BenefitsLink Retirement Plans Newsletter July 14, 2005 Today's sponsor: www.ftwilliam.com (Click on company name or banner to learn more.) Register for our free on-line demo! www.ftwilliam.com offers the employee benefits professional the highest quality plan documents and forms at highly competitive prices. Plan documents on a per document basis are only $50/adoption agreement, or $100/volume submitter document (including cross testing). An annual subscription to all documents is only $1,500. The Form 5500 package and the IRS/PBGC form package are only $250 each. Prices include access for five concurrent users. (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) 401(k) Plans Take On Pension Plan Design Features Excerpt: "Vendors are adding features that make 401(k)s plans appear more like traditional pension plans in order to address the fact that most people aren't professional fund managers, while not overextending the sponsors' financial obligations. Much of this is through automation: vendors and sponsors are increasingly creating plans in which participants do not have to make investment decisions and are guaranteed a stream of income in retirement." (Defined Contribution News) Overview: New 401k/403(b) Plan Design Feature Available for 2006 -- After-Tax Roth Contributions (PDF) 4 pages. Excerpt: "Beginning in 2006, 401k and 403(b) plans will be permitted to offer a new benefit feature to participants-- after-tax 'Roth' contributions. These Roth contributions will generally not be taxed upon distribution to the plan participant and, if a five year holding period requirement is met, the earnings on such Roth contributions also will not be taxed when distributed." (Epstein Becker & Green, P.C.) The U.K. Pension Protection Fund Takes Stake in Insurance Broker (PDF) 8 pages. Excerpt: "The Pension Protection Fund (PPF) has struck a deal with Heath Lambert-- Britain's fifth biggest insurance broker-- under which it will take a significant (reports vary between 10% and 33%) stake in a new Heath Lambert company in return for allowing Heath Lambert's pension deficit to fall into the PPF." (Towers Perrin) Perspectives on Managing Cost and Risk-- Fact, Fiction and Pension Funding -- What If? (PDF) 4 pages. Excerpt: "What if regulators had collaborated with actuaries to establish funding standards that focused on securing 'most of the promised benefits all of the time' and 'all of the promised benefits most of the time'?" (Towers Perrin) Ex-Coca-Cola Workers Sue Over 401(k) Plan Investments in Company Stock Excerpt: "Four former Coca-Cola employees have sued the company, claiming executives shouldn't have encouraged employees to put Coke stock in 401(k) retirement accounts. The latest of three separate but similar suits was filed last week in U.S. District Court in Atlanta by ex-employee Brenda Jackson. She is seeking unspecified damages based on accusations that Coke executives used the company's stock as a component of 401(k) accounts, despite their knowledge of a host of problems." (The Atlanta Journal-Constitution; one-time registration required) Hewitt's Global Retirement and Financial Management Update -- July 2005 (PDF) Excerpt: "Hewitt's Global RFM Update summarizes recent legislative developments and trends related to retirement and financial management and highlights recently passed and pending legislation that may require employers to take action to comply with new rules or review existing plans." (Hewitt Associates) Congress May Wait until 2006 to Decide on Real Estate Option in TSP Excerpt: "A congressional decision on whether to add a real estate investment option to the 401(k)-type retirement savings plan provided to government employees may not happen until next year. Eight House and Senate members, who hold seats on key committees, have given the federal board that administers the Thrift Savings Plan until Jan. 1 to provide a report that would include an assessment on whether to increase investment choices." (The Washington Post; one-time registration required) Legislation Before Congress Affecting NCPERS-- The Voice for Public Pensions Excerpt: "NCPERS tracks federal legislation that has been signed into law and bills that are pending before the Congress affecting public sector pension funds. Each piece of legislation is listed by the bill number, sponsor, title of the bill, and its current status." (National Conference on Public Employee Retirement Systems) Hewitt's Global HR Report 2005: First Quarter Themes Excerpt: "First Quarter Themes: Employment Terms and Conditions; Retirement and Social Security; Taxation of Compensation and Benefits; Issues for Expatriate Employees. Employees in many countries will enjoy lower personal income taxes and higher minimum wages. Employers may need to evaluate their severance pay and policies and practices related to mergers and acquisitions in Europe. Governments continue to examine their social security systems and introduce significant pension reforms." (Hewitt Associates) New Pension Law in Taiwan Ushers in New Era for Employer-Sponsored Plans (PDF) 2 pages. Excerpt: "With the launch of the Labor Pension Act (LPA) on July 1, Taiwan began a new era of retirement plan regulations. The centerpiece of the new law, which overhauls the retirement plan arrangements under the existing Labor Standards Law (LSL), is a requirement for employers to provide employees with some type of defined contribution account that is fully portable." (Towers Perrin) Complete Glossary of Investment Policy Terms Excerpt: "This Glossary identifies, defines, and clarifies the meaning of investment terms used by CalPERS in our investment policies. The purpose of the Glossary is to establish a uniform vocabulary of terms for users of these policies." (California Public Employees' Retirement System) Overview: Market Adjusts to SEC Mandate for TPA Role in Mutual Fund Compliance (PDF) 2 pages. Excerpt: "The SEC has issued its final rules on late trading and redemption fees. These rules include important new requirements for recordkeepers and administrators of employee benefits plans. The new rules require recordkeepers and plan administrators not only to provide shareholder identity and transactional data to mutual fund companies, but also to enforce the new redemption fee rules." (The McHenry Group) Text: Building a Real 'Ownership Society' (PDF) 44 pages. Excerpt: "In [the] new book cosponsored by The Century Foundation and the Institute on Assets and Social Policy at Brandeis University, J. Larry Brown, Robert Kuttner, Thomas M. Shapiro examine asset policies which have shaped the property-owning middle class, such as Social Security, the G.I. Bill, and college loans, and critique current 'ownership' ideas such as Social Security privatization as ineffective and misguided." (The Century Foundation) Washington Regulatory Wrap Up As of July 13, 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 July 13, 2005. The federal updates referenced in the chart are available at http://www.nctr.org/federal/index.html. (National Council on Teacher Retirement) Why Benefit Cuts Will Not Solve Social Security's Financing Problem Excerpt: "According to President Bush, Social Security's long-term financial problems stem primarily from too many future beneficiaries receiving benefits that are too high for too long. The president proposes to solve the problem by lowering the share of income that Social Security insures for workers." (Economic Policy Institute) Opinion: History Teaches Lesson about Investment Fees Excerpt: "Brent Hicks' article, Three Obstacles to a Fee-Only Business, prompted me to add my two-cents. His No. 1 obstacle, historical sales culture and philosophy, is the point I keep raising with consumers and colleagues, but many folks in the industry simply don't 'get it'--nor will they until the market forces it upon them. (Until then, they have a strong vested interest in keeping things the same.)" (Dan Danford of Morningstar) Are These New Exchange-Traded Funds a Good Idea? Excerpt: "StreetTracks Gold Shares ..., the first exchange-traded fund tracking a commodity, was one of the most successful ETF launches in history. Within weeks of its November 2004 launch it amassed more than $1.5 billion in assets. Is it any wonder that other financial firms are scrambling to introduce their own commodity ETFs?" (Yahoo! Financial News) Study Says Latinos Lag in Retirement Savings Excerpt: "Latinos save through retirement accounts at half the rate of the general population, and those with such accounts have less than one-fifth the retirement savings of the overall work force .... Changes in tax and financial policies and promotion of financial counseling could boost retirement savings by Latinos, said the study by the Pew Charitable Trust's Retirement Security Project and the National Council of La Raza, an umbrella organization of Latino groups." (The Washington Post; one-time registration required) Social Security Reform: The Importance of Disability Insurance and Annuities in Individual Accounts (PDF) Pages 1-13 of 20. Excerpt: "Although most of the debate over Social Security has focused on retirement benefits, the program also pays disability and survivor benefits .... According to this EBRI study, retirement benefits would have to be cut substantially or taxes increased if federal policymakers agreed to protect disability payments as part of any overhaul of Social Security, ...." (Employee Benefit Research Institute) Links to Items on Executive Comp, Benefits in General Text of Proposed Regulation on Use of Electronic Media to Provide Notices, Elections and Consents (PDF) 10 pages. Excerpt: "This document contains proposed regulations that would provide guidance on the use of electronic media to provide certain notices to recipients or to transmit participant and beneficiary elections or consents with respect to employee benefit arrangements.... These regulations also reflect the provisions of the Electronic Signatures in Global and National Commerce Act, Public Law 106-229 ... (E-SIGN)." (Internal Revenue Service) Comments on IRS Proposed Regulations for Electronic Transmission of Employee Benefits Information Excerpt: "According to the preamble, the standards set forth in these proposed regulations would apply to any 'notice, election, or similar communication' made to or by a participant or beneficiary under the following types of plans: a qualified plan; a 403(b) plan; a SEP; a simple IRA plan under section 408(p); an eligible governmental plan under section 457(b); an accident and health plan under section 104(a)(3) or 105; a cafeteria plan ...." (Attorney B. Janell Grenier via BenefitsBlog.com) Audio: The Health Benefits of Working for a Lifetime Excerpt: "Many Americans are working well past the age of retirement. Dr. Robert Butler, founding director of the National Institute on Aging and CEO of the International Longevity Center, talks about why people choose to keep working. Butler says work gives older people's lives meaning, control and an income." (Morning Edition via National Public Radio) Benefits Briefs: Legal Developments Affecting Employee Benefits, June 2005 (PDF) 6 pages. In this issue: Errors and Remedies -- Here's a case with a satisfactory outcome arrived at through dubious reasoning. Schaffer v. Westinghouse Savannah River Company, 2005 U.S. App. LEXIS 4164 (4th Cir. 3/11/05); QDRO Dispute -- Blame the Lawyer?; No Fiduciary Obligations for Accrued But Unpaid Benefit Plan Contributions?; IRS Allows More Flex in Flex Plans' Use-It-Or-Lose-It Requirement; Can Corporate Restructuring Lead to a Benefits Interference Claim? (Nixon Peabody LLP) Commentary: Employee Benefits & Executive Comp: Another ERISA Fiduciary Duty Wake-Up Call Excerpt: "Does your company use a retirement plan consultant to help plan how best to invest the company's pension or 401(k) plan money? If so, you need to take note of, and respond to, concerns raised by the government about conflicts of interest and potential bias in the retirement plan consultant and money management industry. ERISA plan fiduciaries who fail to act could be faced with questions about whether they are doing their jobs properly." (Jones Day) New Jersey Law Entitles Union Employees and Elected Officials to State Benefits Excerpt: "Acting New Jersey Governor Richard Codey signed legislation last week that extends generous state benefits to union employees and elected officials despite appointing a benefits review task force in June to assess his state's health and pension requirements." (BenefitNews Connect) Overview: DOL to Enforce Disclosure of Payments, Gifts and Entertainment Involving Union Officials (PDF) 4 pages. Excerpt: "In recent guidance issued June 22, 2005, the Department of Labor ... has indicated an intent to expand its enforcement of the Labor-Management Reporting and Disclosure Act .... Disclosure may now be required of virtually all service providers to unions, including investment managers, brokerage firms, accounting firms, consulting firms and other 'employers,' who provide entertainment or give gifts or other things with a value of $25 or more to union affiliated individuals." (Katten Muchin Rosenman LLP) Commentary: ERISA Section 510 Claim Survives Summary Judgment Excerpt: "ERISA Section 510 prohibits employers from firing employees to prevent them from attaining a benefit. A recent decision from the Eastern District of Pennsylvania recognized that even employees fired allegedly 'for cause' can make use of Section 510. In Leszczuk v. Lucent Technologies, Inc., three Lucent employees claimed that their employer fired them 'for cause' to prevent them from receiving severance benefits." (Michael H. Rosenthal on For Your Benefit Blog) Newly Posted Events Cafeteria Plan Smorgasbord: Fair and Current Nationwide on August 2, 2005 presented by SunGard Corbel HIPAA and Other Health Laws: Mississippi Compliance Assistance Seminar in Mississippi on August 17, 2005 presented by U.S. Department of Labor, Employee Benefits Security Administration LM-10/LM-30 Filings - Now in the Eleventh Hour in Illinois on August 10, 2005 presented by International Foundation of Employee Benefit Plans LM-10/LM-30 Filings - Now in the Eleventh Hour in District of Columbia on August 11, 2005 presented by International Foundation of Employee Benefit Plans Practical Application Of The Retirement Distribution Rules Including Analysis Of The New Bankruptcy Act Nationwide on July 19, 2005 presented by West LegalEdcenter Newly Posted Press Releases Preserving Social Security Disability Payments Would Force Far Deeper Cuts in Retirement Benefits, Study Finds (Employee Benefit Research Institute (EBRI)) Treasury and IRS Issue Proposed Regulations for Electronic Transmission of Employee Benefit Information (U.S. Treasury Department and Internal Revenue Service) New Location for the 52nd Annual Employee Benefits Conference (International Foundation of Employee Benefit Plans) Pension (Asset/Liability) Management Redefined (Dietrich & Associates, Inc.) Newly Posted or Renewed Job Openings Pension Professionals for Associated Pension Consultants in CA Retirement Plan Administrator for Qualified Plans, LLC in GA Reconciliation Specialist for Administaff in TX 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. Housekeeping: How to Sponsor an Issue Subscribe to a Daily Email Announcing Publication of Each Day's Newsletter Privacy Policy Archive of Previous Newsletters If you'd like to STOP this newsletter, just click on this link: STOP sending this newsletter to me