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June 3, 2005
Today's sponsor: APSCREEN, Employee Locator

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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Special Edition of Employee Plans News, June 2, 2005, on Highlights of the 415 Regulations (PDF)
1 page. Excerpt: "After more than 20 years of statutory and regulatory changes, the 415 rules will all be in one place. Containing all of the rules on maximum benefits and contributions, the proposed 415 regulations – when finalized – will provide ... a one-stop resource for ... questions on this oft confusing section of the Code. The Employee Plans News [spoke] with Marty Pippins, Manager of EP Technical Guidance and Quality Assurance [for] his insights on the new regulations." (U.S. Internal Revenue Service)

Article: Self-Directed Brokerage Accounts, Retirement Success, and Plan Sponsor Liability (PDF)
7 pages. Excerpt: "Contrary to what many purveyors of brokerage services may tell plan sponsors, plan fiduciaries continue to retain significant fiduciary responsibility and liability by selecting the provider or restricting the range of investments that may be offered in a self-directed brokerage account. The plan sponsor has a fiduciary duty of prudence in the selection and retention of investment choices, including those in self-directed brokerage accounts." (Journal of Pension Benefits via Unified Trust)

Catch-Up Contributions in 2004: Plan Sponsor and Participant Adoption
Excerpt: "The Economic Growth and Tax Relief Reconciliation Act of 2001 permitted workers age 50 and older to contribute additional savings to their defined contribution (DC) plan accounts. Three years later, most plans allow these catch-up contributions; however, only 13% of eligible plan participants made a catch-up contribution in 2004. [Link to the 8-page PDF from the target page.]' (The Vanguard Group)

401(k) Plan Sponsors Consider Exchange-Traded Funds
Excerpt: "[P]lan sponsors ... are searching for other investment options. Some are looking at different types of investment products, such as real estate investment trusts, preferred security funds and Treasury inflation-protected security funds. Others are exploring the possibility of adding individual stocks to their portfolios. And a growing number are gravitating toward a group of funds that heretofore have been the province of institutional and retail investors-ETFs." (Employee Benefit News)

Opinion: Advice to Bond Issuers -- Beware Metaphysical Certitude Re: New Jersey State Pension Funds
Excerpt: "New Jerseyans beware. Out there somewhere are some bankers just dreaming about selling another $10 billion or $15 billion in bonds to once again, finally, and for all time, cure the state's seemingly intractable pension shortfalls. Their proposals will be couched in the comforting terms of scientific accuracy. New Jerseyans should remember. The bankers and politicians did the same thing last time." (Bloomberg News)

Notice of Hearing on IRS Regulations re Disclosure of Relative Values of Optional Forms of Benefit (PDF)
Excerpt: "SUMMARY: This document contains a notice of public hearing on proposed regulations concerning content requirements applicable to explanations of qualified joint and survivor annuities and qualified preretirement survivor annuities payable under certain retirement plans.... The public hearing is being held on August 24, 2005, at 10 a.m." (Internal Revenue Service)

Federal Update on a New Social Security Number Bill and New Section 415 Regulations (PDF)
168 pages. Excerpt: "Rep. Clay Shaw (R-FL) in re-introducing his legislation, H.R. 1745, on April 20 included new language that should provide clarification [relating] to the use of SSNs in the public and private sectors. .... IRS has just released the long-awaited re-write of the Section 415 regulations. The regulations apply to the annual limits on pension benefits and contributions to retirement savings. A copy of the proposed regulations is [linked on target page]." (National Council on Teacher Retirement)

Taking Control of the Fiduciary Function in Retirement Plans
Excerpt: "[In this article,] we want to cover some fundamental steps that every fiduciary should take to minimize their exposure to litigation related to plan investments." (DuFour and Frank via Employee Benefit News)

Opinion: Time for State Public Employee Pensions to Reflect 'No Guarantees' Reality
Excerpt: "The state has been shortchanging its public employee pension system since the days of Gov. Jim Thompson, when long-term debt was structured so that the heaviest repayment burden falls on future taxpayers. ...Moving from defined benefits to defined contributions would strengthen Illinois' retirement system. That transition is commonplace in the private sector and among innovative state governments, and there is a wealth of expertise on how it can be done in a way that works ...." (Chicago Sun-Times)

United Kingdom Pension Trends Survey Report: Scheme Provision, Contributions and Scheme Deficits (PDF)
6 pages. Excerpt: "This ... report confirms the high level of defined benefit scheme closures to new entrants reported in previous surveys and the extent to which mixed and defined contribution schemes are filling the gap. It looks at why firms offer pension schemes and the number that are trying to reduce pension spending and liabilities in the near and longer-term. .... The report concludes by examining the levels of contributions into all types of schemes." (Association of Consulting Actuaries)

Update on the Employee Retirement Security Act and Pensions in Korea (PDF)
Excerpt: "[Earlier], we issued a summary bulletin on South Korea's new Employee Retirement Savings Act (ERSA). The ERSA sets out broad principles for the establishment and management of employer-sponsored retirement plans as an alternative to the existing mandatory severance payment system. This bulletin provides further detail on the Presidential Decrees, which are to be officially announced in June, as well as some guidance on how employers should prepare for the new pension environment." (Watson Wyatt Worldwide)

Does Galveston Offer a Model for Social Security Reform?
Excerpt: "Some ... have pointed to the experience of Galveston, Texas as demonstrating why private accounts should be incorporated into Social Security. In 1981, Galveston and two other Texas counties opted out of Social Security and established their own substitute Social Security systems for county employees. Their plans provide retirement, survivors, and disability benefits. These plans ... do not provide evidence that the President's approach could be successful, for three basic reasons." (Center on Budget and Policy Priorities)

Would Private Accounts Provide a Higher Rate of Return than Social Security?
Excerpt: "Analyses by some of the nation's leading economists have convincingly demonstrated that the comparisons which private-account proponents often make of rates of return in Social Security to past rates of return in private capital markets are apples-to-oranges comparisons and do not withstand scrutiny. For example, a landmark paper ... found that 'the popular argument that Social Security privatization would provide higher returns for all current and future workers is misleading ...." (Center on Budget and Policy Priorities)

Testimony: The Role of Employer-Sponsored Retirement Plans and National Saving (PDF)
14 pages. Testimony before the Special Committee on Aging, United States Senate, by C. Eugene Steuerle on April 12, 2005. (The Urban Institute)

Another Question is Answered in the Who's the Employer Q&A Column
We have a PEO in which a client organization is top-heavy. The PEO is on a calendar plan and tax year. The client organization is leaving the PEO and wants to delay making the top-heavy contribution. They have a 9/30 tax year. We want them to make the top-heavy contribution before the 2004 form 5500 is filed, no later than 10/17/2005. They want to wait until 6/15/2006, because this is when their corporate tax return for the 9/30/05 plan year is due. Can they? (BenefitsLink.com)

Democratic National Committee Chairman Howard Dean Accuses Bush of Not Protecting Pensions
Excerpt: "The only solution that Dean suggested is to make pensions portable, saying pension plans 'ought not to be controlled by companies, they ought to be controlled by the people who those pensions belong to.' Pension portability was not a major issue in the Democrats' 2004 presidential campaign." (The Washington Post; one-time registration required)


Links to Items on Executive Comp, Benefits in General

News Summaries Developed to Inform Clients and Other Professionals in the Benefits Industry (PDF)
4 pages. Selected contents: Representative Cardin Introduces Pension Reform Legislation; Senate Committee on Aging Conducts Hearing on Redefining Retirement; IRS to Increase Enforcement Activities Related to Benefit Plans; IRS Publishes Revised Federal-State Reference Guide Online. (Gabriel, Roeder, Smith & Company)

ERIC Comments to President's Advisory Panel on Federal Tax Reform Re: Employee Benefit Plans (PDF)
2 pages. Excerpt: "[ERIC] urges that the Advisory Panel consider the following proposals: Enact on a permanent basis the increased savings and funding limits applicable to tax qualified retirement plans that were included in EGTRRA (P.L. 107-16). Increase the amount of contributions that an employer can make to a defined benefit pension plan on a deductible basis; and eliminate penalties for contributions made above deductible limits [and other proposals regarding savings and health care]." (The ERISA Industry Committee)

New York State Senate Approves Increased Benefits for Public Employees in the Military
Excerpt: "A measure to make the death benefits given to the families of public employees who are killed while on active military duty the same as if they were killed while working for state or local governments received final legislative approval in the state Senate Wednesday. The Assembly passed the 'Patriot Plan III' by a unanimous vote Tuesday." (AP via Newsday)

Smooth Transition: HR Input Can Prevent Benefits Blunders during Mergers and Acquisitions
Excerpt: "Mergers and acquisitions open the door for changes in benefit levels and pose some unique challenges for HR professionals. Companies in that situation should take steps to avoid costly errors as they transition benefits for employees. The most common mistakes include not involving HR soon enough, not determining who's responsible for COBRA coverage, and communicating poorly to employees, experts say." (Employee Benefit News)

Washington Regulatory Wrap Up, 2005, as of June 1, 2005 (PDF)
3 pages. Excerpt: "The chart of federal regulatory proposals concerning employee benefits of interest to NCTR members has been updated to be current as of June 1, 2005. The federal updates referenced in the chart are available at http://www.nctr.org/federal/index.html." (National Council on Teacher Retirement)

Developing a Fraud Policy for Employee Benefit Plans (PDF)
4 pages. Excerpt: "To meet the requirements of today's business world, benefit plans will find it necessary to spell out and document certain basic procedures, such as a plan fraud policy statement. Such a statement helps create an atmosphere of honesty and ethical behavior and provides a thorough understanding of expectations of those working for or doing business with the plan." (Benefits & Compensation Digest)

Benefit Plan Design for an Increasingly Complex Workforce
Excerpt: "Many HR professionals are projecting what their workforce will look like 10 years down the road, but these workforce trends are affecting Corporate America right now. Each generation - Veterans, Boomers, Generation Xers and Millenials - has competing interests when it comes to benefits plan design and, therefore, each must be considered." (Employee Benefit News)


Newly Posted Press Releases

Assist America to Make Presentation at American College Health Association Annual Meeting
(Assist America)

Prudential Retirement Launches 'Signature Online'; Powerful Combination of Capabilities Produces New Web-Based Educational Resource for Plan Participants
(Prudential Financial, Inc.)

American Express Retirement Services Announces New Vice President For Northeastern Territory - New Addition To Retirement Plan and Investment Services Distribution: Greg Buzzell
(American Express Retirement Services)

Judge Finds Bosch Automotive Purposely Timed Lay Off of Hendersonville Plant Workers to Avoid Paying Benefits
(Drescher & Sharp, P.C.)

URAC Launches Consumer Education and Support Standards and Sets Stage for New Consumer-Centric Market
(URAC)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

New Business Review Specialist
for CitiStreet
in NJ

Retirement Plan Specialist
for Diversified Investment Advisors
in MO

Sr. Benefits Analyst
for Susquehanna Bancshares, Inc.
in PA

Retirement Plan Relationship Coordinator
for Great-West Retirement Services
in WI

Benefit Analyst
for Edward Hospital
in IL

Communications Consultant
for New York Life Investment Management LLC
in MA

Investment Consultant/Client Service
for MBO Cleary Advisors Inc.
in WI

Client Services Consultant- St. Louis Regional Office
for American United Life Insurance
in MO




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