| BenefitsLink Retirement Plans Newsletter |   |
April 26, 2005
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Survey on the Prevalence of Traditional and Hybrid Defined Benefit Pension Plans: Report of Findings
26 pages. Excerpt: "The purpose of the survey was to examine the prevalence of traditional and hybrid defined benefit pension plans in large organizations that have operations in the United States. The results of the study may prove useful to pension practitioners and policy makers wishing to gauge the effect of a recent US court ruling with potentially widespread implications for pension plans commonly referred to as cash balance plans." (Mathew Greenwald and Associates, Inc. via Society of Actuaries)
Overview: IRS Proposes Regulations on Designated Roth Contributions to 401(k) Plans
Excerpt: "The IRS has issued proposed amendments to the 401(k) and (m) regulations that would provide guidance on designated Roth contributions under Internal Revenue Code section 402A, added by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). Beginning in 2006, a 401(k) plan may permit employees to designate some or all of their elective contributions as Roth contributions." (Watson Wyatt Worldwide)
401(k) Plan Investments' Fee Disclosure Is a Balancing Act for Employers
Excerpt: "Silvia Frank likens the way employees choose investments for their 401(k) plans to how people shopped for food before products carried nutritional labels. 'Back then we had no idea what we were eating,' she says. 'All we knew was if it tasted good.' It's the same with mutual funds. 'We know it's a big name and if Morningstar gives it five stars,' she says. But ultimately, 'we don't know if we are doing anything good for our retirement.'" (Workforce Management; one-time registration required)
Save More for Retirement Act of 2005 -- Senator Bingaman's Speech Upon Introduction of the Bill
Excerpt: "The Save More for Retirement Act of 2005 (S. 875) was introduced last week in the Senate by Senator Jeff Bingaman (D-NM). [The target page excerpts] what he had to say on the Senate floor when he introduced the Bill: ...." (Attorney B. Janell Grenier via BenefitsBlog.com)
Study Rekindles Debate Over 401(k) Plan Options
Excerpt: "Most 401(k) plans lack the investment choices necessary to create a diversified portfolio, contend professors at New York University and Fordham in a new study. Their findings contradict what some benefit experts have been telling employers for years: Simplify plan options so employees can better understand them." (Employee Benefit News)
Letter Submitted to PBGC on Proposed Rule Concerning Liability Pursuant to ERISA Section 4062(e) (PDF)
4 pages. Excerpt: "The American Benefits Council (Council) appreciates the opportunity to comment on the proposed regulations issued on February 25, 2005, relating to computing liability under Section 4063(b) of the Employee Retirement Income Security Act of 1974 (ERISA) when there is a substantial cessation of operations by an employer as described by ERISA Section 4062(e)." (American Benefits Council)
United Kingdom Executives Fear Cost of Closing Pension Gap, According to Study
Excerpt: "Finance directors and other senior managers from some of Britain's biggest companies fear they may have to shore up pension schemes with capital injections, a survey by U.K. insurer Prudential showed on Monday." (Reuters Limited via Business Insurance)
Reports: Impact of Mortality Table Projection Scales on Defined Benefit Pension Plan Valuations
Excerpt: "The study that led to these reports was initiated to provide quantitative information illustrating the impact of reflecting mortality improvement using a 'Generational Approach' in actuarial valuations of defined benefit pension plans versus traditional methods. [Target page has links to the full report and an introductory report.]" (Society of Actuaries)
Opinion: Proposed PBGC Premium Increases Will Cost Jobs, Leave Future Retirees with Less Money (PDF)
4 pages. Excerpt: "The House budget resolution, (H. Con. Res. 95) assumes an unprecedented $18.1 billion premium increase on pension plans over the next five years – effectively a tax increase of over 240 percent for companies maintaining defined benefit plans. This tax increase will cost jobs and could leave workers who retire in the future with less money." (American Benefits Council)
How and When to Inform Employees on Closing of Company's Defined Benefit Plan
Excerpt: "Question: We are considering retiring our defined benefits plan. If we do, it will have an impact on several hundred employees. Since many are within 10 years of retirement, we anticipate it will cause a lot of stress. If we decide to do this, when should we inform our employees? Answer: This is a great question. We generally recommend informing employees 9-12 months in advance of the change. This gives them time to adjust and get used to the idea." (WorkIndex.com)
Overview: Withholding State Income Taxes from Pension and Annuity Payments (PDF)
2 pages. Excerpt: "Some states require state income taxes to be withheld from pension and annuity payments made to individuals who legally reside in that state if federal taxes are withheld from those payments. However, several of these states let individuals elect out of state withholding in certain situations, even if they are having federal taxes withheld." (Prudential Retirement)
DOL Advisory Opinion 2005-03a Regarding Application of Prohibited Transaction Provisions
Excerpt: "Application of the definition of a 'related group of plans' for purposes of the wholly-owned exception of the plan assets regulation at 29 CFR 2510.3-101." (U.S. Department of Labor)
Opinion: Social Security Reform -- The Proof's in the Pension Benefit Check
Excerpt: "I made a pilgrimage to Santiago seeking to resolve the Social Security debate with a simple question: What would Pablo Serra do? .... As it happened, our countries have required our employers to set aside roughly the same portion of our income, a little over 12 percent, which pays for disability insurance as well as the pension program. It also covers, in Pablo's case, the fees charged by the mutual-fund company managing his money." (The New York Times; one-time registration required)
Issue Brief: Social Security's Fixable Financing Issues: Shortfall in Funds Is Not Inevitable
Excerpt: "While a deficit in the 75-year planning horizon of Social Security has emerged, it has not been driven by demographic changes. Further, this deficit has shrunk over the past 10 years, as economic trends have been slightly more favorable. Policy pres.criptions for narrowing the financing gap should focus on its proximate causes: slow real wage growth and inequality." (Economic Policy Institute)
DOL Advisory Opinion, 2005-04A on Proposed Investment of Assets of an Employee Retirement Plan
Excerpt: "Whether a plan may invest in a mutual fund when one of the plan's trustees is the president, CEO, and significant shareholder of the mutual fund's investment advisor." (U.S. Department of Labor)
ASPPA Asks For Further Guidance From PBGC On Computing Liability After Cessations Of Operations
Excerpt: "The American Society of Pension Professionals & Actuaries (ASPPA) has submitted its comments to the Pension Benefit Guaranty Corporation regarding the agency's proposed regulations on the computation of withdrawal liability under ERISA Sec. 4062(e). The proposed regulations, which the PBGC issued this past February, would provide a rule for computing withdrawal liability when there is a substantial cessation of operations by an employer that participates in a multiple-employer plan." (Spencer Benefits Reports)
Young Workers Hungry for Retirement Plan Information, According to Survey
Excerpt: "The nation's youngest workers care more about retirement planning than you might think, some experts say. .... Many companies fail to connect with young workers, the survey data suggests. For example, just 37% of echo boomers say their employer provides enough information about the retirement plan, compared with 58% of Gen Xers and 61% of baby boomers. Echo boomers also express more interest than older workers in having a professional manage their retirement account." (Employee Benefit News)
Links to Items on Executive Comp, Benefits in General
Online Benefit Statements for Employees Help Uncover 'Hidden' Value of Total Job Compensation
Excerpt: "Do your employees know the true value of their total benefits package? Probably not. According to the U.S. Chamber of Commerce, nearly 80 percent of employees don't understand the worth of their compensation packages. Yet benefit costs continue to rise. The U.S. Chamber recently published a study indicating that employers spent an average of $18,358 per employee on benefits in 2003, up slightly from $18,000 the year before." (Nashville Business Journal via bizjournals.com; one-time registration required)
Larger Outsourcing Vendors Are Offering More Services to Employers for Less
Excerpt: "Stung by rising health care costs, some large companies are finding solace in bargains offered by a new breed of outsourcers that can handle everything from benefits to recruiting." (Employee Benefit News)
Former Employees' Claims of ERISA 510 Discrimination Fail; Employer Had Legitimate Reason
Excerpt: "The U.S. Court of Appeals for the Eighth Circuit held that a division of Honeywell International that acts as a government contractor for the U.S. Department of Energy (DOE) did not intentionally interfere with former employees' pension rights when it outsourced the division to a subcontractor in order to make a more competitive bid to the DOE to continue its government contract. Register v. Honeywell Fed. Mfg. & Techs. LLC, No. 04-1902, (8th Cir. 2/17/05)." (BNA Tax Management)
Newly Posted Events
The Future of Roth 401(k)
Nationwide on May 19, 2005
presented by ASPPA (American Society of Pension Professionals & Actuaries)
Ultimate Fixes — The New VFCP and Bankruptcy Rules
Nationwide on May 9, 2005
presented by SunGard Corbel
Newly Posted Press Releases
Workers' Comp Woes to be Addressed at GIANT SEMINAR
(ClearComp)
Rep. Ben Cardin, Architect Of Retirement Plan Reforms, To Speak At SPARK National Conference
(Society of Professional Administrators and Recordkeepers (SPARK))
Newly Posted or Renewed Job Openings
Member Retirement Services Specialist
for Orange County Teachers Federal Credit Union
in CA
Tax Manager
for Deloitte
in NC
Senior Compliance Analyst
for Leggette Actuaries, Inc.
in TX
Supervisor TPA Firm
for Chicago TPA Firm
in IL
Employee Benefits Specialist
for Principal Financial Group
in NC
Employee Benefits Specialist - Voluntary Benefits
for Principal Financial Group
in MA
Account Manager - AMT
for CitiStreet
in NJ
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