| BenefitsLink Retirement Plans Newsletter |   |
August 24, 2005
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Making 401(k) Plan Funds Last by Offering Annuities
Excerpt: "Motorola and BHP Billiton, an Australian mining resources company, are starting to discuss adding annuity options to their menus. Motorola's concern about offering an annuity is that employees will think that the company is recommending that they use it and thus could be held liable if an employee loses money in the long run, says Randy Boldt, director of global rewards." (Workforce Management; one-time registration required)
How Much Employers Are Matching Participant 401(k) Contributions
Excerpt: "In its study titled '2005 Trends and Experiences in 401(k) Plans,' Hewitt Associates found that 70 percent of employers offer fixed matches. Here's a breakdown of how those employers are offering their matches, according to Hewitt [at http://www.workforce.com/tools/Employer_Contributions.htm]." (Workforce Management; one-time registration required)
Few Employers Ready to Make Managed Accounts Automatic
Excerpt: "A growing number of employers with 401(k) plans, such as J.C. Penney and Motorola, have begun offering managed account programs to accommodate employees' desire to have someone else choose and manage their investments for them. However, only a handful have done what BHP did by making managed accounts the default investment for automatic enrollment." (Workforce Management; one-time registration required)
Opinion: Life Expectancy, Age Discrimination, and Retirement at 70
Excerpt: "Some months back I advocated gradually raising the eligibility ages for Social Security and Medicare to 70 over the next 25 years. Even this would only reduce the large increases in future federal retirement costs. Naturally, I was deluged with fan mail. 'You must be on drugs,' said one letter." (The Washington Post; one-time registration required)
RRC Conference Paper: Population Aging and the Structure of Wages (PDF)
21 pages. Excerpt: "The United States ... is on the cusp of a radical transformation of its labor markets. As many have documented ..., the growth rate of the working age population has already dropped substantially, and as the Baby Boomers start to enter normal retirement ages the elderly dependency ratio ... will increase dramatically. As a consequence, labor supply is likely to grow at a slower rate than labor demand, putting upward pressure on wages and creating tight labor market ...." (Center for Retirement Research at Boston College)
Good News for U.S. Employer Pension Funds
Excerpt: "New research shows that pension plans in the United States (US) are four times more likely to be fully funded than occupational in the United Kingdom (UK). In a company press release, Aon Consulting reports that only 5 percent of UK pension plans are fully funded compared to 20 percent of US pension plans for year-end 2004 based on company annual reports." (AccountingWEB, Inc.)
Overview: IRS Final Anti-Cutback Regulations
Excerpt: "[This] summary of the final and proposed regulations is general in nature, and is intended only to highlight key provisions." (Deloitte's Washington Bulletin via BenefitsLink.com)
To Avoid Penalty, Computer Purchased with Early IRA Distribution Must Be 'Required' by University
Excerpt: "Where a computer was not required for a student's university enrollment or classes, the expense of purchasing the computer was not a 'qualified higher education expense,' which would have qualified for the exception from the 10% early distribution tax on an IRA distribution used to pay for the student's university expenses. (Gorski, James M., (2005) TC Summary Opinion 2005-112)" (Pension & Benefits Week via RIA)
Overview: IRS Final Regulations on Eliminating Certain Forms of Defined Benefit Plan Distribution (PDF)
4 pages. Excerpt: "This Alert discusses regulations recently finalized by the Internal Revenue Service that allow sponsors of defined benefit pension plans to eliminate certain benefit distribution forms. The regulations are effective for any plan amendment adopted and effective after August 12, 2005." (Kirkpatrick & Lockhart Nicholson Graham LLP)
Text: IRS Temporary Regulation on Converting an IRA Annuity to a Roth IRA (PDF)
4 pages. Excerpt: "This document contains temporary regulations under section 408A of the Internal Revenue Code (Code). These temporary regulations provide guidance concerning the tax consequences of converting a non-Roth IRA annuity to a Roth IRA. These temporary regulations affect individuals establishing Roth IRAs, beneficiaries under Roth IRAs, and trustees, custodians and issuers of Roth IRAs." (Internal Revenue Service via Federal Register)
Testimony before IRS on the Limitations on Benefits and Contributions under Qualified Plans
Excerpt: "ASPPA has submitted two comment letters on the proposed amendments to the Section 415 regulations setting forth our specific concerns. I will focus today on three major issues where ASPPA feels the proposed regulations take a contrary interpretation to the current understanding of pension professionals, providing undesirable results from a retirement policy perspective." (American Society of Pension Professionals & Actuaries)
Overview: Employers Seek Legal Shelter for 'Phased Retirement' Plans
Excerpt: "As is usually the case, the law is slow to catch up with changing social and economic trends. Phased retirement is a new concept emerging out of demographic patterns and changes in lifestyle. While employers and employees alike will be pushing for greater flexibility to implement such plans to suit the needs of businesses and individuals, the legal roadblocks need to be carefully addressed. Stay tuned for the next phase." (Faegre & Benson LLP)
Dispute over San Diego Public Pension Benefits Legal Counsel Moves Toward Trial
Excerpt: "The legal battle over who is the rightful legal counsel of the city of San Diego's troubled pension system appears headed for trial after a hearing Tuesday that narrowed the scope of the case. The suit was filed in January by the San Diego City Employees' Retirement System to block City Attorney Mike Aguirre's attempt to serve as the system's legal counsel." (voiceofsandiego.org)
Illinois Legislator to Push Pension Reforms As State Board Weighs Lobbyist Guidelines
Excerpt: "A leading Democratic state senator pledged Tuesday to push a reform package this fall to eliminate the type of pension deals that netted $4.5 million for a major Republican lobbyist. The windfall for Robert Kjellander, the treasurer of the Republican National Committee, is at the center of a growing reform effort following the Tribune's disclosure of his lucrative deal with The Carlyle Group, a Washington, D.C., investment firm." (Chicago Tribune; one-time registration required)
Rulings Trim Scope of San Diego Pension Dispute and Fund's Attorneys Allowed to Stay
Excerpt: "A San Diego judge ruled yesterday that attorneys for the city pension system can continue to represent the fund, as its leaders try to block City Attorney Michael Aguirre's attempt to take over as the pension's legal counsel." (The San Diego Union-Tribune)
South Carolina Seeks State Supreme Court Review of Public Pension Plan Lawsuits
Excerpt: "The state of South Carolina wants the state's Supreme Court to review two cases for which it says prior rulings imply state pension plans cannot be changed by the General Assembly." (PLANSPONSOR.com: one-time registration required)
RRC Conference Paper: How Portfolios Evolve after Retirement -- The Effect of Health Shocks (PDF)
20 pages. Excerpt: "[H]ealth shocks constitute a significant source of financial risk for the elderly. Examining how wealth evolves during retirement and how this process is affected by health shocks will help us to predict how future elderly will fare during retirement and what role Social Security will play in their economic well-being." (Center for Retirement Research at Boston College)
Many United Kingdom Pension Trustees Ready for New Rules
Excerpt: "More than half of the trustees of U.K. occupational pension plans say they are ready for new requirements that will be introduced by the U.K. Pensions Act when it comes into force next April, according to a study." (Business Insurance)
Opinions Mixed on Future of Cash Balance Plans: Rep. Boehner's Bill Would Make the Plans Legal
Excerpt: "After two years, there may be an end in sight to the legal limbo. In June, Rep. John Boehner, R-Ohio, proposed the Pension Protection Act, which, if passed, would make cash-balance pension plans legal. Employers have been waiting for such guidance on the issue, but some like Voith say that even if the courts or the federal government decide the plans are legal, companies will not be rushing back into them." (Workforce Management; one-time registration required)
RRC Conference Paper: Why Not Retire? The Time and Timing Costs of Market Work (PDF)
34 pages. Excerpt: "Retirement ages among older Americans have only recently begun to increase after their precipitous fifty-year decline. Early retirement may result from incentives provided by retirement systems; but it may also result from the rigidities imposed by market work schedules. Using the American Time Use Survey of 2003, [the author] first examine[s] whether additional market work is neutral with respect to the mix of non-market activities." (Center for Retirement Research at Boston College)
Links to Items on Executive Comp, Benefits in General
Most Multiemployer Benefit Plans Sue over Missed Employer Payments, According to Survey
Excerpt: "A Brookfield, Wisconsin group has found that nine in 10 multiemployer benefit plans use the courts in their efforts to collect required employer contributions. A survey by the International Foundation of Employee Benefit Plans of 153 US and Canadian salaried and third-party administrators who work with multi-employer plans found that 89% of the funds charge interest on late or missed payments, according to a news release from the group." (PLANSPONSOR.com: one-time registration required)
Perspective on Public Company Director Compensation Trends
Excerpt: "[D]irector pay resumed its upward climb last year and became more important in recruiting, given the shrinking pool of available independent directors. Concurrently, director pay philosophy is being reexamined to reflect how directors carry out their duties and to demonstrate companies' sensitivity to shareholders and shareholder advisory groups, which expect directors to own shares and have a stake in the long-term financial future of the organization." (Mercer Human Resource Consulting LLC and Mercer Investment Consulting, Inc.; one-time registration required)
Long-Term Incentive Programs Growing More Common Around the World, According to Survey
Excerpt: "A news release from Towers Perrin HR Services said its 2005 Equity Incentives Around the World Survey found that large employers in nearly every industrialized nation have increased the use of equity incentives as integral parts of compensation." (PLANSPONSOR.com: one-time registration required)
Executive Summary: The American Workplace 2005 -- The Changing Nature of Employee Benefits (PDF)
11 pages. Excerpt: "[EPF] released its tenth-annual American Workplace Report [today]. The report focuses on the changing role benefits play in the American workplace. Since they were originally introduced, health and retirement benefits have grown from 'fringe' benefits to a central part of employee compensation packages. In addition to health and retirement, employee benefit packages now include a vast array of benefits designed to improve the quality of employees' lives, ...." (Employment Policy Foundation)
Newly Posted Events
Advanced IRAs: The Ever-changing IRA
in Minnesota on September 21, 2005
presented by BISYS Retirement Services
Advanced IRAs: The Ever-changing IRA
in California on October 5, 2005
presented by BISYS Retirement Services
Advanced IRAs: The Ever-changing IRA
in Texas on October 5, 2005
presented by BISYS Retirement Services
Advanced IRAs: The Ever-changing IRA
in California on October 7, 2005
presented by BISYS Retirement Services
Advanced IRAs: The Ever-changing IRA
in Arkansas on October 12, 2005
presented by BISYS Retirement Services
Advanced IRAs: The Ever-changing IRA
in District of Columbia on October 19, 2005
presented by BISYS Retirement Services
Advanced IRAs: The Ever-changing IRA
in Florida on October 21, 2005
presented by BISYS Retirement Services
Advanced IRAs: The Ever-changing IRA
in Maryland on October 21, 2005
presented by BISYS Retirement Services
Basic IRAs
in Minnesota on September 20, 2005
presented by BISYS Retirement Services
Basic IRAs
in California on October 4, 2005
presented by BISYS Retirement Services
Basic IRAs
in Texas on October 4, 2005
presented by BISYS Retirement Services
Basic IRAs
in California on October 6, 2005
presented by BISYS Retirement Services
Basic IRAs
in Arkansas on October 11, 2005
presented by BISYS Retirement Services
Basic IRAs
in District of Columbia on October 18, 2005
presented by BISYS Retirement Services
Basic IRAs
in Florida on October 20, 2005
presented by BISYS Retirement Services
Basic IRAs
in Maryland on October 20, 2005
presented by BISYS Retirement Services
Basic IRAs Web/Telephone Seminar
Nationwide on October 6, 2005
presented by BISYS Retirement Services
ERISA Update Seminar with Charles Lockwood - Orlando
in Florida on October 13, 2005
presented by Global Benefit Advisors and Gray Robinson, P.A.
ERISA Update Seminar with Charles Lockwood - Tampa
in Florida on October 14, 2005
presented by Global Benefit Advisors and Gray Robinson, P.A.
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
General Traditional IRA Distributions Web/Telephone Seminar
Nationwide on October 20, 2005
presented by BISYS Retirement Services
IRA Excess Contributions Web/Telephone Seminar
Nationwide on October 4, 2005
presented by BISYS Retirement Services
IRA Required Reporting Web/Telephone Seminar
Nationwide on October 27, 2005
presented by BISYS Retirement Services
IRA to IRA Transfers and Rollovers Web/Telephone Seminar
Nationwide on October 18, 2005
presented by BISYS Retirement Services
IRA Withholding Web/Telephone Seminar
Nationwide on October 25, 2005
presented by BISYS Retirement Services
Positioning Group Life to Enhance Your Benefits Package
Nationwide on September 20, 2005
presented by SourceMedia
Newly Posted Press Releases
Petition to Support Cash Balance/Hybrid Plans
(ASPPA (American Society of Pension Professionals & Actuaries))
New Health Savings Account Answer Book From Aspen Publishers Answers Tough Questions About Newest Consumer-Driven Healthcare Plan
(Aspen Publishers)
Newly Posted or Renewed Job Openings
Pension Administration Specialist
for Miami Valley Pension, a Brady Ware Company
in OH
Account Manager
for Kibble & Prentice
in WA
Benefits Specialists
for BeneTemps, Inc.
in FL
Regional Sales Consultant
for DailyAccess Corporation
in AZ, CO, CT, DC, DE, ID, MA, MD, ME, MT, ND, NH, NJ, NM, NY, OK, PA, RI, SD, TX, UT, VT, WY
Senior Sales Representative
for Arnerich Massena Education
in OR
Defined Benefits Analyst
for Fidelity Investments
in NC
Defined Contribution Administrator
for PENTEC, INC.
in CT
Pension Manager
for Hogan & Hartson L.L.P.
in DC
Special Markets Coordinator
for Transamerica
in CA
Regional Vice President
for ING US Financial Services
in CA, MI, MO, OH
Defined Benefit Calculations Specialists
for Constantin Control Associates
in NJ
Employee Education Consultant
for PNC Advisors
in KY
401K Administrator - PA
for Vanguard
in PA
Defined Contribution Plan Administrator
for Enterprise Pensions
in AZ
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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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