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August 9, 2005
Today's sponsor: ASPPA-- Working for America's Retirement (tm)

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2005 ASPPA Annual Conference * Nov 6 - 9 * Washington, DC

Each year, there are new regulations and legislation, new products and services and new opportunities to increase your knowledge and enhance your business. Take part in this learning opportunity with more than 1,500 of your professional colleagues

ASPPA. For the Serious Retirement Plan Professional.


(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
Overview: Existing Age Discrimination Exposure-- Effect of NESTEG (PDF)
5 pages. Excerpt: "This memo answers a technical question about the effect of NESTEG on hybrid plans' existing exposure to age discrimination claims, for benefits earned before July 26, 2005." (Ivins, Phillips & Barker via American Benefits Council)

Court Approves IBM Pension Conversion Settlement
Excerpt: "The partial settlement approved by Judge G. Patrick Murphy of the U.S. District Court for the Southern District of Illinois involves a 2003 ruling -- which captured national attention -- by Judge Murphy that IBM's pension program is age discriminatory." (Business Insurance)

The Fiduciary Act of Monitoring Investment Strategy: Beyond Performance
Excerpt: "Once a client's optimal portfolio has been designed and implemented, the final critical step is the monitoring of the investment process. Monitoring should extend beyond a strict examination of investment performance. By definition, it involves the continuing supervision of all fiduciary-related decisions." (Investment News; one-time registration or subscription required)

Overview: Are You Fulfilling Your Fiduciary Responsibility?
Excerpt: "To meet their responsibilities as plan sponsors, employers need to understand some basic rules, specifically the Employee Retirement Income Security Act (ERISA). ERISA sets standards of conduct for those who manage an employee benefit plan and its assets, dubbed fiduciaries." (Bruner-Cox LLP)

Overview: DOL and SEC Issuance of Guidance for Plan Fiduciaries in Evaluating Investment Consultants (PDF)
Pages 1-4 of 9. Excerpt: "Issuance of the DOL/SEC tips puts the onus on plan fiduciaries to use the questions or similar ones in selecting and monitoring investment consultants. Some consultants have already posted responses to the DOL/SEC questions on their websites. Other firms have posted comments in response to the SEC report but have not provided specific answers to the questions." (Trucker Huss)

Mercer to Hire 170 Workers for New Business Segment
Excerpt: "New York City-based Mercer Human Resource Consulting LLC has selected Louisville to be the home of a new division that is scheduled to be launched in October. The new business segment, called the Retirement Service Center, will bring 170 new jobs to the area ...." (Louisville Business First via bizjournals.com; one-time registration required)

Retirement Income Security: A Look at Social Security, Employment-Based Retirement Plans, & HSAs (PDF)
12 pages. Excerpt: "A variety of factors, including rising health care costs, increasingly suggest that individuals who are trying to plan for a secure retirement face a gathering storm, speakers told about 100 participants at the Employee Benefit Research Institute's spring policy forum. EBRI researchers and nearly a dozen other experts examined the different forces at work that threaten Americans' economic security in retirement as they discussed three topics: ...." (Employee Benefit Research Institute)

Overview: Treasury Department Issuance of Proposed Section 415 Regulations (PDF)
Pages 6-8 of 9 pages. Excerpt: "Written or electronic comments on the proposed regulations must be received by July 25, 2005. The IRS has scheduled a public hearing for August 17, 2005. The proposed effective date for the regulations is the plan's limitation year beginning on or after January 1, 2007." (Trucker Huss)

Audio: States Face Crisis Over Pensions, Teachers
Excerpt: "Illinois is one of many states this summer facing deep shortfalls in its pension funds for state employees and state teachers. Jay Field of Chicago Public Radio reports." (All Things Considered via National Public Radio)

$9 Million More Needed from Taxpayers for Cincinnati Retirement System
Excerpt: "Actuarial reports submitted to Cincinnati's City Council say taxpayers may need to contribute $9 million more a year to maintain the city's pension system funding level." (PLANSPONSOR.com: one-time registration required)

The Question of Human Resources Providing Retirement Plan Communication and Education
Excerpt: "Question: What functions of plan communication and retirement education can HR handle and what should we avoid or outsource to a third-party provider? Answer: Walking the tight rope of informing but not recommending is no easy feat. The Department of Labor's Interpretive Bulletin 96-1; Participant Education DOL IB 96-1 is the regulation that spells out compliance and non-compliance." (Workindex.com)

Should You Safeguard Your Pension by Taking a Lump Sum Distribution? That is, If You Can
Excerpt: "As pension plans become vulnerable because of underfunding or corporate bankruptcies, workers must decide whether to take their payout in a lump sum or agree to an annuity and, perhaps, risk learning later that they might receive a fraction of the benefit they had expected. 'The pros of taking a lump sum outweigh the cons much more today than five or 10 years ago,' says Eric Hutchinson, certified financial planner ...." (Bankrate.com)

Opinion: Following the Money in Public Pension Fund Investments' 'Finder's Fees'
Excerpt: "[I]t would have never occurred to me that the pension funds would have allowed to be built into their investment decision-making process a layer of politically-connected middlemen who get finder's fees when the companies they represent are deemed good places to invest. They have a nice name for people who do this work: placement agents. The placement agent receives a 'placement fee' for his services, payable sort of like a sales commission." (Chicago Sun-Times)

Bill to Increase Retirement Savings Tax Credit Sent to the House Ways and Means Committee
Excerpt: "According to a news release on US Representative Connie Mack's (R-Florida) Web site, H.R. 3574, called the Lifetime Prosperity Act of 2005, includes: ...." (PLANSPONSOR.com: one-time registration required)

Federal Update, August 5, 2005 -- Mid-Year Score Card on Pension Issues (PDF)
2 pages. Excerpt: "The Joint Committee on Taxation proposed the repeal of pick ups. The proposal appears in a list of options that would, if enacted, change both pension and non-pension tax provisions. Repeal would treat employee contributions, which are now pretax under the pick up, to immediate taxation." (National Council on Teacher Retirement)

Links to Items on Executive Comp, Benefits in General

Congressional Delegation Championed Employee Benefit Protections in U.S. Bankrup.tcy Law
Excerpt: "The need to reform the Bankrup.tcy Code's treatment of employee benefit plans was brought to light by two situations that arose in Wisconsin in the late 1980s: the Louis Allis Corp. bankrup.tcy and the Pabst Brewing Co.'s termination of its retiree health program. These incidents showed the extent to which workers' benefits are vulnerable when an employer becomes insolvent, and they motivated our state's congressional delegation to create better protections for our system ...." (Wisconsin Lawyer)

Benefits in Brief -- August 2005 Edition from the ERISA Practice Group of Jenkens & Gilchrist (PDF)
8 pages. The contents include: New Deferred Compensation Law Update; COBRA-- Corporate Transactions...What Companies Need to Know When Negotiating a Deal; The IRS Published Proposed Code Section 415 Rules Explaining Which Benefits Distributed After a Severance of Employment Can Be Deferred; Uniformed Services Employment and Reemployment Rights Act 2005 Notice Requirements; and, HIPAA Portability New Certificate of Creditable Coverage. (Jenkens & Gilchrist)

Teleconference -- January 12, 2005: Understanding the Nonqualified Deferred Compensation Guidance
Excerpt: "Presentation [slides in PDF format] delivered via teleconference on January 12th, 2005. An mp3 audio file of this event is also available within." (Haynes and Boone, LLP)

Overview: Pennsylvania Adopts Federal Treatment of Nonqualified Deferred Compensation Plans (PDF)
3 pages. Excerpt: "The new Pennsylvania law addresses only the Pennsylvania personal income tax, and does not apply to local taxes. As a result, there is uncertainty as to local tax treatment of elective deferrals under nonqualified plans (both pre- and post - House Bill 176). In particular, the City of Philadelphia seems to be taking the view that such elective deferrals remain subject to Philadelphia wage tax unless and until the Philadelphia tax act is amended." (Morgan, Lewis & Bockius LLP)

IRS to Increase Scrutiny of Employee Benefit Plans
Excerpt: "HR professionals may want to take a closer look at their benefit plans as the Internal Revenue Service prepares to increase its scrutiny of those plans. The IRS intends to boost the number of employee benefit plan audits by about 10% next year and has hired 50 examiners to tackle the job." (BenefitNews Connect)

Washington Regulatory Wrap Up, As of August 5, 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 August 5, 2005. The federal updates referenced in the chart are available at http://www.nctr.org/federal/index.html. (National Council on Teacher Retirement)

Study Shows Stock Options May Still Be Best Driver of Performance
Excerpt: "'There are a lot of tax and accounting ramifications to offering stock options, but if companies only look at it from that perspective, they may miss out on the bigger picture,' [says DolmatConnell & Partners]. A recent survey conducted by Dolmat-Connell shows that of the 100 largest technology companies, high-performing firms were 65 percent more likely than low-performing companies to grant stock options to their CEOs and 39 percent less likely to grant restricted stock." (Workforce Management; one-time registration required)

Newly Posted Events

2nd Pharmaceutical Cost Management Congress 2005
in Florida on November 14, 2005
presented by International Quality & Productivity Center (IQPC)

Washington Update
in Ohio on August 23, 2005
presented by ASPPA Benefits Council of Greater Cincinnati

Newly Posted Press Releases

August EBRI Notes: Factors Threatening Retirement Security
(Employee Benefit Research Institute (EBRI))

IRS, Treasury Issue Priority Guidance Plan for 2005-2006
(U.S. Treasury Department and Internal Revenue Service)

Health Care Purchasing Coalitions Directory for Multiemployer and Public Funds Now Available
(International Foundation of Employee Benefit Plans)

GASB Publishes Implementation Guide to Statements 43 and 45 on Postemployment Benefits Other Than Pensions
(Governmental Accounting Standards Board (GASB))

NASD Issues Guidance Regarding Equity Indexed Annuity Sales
(NASD (National Association of Securities Dealers))

VALIC Introduces New 401(K) Platform - AIG VALIC SPECTRUM SM 401(k) Offers Best of Both Worlds
(CPI Qualified Plan Consultants, Inc.)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Assistant Mgr. Compliance (Securities Compliance)
for Great-West Corporate
in CO

Pension Administrator
for Growing Accounting/Pension Company
in DC, MD

Controller
for GCC/IBT-SRDF
in IL

Plan Administrator
for RSM McGladrey Retirement Resources
in IL, MN

Human Resources/Benefits Administrator
for Craford Benefit Consultants
in CA

Retirement Plan Administrator
for Independent Retirement Plan Administration Company
in FL



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