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March 7, 2005
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New 401(k) Plan Investment Twists Explored
Excerpt: "The latest buzz in 401(k) plan investment options includes the use of collective trusts, exchange traded funds, separate accounts - and a twist on the use of group fixed annuities. Merrill Lynch & Co. Inc. of New York this year launched its Personal Pension Builder, a 401(k) option that allows plan participants to divert a portion of their payroll deductions into a deferred fixed annuity." (Investment News)
Full Disclosure 401(k) Pricing Models: Putting the Plan Sponsor in the Driver's Seat (PDF)
2 pages. Excerpt: "Plan sponsors must be prepared to ask their 401(k) plan record keeper the right questions to ensure that the plan offered to participants is not only flexible, but also driven by performance rather than compensation. The ideal plan record keeper will create a portfolio, based on a sound investment policy statement, with appropriate fee structures." (Employee Benefit Plan Review via Ceridian)
Safe Harbor Urged for Employers with Automatic 401(k) Plans
Excerpt: "While some companies already offer automatic enrollment and step-ups in their 401(k) plans, there needs to be more incentive for the employers to do this, according to Brookings' Bill Gale." (Workforce Management)
Overview: IRS Issues Proposed Regulations on Roth 401(k) Accounts (PDF)
1 page. Excerpt: "The IRS has issued guidance on designated Roth contributions to qualified cash or deferred arrangements under Section 401(k). Designated Roth contributions were authorized under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) for taxable years beginning after December 31, 2005." (Mellon Financial Corporation)
Don't Max Out Your 401(k): Redux
Excerpt: "This is an amalgam of two articles that ran in 2002 and some recent thoughts. Since we still see many questions on this topic, we figured it was time for an update." (The Motley Fool)
Overview: IRS Opens EGTRRA Restatement
Excerpt: "The IRS just released Revenue Procedure 2005-16 announcing that it is accepting applications for opinion and advisory letters for pre-approved defined contribution plans -- master and prototype (M&P) and volume submitter (VS) plans -- for EGTRRA and subsequent changes on the list below. .... [Included] is a list of changes from the IRS that are to be included in the EGTRRA document." (McKay Hochman Co., Inc.)
Overview: Final 401(k) Regulations — Focus on Rules Regarding Qualified CODAs
Excerpt: "The IRS Rules Relating to Qualified CODAs: Elective contributions under a qualified CODA are: treated as employer contributions for purposes of the Internal Revenue Code; generally are not included in the employee's gross income at the time the cash would have been received (but for the cash or deferred election) or at the time contributed to the plan." (McKay Hochman Co., Inc.)
Opinion: School Districts Would Be Wise to Adopt a 403(b) Plan Document
Excerpt: "In November 2004 the Department of Treasury and the IRS proposed new regulations for the 403(b) retirement plan. Set to go into effect in January 2006 the new regulations, among other things, would require for the first time that all employers offering a 403(b) create a plan document detailing the exact workings of the plan." (403bwise.com)
Hearing: 'The Retirement Security Crisis: The Administration's Proposal for Pension Reform
Witness list with links to testimony from Ann Combs, Mark Warshawsky, Bradley Belt, Kenneth Porter, Norman Stein, and Janemarie Mulvey (U.S. House Committee on Education and the Workforce)
Congress Eyes Pension Reform for Interest Rate Used for Pension Funding Calculations
Excerpt: "Congress has to come up with a permanent method for supplying the interest rate benchmarks that employers use in pension calculations. .... Settling on a permanent pension rate system would a good way for Congress to start helping employers deal with the uncertainties that are hurting the U.S. defined benefit pension system, ...." (National Underwriter)
Overview: Court Enforces Retirement Plan's Six-Month Limitation Period for Filing Lawsuits
Excerpt: "Whether to avoid lengthy statute of limitations periods or to create a uniform limitation period for a plan that operates in more than one state, plan documents often attempt to modify otherwise applicable limitations periods by specifying a limitations period during which a lawsuit can be brought to challenge a denied claim." (Employee Benefits Institute of America Inc.)
Proposed Phased Retirement Regulations Draw Mixed Reaction from Firms
Excerpt: "As the federal government takes steps to encourage phased retirement, many businesses welcome the chance to bolster their workforce, but they are worried about potential liability." (Employee Benefit News)
Problems with Distribution of Present Value of Marital Portion of an Accrued Pension Plan Asset
Excerpt: "How do I distribute the present value of the marital portion of an accrued pension plan asset when the parties have limited assets and the plan is a government sponsored plan that refuses to accept Domestic Relations Orders? You really only have two choices when you encounter a situation such as this. Either, you offset the present value of the pension benefit, through additional real estate or other assets being transferred to the non-participant spouse or, using the present ...." (Divorce, Pensions and Retirement Benefits Newsletter)
Overview: Effective Date for Automatic Rollovers of Mandatory Distributions Fast Approaching (PDF)
4 pages. Excerpt: "The automatic rollover provisions under section 401(a)(31) of the Internal Revenue Code (Code), which were added by the Economic Growth and Tax Recovery Act of 2001 (EGTRRA), will become effective for many tax-qualified plans on March 28, 2005." (Pillsbury Winthrop LLP)
Overview: Participant Rollovers Affect Involuntary Cashouts
Excerpt: "If a plan accepts participant rollovers, and a participant has an account balance of over $1,000 that includes a rollover, the only way the participant can be involuntarily cashed out is via the new automatic rollover method." (McKay Hochman Co., Inc.)
Pension Plan Sponsors Choosing Commingled Funds to Simplify, Cut Fees
Excerpt: "Some plan sponsors are moving to commingled funds to reduce costs and to make it easier for plans to swap funds. Commingled funds lack the registration requirements of mutual funds. They also often cost less than mutual funds because they do not bear the advertising and administrative fees of their counterparts. Often the plan will set up the funds under their own company name, which also helps eliminate pre-judgments that can drive poor decisions by participants." (Defined Contribution News)
Bush Plan Would Streamline Retirement Programs
Excerpt: "President Bush's drive to revamp Social Security has grabbed the headlines, yet a major makeover of private-sector retirement programs also might be in the works. Bush raised the issue in 2003 and 2004 to little avail, but a third try might be the charm. The intent has been to encourage more Americans to save by streamlining the many types of retirement vehicles into a few standard accounts while offering incentives such as higher contribution ceilings." (The Arizona Republic)
Overview: Top Heavy Determination Date
Excerpt: "The determination date for the top-heavy test is the last day of the plan year preceding the plan year for which the rules will be applied. For example, to determine if a calendar year plan is top heavy for 2005 and, thus, to see if a top-heavy allocation is required for 2005, the determination date of December 31, 2004 is utilized. Therefore, the December 31, 2004 account balance for any individual who was a key employee at any time in 2004 is used to determine if the plan is top...." (McKay Hochman Co.)
Opinion: The Social Security Crisis in 1983 Compared to the Crisis of Today
Excerpt: "It is almost 22 years to the month since Representative Barber Conable Jr. strode to the floor of the House to defend a carefully constructed plan to save Social Security. Mr. Conable, a moderate New York Republican with whom I then worked, spoke with characteristic understatement. 'This is not a work of art,' he told a packed chamber. 'But it is artful work.'" (The New York Times; one-time registration required)
IRS Tentatively Rules Bank Pension Plan Afoul of Tax Code
Excerpt: "Bank of America Corp. violated federal law when it allowed employees to transfer to its cash balance plan any pretax contributions they had previously made to the bank's 401(k) plan, Bank of America said the Internal Revenue Service has tentatively concluded." (Business Insurance)
Defining Defined Benefit Pension Plans - A Refresher Course
Excerpt: "All pension schemes are a form of deferred compensation that the employer obligates itself to provide to all employees as a condition of employment. Understanding this, it becomes obvious that they are joint assets earned during the marital period but not available as income to the couple until the future. It really equates to the parties having set aside a portion of their income for their retirement." (Divorce, Pensions and Retirement Benefits Newsletter)
Fact Sheet: Recent Research Findings on Retirement and Aging from The Urban Institute (PDF)
4 pages. Excerpt: "Women are much more likely than men to live in poverty at older ages. Under a voluntary system of individual accounts, outcomes would depend on who opts in and who stays out. This fact sheet offers highlights from Urban Institute's recent research findings on retirement and aging, including cites for additional research." (The Urban Institute)
Key Questions for Social Security Reform (PDF)
3 pages. Excerpt: "There are more issues to the current Social Security reform debate than personal accounts. This Urban Institute fact sheet provides answers to such questions as whether family benefits offered through Social Security now are still relevant today and whether Social Security is effective as an anti-poverty program." (The Urban Institute)
Republicans Float Ideas for Social Security: Hagel Proposing Deficit-Financed Personal Accounts
Excerpt: "A handful of Republican lawmakers are pushing alternatives to President Bush's plan to change Social Security, broadening the debate over the administration's top domestic priority and hoping to soften Democratic opposition, which has been unyielding so far. The latest to jump in is Sen. Chuck Hagel (R-Neb.), who tomorrow will propose reducing Social Security benefits for some retirees while funding individual accounts through government borrowing." (The Washington Post; one-time registration required)
GOP and Democrats Spar over Social Security Retirement Age for Full Benefits
Excerpt: "A leading Republican senator is offering to raise the Social Security retirement age from 67 to 68, while Democrats maintain their opposition to the president's plan to overhaul the retirement program with private investment accounts." (AP via The New York Times; one-time registration required)
Economic Review: Who Wins in a New Social Security System?
Excerpt: "[S]ocial Security has not been a simple retirement savings plan but an instrument of social policy, using part of the taxes paid by some groups to shore up the benefits of others. Any changes made to the system will inevitably shift this distributional mix, and that troubles some members of Congress." (The New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Perspective: Option Expensing Conundrum: Using the FAS 123(R) Value for Compensation Purposes
Excerpt: "Like so many of the issues already raised by FAS 123(R), this one is evolving. Most companies are still exploring the best methodology for valuing their awards; most are also implementing changes to their equity programs, often reducing reliance on stock options. If options become a minor component of executive pay, the significance of using consistent methodologies will decrease." (Mercer Human Resource Consulting; one-time registration required)
DOL Pulls USERRA Notice Poster; Compliant Poster to Be Available on March 10, 2005
Excerpt: "On Thursday, March 3, 2005, the United States Department of Labor, Veterans' Employment and Training Service ('VETS'), removed from its website a poster designed to satisfy new notice requirements under the federal statute dealing with military leave rights, the Uniformed Services Employment and Reemployment Rights Act ('USERRA'). VETS has given no reason why the poster was removed, but has stated that a revised poster will be ready for downloading by March 10, 2005.' (Littler Mendelson, P.C.)
Employer Improperly Refused To Honor Request For Benefits Information Made By Attorney
Excerpt: "An employee may proceed with her claim that her former employer violated ERISA by failing to provide her benefits information requested by her attorney. However, the employee could not proceed with a claim that the employer should have credited her service with a Canadian company in calculating the amount of her pension benefits. These were the conclusions of the Sixth Circuit U.S. Court of Appeals in Murphy v. ICI Paints (No. 03-4343)." (Spencer Benefits Reports)
Overview: Fee and Commission Information Insurers Must Provide to Plan Administrators for Form 5500
Excerpt: "This advisory opinion is noteworthy because of the helpful detail provided on the types of compensation to be disclosed on Schedule A. Insurers and similar entities are required to provide Schedule A information within 120 days of the end of the plan year." (Employee Benefits Institute of America Inc.)
Commentary: ERISA Lessons on Outsourcing from a Federal District Court Case
Excerpt: "While everyone knows that outsourcing is here to stay, and that there are legitimate business reasons and advantages to outsourcing, what I have tried to do here is simply to highlight some of the ERISA litigation that has grown out of this trend .... The reason I think it is important is that when employers contemplate outsourcing and hire advisers to help them through the process, many times they are not advised of the issues and risks that can arise in the benefits arena." (Attorney B. Janell Grenier via BenefitsBlog.com)
Newly Posted Events
401(k) Plan Workshop
in Illinois on April 21, 2005
presented by SunGard Corbel
401(k) Plan Workshop
in Wisconsin on April 21, 2005
presented by SunGard Corbel
401(k) Plan Workshop
in Michigan on April 22, 2005
presented by SunGard Corbel
401(k) Plan Workshop
in District of Columbia on April 22, 2005
presented by SunGard Corbel
401(k) Plan Workshop
in Massachusetts on April 29, 2005
presented by SunGard Corbel
401(k) Plan Workshop
in Illinois on April 29, 2005
presented by SunGard Corbel
COBRA Compliance Workshops
in Florida on April 6, 2005
presented by US Department of Labor/Employee Benefits Security Administration
Form 5500 Workshop
in Wisconsin on April 20, 2005
presented by SunGard Corbel
Form 5500 Workshop
in Illinois on April 20, 2005
presented by SunGard Corbel
Form 5500 Workshop
in Michigan on April 21, 2005
presented by SunGard Corbel
Form 5500 Workshop
in District of Columbia on April 21, 2005
presented by SunGard Corbel
Form 5500 Workshop
in Massachusetts on April 28, 2005
presented by SunGard Corbel
Form 5500 Workshop
in Illinois on April 28, 2005
presented by SunGard Corbel
Personal Accounts in Social Security: How Might Annuities Work for Married and Single Retirees?
in District of Columbia on March 11, 2005
presented by National Academy of Social Insurance
Social Security: Is It Really a Crisis? A Debate on this Critical and Controversial Issue
in New York on March 15, 2005
presented by The Century Foundation
Newly Posted Press Releases
New online compliance service for Insurers, Insurance Agencies, PEOs, TPAs and Benefits/HR Outsourcing Firms
(ComplianceAid, LLC)
Newly Posted or Renewed Job Openings
ERISA Tax Associate
for Groom Law Group, Chartered
in DC
ERISA Tax/Legislative Associate
for Groom Law Group, Chartered
in DC
ERISA Health Associate
for Groom Law Group, Chartered
in DC
Institutional Retirement Plan Sales & Support Manager
for UVEST Financial Services
in NC
Employee Benefits Associate
for Oppenheimer Wolff & Donnelly LLP
in MN
Daily Valuation Administrator
for TPA Firm
in TX
Product Development Leader
for Hewitt Associates
in IL
Health Management Project Manager
for Hewitt Associates
in IL
Education Account Executive
for Principal Financial
in IA
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