| BenefitsLink Retirement Plans Newsletter |   |
May 3, 2005
Today's sponsor: ASPPA • Working for America's Retirement™
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| Meeting Midway Conference |
| July 24-27, 2005 * San Diego, CA
Health and welfare issues * 401(k) plans Employee compensation * Actuarial pension issues Health Savings Accounts * Legal & fiduciary issues You don't want to miss this one! Register online today. Brought to you by WP&BC and ASPPA. |
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Would Corporate Retirement Plans Be Threatened by the Adoption of Social Security Private Accounts?
Excerpt: "As the debate rages over whether Americans should be allowed to 'carve out' some of their Social Security payroll tax to create individual accounts (IAs) for retirement, one potentially volatile question has gone largely unasked: How would the existence of the private IAs affect participation in corporate 401(k) plans?" (CFO Magazine)
Coming to a 401(k) Near You: Automatic Enrollment
Excerpt: "Getting employees to contribute to employer-sponsored retirement-savings programs has been a vexing problem for companies in recent years. Stung by losses in the bear market that followed the bursting of the dot-com bubble, workers aren't keen at putting money into a system that seemingly causes them to lose -- not save -- money." (The Journal News)
Charting the 403(b) Market -- 1999--2004
Excerpt: "The ... chart illustrates the distribution of investments in the 403(b) market as of December 31st of each year. The numbers represent billions of dollars invested." (bWise Guys, LLC.)
The Road to Retirement: Keep Mature Workers on Your Payroll Longer
Excerpt: "You can't teach old dogs new tricks, or so the saying goes. May is national Older American's Month - the perfect time to address stereotypes about the aging workforce. 'There's a misunderstanding about mature workers. People tend to think that they aren't as productive on the job as they once were. Research has shown in most cases, that isn't true. Mature workers can bring significant experience, institutional knowledge, loyalty, and a strong work ethic to the workforce,' ...." (Ceridian Connection)
Text of IRS Notice 2005-40: Deferral of Net Experience Loss Charge by Multiemployer DB Plans (PDF)
Excerpt: "This notice sets forth guidance regarding the election that can be made for certain multiemployer plans to defer charges with respect to net experience losses pursuant to § 412(b)(7)(F) of the Internal Revenue Code ... and section 302(b)(7)(F) of [ERISA], as added by section 104 of the Pension Funding Equity Act of 2004 (PFEA), Pub. L. 108-218." (Internal Revenue Service)
Sharp Divisions Mark Pension Reform Debate
Excerpt: "Pension reform proposals laid out by the Bush Administration and employer groups highlight a great schism in what the regulators and the regulated believe government should do to protect the ailing single-employer defined benefit system." (Employee Benefit News)
Tax Court Upholds IRS Approval of Interest Rate Change to Employees' Pension Benefits
Excerpt: "The United States Tax Court has upheld an Internal Revenue Service (IRS) decision that a suburban Philadelphia company did not illegally cut back employees' pension benefits by changing its lump-sum distribution interest rate. In affirming the IRS decision approving the plan amendment by Hercules Incorporated, Judge Mary Ann Cohen said the company did not violate the anti-cutback rule of the Employee Retirement Income Security Act (ERISA)." (PLANSPONSOR.com; one-time registration required)
Overview: Life Insurance in Retirement Plans
Excerpt: "The IRS has issued guidance on how to calculate a fair market value for life insurance held in a retirement plan." (McKay Hochman Co., Inc.)
Overview: IRS Information Letter Addressing 10% Penalty Exception on Medical Hardship Distribution
Excerpt: "The IRS has issued an information letter regarding which medical expenses are eligible for exception from the 10% early distribution penalty." (McKay Hochman Co., Inc.)
Overview: Abandoned Individual Account Plan Proposed Regulations and Class Exemption
Excerpt: "To facilitate the termination of abandoned defined contribution plans, the Department of Labor (DOL) issued proposed regulations and a prohibited transaction exemption on March 10, 2005." (McKay Hochman Co., Inc.)
How ESOP Companies Handle the Repurchase Obligation
The NCEO presents excerpts from the newly released third edition of the book How ESOP Companies Handle the Repurchase Obligation, featuring essays on various aspects of repurchase obligation as well as the results of the NCEO's 2005 survey on what companies are doing. Among other things, the survey found that compared to 1999, fewer private ESOP companies have a formal repurchase plan now. (National Center for Employee Ownership)
Perspectives on Managing Cost and Risk — Pooled Funds: Prudence Pays (PDF)
6 pages. Excerpt: "Those charged with directing investments of pension and other funds are faced with a multitude of investment choices to generate the returns needed to meet fund goals. In this issue, we examine pooled funds, and share the results of a recent survey of 170 investment managers on this subject." (Towers Perrin)
Overview: Fiduciary's Removal from Decisionmaking to Avoid Conflict of Interest Not Enough
Excerpt: "As a result of this guidance, fiduciaries who must recuse themselves from potential conflicts of interest must now add this additional disclosure factor to their conflict analysis. Determining what is 'material' and what the other fiduciaries 'need to know' will not always be straightforward, and actually making the disclosure can present its own difficulties (including, in some instances, the risk of violating other applicable laws, particularly where securities are involved)." (Employee Benefits Institute of America Inc.)
Legislation Before Congress Affecting NCPERS – The Voice for Public Pensions
Excerpt: "NCPERS tracks federal legislation that has been signed into law and bills that are pending before the Congress affecting public sector pension funds. Each piece of legislation is listed by the bill number, sponsor, title of the bill, and its current status. There is a link from each bill to the official Congressional website, where you can view the complete text of the bill, list of cosponsors, analysis of the bill, and other important information." (National Conference on Public Employee Retirement Systems (NCPERS))
New York State Watchdog Group Calls for Public Employee Benefit Cutbacks
Excerpt: "A private financial watchdog for New York city's and New York state's governments has recommended that both freeze their current defined benefit pensions and migrate new employees to defined contribution programs instead. In calling for the DB to DC switch, the Citizens Budget Commission (CBC) argued that Empire State and New York City officials can longer support the current level of pension and health benefits as being required to lure and retain key employees." (PLANSPONSOR.com; one-time registration required)
Slovakia, Hungary Push Private Pensions as Western Europe Lags
Excerpt: "Richard Kolarik, the deputy head of Allianz AG's pension unit in Bratislava, Slovakia, knew that helping clients switch state retirement contributions to private accounts would keep him busy. He didn't expect a stampede. Since Jan. 1, when the government began to allow Slovaks to divert 50 percent of their pension payments to private funds, insurers including Allianz and Credit Suisse Group have signed up more than 750,000 savers." (Bloomberg News)
Australian Choice of Funds Update: Insights on Administration and ATO's Choice Education Campaign
Excerpt: "In late March, the Deputy Commissioner of the Australian Taxation Office (ATO), Mark Jackson, gave a speech which provided some insights into how the ATO intends to administer Choice of Funds. Of particular interest was the ATO's interpretation of the exemption from Choice of Funds where contributions are made under or in accordance with a State award or an Australian Workplace Agreement or certified agreement." (Watson Wyatt Worldwide)
International Update: Recent Developments in Foreign Public and Private Pensions
Excerpt: "The Update reports on the following issues: European Parliament vote to reform the pension system to eliminate disparities in salaries and pension benefits for its members; Pension Protection Fund begins operations in United Kingdom; Securities and Exchange Commission of Pakistan final rules for a new, voluntary pension system; Taiwan plan to create one unified retirement benefit system; investment policy in France, United Kingdom, Can.ada, and by Telecom Italia." (Social Security Administration)
Movement Toward Social Security Reform Drifting Slowly Forward; U.K. System Profiled
Excerpt: "The Social Security debate continues to show little concrete activity except for more rhetoric. Supporters of personal accounts no longer use the experience of several foreign Social Security systems to bolster their argument. To illustrate some of these systems, Bruce F. Spencer, founder and recently retired editor of the International Benefits Information Service (IBIS), has prepared the following article about the Social Security system in the United Kingdom." (Spencer Benefits Reports)
Question on Switching a Profit Sharing Plan to a Cash or Deferred Arrangement Plan (CODA)
Excerpt: "Question: We are considering switching our profit sharing plan to a cash or deferred arrangement plan (CODA) -- it seems like a good option for employees. Are there hidden costs or tax burdens we should be aware of? Answer: ...." (WorkIndex.com)
Opinion: Social Security, Work Day by Work Day
Excerpt: "This column is about Day Two. Day One is the first day of the work year. On that day, the average American worker earns about $142.31 and, of course, has a piece of that withheld for Social Security. Since the cap on such payments is $90,000 a year and the average American earns only $37,000, he or she pays Social Security tax all year long. Now we come to Day Two. For some people, it's not like Day One at all." (Richard Cohen via The Washington Post; one-time registration required)
The Regressive Impact of the Progressive Indexation of Social Security Benefits (PDF)
14 pages. Excerpt: "This paper examines the distributional impact of the formula for the progressive price indexation of Social Security benefits that President Bush endorsed in his April 28 press conference. This formula would not change the current indexation of benefits for the bottom 30 percent of wage earners, but would change the basis of indexation for the highest wage earners from wages to prices, ...." (Center for Economic and Policy Research)
Links to Items on Executive Comp, Benefits in General
Overview: New Bankrup.tcy Law
Excerpt: "President Bush signed the bankrup.tcy reform act on April 20, 2005. The new law provides qualified plan participants and individual retirement account (IRA) owners with more protection for their retirement assets." (McKay Hochman Co., Inc.)
Benefiting from ERISA: Exclusions Allow Benefits for Small Business Owners and Key Managers
Excerpt: "Before ERISA went into effect in 1974, many business owners and high-income professionals routinely provided themselves with extraordinary retirement and health benefits while their rank-and-file employees received substantially less. ERISA, with its draconian nondiscrimination rules, appeared to have changed all of that forever. ERISA, however, also created opportunities for owners to continue providing an array of exclusive executive benefits under certain codified exclusions, ...." (Financial Advisor)
DHL Benefit Offerings Tell Employees They Count with All Inclusive Employee Web Portal
Excerpt: "When DHL consummated its deal for Airborne in 2003, the benefits and compensation workload was considerable - manage plans for 25,000 employees, redesign the programs from the ground up, launch an employee education portal, and oh, yeah, save some money while you're at it." (Employee Benefit News)
Workers Lack Benefits Knowledge, Mistrust Drug Makers, According to Survey
Excerpt: "Many workers misunderstand their benefits and do not spend much time learning about them, reveals a recent survey from MetLife. About 60% of employees do not understand which benefits best meet their needs. To fill the gap, 27% of employees rely on friends and relatives for financial advice, while 46% do not consult anyone, according to MetLife, .... Furthermore, 55% of employees spend 30 minutes or less making benefits decisions during the open enrollment period." (Employee Benefit News)
Newly Posted Events
Clinical Trials
in California on September 19, 2005
presented by American Conference Institute
Washington Update: HR Policy Association and CMS
in Ohio on May 19, 2005
presented by Worldwide Employee Benefits Network (WEB) - Cleveland Chapter
Western Pension & Benefits Conference -- MT Chapter Quarterly Meeting
in Montana on June 8, 2005
presented by Western Pension & Benefits Conference - Montana Chapter
Newly Posted Press Releases
McKay Hochman eSeminar on Roth 401(k) Deferrals Announced
(McKay Hochman Co., Inc.)
The Honorable John W. Snow Prepared Remarks: The American Academy of Actuaries’ Spring Meeting Washington, DC
(U.S. Treasury Department)
Discover 412(i) CD by Nick Paleveda MBA J.D. LL.M.
(412i Company)
Leaves of Absences (Including FMLA and Military Leaves)
(Worldwide Employee Benefits Network (WEB) - NJ)
Newly Posted or Renewed Job Openings
Defined Contribution Plan Administrator
for Pension Works, Inc.
in VT
Defined Benefit Plan Representative
for United Airlines
in IL
Operations Manager (Las Vegas)
for Zenith Administrators
in NV
Benefits Analyst
for Global Financial Firm - NYC
in NY
ERISA Associate
for Kilpatrick Stockton LLP
in NC
Java Programmer
for ExpertPlan Inc.
in NJ
ERISA Associate
for Kilpatrick Stockton LLP
in DC
Pension Association
for UFCW-Employers Benefit Plans of Northern California Group Admin., LLC
in CA
401k Plan Administrator
for Boston Financial Data Services
in MA
Handy Links:
- View Today's Active Message Threads
- Search BenefitsLink
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
Copyright 2005 BenefitsLink.com, Inc.; except that you may reprint this newsletter in full (including this sentence) without obtaining our permission.
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