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September 28, 2005
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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
Bill Proposes DB(k) Retirement Plan for Small Business
Excerpt: "Representatives Rob Andrews (D-NJ) and Jim Nussle, (R-IA) are co-sponsoring a bill called the Small Employer Defined Benefit Expansion Act, that combines the guaranteed benefits of a defined benefit plan and 401(k) employee savings in a single plan." (PLANSPONSOR.com: one-time registration required)

The Principal DB(k) Fact Sheet
Excerpt: "The Principal Financial Group, the nation's 401(k) leader, and the American Society of Pension Actuaries (ASPPA) have developed a new approach to help American workers save for retirement by combining the best features of defined benefit (pension) plans and defined contribution [401(k)] plans into one plan--a DB(k)." (Principal Financial Services, Inc.)

Senate Committee Agrees to Tighten Pension Rules, with One Exception
Excerpt: "Senate committee leaders reached agreement yesterday on a bill to tighten the rules for companies that run pension plans - an effort aimed at preventing more of the big pension collapses that have occurred in recent years." (The New York Times; one-time registration required)

U.S. Senators Agree on Form of Private Pension Plans Bill
Excerpt: "Leading U.S. senators agreed Tuesday on the outlines of a bill to rewrite the rules governing private pensions, including a 14-year funding holiday for distressed airlines." (Business Insurance)

Letter Sent to Senate Committee Members: Current Negotiations Regarding Pension Funding Legislation (PDF)
4 pages. Excerpt: "[The target page] is a letter that was sent to Senate Finance Committee and Senate HELP Committee members ... and will be sent to the entire Senate ... regarding ongoing negotiations to combine the two committees' pension funding bills. Senate leadership hopes to bring a combined bill to the floor by the end of next week, after completion of the confirmation vote on Judge Roberts." (The ERISA Industry Committee)

EBRI/ICI Study: 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2004 (PDF)
20 pages. Excerpt: "The study reported that aggregate averages do not reveal the wide range of rates of change in 401(k) participants' account balances over time. For example, average account balances for participants in their 20s rose 206 percent from 1999 through 2004 ... reflecting the strong impact of contributions on account balances for this age group. Because their account balances tended to be small, contributions (as opposed to investment gains) produced significant growth." (Employee Benefit Research Institute)

Automatic 401(k) Plan Enrollment Program Can Carry Unintended Consequences
Excerpt: "No plan administrator likes telling the boss (often the company chief executive) that the CEO can't defer the maximum amount into a 401(k), especially if the problem is the administrator's inability to generate sufficient interest in the program. Little wonder that improving participation rates was the No. 1 priority of nearly half the 4,000 employers who responded to a 2004 survey by PLANSPONSOR magazine." (On Wall Street)

401(k) Is Now the Main Retirement Plan at Most Big Firms
Excerpt: "Sixty-four percent of employers responding to a Hewitt Associates Inc. survey said they considered their 401(k) to be their primary retirement plan. By contrast, when Hewitt conducted a similar survey a decade ago, just 35% of respondents said their 401(k) plan was their companies' primary retirement plan." (Business Insurance)

Will 401(k) Shortfalls at Retirement Precipitate a Wave of Lawsuits?
Excerpt: "Millions of Americans will set out to retire over the next few decades only to discover they don't have enough in their nest egg to fund their golden years. And when that happens, many Americans will look to blame someone for their misfortune. In fact, odds are high that Americans -- being the lawsuit-happy lot they are -- will start suing everyone and anyone, including former employers, plan sponsors and perhaps even 401(k) plan providers." (MarketWatch via Investors.com)

Retirees Lose Out as Bankrupt Companies Cut Pensions -- Airline Pilots Are Extreme Example
Excerpt: "Pilots must retire by age 60, but because the rules that govern the PBGC penalize retirements before 65, their maximum annual payment in a plan canceled this year would be $29,649, according to the PBGC." (The Ledger)

Request for Proposal: Defined Benefit versus Defined Contribution: Inherent and Stakeholder Value
Excerpt: "The Society of Actuaries Pension Section Research Committee (PSRC) wishes to better understand the existing research and quantitative analysis that has assessed the value of DB systems versus DC systems -- to plan sponsors, participants, and society as a whole. The PSRC is therefore issuing this Request for Proposals to conduct a literature survey of existing published material that considers the following basic question from both an inherent and stakeholder value perspective: ...." (Society of Actuaries)

Defined Benefit Plans Become More Valuable
Excerpt: "As interest rates have declined over the past five years, sponsoring defined benefit pension plans has become increasingly expensive -- as plan sponsors are well aware. Plan participants, on the other hand, often do not fully understand or appreciate how much their defined benefit plans are worth." (Watson Wyatt Worldwide)

Overview: Hurricane Katrina Tax Relief - Effects on IRAs
Excerpt: "[The Katrina Emergency Tax Relief Act of 2005 includes] distribution and rollover opportunities to eligible individual retirement account (IRA) owners and/or participants in qualified employer plans. Specifically, a qualified Hurricane Katrina distribution is not subject to the 10 percent penalty tax, is generally taxable over a three-year period, and is nontaxable to the extent an individual rolls it over within a different three-year period." (Bankers Systems, Inc.)

Lawmakers Delete Katrina IRA Rollover Provision
Excerpt: "The final Hurricane Katrina relief bill that President Bush signed Friday left out a provision included in earlier drafts that would have allowed direct, tax-free rollovers of individual retirement account assets to charity." (National Underwriter Life & Health; free one-time registration or paid subscription required)

Second Chances: Exceptions to the 60-Day Rollover Requirement
Excerpt: "When is 60 days longer than 60 days? According to the Internal Revenue Service, it may happen more often than one thinks. Under an evolving policy, there are a variety of circumstances under which a blind eye can be turned toward the well-established timeline for completing a rollover transaction." (Journal of Financial Planning)

Overview: Hurricane Katrina Affects Retirement Plan Administration (PDF)
8 pages. Excerpt: "This information applies to sponsors of qualified pension, profit sharing and stock bonus plans, including 401(k) plans, multiemployer plans, governmental plans and church plans. It also applies to ERISA 403(b) plans and non-ERISA 403(b) programs, and to governmental section 457 plans. In certain circumstances, plan sponsors and participants who were not directly affected by Hurricane Katrina are still eligible for special relief." (Prudential Retirement)

Towers Perrin U.S. Legislative Tracking Charts: Retirement (Updated September 26, 2005) (PDF)
15 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)

Links to Items on Executive Comp, Benefits in General

Advanced Bankrup.tcy Proceedings -- Plan Contribution Collection Litigation (PDF)
4 pages. Excerpt: "Trustees responsible for collection of delinquent contributions often will deal with bankrup.tcy. Some of the important terms and issues that arise under Chapter 7 and Chapter 11 of the Bankrup.tcy Code are the automatic stay, the bankrup.tcy estate, liquidation and the plan of reorganization. Trustees must know their rights. Valuable information can be obtained from government Web sites." (International Foundation of Employee Benefit Plans)

The Auditor's Written Communication to Trustees (PDF)
8 pages. Excerpt: "An auditor of an employee benefit plan is required to communicate in a management letter to the board of trustees any reportable conditions or material weaknesses found during the audit. Auditors can often make useful suggestions for operational improvements." (International Foundation of Employee Benefit Plans)

Overview: Provision of Hurricane Katrina Disaster Relief Affecting Employee Benefit Plans
Excerpt: "Congress, the Internal Revenue Service and the Department of Labor have moved quickly during the last several weeks to provide disaster relief to both participants and sponsors of employee benefit plans affected by Hurricane Katrina. This Alert summarizes the relief that has been provided to date. It is quite possible that more relief will be granted in the next few weeks." (Faegre & Benson LLP)

Overview: Federal Agencies and Congress Provide Benefit Plan Relief for Victims of Hurricane Katrina
Excerpt: "In the aftermath of Hurricane Katrina, the federal agencies regulating employee benefit plans under the Internal Revenue Code (the 'Code') and ERISA, and most recently Congress, have provided a number of relief measures to persons in the areas devastated by Katrina. A general summary of these relief measures is provided [on the target page]." (McGuire Woods LLP via Profit Sharing/401(k) Council of America)

NetWorth Newsletter -- Solutions for Executives and Directors -- Third Quarter 2005 (PDF)
pages. The newsletter includes articles titled: It's Third Quarter of 2005 -- Do You Know Where Your Plans Are? Why All the Hoopla Over Pension Funding Reform; and, Proven Techniques to Enhance Your Nonqualified Benefit Plan. (The Cochlan Group)

Michigan Circuit Court Judge Says G.ay Couples Can Get Domestic Partner Benefits
Excerpt: "Public universities and governments can provide health insurance to the partners of g.ay employees without violating the Michigan Constitution, a judge ruled Tuesday. The ruling sets aside a legal opinion issued this year by Republican Attorney General Mike Cox saying that the city of Kalamazoo could not provide benefits to g.ay partners." (The New York Times; one-time registration required)

Towers Perrin U.S. Legislative Tracking Charts: Human Resources (Updated September 26, 2005) (PDF)
8 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)

Human Resources Hurricane Recovery Guide (PDF)
3 pages. Excerpt: "The [target page] is a list of the top ten issues that are likely to present themselves in the near future as employers adapt their policies and operations to circumstances that were never foreseen and certainly not planned for in employee manuals or benefit plans." (Epstein Becker & Green, P.C.)

Newly Posted Events

ERISA Litigation Forum
in California on October 11, 2005
presented by Paul, Hastings, Janofsky & Walker LLP

First Blush: A Review of Proposed Regulations under Code Section 409A for Deferred Compensation Arrangements
Nationwide on October 14, 2005
presented by West LegalEdcenter

Newly Posted Press Releases

Study Tracks Shifts in 401(k) Balances Over Five-Year Period
(Employee Benefit Research Institute (EBRI))

Employers Applaud Court Ruling Supporting EEOC Authority
(ERIC (ERISA Industry Committee))

Director Pay Nears $200,000 at Top U.S. Companies According to Pearl Meyer & Partners Study; Fewer Stock Options, More Ownership Requirements; Premium Pay for Major Committee Heads
(Pearl Meyer & Partners)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

401(k) Account Manager
for BISYS Retirement Services
in PA

Consultant
for Louis Kravitz & Associates
in CA

Sales Vice President Insurance And Specialty Markets
for ING US Financial Services
in TX

Document Design Specialist
for Kidder Benefits Consultants, Inc.
in IA

Trust Officer/401K Plan Administrator
for City National Bank
in CA

Account Manager
for SunTrust Bank
in VA

Trust Transition Coordinator
for Marshall and Ilsley Wealth Management
in WI

Plan Administration Specialist
for Boston Financial Data Services
in MA

Registered Representative I
for Charles Schwab
in AZ

Experienced Regional Sales Managers
for Virgin Life Care
in FL

Experienced Regional Sales Managers
for Virgin Life Care
in TX



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