August 29, 2005 Today's sponsor: DATAIR Employee Benefit Systems, Inc. (Click on company name or banner to learn more.)
'Employee Plans News' Publication Discusses New Revenue Procedure for Document Submissions (PDF) 2 pages. Excerpt: "The Revenue Procedure ... extends the October 31, 2005 submission deadline to January 31, 2006 for mass submitters and national sponsors maintaining defined contribution master and prototype and volume submitter plans.... Please send any comments or questions on the procedures ... to RetirementPlanComments@irs.gov. The Service will collate comments and establish a FAQs page ... [at http://www.irs.gov/retirement/], to be updated periodically." (Internal Revenue Service) Appeals Court Upholds Denial of Supplemental Retirement Benefits for Discharged Employee Excerpt: "The US 6th Circuit Court of Appeals has upheld a lower court ruling in a case where a former General Motors Corp. (GM) employee claimed he was entitled to supplemental retirement benefits according to a Summary Plan Description (SPD), in spite of being discharged." (PLANSPONSOR.com: one-time registration required) Commentary: How to Fix Your Faulty 401(k) Plan and Get Results Excerpt: "Taking a hard look at your 401(k) or other retirement savings plan after Labor Day is worthwhile, especially if your plan's funds failed to keep up with indexes of most listed U.S. stocks and bonds. There's plenty you can do to pressure your employer to improve your 401(k), provided you are organized, informed and know the right questions to ask." (Bloomberg News) Tom's Foods Terminating Pension Plan -- Will Replace with 401(k) Excerpt: "Tom's Foods, currently in bankrup.tcy court, has filed an application with the Pension Benefit Guaranty Corporation to stop benefit accruals for its pension plan by October 7, ...." (PLANSPONSOR.com: one-time registration required) Use of Roth 401(k) Requires Tax Forecasting Excerpt: "Starting next year, you may have access to a brand new 401(k) option aimed at decreasing your tax burden in retirement. Deciding whether or not to contribute to the new option - known as a Roth 401(k) - however, may require some crystal-ball gazing. Highly paid workers are the most likely to take the gamble and contribute to this new type of account. They are also the most likely to see it pay off, tax experts said." (AP via The Sacramento Bee; one-time registration required) Employee Ownership Update for August 28, 2005 NCEO Executive Director Corey Rosen discusses a retirement reform bill in the Senate and the effects it would have on 401(k) plans and ESOPs; two large settlement agreements in employee class action suits concerning company stock in 401(k) plans; and FASB's clarification of the grant date for purposes of equity award valuations. (National Center for Employee Ownership) Overview: Credit Balances in Pension Funding Reform-- Will They Be Real or Illusory? Excerpt: "Under pension funding law established over 30 years ago in ERISA, plan sponsors that contribute more than the minimum funding requirement in any plan year accumulate the overpayments as 'credit balances' in their funding standard accounts. This encourages sponsors to prefund their plans when they can afford to, generally during good economic times, so there is less need for additional funding during poorer economic times." (Watson Wyatt Worldwide) Special Report: Why Marin County's Pension Costs Keep Soaring -- First of a Three-Day Series Excerpt: "A financial time bomb threatens taxpayers in Marin County. It's the rocketing cost of Marin's county and municipal pension programs, a mounting fiscal obligation that compels taxpayers to provide public employee retirees with escalating pensions that are more generous than those available to many in private enterprise." (Marin Independent Journal) Overview: ERISA Bars Pension Plan's 'Break-in-Service' Exclusion Excerpt: "Under ERISA, the calculation of a worker's pension benefits cannot exclude a period of work due to a 'break in service' -- even if that first stretch of work occurred before ERISA was passed -- a divided panel of the 3rd U.S. Circuit Court of Appeals has ruled. The 3rd Circuit's 27-page opinion in DiGiacomo v. Teamsters Pension Trust Fund of Philadelphia and Vicinity sharpens an existing split in the circuits." (Law.com) U.S. Denies a Tax Deduction to Foreign-Based Companies for Dividends Paid on ESOP Shares Excerpt: "DaimlerChrysler, BP and other international companies that let American employees purchase shares under a stock ownership plan cannot claim tax deductions for dividends paid on those shares, the United States Treasury Department has ruled." (Bloomberg News via The New York Times; one-time registration required) Ethics Rules Proposed for Illinois Pension Trustees and Lobbyists Excerpt: "Gov. Rod Blagojevich proposed a package of ethics reforms Friday that would eliminate the type of windfall payments lobbyists have received as part of the state pension deals now under federal scrutiny." (Chicago Tribune; one-time registration required) Overview: In the United Kingdom the Pensions Reform Picture Takes Shape Excerpt: "Over the past four months, there have been significant developments concerning the implementation of the Pensions and Finance Acts 2004." (Watson Wyatt Worldwide) Overview: Pension Protection Act Would Establish New Rules for Multiemployer Pension Plans Excerpt: "The Pension Protection Act (PPA) approved by the House Education and the Workforce Committee on June 30, 2005, would significantly reform the rules governing multi-employer pension plans. The act would reduce the amortization period from 30 to 15 years, establish special funding rules for 'endangered' or 'critical' multiemployer plans and impose new reporting requirements." (Watson Wyatt Worldwide) RRC Conference Presentation: The Decline in Saving: What Can We Learn from Survey Data? (PDF) 20 pages. Excerpt: "Conclusion: We know very little about the causes of the decline in U.S. saving. It is a major issue of substantial policy importance. We currently devote no significant effort to measuring saving behavior. A synthetic cohort analysis is no substitute for direct panel survey data. Need to reinstitute the panel component of the SCF." (Center for Retirement Research at Boston College) Overview: Tales of Extinction: Lessons for Defined Benefit Pensions and the Retirement Ecosystem Excerpt: "Despite the endangered status of private defined benefit plans, rather than pursuing policies that will bolster their vitality, policymakers are making things worse. Changes in the underlying economics of defined benefit plans have made hybrid plans more attractive to employers and to many employees as well. But it could be foolhardy to establish these plans in today's unfriendly legal environment." (Watson Wyatt Worldwide) Brief Commentary on Recent Cash Balance Plan Litigation Development Excerpt: "[The target page provides a link to] the Order ... denying the defendants' motion to dismiss in the cash balance plan litigation involving the Gannett Retirement Plan. The Order is too sparse in its analysis to provide any meaningful discussion here other than to say that the opinion seems to disagree with Eaton v. Onan Corp., 117 F. Supp. 2d 812, 817 (S.D. Ind. 2000) and Tootle v. ARINC, Inc., et al. ...." (Attorney B. Janell Grenier via Benefitsblog.com) Audio: Long-Range Money Plans with Ben Stein Excerpt: "How much are you saving for retirement? How much should you be saving for retirement? And why is Ben Stein worried? David Gardner does some retirement planning with actor, author, and economist Ben Stein." (The Motley Fool via National Public Radio) Labor Leaders Call for Wal-Mart Stock Sale Excerpt: "Union Network International, has passed a resolution calling for fund companies that manage union pension assets to sell shares of Wal-Mart Stores, Inc." (PLANSPONSOR.com: one-time registration required) RRC Conference Paper: Cross-National Evidence on the Burden of Age-Related Transfers (PDF) 23 pages. Excerpt: "This paper examines international differences in sources of support for old age consumption. How much consumption is financed with aged households' own earnings and saving? How much depends on transfers from the working-age population?" (Center for Retirement Research at Boston College) RRC Conference Paper: What Replacement Rates Do Households Actually Experience in Retirement? (PDF) 26 pages. Excerpt: "This paper estimates how much people actually receive in retirement relative to earnings before retirement when all sources of income, including income generated by homeownership, are combined." (Center for Retirement Research at Boston College) Retirement Savings on Congress' Radar Screen Excerpt: "As defined benefit reform was debated on Capitol Hill in June and July, lawmakers also continued to focus on retirement savings and other issues that affect defined contribution plans. Final pension reform could include provisions to ease automatic 401(k) enrollment, encourage annuities, and promote retirement education and investment advice." (Watson Wyatt Worldwide) Links to Items on Executive Comp, Benefits in General Employer Hit with $2,500 Fine for Plan Information Disclosure Delay Excerpt: "A federal judge has slapped a Puerto Rican company with a $2,500 fine for delaying its response to an employee's inquiry about the firm's long-term disability plan for 25 days after the 30-day response deadline." (PLANSPONSOR.com: one-time registration required) Suit for Fiduciary Breach Proceeds Even Though Only Subset of Plan Participants Affected Excerpt: "As noted in the opinion, the Sixth and Eighth Circuits also have ruled that a subset of participants can sue an ERISA plan for breach of fiduciary duty under ERISA Section 502(a)(2). And as the court points out in a footnote, the Fifth Circuit has granted a rehearing in the Milofsky case, effectively vacating that opinion." (Employee Benefits Institute of America Inc.) Recovering Losses for Individual Participants Is Recovery for the Plan, Says Appeals Court Excerpt: "The US Court of Appeals for the 3rd Circuit has disagreed with a lower court decision that an ERISA case be dismissed because it was seeking financial recovery of losses on behalf of some plan participants and not the plan as a whole." (PLANSPONSOR.com: one-time registration required) Newly Posted Events 2005 PenServ Fall Seminar Series Nationwide on October 4, 2005 presented by PenServ, Inc. Membership 2005-2006: Join Now for Discounts on Upcoming Educational Events and Seminars in Arizona on August 30, 2005 presented by Western Pension & Benefits Conference - Phoenix Chapter Newly Posted Press Releases Treasury Releases Final Regulations Shutting Down Abusive Valuation Of Life Insurance Contracts (U.S. Department of Treasury) NEW Employee Wellness Benefit: The "Managing My Life" Online Library Series (Planning For Life) COBRA Outsourcing Company hires Deloitte & Touche for SAS 70 Review (COBRA Outsourcing Company) Newly Posted or Renewed Job Openings Accounting Administrator in Trust Department for Associated Pension Consultants in CA Supervisor, Service for BISYS Retirement Services in PA 401(k) / Defined Contribution Administrator for Pension Investors Corporation in FL Employee Benefits Product Manager for Wachovia in NC Product Manager II for Wachovia in NC Retirement Services Project Leader for State Bank & Trust in ND Administrative Assistant for Milliman, Inc. in WA Handy Links:
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