| BenefitsLink Retirement Plans Newsletter |   |
April 18, 2005
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IRS Rev. Proc. Tells How to Correct a Plan's Now-Illegal Suspension-of-Benefits Amendment (PDF)
Rev. Proc. 2005-23; 8 pages. Excerpt: "With regard to qualified retirement plans that adopted certain amendments before June 7, 2004, section 3 of this revenue procedure generally provides that the Service will not disqualify a plan solely on account of a plan amendment adding or expanding a suspension of benefit provision, as prohibited under Central Laborers' [Pension Fund v. Heinz, 124 S. Ct. 2230 (June 7, 2004)]." (Internal Revenue Service)
457 Plans Create New Opportunities for Tax Exempt Clients
Excerpt: "Changes to the tax law made by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) included some good news for people who work for governmental and not-for-profit employers. Those employees can potentially double their savings opportunities because they can now participate in both a 403(b) tax-sheltered annuity and a 457 plan at the same time." (McKay Hochman Co., Inc.)
U.S. Congress Sends Bankrup.tcy Bill to White House -- Bill Includes Pension Asset Provisions
Excerpt: "The Bankrup.tcy Abuse Prevention and Consumer Protection Act – which includes numerous retirement provisions – has passed both chambers of Congress and is on its way to the White House. .... President Bush is expected to sign the bill. .... The bill includes numerous provisions related to pension assets, and, overall, excludes more retirement income from a pension plan participant's bankrup.tcy estate." (PLANSPONSOR.com; one-time registration required)
A Nest Egg That's a No-Brainer: Automatic 401(k)s Are Taking Hold and Employees Save More
Excerpt: "[A]s companies continue to drop traditional pension and retiree health coverage for new hires, they see automatic enrollment 401(k)s as a way to help employees make up the difference. Boosting enrollment by low-paid workers also helps employers get out from under federal rules that can limit contributions by higher-paid managers if 401(k)s aren't used equitably throughout the company." (BusinessWeek)
Focus on 401(k) Plans: Information and Ideas for 401(k) Decision-Makers -- Fourth Quarter 2004 (PDF)
4 pages. This issues contains articles titled: Prudent Costs: Evaluating Fees and Expenses; Educating Non-English Speaking Participants; and, Failure to Register Plan as a Security Results in $1 Million Claim. (The 401(k) Company)
Overview: Roth Accounts Offer New Savings Opportunity for Employees
Excerpt: "With many companies expressing interest in setting up the new Roth savings accounts that can be offered in company-sponsored savings plans starting in 2006, plan sponsors will want to learn the details of how these accounts will work and assess whether they may be an attractive option for their employees." (Towers Perrin)
'Exclusive' Separately Managed Accounts Find Way Into 401(k) Plans
Excerpt: "[S]eparately managed accounts - which are essentially the haute couture of mutual funds - are finding their way into 401(k) plans. Known as SMAs, these products are individual accounts through which investors directly own the stocks or bonds inside, as opposed to owning shares of a mutual fund. The direct ownership allows investors to customize holdings to a degree, and, as such, SMAs are popular for their flexibility, tax efficiency and transparency, ...." (The Washington Post; one-time registration required)
IRS Addresses How Medical Expense Exception to 10% Early Distribution Penalty Applies
Excerpt: "In this Information Letter, the IRS explains that the medical expense exception applies only if the medical expenses would have been deductible medical expenses on the participant's federal income tax return (i.e., deductible on Schedule A, Form 1040)." (Employee Benefits Institute of America Inc.)
Retirement Investor Report Card for December 2004: Positive Gains from Rising Equity Markets (PDF)
16 pages. Excerpt: "Rising equity markets in 2004 contributed to double-digit gains in account balances and personalized returns for defined contribution (DC) plan and IRA investors. Asset allocations for both types of accounts rebounded to 70% equities. Trading remained at low levels but was consistently higher in DC plans than in IRAs." (The Vanguard Center for Retirement Research)
Overview: The Proposed 403(b) Regulations
Excerpt: "Late last year, the U.S. Treasury Department issued regulations consolidating the last 40 years of changes to 403(b) plans into a single new proposed regulation. McKay Hochman features an overview of the proposed regulation in a special double issue of the quarterly newsletter, 403(b) Perspectives." (McKay Hochman Co., Inc.)
Bookkeeping Change Costs Taxpayers -- Contributions to State Teacher's Retirement System Increases
Excerpt: "The change doesn't affect teacher pensions. Rather, it requires districts to budget teacher retirements in the year the salaries are paid, beginning in the 2005-06 school year. Districts that had used the state's decades-old delayed-payment method will be required in this year to budget a two-year rate increase in contributions." (The Journal News)
Policy Brief on the Proposed Reform of Single Employer Defined Benefit Pension Plan Insurance (PDF)
3 pages. Excerpt: "This policy brief provides a general explanation of the administration's proposed reforms, recognizing that many details are yet to be provided." (HR Policy Association)
Milliman 2005 Defined Benefit Pension Funding Status Study of 100 Large U.S. Corporations (PDF)
14 pages. (Milliman)
Companies Get Creative with Retirement Plan Communication
Excerpt: "Companies are becoming increasingly creative in their efforts to boost interest in their retirement plans. While a big budget is one way to ensure a clever and engaging communications strategy, more traditional and affordable approaches also exist. Many companies are recognizing that simply coordinating their approach makes a big difference." (Employee Benefit News)
NCPERS Adopts Model Proxy Voting Guidelines for Public Pension Fund Boards
Excerpt: "These guidelines are to protect the investments of the fund and make sure pension boards are acting like owners, not rubberstamps, in the corporate arena. This voting policy ensures that funds' shares in publicly-traded companies are voted from the shareholder perspective on such issues as boards of directors, auditors, compensation and shareholder rights. [The 6 page NCPERS Model Proxy Voting Policy is at http://www.ncpers.org/artman/uploads/ncpers_model_proxy_voting_guidelines.pdf]" (National Conference on Public Employee Retirement Systems)
Finding the Right Service Provider for Your Savings Plan
Excerpt: "The best way to demonstrate that you have carried out your fiduciary responsibility for selecting and monitoring your service provider in a prudent manner is to have clear documentation of your process. Nothing makes you a less attractive defendant to those who might litigate against you than having documentation that supports your decisions. Always put yourself in a position to be able to answer the question, 'Why did or didn't you do what you did?'" (Aon Consulting)
Two South Carolina Pension Reform Bills Differ Sharply on Cost Issue
Excerpt: "South Carolina's two competing pension reform bills differ sharply regarding who is picking up the final costs, .... State and local government employees would pay more for their benefits under a state House proposal to revamp the ailing public retirement system, .... This plan - written by a House subcommittee - stands in sharp contrast to a state Senate bill that would make several changes in how state retirement funds are invested, but would not boost the cost for employees." (PLANSPONSOR.com; one-time registration required)
U.K. Conservatives Offer Boost to Pension Savings, If Elected
Excerpt: "The U.K. Conservative party announced plans to boost the pension funds of people earning under 37,000 pounds ($70,000) a year by an annual 1.7 billion pounds in an effort to encourage saving if they are elected. Under the proposal, for every 100 pounds saved into a pension by workers, the government would add 10 pounds. The bonus would not apply to people earning enough to pay the U.K.'s top 40 percent rate of tax." (Bloomberg News)
Attorneys Ready to Hang Suits on Fee Complaints by Retirement Plan Participants
Excerpt: "Krispy Kreme is just the latest brand name to top-line a complaint about its retirement plan holding too much company stock. The doughnut maker is in good company, joining Enron, Lucent and others at the table of fiduciary irresponsibility. However, many ERISA attorneys and other retirement plan consultants believe that fee complaints by plan participants, not company stock suits, are the more insidious threat, ...." (Employee Benefit News)
Congressional Quarterly Chronology Report for Pension Bills in the 109th Congress
Target page provides listing of pension bills introduced in the 109th Congress and a link to a chart showing the progress of the bills. (The ERISA Industry Committee)
Senate Finance Committee May Take Lead on Social Security Reform
Excerpt: "After spending nearly four months campaigning to restructure Social Security, President Bush is headed toward what many Republicans consider a make-or-break moment in the effort to transform the 70-year-old retirement program: a showdown with the Senate Finance Committee." (The Washington Post; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Overview: The Securities and Exchange Commission Delay of the Effective Date for Statement 123R (PDF)
3 pages. Excerpt: "The Securities and Exchange Commission ... voted unanimously to adopt a staff recommendation to delay the effective date of Financial Accounting Standards Board ... Statement No. 123(R) (Statement 123R) for many public companies. Specifically, the new rule states that public companies do not have to begin complying with Statement 123R until the first quarter of the first fiscal year beginning after June 15, 2005 (December 15, 2005 for 'small business issuers')...." (Frederic W. Cook & Co., Inc.)
American Bar Association Comments to IRS on Section 409A Regarding Funding Issues (PDF)
10 pages. (American Bar Association)
Banks Should Reassess their BOLI and Benefit Plans After New Interagency Statement and 409A Rules (PDF)
2 pages. Excerpt: "On December 7, 2004, the OCC, Federal Reserve, FDIC, and OTS issued a joint 'Interagency Statement on the Purchase and Risk Management of Life Insurance.' The Statement can be found in FDIC FIL-127-2004 (http://www.fdic.gov/news/news/financial/2004/fil12704.html#body)." (Powell Goldstein LLP)
Comments to IRS Regarding Distribution Restrictions of Section 409A of the Internal Revenue Code (PDF)
25 pages. (American Bar Association)
Top Hat Participant Loses Top-Hat Plan/Social Security Offset Legal Battle
Excerpt: "A retiring executive challenging how the administrator of his employer's top-hat plan calculated his Social Security offset lost a second legal battle when an appeals court upheld a lower court's decision denying his claims." (PLANSPONSOR.com; one-time registration required)
Stock Incentive Plans with Flexible Reserves Gain in Popularity
Excerpt: "Flexible share reserves can give companies a way to avoid having to commit to a specific type of stock award at the time they are adopting a plan. This may be particularly helpful as companies seek to revise their executive compensation practices by trimming their reliance on stock options in favor of restricted stock or performance shares in response to new accounting and governance requirements -- or just to stay competitive in a changing compensation market." (Towers Perrin)
Comments Sent to IRS on Section 409A Regarding its Impact on Business Transactions (PDF)
17 pages. (American Bar Association)
Newly Posted Events
Form 5500 Update and Troubleshooting Webcast
Nationwide on May 10, 2005
presented by ASPPA (American Society of Pension Professionals & Actuaries)
NAGDCAST #3 "Health Savings Accounts"
Nationwide on June 8, 2005
presented by NAGDCA (National Association of Government Defined Contribution Administrators, Inc.)
The Future of Roth 401(k) & LSAs, RSAs and ERSAs
Nationwide on May 19, 2005
presented by ASPPA (American Society of Pension Professionals & Actuaries)
Newly Posted Press Releases
Instant HR Answers™ Debuts – BLR’s New Human Resource Answer Site Uses “Revolutionary” Search Technology
(Business and Legal Reports, Inc.)
Treasury and IRS Provide Guidance on Pension Plan Amendments
(U.S. Treasury Department and Internal Revenue Service)
ARAG Offers Legal Insurance to State of Iowa Employees
(ARAG)
Newly Posted or Renewed Job Openings
Qualified Plans
for Fiserv Investment Support Services
in CO
DCS Research Analyst
for Hewitt Associates
in IL
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