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February 9, 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)
Garden State's Deficit Fix: Taxing 401(k) Plan Contributions?
Excerpt: "Faced with a pending $4 billion budget shortfall, New Jersey officials are considering taxing K plan contributions as a way to pump an additional $400 million into state coffers. If such a plan were to become reality, the Garden State would tax contributions as they are made rather than, as at present, waiting until workers withdraw the money to impose state taxes, the Newark Star Ledger reported. Pennsylvania currently imposes K plan taxes when the contributions are made." (PLANSPONSOR.com; one-time registration required)

Survey Shows Market Concerns Dominate Defined Pension Plan Focus, but Allocations Remain Static
Excerpt: "While it failed to gain the headlines of the previous two years, the 'health' of many large US corporate pension plans (at least as measured by funded status) improved remarkably in 2003, according to the 2004 Fidelity Investments/ PLANSPONSOR study of defined benefit plan practices. Among the 100 larger defined benefit plans surveyed last summer, just 54% of corporate plans were underfunded ..., and only 8% by more than 20%, compared with 69% and 12%, respectively, in 2002." (PLANSPONSOR.com; one-time registration required)

Overview: Directed-Trustee Guidance in the Form of EBSA's Field Assistance Bulletin (FAB) 2004-03
Excerpt: "Since mid-2002, so-called 'directed trustees,' and the plan sponsors that rely on their services, have been in something of a regulatory no-man's land in the wake of the Enron 401(k) participant litigation and a friend of the court filing by the Department of Labor regarding the delineation of roles and responsibilities of directed trustees." (PLANSPONSOR.com; one-time registration required)

A Swing of the Pendulum to Reduce Directed-Trustee Liability for Investment Losses in Plans
Excerpt: "Unlike trustees under the common law, directed trustees do not manage plan assets, do not provide investment advice, and are not responsible for communicating with participants. In short, directed trustees do not undertake investment responsibility for plan investments. Nevertheless, scores of cases have been brought in the wake of the Enron class action litigation seeking to hold directed trustees liable for investment losses resulting from a plan's holding of company stock." (PLANSPONSOR.com; one-time registration required)

Company Stock in Retirement Plans -- Fiduciary Status and Participant Investment Education
Excerpt: "The number of lawsuits about company stock in 401(k) plans and KSOPs is large -- and growing almost every week. All of these share a common thread: substantial and dramatic losses in the value of company stock. .... In this article, I am focusing on two specific issues. The first is the risk of fiduciary status as a 'functional' fiduciary; the second is the importance of assisting participants in their investment decisions about company stock." (Fred Reish via PLANSPONSOR.com; one-time registration required)

Overview: The Whole Truth about Participant Investing and Fiduciary Responsibility
Excerpt: "To paraphrase the courtroom oath, fiduciaries have an obligation to tell the truth, the whole truth and nothing but the truth. However, because of a lack of understanding of ERISA's requirements, there may be an inadvertent failure to tell 'the whole truth.' When a participant doesn't direct his investments, many plans provide for a 'default' account, where his money is automatically placed in a predetermined investment. That raises four questions." (Plan Sponsor via Reish Luftman Reicher & Cohen)

Opinion: Employees Need Options and Information to Build Efficient Retirement Investment Portfolios
Excerpt: "As a professional financial advisor, I find it very difficult to work with the poor choices that employers provide their employees in one of the most important retirement savings accounts they have. It seems the companies select 401k providers based on how easy they make plan administration instead of spending enough time on the quality and kind of investment options they select for the plan." (401khelpcenter.com)

Several Democrats Suggest Alternate Ideas to President Bush's Social Security Reform Concept
Excerpt: "Rep. Dennis Moore, Kansas Democrat, and Rep. Rush D. Holt, New Jersey Democrat, have each crafted versions of 'lock box' bills aimed at ensuring that Social Security trust fund money is not diverted for other uses. Sen. John D. Rockefeller IV, West Virginia Democrat, has been shopping the idea that Congress could pay for Social Security's projected shortfall over the next 75 years simply by refraining from extending some of Mr. Bush's tax cuts." (The Washington Times)

Timetable May Be First Fight in Overhaul of Social Security
Excerpt: "Despite appeals from the Bush administration to act quickly on Social Security, leading Republicans in the House indicated on Tuesday that they would not rush on what was shaping up as the thorniest political issue of the year. Representative Tom DeLay of Texas, the majority leader, told reporters not to expect a measure out of the House any time soon. 'This is a huge, huge project,' Mr. DeLay said." (The New York Times; one-time registration required)

Opinion: Bush Social Security Plan Assumes Much from Stocks
Excerpt: "To conclude that Social Security is careening toward a crisis in 2042, President Bush is relying on projections that an aging society will drag down economic growth. Yet his proposal to establish personal accounts is counting on strong investment gains in financial markets that would be coping with the same demographic head wind." (The Washington Post; one-time registration required)


Links to Items on Executive Comp, Benefits in General

Overview: Department of Treasury Proposed Regulations on the Tax Treatment of Supplemental Wages (PDF)
4 pages. Excerpt: "GCD Note: The proposed regulations in no way change the FICA taxation of wages." (Gardner Carton & Douglas)


Newly Posted Events

A Brave New World: 403(b) Proposed Regulations
Nationwide on March 1, 2005
presented by ABA Joint Committee on Employee Benefits

DOL Enforcement Initiatives for 2005 and Beyond
in Massachusetts on February 16, 2005
presented by Worldwide Employee Benefits Network (WEB)


Newly Posted Press Releases

Employers Need More Time for Income Deferral Elections
(ERIC (ERISA Industry Committee))

Women for a Social Security Choice Says Women Have Divergent Opinions on Social Security Reform, and All Views Deserve Discussion
(Women for a Social Security Choice (WSSC))


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Employee Benefits Consultant Regional Manager - 92612
for Wachovia
in GA

Benefits Implementation Lead
for Mellon Human Resources and Investor Solutions
in NJ

Employee Benefit Service Center Representative
for Dynamic Healthcare Consulting Firm
in TX

Healthcare Consultant
for Dynamic Healthcare Consulting Firm
in TX

DC/401 (k) Plan Administrator
for Benefit TechGroup, Inc.
in NJ, PA

Operations Administrator
for Mellon Financial
in NJ

Paralegal - Employee Benefits
for Law Firm
in OH




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

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