BenefitsLink Retirement Plans Newsletter July 13, 2005 Today's sponsor: Employee Benefits Institute of America (EBIA) (Click on company name or banner to learn more.) Explore the Seven Wonders of the Benefits Compliance World No HR or benefits professional's library would be complete without EBIA's compliance manuals. Save time and steer clear of compliance traps by joining thousands of professionals who rely on our manuals. "I know I can rely on your manuals, above and beyond any others, to be clear, concise, easy to understand, and accurate!" -Director of Flexible Benefits (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) Enron Settles Retirement Plan Suits Excerpt: "Enron Corp. has agreed to a $356.3 million settlement of a U.S. Labor Department lawsuit and a private class action lawsuit filed over the alleged mismanagement of the former Houston-based energy trader's retirement plans, Labor Secretary Elaine L. Chao announced Tuesday [July 12, 2005]." (Business Insurance) Shell Settles Class Action Suit with Workers: Savings Plans Took Hit After Firm Restated Reserves Excerpt: "The Royal Dutch-Shell Group of Companies has agreed to pay $90 million to settle a lawsuit brought by U.S. employees after it revealed it had inflated its oil and natural gas reserve numbers." (Houston Chronicle) The Influence of Automatic Enrollment, Catch-Up, and IRA Contributions on 401(k) Accumulations (PDF) 28 pages. Excerpt: "The Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) have collaborated to develop the EBRI/ICI 401(k) Accumulation Projection Model. This model examines how401(k) assets might contribute to retirement income for future retirees based on decisions workers make throughout their careers and finds that the median replacement rate from 401(k) accumulations depends primarily on whether current participants will continue to work for ...." (Employee Benefit Research Institute) Issue in Brief: Do Older Workers Face Discrimination? (PDF) 8 pages. Excerpt: "Americans will need to work longer, they are capable of working longer, and many say they wish to work longer. But will they be able to find work at later ages? This brief describes existing evidence on age discrimination and summarizes the results of a recent experiment that found that older job applicants are treated differently than younger applicants. It then explores possible reasons for this differential treatment." (Center for Retirement Research at Boston College) Opinion: Beyond Just Social Security: The Need to Fix Our Pension System Excerpt: "While Social Security has received the most attention, recent developments emphasize the need for a comprehensive approach to pensions that expands opportunities to save for retirement and strengthens defined benefits plans. The Pension Benefit Guaranty Corporation (PBGC), which insures defined benefit pension plans, faces potential deficits of hundreds of billions of dollars that may require a government bailout." (The Heritage Foundation) Opinion: Pension Pains: ERISA...What Did It Do to Your Pension? Excerpt: "We have all been reading about the losses suffered by employees in the air carrier business and others as a result of bankruptcies and the termination of their pensions. Here is a brief discussion of what's been going on." (Aircraft Maintenance Technology) Early IRA Withdrawal Penalty Exception for Education Expenses Did Not Apply to Previous Years' Costs Excerpt: "In a memorandum decision, the Tax Court has upheld an IRS determination that the Code Sec. 72(t)(2)(E) exception to the 10% penalty for early withdrawals from an IRA did not apply to higher education expenses that the taxpayer incurred in years before making the withdrawal. (Beckert v. Comm., T.C. Memo. 2005-162)" (RIA's Pension & Benefits Week) The Details of Withdrawing from an IRA to Pay Some Tuition Costs at Law School Without a Penalty Excerpt: "An IRA owner can take distributions from his/her IRA to pay certain higher education expenses and avoid the 10 percent penalty tax on any taxable portion of his/her distribution. The education expenses must be for the IRA owner, his/her spouse, or their children or grandchildren." (Bankers Systems, Inc.) United Kingdom Pension Protection Fund Wants Risk Levy Next Year Excerpt: "The Pension Protection Fund wants to start its risk-adjusted levy on retirement schemes as soon as the 2006-2007 financial year, it said on Tuesday [July 12, 2005], prompting mixed reactions from industry groups.' (Reuters) Opinion: Stopping the Raiding of the Social Security Trust Funds Excerpt: "A coalition of House and Senate Republicans has transformed the Social Security debate with a new proposal that finally focuses reform on the personal accounts and sets aside all tax increases and benefit cuts. Skeptics take note: This bill can really pass. Nothing else can." (Peter Ferrara via The Washington Times) Links to Items on Executive Comp, Benefits in General Down in Flames: Airlines Go for Broke While Executives Take the Cash Excerpt: "In any case, according to a transcript of the congressional hearing, Steenlan said, the airline's pensions are going the way of the wooly mammoth: 'Northwest has concluded that defined benefit plans simply do not work for an industry that is as competitive as we are and that is as vulnerable to forces ranging from terrorism to international oil prices.' There's no word on whether Northwest will freeze its executives' pensions, ...." (City Pages Media, Inc.) IRS Agents Training for Code Section 409A Audits Excerpt: "RIA is reporting today that at a recent ALI-ABA session on Executive Compensation, Catherine Livingston Fernandez, Esq., Chief, Executive Compensation Branch in the IRS's Office of the Associate Chief Counsel and Keith Jones, Director, Field Specia.lists, Large and Mid-Size Business Division (LMSB) revealed that IRS agents are already receiving training in Section 409A of the Internal Revenue Code, with the first wave of audits likely to begin in 2007." (Attorney B. Janell Grenier via BenefitsBlog.com) A Federal Employee's Letter about Federal Employee Benefits to Mike Causey's Federal Report Excerpt: "I suspect that you get a lot of mail or telephone calls from federal workers who are unhappy with their job. I hear a lot of it. The primary complaint being that 'we' could make more money in the private sector, and get a better benefits package. I am here to tell you that ain't necessarily so." (Federal News Radio) Opinion: Bigger is Better for Social Insurance Programs Excerpt: "When it comes to providing broad-based social-insurance programs, it's the government that's rational and the market that's dumb. [Originally published 5/6/05.]" (The American Prospect via Physicians for a National Health Program) Compliance Checklist 2005 for Plans that Are Subject to ERISA (PDF) 36 pages. Excerpt: "The Checklist incorporates Defined Benefit, Defined Contribution and ERISA 403(b) requirements and provides information on the materials that you will need to file, filing due dates, and agencies to which the filings should be made." (Prudential Retirement) Compliance Checklist 2005 for Benefit Plans that Are Not Subject to ERISA (PDF) 14 pages. Excerpt: "The Checklist incorporates requirements for Governmental and Nonelecting Church Plans, Non-ERISA 403(b) Programs, 457 Plans, and Nonqualified Executive Benefit Plans, and provides information on the materials that you will need to file, filing due dates, and agencies to which the filings should be made." (Prudential Retirement) Board Revokes Severance Pay of Ex-Pension Chief; Virginia Agency Offers $15,000 in Place of $263,000 Excerpt: "The panel that oversees Virginia's public pension system voted Tuesday to rescind a $263,000 severance package given to its former chief, acting after state officials said the payment was improper." (The Washington Post; one-time registration required) Newly Posted Events Great Lakes Benefits Conference in Illinois on May 15, 2006 presented by ASPPA & IRS Newly Posted Press Releases DataPath Concludes Survey On The IRS' Groundbreaking Ruling Regarding FSA Claims 86% Of Respondents Anticipate Rule Adoption At The Plan Level (DataPath, Inc.) Automatic Enrollment Could Have a Significant Impact On Raising 401(k) Balances at Retirement, Study Finds (Employee Benefit Research Institute (EBRI)) Cheri E. Havasi Joins BPA as a Senior Claims Evaluator (Benefit Plan Audit Services, LLC) Travis Software Releases TravisCobra Version 7.30, With Enhanced Premium Payment Systems, Disbursement Processes and HIPAA Features (Travis Software Corp.) New Online Course for Federal Employees in FERS Retirement System (Snow-cap Agency, Inc.) Newly Posted or Renewed Job Openings Senior Pension Plan Administrator for Chicago TPA Firm in IL Assistant Vice President, Quality for Great-West Corporate in CO Financial Planner/Investment Specialist for Diversified Investment Advisors in KY 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. Published by: BenefitsLink.com, Inc. https://benefitslink.com/about.html 1298 Minnesota Avenue, Suite H Winter Park FL 32789 (407) 644-4146 Fax: (407) 644-2151 Editor and Publisher: David Rhett Baker, J.D. 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