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February 25, 2005
Today's sponsor: APSCREEN, Employee Locator
(Click on company name or banner to learn more.)
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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)
Employers Can Affect 401(k) Fees: Third-Party Administrators Track Regs, Keep Contracts, Records
Excerpt: "Though a federal investigation into 401(k) plan administration nationally could end up helping the 900-plus employers here that offer such plans, industry sources say employers might see more impact simply by making careful choices when setting up the plans." (Journal of Business)
Working Paper: Financial Communication for 401(k) Participation Rates and Contribution Levels (PDF)
47 pages. Excerpt: "Building upon previous research, this analysis examines the impact of firm-sponsored financial communication on employee 401(k) participation and contribution rates. In particular, the analysis updates and expands upon Clark and Schieber (1998) by using more recent plan administration records and more extensive plan communication information, which was collected directly from employer sponsors. The study results appear to confirm that enhanced financial communication ...." (Pension Research Council of the Wharton School of the University of Pennsylvania)
PBGC Seeks Comment on ERISA Rule Change
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) is seeking comments on a proposed rule change to section 4062(e) of the Employee Retirement Income Security Act (ERISA). The section currently requires employers to provide the agency with a bond or escrow if, after the cessation of operations at a facility, more than one in five workers who participate in an ERISA plan are separated from employment, according to a press release from the PBGC." (PLANSPONSOR.com; one-time registration required)
Text of Prop. PBGC Regs on Liability of Single Employers with Substantial Cessation of Operations
Excerpt: "[S]ection 4062(e) creates liability that is analogous to the section 4063(b) liability arising when a substantial employer withdraws from a multiple employer plan. Section 4062(e) does not, however, provide any details as to how this analogy is to be implemented--i.e., how the total liability is to be apportioned with respect to the cessation of operations." (Pension Benefit Guaranty Corporation)
Overview: Automatic Rollover Requirements for Qualified, 403(b), Government 457(b), and Church Plans (PDF)
2 pages. Excerpt: "The IRS and the Department of Labor have both issued guidance concerning the automatic rollover requirements. The key points of that guidance are summarized [in the target document]." (von Briesen & Roper, s.c.)
Overview: IRS Provides Further Guidance on Mandatory Rollover Rules
Excerpt: "The IRS is requiring that all qualified retirement plans be amended to comply with the new requirements by the last day of the first plan year ending after March 28th. For a calendar year plan, the deadline is therefore December 31, 2005." (Faegre & Benson LLP)
Coming Soon . . . The Roth 401(k) (PDF)
5 pages. Excerpt: "The 401(k) plan is the most popular type of employer-sponsored retirement plan. The Bush administration has proposed replacing the myriad of individual account retirement plans – 401(k)s, 403(b)s, and 457(b)s – with a single type of individual savings account – the employer retirement savings account. The ERSA would be an after-tax, Roth IRA-style account, where participants could elect to contribute up to $15,000 year on an after-tax basis." (Pension & Benefits Week via Groom Law Group)
Is 'Third Time the Charm' for the President's Retirement Savings Accounts? (PDF)
5 pages. Excerpt: "In its 2006 budget, the Bush Administration again proposed new types of individual and employer-sponsored savings accounts. The proposal would consolidate the current array of employer-sponsored savings plans ... into one – referred to as an Employer Retirement Savings Account. The proposal also would significantly transform the individual retirement savings landscape by combining the three ... forms of individual retirement accounts into a single Retirement Savings Account." (Mellon Financial Corporation)
Social Security Reform 'Calculators' Vary Widely -- Different Assumptions Produce Different Results
Excerpt: "A variety of do-it-yourself 'calculators' purport to show the impact of Social Security changes on individual workers. But anyone who tries to use them might come away confused. Created by partisans in the Social Security debate, each of these online calculators begins with different assumptions, and that makes all the difference. 'You can get yourself into trouble if you're comparing apples to oranges,' said Michael Tanner of the libertarian Cato Institute, a leading proponent ...." (AP via Yahoo! News)
Audio: Social Security Plan Combines Privatization and Income Cap Raise
Excerpt: "A proposal that offers a long-term fix for Social Security involves reducing the annual cost-of-living adjustments that compensate retirees for inflation. The plan raises the cap on income subject to Social Security payroll taxes, and adds private accounts as ways to fill the funding gaps in the Social Security program." (Morning Edition via National Public Radio)
Opinion: Social Security: The Paper Cut 'Crisis'
Excerpt: "[S]ocial Security is a symbol of America's best values. 'It promises all Americans that if they work hard and play by the rules, they can retire and live in dignity. ....' The actual name of the program, Old-Age, Survivors, and Disability Insurance (OASDI), reveals its main purpose. So does the usual acronym for the payroll tax found on pay stubs across the country, FICA, Federal Insurance Contributions Act. It is not an entitlement program, and it is not a retirement plan." (Global Polititian)
Social Security and the Generations -- Six Letters to the NYT Including One from the White House
Excerpt: "I take issue with your Feb. 23 editorial 'Some Inheritance' regarding President Bush's policy on personal accounts within Social Security. The president is firmly on record in favor of allowing those who die before retirement to pass on their nest egg to their loved ones." (The New York Times; one-time registration required)
Is Financial Risk Adequately Accounted for in Social Security Reform Measures? (PDF)
7 pages. Excerpt: "In most analyses of private accounts funded out of the payroll tax, it is assumed that accounts will earn a rate of return equal to the average market return over some historical period. How that approach fails to take into account important sources of variation (risk) in rates of return is demonstrated in this AARP Public Policy Institute Issue Brief by Thomas Hungerford, a Washington-based economic consultant ...." (AARP)
How Earnings and Financial Risk Affect Private Accounts in Social Security Reform (PDF)
11 pages. Excerpt: "In this AARP Public Policy Institute Issue Brief, Hungerford finds a real possibility that all or most individuals can be worse off under a private account plan. In fact, lower lifetime earners have a 50 percent chance of receiving private account benefits that are below what they would receive under the current system." (AARP)
Links to Items on Executive Comp, Benefits in General
Do Benefits Affect Turnover? It Depends on How They're Communicated
Excerpt: "Offering rich benefits won't be effective at reducing turnover if employers don't do a good job of communicating the value of the benefits, according to Watson Wyatt." (Workforce Management)
A.I.G.'s Lucrative and Unusual Ties to Affiliate Are Examined in Lawsuit Brought by Pension Fund
Excerpt: "The American International Group is a complex galaxy of insurance and investment units, some with financial workings only dimly visible. Now, one obscure body in that universe, C. V. Starr & Company Inc., is attracting scrutiny over its dealings with A.I.G. Starr, a private holding company owned by A.I.G.'s top executives and managers, sells specialized insurance policies with A.I.G.'s name on them. Its partners reap lucrative benefits from their Starr stakes." (The New York Times; one-time registration required)
Newly Posted Events
2005 PenServ Academy
Nationwide on May 3, 2005
presented by PenServ, Inc.
Last Minute HIPAA Security: The Eleventh Hour
Nationwide on March 3, 2005
presented by International Foundation of Employee Benefit Plans
Web Seminar on Medicare Part D for Plan Sponsors
Nationwide on March 3, 2005
presented by Hay Group
Web Seminar on Medicare Part D for Plan Sponsors
Nationwide on March 8, 2005
presented by Hay Group
Web Seminar on Medicare Part D for Plan Sponsors
Nationwide on March 15, 2005
presented by Hay Group
Web Seminar on Medicare Part D for Plan Sponsors
Nationwide on March 23, 2005
presented by Hay Group
Newly Posted Press Releases
PBGC Seeks Comment On Proposed Rule Under ERISA Section 4062(e)
(Pension Benefit Guaranty Corporation (PBGC))
Blue Cross Blue Shield of Vermont Chooses Newkirk Enrollment Publishing System
(Newkirk Products, Inc.)
Newly Posted or Renewed Job Openings
Relius Administration Trainer
for SunGard Corbel
in FL
Defined Contribution Plan Administrator
for Industry leader in benefits administration and record keeping
in PA
Institutional Trust & Custody Relationship Manager
for U.S. Bank
in MN
Quality Assurance Analyst
for Pyramid Digital Solutions
in AL
Technical Product Support Specialist
for Pyramid Digital Solutions
in AL
Benefits Administrator
for IBEW Local 82 Employee Benefit Funds
in OH
Pension Education Consultant
for Diversified Investment Advisors
in AZ, CA, TX
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Copyright 2005 BenefitsLink.com, Inc.; except that you may reprint this newsletter in full (including this sentence) without obtaining our permission.
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