash out your 401(k) plan altogether. However, there are disadvantages to this option. Early withdrawals can lead to extensive tax liabilities. Furthermore, not only are you responsible for possible penalties, but you are impacting the growth of your assets by not allowing them to remain invested. Another option you may consider is to simply leave the money in the plan." (Contra Costa Times; one-time registration required)

Defined Benefit Pension Reform Proposal Could Hit Companies with Older Workforces the Hardest
Excerpt: "If the Bush Administration's proposed reform for the defined benefit system passes as is, companies in the manufacturing, transportation and communication industries will be hit the hardest, according to a recent report by the Employment Policy Foundation, .... These companies, which are already being battered by increasing competition and the threat of outsourcing, may now be punished further by their own government for having older workforces, the report states." (Workforce Management)

The Risk Associated with Equities and How to Evaluate the Financial Health of Retirement Systems (PDF)
11 pages. Excerpt: "[T]his brief does three things. First, it describes how equities have performed over the last 75 years. Second, it explains how economists, accountants, and actuaries handle the high returns/high risks associated with equities in the real world. Finally, it explores the implications of the risk discussion for evaluating Social Security reform proposals." (Center for Retirement Research at Boston College)

ERIC Submits Statement to PBGC on the Agency's Proposed Rule Regarding Section 4010 Filings
Excerpt: "The ERISA Industry Committee (ERIC) [on January 27, 2005] submitted to the Pension and Benefits Guaranty Corporation (PBGC) ERIC's comments on the PBGC's proposed rule regarding filings under ยง4010 of the Employee Retirement Income Security Act of 1974 (ERISA). The proposed rule was published in the December 28, 2004 issue of the Federal Register." (The ERISA Industry Committee)
Bush Advisers OK Structure of the Personal Accounts Social Security Plan
Excerpt: "President Bush's advisers have settled on a proposal for structuring the personal accounts they hope to create in Social Security, while on Capitol Hill Senate Democrats were launching an effort to defeat the plan altogether. Under a plan recommended to Bush, the private accounts would resemble many company-sponsored retirement plans, with just a handful of investment options." (AP via The New York Times; one-time registration required)

Abstract of Working Paper: Measuring Social Security's Financial Problems
Excerpt: "[A]ccording to the Social Security and Medicare Trustees, Social Security faces a future financial shortfall of $10.4 trillion in present value. This enormous imbalance has received little attention in public debates about Social Security. .... You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery [at http://hq.ssrn.com/Pub_Login.cfm?type=detquan; registration required.]" (National Bureau of Economic Research)

Report Available: Paying Benefits from Individual Accounts in Federal Retirement Policy
Excerpt: "The study focuses on the benefits to be paid under different forms of [Social Security] individual account proposals. .... The study also addresses how any new individual account program would fit with traditional Social Security, employer-based pensions and tax-advantaged individual retirement savings (e.g. IRAs), as well as Individual Development Accounts (IDAs) targeted to low-income households. [The Academy will fill requests for PDFs or printed copies of the report.]" (National Academy of Social Insurance)

Issue Brief: A Bird's Eye View of the Social Security Debate (PDF)
10 pages. Excerpt: "President Bush plans to use his political capital to 'privatize' a portion of the Social Security program. Whether or not such a change is desirable and the extent to which it solves Social Security's financing problems will dominate much of the policy agenda over the next few years. This Issue in Brief is intended to highlight the key points in the debate." (Center for Retirement Research at Boston College)

Audio: Social Security Perspectives -- Young Workers Doubt Future of Social Security
Excerpt: "President Bush has been urging action to fix what he calls a looming crisis in funding for the Social Security program. Young people have heard warnings about the system for decades. In the third part of his series on how people of different generations look at Social Security, NPR's John Ydstie finds that younger workers are highly skeptical they'll get their promised benefits." (All Things Considered via National Public Radio)


Opinion: Social Security Crisis? Not If Wealthy Pay Their Way with Higher Income Taxes
Excerpt: "So this was the implicit bargain in the reforms recommended by Greenspan and signed into law by Reagan: From 1983 to 2018, low- and middle-income earners would pay excess payroll taxes. This allowed income taxes to be kept low, and primarily benefited high earners. Then, beginning in 2018, instead of raising payroll taxes to pay for baby-boomer retirement benefits, Social Security would begin selling its bonds back to the government. To pay for those bonds, income taxes would be ...." (The Christian Science Monitor)

Interview with Edward Gramlich on Social Security -- Getting Some Perspective
Excerpt: "In a U.S. Social Security debate in which partisans cite facts selectively to justify their positions, newspaper columnists occasionally turn for perspective to veterans .... One is Edward 'Ned' Gramlich, a U.S. Federal Reserve governor who chaired a Social Security advisory commission a decade ago. [M]r. Gramlich argues that it's time to fix Social Security. He advocates private accounts -- as long as they're on top of Social Security, not created by diverting payroll ...." (The Wall Street Journal Online)

Opinion: Social Security Reform -- Personal Accounts Are a Solution with a Side Benefit
Excerpt: "The personal accounts first boost the economy because they involve a large effective reduction in the payroll tax, depending on the size of the personal account option. The amount workers can shift from the payroll tax to their accounts is no longer a tax used by the government to fund spending for other people. It is personal savings owned and controlled by the worker, .... Therefore, it is not a tax but part of the worker's compensation." (The Washington Times)

Survey Results: Views on Social Security -- The Future of Benefits and Personal Accounts
Excerpt: "Younger people have less faith in the Social Security system, but they are more supportive of private accounts. Read key results of a recent Washington Post-ABC News poll." (The Washington Post via National Public Radio)

Audio: The Birth Rate and Social Security
Excerpt: "Predictions of Social Security's demise have been floating around for years -- but what is the best data to judge the system's future? Some [s]ay the nation's changing birth rate is a good place to start. Guest: William Frey, demographer, the Brookings Institution." (Talk of the Nation via National Public Radio)

Links to Items on Executive Comp, Benefits in General

Should Executive Bonuses Based on Earnings before Earnings Restatements Be Recalculated?
Excerpt: "With restatements of financial earnings reaching record levels in 2004, the question arises whether executive bonuses based on incorrect earnings statements should be recalculated. .... The issue seems relatively straightforward: incentive-based executive compensation typically ties bonuses to earnings performance, so when errors are discovered that necessitate earnings restatements, bonuses should be recalculated to retain their correlation to actual earnings." (SocialFunds.com)

Newly Posted Events

403(b) Plan Workshop
Nationwide on March 17, 2005
presented by SunGard Corbel

Instructor-Led COBRA seminar
Nationwide on February 9, 2005
presented by HRTrainingCenter.com

Nonqualified Deferred Comp. Plan Workshop With 457 Update
Nationwide on March 18, 2005
presented by SunGard Corbel

Newly Posted Press Releases

U. S. Labor Department Extends Annual Reports Deadline After Severe Winter Storms Hit Indiana
(U.S. Department of Labor, Office of Public Affairs, Washington, D.C.)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Compensation, Benefits and Compliance Manager, North America
for Atos Origin Inc.
in TX

Prospect Project Manager - PA
for The Vanguard Group
in PA

Employee Benefits Consultant
for Wachovia Corporation
in PA

401(k) Plan Administrator
for Matthews Benefit Group, Inc
in FL



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