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June 21, 2005
Today's sponsor: ASPPA-- Working for America's Retirement (tm)

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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)

Text of Summer 2005 Issue of IRS Employee Plans News (PDF)
Excerpt: "Beach Materials: Sun Block and the Federal Register; EP Connections: Interview with Donna Prestia; Critical Few Points...by Michael Julianelle; It's Not Too Late to Register! - The 2005 IRS Nationwide Tax Forums; Volume Submitter Program Follow-Up; We're Glad You Asked: SIMPLE IRA Plan Exam Program Update; New Tax Shelter Reporting Rules; ACT IV - The Trilogy Continues; Actuary Extraordinaire; PBGC Insights; DOL Corner; Mailing Address is Now the Same for M&P Plans and VS Plans" (Internal Revenue Service)

Overview: IRS Issues New Proposed Regulations Interpreting Section 415 Limits (PDF)
3 pages. Excerpt: "On May 31, 2005, the IRS proposed new regulations under section 415 of the [IRC]. Section 415 limits the benefits that may be paid by defined benefit plans and contributions that may be made to defined contribution plans. While some of the provisions may be a restatement of the current rules or a codification of guidance issued over the years since the current regulations were adopted, other provisions may represent new interpretations that need to be studied carefully." (National Council on Teacher Retirement)

Highlights of the 415 Regulations -- Updated June 20, 2005 (PDF)
1 page. Excerpt: "Expanded highlights of the proposed 415 regulations issued May 31, 2005. Containing all of the rules on maximum benefits and contributions, the proposed 415 regulations - when finalized - will provide the benefits community with a one-stop resource for their questions on this oft confusing section of the Code." (U.S. Internal Revenue Service)

Fred Reish on Figuring 401(k) Fees and Explaining Expenses
Excerpt: "Fees and expenses continue to be a hot topic for the Department of Labor and 401(k) fiduciaries, and the expectations are rising. ERISA's fiduciary responsibility rules and prohibited transaction restrictions require that fiduciaries avoid paying more than reasonable amounts from plan assets. While 'reasonable' sounds reasonable, its application can be problematic." (PLANSPONSOR.com; one-time registration required)

Overview: Adding a Roth Account Option to 401(k) and 403(b) Plans
Excerpt: "The Roth IRA is a wonderful vehicle for long term planning. Contributions are with after-tax dollars, and investment earnings are not taxed. Withdrawals are totally tax free, and minimum distribution rules at age 70 & 1/2 do not apply. Starting in 2006, an account with most of these attributes (the 'Roth feature') can be added to 401(k) and 403(b) plans." (Rackemann, Sawyer & Brewster)

Managing ERISA Risk -- A Series -- Risk Management in 401k Plans
Excerpt: "The failure to apply risk management principles to the management of a defined contribution (DC) plan is very much a breach of fiduciary duty as it would be if the same conduct applied to a defined benefit (DB) plan. There is no allowance for 401(k) fiduciaries to manage a plan using lower fiduciary standards than fiduciaries of defined benefit plans. There is no safe harbor in ERISA for not paying attention to your statutory duties." (Sarbanes-Oxley Compliance Journal)

Many Americans Already Lack a Steady Job before the Social Security Retirement Age
Excerpt: "[S]ome policy makers have suggested raising the retirement age as a way to address the projected long-term gap in Social Security's finances. .... However, ... large percentages of both men and women lose employment before they reach Social Security eligibility. Increasing either the early retirement age or the normal retirement age would put more Americans at risk of poverty and would do nothing to make employment opportunities more available to older Americans." (Economic Policy Institute)

Opinion: End of the Private New Deal As Republicans Loudly Threaten the Public New Deal
Excerpt: "The old corporate America that took responsibility for workers' pensions and health care is dying, and the nation's political leadership has hardly taken notice of the implications. The rise of corporate social protection had a huge impact, and so will its decline. Conservatives long touted employer-provided pensions and health plans as the private alternative to big government -- the very epitome, supposedly, of the American way." (Paul Starr via The American Prospect.)

The Experience of Public Retirement Systems in Washington, Michigan, and Ohio
Excerpt: "California is not the first state to try private accounts for public employees, and a growing number of states face situations similar to that in the Golden State, including Illinois, South Carolina, and Alaska. In this, the second of our two-part series, other states' experiences speak to the challenges ahead for public plan sponsors and retirees." (PLANSPONSOR.com; one-time registration required)

Employee Ownership Update for June 20
NCEO Executive Director Corey Rosen discusses the endorsement of employee ownership by Thomas Friedman and the Progressive Policy Institute; a new project that can help low-wage workers at employee ownership companies; the nomination of Christopher Cox, who cosponsored a bill to limit stock option expensing, to head the SEC; and increased Department of Labor scrutiny of ESOPs. (National Center for Employee Ownership)

Developing Law: The Responsibilities of Directed Trustees under ERISA
Excerpt: "[C]lass action litigation has often focused on whether 'directed trustees' -- such as banks, trust companies and mutual fund companies -- have fiduciary liability for not having brought a halt to allegedly imprudent investments in employer securities, and thus contributing to declines in the value of individual accounts. Directed trustees have countered by pointing out they were hired and paid to execute instructions, not to serve as discretionary trustees, ...." (Bender’s Labor & Employment Bulletin via Thelen Reid & Priest LLP)

Many UK Employers May Close Final Salary Schemes to All Further Contributions
Excerpt: "Some of the biggest and best employers in the UK are expected to close the final salary pension schemes they run for their staff to all investors in the next 12 months. " (Guardian Unlimited)

Social Security Has Promises to Keep and Problems to Solve
Excerpt: "Proposals on how best to modify Social Security to ensure its long-term viability but not betray soon-to-retire baby boomers or overburden the young, proportionately smaller workforce are now front and center, thanks to President George W. Bush's push for a reform plan. The good news is the funding shortfall finally is being discussed seriously. The bad news lies in the considerable uncertainty about the best way to solve it." (Journal of Accountancy)

American Academy of Actuaries Report Highlights Bad Retirement Decisions
Excerpt: "Mathew Greenwald, a strategic planner and marketer, describe[d] the current state of American thought on retirement planning [as] outlined in a report by The American Academy of Actuaries. .... The report detailed 10 common misperceptions about retirement and found, through research on behavior, that people rely too heavily on Social Security for retirement and often make miscalculated decisions on how much money they'll need to maintain the lifestyle they want, among other things." (Knight Ridder/Tribune News Service via)

Overview: SEC Examines Conflicts of Interest and Disclosure for Pension Consultants (PDF)
3 pages. Excerpt: "A recent report by the SEC examined 24 pension consultants registered as investment advisers, reflecting the SEC's concerns about compliance with securities laws, and that many conflicts of interest are not being properly disclosed." (Dechert LLP)


Links to Items on Executive Comp, Benefits in General

HR Involvement Critical to M&A Success, Due Diligence Practice
Excerpt: "In mergers and acquisitions, due diligence forms the base upon which virtually all key decisions -- both strategic and operational -- are made. Those involved in such transactions understand the importance of due diligence in identifying potential 'deal breakers' and any items that may have a material impact on the negotiations or price." (WorldatWork Journal via Mercer Human Resource Consulting; one-time registration required)

Baby Boomers Will Invent New Life Stage Between Middle Years and Old Age, and New Stage of Work
Excerpt: "The MetLife Foundation, New York, and Civic Ventures, San Francisco, have published figures describing older workers in a report on a new survey of 1,000 Americans in their 50s and 60s. For the purposes of this survey, researchers classified individuals in their 50s as boomers and individuals in their 60s as 'pre-boomers.'" (National Underwriter Life & Health; free one-time registration or paid subscription required)

Text of Section 409A of the Internal Revenue Code: Nonqualified Deferred Compensation Rules
Attorney B. Janell Grenier supplies an online version of section 409A of the Internal Revenue Code (as added by section 885 of the American Jobs Creation Act of 2004). (Attorney B. Janell Grenier via BenefitsBlog.com)

Overview: IRC Section 409A Imposes New Requirements on Nonqualified Deferred Compensation
Excerpt: "The section broadly defines a 'deferral of compensation' to include all amounts employees defer under such plans. These amounts are included in gross income unless they are subject to a substantial risk of forfeiture or were previously included in income. To avoid this draconian tax treatment, section 409A significantly restricts when plan participants may make deferral and distribution elections, and narrowly defines when they can take distributions." (Journal of Accountancy)

Fewer Stock Options for CEOs in 2005, According to Watson Wyatt Analysis
Excerpt: "Performance-based incentives and restricted stock awards are replacing stock options as motivators for CEOs of the nation's largest companies, according to a new analysis by Watson Wyatt. In what the consulting firm described as the industry's first analysis using 2005 data, the survey showed a 16% decline in the number of stock options awarded to CEOs, on top of a 7% decline in 2004." (PLANSPONSOR.com; one-time registration required)


Newly Posted Events

2005 PenServ Academy
in Nevada on August 2, 2005
presented by PenServ, Inc.

HIPAA and Other Health Laws: Arkansas Compliance Assistance Seminar
in Arkansas on June 22, 2005
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

The Top 10 HIPAA Compliance Problems Still Facing Employers Today
Nationwide on July 21, 2005
presented by Alexander Hamilton Institute


Newly Posted Press Releases

PSCA's Signature Awards Deadline Extended to July 5, 2005
(Profit Sharing/401(k) Council of America (PSCA))

Choose To Save® Programs Win Regional Emmy Awards
(Employee Benefit Research Institute (EBRI))

Vertafore Benefits Adds Work/Life Resources to BenefitsCenter Employee Portal
(Vertafore Benefits)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Pension Administration Specialist
for Miami Valley Pension, a Brady Ware Company
in OH

Implementation and Conversion Consultant
for PAi
in WI

Operations Project Manager
for Transamerica
in CA

401(k) Plan Benefits Administrator
for Phillips-Van Heusen Corporation
in NJ

Defined Benefit Calculations Specialists
for Constantin Control Associates
in NJ

Pension Reconciliation Supervisor
for Growing Major Midtown Union Health Plan
in NY

401(k) Analyst
for 401(k) Advisors
in CA

Daily Valuation Specialist
for The Weiss Group, Inc.
in IL

401(k) Plan Administrator
for Kaufmann and Goble Associates
in CA

Client Services Manager
for ClearBenefits
in CA

Defined Contribution Plan Administrator
for Benefit Consulting Group, LLC
in NY

401(k) RFP Consultant
for 401(k) Advisors
in CA

401(k) Product Specialist
for 401(k) Advisors
in CA

401(k) Enroller (Bi-Lingual)
for 401(k) Advisors
in CA

401(k) Employee Communications Specialist (Bi-Lingual)
for 401(k) Advisors
in CA




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