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March 28, 2005
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Benefits and Compensation Glossary Just Published. Order Today!
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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)
401(k) Plan Will Come in Two Styles: Mix the Regular and the Roth to Suit Investment Strategy
Excerpt: "Taxpayers who've wanted to open a Roth IRA but couldn't because they make too much money can take heart. Starting next year, employers will be able to add a new Roth 401(k) to their menu of retirement plans. Think of it as a cross between the Roth IRA and a traditional 401(k)." (The Dallas Morning News; one-time registration required)

Opinion: Can Cyber Shopping Improve Faulty Retirement Plans?
Excerpt: "If Congress succeeds in privatizing part of Social Security or even eking out modest employer pension reforms, it should make picking decent retirement funds as easy as shopping online. You would log on and quickly identify diversified funds with the highest, most consistent returns, lowest expenses and lowest risk. Such a cyber-investing model partially exists. It's called 403bcompare (http://www.403bcompare.com) and it's offered by CalSTRS, the California State Teachers ...." (Bloomberg News)

Overview: Annuity Payout Options in the 401(k) Market
Excerpt: "As a method of retirement income distribution, annuities appear to be going the way of the handshake and a gold watch. The ranks of large employers offering an annuity payout option to 401(k) participants fell from 31% to 17% between 1999 and 2003, according to human resource consulting firm Hewitt Associates. Meanwhile, as the defined benefit pension system erodes, more plans are letting workers select a lump-sum payment at retirement instead of life-long pension checks." (Employee Benefit News)

Motorola to Phase Out Defined Benefit Pension Plan -- New Employees under More Generous 401(k) Plan
Excerpt: "Motorola Inc. is phasing out its $3.5 billion pension plan covering U.S. employees, as the exodus of big employers from the defined benefit plan system continues. Effective Jan. 1, 2005, new employees will be covered only by Motorola's 401(k) plan, which the Schaumburg, Ill.-based high-tech company is sweetening for the new hires. Motorola disclosed the change in its annual report filed with the Securities and Exchange Commission." (Business Insurance)

Overview: IRS Proposes Regulations for Roth 401(k) Programs Starting in 2006
Excerpt: "The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) included a provision allowing qualified 401(k) plans and 403(b) plans to permit participants to designate some or all of their contributions as 'Roth contributions' for plan years beginning in 2006 or later. The IRS recently published its first round of guidance (REG-152354-04, 70 Fed. Reg. 10062 (3/2/05)) on Roth contributions." (BNA Tax Management)

Court Finds 401(k) Participants Unable to Recover for Fiduciary Breach--Milofsky v. American Airline
Excerpt: "As noted in the dissenting opinion, the Sixth Circuit and others have held otherwise, finding that a subclass of beneficiaries can sue under ERISA Section 502(a)(2). Taken to its logical conclusion, this holding would mean that--in the 401(k) plan context--a lawsuit under ERISA Section 502(a)(2) would be possible only if every participant in the plan was harmed by the fiduciary breach." (Employee Benefits Institute of America Inc.)

What You Need to Know About the Final 401(k) and 401(m) Regulations (PDF)
5 pages. Excerpt: "The regulations are effective for plan years beginning on or after January 1, 2006. A plan sponsor can apply the regulations to plan years beginning after December 29, 2004. However, with one exception noted below, if a plan sponsor wants to apply a portion of the rules early, it must apply all of the final regulations to the plan, not just selected portions." (Gardner Carton & Douglas)

Fidelity's Redemption Fees: Two Charts Showing the Fees for Various Mutual Funds
Excerpt: "Fidelity Investments is one of several fund companies that have different redemption fee schedules for different funds. [The target page has links to] Fidelity's chart called 'Retail Funds Short-Term Redemption Fee Schedule' as well as its 'Advisor Funds Short-Term Redemption Fee Schedule.'" (Workforce Management Online)

Opinion: Proposed IRS Rules Allowing Phased Retirement Fall Short
Excerpt: "[A]t a recent IRS hearing on the proposed rules, employers and experts noted that the regulations had several shortcomings. Not only would they be unduly costly to implement, but also the rules only apply to employees at least age 59 and a half. This would exclude the majority of the participants in phased retirement programs." (HR Policy Association)

Retirement Plan Sponsors Must Decide Whether to Implement New Automatic Rollover Requirements
Excerpt: "On February 16, 2005, the IRS released an Employee Plans News news flash, clarifying that the deadline for amending retirement plans to reduce or eliminate the $5,000 limit for involuntary distributions is the end of the first plan year ending on or after March 28, 2005." (BNA Tax Management)

A Brief History of Bankrup.tcy, Collective Bargaining, Compensation, and Pensions at United Airlines
Excerpt: "Jeremy Bulow, professor of economics at Stanford Business School, understands why United employees are angry. They were promised set pensions and likely won't get them. Bulow, who testified for the government when U.S. Airways went bankrupt and terminated its pilots pension plan, said United had the misfortune of seeing its business deteriorate after the Sept. 11, 2001, terrorist attacks." (San Mateo County Times)

Appeals Court Upholds Suit Dismissal in Conversion/Blackout Case
Excerpt: "Two pilots for a commuter carrier later acquired by American Airlines have lost another round in their legal battle against the company and a TPA over a mismanaged plan conversion which they said prompted significant asset losses." (PLANSPONSOR.com; one-time registration required)

Rhode Island General Treasurer Releases Proposal to Control Costs in the State's Pension System
Excerpt: "Tavares, a Democrat, is seeking to limit the cost-of-living adjustments (COLA) given to many of today's workers when they retire - a sharp contrast to the Republican Governor of the state, who only wants to institute changes for new workers, according to the Providence Journal." (PLANSPONSOR.com; one-time registration required)

Opinion: Social Security vs. Stock Returns: No Contest
Excerpt: "One of the strangest arguments against voluntary personal accounts is that those who choose such accounts will earn a lower return than those who do not. This argument is not odd because I disagree with it but because if it were persuasive, young people could easily be convinced to shun personal accounts." (The Washington Times)

Text of H.R. 1161: House Bill Providing for Employer Retirement Savings Accounts (PDF)
26 pages. (U.S. House of Representatives via American Benefits Council)

Text of H.R. 1162: Retirement Savings Account Act: Bill Providing for Retirement Savings Accounts (PDF)
26 pages. (U.S. House of Representatives via American Benefits Council)

Text of H.R. 1163: Lifetime Savings Account Act: House Bill Providing for Lifetime Savings Accounts (PDF)
12 pages. (U.S. House of Representatives via American Benefits Council)

Editorial: Add-On Accounts Add No Value to Social Security
Excerpt: "The latest trial balloon in the Social Security battle is something called 'add-on accounts.' Touted as a possible compromise between friends and foes of privatization, they would be like souped-up I.R.A.'s - subsidized savings accounts intended to supplement government-guaranteed Social Security benefits, not to reduce or replace them." (The New York Times; one-time registration required)

Links to Items on Executive Comp, Benefits in General

Making Multiemployer Mergers Work -- Pension Plan Considerations (PDF)
4 pages. Excerpt: "Work on multiemployer mergers can involve multiple areas. Here are some of the tasks that those considering multiemployer mergers will have to work on with their professional advisors: review actuarial valuations of plans considering a merger; review pension and vesting credit; and, study withdrawal liability issues." (The Segal Company)

Utah State University Weighs Issue of Employee Benefits for Same-Sex Domestic Partners
Excerpt: "Despite potential backlash, Utah State University officials are exploring a proposal to offer employee benefits to same-sex couples. .... The issue gained momentum when a draft proposal - dated Jan. 27 and written by four USU faculty members - requested domestic-partner benefits on demand to same-sex partners of USU faculty and staff." (The Salt Lake Tribune)

The November 2004 Edition of 'Benefits in Brief' (PDF)
16 pages. Includes articles on: The Changing Landscape of Nonqualified Deferred Compensation Plans: The American Jobs Creation Act of 2004; Top Hat Plan Basics; Requirements Under the New Relative Value Regulations for Certain Retirement Plans; Employer Not Liable Under ERISA for Acts of its Human Resources Manager; Proposed Procedures for Determination Letters; When a Person is a 'Dependent,' for Tax and Plan Purposes Has Changed; and, COBRA Notice Requirement Changes, Beginning January 1, 2005 (Jenkens & Gilchrist)

Congress Takes Another Run at Giving Breaks to Federal and Military Retirees
Excerpt: "The legislative table has been set, once again, for federal retirees. Bills have been introduced in the House and Senate to repeal two parts of Social Security law that penalize numerous government retirees. Bills that would permit federal and military retirees to pay their health insurance premiums with pretax dollars also have been put in the legislative hopper." (The Washington Post; one-time registration required)

Newly Posted Press Releases

Assistant Treasury Secretary Mark Warshawsky's Remarks to the American Enterprise Institute on the Urgent Need for Social Security Reform
(U.S. Department of Treasury)

ASC & GBA Announce the Formation of The ASC Institute
(ASC)

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