| BenefitsLink Retirement Plans Newsletter |   |
March 8, 2005
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Department of the Treasury's Blue Book Proposes Renaming Roth 401(k) to Roth RSA (PDF)
Page 12 of 159. Excerpt: "Existing Roth IRAs would be renamed RSAs and be made subject to the new rules for RSAs. Existing traditional and nondeductible IRAs could be converted into an RSA by taking the conversion amount into gross income, similar to a current-law Roth conversion. However, no income limit would apply to the ability to convert." (U.S. Department of the Treasury)
Overview: 401(k) and 401(m): IRS Issues Final Regulations (PDF)
Pages 3-6 of 7 pages. Excerpt: "On December 29, 2004, the Internal Revenue Service (IRS) issued long awaited final regulations governing cash or deferred arrangements (CODAs) under Code section 401(k) and matching contributions under Code section 401(m) that consolidate and simplify previous guidance, as well as reflect substantial legislative changes. This article will highlight significant provisions of the final regulations." (Trucker Huss)
The Automatic 401(k): A Simple Way to Strengthen Retirement Saving (PDF)
8 pages. Excerpt: "The 'automatic 401(k)' is a simple concept with enormous potential. An automatic 401(k) plan would have intelligent defaults at each phase of the 401(k) savings cycle: participation, contribution levels, investment allocations, rollovers, and withdrawal options. Workers would be free to opt out of these defaults if they chose to. For example, under an automatic 401(k) workers would participate unless they actively choose not to." (Tax Notes via Urban Institute)
Overview: Roth Contributions to 401(k) and 403(b) Plans
Excerpt: "The IRS has just released proposed regulations addressing Roth contributions to a 401(k) plan. The ability to make Roth contributions to 401(k) plans and 403(b) plans was added by EGTRRA (Code Section 402A) and will be effective for taxable years beginning on or after January 1, 2006. If permitted by a plan, participants in a 401(k) or 403(b) plan may designate that all or a portion of their elective deferrals be treated as Roth contributions." (SunGard Corbel)
Section 412(i) Defined Benefit Plans: Simplicity, Safety, and Power
Excerpt: "Section 412(i) of the Internal Revenue Code ('Code') provides an exemption from certain funding requirements if a qualified plan satisfies the requirements of that subsection. Those requirements and other issues involving 412(i) plans are discussed in the following questions, answers, and tables. Lawyers and their clients should know their options in this environment of fewer and fewer income tax advantages." (Attorney John J. Koresko in the Florida Bar Journal)
Key Committees Hold Hearings on Pension Reform
Excerpt: "At a March 1, 2005 Senate Finance Committee hearing and a March 2, 2005 House Committee on Education and the Workforce hearing, representatives from the Administration, the business community, organized labor, academia, and participants' rights groups took turns discussing, describing, dissecting, disparaging, and in some cases defending, the Bush Administration's controversial proposals for reforming pension funding rules and ... [the PBGC's] financial condition." (Deloitte)
Testimony: Henry Eickelberg on Administration's Proposal for Single-Employer Pension Funding Reform (PDF)
13 pages. Testimony of Henry Eickelberg, Staff Vice President for Human Capital Processes for the General Dynamic Corporation on behalf of the American Benefits Council, Business Roundtable, ERISA Industry Committee, National Association of Manufacturers, and US Chamber of Commerce Before a Hearing of The House Ways and Means Subcommittee on Select Revenue Measures, Washington, DC, March 8, 2005 (The ERISA Industry Committee)
Technical Tip: How to Correct Defined Benefit Plan Overpayments to Retiree
Excerpt: "An employee retired and began receiving a straight life annual annuity ... from the employer's defined benefit plan .... The defined benefit plan is a qualified plan and does not provide for employee contributions. [I]t was determined that the annual payments for 2000, 2001, and 2002 were overstated by $2,000 per year for three years, and the employee included these amounts in gross income in the years received. a. What are the acceptable methods to correct for the overpayment?" (Reish Luftman Reicher & Cohen)
Most Advisers Haven't Kept Current on Rules Governing IRA Distributions: Here Are Some For-Instances
Excerpt: "A few recent experiences have reminded me about the difficulty of keeping up with changes in IRA law. In one case, an adviser sought permission to reprint an article I'd done on calculating 72(t) distributions four years ago. While the article was accurate when I wrote it, Internal Revenue Service (IRS) overhauls had rendered most of it totally outdated. I said no--and saved the planner from enormous embarrassment." (Financial-Planning.com)
Correction to Final IRS Regs on Elimination of Forms of Distribution from Defined Contribution Plans
Excerpt: "[In] Section 1.411(d)-4, A-2, paragraph (e)(3), Example (i) and (ii), in each location the year '2004' is removed, and the year '2005' is added in its place." (Internal Revenue Service)
Overview: IRS Clarifies Automatic Rollover Amendment Rules
Excerpt: "The IRS has clarified several issues that we had raised with respect to the automatic IRA rollover amendments ... provided in an IRS Employee Plans News publication .... However, the guidance is not as extensive as many practitioners had hoped." (SunGard Corbel)
Retirement Plan Sponsors Must Decide Whether to Implement New Automatic Rollover Requirements (PDF)
4 pages. Excerpt: "Plan sponsors should keep in mind that reducing the limit on involuntary distributions from $5,000 to $1,000 may increase the cost of maintaining plans if enough participants leave their benefits in their plans, and may create additional responsibilities for plan fiduciaries (e.g., locating participants and accounting for small benefits). Sponsors of defined benefit plans will also be required to pay PBGC premiums on behalf of participants who defer payment." (Morgan, Lewis & Bockius LLP)
Overview: Automatic Rollover Requirements for Qualified, 403(b), Government 457(b), & Church Plans (PDF)
2 pages. Excerpt: "Once a plan makes an automatic rollover that complies with these rules, the individual whose account is rolled over will no longer be considered a plan participant and the plan will no longer have fiduciary responsibilities with respect to the assets that have been rolled over. Employers may, but are not required to, apply the automatic rollover provisions to involuntary distributions of less than $1,000." (von Briesen & Roper, s.c.)
Correction to Temporary IRS Regs on ESOPs Holding Stock in S Corporations
Excerpt: "Section 1.409(p)-1T(d)(2)(iv), is removed." (Internal Revenue Service)
New Mexico Pension Funding Increase Proposal Would Require Teachers Increase Pension Payments
Excerpt: "The state of New Mexico Senate has approved three proposals to help shore up the state's teachers' pension fund and help close a $2.4 billion shortfall that include a requirement that employees and employers step up their pension payments." (PLANSPONSOR.com; one-time registration required)
Text of GAO Testimony: Long-Term Fiscal Issues: The Need for Social Security Reform
28 pages. Testimony by David M. Walker, comptroller general of the United States, before the House Committee on the Budget, February 9, 2005. Highlights are at http://www.gao.gov/highlights/d05318thigh.pdf. (U.S. Government Accountability Office)
Court Says Verizon Can't Change Ex-Employee's Retirement Date
Excerpt: "An employer can't retroactively change a former worker's retirement date necessary for the worker to get credit for full 30-year pension, a West Virginia federal judge ruled." (PLANSPONSOR.com; one-time registration required)
Text: Federal Thrift Savings Plan: Customer Service Practices Adopted by Private Sector Managers
35 pages. Excerpt: "Private sector plan managers ... have adopted various other practices that are not featured within TSP, such as regularly assessing customer satisfaction and using regularly updated technology to improve customer service. These managers gather participant feedback on their voice response system via short, automated surveys at the end of participants' calls and use short, .... [Highlights of January 18, 2005, report are at http://www.gao.gov/highlights/d0538high.pdf]" (U.S. Government Accountability Office)
Bush Social Security Reform Plan Sharpens Retirement Money Investing Debate
Excerpt: "Even if Americans never get the option ... of investing some of their Social Security tax money, the idea still may have served a useful purpose: [to] focus many people on the broader issue of where retirement savings belong. .... Egged on by the Social Security privatization debate, academics like Zvi Bodie, a Boston University economics professor, assert that many investors shouldn't be putting a dime of retirement money in the stock market. (Originally published January 23, 2005)" (Los Angeles Times; one-time registration required)
Unions Muffle Wall Street Support of Private Social Security Accounts
Excerpt: "Financial services companies are making their points mostly behind the scenes, partly because some of them doubt that they can make much money from the initially tiny accounts. A bigger reason: They all fear that opponents will use their eagerness for change as a weapon against them -- and against the president's plan." (The Washington Post; one-time registration required)
Understanding Social Security Reform: The Issues and Alternatives - March 2005, 2nd Edition (PDF)
121 pages. Excerpt: "This report was first issued in 1998. In 2005, President George W. Bush made Social Security reform a priority for his second term. This revised second edition has been issued to facilitate discussions on reform. [The executive summary is available at http://www.aicpa.org/members/socsec.htm.]" (The American Institute of Certified Public Accountants)
At Heart of Social Security Debate, a Misunderstanding of How Social Security Really Works
Excerpt: "'If the president can convince people how the trust fund works, we're over a hurdle,' said Senator Charles E. Grassley of Iowa, the chairman of the Finance Committee. 'The trust fund is a mirage, but I still have Iowans say to me, 'Where's the money?' ' But unlike a mirage, the trust fund does exist. The details are on Page 1,112 of the appendix in the president's budget for the 2006 fiscal year. What Mr. Grassley meant was that the significance of the trust fund is limited.' (The New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Senator Bingaman Says Executive Compensation Limits Should be Toughened
Excerpt: "A Democratic US senator used a hearing on the Administration's pension reform proposal last week to urge that the proposal's executive compensation limit go even farther. Senator Jeff Bingaman (D-New Mexico) suggested that all executive compensation should be capped - not just deferred compensation – when plans facing termination are prohibited from increasing benefits for rank-and-file workers, according to a news report on hrpolicy.org." (PLANSPONSOR.com; one-time registration required)
Overview: Voluntary Deferral Elections for 2005 Must Be Made by March 15 (PDF)
5 pages. Excerpt: "[U]nder special transition relief provided by the IRS, an employee may make an election as late as March 15, 2005, to defer compensation for services performed on or before December 31, 2005. To be entitled to take advantage of this special rule, several conditions must be satisfied." (Utz & Miller, LLC)
Overview: New Rules Governing Nonqualified Deferred Compensation Plans
Excerpt: "On December 20, 2004, the Internal Revenue Service (IRS) issued the first round of guidance pertaining to the new Internal Revenue Code (IRC) §409A, which was added to the IRC last October as part of the American Jobs Creation Act (Jobs Act). As we reported last fall following enactment of the Jobs Act, IRC §409A imposes significant new restrictions on the design and operation of nonqualified deferred compensation plans and arrangements." (Hodgson Russ LLP)
Overview: March 15, 2005, May Be Next Deadline for Deferred Compensation Plans (PDF)
2 pages. Excerpt: "By March 15, 2005, any individual who wishes to defer compensation still payable in 2005, but who has not yet made such an election, will have a final chance to make a valid deferral election for 2005." (Winston & Strawn LLP)
Court Says Non-Fiduciary State Lawsuit not ERISA Barred
Excerpt: "A federal appeals court has thrown out part of a lower court's ruling that a Ohio company's state law claims against its employee stock ownership plan's (ESOP) recordkeeper were preempted by federal law." (PLANSPONSOR.com; one-time registration required)
Older Workers Demand Autonomy, Flexibility and Satisfaction on the Job
Excerpt: "[R]andy Chambers is not a typical worker. He is the new Bonus Worker -- a person who has officially retired and is back in the workforce. But he's working on his own terms. Key is control over his time on the job. He wants to work part time and have a flexible schedule. He also wants to enjoy the work. He is not in it for the money." (The Washington Post; one-time registration required)
Newly Posted Events
401(k) Compliance Seminar for HR and Benefits Professionals
in Nebraska on March 29, 2005
presented by Manarin Investment Counsel, Ltd.
HSA: One Year Later
in Texas on March 29, 2005
presented by WEB (Worldwide Employee Benefits Network) Dallas Chapter
Know Your Fiduciary Responsibilities and Other Compliance Issues
in Pennsylvania on March 24, 2005
presented by Central Pennsylvania Chapter - ISCEBS
Newly Posted Press Releases
Disaster Relief Announcements 05-1 through 05-3 - PBGC Provides Guidance for Disaster Relief to Plan Administrators and Sponsors.
(Pension Benefit Guaranty Corporation (PBGC))
Employers Unveil "10-Point Plan" to Promote the Health of the Nation's Pension System
(ERIC (ERISA Industry Committee))
Prepare for Automatic Rollover Rules Compliance
(Bell, Boyd & Lloyd LLC)
Digital Documents, LLC Announces the Latest Version of Their dDSpeedScan ® 4.0 Document Scanning Software and Processes to Provide the Industry's Highest Level of Image and Data Quality.
(Digital Documents, LLC--The Leader in Document Scanning and Imaging Services)
Newly Posted or Renewed Job Openings
Senior DC Tiered Plan Administrator
for The Pension Group, Inc.
in CA
Benefit Analyst
for OfficeMax
in IL
Benefits Manager
for OfficeMax
in IL
Director, Employee Benefits
for Howrey Simon Arnold & White, LLP
in DC
Contract Enroller
for Professional Benefit Services, Inc.
in ANY STATE
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