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February 11, 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)
New 401(k) Rules Might Require Revising Nondiscrimination Testing (PDF)
3 pages. Excerpt: "The regulations apply for plan years beginning on or after January 1, 2006. However, plan sponsors are permitted to apply the regulations to any plan year that ends after December 29, 2004, provided the plan applies all of the rules of the final regulations for that plan year and all subsequent plan years. In this Alert, we focus on the new regulations that could affect an employer's nondiscrimination testing strategies." (Aon Consulting)

Roth 401(k) Accounts Mark New Way to Save for Retirement at Work
Excerpt: "While Social Security reform advances tediously in Washington toward an uncertain conclusion, workers saving for retirement through their companies' 401(k) plans may get a new option next year. That's when companies can start offering workers Roth 401(k) accounts. .... The Roth 401(k)s were included in President Bush's 2001 tax cut act. Hardly anyone outside of company human resources departments is aware of this." (San Antonio Express-News via 401khelpcenter.com, LLC)

Text of Comments by National Tax Sheltered Accounts Association (NTSAA) on 403(b) Proposed Regs (PDF)
21 pages. (National Tax Sheltered Accounts Association (NTSAA))

Social Security Plan for Restoring the System to Financial Balance Could Hinge on an Index
Excerpt: "If indexed to prices, Social Security would function less like a pension plan and more like an anti-poverty program, he and other experts said. Instead of replacing a fixed portion of one's income - about 40 percent at the moment for a medium-wage worker - price indexing would eventually reduce benefits for most people so they simply covered the cost of life's basic necessities. Investment accounts would offer the chance of winning some of the loss back." (The New York Times; one-time registration required)

Bush Social Security Plan for Personal Investment Accounts Differs in Key Way from Federal Model
Excerpt: "Personal investment accounts modeled on the federal Thrift Savings Plan, the centerpiece of President Bush's plan for overhauling Social Security system, would bring users both new advantages and risks. While holders of Bush's accounts could collect financial market gains, they would not share one key edge that federal workers now enjoy -- the ability to collect full Social Security benefits upon retirement." (Cox News Service via The Palm Beach Post)

U.S. Pension Funds Overly Optimistic About Markets?
Excerpt: "U.S. corporate pension funds, already struggling with a multi-billion-dollar industry deficit, have unrealistic expectations for investment returns that are likely to be well below their forecasts in 2005, leading market experts said." (Reuters)

Opinion: Market Risk in Social Security Privatization-- The Retirement Savings Gamble (PDF)
32 pages. Excerpt: "Considering historical data and reasonable forecasts for the future, this analysis highlights the following points about market risk under Social Security privatization: Market risk is severe. Depending on a worker's birth date, the retirement benefits generated from putting 10 percent of earnings in a private account for 35 years would have ranged from 100 percent to less than 20 percent relative to pre-retirement earnings." (Center for American Progress)

Automating Your Savings Plan to Provide Retirement Security
Excerpt: "In this Perspective, we take a look at some automatic design features as well as other strategies that encourage savings among employees." (Mercer Human Resource Consulting)

Examining a Texas Experiment in Privatized Social Security
Excerpt: "In 1983, three Texas counties shifted their government pensions out of Social Security and into privately managed accounts. NPR's Wade Goodwin examines why they did it, how it worked and what ideas it gave the president." (Morning Edition via National Public Radio)

Links to Items on Executive Comp, Benefits in General

CEO Golden Parachutes Average $4.5 Million -- Costs Hidden in Pensions, According to Study
Excerpt: "Almost 80% of Fortune 500 CEOs who retire or are pushed out of office receive separation pay with a mean present value that exceeds $4.5 million. According to a study ..., packages for fired CEOs can reach upwards of $7 million. .... [The] research also shows that companies often to hide these costs in their Securities and Exchange Commission filings by tweaking the pension formula to diminish transparency to investors, according to the study." (PLANSPONSOR.com; one-time registration required)

Hewitt Federal Legislation Quick Guide Updated February 8, 2005
Excerpt: "Hewitt's Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding health and welfare benefit plans, retirement plans, and human resources and employment law." (Hewitt Associates)

Overview: Government Audit Programs Shift Compliance Risk to Employers
Excerpt: "Employer-sponsored retirement plans, health and welfare plans, and executive compensation plans are under intensifying scrutiny as federal agencies step up their efforts to ensure compliance with relevant laws and regulations. For qualified retirement plans in particular, the government is essentially putting companies on notice that they should voluntarily correct any compliance defects with their plans or face potentially severe financial penalties if operational defects are ...." (Towers Perrin)

Newly Posted Events

Hot Topics in Employee Benefits
Nationwide on February 22, 2005
presented by Winston & Strawn

Newly Posted Press Releases

Erich Urbach Named Assist America Regional Sales Director
(Assist America, Inc.)

Dennison to Handle Middle Market Sales for ARAG
(ARAG)

Over 75 Fortune 500 Companies Choose WageWorks for Tax-Advantaged Spending Accounts
(WageWorks Inc.)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Legal Counsel
for PotashCorp
in IL

Enrollment Coordinator (Bi-Lingual)/Greenbelt, MD
for John Hancock
in MD

Sales Associate/New York, NY
for John Hancock
in NY

Client Services Analyst - US Outsourcing
for Mercer Human Resource Consulting
in IL, MA



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