| BenefitsLink Retirement Plans Newsletter |   |
March 9, 2005
Today's sponsor: PenChecks, Inc.
(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)
5 Years Later, Many 401(k)s Are Still at Risk
Excerpt: "The market-bubble burst in March 2000 taught us the value of diversification. But many 401(k) plans still don't offer choices investors need to protect themselves." (MSN Money)
Testimony of Mark J. Warshawsky before the U.S. House Ways and Means Committee, March 8, 2005 (PDF)
16 pages. Excerpt: "I appreciate the opportunity to participate in this hearing to discuss the Administration's proposal to reform and strengthen the single employer defined benefit pension system. In my testimony, I will focus on the proposal's funding rules, in particular, the calculation of the funding targets." (U.S. Department of the Treasury)
Testimony on Single-Employer Pension Funding Reform to Subcommittee on Select Revenue Measures (PDF)
9 pages. (American Academy of Actuaries)
Text: 2004 Annual Report of the Pension Benefit Guaranty Corporation (PDF)
52 pages. Excerpt: "Despite a heavy and growing workload, PBGC continued to provide high quality service to its customers as it paid more than $3 billion in benefits during 2004 to more than 518,000 people. At year-end, PBGC was responsible for the pensions of more than 1 million people, including 443,000 who will begin to receive benefits from PBGC when they retire in the future and 100,000 who are receiving or will receive benefits through PBGC's financial assistance to multiemployer plans." (Pension Benefit Guaranty Corporation)
High Court Lets Stand Shutdown Benefit Decision in Dispute Between United Steelworkers and PBGC
Excerpt: "The nation's high court has refused to overturn a lower court ruling that the Pension Benefit Guaranty Corporation (PBGC) is not required to pay workers of a bankrupt steel company $96 million in unvested shutdown benefits. The US Supreme Court's decision came in a case involving a dispute between the United Steelworkers of America and the PBGC, which insures private sector pensions." (PLANSPONSOR.com; one-time registration required)
Overview: IRS Finalizes 401(k) and 401(m) Regulations
Excerpt: "The IRS has finalized the 401(k) and (m) regulations that were proposed in 2003. The regulations address cash or deferred arrangements (CODAs) under Internal Revenue Code section 401(k) and matching contributions and employee contributions under section 401(m). The final regulations generally preserve the proposed regulations which, for example, significantly restricted the use of targeted qualified ...." (Watson Wyatt Worldwide)
Overview: Net Unrealized Appreciation and the Retirement Plan Distribution Decision (PDF)
3 pages. Excerpt: "The determination of whether the lump sum distribution and possible retention of employer securities is appropriate is dependent on many factors. The major factors ... include the amount and time frame of distributions required to meet expenses, the assumed annual growth rate of the stock, the assumed annual growth rate of a diversified portfolio and whether or not the employer securities are sold immediately after the distribution from the qualified plan." (The Cochlan Group, Inc.)
Overview: Guidance Relating to Automatic Rollover Provisions Under Section 401(a)(31)(b) of IRC (PDF)
2 pages. Excerpt: "In Notice 2005-5, the Internal Revenue Service (IRS) issued guidance relating to Automatic Rollover provisions under section 401(a)(31)(B) of the Internal Revenue Code (Code) as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This guidance supplements the final regulations issued by the Department of Labor (DOL) on September 28, 2004, which we summarized in TCRS 2004-07." (Transamerica Center for Retirement Studies)
Overview: IRS Issues Automatic Rollover Guidance
Excerpt: "In Notice 2005-5, the IRS provides guidance on the automatic rollover rules for qualified retirement plans, section 403(b) plans and section 457 plans. These rules were added to the Internal Revenue Code by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), but they do not become effective until March 28, 2005, the effective date of a related final regulation published by the U.S. Department of Labor (DOL)." (Watson Wyatt Worldwide)
Compliance Date Approaches for Automatic Rollover Rules Under IRC of 1986, As Amended
Excerpt: "These rules require that mandatory distributions from tax-qualified retirement plans of more than $1,000 but less than $5,000 be automatically transferred to an individual retirement account or individual retirement annuity selected by the plan sponsor, if the participant fails to make an affirmative election to either have the amount paid in a direct rollover to the eligible retirement plan of their choice or to receive the distribution directly." (Bell, Boyd & Lloyd LLC)
Delphi Scandal Spurs Retiree Suit -- Pension's Losses Are Firm's Fault, It Says
Excerpt: "The accounting scandal at auto supplier Delphi Corp. has prompted a 60-year-old Delphi retiree to sue her former employer, alleging that the executives overseeing the company's pension fund for her and about 19,000 salaried workers and retirees were the same people who knew or should have known of the accounting irregularities that likely inflated the company's stock." (Detroit Free Press)
Oregon High Court Issues Mixed Ruling on Public Employee Retirement System Reforms
Excerpt: "The state of Oregon's high court has thrown out two legislative pension reform measures, including a minimum earnings guarantee for veteran government employees and the halting of certain cost of living adjustments (COLA). The high court's 92-page ruling Tuesday represents the latest chapter in a long-running saga in which Oregon officials have struggled to fix the state's Public Employee Retirement System (PERS)." (PLANSPONSOR.com; one-time registration required)
Problems Encountered with Social Security Private Accounts in the United Kingdom
Excerpt: "Since 1987, the United Kingdom (UK) has allowed employees to voluntarily withdraw from part of social security by reducing their contributions and receiving reduced benefits. Instead, employees contribute to an individual account. This Fact Sheet outlines problems the UK has experienced with this system of voluntary carve-out accounts (VCOs)." (AARP)
The Changing Nature of Defined Benefit Plans
Excerpt: "The composition and character of retirement plans for U.S. workers have changed over the past few decades. For small employers, this has often meant abandoning traditional defined benefit (DB) plans in favor of a defined contribution (DC) approach. Larger employers, on the other hand, have tended to retain their defined benefit plans, but to make important changes in how these plans determine benefits." (Watson Wyatt Worldwide)
Disaster Relief Relating to PBGC Deadlines in Response to Major Disaster Declared in Ohio
Excerpt: "The Pension Benefit Guaranty Corporation is waiving certain penalties and extending certain deadlines in response to the major disaster declared by the President of the United States on account of severe winter storms, flooding, and mudslides December 22, 2004, through February 1, 2005, in Ohio." (Pension Benefit Guaranty Corporation)
Disaster Relief Relating to PBGC Deadlines in Response to Major Disaster Declared in California
Excerpt: "The Pension Benefit Guaranty Corporation is waiving certain penalties and extending certain deadlines in response to the major disaster declared by the President of the United States on account of severe storms, flooding, debris flow, and mudslides December 27, 2004, through January 14, 2005, in California." (Pension Benefit Guaranty Corporation)
Disaster Relief Relating to PBGC Deadlines in Response to Severe Winter Storms & Flooding in Indiana
Excerpt: "The Pension Benefit Guaranty Corporation is waiving certain penalties and extending certain deadlines in response to the major disaster declared by the President of the United States on account of severe winter storms and flooding during the period January 1 through February 11, 2005, in Indiana." (Pension Benefit Guaranty Corporation)
Bill to Amend the IRC of 1986 to Provide for Retirement Savings Accounts, and for Other Purposes (PDF)
25 pages. (U.S. Senate via American Benefits Council)
Senate Bill to Amend the Internal Revenue Code of 1986 to Create Lifetime Savings Accounts (PDF)
12 pages. (U.S. Senate via American Benefits Council)
Hagel Bill Offers Compromise on Social Security, Analyst Says
Excerpt: "U.S. Republican Senator Charles Hagel's bill to raise the Social Security retirement age and tie benefits to life expectancy could be the basis of a compromise with Democrats, said Brookings Institution analyst Henry Aaron." (Bloomberg)
Opinion: Social Security Reform Sellout
Excerpt: "Only this White House staff would send the president out to sell personal accounts for Social Security with the message they don't really solve the problem. Is it any wonder then that the more George W. Bush talks about personal accounts the lower they sink in the polls? Of course, this message is totally wrong. The chief actuary of Social Security has already scored four proposals for personal accounts alone, with no benefit cuts or tax increases, as achieving permanent solvency ...." (Peter Ferrara via The Washington Times)
The Right Questions on Social Security: A Democrat's Practical, Compassionate Plan
Excerpt: "Every once in a while, in a debate as dominated by partisanship and dogma as the current slugfest over Social Security, you run into someone whose views seem informed instead by facts and fundamental principles. One such person came to The Post the other day in the slightly rumpled form of Bob Pozen, who arrived without the usual ideological baggage or the entourage that trails your average corporate titan." (The Washington Post; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Overview: New Stock Option Accounting Must Be Applied Properly
Excerpt: "The new stock option accounting is probably the most controversial accounting change in years. This is because (i) some companies view stock options as an integral part of their compensation strategy, and are resisting the substantial income change, and (ii) the methods of valuing employee stock options are not well established or accepted. To avoid overstating the new stock option expense, companies will need to carefully consider how this new pronouncement is implemented." (Fulcrum Financial Inquiry)
Overview: FASB Finalizes Accounting Rules for Equity-Based Compensation (PDF)
3 pages. Excerpt: "After extended debate regarding whether and to what extent there should be a charge to earnings for stock option grants and other equity-based compensation, and despite strong opposition, in particular, from technology companies, the Financial Accounting Standards Board (FASB) adopted final revisions to Financial Accounting Statement (FAS) No. 123, now referred to as 'Share-Based Payment.'" (Seyfarth Shaw LLP)
Overview: Treasury Provides Initial Guidance on New Rules for Nonqualified Plans
Excerpt: "Companies now have a partial roadmap for implementing the changes made by new section 409A of the Internal Revenue Code, which was added by the American Jobs Creation Act of 2004. On January 10, 2005, the U.S. Department of the Treasury and the IRS issued Notice 2005-1 (Internal Revenue Bulletin 2005-2), the first part of the comprehensive guidance on the new law planned for 2005." (Watson Wyatt Worldwide)
Overview of Renewed Public and Regulatory Scrutiny of Executive Deferred Compensation Plans (PDF)
3 pages. Excerpt: "Disclosure on such perks is intended to bring to light the magnitude of executive deferred compensation plans as neither the Securities Exchange Commission (SEC) nor the Department of Labor (DOL) have a method for listing and tracking deferred executive benefits. ERISA actually affords the DOL such a disclosure method, but it has abdicated its rights in this area." (The Cochlan Group, Inc.)
Designing Benefits for Key Executives - Mistakes to Avoid (PDF)
2 pages. Excerpt: "ERISA Considerations. Since most nonqualified deferred compensation programs are considered 'top-hat' plans for a select group, minimum ERISA filing and disclosure requirements can be met with proper guidance from legal counsel. Department of Labor filings should be made timely and documented with care. It is also important to monitor the size of the top-hat class so that a particular program does not become too broad to continue qualification for ERISA exemptions." (The Cochlan Group, Inc.)
Fringes vs. Basics in Silicon Valley
Excerpt: "Electronic Arts, based in Redwood City, Calif., has become the focal point of a debate over whether technology companies are exploiting workers by demanding long hours and using on-campus fringe benefits while skimping on tangible benefits like overtime pay, and rewarding worker loyalty by sending jobs to cheaper labor overseas." (The New York Times; one-time registration required)
Making the Transition: A Pre-Retirement Checklist
Excerpt: "Although many recent retirees report that they are living the lifestyle that they had hoped in retirement, over half look back on the years before leaving the workplace and wish they had done more to prepare, according to a study by Fidelity Investments. Here is a checklist prepared by Fidelity Investments that should help those approaching retirement." (Fidelity Investments via 401khelpcenter.com, LLC)
Newly Posted Events
2005 Annual Conference
in Florida on September 17, 2005
presented by NAGDCA (National Association of Government Defined Contribution Administrators, Inc.)
How to Optimize Your Organization’s Cash Flow by Effective Denials Management
Nationwide on March 8, 2005
presented by Health Resources Online
Legislative Issues Focus of March 31st NAGDCAST
Nationwide on March 31, 2005
presented by NAGDCA (National Association of Government Defined Contribution Administrators, Inc.)
Legislative Update
Nationwide on March 31, 2005
presented by NAGDCA (National Association of Government Defined Contribution Administrators, Inc.)
Medicare Part D for Retiree Plan Sponsors
Nationwide on March 15, 2005
presented by Hay Group
Medicare Part D for Retiree Plan Sponsors
Nationwide on March 23, 2005
presented by Hay Group
Roth 401(k)s - Coming Soon to a Plan Near You
Nationwide on March 29, 2005
presented by SunGard Corbel
Same Sex Marriage and Domestic Partners
in Illinois on March 30, 2005
presented by WEB - Chicago Downtown
Newly Posted Press Releases
Legislative Issues Focus of March 31st NAGDCAST
(NAGDCA (National Association of Government Defined Contribution Administrators, Inc.))
Labor Department Testifies Before House Ways and Means Subcommittee On Administration’s Pension Reform Proposal
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))
Careful Review of Pension Reform Proposals Urged of House Ways & Means Select Revenue Measures Subcommittee
(American Benefits Council)
International Foundation Publishes New Glossary of Benefits and Compensation Terms
(International Foundation of Employee Benefit Plans)
Ftwilliam.com introduces the 55Autofill feature
(ftwilliam.com)
Lifetime Achievement Fund now available as a fund of funds investment option for employee sponsored retirement plans.
(Lifetime Achievement Fund, Inc.)
Newly Posted or Renewed Job Openings
Annual Plan Reporting Administrator
for The Vanguard Group
in PA
Defined Contribution Business Analyst
for SunGard Employee Benefit Systems
in AL
Retirement Benefits Analyst
for Stanford University
in CA
Retirement Consulting Actuary
for Blue Chip Performance Strategies, LLC
in NY
Handy Links:
- View Today's Active Message Threads
- Search BenefitsLink
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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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