BenefitsLink Retirement Plans Newsletter May 24, 2005 Today's sponsor: ASPPA • Working for America's Retirement™ (Click on company name or banner to learn more.) 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. (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) DOL Cautions Bank on Fees Intended to Steer Retiree Account Funds into Mutual Funds Excerpt: "The Labor Department has issued an advisory opinion that banks, brokerage firms and investment firms cannot accept payments from mutual fund companies in exchange for steering retirement account customers into those funds. The opinion may help eliminate some of the troubling conflicts of interest that exist in many individuals' retirement accounts." (The New York Times; one-time registration required) Retirement News for Employers, Spring 2005 Edition (PDF) 10 pages. Contents: IRA Resource Guide: On CD and Online; IRA Investments; The Fix Is In: Common Plan Mistakes; Since You Asked: SIMPLE IRA Plan Exam Program Selections; It's Not Too Late! The 2005 IRS Nationwide Tax Forums; Your 401(k) and Your TPA; New Tax Shelter Reporting Rules. (U.S. Internal Revenue Service) Opinion: Cadillac of 401(k)s Belongs to General Motors: Auto Giant's 401(k) Plan Is Cheap and Smart Excerpt: "Armed with an array of low-cost, high-quality investment options, General Motors ... employees can earn tens of thousands of dollars more in investment returns over a working career than the typical 401(k) investor. .... While 401(k) plans typically offer an array of mutual funds that anyone can buy, a little-known fact is that the funds add huge costs that could be easily avoided if more companies, like GM, offered the same types of low-cost institutional [investment] funds." (MSN Money) Working Paper: Local Labor Market Conditions and Retirement Behavior (PDF) 38 pages. Excerpt: "In this paper, we explore the effect of local labor market conditions on the labor supply decisions of older workers. .... While each experiment uses different methodology, the three [sources of variation] tell a remarkably consistent story: the retirement decisions of Americans over the last thirty-five years have been affected by the performance of local labor markets." (Center for Retirement Research at Boston College) ERIC Consensus Proposals for Pension Funding, PBGC Reform, and Hybrid Pension Plans (PDF) 24 pages. The document contains ERIC's consensus proposals regarding pension funding, PBGC reform and hybrid pension plans. A copy of the document's Executive Summary is also included at the first of the full document. (The ERISA Industry Committee) Opinion: Pension Law Bars Disclosure of Underfunded Amount to Those Who Need to Know the Most Excerpt: "The good news is that companies with underfunded plans file this impossible-for-an-outsider-to-calculate information with the Pension Benefit Guaranty Corp.,.... The bad news is that the PBGC isn't allowed to share this information with you. Why? Because the same 1994 law that requires companies to tell the PBGC what's going on forbids the PBGC from telling anyone else what's going on -- unless there's a court case or a request from Congress." (The Washington Post; one-time registration required) Federal Appeals Court Finds Accountant Liable as Plan Fiduciary for a Profit-Sharing Plan Excerpt: "A federal appeals court has turned aside arguments by an accountant for a profit-sharing plan that he was not a plan fiduciary because disputed checks he wrote to an investment advisor were issued at the advisor's instructions. Instead, the US 10th Circuit Court of Appeals ruled that the accountant was a fiduciary under the [ERISA] because he had control of the disbursement of assets under his arrangement with the plan run by a Salt Lake City dentist." (PLANSPONSOR.com; one-time registration required) Opinion: Populist Approach to Pension Funds and the Ownership Society Excerpt: "While President Bush pursues setting up private retirement accounts within Social Security, there is another way to allow Americans to build up significant savings without costing taxpayers a dime: Give average working people access to the investment expertise of public pension funds." (Joseph P. Kennedy II via The Boston Globe) Open Defined Contribution Plans Lead in United Kingdom, According to Hewitt Excerpt: "A study of U.K. occupational pension plans has revealed that, of those plan studied, there are more open defined contribution plans than open defined benefit plans. Hewitt Associates in London studied 460 pension plans operated by 277 U.K. companies in various sectors and of various sizes. According to the study, 32% of plans operated by the employers studied were open defined contribution plans, while 26% were open defined benefit plans, a spokeswoman for Hewitt said." (Business Insurance) Hearing on the Retirement Policy Challenges and Opportunities of our Aging Society, May 19, 2005 The target page has links to the testimony of the witnesses: Douglas Holtz-Eakin, Director, Congressional Budget Office; The Honorable Hal Daub, Chairman, Social Security Advisory Board; Richard Jackson, Director and Senior Fellow, Global Aging Initiative, Center for Strategic and International Studies; Dallas L. Salisbury, Employee Benefit Research Institute; Peter R. Orszag, The Brookings Institution; and, John C. Goodman, National Center for Policy Analysis. (U.S. House Committee on Ways & Means) How High Earners' Paychecks May Change If More Wages Are Subject to a Social Security Tax Excerpt: "CNN/Money asked tax information publisher CCH, Inc. to crunch some numbers demonstrating how high-income taxpayers would fare under the Pozen plan, the Wexler plan and a ... plan that would raise the wage cap to $150,000. Take, for example, a two-earner household where each spouse earns $100,000 for a total of $200,000 in wages. Under the Pozen plan, they would pay an additional $290 combined. [A] one-earner household pulling in the same $200,000 ... would pay an additional $1,595." (CNN Money) Links to Items on Executive Comp, Benefits in General Overview: New Bankrup.tcy Act Gives Increased Protection to Employee Benefits Excerpt: "On April 20, President Bush signed the Bankrup.tcy Abuse Prevention and Consumer Protection Act of 2005 into law. The Act has several provisions that give increased protection to employee benefits when an employer or employee files for bankrup.tcy. Plus, the Act has created strict standards regarding executive compensation while an employer is filing for bankrup.tcy." (Watson Wyatt Worldwide) Overview: New Bankrup.tcy Act: Employee Benefits and Executive Compensation Provisions Excerpt: "The Act clarifies how certain Bankrup.tcy Code rules apply to employee benefits and enhances the protection of plan benefits in bankrup.tcy and contains new restrictions on executive compensation that may be paid by an employer in (or prior to) bankrup.tcy. [On the target page] is a summary of the Act's principal provisions affecting employee benefits and executive compensation." (McDermott, Will & Emery via BNA Tax Management) Overview: Provisions of Bankrup.tcy Reform Act (S 256) Affecting Retirement Plans and Arrangements (PDF) 4 pages. Excerpt: "[T]he 'Bankrup.tcy Abuse Prevention and Consumer Protection Act of 2005' does provide significant new benefits to debtors who participate in tax-favored retirement plans and arrangements and/or have retirement savings in IRAs and Roth IRAs." (NAPPA Report via National Council on Teacher Retirement) Newly Posted Events The "New" Use-It-or-Lose-It Rule: How the May 2005 IRS Guidance Affects Employers, Health FSAs, and DCAPs Nationwide on June 1, 2005 presented by Employee Benefits Institute of America Inc. (EBIA) Newly Posted Press Releases Metrics Partners Announces More Than 20 Advertisers Have Signed Up For The Retirement Professionals Buyers Guide (Metrics Partners) Newly Posted or Renewed Job Openings Defined Contribution Professionals for John Mulligan & Associates in CA, CT, FL, GA, MA, MD, NJ, NY, SC, TX Defined Benefit Plan Administrator for The Pension People, Inc. in CA Dental Claims Supervisor for Growing Major Midtown Union Health Plan in NY Compliance/Conversion Specialist for Employee Benefits Firm in MD Retirement Actuarial Associate for Towers Perrin in CA, IL, MI, WA Pension Administrator for Stanton Group in MN 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. Published by: BenefitsLink.com, Inc. https://benefitslink.com/about.html 1298 Minnesota Avenue, Suite H Winter Park FL 32789 (407) 644-4146 Fax: (407) 644-2151 Editor and Publisher: David Rhett Baker, J.D. Housekeeping: How to Sponsor an Issue Subscribe to a Daily Email Announcing Publication of Each Day's Newsletter Privacy Policy Archive of Previous Newsletters If you'd like to STOP this newsletter, just click on this link: STOP sending this newsletter to me