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September 6, 2005
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Text of Notice 2005-60: Minimum Funding Relief for Plans Affected by Hurricane Katrina (PDF)
3 pages. Excerpt: "For any plan that is affected by Katrina (an 'Affected Plan'), if the date described in § 412(c)(10) or 412(m) of the Code and § 302(c)(10) or 302(e) of ERISA for making contributions falls within the period beginning on August 29, 2005, and ending on October 30, 2005, then the date such contributions must be made is postponed to October 31, 2005." (Internal Revenue Service)
U.S. Judge Approves US Airways Pension Claims Deal with PBGC
Excerpt: "A federal bankrup.tcy judge Friday approved a settlement between US Airways Group and the U.S. Pension Benefit Guaranty Corp. that resolves about $2.7 billion worth of claims. The settlement gives the pension agency an ownership stake in the airline and helps clear the way for US Airways to emerge from bankrup.tcy as well as complete its merger with America West Airlines this fall." (Reuters Limited via Business Insurance)
Roth 401(k) in 2006? Not That Likely -- Employers Not Rushing to Offer New Retirement Design
Excerpt: "[D]on't count on your employer providing the retirement benefit, at least not in 2006. Few companies are rushing in. Many are waiting to see how the few firms who do provide the perk fare, and whether employees embrace it." (MarketWatch)
Pension Funding Reform: It's Time to Get the Rules Right (Part 1 of 2) (PDF)
17 pages; reprinted here through permission by Tax Analysts, publishers of TAX NOTES. Excerpt: "In [the first part of a] two-part article, the author explains how and why ERISA's historical pension funding rules-- although well-intentioned-- nevertheless led employers, such as United Airlines' parent UAL Corp., to have seriously underfunded pension plans, and the Pension Benefit Guaranty Corp. to assume billions of dollars of those unfunded liabilities." (Prof. Kathryn J. Kennedy, John Marshall Law School, reprinted from TAX NOTES)
Pension Funding Reform: It's Time to Get the Rules Right (Part 2 of 2) (PDF)
12 pages; reprinted here through permission by Tax Analysts, publishers of TAX NOTES. Excerpt: "Part two discusses the need for reform in ERISA's funding and plan termination rules. This article will examine various legislative and industry proposals and the policy considerations relevant to such proposals, in light of historical mistakes that should be avoided with subsequent legislation. The article's conclusion makes recommendations in support of preserving the defined benefit system." (Prof. Kathryn J. Kennedy, John Marshall Law School, reprinted from TAX NOTES)
Summary of the Chairman's Mark of the Defined Benefit Security Act of 2005 (PDF)
2 pages. Excerpt: "The Chairman's mark adopts a stringent new funding regime to ensure that defined benefit plans are fully funded. The new rules require the amortization of all liabilities over ten years, based on assets averaged over no more than 18 months and liabilities measured over a full yield curve that is smoothed over 18 months. Because such measurements can cause volatility, a company's minimum required contribution for a year is smoothed on the back end by restricting swings ...." (American Benefits Council)
Text: Chairman's Mark of the Defined Benefit Security Act of 2005 (PDF)
404 pages. HELP Committee Bill (U.S. Senate via American Benefits Council)
Pension Reform Proposals Face Several Hurdles in Congress
Excerpt: "The effort could stall because of key differences between the House and Senate bills or an extended debate over Judge John Roberts' nomination to the U.S. Supreme Court." (The Kansas City Star; one-time registration required)
Firms Move to Ease Participants' 401(k) Burden of Decisions
Excerpt: "Confronting shell-shocked, gun shy and in some cases simply disinterested employees, employers have responded in several ways to help their workers do a better job of managing their retirement money." (Pittsburgh Post-Gazette)
Participant Retirement Statements Get Facelift to Boost Deferrals
Excerpt: "Paper retirement statements seem a low-tech way to increase participation in 401(k) plans when compared with online advice, automatic enrollment and managed accounts. But employers who take the time to personalize these quarterly documents find it encourages participants to increase their deferral rates, plan providers say." (Employee Benefit News)
Overview: Treasury Issues Final Regs Allowing Elimination of Certain Protected DB Plan Benefits
Excerpt: "On August 11, 2005, the Department of the Treasury published final regulations under Tax Code section 411(d)(6), allowing the elimination of certain benefits and payment forms in defined benefit plans where certain criteria are met. The final regulations generally follow the scheme laid out in proposed regulations published in 2004." (Chicago Consulting Actuaries, LLC)
Nomura Targets $731 Billion in Japanese Baby-Boomer Pension Payouts
Excerpt: "Nomura Holdings Inc., Japan's biggest brokerage, said it started selling an investment trust combining stocks, bonds and property, aiming to attract retirees it says will receive $731 billion of lump-sum retirement payouts." (Bloomberg News)
PBGC to Replace Benefit Checks Lost Due to Katrina
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) is offering next day direct deposit of benefits missed due to Hurricane Katrina. .... Those who still wish to receive a paper check can call the contact center with a new or temporary address or can e-mail the address to mypension@pbgc.gov. Replacement checks should arrive at the new address within six days, according to the release." (PLANSPONSOR.com: one-time registration required)
Kenya Employers Federation Calls for Review of Retirement Rules
Excerpt: "The Kenya Federation of Employers (FKE) has protested against the new rules on retirement benefits that were introduced in this year's Budget." (The East African Standard via allAfrica.com)
U.K. Pension Law Limits Foreign Owner Control and Could Increase Required Cash Contribution
Excerpt: "A newly enacted U.K. pension law could have serious ramifications for U.S. owners of U.K. assets because it limits their flexibility in repatriating capital, including dividend payments. The statute could also remove the limited liability that plan sponsors had enjoyed by requiring associated parties to help fund a pension deficit in the United Kingdom." (Employee Benefit News)
Only 13% Of Those Age 50 And Older Made Catch-Up Contributions In 2004
Excerpt: "According to a survey recently conducted by the Vanguard Center for Retirement Research, only 13% of those eligible to make catch-up contributions to qualified retirement plans and individual retirement accounts made those contributions in 2004. The survey covered more than 2.6 million participants in nearly 2,000 defined contribution plans administered by the investment firm." (Spencer Benefits Reports)
Choosing When to Retire? -- 'Retire Early? Make the Smart Choices' Reviews Options
Excerpt: "You won't find the answer to the question of when to retire in Steven Silbiger's Retire Early? You might, however, find yourself thinking about the prospect of retiring, particularly if you're looking ahead to age 62 -- and this book can be a place to start. Silbiger says age 62 is when 56% of retirees begin collecting Social Security. That might not be in their best interest." (USA TODAY)
Overview: IRS Unveils 'New and Improved' Retirement Plan Determination Letter Program (PDF)
3 pages. Excerpt: "[It would seem] the determination letter program has a new lease on life. Following on the heels of Announcements 2004-33 and 2004-71, in which the IRS proposed something of a program overhaul, Revenue Procedure 2005-66, released on August 26, trumpets 'a new determination letter program designed to provide staggered remedial amendment cycles.'" (Nixon Peabody LLP)
Overview: System of Remedial Amendment Cycles for Individually Designed and Pre-Approved Plans
Excerpt: "The revenue procedure provides detailed rules for determining a plan's remedial amendment cycle, including examples illustrating the more complex determinations. The first step will be to determine whether the plan is an individually designed or a pre-approved plan for purposes of the remedial amendment cycle (which in some instances may not correlate with a plan's current status)." (Employee Benefits Institute of America Inc.)
Tax Cuts a Threat to Retirement Plans, According to Analysis
Excerpt: "Tax cuts on capital gains and dividends are popular, but they are hurting the growth of retirement plans among small companies, according to an analysis by American Society of Pension Professionals & Actuaries. Brian Graff, the pension advocacy group's executive director, warned a Senate finance subcommittee in June that extending those tax cuts could create a bleak savings environment for employees because lower taxes would discourage many employers from offering retirement plans." (Employee Benefit News)
Retirement Contribution Paid by State of New Hampshire Not Paid Back by Business
Excerpt: "Whenever a Manchester police officer works special detail at a downtown bar, construction site or hockey game, state taxpayers subsidize some of the work. The state treasury gets hit because the state is required to contribute toward a full-time police officer's pension whenever he earns wages." (The Union Leader)
Links to Items on Executive Comp, Benefits in General
Online Message Board for Katrina Victims Created by ASPPA, American Academy of Actuaries
Excerpt: "ASPPA and the American Academy of Actuaries have started this message board to allow the actuarial and ASPPA community to be able to communicate with those affected by Hurricane Katrina. We are encouraging all members of the community to post messages regarding needs, or offers of assistance, thoughts, or general messages. This is being offered as a courtesy to the community." (ASPPA and the American Academy of Actuaries)
Regulatory Update Published in the September 2005 Edition of Employee Benefit Plan Review (PDF)
4 pages. Excerpt: "Topics include the proposed Code Section 415 regulations, the final regulations under Code Section 861 regarding compensation sourcing and the proposed electronic communications regulations for employee benefit plans." (Employee Benefit Plan Review via Gardner Carton & Douglas LLP)
Participant Awarded Penalties for Employer's Failure to Comply with Information Request
Excerpt: "An ERISA plan administrator must, on written request from a participant or beneficiary, furnish certain documents, including a copy of the latest SPD and any interim SMMs. This case is a useful reminder that ERISA's requirement to provide certain documents upon request is separate and in addition to the requirement to provide SMMs when there is a material modification to a plan (or to provide an updated SPD every five years)." (Employee Benefits Institute of America Inc.)
Quitting Your Job? What to Know Before You Go
Excerpt: "You're thinking about leaving your job, but first you want to explore your company's postemployment benefits. Should you ask your boss about them?" (The New York Times; one-time registration required)
Commentary: Changing Times for Worker Benefits
Excerpt: "The typical employment relationship has four main components: work, pay, health insurance and retirement security. The first two components are easy to understand. They're the foundation of the relationship." (The Denver Post)
A Summary of Government Agency Katrina Relief
Excerpt: "Here is a summary of some of the agency relief provided for plan sponsors and employers affected by Hurricane Katrina: ...." (Attorney B. Janell Grenier via Benefitsblog.com)
Opinion: An Economy Raised on Pork
Excerpt: "The old work-force compact is in shreds. Paychecks that rose with productivity gains through the middle decades of the 20th century no longer do so. [N]ational product per person has grown more than 75 percent, but the median wage of male workers has risen barely two cents, adjusted for inflation, from $15.24 in 1973 to just $15.26 last year. Family incomes are up only because wives have gone into paid work .... Job loss often means loss of health insurance and a tax-advantaged ...." (Robert B. Reich via The New York Times; one-time registration required)
Newly Posted Events
Retirement Plans: What Every Employer Must Know
Nationwide on October 26, 2005
presented by SunGard Corbel
Newly Posted Press Releases
2006 NCHS/AcademyHealth Fellowship Call for Applications
(AcademyHealth)
Stephen E. Barber Named Chief Administrative Officer At PBGC
(Pension Benefit Guaranty Corporation (PBGC))
BAN Educational Conference Termed Extraordinary
(Benefit Advisors Network)
IRS Grants Relief on Minimum Funding Contributions to Employee Benefit Plans Affected by Hurricane Katrina
(Internal Revenue Service (IRS))
Gary Lawson & Gus Fields join Godwin Gruber LLP
(Godwin Gruber LLP)
Fringe Benefit Administrators LTD Up and Running Despite Devastation of Katrina
(Fringe Benefit Administrators, LTD)
New Ameriprise Retirement Services Survey Finds Financial Stress Still a Factor This 401(k) Day, Despite a Stronger Economy
(Ameriprise Retirement Services)
Ameriprise Retirement Services Helps Clients Celebrate 401(k) Day 2005
(Ameriprise Retirement Services)
Newly Posted or Renewed Job Openings
Employee Benefit Recordkeeper/Tester
for WySTAR Global Retirement Solutions
in MN
Defined Benefit Client Account Manager
for New York Life Investment Management LLC
in MA
Benefits Project Manager
for Publix Super Markets, Inc.
in FL
Compliance Administrator (Defined Contribution)
for AIG VALIC
in ANY STATE, TX
Senior Benefits Consultant
for Philips
in NY
Retirement Practice Compliance Administrator
for TRI-AD
in CA
401(k) Profit Sharing Administrator
for The Pension Source, Inc.
in FL
Manager - Retirement Plans
for Delta Air Lines
in GA
Plan Manager- Premier Account Services
for American United Life Insurance Company
in IN
Transition Consultant
for American United Life Insurance Company
in IN
Plan Services Consultants
for American United Life Insurance Company
in IN
Plan Documents Specialist
for Bay Area pension administration and consulting firm
in CA
Benefits Manager
for Denver-based Fortune 500 global manufacturer
in CO
Pension Administrator
for VPC Group
in FL, VA
Retirement Plan Administrator
for RSM McGladrey Retirement Resources
in IL
Conversion (Implementation) Specialist
for RSM McGladrey Retirement Resources
in IL
Plan Consultant
for Small TPA in Alabama
in AL
Retirement Plan Consulting Manager
for Invesmart, Inc.
in OH
Customer Service Representative
for Elite Benefits
in CA
Compliance Testing Consultant
for Diversified Investment Advisors
in NY
Implementation Specialist / Consultant
for Great-West Financial Services
in CO
Handy Links:
- View Today's Active Message Threads
- Search BenefitsLink
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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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