April 19, 2005 Today's sponsor: ASPPA • Working for America's Retirement™ (Click on company name or banner to learn more.)
IRS's Employee Plans Provides Example to Illustrate Heinz Revenue Procedure Compliance Excerpt: "The Treasury Department and IRS have issued Revenue Procedure 2005-23 that addresses the application of the Supreme Court Decision in Central Laborers' Pension Fund vs. Heinz. This example illustrates how plans can comply with the provisions of the revenue procedure and avoid plan disqualification. The following example illustrates the rules in sections 3.03 and 3.04 of Revenue Procedure 2005-23." (Internal Revenue Service) Commentary & Highlights: IRS Guidance on Compliance with Central Laborers' Pension Fund vs. Heinz Excerpt: "The Treasury and IRS have announced the issuance of guidance addressing issues pertaining to the Supreme Court's decision in Central Laborers' Pension Fund vs. Heinz." (Attorney B. Janell Grenier via BenefitsBlog.com) Pension Plans Can Restore Improperly Discontinued Benefits Excerpt: "The Internal Revenue Service is providing protection from federal sanctions for pension plans whose early retirement provisions are illegal under a 2004 U.S. Supreme Court decision. Plans will not lose their tax-favored status and be disqualified so long as they restore benefits that they improperly took away, the IRS said Monday in Revenue Procedure 2005-25." (Business Insurance) IRS Issues Guidance on Anti-Cutback Case, Central Laborers' Pension Fund v. Heinz, Enforcement Excerpt: "Government officials on Monday announced that they would limit the retroactive enforcement of a June 2004 US Supreme Court decision that employers cannot retroactively decrease pensions for early retirees. The guidance dealt with how the Internal Revenue Service (IRS) would enforce the dictates of Central Laborers' Pension Fund v. Heinz." (PLANSPONSOR.com; one-time registration required) IRA Online Resource Guide Now in CD-ROM Format and Available for Free Excerpt: "The office of Employee Plans (EP) under the Tax Exempt and Government Entities (TE/GE) operating division of the Internal Revenue Service has created a cd-rom for use as a reference guide to IRAs and retirement plans funded with IRAs. This cd-rom is distributed at various benefits conferences, educational events, etc. sponsored by EP. This online guide contains information found on Publication 4395, Individual Retirement Arrangement (IRA) Resource Guide for Small Business Owners ...." (Internal Revenue Service) Opinion: Banks Profit From Employees' 401(k)s Excerpt: "Employees of banks often find their 401(k) investments are in mutual funds operated by the bank itself. Those funds are often mediocre or worse." (MSN Money) The Perils of Holding Company Stock in Sponsored Plans (PDF) 19 pages. Excerpt: "In this paper, authors Bob Eccles and Dave Gordon deliver a broad overview of recent employer stock litigation, fiduciary duties with regard to company stock, and one's status as a fiduciary and co-fiduciary. They also offer important suggestions for mitigating fiduciary liability, including a checklist of best practices." (Chubb Group of Insurance Companies) UK Employers Contributed Almost Five Times As Much As Employees to Pension Schemes in 2004 Excerpt: "Commenting on new figures from the Office for National Statistics showing that employers' contributions to self-administered pension schemes in 2004 were a record four and three quarter times as much as employees contributed, Stephen Yeo, a partner at Watson Wyatt commented: 'The cost of pensions has risen in recent years due to increasing longevity and lower expected investment returns." (Watson Wyatt Worldwide) Automatic Rollovers: A New Opportunity for IRA Custodians/Trustees Excerpt: "Qualified employer retirement plans can provide several distribution options .... A plan can permit distribution of a participant's plan assets when he/she separates from service or restrict distributions until he/she reaches a certain age. A plan can allow for an immediate mandatory distribution or cash out under Internal Revenue Code (IRC) Sections 411(a)(11) and 417(e), without a separating participant's consent, if his/her plan balance has a present value of $5,000 or less." (Bankers Systems, Inc.) Jury Decides Investment Company for Florida State Pension Funds Did Nothing Wrong Excerpt: "An investment fund did nothing wrong when it put Florida state employee pension money in falling Enron stock, costing the retirement plan more than $280 million, a jury ruled Monday. Jurors agreed with Alliance Capital Management in the lawsuit filed by the state Board of Administration, which invests the pension fund and had argued that Alliance breached its contract and trust by putting money into Enron as it spiraled toward bankrup.tcy at the end of 2001." (AP via nj.com) An Investment Policy Statement, Done Right, Is Vital Excerpt: "Based on personal industry experience, about 30% to 40% of the attorneys who work with investment fiduciaries (investment committees of retirement plans, foundations and endowments, and trustees of personal trusts) recommend that their clients not prepare an investment policy statement, because they fear that a written document, not followed, might expose the fiduciary to greater liability than not having any document at all." (Investment News; registration or subscription required) Mexican President Contemplates Pension Plan for All Excerpt: "A plan is under development to provide pensions to Mexicans with no other formal financial support in their old age, Mexican President Vicente Fox said during his weekly radio address. 'Under a system that we are soon going to announce, you also will have the opportunity of a pension plan for everyone,' Fox said during the Saturday show." (Union-Tribune Publishing Co.) Older Americans, Already Retiring Later, May Help Fix Social Security Excerpt: "Federal Reserve Chairman Alan Greenspan, who said last month that encouraging senior citizens to keep working is one way to help fix Social Security, at age 79 still draws a salary and pays taxes into the retirement program. Like Greenspan, millions of older Americans are retiring later than in the past, reversing a trend toward earlier retirement dating from the 19th century." (Bloomberg News & Commentary) Bush Plan to Reform Social Security Will Mean a Double Cut in Benefits Excerpt: "When the president argues for privatizing Social Security, he hammers home a single point: it's a better financial deal for the young. If they all had personal investment accounts, they'd wind up richer than if they stuck with the government plan. Some unlucky people would fall behind, but not enough to matter (and besides, 'it won't be me'). But how many of the young (not to mention the middle-aged) might fall on the 'unlucky' side? A larger number than you think." (Newsweek via MSNBC News) National Association of Securities Dealers Says 12(b)-1 Fees Should Be Retained Excerpt: "NASD's mutual fund task force, in its second and final report to the Securities and Exchange Commission, said that 12(b)-1 fees should continue to be allowed, but with improved disclosure. However, in the report, which was sent to the SEC in late March, it argued against the agency's suggestion that the $10 billion in annual 12(b)-1 fees be deducted directly from shareholder accounts." (Investment News; registration or subscription required) Links to Items on Executive Comp, Benefits in General Overview: SEC Postpones Stock Option Expensing Standard (PDF) 1 page. Excerpt: "The Securities and Exchange Commission released a new rule yesterday that amends the compliance date for FASB Statement No. 123R, Accounting for Share-Based Payments. FAS 123R, among other things, requires companies to expense for stock options. The new SEC rule permits companies to implement FAS 123R at the beginning of their next fiscal year, instead of the next reporting period that begins after June 15, 2005 (or December 15, 2005 for small businesses)." (Mellon Financial Corporation) Mellon's HR&IS Issues Survey of Year-End 2004 Global U.S. GAAP Assumptions (PDF) 2 pages. Excerpt: "Mellon's Human Resources & Investor Solutions has released a survey of the year-end 2004 accounting assumptions for benefit plans that were used for U.S. GAAP disclosures by their clients. This For Your Information highlights the results of this survey." (Mellon Financial Corporation) SEC Defers Mandatory Option Expensing for Many Companies: Effective Date Revised for FAS 123(R) (PDF) 2 pages. Excerpt: "On April 14, the SEC delayed the date by which many companies must implement FAS 123(R), which requires the expensing of employee stock options. The SEC's new rule allows public companies to implement FAS 123(R) at the beginning of their next fiscal year, rather than the next reporting period, that begins after June 15, 2005." (Powell Goldstein LLP) News Scan Summarizes News in the Benefits Industry -- April 18, 2005 Edition (PDF) 6 pages. This edition includes articles titled: DOL Issues Required Notice of Rights and Duties Under USERRA; IRS Proposes Rule to Exclude Certain Disability Payments from FICA Taxes; Michigan House Approves Bill to Eliminate Tax on Health Care Benefits; and, AICPA Reports on Social Security Reform Alternatives. (Gabriel, Roeder, Smith & Company) Overview: DOL Revises Voluntary Fiduciary Correction Program (PDF) 4 pages. Excerpt: "The revisions, which are intended to make it easier for plan sponsors and other plan officials to correct certain ERISA violations, include new transactions that can result in violations and simplified methods for correcting them. In addition to the revisions to the VFCP, the DOL has proposed amendments to the prohibited transaction exemption applicable to certain transactions under the VFCP." (Mellon Financial Corporation) Newly Posted Events HIPAA and Other Health Laws: Virginia Compliance Assistance Seminar in Virginia on May 18, 2005 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA) Newly Posted Press Releases 401(K) Assets Hit Record Level, Nearing $2 Trillion Says New Spark Report (Society of Professional Administrators and Recordkeepers (SPARK)) Eisner Retirement Solutions LLC To Provide Mandatory IRA Rollover Solution (Eisner Retirement Solutions LLC) Meet the COBRApoint Team at the HRMStrategies (COBRApoint) Free Monthly COBRA Information Through Email Newsletter (COBRApoint) Free Daily COBRA Point delivered by email (COBRApoint) COBRApoint Sponsored NAPBA Legislative Spring Conference (COBRApoint) Newly Posted or Renewed Job Openings AVP, Health & Welfare Consultant for Aon Corporation in MI, MN Defined Benefits Manager for Great-West Financial Services in WI Senior Health & Welfare Pharmacy Consultant for Mellon in GA Benefit Administrator for Mellon in GA Reconciliation Supervisor - PA for Vanguard in PA Daily Transaction Administrator for IPA Northeast, LLC in NJ Tax Manager - PA for Vanguard in PA Handy Links:
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