| BenefitsLink Retirement Plans Newsletter |   |
May 13, 2005
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Overview: Portman and Cardin's Comprehensive Pension Legislation
Excerpt: "Representative Portman (R-OH) has introduced H.R. 1960, the Individual and Workplace Retirement Savings Promotion Act, and Representative Cardin (D-MD) has introduced H.R. 1061, the Preservation and Savings Expansion Act. The bills, which propose a broad array of changes to rules for both defined benefit and defined contribution plans, are nearly identical -- the major difference is that Roth 401(k)s (which will become available in 2006) are repealed in Cardin's legislation." (Chicago Consulting Actuaries, LLC.)
AIG Faces ERISA Lawsuit on 401(k) Investments in Company Stock
Excerpt: "American International Group Inc. is facing a class-action lawsuit that claims the insurer led employees to invest in the company's 401(k) savings plan while concealing improper activities that drove down the value of AIG stock in the plan." (Business Insurance)
Editorial: Who Pays for Defined Benefit Pension Plans?
Excerpt: "Every time a company promises a pension benefit, taxpayers are potentially on the hook. The company is supposed to put aside money to back its promise, but if it goes bust without doing so, ..., the Pension Benefit Guaranty Corp., shoulders its obligations to workers. By the end of 2004, this government backstop had taken over pension plans whose liabilities exceeded assets by $23 billion, and the current trouble in the airline industry seems likely to inflate that total." (The Washington Post; one-time registration required)
Overview: Heinz, Rev. Proc. 2005-23 and Suspension of Benefits
Excerpt: "A final note. The Rev. Proc. in effect limits the 'back pay' obligation under the Tax Code to periods from and after June 7, 2004. It does not, however, affect participants' litigation rights under ERISA's parallel anti-cutback provision. Participants may be able to sue for unpaid benefits for the entire period the cutback amendment was applied, subject to any statute of limitations. To reduce this litigation risk, the Rev. Proc. permits the reforming amendment to be more ...." (Chicago Consulting Actuaries, LLC.)
Outline on ESOP Advanced Fiduciary Issues (PDF)
12 pages. Gary Howell of the Gardner, Carton & Douglas HR Law Department recently participated in a panel titled 'ESOP Advance Fiduciary Issues' at the 2005 Annual Conference of the National Center for Employee Ownership/Beyster Institute held April 20-22, 2005. (Gardner, Carton & Douglas)
IRS Issues IRA Resource Guide on CD-ROM for Small Business Owners and Individuals
Excerpt: "The IRS has issued a second multimedia publication (Publication 4395, 2-2005) on CD-ROM providing information on retirement planning. The IRS previously issued a multimedia disk (Publication 4050) describing its correction programs for retirement plans. This second CD-ROM covers IRAs, SEPs, and SIMPLE IRAs. There is no charge to order the disk. The IRS Resource Guide is geared to three target audiences: (1) individuals, (2) small businesses and (3) tax and benefit professionals." (McKay Hochman Co., Inc.)
Overview: Latest News on Mutual Fund Redemption Fees (PDF)
2 pages. Excerpt: "On March 3, 2005, the SEC unanimously voted to adopt a revision of Rule 22c-2, concerning mutual fund redemption fees. The rule will require the boards of mutual funds that redeem shares within 7 days to: i. Adopt a redemption fee of no more than 2 percent of the amount of the shares redeemed; or ii. determine that a redemption fee is not necessary or appropriate for the fund." (National Association of Government Defined Contribution Administrators)
House Panel Seeks Fast Work on Social Security Reform and New Savings Vehicles
Excerpt: "Amid sharp partisan sniping, the House Ways and Means Committee launched a whirlwind drive [May 12, 2005] to write a bill by this summer that would overhaul Social Security and enable Americans to increase their private retirement savings." (Chicago Tribune via Yahoo! News)
Testimony of C. Eugene Steuerle before the U.S. House Committee on Ways and Means, May 12, 2005
Excerpt: "Thank you for the opportunity to testify on alternatives to strengthen Social Security. I must confess my frustration at how narrowly the Social Security debate has usually been focused. It's as if the public is being asked to choose a dog from the pound by looking only at its tail -- or at best its hind legs -- but not the whole dog." (Urban Institute)
Opinion: About those Higher Returns for Social Security Personal Accounts....
Excerpt: "This is misleading for a slew of reasons: 1) Social Security's benefits go far beyond profits on a portfolio -- they also include disability and survivor benefits impossible to obtain on the private market; 2) private accounts would be invested conservatively in order to reduce risk; and 3) the future growth Catch-22: if all the economic assumptions we have about the future hold true, equities returns can't be as high in this century as they were in the last -- ...." (The Century Foundation)
Working Paper: Are Firms or Workers Behind the Shift Away from Defined Benefit Pension Plans? (PDF)
33 pages. Excerpt: "In this study we estimate the contribution of changing workforce characteristics and production environments to the shift in pension coverage. Our findings suggest that, while aggregate factors explain a large part of the movement, changes in worker demand, due to evolving workforce characteristics, also contributed notably. On the supply side, we find support for the theory that technical change has reduced the value of DB plans." (Federal Reserve Board)
Links to Items on Executive Comp, Benefits in General
Overview: Demystifying Volatility -- FAS 123R and Assumptions in Stock Option Valuation
Excerpt: "FAS 123R brought the valuation of share-based compensation from the opaque depths of financial statements footnotes to the forefront. It has created an immediate need for companies to understand the valuation models, key assumptions, and the financial implications. Setting assumptions is as important as selecting the valuation model." (Chicago Consulting Actuaries, LLC.)
Bill to Limit COLI Policies Introduced in House
Excerpt: "Bipartisan legislation introduced in the House on Wednesday would limit newly issued corporate-owned life insurance policies to top executives and highly compensated employees. Under the measure, H.R. 2251, coverage under COLI policies would be limited to corporate directors and highly compensated employees-those earning at least $90,000 a year or who are in the top 35% by compensation." (Business Insurance)
Hewitt Federal Legislation Quick Guide Updated as of May 10, 2005
Excerpt: "Hewitt's Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding health and welfare benefit plans, retirement plans, and human resources and employment law." (Hewitt Associates)
Overview: Employee Stock-Based Compensation Awards with Non-Substantive Vesting Conditions (PDF)
3 pages. Excerpt: "This DataLine provides important guidance on how to address non-substantive vesting conditions, such as retirement eligibility provisions, of employee stock-based compensation awards under Financial Accounting Standards Board Statement No. 123, Accounting for StocBased Compensation (FAS 123), and Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25)." (PricewaterhouseCoopers via)
Cisco Systems Proposes New Employee Stock Options Instrument
Excerpt: "Prominent technology company Cisco Systems has thrown a new wrinkle into the ongoing controversy over stock option expensing with a proposal to publicly sell a new options-related security. Cisco has proposed to regulators the creation of employee stock option reference securities (ESORS), which it would sell to institutional investors when it issued options to its employees, according to a New York Times report." (PLANSPONSOR.com; one-time registration required)
Newly Posted Events
Using Care Management Strategies to Reduce Benefit Costs and Improve Employee Health
in California on June 16, 2005
presented by Precept Human Capital Management
Newly Posted or Renewed Job Openings
Associate Relationship Manager
for Great-West Corporate
in KS
Group Product Design & Marketing Specialist
for Sentry Insurance
in WI
Administrative Assistant
for Growing Major Midtown Union Health Plan
in NY
Account Executive - Client Services
for Diversified Investment Advisors
in CA
Global Supply Chain - Corporate Benefits and Facilities
for Apple Computer Inc.
in CA
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