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August 16, 2005
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Congressional Research Service's Summary of S. 219: The NESTEG Act (PDF)
6 pages. Excerpt: "On July 26, 2005, the Senate Finance Committee approved S. 219, the 'National Employee Savings and Trust Equity Guarantee (NESTEG) Act of 2005,' a bill to reform federal pension laws." (Congressional Research Service, U.S. Library of Congress)

Bankrupt Bosses Can't Touch Employees' 401(k) Funds
Excerpt: "If the company I work for goes bankrupt, would my 401(k) assets be affected? Do the same rules that apply to pensions apply to 401(k)s? Money in a 401(k) is actually safer in the event of an employer bankrup.tcy than money in a company pension plan." (Kiplinger's Personal Finance)

Revenue Sharing Rampant Among 401(k) Plan Vendors -- What Do Plan Sponsors Need to Know?
Excerpt: "Not only is the DoL delving into revenue sharing, but also the US Securities and Exchange Commission (SEC) is investigating its utilization in defined contribution plans. Yet, the use of most types of revenue sharing has not dropped recently. 'It is still how much of the industry gets paid for retirement plan services,' says Ward Harris, managing director at McHenry Consulting Group in Emeryville, California." (PLANSPONSOR.com: one-time registration required)

Insurance Companies Aim to Breathe New Life Into Old Product: Annuities
Excerpt: "A new breed of annuities is making its way to 401(k)s. As more companies shed traditional pension plans that guarantee retirees income for life, insurance products known as annuities -- which can convert lump sums of money into pension-like streams of income -- are often being talked up as a way to supplement retirement savings." (The Wall Street Journal via Pittsburgh Post-Gazette)

A Growing Number of 401(k) Plan Sponsors Are Defaulting Participants Into Asset-Allocated Funds
Excerpt: "The new logic goes somewhat like this: If investor inertia has, in large part, contributed to some of the structural problems with defined contribution plans, why not leverage that inertia to work in favor of the participant? Thus, the theory goes, move toward an opt-out rather than an opt-in logic, and look to default participants into asset-allocated funds." (PLANSPONSOR.com: one-time registration required)

Many Factors Cloud Colorado's Public Pension Plan's Future Creating a Funding Gap
Excerpt: "It would be one of the most significant expansions of pension benefits in the history of Colorado's Public Employees' Retirement Association. Legislators were asked to consider a bill that would raise payments to full benefit recipients by 15 percent. For example, a 30-year employee making $50,000 a year would get $37,500 a year in retirement, rather than $32,500. That bill, in 1997, added billions of dollars to the amount Colorado's taxpayers owe its public employees." (Rocky Mountain News)

Colorado Fire Sale on Public Pension Credit: Members Bought Extra Service Years at Fraction of Cost
Excerpt: "For three years, PERA conducted what one executive called, in retrospect, a 'fire sale' on the service credit. .... PERA had long allowed members to purchase extra service to cover years they'd spent working in the private sector or for any other non-PERA employer. .... The price of a year of service, 18.1 percent of salary, was equal to one year's worth of PERA contributions by the employer and the employee." (Rocky Mountain News)

San Diego Pension Board Plans New Review of Pension Fund
Excerpt: "Treading the same path the city has been on for more than a year, San Diego's pension board will hire a private firm to examine records the City Council has pushed the board to release to investigators.The board of San Diego City Employees Retirement System voted 7-1 yesterday to have an independent consultant conduct an examination that would go 'above and beyond the financial audit' or standard annual analysis of the fund's records, said board president Peter Preovolos." (The San Diego Union-Tribune)

Chart: 30-Year Treasury Rate v. ERIC Composite Corporate Rate
Excerpt: "The ... chart compares the current rate of the 30-year Treasury rate with a composite corporate rate consisting of ... bonds." (The ERISA Industry Committee)

Why Are So Many Public Pension Plans in Trouble?
Excerpt: "There has been lots of talk about how poor stock market returns and low interest rates led to problems for pension plans. However, there has been less light shed on another major contributor to the dilemmas faced by public plans: politicians." (PLANSPONSOR.com: one-time registration required)

When IRAs Meet Chapter 11
Excerpt: "If you enter bankrup.tcy, can creditors claim the contents of your traditional IRA? Not always, according to the Supreme Court's recent unanimous ruling on Rousey v. Jacoway. But if you assumed that the justices made IRAs untouchable to bankrup.tcy creditors, think again." (The Motley Fool)

SIMPLE IRA Plan Annual Notice: Employee Notification Deadline Quickly Approaching
Excerpt: "Each year, an employer notifies participants of its contribution choice for the coming plan year and provides them with a 60-day salary-deferral election period. A financial organization serving as a SIMPLE IRA custodian/trustee is responsible for providing part of the content of this annual notice. The deadline for providing the annual SIMPLE IRA plan notice is quickly approaching. This article serves as a reminder of the ... notice requirement and reviews the necessary content." (Bankers Systems, Inc.)

Venture Capitalists Are Following Texas and California Public Pension Fund Disclosure Bills
Excerpt: "Venture capital firms are closely watching a newly adopted Texas law, and a similar legislative proposal in California, that could help establish a standard for public pension funds' disclosures about their venture capital holdings." (PLANSPONSOR.com: one-time registration required)

Bank of America Suit Attacks Retirement Date Issue for Cash Balance Plan First
Excerpt: "A motion filed in the lawsuit concerning Bank of America's (BoA) Cash Balance Plan asks the judge to rule on the legality of the retirement age used in the plan, saying it is the 'single-most important question' in the case." (PLANSPONSOR.com: one-time registration required)

Overview: IRS Guidance on Complying with the U.S. Supreme Court's Decision in Heinz (PDF)
2 pages. Excerpt: "This issue discusses Internal Revenue Service (IRS) Revenue Procedure 2005-23, which is a response to the U.S. Supreme Court's 2004 decision in the Central Laborers' Pension Fund vs. Heinz suspension-of-benefits case. The Bulletin also mentions proposed IRS regulations under Section 411(d)(6) of the Internal Revenue Code, released on August 11, which provide additional examples." (The Segal Company)

Overview: IRS Issues Final and Proposed Regulations on Anti-Cutback Rules
Excerpt: "IRS has just released final and proposed regulations regarding the anti-cutback rules of Code Section 411(d)(6), which generally protect accrued benefits, early retirement benefits, retirement-type subsidies, and optional forms of benefit under qualified retirement plans." (Employee Benefits Institute of America Inc.)

Making an ESOP Work for You
Excerpt: "Making an ESOP Work for You provides an overview of communications, organizational culture, and participation for employee ownership companies. It is available at no charge in electronic format on [the target page]. The booklet is available in two versions: Version 1: Companies Considering an ESOP .... [and] Version 2: Companies with Existing ESOPs." (Ownership Associates, Inc.)

Risk Management Tips on Plan Investment Options from Plan Sponsors
Excerpt: "Particularly as a result of the Enron scandal and company stock lawsuits that have followed, benefits professionals are spending more time making sure the right folks are watching the henhouse as members of the investment committee." (PLANSPONSOR.com: one-time registration required)

San Diego County Pension Computers May Have Suffered Second Breach
Excerpt: "Authorities have shut down the computer system that manages the retirement and pension information for some 33,000 current and former county employees after a possible second breach of the data bank. The shutdown came last week after workers at the San Diego County Employees Retirement Association discovered a computer virus in the information system for the county's $6.3 billion retirement fund." (North County Times)

Opinion: Responses to Short-Term Trading Create Pain for Recordkeepers & Plan Sponsors
Excerpt: "[T]he SEC has mandated that fund complexes either adopt a redemption fee ... applied to sales of fund shares held less than seven calendar days, or determine that such a fee is 'not necessary or appropriate' for the fund. In March, they also mandated that fund companies are to enter into written agreements with certain intermediaries ... to ensure that those redemption fee determinations are implemented ...." (PLANSPONSOR.com: one-time registration required)

Retirement Planning: A Reality Check
Excerpt: "Retirement planning has been likened to a three-legged stool. One leg is Social Security, another is made up of retirement benefits from work, and the third leg comes from accumulated assets. In this analogy, missing any one of the legs causes the stool to fall -- the plan to fail. And if the legs aren't balanced right, the stool wobbles. .... Rather than panic perhaps it's time to sit back and do a reality check to get a better understanding of retirement and how best to plan for it." (Precision Information, LLC via Employee Benefit News)

Links to Items on Executive Comp, Benefits in General

Board Approval Not Considered Equity Grant Date under FAS 123(R)
Excerpt: "At least one Big Four accounting firm has opined that companies cannot fix the equity grant date at which expensing would begin until the terms of the award have been communicated to employees. Most companies had previously believed the grant date to be when the Board approves specific grant levels to employees, which was also the date on which the grant price is established." (Watson Wyatt Worldwide)

Raising the Issue of Age Discrimination on the Job
Excerpt: "Given corporate America's ever-changing strategies, workers often are left with unexpected questions, even about something seemingly as simple as how they might collect an annual raise." (The Washington Post; one-time registration required)

Court Enforces Actively-at-Work Requirement Omitted from Highlights Brochure
Excerpt: "Employers that offer plan enrollment through brochures or other informal documents should make sure that the informal documents do not omit crucial details regarding eligibility and benefits. And although disclaimer language may help (as it did here), it does not replace complete and accurate disclosure; some courts have refused to enforce disclaimers against participants and beneficiaries." (Employee Benefits Institute of America Inc.)

Pre-IPO and Private Company Total Compensation Survey
Excerpt: "Survey Highlights: The only survey to report information on traditional stock plans, performance-based stock plans, restricted stock and other long-term incentive plans. The only survey to effectively combine employee ownership percentages with position-by-position pay practices. The only survey to report upon Board of Director compensation (cash and stock) for private companies, including Lead Director and Advisory Board members." (Syzygy Consulting Group via PLANSPONSOR.com: one-time registration required)

Newly Posted Press Releases

Effective Recruiting Tied to Stronger Financial Performance
(Watson Wyatt)

New Book on 412(i) Plans by Nick Paleveda MBA J.D. LL.M.
(412iCompany, The)

Movers and Shakers: Newly Posted Announcements of Promotions and New Personnel
(Post Yours!)

Dennis Cargile
(Bidwell Consulting Services, Inc.)

Dave Banathy, APA
(Bidwell Consulting Services, Inc.)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

401(k)/Defined Contribution or Defined Benefit Account Manager
for National Retirement Services, Inc. (NRS)
in CA, NC

Actuarial Specialist
for Louis Kravitz & Associates
in CA

Pension Administrator
for R.J.L. Pension Services, Inc.
in FL

Pension Administrator
for Small Employee Benefit Firm in the Northwest Suburbs of Chicago, IL
in IL

Employee Benefits Account Manager (Service)
for The Protector Group Insurance Agency, Inc.
in CT, MA, RI

Installation Administrator
for Transamerica
in CA

Client Relationship Manager
for Great-West Retirement Services
in DC

Benefits Administrator
for Esterline Technologies
in WA



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