BenefitsLink Retirement Plans Newsletter June 23, 2005 Today's sponsor: ASPPA-- Working for America's Retirement (tm) (Click on company name or banner to learn more.) 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) Financial Accounting Standards Board Aims New Scrutiny on Auditing of Pensions Excerpt: "The body that writes the accounting rules for American business is now preparing an overhaul of how companies calculate the financial impact of their pension plans. Corporations are likely to oppose revisions by the body, the Financial Accounting Standards Board, or FASB, because a new pension standard could lead to significant changes in how corporate earnings are reported. There could also be major changes in employee benefits and how pension funds invest workers' retirement money." (The New York Times; one-time registration required) Pension Bill Author Wary of Airline Aid Excerpt: "The main sponsor of a bill to tighten rules governing U.S. corporate pensions said ... he did not want any special airline aid added to the measure as it progresses in the House of Representatives. Republican Rep. John Boehner of Ohio said he intended to keep the pension bill free of specific relief for any particular industry, although he did not rule out such action in the Senate or later in the legislative process, when the two chambers negotiate a single bill for final passage." (Reuters via The Washington Post; one-time registration required) Overview: Retirement Plans and IRAs in Bankrup.tcy Excerpt: "As a condition of tax-qualified plans benefiting from the protections of the Act, the plan must be able to demonstrate its compliance with Code Section 401(a). If the plan has a current favorable IRS determination letter, an individual's plan accounts are presumed qualified and therefore exempt from the claims of the individual's creditors." (Bell, Boyd & Lloyd LLC) Technical Tip: Fees Allocated to Participant Accounts Are Not Distributions Excerpt: "The following question and answer were from the IRS Q&A Session at the 2003 ASPPA Annual Conference: If QDRO fees and/or loan fees are allocated to a specific participant's account, is that portion considered to be a taxable distribution? Response: No." (Reish Luftman Reicher & Cohen) University of Alaska Amends Faculty Pension Plan Excerpt: "The University of Alaska Board of Regents on Wednesday approved capping employee contributions to its optional retirement program at 12 percent. The move was necessary to head off a 150 percent increase in the cost of funding the pension program over the next five years, said Jim Johnsen, vice president of faculty and staff relations for the University of Alaska. The change will only affect teachers and administrators hired after June 30." (Fairbanks Daily News-Miner, Inc.) Towers Perrin U.S. Legislative Tracking Charts — Retirement -- Updated June 20, 2005 (PDF) 14 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin) Update: Mutual Fund Redemption Fee Rule Opens Up Omnibus Accounts Excerpt: "The Securities and Exchange Commission approved a rule recently that makes it easier for mutual funds to implement redemption fees on short-term trades, a step designed to stop market timers. The agency dropped an earlier idea--pushed by the fund industry--to make redemption fees mandatory. But Rule 22c-2 will also force intermediaries like brokerage firms to share customer account information with funds so timers can't hide behind omnibus shareholder accounts." (On Wall Street) Testimony: Economic Conditions Affecting Social Security and the Merits of Pre-Funding (PDF) 16 pages. Statement by Lee Price, Research Director, Economic Policy Institute, to the Subcommittee on Social Security, Committee on Ways & Means, U.S. House of Representatives on June 21, 2005. (Economic Policy Institute) The Future of Retirement in a World of Rising Life Expectancies (PDF) 16 pages. Excerpt: "The Future of Retirement research, of which this report is a précis, examined attitudes towards ageing and retirement planning in 10 societies that together contain half of the world's population. .... It is ... the first [research] to study the various ways in which people of different generations throughout the world prepare for their later years, and the first to reveal emerging models of personal growth, new careers and changing family relationships." (HSBC) Level of Frozen, Terminated Defined Benefit Pension Plans Up Sharply in 2004 Excerpt: "The number of Fortune 1000 firms freezing or terminating their defined benefit pension plans skyrocketed by 36.6% last year, according to new Watson Wyatt data." (PLANSPONSOR.com; one-time registration required) Chart: Options to Put Social Security in Financial Balance for 75 Years (PDF) 1 page. Chart shows solvency options with percent of 75-year shortfall met by each option. ("Options to Balance Social Security Funds over the Next 75 Years" via National Council on Teacher Retirement) House GOP Offers Plan for Social Security: Bush's Private Accounts Would Be Scaled Back Excerpt: "After watching the Social Security debate from the sidelines, House Republican leaders yesterday embraced a new approach to Social Security restructuring that would add individual investment accounts to the program, but on a much smaller scale than the Bush administration favors." (The Washington Post; one-time registration required) New Plan for Personal Social Security Accounts Urges Use of Surplus Excerpt: "Influential Republicans offered a sketchy proposal on Wednesday that would use the cash surplus the Social Security system is running nowadays to finance private investment accounts, in an effort to neutralize the political opposition to a fundamental change in the system." (The New York Times; one-time registration required) Links to Items on Executive Comp, Benefits in General An Employer Update on Same-Sex Marriage and Domestic Partner Benefits Excerpt: "Massachusetts authorizes same-sex marriages, but judicial challenges to state marriage laws are pending in other states. Connecticut has joined Vermont in extending civil unions to same-sex couples. Other states have enacted domestic partnership laws. These developments continue to raise new questions for employers about their legal obligations. The following is an update for employers on the current status of the law." (Littler Mendelson, P.C.) Commentary on Two Private Letter Rulings on Domestic Partner Benefits from the IRS Excerpt: "The IRS has issued companion Private Letter Rulings (Priv. Ltr. Rul. 200524016 & Priv. Ltr. Rul. 200524017), holding that a County's collectively bargained 457(b) plan will not meet the requirements of section 457 of the Internal Revenue Code if the plan provides benefits to same-gender domestic partners. ..." (Attorney B. Janell Grenier via BenefitsBlog.com) Reminder: June 30th Deadline for Deferral Elections of Certain Performance-Based Bonus Compensation (PDF) 3 pages. Excerpt: "Internal Revenue Code section 409A requires that elections to defer compensation earned in a taxable year be made before the beginning of that year. A special rule applies for performance-based compensation, however. An election to defer performance-based compensation that is based on services performed over a period of at least 12 months must be made at least 6 months before the end of the performance period." (Pillsbury Winthrop Shaw Pittman LLP) Overview: June 30 Deadline for Deferrals under Calendar Year Performance Plans Excerpt: "New §409A generally requires that elections to defer compensation under a nonqualified deferred compensation plan be made in the year prior to the taxable year in which the underlying services are performed. However, there is an exception to this general rule for elections related to certain performance-based compensation. When performance-based compensation is based on a measuring period of at least 12 months, the deferral election may be made as late as six months prior ...." (Womble Carlyle Sandridge & Rice, PLLC via BNA Tax Management) Towers Perrin U.S. Legislative Tracking Charts — Human Resources -- Updated June 20, 2005 (PDF) 7 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin) Chart: Employer Costs Per Hour Worked for Employee Compensation, Private Industry, March 2005 Excerpt: "In March 2005, private industry employer compensation costs averaged $24.17 per hour worked." (U.S. Bureau of Labor Statistics) Newly Posted Events Health Information Technology - Ask the Experts, Live Webcast Nationwide on June 30, 2005 presented by Kaiser Family Foundation Population Health Management - How mid-size employers can reduce health care costs by promoting healthy lifestyles for employees in California on July 12, 2005 presented by ArlenGroup Population Health Management - How mid-size employers can reduce health care costs by promoting healthy lifestyles for employees in California on July 14, 2005 presented by ArlenGroup Newly Posted Press Releases EDSA Creates Good Money Habits for Companies and Their Employees (EDSA Group, Inc., The) Consumer Driven Care Training Kit - Version 4.0 - June 2005 Release (MCOL) 401kLoans Easing The Grief Of Participant Loan Origination (Metrics Partners) Newly Posted or Renewed Job Openings Enrolled Actuary for Qualified Retirement Plans for First Actuarial Corporation in IL, MI Benefit & Planning Counselor for The Principal Financial Group in NY Implementation Consulting Analyst - US Outsourcing for Mercer Human Resource Consulting in IL Account Representative for Great-West Financial Services in FL Marketing & Sales Coordinator for Exit & Retirement Strategies, Inc. in CA Human Capital Services Coordinator for Guaranty Bank in WI 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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