ertising on BenefitsLink">
February 22, 2005
Today's sponsor: DATAIR Employee Benefit Systems, Inc.
(Click on company name or banner to learn more.)
FREE for 2005: 5500 / PBGC / 1099-R / 5300 Software from DATAIR
DATAIR is making an incredible offer: Get our Pension Reporter
System now for next year’s 5500s, PBGC Forms, 1099-Rs and 5300
series forms and pay NOTHING! No license fee; no monthly support
fees; no obligation. We will provide all updates and DATAIR’s
excellent support, FREE until October 31, 2005. For details and
to receive your free copy of Pension Reporter, click the banner
above, visit www.datair.com/register or call 1-888-DATAIR4 (328-2474).
(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
Treasury Response to ERIC Letter on March 15 Deadline on Deferral Elections
Excerpt: "On February 4, ERIC, joined by the Profit Sharing/401(k) Council of America (PSCA), wrote the Treasury Department to ask for a delay in the March 15, 2005, deadline for deferral elections, especially regarding issues related to 401(k) spillover plans and 415 excess plans. As a result of recent informal discussions with a Treasury Department official, ERIC has learned that the Treasury and the Internal Revenue Service are unlikely to grant ERIC's February 4th request for an ...." (The ERISA Industry Committee)
Comments Sent to IRS on the Proposed 403(b) Regulations on Behalf of Six Annuity Providers (PDF)
17 pages. Excerpt: "We are writing to comment on certain provisions of the recently issued proposed 403(b) regulations on behalf of a group of leading annuity providers, including: AXA Financial; Diversified Investment Advisors; ING; Principal Financial Group; Prudential Insurance Company of America; and, TIAA-CREF." (Groom Law Group)
CFOs Worry About Pensions' Funding Status and Effect on Corporate Finances
Excerpt: "CFOs are growing increasingly worried about pensions, not only the funding status of their defined benefit plans, but the impact of pension funding on corporate finances. The 2nd Annual CFO Pension Management Survey from SEI Investments, an asset management firm in Oaks, Pa., indicates that 76% of CFOs 'felt the negative impact of defined benefit plans' in 2004, compared to 61% in 2003." (Employee Benefit News)
Bush Administration and American Benefits Council at Odds over Pension Funding Reform
Excerpt: "The Bush administration is criticizing a pension funding reform package proposed by the American Benefits Council as inadequate in overhauling pension rules. 'It is disappointing that the report fails to recognize the reality that the pension funding rules are broken, causing workers and retirees harm and putting taxpayers at risk,' said Labor Secretary Elaine Chao, who also is chairman of the board of the Pension Benefit Guaranty Corp." (Business Insurance)
Employee's Tax-Deferrable Income: When Plans Compete for It, Can Employees Win? (PDF)
1 page. Excerpt: "When it comes to tax-deferrable income, employees can win if their employer helps them understand the true value of each type of savings or coverage offered to them, depending on their financial situation and where they are in their career. [See chart for Comparison of Benefit Plans that Accept Employees' Pre-Tax Contributions/Premiums.]" (HR TODAY via Mellon Financial Corporation)
Overview: IRS Final Rules on Defined Contribution Plans and Elimination of a Form of Distribution (PDF)
2 pages. Excerpt: "The IRS has issued final regulations which allow a defined contribution plan to eliminate an optional form of distribution without a 90-day advance notification. The removal of this requirement conforms the regulations to the amendments made by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)." (Mellon Financial Corporation)
Overview: IRS Proposed Relative Value Regulations Add New Flexibility for Disclosures (PDF)
3 pages. Excerpt: "The IRS has issued proposed regulations that would incorporate and expand the guidance in Announcement 2004-58 on disclosures of relative values of optional forms of benefit. These regulations would amend the December 2003 final regulations on the content requirements for qualified joint and survivor notices. Among other things, the proposed regulations generally would delay the date for providing these notices for annuity starting dates beginning on or after February 1,...." (Mellon Financial Corporation)
401(k) Non-Savers, and Low-Savers, Unmoved by Matching Contributions and Plan Education
Excerpt: "You might like to think that non-participants and participants with low savings rates just need better education, or maybe a timely reminder of the money they are leaving on the table. However, according to the findings of a new study, you'd be wrong. The study, by Hewitt Associates, as well as researchers from Harvard University and the Wharton School of the University of Pennsylvania, found that not only did employees overall have critical misperceptions about their 401(k) ...." (PLANSPONSOR.com; one-time registration required)
Technical Tip: Tax Consequences of Repayment of Excess Distributions from Defined Benefit Plan
Excerpt: "Revenue Ruling 2002-84 provides guidance for this situation. If the overpayment is repaid to the plan in the same taxable year as the overpayment, the amount overpaid reduces the taxable amount received by the participant from the plan. Therefore, in 2002, the taxable amount to the participant is the amount of the single-sum distribution, reduced by the amount repaid to the plan. If the amount of the overpayment is repaid in 2003 or a subsequent taxable year, the participant ...." (Reish Luftman Reicher & Cohen)
Text of American Bankers Association Comments on Phased Retirement Proposed Regulations (PDF)
5 pages. Excerpt: "The proposed regulations prohibit the distribution of lump sum benefits and require that all other forms of benefit options be provided to a phased retiree. For the reasons discussed here, we believe that the plan sponsor should have additional flexibility in determining the form of benefit distribution." (American Bankers Association)
Overview: IRS Issues Guidance on Automatic Rollovers and Plan Amendments (PDF)
2 pages. Excerpt: "Retirement plans that reduce the threshold for mandatory distributions ... to account balances of less than $1,000 to avoid having to transfer larger amounts into an individual retirement arrangement ... generally must be amended by the close of the first plan year ending on or after March 28, 2005 ..., according to the IRS. Milliman's Client Action Bulletin 05-03 examines the implications of the IRS's guidance on retirement plans." (Milliman)
GAO Report on the Federal Thrift Savings Plan: Ask Participants for Improvement Ideas
Excerpt: "If the Federal Thrift Savings Plan (TSP) wants to continue trying to improve, officials there need only study what their private-sector counterparts are doing to better serve participants. That was the conclusion of a Government Accountability Office (GAO) study ['Federal Thrift Savings Plan: Customer Service Practices Adopted by Private Sector Plan Managers Should Be Considered' at http://www.gao.gov/new.items/d0538.pdf] ...." (PLANSPONSOR.com; one-time registration required)
States' Private Pensions Make a Weak Showing: Accounts Have Had Low Appeal and Spotty Success
Excerpt: "President Bush believes Americans are so eager to join the 'ownership society' that, given a chance, two-thirds of those eligible would divert funds from Social Security into the personal investment accounts he proposes. But when public employees in seven states were offered the opportunity for similar accounts during the last decade, nowhere near two-thirds signed up for them. In many instances, the figure was closer to 5%." (Los Angeles Times; one-time registration required)
Pension Reform in Japan and Germany: Workers' Expectations and Demographic Constraints
Excerpt: "This article is based on the book, The Economic Implications of Aging Societies: The Costs of Living Happily Ever After, by Steven A. Nyce and Sylvester J. Schieber. The book describes current trends in birth rates, longevity, and labor force participation and productivity; the cross-border flow of capital; the globalization of labor markets; the financial viability of social insurance programs; and the ways economic output is shared between working-age and retiree populations." (Watson Wyatt Worldwide)
The One-Stop Fund: The All-in-One Mutual Fund that Has Advice Built In
Excerpt: "Too bad we got what we wanted, when we started investing our own retirement funds. We wanted choice -- lots of different types of mutual funds. We imagined dividing our money among the best of the best -- so much in stocks, so much in bonds (if we paid any attention to bonds). For fun, we'd pick the stocks that went up, or our brokers would. Ha." (Newsweek via MSNBC.com)
Opinion: A Free-Market Alternative for Social Security Reform
Excerpt: "The end of Social Security and its diversion of funds into government consumption -- the return to private, individual saving and provision for the future -- will mean a great increase in saving and the accumulation of capital, because the savings of individuals will be invested, not squandered. .... The only really proper reform of Social Security is the gradual abolition of the whole system." (Ludwig von Mises Institute)
Public Pension Fund May Conduct Conflict of Interest Audit of Pension Investment Consultant
Excerpt: "The board of the Public School Teachers' Pension and Retirement Fund of Chicago is reviewing a proposal to conduct a comprehensive conflict-of-interest audit of its investment consultant, Mercer Inc., a unit of Marsh & McLennan." (The New York Times; one-time registration required)
Social Security Private Accounts Proposal Would Expand Investor Class
Excerpt: "The stock market is risky enough for people who know what they're doing. So what happens when hundreds of thousands of Americans get their hands on Social Security money for private investment accounts they must then manage? Only slightly exaggerated, that's one of the big questions that pops up when talk turns to Social Security reform, especially the part about personal retirement accounts." (The Atlanta Journal-Constitution; one-time registration required)
Poorest Face Most Risk on Social Security: Bush Plan's Success May Hinge on Perceived Safety
Excerpt: "No group of Americans would be affected more by President Bush's Social Security plan than those earning the least. .... [M]any experts think the debate over the Bush Social Security plan will come down to one question: Is it a good deal for the neediest people?" (The Washington Post; one-time registration required)
Opinion: Pension Consultant Conflicts Sap Your Retirement
Excerpt: "In a perfect world, you would know if your pension fund's consultants are making money through conflicted side deals and how much it was eating into your retirement fund returns. Although reports of myriad conflicts between brokers, consultants and money managers have surfaced over the last year, no government agencies have acted to force full disclosure of this information or curtail the practices." (John Wasik via Bloomberg News)
Opinion: Big Social Security Questions Haven't Been Answered
Excerpt: "Supporters of privatization suggest that the Social Security Trust Fund can't be relied upon to support future benefits. If that's the case, why should American workers and businesses continue paying into it?" (The Register-Guard)
5 Letters on Social Security Reform to the Editor of the New York Times
Excerpt: "With faster real wage growth, benefit cuts are larger, even though the financial difficulty of Social Security is smaller. With real wages growing 1.5 percent annually, the cuts become 14, 36 and 56 percent for 45-year-olds, 25-year-olds and newborns. This form of indexing works backward. It should be abandoned, along with the idea that only benefit cuts be used in restoring financial balance. [From] Peter Diamond [and] Peter Orszag (The New York Times; one-time registration required)
Pension Funds Thinking Twice about Stock Investments; Should Social Security Reformers Do the Same?
Excerpt: "Does it make sense to use stock investing as a way to finance retirement security? The Bush administration and some members of Congress have been promoting the idea as a way of taking pressure off the Social Security system. Stocks, they argue, tend to produce higher average returns over the long run than bonds do, and especially the super-safe Treasury securities that the Social Security trust fund is invested in." (The New York Times; one-time registration required)
Private Account Concept for Social Security Grew from Obscure Roots
Excerpt: "Twenty-five years ago, Peter J. Ferrara was a Harvard Law School student with what he called 'the craziest idea in the world.' In a paper he wrote before graduating, he suggested converting the government-run Social Security program into a web of private investments." (The Washington Post; one-time registration required)
Economists Say Social Security 'Transition Costs' a Myth
Excerpt: "Transition costs, trumpeted by Democrats as a chief reason not to support President Bush's Social Security reforms, are a myth, according to several prominent economists, including the 2004 Nobel Prize winner. The trillion dollar totals that Democrats cite as 'transition costs' are actually the amount the government is borrowing to pay current Social Security benefits combined with the massive debt already owed to the so-called Social Security 'Trust Fund.'" (CNSNews.com)
Links to Items on Executive Comp, Benefits in General
Perspective: Update: Practical Effects of 'Real Time' Disclosure on Executive Compensation
Excerpt: "As companies scramble to adapt to last year's revisions to the Securities and Exchange Commission's Form 8-K filing requirements, they are learning that the real-time disclosure the revisions mandate affects a larger number of management compensation decisions than originally thought. So now, at the outset of 2005, Form 8-K disclosure has become the latest hot corporate governance concern." (Mercer Human Resource Consulting; one-time registration required)
Article: Sponsors Have Some Time to Comply with New Deferred Compensation Law
Excerpt: "The federal government's recently released deferred compensation plan guidance cuts plan sponsors some slack in meeting deadlines to comply with a new law, and it spells out some -- but only some -- of what they need to do to comply. In late December, the US Treasury Department released guidance on the deferred compensation portions of the American Jobs Creation Act of 2004 ...." (PLANSPONSOR.com; one-time registration required)
A Chart Showing the Percentage of Part-Time & Full-Time Employees Who Have Access to Benefits
Excerpt: "There are nearly 25 million part-time workers in the United States, and they lag behind full-time employees in benefit coverage. But at Starbucks, where 64 percent of the staff is part-time, all employees working at least 20 hours per week have equal access to benefits." (Workforce Management)
Maryland State Workers See Some Benefits Erode As Governor Tries to Rein in Spending
Excerpt: "Employment experts say Ehrlich's decisions to increase employee contributions to health insurance and to cut other benefits mirror those of other chief executives - public and private - in an economy that has struggled over the past three years." (The Baltimore Sun; one-time registration required)
Letter to Chairman Mike Enzi on The Genetic Information Nondiscrimination Act of 2005 (S. 306) (PDF)
4 pages. Excerpt: "We write on behalf of the Genetic Information Nondiscrimination in Employment (GINE) Coalition to express our concerns with the Genetic Information Nondiscrimination Act of 2005 (S. 306) .... The GINE Coalition is a group of employers, national trade associations, and professional organizations formed to address concerns about workplace discrimination based on employees' genetic information as well as the confidentiality of that information." (Genetic Information Nondiscrimination in Employment Coalition via American Benefits Council)
Overview: The Employer's Obligations to Employees Called to Active Duty (PDF)
2 pages. Excerpt: "The Uniformed Services Employment and Reemployment Rights Act of 1996 is the most recent in a series of federal statutes enacted over the last 60 years. The Act includes all military personnel and federal reserve services (Army Reserve, Naval Reserve, etc.) and the National Guard and is applicable to all employers in both the public and private sector. All employees, whether full-time or part-time, are protected by the Act." (Snell & Wilmer L.L.P.)
Time Warner Stops Granting Stock Options to Most of Staff
Excerpt: "Time Warner said ... that it would no longer grant stock options to most employees, citing new accounting rules. The decision comes at a time when a number of companies that happily doled out options to employees during the last market boom are reining in their use. With the stock market weak, options no longer have much of a cachet for many employees. Some companies - most notably Microsoft - have sought other ways to link equity pay with performance." (The New York Times; one-time registration required)
Newly Posted Events
3rd Annual Orlando ERISA Update Seminar
in Florida on April 20, 2005
presented by TRI Pension Services/GrayRobinson, P.A.
ALI-ABA Course: Annual Spring Employee Benefits Law and Practice Update
Nationwide on April 7, 2005
presented by ALI-ABA (American Law Institute-American Bar Association)
The 412i SUMMIT
in Washington on July 21, 2005
presented by 412i Company
Newly Posted Press Releases
U.S. Secretary of Labor Elaine L. Chao Statement on American Benefits Council Pension Reform Report
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))
U.S. Secretary of Labor Elaine L. Chao Commends Senate for Introducing Association Health Plan Legislation
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))
US Treasury Warshawsky Remarks on Social Security at SIA Savings & Retirement Symposium
(U.S. Department of Treasury)
New Advent Product Provides Custom Newsletter Service
That Is User Friendly And Low Cost
(Advent Information Services)
Millennium Trust Company Announces an Automatic Rollover Solution at no Cost to the Plan Sponsor
(Millennium Trust Company, LLC)
Newly Posted or Renewed Job Openings
Employee Benefits Tax Manager
for Deloitte Tax LLP
in OH
Defined Contribution Plan Administrator
for Benefit Consulting Associates, Inc.
in PA
ML Connect Manager
for Merrill Lynch
in NJ
Employee Benefits Marketing and Service Associate
for WESPAC
in CA
Benefits Manager
for Grand Victoria Casino & Resort
in IN
Director, Product Development
for BISYS Retirement Services
in PA
VP-Operations
for ADP Retirement Services
in NJ
Document Compliance Manager
for ADP Retirement Services
in NJ
Health & Welfare Consultant - Part Time (Health & Welfare Tools)
for Towers Perrin
in DC, VA
Compliance Analyst
for Mayo Clinic
in MN
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: