BenefitsLink Retirement Plans Newsletter September 12, 2005 Today's sponsor: Bankers Systems - Part of Wolters Kluwer Financial Services (Click on company name or banner to learn more.) Taking Advantage of IRAs The Wall Street Journal, on July 21, 2004, predicted that rollovers from 401(k) plans could reach as much as $300 billion a year by 2008. The opportunity to increase IRA deposits is real, but administering IRAs can be challenging. By automating many of the tasks involved with opening and maintaining IRAs, a financial organization can truly take advantage of the benefits tied to IRAs-- instead of being the one taken advantage of. Find out more. (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) IRS and Congress to Provide Hurricane Katrina Pension Relief Excerpt: "The [target page contains] a summary of what both the IRS and Congress are considering." (401khelpcenter.com) Text of SPARK Institute Communication to the IRS Regarding Hurricane Katrina Relief Issues (PDF) 7 pages. Excerpt: "[T]he purpose of this Memorandum is to assist the appropriate government agencies ... in (1) identifying impacted areas of retirement plan administration, as well as, (2) provide practical solutions that should address these concerns. We applaud the willingness of these government agencies to review our concerns and we are certain that appropriate efforts will result in constructive actions that will benefit the security of affected participants' retirement benefits." (The SPARK Institute, Inc.) Firms Move to Release Retirement Funds to Participants Affected by Katrina Excerpt: "Hardship withdrawal requests are spiking in the wake of Hurricane Katrina and firms are working on ways to get distributions to participants affected by the disaster." (Defined Contribution & Savings Plan Alert) Social Security Information for People Affected by Hurricane Katrina Excerpt: "If You Get Benefit Payments -- The Social Security Administration is doing everything it can to ensure that monthly payments get to beneficiaries affected by Hurricane Katrina." (U.S. Social Security Administration) Hurricane Katrina-Affected People May Convert 401(k) Assets into Immediate Survival Resources Excerpt: "Action on hurricane legislation is beginning on Capitol Hill and could become a vehicle for 401(k) measures. Jacobson [of ABC] has found lawmakers willing to take on the penalty tax for early distribution as well as encourage regulators to make 401(k) money more available. For regulators, said PSCA vice president Edward Ferrigno, 'There is a wide range of issues out there, far beyond extending filing deadlines.'" (Defined Contribution & Savings Plan Alert) Annuities Option for Retirement Savings: Insurance Companies Tout Products as Way to Assure Income 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." (Wall Street Journal via TimesUnion.com) Overview: Allowing Participants to Decide When to Pay Taxes -- New Roth 401(k) Contributions (PDF) 4 pages. Excerpt: "This Employee Benefits Law Alert addresses the new Roth contribution feature that can be added to 401(k) plans starting January 1, 2006. The new option permits employees to designate some or all of their elective deferral contributions as pre-tax or after-tax contributions. Thus, employees will be able to determine whether it makes more sense to pay taxes now or to pay taxes at retirement." (Porter, Wright, Morris & Arthur LLP) A Job-Hopper's Guide to 401(k) Rollovers Excerpt: "With the first of the baby boomers closing in on retirement age and many workers changing jobs every two to three years, an increasing number of investors are grappling with whether to leave money in a 401(k) plan, roll it over into an IRA or cash out." (USA TODAY) American Airlines Issues Frequent Trading Restrictions on 401(k) Plan Participants Excerpt: "The Fort Worth Star-Telegram reports that, while company managers and union officials understand that the company's pension plan problems are causing employees to focus more on their 401(k) and try to time the market to increase their investment, they say it creates costs all participants must shoulder. Fees for frequent trading imposed by some of the fund's in which the 401(k) is invested are allocated to all participants in those funds." (PLANSPONSOR.com: one-time registration required) Pension Mess Isn't Unique to San Diego -- Other Cities and Counties Also Struggling to Fill Gaps Excerpt: "Public retirement systems in Orange County, Los Angeles County and other parts of California are sliding deep into debt for some of the same reasons behind the San Diego mess-- fattened benefits, the whims of Wall Street and mismanagement by elected officials." (signonsandiego.com) Police and Fire Retirees Battle Pension Funding Change in Tampa Excerpt: "Beginning Oct. 1, the city's police and firefighters will pay less toward their pension benefits, agitating retirees suing the city and pension board. Unlike most public service pensions, the fund for Tampa's police and firefighters has a variable contribution rate for employees and the city, depending on the fund's activity." (Tampa Bay Online) When You Decide to Retire or Just Leave Your Job, What Will You Do with Your Retirement Money? Excerpt: "Before you pack up and say your last goodbyes, you have one more important decision to make -- what to do with your retirement plan distribution. If you are like many savvy investors, you realize the importance of tax deferral. For this reason, you should be interested in shielding your distribution from unnecessary taxes and possible penalties. Fortunately, this task can be achieved by selecting from two possible tax-advantaged alternatives: ...." (The Kansas City Star; one-time registration required) Towers Perrin United Kingdom Monitor -- Is an Early Valuation Worth the Trouble? (PDF) 8 pages. Excerpt: "Reactions to the Pension Protection Fund (PPF) levy document published in July (Monitor August) have been resoundingly negative. Many commentators have argued that the proposed total levy is too high for many plans. Conversely it is generally agreed that the government's initial estimate of the total levy needed on all schemes is too low at 300 million [pounds Sterling]." (Towers Perrin) 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) AARP Letters to Senate HELP Committee Regarding Concerns with Hybrid Plan Provisions (PDF) 4 pages. Excerpt: "The Age Discrimination in Employment Act (ADEA) currently states that it is unlawful for an employer to cause any 'reduction' or 'cessation' in the accruals of an employee in a defined benefit pension plan because of their age. Some conversions to cash balance plans from traditional defined benefit plans have included a so-called 'wearaway' period. The wearaway is separate from the question of whether the cash balance plan design is legal." (AARP via American Benefits Council) New Retirement Realities: Five Ways Employers Can Benefit Excerpt: "This article provides a snapshot of how retirement is changing and presents five steps that employers can take to fully leverage the new realities to enhance business success." (Watson Wyatt Worldwide) Triage for Your Retirement Planning Excerpt: "Feeling antsy about your retirement plans? Does the calendar say that happy day is just around the corner while your savings are saying, 'Dream on. At this rate, you'll be working forever'? Take a deep, cleansing breath. An underdeveloped nest egg isn't the end of your sunny-side-up retirement. There are three ways to get it cookin' again: ...." (The Motley Fool) Main Issues in Japan's Parliament Election Excerpt: "Japan's national pension system is expected to run into serious trouble as the population ages and there are not enough workers to pay for increasing pension costs. Koizumi pledged not to raise taxes to fund the system, while the Democrats want to increase the consumption tax rate to 8 percent from 5 percent." (AP via The New York Times; one-time registration required) Koizumi Wins Japan Elections by Landslide Excerpt: "Koizumi quickly came under pressure to use his new strength to deliver -- not just on his cherished plans to privatize the nation's postal savings and insurance system but on issues ranging from pension reform to diplomatic relations." (AP via SFGate.com) Links to Items on Executive Comp, Benefits in General Immediate Employer Issues in Responding to Hurricane Katrina Excerpt: "Employers with businesses in the path of Hurricane Katrina confront a variety of human resource issues as they help employees cope with losses and try to restore operations. This article outlines some of the most urgent HR issues, with a focus on legal and tax considerations affecting employee benefits. We have included frequently asked questions (FAQs) relating to expense reimbursements, health benefits, death benefits, retirement benefits, compliance deadlines ..." (Mercer Human Resource Consulting) Bad Boys (and Girls) Get Clawed Back in Executive Compensation Plans (PDF) 15 pages. Excerpt: "Senator Schumer's amendment, which became SOA Section 304, requires the chief executive officer (CEO) and chief financial officer (CFO) of a public company to reimburse the company for certain incentive compensation they receive and profits they realize on the sale of company securities during the 12-month period following the issuance by the company of a financial report that, due to misconduct, is materially noncompliant with the federal securities laws." (Benefits Law Journal via Kirkpatrick & Lockhart Nicholson Graham LLP) U.S. Rejects Cisco Systems Plan on Stock Options Excerpt: "The Securities and Exchange Commission threw cold water yesterday on a plan being pushed by Cisco Systems to value employee stock options by selling similar securities to institutional investors. But the agency said other market-based approaches might work." (The New York Times; one-time registration required) Aging Population Will Mean Shortage of Critical Talent Excerpt: "This article focuses on the labor shortage from a business perspective and suggests several strategies to help businesses ensure that they have the right skills and expertise to succeed in the decades ahead." (Watson Wyatt Worldwide) IRC 409A Effect on Design and Operation of Ineligible Plans of Deferred Comp of Tax-Exempt Employers (PDF) 19 pages. Excerpt: "This article recently published by the Bureau of National Affairs, Inc. in the September 2005 issue of its Tax Management Compensation [Planning] Journal discusses the impact of this new law on tax-exempt employers such as colleges and universities, independent schools, hospitals, and cultural institutions, among others. The article was written by Alden Bianchi, who is the practice group leader of the Firm's employee benefits and executive compensation practice." (Tax Management Compensation Planning Journal via Mintz Levin Cohn Ferris Glovsky and Popeo P.C.) Florida's Palm Beach County to Discuss Domestic Partner Registry and Benefits Excerpt: "Palm Beach County soon may become the fifth Florida government to offer a domestic-partnership registry, which would grant some legal recognition to g.ay and les.bian couples as well as straight couples who choose not to marry." (South Florida Sun-Sentinel) IRS Warns Nonprofit Organizations on Excess Benefit Transactions Excerpt: "The Internal Revenue Service issued proposed regulations clarifying the requirements for tax-exempt status and the imposition of intermediate sanctions. In the 20-page notice of proposed rulemaking, the IRS for the first time links the tax-exempt status of not-for-profit organizations to violations involving excess benefit transactions, ...." (Modern Healthcare; one-time registration required) Silicon Valley Employers Forum Collectively Manages Global Rewards Excerpt: "The Silicon Valley Employers International Forum (SVEIF) faced an enormous challenge in 2003: Help members manage benefit programs on a global basis, while addressing business issues related to corporate governance, mergers and acquisitions, and competitive standing." (Watson Wyatt Worldwide) Newly Posted Events 58th National Conference in California on September 20, 2005 presented by Profit Sharing/401(k) Council of America (PSCA) Defined Contribution 401(k) West Coast Conference in California on October 9, 2005 presented by International Foundation of Employee Benefit Plans ERISA Litigation Forum Nationwide on October 4, 2005 presented by Paul, Hastings, Janofsky & Walker LLP ERISA Litigation Forum -- The Faithless Servant Doctrine Nationwide on September 13, 2005 presented by Paul, Hastings, Janofsky & Walker LLP Hot Topics in Qualified Plans in New Jersey on September 13, 2005 presented by Worldwide Employee Benefits Network (WEB) - NJ Newly Posted Press Releases IRS Increases Mileage Rate Until Dec. 31, 2005 (Internal Revenue Service (IRS)) BusinessPlans, Inc. - myCafeteriaPlan Announces Hiring of New Cafeteria Plan Administrators (BPI - myCafeteriaPlan) NCQA, U.S. News & World Report To Collaborate On 'America's Best Health Plans' (National Committee for Quality Assurance (NCQA)) Newly Posted or Renewed Job Openings Plan Consultant / Relationship Manager for Boyce & Associates, Inc. in AZ Director - Pension Consulting Services, AMEX-TBS Phoenix for American Express Tax and Business Services in AZ Director, Health & Welfare for Charles W. Cammack Associates, Inc. in NY Vice President, Health & Welfare for Charles W. Cammack Associates, Inc. in NY Institutional Trust Communication Specialist for BB&T (Branch Banking and Trust) in VA Pension Analyst/Administrator for Snyder Cohn in MD 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. Published by: BenefitsLink.com, Inc. https://benefitslink.com/about.html 1298 Minnesota Avenue, Suite H Winter Park FL 32789 (407) 644-4146 Fax: (407) 644-2151 Editor and Publisher: David Rhett Baker, J.D. Housekeeping: How to Sponsor an Issue Subscribe to a Daily Email Announcing Publication of Each Day's Newsletter Privacy Policy Archive of Previous Newsletters