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March 14, 2005
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Benefits Advisory: Memo to Employers: Time to Pay Attention to 401(k) Plan Governance
Excerpt: "The twin scandals that rocked the corporate world and mutual fund industry have, among other things, refocused attention on the administration of tax-qualified retirement plans generally and 401(k) plans in particular. For years, employers were content to let their vendors ... take the lead in plan operation with a minimum of oversight or intervention. This approach worked fine in rising markets such as the bull market of the late 1990s, but it can be a disaster where plan ...." (Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.)

Using All the Features, Including Investing Advice, of the Companies' 401(k) Plan
Excerpt: "More than 20 years after its debut, the 401(k) has become the most popular retirement plan offered by employers. Across the country, 410,000 plans hold $2 trillion in assets for 43 million employees. In many cases, employers match a portion of each employee's contribution. But the weaknesses of the plan are becoming apparent. Many employees don't sign up to participate in the plans. Others sign up but fail to direct enough of their income toward the plan or make poor choices ...." (The Times-Picayune)

Audio: 401(k) Basics and Social Security Private Account Decisions
Excerpt: "[A] new study suggests we don't even understand the basics behind an existing retirement system - the work-sponsored 401 (k). What does this mean for Social Security? Marketplace's Matthew Algeo reports. " (Sound Money)

Managing Retirement -- Automatically Managed 401(k) Accounts Appeal to Employers and Employees
Excerpt: "Survey after survey reveals that employees just aren't saving enough to retire - and oftentimes don't even know what they actually need to retire. Consequently, many companies have resorted to doing some of the retirement work for their workers, using approaches such as automatic enrollment and automatic annual deferral increases." (Employee Benefit News)

Retirement Ain't Gonna Be What It Used to Be: Shorter Retirements May Be Good for Plan Sponsors
Excerpt: "In the future, Americans will be spending a lot less time in retirement than they do now. That is the conclusion of Jeremy Siegel, professor of finance at the Wharton School of the University of Pennsylvania. He lays out his findings in a new book, The Future for Investors." (PLANSPONSOR.com; one-time registration required)

Will Retiring Boomers Sink Stock Market?
Excerpt: "Baby boomers have triggered social change at each stage in their lives - from expanding school rolls to inventing the yuppie. Now, they're reaching a milestone that has some experts worried. The first boomers turn 59-1/2 this year. That's old enough to pull money out of Individual Retirement Accounts (IRAs) without tax penalty. And while no one expects a huge drawdown immediately, some financial analysts are concerned about what boomer retirement will do to the stock market." (The Christian Science Monitor via CBSNEWS.com)

Towers Perrin Suggests Enhancements to Proposed Rules on Phased Retirement Programs
Excerpt: "In comments filed with the IRS, Towers Perrin said the proposed phased retirement regulations are a step in the right direction but need substantial changes to enable sponsors of defined benefit (DB) pension plans to create effective programs for retaining older workers and addressing future workforce needs." (Towers Perrin)

Abstract of Working Paper: The Taxation of Individual Retirement Plans -- Choices for Seniors
Excerpt: "For many senior citizens, individual retirement plans, such as IRAs and 401(k)s, are a primary saving vehicle for retirement. Along with Social Security, individual retirement plans ('IRPs') represent a major source of money for retirement. However, even though IRPs are a valuable saving vehicle for many seniors, many IRPs have one major drawback: the forced distribution of assets and the associated taxation of those assets ...." (Social Science Electronic Publishing, Inc.)

Regulatory Update Published in the February 2005 Employee Benefit Plan Review (PDF)
Excerpt: "This month's Regulatory Update focuses on two issues that plan sponsors need to address in the very near future. First, sponsors of retirement plans that automatically distribute account balances of $5,000 or less to terminated participants will need to take certain actions by March 28, 2005, to continue making these automatic distributions. Second, the HIPAA security rules are effective April 21, 2005, for covered entities, including employer-sponsored health plans ...." (Employee Benefit Plan Review via Gardner Carton & Douglas LLP)

Automatic Rollovers: It is a Good Idea for Plan Practitioners to Offer Them (PDF)
2 pages. The author provides nine reasons TPAs should make automatic rollovers available to their clients plans. (James R. Norman, Jr. via The Pension Group, Inc.)

Opinion: Lindsey Graham's Good Idea -- Raise the Current $90,000 Limit on Income Subject to FICA
Excerpt: "Graham believes that some borrowing is appropriate to make stakeholders of future generations, which will be the biggest beneficiaries of personal accounts. But substantially reducing the borrowing would deny Democrats the ability to disguise as fiscal responsibility their opposition to personal accounts, which really is rooted in reluctance to enable people to become less dependent on government." (George F. Will via The Washington Post; one-time registration required)

Employer Based Retirement Plan Community Urges Enactment of EGTRRA Permanency (PDF)
2 pages. Excerpt: "The undersigned organizations, representing the broad spectrum of employer plan sponsors and retirement plan service providers, commend President Bush for including the permanency of the pension provisions found in Title Six of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) in the Administration's 2006 Budget. Many critical retirement savings provisions in EGTRRA will expire at theend of 2010 or earlier unless they are made permanent." (American Benefits Council)

United Airline Mechanics and Baggage-Handlers' Employee Pensions Targeted for Federal Takeover
Excerpt: "The Pension Benefit Guaranty Corp. -- the federal agency that insures corporate pension plans -- moved yesterday to take over the pensions of United Airlines' 36,000 mechanics and baggage handlers, relieving the airline of millions of dollars in obligations to the under-funded plan." (The Washington Post; one-time registration required)

Amicus Brief in the Case of Langbecker v. EDS (PDF)
28 pages. Excerpt: "The ERISA Industry Committee ..., the American Benefits Council ..., and the ESOP Association are all associations whose members maintain, administer, and provide services to pension and other employee benefit plans governed by [ERISA]. With the consent of the parties, they respectfully submit this brief as amici curiae in support of appellant Electronic Data Systems Corporation." (American Benefits Council)

Links to Items on Executive Comp, Benefits in General

Multinationals Revising Long-Term Incentive Programs for Executives Outside the U.S.
Excerpt: "U.S. multinationals are overhauling their long-term incentive (LTI) programs for non-U.S. executives. This is a departure from the recent practice of relying on LTI plan features that were uniform worldwide, with the same vehicle -- stock options -- and the same plan terms and award sizes. Now a growing number of companies are shifting to customized approaches." (Towers Perrin)

Overview: Congress Rewrites Rules for Non-Qualified Deferred Compensation Plans (PDF)
6 pages. Excerpt: "Passed shortly before Halloween, and effective on January first of next year, Section 409A will be a New Year's nightmare for many businesses. For almost all business entities, it will mean reviewing compensation policies and for many businesses modifying those policies to conform to Section 409A's requirements. Fortunately, modification of plans can probably wait until next year ...." (Adams and Reese/Lange Simpson LLP)

Employment and Economic Changes Lead to Benefit Policy Shifts in Asia (PDF)
2 pages. Excerpt: "Many policy shifts in employment benefits have emerged out of the changing work patterns and a challenging economic climate in Asia. In a volatile business environment, employees can expect to change employment more frequently, and lifetime employment is a thing of the past. With each change, employees may lose their employer-provided medical benefits." (Aon Corporation)

Overview: New Military Service Notice Requirement: Post it Now! (PDF)
3 pages. Excerpt: "Employers may satisfy the new notice requirement by posting the DOL– issued notice where employee notices are customarily placed. Alternatively, employers may deliver the notice in other ways that will minimize costs while ensuring that the full text of the notice is provided." (Utz & Miller, LLC)

Newly Posted Events

2005 Annual Spring Summit, "A Check-Up for Your Plan"
in California on April 26, 2005
presented by Western Pension & Benefits Conference - Los Angeles Chapter

Global Health Care Issues and Trends--Teleweb Seminar
Nationwide on March 23, 2005
presented by International Foundation of Employee Benefit Plans

Newly Posted Press Releases

EBIA Weekly Celebrates 5th Anniversary!
(Employee Benefits Institute of America Inc. (EBIA))

The Honorable Mark Warshawsky Prepared Remarks The National Newspaper Association “The Urgency For Social Security Reform In The United States” March 11, 2005 Washington, DC
(U.S. Department of Treasury)

Dorsa Consulting Inc. Selected as Member Firm of 401(k) Advisors USA
(Dorsa Consulting)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Team Leader - Defined Pension
for The Rosen Group
in MA

Client Service Analyst
for The Rosen Group
in MA

Director, Business Development - Retirement & Benefits
for PAi
in WI

Senior Benefits Analyst
for Hospira
in IL

Defined Contribution/401(k) Administrator
for Professional Capital Services, LLC
in PA

Investment Operations
for PennRock Financial Advisors, N.A.
in PA

Retirement Plan Enrollment Specialists
for Invesmart, Inc.
in CA, PA



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