BenefitsLink Retirement Plans Newsletter May 27, 2005 Today's sponsor: www.ftwilliam.com (Click on company name or banner to learn more.) Register for our free on-line demo! www.ftwilliam.com offers the employee benefits professional the highest quality plan documents and forms at highly competitive prices. Plan documents on a per document basis are only $50/adoption agreement, or $100/volume submitter document (including cross testing). An annual subscription to all documents is only $1,500. The Form 5500 package and the IRS/PBGC form package are only $250 each. Prices include access for five concurrent users. (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) Legislation Providing 401(k) Automatic Enrollment Incentives Would Increase Employee Participation (PDF) 2 pages. Excerpt: "As part of the broad retirement security debate anticipated this summer, Congress is expected to review whether to revamp the rules surrounding 401(k) plans to encourage employers to make employee participation automatic unless the employee opts out. Currently, most employees are required to opt-in to participation in their 401(k) plans, but many employees never do so or wait for years before participating." (HR Policy Association) Democrats Push Plan to Balance Illinois State Government Budget -- Divert Pension Contributions Excerpt: "Confounded over how to raise revenues to close a gaping budget hole, Democrats who control Illinois government agreed Thursday to divert hundreds of millions of dollars earmarked to underfunded state government pension plans and use it for schools and other programs." (Chicago Tribune; one-time registration required) Northwest Airlines Seeks Time to Shore Up Pension Plan and Avoid Bankrup.tcy Filing Excerpt: "Unless Congress grants Northwest Airlines Corp. more time to shore up its pension plans, the airline's difficulty in funding those plans could contribute to a bankrup.tcy filing, an executive said. Andrea Fischer Newman, Northwest's senior vice president of government affairs, is stumping to obtain 25 years to fund the plans, which are $3.8 billion short. Current law requires the airline to close the gap in five years." (AP via sanluisobispo.com) Overview: New Bankrup.tcy Law Protects IRA Assets Excerpt: "Recent changes in federal bankrup.tcy law provide new protection to owners of IRAs who file for personal bankrup.tcy. Under the new rules, IRA assets that have been rolled over from a tax-qualified plan are generally not subject to the claims of the IRA owner's creditors, regardless of the state in which the IRA owner resides or the value of the IRA." (Buchanan Ingersoll PC) Retirement Income and Spending Strategies Promoted Excerpt: "Most Americans focus on saving for retirement during their working years and don't think much about how they're going to spend their nest eggs in retirement. But planning is important if today's retirees - who can expect to live much longer than their parents or grandparents - hope to avoid outliving their money." (AP via The Charlotte Observer) New York City Police Sergeants' Annuity Fund Settles with Investment Firm Excerpt: "The New York City Sergeants Benevolent Association announced yesterday that its annuity fund had reached a $4.75 million settlement with an investment firm that the fund had sued, accusing it of investing far too much in risky technology stocks. The sergeants' annuity fund asserted that the investment firm, Trainer Wortham & Company, had lost $27 million of the fund's money by putting more than half the assets it handled in technology stocks rather than in conservative investments." (The New York Times; one-time registration required) California Coalition Seeks Information About Hedge Fund Investments by State Pension Funds Excerpt: "An open government group has filed a public records request to get two of the state's largest pension funds to reveal details of hedge fund investments. The California First Amendment Coalition filed requests Tuesday to force the $182.9 billion California Public Employees' Retirement System and the $63 billion University of California pension and endowment fund to divulge information about debt levels at the hedge funds they invest in." (AP via dailybreeze.com) Alaska Special Session Closes With Major Pension Reform Legislation Passed Excerpt: "[T]he Alaska Senate closed the first 2005 special session by passing two landmark reform bills, a historic capital budget, operating budget and several other bills that will move Alaska forward into the 21st century. 'We decided to remain in Juneau for an additional two weeks because the legislation before us was so important to our state. Reforming the public employees pension and workers' compensation systems will be remembered as the historic achievements of this session,' ...." (SitNews) Norway to Make Private Pensions Plans Mandatory for All Employees Excerpt: "The Norwegian parliament, Stortinget, has decided to make private pension plans mandatory for all employees from 2006. All businesses with employees in Norway will under the new law have to pay a contribution of at least 2 pct of annual wages towards employees' private pensions. Under the old system employers could choose whether or not to offer pension plans to their employees." (Forbes.com) France's 2005 Budget Introduces Framework for Granting Free Shares to Employees Excerpt: "Among the provisions of the 2005 Finance Act, which became effective on 1 January 2005, is the introduction of a new legal and tax framework that will allow companies in France to grant free shares to their employees. The move provides an alternative to the discretionary employee share schemes, which were the only vehicles that were considered as qualified employee stock option plans." (Watson Wyatt Worldwide) Senate Considers GI IRA Measure -- The Heroes Retirement Act, H.R. 1499, Already Passed in House Excerpt: "The Senate is considering a bill that would enable military personnel serving in combat zones to use tax-free pay to make deductible contributions to individual retirement accounts. The Heroes Retirement Act, H.R. 1499, passed in the House earlier this week by a voice vote. The bill, introduced by Rep. Sam Johnson, D-Texas, would let military personnel in combat zones use tax-deductible pay to make deductible IRA contributions." (National Underwriter Life & Health; free one-time registration or paid subscription) New Proposed Rules Allow National Guard and Reserve Personnel to Maintain Retirement Savings Excerpt: "The Treasury Department and Internal Revenue Service have proposed new rules that National Guard and Reserve members can continue to contribute to their employer's retirement plan while on active duty. .... Plan administrators may rely on the proposed regulations immediately to allow service members to contribute to qualified retirement plans, regulators said. The proposed regulations will formally go into effect in years beginning in 2007." (PLANSPONSOR.com; one-time registration required) IRS Gives Multi-Employer Pension Plans a Break Excerpt: "Some pension plans got a bit of relief from the Internal Revenue Service recently in the wake of a Supreme Court ruling that had alarmed them. Many multi-employer plans require that benefit payments be suspended for retirees who go back to work in the same or similar occupations. .... Last month, the IRS said that if plans correct their rules and pay benefits retroactive to last June, they will be safe." (Northwest Herald Online) Report: President's Savings Proposals Most Likely to Benefit Wealthy -- Revised May 25, 2005 (PDF) 7 pages. Excerpt: "The President's 2006 budget includes a proposal to establish new savings tax breaks. .... The proposal would establish tax-favored 'Lifetime Savings Accounts' and replace existing Individual Retirement Accounts with 'Retirement Savings Accounts.' Further, there appears to be growing interest in Congress for expanding tax-preferred savings opportunities, particularly along the lines of the administration's RSA proposal." (Center on Budget and Policy Priorities) Retirement Security for U.S. Workers: Six Principles for Long-Term Reforms to Outdated Pension Laws (PDF) 2 pages. Excerpt: "In the coming weeks, Education & the Workforce Committee Chairman John Boehner (R-OH) and Employer-Employee Relations Subcommittee Chairman Sam Johnson (R-TX), working with Ways & Means Chairman Bill Thomas (R-CA), will introduce comprehensive reform legislation to fix outdated pension laws that threaten the retirement security of workers and retirees, and could result in a taxpayer bailout. This proposal will be based on the following six principles." (John Boehner and Sam Johnson via HR Policy Association) Opinion: Social Security Reform Proposal of Progressive Price Indexing Edges Out Personal Accounts Excerpt: "[T]he progressive price indexing benefit changes would reduce the replacement rate, or percent of preretirement income replaced by Social Security, each and every year into the future as well, again for everyone making more than $25,000 per year. The replacement rate for average income workers would fall from 40 percent today eventually to 30 percent, then to 20 percent, then to 10 percent, etc." (Peter Ferrara via The Washington Times) Beyond Social Security Accounts: Other Retirement Ideas May Be Gaining Bipartisan Support Excerpt: "[T]here are other retirement-related proposals that have generated bipartisan discussion – and, in some cases, agreement. Even though the proposals are not related to Social Security per se, they may be included either in legislation on Social Security reform or in other retirement-related bills, .... The proposals focus primarily on providing more tax-based savings incentives and on making it easier for employers and workers to set up retirement savings plans." (CNN Money) Links to Items on Executive Comp, Benefits in General Audio/Video/Transcript: Graying of America -- A NewsHour with Jim Lehrer Transcript Excerpt: "As the government continues to debate Social Security, the fastest growing age group in America is people over 85. Social Security analysts talk about the growing number of senior citizens in America and the impact they could have on Social Security." (MacNeil/Lehrer Productions via PBS) Newly Posted Events Form 5500 Preparation Workshop in District of Columbia on June 9, 2005 presented by International Brotherhood of Teamsters Fundamentals of 401(k) Plans Nationwide on June 9, 2005 presented by SunGard Corbel Newly Posted Press Releases Seventy Percent Of PBGC'S Losses Incurred In 2000-2004 (Pension Benefit Guaranty Corporation (PBGC)) New Data from Transamerica Retirement Services Highlights Importance of EGTRRA; Important Provisions from 2001 Federal Tax Law at Risk Unless Congress Acts Now to Make EGTRRA Permanent (Transamerica Retirement Services) New Survey Results Focus on Vacation Benefits and Paid Time Off Banks (International Foundation of Employee Benefit Plans) International Foundation Introduces New Job Posting Feature (International Foundation of Employee Benefit Plans) Second Edition of HSA Road Rules Released; More than 30,000 Copies of First Edition Downloaded (HSA Insider) Newly Posted or Renewed Job Openings Requirements Analyst 1 - H&W for Hewitt Associates in IL Pension Administrator for Coble Pension Group, LLC in AZ Client Services Manager/Trust Associate for WySTAR Global Retirement Solutions in MN Pension Analyst for Giant Eagle in PA Manager, Health and Welfare Benefits for Giant Eagle in PA 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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