July 29, 2005 Today's sponsor: ASC & The ASC Institute (Click on company name or banner to learn more.)
Overview: IRS to Permit 401(k) Deferrals Only from Certain Compensation Paid After Severance Excerpt: "The proposed section 415 regulations ... clarify that terminated employees may make elective deferrals only from specified forms of post-severance compensation. While most sponsors of 401(k) and other plans with cash or deferred elections will welcome the new deferral possibilities, they may need to modify their payroll systems to distinguish between different types of compensation, such as regular paychecks received after severance and post-employment severance plan benefits ...." (Watson Wyatt Worldwide) Overview of Some Facets of the Roth 401(k) Option Excerpt: "To which type of plans may a participant roll over his/her Roth 401(k) account? A participant may roll over his/her Roth 401(k) account to a Roth IRA, a 401(k) plan that includes a Roth 401(k) option, or a 403(b) plan that includes a Roth 403(b) option." (SunGard Corbel) Employee Ownership Update for July 28, 2005 NCEO Executive Director Corey Rosen discusses the promise of Christopher Cox, the nominee to head the SEC, to implement the new equity compensation accounting rules despite his previous support of a bill to limit their application; a DOL settlement with Enron over 401(k) and ESOP fiduciary breaches; and a study from Ohio showing that ESOP companies are performing well. (National Center for Employee Ownership) Overview: FASB Considers Amending SFAS 87 for Plans that Pay Lump Sum Benefits Excerpt: "At its May meeting, the Financial Accounting Standards Board (FASB) directed its staff to analyze how accounting for a defined benefit plan that offers a lump sum payment option would be affected if the accumulated benefit obligation (ABO) for each participant eligible for a lump sum were required to at least equal the lump sum payable to the participant as of the measurement date (the 'walk-away benefit')." (Watson Wyatt Worldwide) Overview: Pension Fund Finances and Business Risk Excerpt: "Watson Wyatt has developed a measure of the amount of risk that pension plans pose to individual companies and to the larger financial system, which we call the Pension Risk Index. Our analysis suggests that for the majority of the Fortune 1000, pension plans pose little risk to the individual firm's financial health." (Watson Wyatt Worldwide) Overview: House Committee Approves Pension Funding Bill Excerpt: "Congress moved one step closer to pension reform when the House Education and the Workforce Committee approved the Pension Protection Act of 2005 (H.R.2830) on June 30, 2005. The act would: Reform the funding rules for both single-employer and multiemployer defined benefit plans; Require more disclosures from plan sponsors; Restrict benefits in underfunded plans; Increase the premiums that plan sponsors pay to the Pension Benefit Guaranty Corporation (PBGC)." (Watson Wyatt Worldwide) Overview: Senate and House Defined Benefit Funding Reform Alternatives Excerpt: "As expected, on July 26, 2005, the Senate Finance Committee approved a defined benefit funding reform bill, in the form of a revised 'National Employee Savings and Trust Equity Guarantee (NESTEG) Act' -- S. 215. The Senate Finance Committee's bill is much more like the Administration's DB reform proposal than H.R. 2830, recently approved by the House Education and the Workforce Committee." (Chicago Consulting Actuaries, LLC) Bush Plan Would Raise Pension Contributions: Some Fear Firms Will Eliminate Pension Plans Instead Excerpt: "If President Bush's pension-funding proposals were enacted, companies that operate traditional pensions would have to put about $430 billion more into their plans collectively than is required under present law, according to figures from the government's pension insurance agency." (The Washington Post; one-time registration required) Comments on Proposed Amendments to Benefit & Contribution Limitation Regs of Qualified Plans (PDF) Excerpt: "The ERISA Industry Committee ('ERIC') is pleased to submit the following comments on the proposed amendments to the regulations under Internal Revenue Code ('Code') section 415 regarding the limitations on benefits and contributions under tax-qualified plans. The proposed regulations were published in the May 31, 2005, issue of the Federal Register. 70 Fed. Reg. 31,214." (The ERISA Industry Committee) Overview: Australian Choice of Funds Update Excerpt: "The Choice of Funds regime commenced on 1 July 2005. By 29 July 2005, employers had to give a Standard Choice Form to all existing employees at 1 July 2005 who are eligible for Choice. In the lead up to Choice, there was a flurry of activity from the government and superannuation regulators with the following results: .... [See a Super Update on this issue at http://www.watsonwyatt.com/asia-pacific/pubs/superupdate/showarticle.asp?ArticleID=14887&Component=Super+Update]" (Watson Wyatt Worldwide) Singaporean Government Has Shelved Proposal to Introduce Privately-Managed Retirement Plans Excerpt: "In March 2005, the Singaporean government decided to withdraw the low-cost, voluntary private pension plans, after consultations with pension fund experts, industry players and Central Provident Fund (CPF) members." (Watson Wyatt Worldwide) Increasing Employees' Appreciation of Their Retirement Programs Excerpt: "Designing a retirement plan that strongly appeals to employees can create significant value for an organization. But a retirement program's ability to influence behavior depends largely on its perceived value to workers. The Watson Wyatt Retirement Attitude Survey examines factors that influence employees' appreciation of their plans." (Watson Wyatt Worldwide) Labor News Opinion: Dismantling Retirement Benefits -- The Next Phase Excerpt: "In the final analysis what Corporate America wants is a fully privatize total retirement system. It wants Bush's private investment accounts for Social Security, which will allow banks and financial institutions to get their hands on workers' payroll taxes. And it wants to convert Defined Benefit Pension plans into hybrid 'Cash Balance' 401k-like pension plans, which allow companies to get out from under the liability of having to guarantee levels of benefit payments ...." (International Labor Communications Association) Appeals Court Sets Rehearing in Milofsky v. American Airlines Inc. Blackout Challenge Case Excerpt: "Appeals judges at the US 5th Circuit Court of Appeals have agreed to rehear as a group a case involving allegations of a mismanaged plan conversion against an employer and a TPA. The so-called en banc rehearing - in which all 16 Circuit judges hear a case together - has been scheduled for September 12." (PLANSPONSOR.com; one-time registration required) Federal Update 2005-24 -- Senate Committee Passes Pension Bill with Government Plan Provisions (PDF) 2 pages. Excerpt: "On July 26, 2005, the Senate Finance Committee approved by voice vote the National Employee Savings and Trust Equity Guarantee (NESTEG) Act of 2005. The bill is a revised version of S. 219, also entitled NESTEG, which was introduced on January 31, 2005. The revisions affect principally private plans; the provisions of interest to NCTR members seem not to have changed. (At this point only a summary of the revisions is available.)" (National Council on Teacher Retirement) Analysis: H.R. 2830, The Pension Protection Act as Approved by Committee on 6/30/05 (PDF) 10 pages. Excerpt: "The bill would be effective for plan years beginning on or after June 29, 2005 (i.e., the provisions would be effective on a prospective basis only). The bill does not specifically address cash balance or hybrid conversions." (Groom Law Group) Social Security Private Accounts Would Substantially Increase Federal Debt and Interest Payments (PDF) 42 pages. Excerpt: "All of the major proposals to replace a portion of Social Security with private accounts would require large increases in federal borrowing for many decades. This increased borrowing is not necessary to restore Social Security solvency. Instead, the increased borrowing would be needed to finance the creation of the private accounts, which by themselves would not do anything to restore solvency, and under some circumstances would worsen solvency." (Center on Budget and Policy Priorities) Links to Items on Executive Comp, Benefits in General Overview: Interim Relief for Federal Credit Union 457 Plans (PDF) 2 pages. Excerpt: "In Notice 2005-58, the Internal Revenue Service provided, pending further guidance, relief for section 457 plans maintained by federal credit unions. The status of those plans had been called into question by PLR 200430013, which ruled that, as an instrumentality of the federal government, a federal credit union was not an 'eligible employer' under section 457(e)(1) and its nonqualified deferred compensation plan was not a section 457(b) 'eligible plan.'" (Sutherland Asbill & Brennan LLP) Overview: IRS Clarifies Corporate Deduction Limit for Executives' Personal Aircraft Use Excerpt: "Companies may deduct up to the amount included in the executive's income under the Standard Industry Fare Level formula ..., rather than the much higher actual cost ... of operating the aircraft. Recently issued Notice 2005-45 provides detailed guidance on the methodology for determining the allowable expense." (Watson Wyatt Worldwide) Cox's Nomination as SEC Chair May Affect Executive Compensation Initiatives Excerpt: "[The] nomination of [Rep.] Christopher Cox (R-California) to succeed [the] outgoing Securities and Exchange Commission ... chairman ... could affect the future of important SEC executive compensation initiatives. One of Representative Cox's first pivotal decisions will be whether to try to block or further delay the expensing of stock options as required by Financial Accounting Standard (FAS) 123(R), which was released by the Financial Accounting Standards Board (FASB) last year." (Watson Wyatt Worldwide) IASB Publishes Convergence Proposals on the Accounting for Liabilities and Restructuring Costs Excerpt: "The International Accounting Standards Board (IASB) has published for public comment proposed amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets (to be retitled Non-financial Liabilities) and complementary limited amendments to IAS 19 Employee Benefits." (Accounting Education) Milliman Global Employee Benefits -- A June 2005 Update (PDF) 12 pages. Contents include articles on the 2004 Pension Reform Act in Nigeria; Taking Stock of Option Expensing in the United States; and, the Pensions Act 2004 in the United Kingdom. (Milliman) Oregon Senator Suggests Executive Compensation Limits for Companies with Underfunded Plans Excerpt: "A statement on [U.S.] Senator Ron Wyden's Web site said the provision would prohibit companies from giving executives deferred compensation - or retirement funds held in accounts outside of the same program used for all other company employees - if the company's pension plan is less than 80% funded." (PLANSPONSOR.com; one-time registration required) Overview: Proposed Regulations for Electronic Transmission of Employee Benefit Information Excerpt: "The proposed regulations (which will not go into effect until they are adopted as final regulations) reflect the provisions of the Electronic Signatures in Global and National Commerce Act, commonly referred to as E-SIGN. E-SIGN set forth special protections for consumers that apply when a statute, regulation, or other rule of law requires that consumer information relating to a transaction, be provided or made available in writing." (Winston & Strawn LLP) Overview: Expanding Use of Electronic Media for Benefit Plans Communications (PDF) 4 pages. Excerpt: "The Internal Revenue Service has proposed regulations that would set standards for electronic communications for a broad range of employee benefit plans, including qualified plans, 403(b) arrangements, health plans and other types of plans. The regulations would establish rules for the use of electronic media by employers to send notices to plan participants or by participants to make elections under plans, including qualified joint and survivor annuity elections." (Sutherland Asbill & Brennan LLP) Hewitt Federal Legislation Quick Guide Updated as of July 26, 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) Labor Department Offers New Spanish-Language Compliance Assistance Resources Excerpt: "The U.S. Department of Labor today announced the availability of two Spanish-language compliance assistance resources designed to help members of the Hispanic community understand and comply with federal employment laws and regulations." (U.S. Department of Labor) Newly Posted Events Live Webinar- Bond Issues for ESOP Companies Nationwide on October 19, 2005 presented by National Center for Employee Ownership Live Webinar- Communicating Your ESOP Nationwide on November 22, 2005 presented by National Center for Employee Ownership Live Webinar- Equity Compensation for Closely Held Private Corporations Nationwide on September 21, 2005 presented by National Center for Employee Ownership Live Webinar- ESOPs as a Business Transition Tool Nationwide on October 4, 2005 presented by National Center for Employee Ownership Live Webinar- Floating Rate Notes as an ESOP Investment Choice Nationwide on September 15, 2005 presented by National Center for Employee Ownership Live Webinar- Handling the Repurchase Obligation Nationwide on December 6, 2005 presented by National Center for Employee Ownership Live Webinar- Is an ESOP Right for You? Nationwide on December 13, 2005 presented by National Center for Employee Ownership Live Webinar- Keeping Your ESOP Culture Alive: Communications, Participation and Plan Design Issues Nationwide on November 8, 2005 presented by National Center for Employee Ownership Live Webinar- S Corporation ESOPs Nationwide on September 20, 2005 presented by National Center for Employee Ownership Newly Posted Press Releases PBGC Pays Pensions At Amcast Industrial Corporation (Pension Benefit Guaranty Corporation (PBGC)) NCQA's Quality Compass (R) Goes Online For 2005; Three-Year Trended Data Now Available (NCQA) HRmarketer.com Reports Continued Optimism on Human Capital Marketplace (HRmarketer.com) Newly Posted or Renewed Job Openings ERISA Consultant for BISYS Retirement Services in MN Administrator/Operations Manager for Alliance Benefit Group of New England in NH Regional Vice President - Northern California for BISYS Retirement Services in CA Regional Vice President - Raleigh/Durham, North Carolina for BISYS Retirement Services in NC Retirement Plan Coordinator for American Funds, a part of the Capital Group Companies, Inc in TX Senior Analyst, Heathcare Pricing and Underwriting for Gevity in FL Employee Benefits Attorney: Practice Leader (945 BW) for Marvel Consultants, Inc. in DC Equity Stock Compensation Analyst (75K 10% Bonus) for Praxis Search LLC (search Firm) in IL Senior DC Plan Administrator for Berlin Ramos & Company in DC, MD, VA 401(k) Field Consultant for 1st GLOBAL in TX Senior Benefit Analyst for Stanford University in CA Sr. Benefits Specialist for Southern Company in GA Handy Links:
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