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June 9, 2005
Today's sponsor: ASPPA • Working for America's Retirement™

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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)

2 Republicans to Propose Fix for Private Pension Woes Today
Excerpt: "The first major legislative blueprint for solving the problems of private pensions is expected to be introduced today in the House Committee on Education and the Work Force by Representatives John A. Boehner, Republican of Ohio, and Sam Johnson, Republican of Texas. The plan would require companies to put more money behind their pension promises and give workers more information about the security of their pensions." (The New York Times; one-time registration required)

American Benefits Council Summary of the Boehner Pension Reform Bill (PDF)
2 pages. Excerpt: "Single Employer Plan Funding. The bill would replace all of the current funding rules, including the ERISA funding rules and the deficit reduction contribution ('DRC') rules, with a single set of funding rules closely modeled on the current DRC rules. The primary differences are that plans would be required (i) to fund to a target of 100% of current liability; (ii) the shortfall between current liability and assets would be amortized over 7 years; and (iii) current ...." (American Benefits Council)

Pension Bill May Join Social Security Overhaul in Retirement Security Package
Excerpt: "New rules governing defined-benefit pension plans offered by private employers may join changes to the government Social Security program in a retirement security package now being cobbled together in the House." (AP via The New York Times; one-time registration required)

Summary of Boehner Pension Reform Bill, The Pension Protection Act, by House Education & the Workforce Committee (PDF)
8 pages. Legislation produced by Boehner and Johnson. (House Education & the Workforce Committee via American Benefits Council)

May a Safe Harbor 401(k) Plan Be Terminated with a Short Plan Year During 2005? -- Rev. 6/9/05
Excerpt: "Before the release of the 401(k) and 401(m) final regulations there had been no authority permitting a short plan year for a safe harbor 401(k) plan in its year of termination. The final 401(k) regulations do not become effective until plan years starting after December 31, 2005." (McKay Hochman Co., Inc.)

The Roth 401(k): A Hidden Wealth Transfer Treasure for High Income Taxpayers
Excerpt: "[R]oth IRAs are not subject to ... minimum distribution requirements. This means that you can delay distributions indefinitely until death, at which time your heirs have the option to receive distributions throughout their lifetime. So why is this significant to high income taxpayers? Because they typically can afford to delay the distributions, especially if it means an favorable economic outcome for themselves, whether they start to distribute the assets while living, or ...." (Milberg Consulting LLC)

More 401(k) Accounts Being Managed by Professionals
Excerpt: "[There is] a growing trend, in which workers are choosing managed 401(k) accounts and letting professionals handle important decisions like asset allocation and periodic rebalancing. Most major plan administrators -- including the Vanguard Group, Fidelity Investments and the T. Rowe Price Group -- offer managed account services for 401(k) plans. Not all companies adopt the system, but when they do, between 10 percent and 15 percent of workers enroll in this do-it-for-me strategy." (The Washington Post; one-time registration required)

Proposed Regulations Clarify Maximum Limits for Governmental Qualified Plans
Excerpt: "On May 31, 2005, the Internal Revenue Service proposed new regulations under section 415 of the Internal Revenue Code of 1986, as amended ('Code'). ... Many of the proposed regulations merely represent codification of existing guidance, or modifications to reflect statutes enacted after the prior regulations were issued. However, several new provisions are likely to be of particular interest to governmental retirement plans." (Calhoun Law Group, P.C.)

Hearing: Preventing the Next Pension Collapse: Lessons from the United Airlines Case
Target page has links to member and witness statements given at the June 7, 2005, hearing. (U.S. Senate, Committee on Finance)

Testimony: Bradley D. Belt, PBGC, before the Committee on Finance, United States Senate June 7, 2005 (PDF)
36 pages. Excerpt: "[I] again describe in detail why comprehensive pension reform is so urgently needed and how the Administration's comprehensive reform proposal will stabilize the defined benefit system, strengthen the insurance program, and protect the retirement benefits earned by tens of millions of American workers. I also address the claims made by some commentators regarding the Administration's proposals." (Pension Benefit Guaranty Corporation via Employee Benefits Security Administration)

Overview: Section 415 Proposed Regulations
Excerpt: "The IRS has issued comprehensive proposed regulations regarding limitations on benefits and contributions under qualified plans." (McKay Hochman Co., Inc.)

Intent Not Necessary for ERISA Breach, Magistrate Rules on Defined Benefit Pension Plan Benefits
Excerpt: "A federal magistrate has ruled that a defined benefit plan administrative committee breached its fiduciary duties even though it did not intentionally miscalculate one participant's benefits and misrepresent that benefit level .... As a result, US Magistrate Judge Pamela Meade Sargent of the US District Court for the Western District of Virginia ordered the plan to rescind the participant's early retirement election and reinstate full benefits as of his normal retirement date." (PLANSPONSOR.com; one-time registration required)

A Fresh Look at Pension Risks
Excerpt: "This article will cover several issues of concern to pension plan sponsors, including pension risks, how pension liabilities affect the balance sheet, and some insights into how analysts are viewing pensions." (Mercer Human Resource Consulting; one-time registration required)

States Continue as Mainstay for Defined Benefit Pension Plans
Excerpt: "State and local governments may well be the last bastion of defined benefit pensions, as more private businesses freeze their DB programs." (Employee Benefit News)

Overview: Catch-Up contributions and USERRA
Excerpt: "Regarding catch-up contributions and USERRA, if someone returns to work after three years, can they make catch-up contributions for the years they were gone? How are limits applied to these contributions? How is testing done? Response: In this circumstance, catch-up contributions can be made for the years that they would have been available had the individual not been on leave." (Reish Luftman Reicher & Cohen)

Testimony at Hearing: A Pension Double Header: Reforming Hybrid and Multi-Employer Pension Plans (PDF)
16 pages. Testimony of James M. Delaplane, Jr. on behalf of the American Benefits Council before the Committee on Health, Education, Labor and Pensions Subcommittee on Retirement Security and Aging, United State Senate, June 7, 2005. (American Benefits Council)

EBSA Seeks Input on Agenda for Third National Summit on Retirement Savings (PDF)
Excerpt: "This document requests comments from the public for the purpose of developing a comprehensive agenda for the third National Summit on Retirement Savings (2006 National Summit), tentatively planned to be convened in early March, 2006. The 2006 National Summit is called for by the Savings Are Vital To Everyone's Retirement (SAVER) Act of 1997 (Pub. L. 105–92)." (Employee Benefits Security Administration)

UK Researcher Develops Retirement Nest Egg Formula for a Secure, Happy Retirement
Excerpt: "Workers trying to figure out how much they will need to save for a happy retirement can find the answer by using the formula CI x {55 - (A/3) - (RA/7)}, according to new UK research. A news report in The Guardian said CI stands for current income, A for current age and RA the retirement age in the formula by Edmund Cannon, a senior lecturer at the University of Bristol, for financial services company JPMorgan Invest." (PLANSPONSOR.com; one-time registration required)


Links to Items on Executive Comp, Benefits in General

Recalibrating Turnover Cost Calculators: Turnover Can Produce Savings in Employee Benefit Programs
Excerpt: "Turnover can produce substantial savings in employee benefit programs, particularly when younger workers replace older workers. Generally, total benefit costs for older workers are 20 percent higher than for younger workers, according to Jamie Hale, senior consultant at Watson Wyatt. Most of the higher costs come from health care premiums, which are age-related." (Workforce Management; one-time registration required)

June 3, 2005, Letter to IRS Requesting Code Section 409A Guidance (PDF)
16 pages. Excerpt: "We are writing on behalf of several clients to request guidance under section 409A of the Internal Revenue Code ..., enacted as part of the American Jobs Creation Act of 2004 .... The issues discussed [in the letter] are extremely important to our clients as they attempt to address the impact of Code section 409A and the transition guidance in Notice 2005-1 on their compensation and benefit plans." (Groom Law Group)

Overview: Next Round of Deferred Compensation Guidance Expected 'Mid-Summer' (PDF)
3 pages. Excerpt: "As the summer draws near, many are asking whether Treasury and the IRS will meet their goal for issuing the second round of guidance on Code section 409A. Ever since the issuance of Notice 2005-1 late last year, Treasury and IRS officials have indicated that a second round of guidance will be issued by 'mid-summer' 2005, but informal conversations with Treasury and IRS officials indicate that the issuance may slip to late summer." (Groom Law Group)

How Best to Divest? -- With Benefits for All Parties Involved
Excerpt: "Marrying disparate benefit packages - as in a merger or acquisition - is definitely a tougher row to hoe than simply carving out and selling a business unit. But that's not to say there aren't some rocks that must be removed or avoided to ensure smooth tilling with a divestiture. .... If the employees are the essential ingredients, then maintaining an acceptable benefits package will help ensure the success of the divested business unit as a stand-alone entity, ...." (Employee Benefit News)


Newly Posted Events

Advanced Pension Conference
in Illinois on September 7, 2005
presented by SunGard Corbel


Newly Posted Press Releases

ERIC Supports Advance Of Electronic Health Information Before National Committee On Vital Health Statistics
(ERIC (ERISA Industry Committee))

The ERISA Industry Committee Commends Ch. Boehner, House Retirement Leadership, on Step Toward Pension Reform
(ERIC (ERISA Industry Committee))

Council Testifies Before IRS on Supplemental Wage Withholding Requirements
(American Benefits Council)

ASC Acquires SMART Pension Systems
(ASC)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Health Insurance Specialist
for Centers for Medicare & Medicaid Services, HHS
in DC, MD, VA

Defined Benefits Manager
for Great-West Retirement Services
in WI

Client Management Consultant
for CapTrust Financial Advisors
in NC

Benefits Manager/Director DOE
for Odell Consulting
in CA

Senior Financial Benefits Analyst - 2116
for Aerojet
in CA

Senior Benefits Compliance Representative - 2127
for Aerojet
in CA

Senior 401(k) Administrator
for Pencor, Inc.
in FL




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