| BenefitsLink Retirement Plans Newsletter |   |
August 23, 2005
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Text of Proposed Changes to P.T. Class Exemption for Qualified Professional Asset Managers (PDF)
6 pages. Excerpt: "[A]s described in the notice of final amendment to PTE 84-14 contained in this issue of the Federal Register, limited retroactive and transitional relief is provided for financial service entities to act as QPAMS for their own plans. If this proposed amendment is granted, a QPAM may prospectively manage an investment fund containing the assets of its own plan or the plan of an affiliate, to the extent the conditions of the proposal are met." (Employee Benefits Security Administration, U.S. Department of Labor)
Text of Final Prohibited Transaction Class Exemption for Qualified Professional Asset Managers (PDF)
8 pages. Excerpt: "This document amends PTE 84-14, a class exemption that permits various parties that are related to employee benefit plans to engage in transactions involving plan assets if, among other conditions, the assets are managed by 'qualified professional asset managers' (QPAMs), which are independent of the parties in interest and which meet specified financial standards." (Employee Benefits Security Administration, U.S. Department of Labor)
EBSA Finalizes 2003 QPAM Rules
Excerpt: "The Employee Benefits Security Administration (EBSA) of the US Department of Labor has issued final approval of amendments to prohibited transaction rules outlining the roles of qualified professional asset managers (QPAMs)." (PLANSPONSOR.com: one-time registration required)
Social(k) Allows Socially Responsible Investment Retirement Portfolios to More Fully Diversify
Excerpt: "Ever since the US Department of Labor (DOL) issued the 1998 'Calvert letter' allowing socially responsible investment (SRI) in company retirement plans covered by the Employee Retirement Income Security Act (ERISA), more and more 401(k) plans are adding SRI funds choices. All too often, however, plan administrators add just a smattering of SRI funds, making it difficult if not impossible to diversify SRI retirement portfolios across asset classes." (SocialFunds.com)
Outlook for 2006: Retirement Planning from Structure to Results (PDF)
3 pages. Excerpt: "It is mutually beneficial for companies and employees that employers do more than just offer the opportunity to save for retirement. Sponsors will increasingly take a greater role in the management of their defined contribution plans. Employees still will have choices. It is still about empowerment. But there will also be paternalism. The future will be based on empowered paternalism." (Benefits & Compensation Solutions)
Rule Would Encourage Employers to Offer Automatic 401(k) Enrollment
Excerpt: "The Department of Labor expects to propose a regulation by year's end that will encourage companies to automatically enroll their workers in 401(k) plans." (USA TODAY)
San Diego Pension System and City Attorney Aguirre to Face Off in Court
Excerpt: "A judge will hear arguments today in the San Diego City Employees Retirement System's lawsuit to block City Attorney Michael Aguirre's assertion that he is the rightful legal counsel to the pension fund." (The San Diego Union-Tribune)
City of San Diego Pension Documents to Be Turned Over to Feds
Excerpt: "Officials in the city of San Diego's pension system have accepted a judge's secret order to turn over long-guarded documents to federal investigators, .... Under the threat of being held in contempt of court, pension officials are giving the documents to investigators who have been probing possible political corruption in City Hall since early 2004, according to multiple sources who requested anonymity due to the sensitive nature of the case." (voiceofsandiego.org)
Report Says the United Kingdom Needs New Pension Shortfall Measure
Excerpt: "New pension reporting mandated by a UK accounting rule may now show that many pension funds are deeply in the red, but that picture exaggerates shortages, according to a new report." (PLANSPONSOR.com: one-time registration required)
RRC Conference Paper: Political Risk versus Market Risk in Social Security (PDF)
21 pages. Excerpt: "[The authors] argue that the characterization of traditional Social Security as a defined benefit retirement program is inappropriate. An essential element of defined benefit pension programs is that the participants do not bear the funding risk. That is, if the fund becomes underfunded ..., the funding inadequacy is not borne by the participants, but by the employer or an insurance entity. The risks are transferred from the participants to others, ...." (Center for Retirement Research at Boston College)
Editorial: Pension Disclosure -- What the Public Needs to Know
Excerpt: "When managers of public pension funds invest in a new biotech firm or an experimental high-tech venture, how much should they have to tell the public about those investments? It's not an idle question." (The Sacramento Bee; one-time registration required)
Experts Share Tips, Strategies, Secrets for the Best Ways to Accumulate Wealth and Retire Rich
Excerpt: "Perhaps it's their built-in tolerance for risk, or the success-at-any-cost passion that entrepreneurs wear on their sleeves, but many seem to want to work until they hit it really big--or die trying. .... Like it or not, to retire rich requires careful planning at every stage of your business. From starting up to selling out, there are things every entrepreneur should be doing to balance the inherent risks of owning a business with the inevitable certainties of old age and death." (Entrepreneur magazine)
Overview: Valuing IRA Annuities in Roth IRA Conversions (PDF)
2 pages. Excerpt: "On August 19, 2005, the Treasury issued proposed and temporary regulations governing the valuation of annuity contracts in conversions from traditional IRA's to Roth IRA's. Pursuant to Code sections 408(d)(1) and (2), and as provided in Treas. Reg. §1.408A-4, Q&A-7 as adopted in 1999, the amount converted from the traditional IRA is treated as distributed and taxable in the year of conversion." (Sutherland Asbill & Brennan LLP)
SEI Issues Plan Sponsor Guidance on Planning and Managing Pensions
Excerpt: "In response to recent pension problems and their effect on corporate finance, SEI Investments has issued a white paper outlining five considerations to help plan sponsors change the way they manage their pensions by aligning pension strategy with corporate strategy throughout the plan's lifecycle." (PLANSPONSOR.com: one-time registration required)
Exchange Traded Funds and Fiduciary Best Practices Are a Good Fit
Excerpt: "ETFs join other index vehicles such as mutual funds and bank collective funds as prudent investment tools for fiduciaries and even add to a fairly robust list of benefits that includes diversification and low cost." (InvestmentNews.com)
Cruise Control vs. Auto Pilot: The Need for a Third Party Review of Plan Fiduciary Functions
Excerpt: "The recent literature on qualified plan governance is replete with violations of ERISA and common law principles. By properly scrutinizing these cases, plan sponsors can learn a valuable lesson in behavior avoidance. A common pattern we often see is the self-perpetuating behavior of sponsors, fiduciaries, administrators and advisors where inertia takes over and decision-making ceases being the product of a prudent process." (401khelpcenter.com)
State of South Carolina Files Motion in Public Employee Pension Plans' Lawsuit
Excerpt: "The state filed a motion Monday asking the South Carolina Supreme Court to consider two cases dealing with retirement plans for state employees. The state says that both cases deal with an argument that the pension plan is considered a contract that can't be changed by the General Assembly." (WorldNow and WISTV)
Commentary: San Diego Pension Proposals Don't Do Enough to Improve Situation
Excerpt: "The severity of San Diego's fiscal crisis clearly calls for the mayoral candidates to push for changes that fundamentally alter the way that future employee benefits are managed, but both plans lack structural reforms and ignore the elephant in the room." (The San Diego Union-Tribune)
Pension Expert Warns Against Changes: Public Pension Plans Are Solid, Conference Told
Excerpt: "Despite a push to move from state workers' pensions to private-sector-style retirement plans, a national authority told lawmakers from across the country last week that it is not necessary." (The Olympian)
What to Do When Hiring a Financial Planning Firm to Provide Retirement Planning for Employees
Excerpt: "Question: Our company is working with a financial-planning firm to help employees plan for retirement. I have some concerns about a potential conflict of interest, as I know the firm's representatives are all compensated based on sales of financial products and services. What's your advice on how to manage financial-planning firms that are conducting one-on-one consultations with employees? Answer: This is a great question." (Workindex.com)
Commentary -- Cash Balance Legislation: Myth Versus Fact (PDF)
6 pages. Excerpt: "MYTH # 1: EMPLOYERS PROTECT OLDER WORKERS FROM THE ADVERSE IMPACTS OF CONVERSIONS TO CASH BALANCE PLANS FACT: While some employers have protected their employees from some of the worst adverse impacts of a conversion, even cash balance supporters have acknowledged that 'it is not unusual in some cash balance conversions for the 40 to 50 year old employee to lose one-third to as much as one-half of his expected pension.'" (cashpensions.com)
RRC Conference Paper: Demographic Change, Retirement Saving, and Financial Market Returns (PDF)
21 pages. Excerpt: "This paper is the first part of an analysis that aims to evaluate the likely empirical importance of demographic trends on market returns in the United States." (Center for Retirement Research at Boston College)
Washington Lawmakers Are Rolling Out Bills Meant to Untangle the Retirement Knot
Excerpt: "The Congressman who will be most influential in fixing Social Security and tax reform is now on a crusade to remedy all of the nation's retirement-related challenges. At press time, industry observers in Washington and across the nation were awaiting a proposal from Rep. Bill Thomas (R-California), chairman of the House Ways and Means Committee, that's expected to include Social Security reform and enhanced retirement savings incentives." (Wicks Business Information, LLC via investmentadvisor.com)
RRC Conference Presentation: What are the Risks and Returns of Private Accounts for Social Security? (PDF)
15 pages. Conference session Discussant Remarks by Deborah Lucas. (Center for Retirement Research at Boston College)
Links to Items on Executive Comp, Benefits in General
SEC Small Company Panel Recommends Section 404 Relief (PDF)
Excerpt: "On August 10, the Securities and Exchange Commission'sAdvisory Committee on Smaller Public Companies approved three recommendations intended to provide relief to small companies struggling to comply with Section 404 of the Sarbanes-Oxley Act and other federal securities laws." (Powell Goldstein LLP)
Overview: Section 409A Deferred Compensation Guidance Appears Imminent (PDF)
2 pages. Excerpt: "Companies that maintain deferred compensation arrangements are bracing for the upcoming release of IRS guidance that will dictate the necessary amendments for these arrangements to comply with recent changes in federal tax law." (Miller & Chevalier Chartered)
Restricted Stock and 83(b) Elections: Issues and Answers
Excerpt: "Restricted property grants, specifically restricted stock grants, are likely to become a more popular compensation vehicle because they are subject to the same accounting treatment as options; they are less dilutive than options, and they are exempt from the new [409A] rules governing nonqualified deferred compensation ... [but] the administrative requirements and tax implications to executives and the employer are not always obvious. The following outlines some common issues ..." (Deloitte)
Employee Plans -- IRS Forms & Publications
Forms and publications are accessible in tables by name and title. (U.S. Internal Revenue Service)
Severance Pacts Can Leave Workers in a Quandary
Excerpt: "Companies are under no legal obligation to offer severance packages when they lay off workers, unless an employment contract stipulates one, as is often the case with executive posts and in collective-bargaining agreements. Companies offer severance packages simply to be nice, said Kate Wendleton, president of the Five O'Clock Club, a Manhattan-based outplacement firm." (Gannett News Service via Burlington Free Press)
Newly Posted Events
51st Annual U.S. Employee Benefits Conference
in Hawaii on November 13, 2005
presented by International Foundation of Employee Benefit Plans
Newly Posted Press Releases
ASPPA Announces Carol R. Sears, FSPA, CPC, as the 2005 Educator's Award Recipient
(ASPPA (American Society of Pension Professionals & Actuaries))
New Magazine From Great-West Healthcare Urges Employers To 'Look Before You Leap' Into Consumer-Driven Health Care
(Great-West Life & Annuity Insurance Company)
Social(k) Allows Socially Responsible Investment Retirement Portfolios to More Fully Diversify
(SocialFunds.com)
Easy Retirement Guidance Tool Released by Two Leading Retirement Plan Experts
(Hamilton Hutcheson LLC)
Newly Posted or Renewed Job Openings
Employee Benefits Tax Group - Manager
for Deloitte Tax LLP
in IL
DC Plan Administrator
for Upstate SC
in SC
Regional Sales Director
for RSM McGladrey Retirement Resources
in IL
Daily Valuation Specialist
for R-Tech Consultants, Inc.
in CA
Regional Vice President - PA/NJ/NYC
for BISYS Retirement Services
in NJ, NY, PA
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