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January 31, 2005
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Overview: IRS Curbs Some 401(k) Plan Contributions with Final Regulations
Excerpt: "Final Internal Revenue Service 401(k) rules curb a low-cost approach that some employers have used to allow higher-paid employees to contribute more to 401(k) plans and still enable the plans to pass nondiscrimination tests. The rules also broaden the list of situations in which employees can make so-called hardship withdrawals from the plans." (Business Insurance via Workforce Management Online)

Overview: Final Regs Remove 90-Day Notice Requirement for Eliminating Optional Forms of Distribution
Excerpt: "The IRS has issued final regulations that remove the requirement that a participant be given 90 days advance notice of an amendment to a defined contribution plan that eliminates or restricts a participant's ability to receive a distribution in a particular optional form of payment." (Employee Benefit Institute of America Inc.)

Saving for Retirement Harder under 403(b) Law
Excerpt: "Unlike private-sector workers, who are eligible for 401(k)s, Jones and California's thousands of other teachers are stuck in a tax-deferred retirement program that teacher advocates say is tilted in favor of insurance companies and their commission-based products." (Union-Tribune Publishing Co.)

Opinion: How You Can Take Ownership of Your 401(k) Program
Excerpt: "You can't know how much your 401(k)- type plan is costing you until you and your employer understand a hide-and-seek game by third parties that often cloaks expenses. Since most of the expenses of your 401(k), 403(b) and 457 programs come out of your pocket, you should know how much you are paying. Unfortunately, many expenses are buried, not disclosed and disguise costly conflicts." (Bloomberg News)

Fed Rules Allow Defined Benefit Pension Plan Funding Gaps; Leave Workers and Taxpayers with IOUs
Excerpt: "United [Airlines] illustrates why pension reform has become a front-burner issue. Thirty-four million Americans are covered by private pensions governed by federal rules that encourage cash-strapped companies to cut back their contributions, even while promising workers benefits they can't afford." (Chicago Tribune; one-time registration required)

Before Pension Shows Trouble, Calculate Benefit Earned and Whether It Exceeds Fed Insurance Limits
Excerpt: "If the company's finances show signs of weakness, it makes sense to try to determine the strength of the pension fund. But that will probably mean a lot of paper chasing. Pension documents can be cryptic, and the ones that offer employees the most useful picture of the pension fund - annual plan reports filed with the Labor Department - are often at least two years old. The section called Schedule B: Actuarial Information is most relevant." (The New York Times; one-time registration required)

Recharacterizing IRA Contributions No Problem with Documentation and Procedures in Place
Excerpt: "During tax season, many taxpayers wonder what is better -- a regular contribution to a traditional individual retirement account (IRA) or to a Roth IRA. Inevitably, some IRA owners will choose to contribute to one type and later decide that they really want the other type. No problem, just recharacterize!" (Bankers Systems, Inc.)

Life Cycle Funds May Star In Privatization Debate
Excerpt: "Bush administration officials have sketched out proposals for putting some Social Security assets in privately managed accounts. One option would encourage workers to put the first $5,000 of assets in a handful of carefully selected investment funds, according to published reports. The default option would be professionally managed 'life cycle' funds, or funds designed for workers with specific retirement dates." (National Underwriter)

Commentary on Important Employer Stock Litigation Development
Excerpt: "The end of 2004 brought an important development in the ERISA employer stock litigation arena. A federal appellate court granted a discretionary petition on December 29, 2004 to consider some critical questions, including whether such cases may be maintained as class actions under Fed.R.Civ. P. 23." (Attorney B. Janell Grenier via BenefitsBlog.com)

Opinion: More Social Security Chatter from the 'Social Security Watchers'
Excerpt: "I recently began grading members of the chattering class for their wise or inane comments about how and why Social Security needs to be changed. This ongoing project was facilitated by an Outlook section in The Washington Post that recruited 'a variety of Social Security watchers' to comment on the topic. Predictably, most attacked the president's approach, and one supported it. Given the respective merits of the two sides, that may be a fair fight." (The Washington Times)

Opinion: A 10% Solution Would Perfect Social Security for the Future
Excerpt: " It's a good bet that if you analyze a problem incorrectly, you'll come up with the wrong solution. Case in point: George Bush and Social Security. The first problem is one of semantics. Social Security is not running out of money. If nothing is done, inflation-adjusted benefits might wind up being 27 percent less in 2050 than they are scheduled to be, but still wind up higher than they are today. Undesirable, maybe, but hardly economic calamity." (The Journal Gazette)

Opinion: Social Security Rhetoric from the Democrats' McAuliffe and the Republicans' Thomas
Excerpt: "The chairman of the Democratic National Committee has many talents, chief among them the ability to separate donors from their money, but no one's ever mistaken Terence R. McAuliffe for a policy wonk. And for good reason: Mr. McAuliffe's recent foray into the weeds of the Social Security debate was the kind of ill-informed demagoguery that discourages responsible politicians from confronting the problem." (The Washington Post; one-time registration required)

Study: Comparing the Retirement Savings of the Baby Boomers and Other Cohorts
Excerpt: "This study compares the retirement savings behavior of four different age cohorts and finds that Older Baby Boomers (born from 1946 to 1954) are somewhat more likely than the other cohorts to hold a retirement account. It also finds that households in the Swing cohort (1928 to 1945) hold the largest amount of retirement savings, followed by, in order, households in the Older Boomers, Younger Boomers (1955 to 1964), and Generations X and Y (1965 to 1987) cohorts." (U.S. Bureau of Labor Statistics)

Audio: Experts Answer Questions on Social Security
Excerpt: "Robert Siegel talks with Alicia Munnell of the Carroll School of Management at Boston College and Kent Smetters of the Wharton School of Business at the University of Pennsylvania. Munnell and Smetters, both former Treasury Department officials, address questions about Social Security." (All Things Considered via National Public Radio)

Social Security Privatization Pits Risk vs. Return
Excerpt: "What kind of return would an average worker receive from a private Social Security account? That depends on the course of the stock market, the investment options chosen and the still-hazy details of the reform plan. But a few clues have emerged. Bush advisers told the Associated Press this week that they are modeling their Social Security plan on a federal retirement plan called the Thrift Savings Plan." (The News Journal)

The Future of Social Security: Women the Deciding Factor in Retirement System Debate
Excerpt: "Since women generally live longer than men, earn less, are less likely to have a significant pension, and lose more years of retirement-building income when they stop working to raise kids or take care of parents, they depend more on Social Security when they retire. Most over 85 are women. It is the only source of income for 29 percent of unmarried female seniors. Seventy percent of all Social Security beneficiaries older than 85 are women." (San Francisco Chronicle)

Links to Items on Executive Comp, Benefits in General

Overview: Deferred Compensation: Preparing for the Changes to Nonqualified Plans (PDF)
2 pages. Excerpt: "The American Jobs Creation Act of 2004 (the 'Act') made sweeping changes to non-qualified deferred compensation earned or vested after December 31, 2004. The Act's reach is not limited to employees making elective deferrals under non-qualified deferred compensation plans. Because the Act does not define what constitutes a 'deferral' it is broad enough to reach employer only contribution plans." (Haynes and Boone, LLP)

Aon Corporation Adds Acquisition-Triggered Severance Plan for Key Executives
Excerpt: "Aon Corp. has implemented a new severance package plan for its key executives in the event the Chicago-based brokerage giant is acquired. Aon's board of directors approved the new severance agreements Jan. 21. They were detailed in Securities and Exchange Commission filings on Thursday." (Business Insurance)

Stock Options Don't Add Up If Unrealistic Assumptions in Calculating the Option Expense Are Used
Excerpt: "Top executives on the receiving end of munificent pay packages like to argue that their troughs full of stock options have no relationship to the improprieties that keep erupting across corporate America. But an episode last week involving Brocade Communications, a San Jose, Calif., company that makes switches for computer storage networks, suggests that every now and again there just might be a connection after all." (The New York Times; one-time registration required)

Newly Posted Events

Defined Contribution Plans: Learn How Latest Regulations and Guidance Impact Your Plans
in California on February 3, 2005
presented by International Society of Certified Employee Benefit Specialists, Northern California Chapter

Nonqualified Deferred Comp. Plan Workshop with 457 Update
in Minnesota on March 18, 2005
presented by SunGard Corbel

Nonqualified Deferred Comp. Plan Workshop with 457 Update
in Pennsylvania on March 18, 2005
presented by SunGard Corbel

Nonqualified Deferred Comp. Plan Workshop with 457 Update
in Georgia on March 24, 2005
presented by SunGard Corbel

Newly Posted Press Releases

PBGC Selects Fixed Income Portfolio Managers
(Pension Benefit Guaranty Corporation (PBGC))

Still River Releases Sixth Paper in Series on Comprehensive Retirement Planning
(Still River Retirement Planning Software, Inc.)

Hard Charging New Comer Expands Client List and Announces Sweet Tooth Giveaway
(Metrics Partners)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Actuary
for Matthews Benefit Group, Inc.
in FL

Sr. Benefits Representative
for Phelps Dodge
in AZ

Pension Administrator/TPA
for Block Consulting Actuaries, Inc.
in CA

DC/401(k) Administrator
for Gelman Pension Consulting, Inc.
in NY

Special Markets Education Coordinator
for Transamerica
in CA

Account Executive
for TRANSAMERICA
in IL

Plan Services Consultants-Indianapolis
for American United Life Insurance Company
in IN

Client Account Manager
for New York Life Investment Management LLC
in MA

Director, Health & Welfare Practice
for Charles W. Cammack Associates, Inc.
in NJ, NY



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