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June 16, 2005
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SEC Report Card Says Accounting for Pensions Still Needs Improvement
Excerpt: "The state of American accounting is better than it was before the Enron scandal, the Securities and Exchange Commission said yesterday in a report to Congress and President Bush. But, according to the report, accounting still needs much improvement. The staff of the commission recommended that steps be taken to change accounting for leases, pensions and derivatives to make it easier for investors to determine the accurate state of balance sheets of American companies." (The New York Times; one-time registration required)

Overview: Roth Contributions to 401(k) Plans (PDF)
Excerpt: "Beginning in 2006, 401(k) plans (and 403(b) plans) may permit participants to designate some or all of their employee contributions as 'Roth contributions.' This law change was one of the numerous changes to the rules governing qualified plans made by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The IRS recently issued proposed regulations that provide its first round of guidance on Roth contributions to 401(k) plans." (Powell Goldstein LLP)

Advisers Slow to Embrace Roth 401(k)s
Excerpt: "Many financial advisers are in the dark about Roth 401(k) accounts. The new accounts, which combine the features of Roth individual retirement accounts with those of traditional 401(k)s, are slated to make their debut in January. But so far, relatively few financial advisers are well versed in the ins and outs of these new accounts, according to industry experts." (Investment News; registration or subscription required)

The Roth 401(k): A Hidden Wealth-Transfer Treasure for High Income Taxpayers
Excerpt: "As planning professionals and plan sponsors, you know by now that participants can contribute all or part of their 401(k) salary deferrals on an after-tax basis to a Roth 401(k) starting January 1, 2006. A Roth 403(b) feature is also available to participants in 403(b) plans on January 1, 2006. But do you know that the Roth 401(k) provides a retirement and estate planning treasure for our country's highest income taxpayers?" (Milberg consulting LLC)

Exchange-Traded Funds: Less Expense for 401(k) Plans-- but at a Price?
Excerpt: "As the venerable 401(k) plan celebrates its 25th anniversary, new, more sophisticated wrinkles like exchange-traded funds (ETFs) are beginning to pop up on 401(k) plan management screens. What's an ETF? Put succinctly, ETFs are passive investments designed to track the performance of a broad range of market indexes-- including stock, bond, broad market, equity sector and international indexes-- and to deliver benchmark returns." (Society for Human Resource Management)

FEI Summary of SEC's Off-Balance Sheet Study
Excerpt: "[SEC]... released a report on a study of Arrangements with Off-Balance Sheet Implications, Special Purpose Entities, and Transparency of Filings by Issuers ....... The report describes the ... study, details its findings, and provides specific recommendations. The document indicates ... broad initiatives/goals to improve financial reporting transparency: .... Additionally, the document includes the ... recommendation areas related to accounting standards: ...." (Financial Executives International)

Many Older Workers Already Lack a Steady Job before the Social Security Retirement Age
Excerpt: "In the Social Security debate, some policy makers have suggested raising the retirement age as a way to address the projected long-term gap in Social Security's finances. Those who favor a later retirement age seem to assume that people work right up until they become eligible for early retirement at age 62 or until the 'normal retirement age' under Social Security, and then immediately retire." (Economic Policy Institute)

Pension Plan Funding Levels Remain under Pressure for Companies Around the Globe
Excerpt: "For the last couple of years, generally favorable business conditions have enabled many global companies to generate strong profits and accumulate significant amounts of cash. .... Despite these positive business trends, the environment for defined benefit (DB) pension plans in the U.S. and elsewhere has remained challenging as funded levels and other ongoing financial issues for these plans continue to draw intense interest among plan sponsors, regulatory bodies and investors." (Towers Perrin)

Overview: Defined Benefit Funding Reform -- Current Efforts in Congress and Airline Funding Relief
Excerpt: "In this article we focus, first, on the politics and process of moving DB funding reform in the House. We then turn to the issue of airline funding relief, thought to be an essential element of any DB funding reform proposal." (Chicago Consulting Actuaries)

Testimony: U.S. Chamber of Commerce on H.R. 2830, The Pension Protection Act Of 2005 (PDF)
14 pages. Testimony before the Committee on Education and the Workforce of the United States House Of Representatives by the United States Chamber Of Commerce on H.R. 2830, The Pension Protection Act Of 2005, by Lynn Franzoi, June 15, 2005. (U.S. Chamber of Commerce)

Testimony before House Committee on Pension Funding, PBGC & Hybrid Plan Reform (PDF)
15 pages. Statement of The ERISA Industry Committee presented to the Committee on Education and the Workforce, U.S. House Of Representatives, on June 15, 2005, regarding The Pension Protection Act of2005, and H.R. 2831, The Pension Preservation and Portability Act of 2005. (The ERISA Industry Committee)

Comments: Defined Benefit Pension Funding Bill -- Single Employer Plans and Multiple Employer Plans (PDF)
11 pages. Excerpt: "The funding bill introduced by Chairman Boehner, Chairman Thomas, Chairman Johnson, and Vice Chairman Kline (H.R. 2830) is vastly superior to the Administration's proposal. It addresses to a large extent the key business concerns regarding predictability, credit balances, and the use of a company's credit rating." (American Benefits Council)

Pension Costs Remain Flat Despite Stronger Returns
Excerpt: "Even though pension plan investment returns hit double digits in 2004, slight gains in plan funding status have not produced lower pension plan costs, according to new research [How Does Your Retirement Program Stack Up?]. An analysis by Mercer Human Resource Consulting and Mercer Investment Consulting found that median plan costs remained at 0.5% of corporate revenue during 2003 and 2004, ....' " (PLANSPONSOR.com; one-time registration required)

Online Tools and Statements Widen Worker Defined Benefit Pension Perspective
Excerpt: "To give frazzled benefit managers some relief from an onslaught of pension estimate requests, Watson Wyatt encourages employers to implement an online pension estimator tool, so employees can calculate pension payouts on their own. 'It can be accessed on a 24/7 basis, and just like a DC plan, employees can see the latest SPD, a glossary of terms and frequently asked questions and then run their own estimates,' ....' (Employee Benefit News)

Testimony: PBGC -- Financial Condition, Potential Risks, and Policy Options (PDF)
14 pages. Statement of Douglas Holtz-Eakin, Director, PBGC, on the Pension Benefit Guaranty Corporation: Financial Condition, Potential Risks, and Policy Options before the Committee on the Budget, United States Senate, June 15, 2005, on issues of pension insurance and pension plan funding. (U.S. Congressional Budget Office)

Comments Presented to the Committee Hearing on H.R. 2830 'The Pension Protection Act of 2005'
Excerpt: "Small business defined benefit plans have historically not been a burden on the PBGC since the owners are generally not covered under the PBGC pension insurance program. A new, early notice requirement for small business defined benefit plans that do not pose a potential risk to the PBGC would unnecessarily increase administrative complexity and costs for practically no benefit." (American Society of Pension Professionals & Actuaries)

Overview: Bankrup.tcy Reform Act Includes Pension Provisions (PDF)
4 pages. Excerpt: "The new law affects sponsors of and participants in qualified defined benefit and defined contribution plans, including 401(k) plans. It also affects 403(b) plans and programs and governmental section 457(b) plans, as well as holders of individual retirement accounts and annuities (IRAs)." (Prudential Retirement)

Senator Enzi Warns States on Pension Fraud Schemes
Excerpt: "A US Senator has urged the nation's governors to be particularly wary of pension fraud attempts similar to that from the now defunct Capital Consultants, LLC, a Portland, Oregon investment manager. Senator Mike Enzi (R-Wyoming), chairman of the Senate Health, Education, Labor and Pensions Committee, included the warning in letters sent to all 50 governors, which also focused on the results of his committee's inquiry into the Capital Consultants scandal." (PLANSPONSOR.com; one-time registration required)

New York's Pataki Signs Pension Bill for Workers at Ground Zero
Excerpt: "[G]ov. George E. Pataki signed a bill ... that will increase the pensions the city must pay to employees who worked at the World Trade Center site after Sept. 11, 2001. Mayor Bloomberg has opposed the bill for several years, arguing that it could cost the city roughly $50 million a year. Governor Pataki had twice vetoed the bill, which was strongly supported by the city's unions, but he signed it this year after it was amended slightly. City officials say it will still be too costly." (The New York Times; one-time registration required)

Proposed Pension Reporting Changes Could Increase Plan Sponsor Woes
Excerpt: "Calls to reform and stabilize the pension system are louder than ever - with good reason. But even as employer groups press Congress for relief, they could take another blow if a pension reporting proposal driven by the Financial Accounting Standards Board moves forward, some experts say." (Employee Benefit News)

Opinion: The Mother of All Mismanaged Retirement Plans -- Social Security
Excerpt: "While the vast majority of retirement plans are run responsibly, unethically using workers' retirement contributions to fund current expenses, ..., is still an all-too common occurrence. By far, the biggest perpetrator of such shenanigans is the US government. Unlike responsible plan administrators, which save all retirement contributions rather than spend them, the government immediately spends most of our Social Security contributions on current retirees." (The Christian Science Monitor)

Question and Answer on Form 5500 Reporting of Delinquent Contributions Requirement
Excerpt: "Must delinquent participant contributions continue to be reported on Line 4a of Form 5500 for every year until they are corrected? DOL Response: If participant contributions were transmitted to the plan late during Year 1, and the violation was not corrected until sometime during Year 2, the total amount of the delinquent contributions should be included on Line 4a of the Schedule H or I for Year 1 and should be carried over and reported again on Line 4a of the Schedule H or I ...." (U.S. Employee Benefits Security Administration via Reish Luftman Reicher & Cohen)

Consultants Intensify Opposition to Investigations of Their Conflicts -- Harm to Pensions Not Shown
Excerpt: "What the SEC and DOL did not say is whether the pervasive conflicts and non-disclosure they discovered have resulted in any harm to pensions. With regard to whether payments by money managers influence consultant recommendations, the SEC said it was unable to determine such a link because consultants do not maintain the records necessary to prove 'pay to play' exists." (The Benchmark Companies)

Working Paper Abstract: Alternative Methods of Price Indexing Social Security
Excerpt: "This paper explains four methods of 'price indexing' initial Social Security retirement benefits, and discusses the effect of each method on the fiscal sustainability of Social Security, benefit levels and replacement rates, redistribution, and sensitivity of system finances to demographic and economic shocks." (National Bureau of Economic Research)

Bush's Social Security Plan Would Hurt Small Businesses, Democrats Say
Excerpt: "Two leading Democratic senators said Wednesday that President Bush's Social Security plan would be devastating to small businesses. At a Capitol Hill news conference, Sens. John Kerry of Massachusetts and Byron Dorgan of North Dakota presented a report saying the plan hasn't accounted for the affect on small businesses - which Kerry and others said would be paralyzing." (Knight Ridder/Tribune News Service)


Links to Items on Executive Comp, Benefits in General

SEC Report and Recommendations Pursuant to Section 401(c) of the Sarbanes-Oxley Act of 2002 (PDF)
119 pages. Section 401(c) of the Sarbanes-Oxley Act of 2002 mandates that the Securities and Exchange Commission conduct a study of filings by issuers and issue a report. The staff of the Commission conducted an empirical analysis of the filings as well as a qualitative analysis of pertinent U.S. Generally Accepted Accounting Principles and Commission disclosure rules. In this Report the Staff describes the Study, reports its findings and provides recommendations." (U.S. Securities and Exchange Commission)

Perspective on Equity Compensation
Excerpt: "For the third time in four years, Mercer has conducted a Future of Equity survey to examine equity compensation trends. The most recent results, Compensation 2005: A Time to Question Everything, show continued and dramatic change in the marketplace." (Mercer Human Resource Consulting; one-time registration required)

Text of IRS Rev. Rul. 2005-39 on Treatment of 83(b) Restricted Stock for Golden Parachute Purposes (PDF)
Holdings: Restricted stock for which a section 83(b) election has been made is treated as outstanding stock for purposes of determining whether there has been a change in ownership or control under section 280G. In addition, restricted stock for which a section 83(b) election has been made is treated as outstanding stock for purposes of determining the amount of stock held by shareholder in testing whether such shareholder is a disqualified individual under section 280G. (Internal Revenue Service)

Washington Regulatory Wrap Up, 2005, As of June 14, 2005 (PDF)
3 pages. The chart of federal regulatory proposals concerning employee benefits of interest to NCTR members has been updated to be current as of June 14, 2005. The federal updates referenced in the chart are available at http://www.nctr.org/federal/index.html. (National Council on Teacher Retirement)

Hewitt Federal Legislation Quick Guide Updated as of June 14, 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)

Working Paper Abstract: Employee Sentiment and Stock Option Compensation
Excerpt: "We analyze whether the popularity of option compensation for rank and file employees may be driven by employee optimism. We develop a model of optimal compensation policy for a firm faced with employees with positive or negative sentiment, and explicitly take into account that current and potential employees are able to purchase equity in the firm through the stock market." (National Bureau of Economic Research)


Newly Posted Press Releases

Council to Congress: help employers remain in the defined benefit pension system
(American Benefits Council)


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

Benefit Project Specialist
for Aon Consulting
in MD

Employee Benefits/Executive Compensation Attorney
for Miller Johnson
in MI

401(k) Analyst
for The Paragon Consulting Group, Inc.
in CA

TPA MANAGER POSITION- UPPER MIDWEST
for The Rose Search Group, Inc
in WI

DC Plan Administrator
for Milliman, Inc.
in TX

Benefits Account Executive- Design and Financing
for Lockton Companies, Inc.
in CA

Employee Benefits Consultant
for CUNA Mutual Group
in DC, NC

Benefits Account Executive- Administration Outsourcing
for Lockton Companies, Inc.
in CA

Manager, Benefit Strategy & Design
for Amerada Hess Corporation
in NJ

Compliance Testing Consultant
for Diversified Investment Advisors
in NY

Health Benefits Consultant / Account Manager
for Financial Directions Group
in NC

H&W Project Manager
for The Paragon Consulting Group, Inc.
in TN

Compliance Specialist
for Mercer HR Services
in MA

Defined Benefit Account Executive
for Transamerica
in CA




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