May 9, 2005 Today's sponsor: DATAIR Employee Benefit Systems, Inc. (Click on company name or banner to learn more.)
Announcement 2005-37: Authority of Volume Submitter Practitioner to Amend for Adopting Employers (PDF) 3 pages. Excerpt: "[E]ffective February 17, 2005 ... a Volume Submitter (VS) plan [is permitted to] include a provision ... that authorizes the VS practitioner to amend the plan on behalf of adopting employers. This announcement explains how a VS practitioner adopts the implementing amendment, describes the type of amendments that can be made on behalf of adopting employers, provides practitioners with interim relief of 60 days ... and contains sample language for the implementing amendment." (Internal Revenue Service) Announcement 2005-36: Closing of the GUST Program for Defined Contribution Pre-Approved Plans (PDF) Announcement 2005-36. Excerpt: "[T]he GUST defined contribution pre-approved program will close as of June 15, 2005. Applications for [n]ew defined contribution pre-approved non-mass submitter and mass submitter (i.e., identical adopters and minor modifiers) plans, and [n]ew sponsors and practitioners of defined contribution non-mass submitter and mass submitter (i.e., identical adopters and minor modifiers) plans may be submitted through June 15, 2005." (Internal Revenue Service) Electronic Data Systems Corp. Settles 401(k)/Company Stock Suit Excerpt: "Electronic Data Systems Corp. said Friday it has reached a preliminary $16.5 million settlement of a class action lawsuit that will require the computer-services company to make changes to its 401(k) plan. Participants who had invested in company stock in the Plano, Texas-based company's 401(k) plan brought suit alleging the company withheld material information about its financial condition ahead of a preliminary announcement of 2002 earnings, which resulted in a drop in the ...." (PLANSPONSOR.com; one-time registration required) Workers Who Want Roth 401(k) Accounts Should Start Making Their Wishes Known to Their Employers Excerpt: "For employers, the new option entails some administrative headaches -- including such matters as keeping two separate 401(k) accounts for participating employees and getting payrolls adjusted to include and exclude the proper amounts on tax forms. However, some experts think companies will find the accounts very appealing for at least certain types of workers." (The Washington Post; one-time registration required) Transcript of Practitioner's Forum Discussion on Federal Bankrup.tcy Law and Retirement Plans Excerpt: "The [target page presents] the transcript of an informal discussion of employee benefit practitioners held in Washington, DC on April 20, 2005. The topic centers on recent developments in federal bankrup.tcy law and retirement plans." (BNA Tax Management) Nest Eggs Used to Start Businesses: Self-Directed Retirement Plans May Be Effective Financing Method Excerpt: "Most owners of 401(k) retirement plans know they would have to pay income taxes plus penalties for withdrawing money before age 59½. Quinn avoided those costs through a self-directed retirement plan that let him roll money into his own corporation's retirement fund and invest the money in the business. When structured properly, this method can meet Internal Revenue Service requirements." (Orange County Register via Pioneer Press; one-time registration required) Pension Boosting Legal; Practice Sharply Criticized, But NJ Legislature Does Little to Change It Excerpt: "This is how it works: A public official or employee works at a low salary for years to build up time in the state pension system. As he comes closer to retirement, his salary is boosted to six figures, .... Since pensions are generally calculated on a formula based on the average of the highest three salary years, the boost has the effect of wiping out all the years the employee worked at a much lower salary. The employee is then eligible for a pension few others can reach ...." (Courier Post Online) NCPERS Battles Against Privatization of Public Employee Retirement Plans Excerpt: "National Conference on Public Employee Retirement Systems is totally involved in the battle to stop privatization of public pension benefits by eliminating defined benefit plans and totally replacing them with defined contribution plans. NCPERS has published the following myths and facts about privatizing public employee retirement in California [in the target page] ...." (Cypen & Cypen) Interview: Social Security Point Man Allan Hubbard Assesses the Campaign for Private Accounts Excerpt: "As the head of the National Economic Council, White House official Allan B. Hubbard has drawn a tough assignment -- muscling private Social Security accounts and other elements of the President's ownership agenda past Congress. Recently Hubbard sat down with Businessweek ... to take stock of the campaign. Edited excerpts of their conversation follow. Note: This is an extended, online-only version of the interview that appears in the May 16, 2005, issue of BusinessWeek." (BusinessWeek Online) Opinion: Bush Plan May Destroy Social Security, Not Fix It Excerpt: "The sweeping changes Bush has proposed for Social Security, creation of private accounts and progressive indexing of benefits, are far more likely to destroy the program than to fix it. Together, these proposals would so reduce the value of regular benefits that Social Security would become much less important as a source of retirement income for average workers and virtually irrelevant for those with relatively high incomes." (Bloomberg News) Opinion: Social Security as Welfare Excerpt: "Progressive indexation is means testing politely labeled, and means testing, however labeled, is an attribute of welfare programs. Which is why in 1997 -- eight years before Bush's attempt to attract Democratic support by proposing progressive indexation to make Social Security more redistributive -- Moynihan understood why a combination of progressive indexation and personal accounts 'carved out' of Social Security would repel Democrats." (George Will via The Washington Post; one-time registration required) Resource Guide to Understand Progressive Price-Indexing and What It Means for Social Security Reform Excerpt: "Recognizing the unpopularity of benefit cuts and their potential impact on vulnerable seniors, privatization advocates are proposing benefit reductions through a method known as 'progressive price-indexing.' Under this formula, the lowest-wage workers do not receive cuts in guaranteed benefits, while middle and high income beneficiaries see their Social Security decrease over time." (The Century Foundation) Understanding the Proposed Cuts to Social Security Benefits (PDF) 4 pages. Excerpt: "The newly proposed cuts in guaranteed benefits would not reduce the huge amount of federal debt required to finance the previously announced plans for private accounts. Paying for the new accounts would still require $4.9 trillion in additional federal borrowing over the first 20 years of the plan, while depleting Social Security's trust funds more than 10 years sooner than would be the case without private accounts." (The Century Foundation) Fixing Social Security: Changes Need to Be Made, but Choices Aren't Hard Nor Measures Painful (PDF) 7 pages. Excerpt: "There is no good reason to 'reform' Social Security. Social Security has not failed. What is needed are some relatively small changes that are desirable in any event and that would improve the fairness and efficiency of Social Security, while at the same time improving its financing. Diverting Social Security funds into private accounts as proposed by the president only makes basic retirement benefits uncertain and the program more difficult to finance." (Robert M. Ball via The Century Foundation) Issue in Brief: Are the Social Security Trust Funds Meaningful? (PDF) 8 pages. Excerpt: "This brief explores the effectiveness of building up assets in the Social Security trust funds. It first describes the economic rationale for such a buildup. It then looks at the debate about whether the accumulation of assets in the trust funds since 1983 has increased national saving. The final section explores ways that could make the accumulation of assets more effective -- ..., restricting trust funds' investment in Treasury debt, and, finally, personal accounts." (Center for Retirement Research at Boston College) Links to Items on Executive Comp, Benefits in General Web-Based Total Compensation Statements Keep Employees in the Know Excerpt: "As benefit costs represent an increasingly large slice of employee compensation, experts say it's more critical than ever to communicate the total value of compensation and benefits. A growing number of employers have decided the best way to do that is to ditch paper-based total compensation statements in favor of the Internet." (Employee Benefit News) Spokane, Washington, City Council OKs Domestic Partner Benefits Excerpt: "The Spokane City Council has approved extending benefits to unmarried partners of city employees - if their labor unions want to negotiate for those benefits. The ordinance, which passed by a 5-2 vote, would allow domestic partners to obtain health-care benefits, city-sponsored life insurance, and pension rights. Employees could take paid leave from work to attend to emergencies or illnesses involving their partners." (PLANSPONSOR.com; one-time registration required) 10 Mistakes Corporations Make When Designing Benefit Plans for Executives Excerpt: "Despite the focused interest on changes in executive benefit strategies triggered by the Sarbanes-Oxley legislation and the more recent American Jobs Creation Act, companies continue to make a number of common errors when putting together executive benefits packages, and in particular, nonqualified benefit packages. The outcome could harm the executives, the company or both." (Jim Clary, Mullin Consulting, via Employee Benefit News) Commentary and Outline on IRS Executive Compensation Audit Technique Guides Excerpt: "What is the IRS telling its agents to look for in the executive compensation arena when they audit an employer? The IRS has recently posted on their website 'audit technique guides (ATGs) that agents use during the course of corporation and/or executive employee tax examinations' which cover these topics: ...." (Attorney B. Janell Grenier via BenefitsBlog.com) Newly Posted Events Medicare Part D: Decision-Making Information Nationwide on May 19, 2005 presented by International Foundation of Employee Benefit Plans Newly Posted Press Releases Union Membership a Key to Health Care Coverage (Employee Benefit Research Institute (EBRI)) Newly Posted or Renewed Job Openings Public Policy Analyst for National Business Group on Health in DC Actuary for Bolton Partners, Inc. in MD Internal Wholesaler for ING U. S. Financial Services in KS Pension Administrator for Benetech, Inc. in GA, VA 401(k)/ DC Plan Consultant for Benefit Services Group, Inc. in IL Non-Qualified Benefit Plan Administration Specialist for McCamish Systems, LLC in GA 401(k) Plan Administration Consultant for Chesapeake Benefit Partners in DC, MD, VA Benefit Analyst, Sr. for O'Charley's in TN Research Manager, Human Resource Practice for The Corporate Executive Board in DC Handy Links:
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