BenefitsLink Retirement Plans Newsletter July 15, 2005 Today's sponsor: ASC & The ASC Institute (Click on company name or banner to learn more.) ASC-- YOUR PREMIER SOURCE FOR RETIREMENT PLAN SOFTWARE, DOCUMENTS & EDUCATION For over 25 years ASC has helped pension professionals build their businesses by turning advances in technology into opportunities to increase efficiency and profitability. ASC Software includes DC/401(k) and DB administration and valuation systems, Compliance Testing, DV Direct Daily Valuation, Gemini Participant & Plan Sponsor Web Access, AIM-- Case Management Database and Single-Step Processing. The ASC Institute offers Retirement Plan Documents, Education for pension professionals and ERISA Compliance Consulting. Contact us today! (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) CRS Report: Defined Benefit Pension Reform for Single-Employer Plans (PDF) 37 pages. Excerpt: "This report outlines the complex current law governing the funding of single-employer defined benefit pension plans. It discusses the role of the PBGC in insuring pension benefits, the structure of the premiums that single-employer plans must pay the PBGC, and the benefits guaranteed by the PBGC in exchange for the payment of premiums. The report also describes reporting and disclosure requirements that apply to plans." (Congressional Research Service, U.S. Library of Congress) Overview: House Education and the Workforce Committee Approves Amended Pension Funding Bill Excerpt: "On June 30, 2005, the House Education and the Workforce Committee approved an amended version of the Pension Protection Act of 2005 (H.R. 2830). [Chicago Consulting] posted a comprehensive article on the bill as originally introduced. In this article, [they] discuss briefly some of the key changes made on June 30 and what is likely to happen next." (Chicago Consulting Actuaries, LLC) Overview: How Much Should a Plan Sponsor Contribute to Its Defined Benefit Plan? Excerpt: "In this article [the authors] discuss the general principles behind a sponsor's determination of how much to contribute to a defined benefit plan. Two of the three key areas we discuss -- ERISA minimum funding and PBGC variable premium rules -- are currently under review by Congress, and legislation changing rules in these areas is likely to be adopted this year. [The Authors] have provided a review of current funding legislation." (Chicago Consulting Actuaries, LLC) Commonwealth of Puerto Rico Pension Plans Are Severely Underfunded Excerpt: "The new administrator of the Commonwealth Employees Retirement System, Juan Cancel certainly has his work cut out for him. The new administrator has inherited a government-employee pension-fund system that for decades has suffered from bad decisions and policy-making, to the point it now has the lowest funding ratio of any state pension plan in the U.S." (Caribbean Business via Puerto Rico Wow!) New York State Public Pension Cost Report Says Legislature in Albany Is Part of Problem Excerpt: "Skyrocketing pension costs have been straining city and state budgets for years, adding more than $4 billion in costs to New York's taxpayers since 2000. Yet the Legislature responded this year with hundreds of measures to sweeten various pension pots for unions and workers, according to a report by a conservative policy research group, the Empire Center for New York State Policy, an arm of the Manhattan Institute." (The New York Times; one-time registration required) Overview: Post-Severance Compensation under the Proposed 415 Regulations Excerpt: "One of the most important issues in the proposed 415 regulations is their treatment of post-severance compensation. .... The proposal refines the Code's base definition of compensation to address this important matter. While the proposed effective date is in 2007, the IRS has said that taxpayers can rely on this part of the proposal now. (In fact, although this is not in the regulations, one IRS official went so far as to say that these rules are retroactively effective to ....)" (SunGard Corbel) Overview: SEC Rule on Fund Redemption Fees -- Plan Administrator Liability Excerpt: "This week, The McHenry Group issued an alert on the new Securities and Exchange Commission rule concerning mutual fund redemption fees. The rule, which has a compliance date of October 16, 2006, permits a fund to impose redemption fees of up to 2% if it determines the fee is necessary to recoup short-term trading costs. Why are we so concerned about the SEC's actions?" (The McHenry Group) San Diego Whistleblower Calls Public Pension System Broken Beyond Repair Excerpt: "The former San Diego pension board member who alerted local lawmakers to problems with their retirement system, ... said that the San Diego City Employees' Retirement System (SDCERS) is broken beyond repair and should be shut down, according to a San Diego Union Tribune report." (PLANSPONSOR.com; one-time registration required) Italian Employers Must Act Now on New Pensions Law Excerpt: "Italian employers need to address new laws affecting supplementary retirement schemes now in order to avoid unnecessary cost and administration when they come into effect next year." (Watson Wyatt Worldwide) Research Round-Up: The Latest in Retirement Industry Trends as of July 2005 Excerpt: "[N]ow is a good time to take a step back and reflect on the direction in which the retirement industry is headed. Several surveys released this past quarter provide valuable information about the concerns of plan sponsors and participants, and industry professionals would be well advised to pay attention to what they are saying. .... Let's examine the latest investment-based benefits findings and their implications for the health and direction of the retirement industry." (The McHenry Group) Retirement Security Act Promoters Say Momentum Building -- Almost 15,000 Signed Online Petition Excerpt: "Americans for a Secure Retirement, an organization of business and consumer groups, says almost 15,000 people have signed the petition on their Website to urge Congress approve The Retirement Security for Life Act, which they say provides tax incentives to invest in retirement vehicles like annuities. The Retirement Security for Life Act (H.R. 819/S. 381) is promoted as helping Americans 'provide income to last a lifetime.'" (SeniorJournal.com) Recordkeepers React to Expenses Associated with SEC Redemption Fee Rules Excerpt: "Third party administrators (TPAs), such as retirement plan recordkeepers and administrators, are weighing options for alternative investment choices in response to a reporting requirement of a new rule (Rule 22c-2) permitting funds to impose redemption fees if they feel it is necessary to recoup frequent trading losses, McHenry Consulting reports." (PLANSPONSOR.com; one-time registration required) Keep Employees Financially on Track with Personalized Retirement Education Excerpt: "This article shows how personalized communication helps your employees determine how much they will need, how much to save, and how to invest today for their retirement tomorrow and motivates them to do something with the information." (Aon Consulting) Two Steps Back: African Americans and Latinos Will Lose Ground under Bush's Social Security 'Reform' Excerpt: "An equitable national retirement system that aims to provide minority households with sufficient income to retire in comfort and dignity must either change or, at the least, take into account the facts that Latinos and African Americans on average earn substantially lower wages and are far less likely to be covered by employer-provided pensions than whites." (Economic Policy Institute) Lawmakers Postponing Bush Priority on Social Security Reform Excerpt: "With no consensus in sight, even among Republicans, the chairmen of the Senate and House committees with jurisdiction over Social Security have decided to postpone further consideration of the issue at least until September." (The New York Times; one-time registration required) Overview: Participant Loans and Bankrup.tcy Process Excerpt: "The new rules provide a better outcome by exempting plan loans from the bankrup.tcy process. Payroll deduction authorizations remain in effect during the bankrup.tcy process, meaning that in most cases defaults will be avoided. Also, plan loans survive bankrup.tcy intact ..., preserving retirement savings and standard operating procedure." (Oppenheimer Wolff & Donnelly LLP) Roth 401(k) on the Horizon? It Is Worth the Effort Excerpt: "In this article we explore the tax treatment of various types of retirement savings vehicles, the advantages and disadvantages of adding a Roth 401(k) option to your savings plan, things to watch for in preparing to add a Roth to your plan, and how to identify which employees may benefit from making after-tax contributions." (Aon Consulting) Opinion: The Pension Protection Act Would Help Companies Meet their Pension Funding Obligations Excerpt: "Retirement security is important to every American, and at American Airlines we know that the best way to secure retirement is to ensure a profitable company with a strong commitment to meet its pension obligations. We're making progress, but without sensible pension-reform legislation that will give us a better chance to save our defined-benefit plans, the barriers will be much higher." (Gerard J. Arpey via The Miami Herald; one-time registration required) Links to Items on Executive Comp, Benefits in General Seven Habits of Highly Effective Employee Benefits Communicators (PDF) 2 pages. The paper discusses how to develop and maintain an effective employee benefits communications program. (Milliman) Regulatory Developments in Employee Benefits this Year Excerpt: "This issue of Regulatory Developments covers 19 developments dealing with new legislation, retirement plans, health and welfare plans, and human resources policies and practices that have occurred since our December 2004/January 2005 issue." (Aon Consulting) Hewitt Federal Legislation Quick Guide Updated as of July 12, 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) American Bar Association Employee Benefits Committee Posts 2005 Q & A Session Transcripts Excerpt: "The Joint Committee on Employee Benefits (JCEB) of the American Bar Association has posted transcripts of the 2005 Q & A Sessions with the following governmental agencies: Centers for Medicare and Medicaid Services (CMS); Equal Employment Opportunity Commission (EEOC); Health and Human Services (HHS); Internal Revenue Service & U.S. Department of Treasury (IRS); Pension Benefit Guaranty Corporation (PBGC)." (Attorney B. Janell Grenier via BenefitsBlog.com) Overview: Determining FAS 123R Expense: Straight-Line vs. Accelerated Attribution Excerpt: "[The article on the target page describes] the two broad categories of expense attribution for awards with time-based vesting, straight-line and accelerated, while offering illustrations of these techniques. It will also touch on some of the arguments that have been made in favor of each of the methods and some of the factors that should be considered when choosing between the two." (Chicago Consulting Actuaries, LLC) Newly Posted Events 72(t) Payments Web/Telephone Seminar Nationwide on September 27, 2005 presented by BISYS Retirement Services Advanced Distribution Issues and Loans Web/Telephone Seminar Nationwide on September 21, 2005 presented by BISYS Retirement Services Basic HSAs Web/Telephone Seminar Nationwide on September 22, 2005 presented by BISYS Retirement Services Conversions and Recharacterizations Web/Telephone Seminar Nationwide on September 20, 2005 presented by BISYS Retirement Services Direct Rollovers and Other Portability Issues Web/Telephone Seminar Nationwide on September 29, 2005 presented by BISYS Retirement Services Fall Forum in Georgia on September 26, 2005 presented by BISYS Retirement Services Fall Forum in Minnesota on October 10, 2005 presented by BISYS Retirement Services Fall Forum in Massachusetts on October 24, 2005 presented by BISYS Retirement Services Fall Forum in California on November 14, 2005 presented by BISYS Retirement Services Handling IRA Legal Issues Web/Telephone Seminar Nationwide on September 8, 2005 presented by BISYS Retirement Services IRA Contributions Web/Telephone Seminar Nationwide on September 13, 2005 presented by BISYS Retirement Services IRA Update Web/Telephone Seminar Nationwide on September 14, 2005 presented by BISYS Retirement Services Plan Design Trends I - Safe Harbor 401(k) Web/Telephone Seminar Nationwide on September 7, 2005 presented by BISYS Retirement Services Plan Design Trends II - New Comparability and Age-Weighted Plans Web/Telephone Seminar Nationwide on September 13, 2005 presented by BISYS Retirement Services SIMPLE IRA Plans Web/Telephone Seminar Nationwide on September 15, 2005 presented by BISYS Retirement Services Waiting for the Rabbit: Retirement Savings and Social Security Reform Looking for Votes and Revenue Nationwide on July 21, 2005 presented by Employers Council on Flexible Compensation (ECFC) Newly Posted Press Releases Great-West Healthcare Plan Reduces Use of Medical Services by over 9%, Delivers Savings to Employers; Consumer-Driven PPO an Alternative to High-Deductible Plans (Great-West Life & Annuity Insurance Company) Remarks by Asst. Secretary for Economic Policy Mark Warshawsky on Social Security Reform and the Implications for National Savings (U.S. Department of Treasury) BasicPlus Vows to Help Fight Health Condition Discrimination (BasicPlus Insurance Services, LLC) Newly Posted or Renewed Job Openings Actuary for The Mayer Benefits Advisory, LLC in CT Enrollment Specialists for National Automobile Dealers Association in VA AVP, Health Management & Insurance Programs for UnumProvident Corporation in ME Plan Consultant for Weaver Partners, Inc. in ANY STATE Compliance/Conversion Specialist for Employee Benefits Firm in MD Administrator - Pension Services for Aris Corporation of America in PA Daily Retirement Plan Consultant for Long Island, NY Benefits Consulting firm in NY Employee Benefit Recordkeeper/Tester for WySTAR Global Retirement Solutions in MN 401(k) / Defined Contribution Administrator for Pension Investors Corporation in FL Client Services Specialist for U.S. Bank in MN Benefits Service Manager-Defined Benefit for Hewitt Associates in IL 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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