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October 4, 2005
Today's sponsor: DATAIR Employee Benefit Systems, Inc.

(Click on company name or banner to learn more.)
Banner ad for DATAIR Employee Benefit Systems, Inc.

Software for DC/401(k) Plan Administration

DATAIR's IMPROVED BENEFIT ADMINISTRATION SOFTWARE for 401(k), Profit Sharing and all other Defined Contribution plans. Designed for administrators and consultants.

This Windows system features many important enhancements including flexible input for employee data, share and dollar accounting; redesigned easy-to-read report formats, a transaction database for time-weighting of allocations; electronic anniversary notification and data collection; and unlimited investment and source definitions. The system also allows for great flexibility in setting up graded class allocation (cross-tested new comparability) plans.

Training and support included. For free demo versions and pricing, contact sales@datair.com or call 1-888-328-2474.


(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Opinion: Adding Roth 401(k) Contributions in 2006 Not Good for Most Employees, Employers (PDF)
3 pages. Excerpt: "In our opinion, most 401(k) plans should NOT offer Roth contributions. They will create significant difficulties and additional expense for plan sponsors, they do not increase overall plan contribution limits, and they are not a good financial bet for most employees." (The Pension Group, Inc.)

Overview: Private Sector DC Provisions in S1783, The Pension Security and Transparency Act (PDF)
8 pages. Excerpt: "UPDATING DEDUCTION RULES FOR COMBINATION OF PLANS (Sec. 123) IRC 404(a)(7)(C) is amended to provide a limitation of the application of 404(a)(7) in the case of employer contributions to one or more defined contribution plans to apply only to the extent that such contributions exceed six percent of compensation otherwise paid or accrued during the taxable year. Effective for contributions for taxable years beginning after 12/31/05." (Profit Sharing/401(k) Council of America)

401(k) Participant's Timing Triggers 'Wells Notice' for Bank of Hawaii
Excerpt: "Another financial services firm could be facing legal troubles due to the activities of a 401(k) retirement plan participant. [T]he Bank of Hawaii Corporation announced that it has received a so-called 'Wells notice' from the staff of the Pacific Regional Office of the Securities and Exchange Commission." (PLANSPONSOR.com: one-time registration required)

Conducting a Meaningful Company 401(k) Plan Due Diligence Study
Excerpt: "Scandals in the financial services industry over the past few years have increased 401(k) plan sponsors' interest in conducting a meaningful due diligence. However, most sponsors are overwhelmed by the complexity of the task and end up either putting it off or conducting a cursory review, which is meaningless and a waste of time." (Employee Benefit News)

Commentary: Can Employer-Sponsored Defined Benefit Plans Survive?
Excerpt: "As defined-benefits wells run dry and cash-balance uncertainties abound, opinions are mixed about what might salvage employer-sponsored retirement plans." (Human Resource Executive)

Committee Report to Accompany H.R. 2830 -- The Pension Protection Act of 2005 (PDF)
282 pages. Excerpt: "The Committee on Education and the Workforce, to whom was referred the bill (H.R. 2830) to amend the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to reform the pension funding rules, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended do pass." (U.S. House of Representatives via American Benefits Council)

Commercial Aviation: Bankrup.tcy and Pension Problems Are Symptoms of Underlying Structural Issues
91 pages. Excerpt: "This report details: (1) the role of bankrup.tcy in the airline industry, (2) whether bankruptcies are harming the industry, and (3) the effect of airline pension underfunding on employees, airlines, and the PBGC. [Highlights of the report are at http://www.gao.gov/highlights/d05945high.pdf.]" (U.S. Government Accountability Office)

Small Correction to Final Regs on Value of Life Insurance Distributed from a Qualified Plan (PDF)
1 page. Excerpt: "Accordingly, the publication of the final regulations (TD 9223) which was the subject of FR Doc. 05-17046, is corrected as follows: On page 50969, column 2, in the preamble, under the paragraph heading 'B. The 2004 Proposed Regulations', line 2 from the top of the column, the language '§ 1.79-(d) to replace the term 'cash'' is corrected read '§ 1.79-1(d) to replace the term 'cash''." (Internal Revenue Service)

Inventing the Stretchable Retirement Dollar with Annuities
Excerpt: "Faced with the increased longevity of employees, plan sponsors start to toy with annuities as a way to ensure that savings last through retirement" (Treasury & Risk Management)

A New IRA Beneficiary Trust Maximizes the Income Tax Stretch-Out While Protecting Beneficiaries
Excerpt: "[A] trust may provide the individual beneficiary with greatly enhanced protection against loss of the inherited IRA to a spouse after a divorce; protect against the beneficiary's own poor spending habits or money management skills; and may preserve a beneficiary's needs-based government benefits, such as supplemental or disability income and Medicaid. A trust may also reassure the original account owner that the right people will eventually inherit his IRA assets, ...." (Wicks Business Information, LLC via InvestmentAdvisor.com)

How Are Fund Options Asset-Allocated on a Participant by Participant Basis?
Excerpt: "[P]lan sponsors must spend time in making sure their plan is appropriately structured so that participants in the main ... will, in fact, build and maintain portfolios that give them a fair chance at investment success. This transcends the simple fact of having good fund choices. And whether that's through targeted education, an in-person advisor relationship, or a 'check the box' managed portfolio option, this is every bit as important (if not more so) as fund menu selection." (Michael Malone via MJM Financial)

Commentary and Excerpts -- The DeFelice v. US Airways Opinion
Excerpt: "For those of you interested in the developing law pertaining to ERISA fiduciary responsibility of directed trustees, please note this recent federal district court opinion from the Eastern District of Virginia--DeFelice v. US Airways. [Plaintiffs] in the case had brought a class action lawsuit against US Airways and Fidelity, the directed trustee, seeking to recover losses to the Plan resulting from the diminution in value of US Air Group stock between ...." (Attorney B. Janell Grenier via BenefitsBlog.com)

Public Sector Plan Sponsors Confront Participation Challenges
Excerpt: "[D]ifficulties abound in government employers' attempts to reach the 75% participation rates common at private employers. Having said for years that the defined benefit plan would cover retirees' financial needs, 'it's a struggle for employers to be able to make the case' that another employer-sponsored savings vehicle is needed, .... 'Unions would say: 'Then, increase the defined benefit plan.'" (PLANSPONSOR.com: one-time registration required)

Overview: Staggered Remedial Amendment Periods for Individually-Designed and Pre-Approved Plans (PDF)
5 pages. Excerpt: "Beginning February 1, 2006, the [IRS] will implement a system of staggered, cyclical remedial amendment periods for individually designed plans and pre-approved plans. Sponsors of individually designed plans will generally only have to apply for new determination letters once every five years, and sponsors of pre-approved ... plans will generally only have to apply for new opinion, advisory and determination letters once every six years." (Pillsbury Winthrop Shaw Pittman LLP)

Notes on the Progress in the Senate on Pension Legislation (PDF)
3 pages. (National Council on Teacher Retirement)

Unhappy Moment Looms When Boomers Look for Retirement Income
Excerpt: "'One story that has gone underreported in the popular press is just how challenging the past several years have been for those investing during their retirement,' said analyst Christine Benz in a recent Web site commentary for mutual-fund researchers Morningstar Inc. 'Even those seniors who didn't make big portfolio mistakes have been quietly fighting an uphill battle.'" (Bloomberg News)

Pension Plans Increasingly Consider Operational and Political Risk, According to a New Study
Excerpt: "The study, New Frontiers of Risk: The 360-Degree Risk Manager for Pensions and Nonprofits, found that while market risk remains the foremost concern for plan sponsors, managers are now spending close to 40% of their risk-related time on operational and political considerations. That represented an increase of nearly 20% from five years ago. About 80% of plan sponsors indicate they will increase the time spent on operational risk over the next five years." (PLANSPONSOR.com: one-time registration required)


Links to Items on Executive Comp, Benefits in General

Overview: Proposed Regs for Nonqualified Deferred Comp Plans under Code Section 409A - Part II (PDF)
8 pages. Excerpt: "This Bulletin addresses the treatment of stock options, stock appreciation rights (SARs) and other forms of equity based compensation under the proposed regulations issued by the Internal Revenue Service (IRS) on September 29, 2005, under Section 409A of the Internal Revenue Code of 1986." (Sherman & Howard L.L.C.)

Overview: Proposed Regs for Nonqualified Deferred Compensation Plans under Code Section 409A (PDF)
8 pages. Excerpt: "This benefits bulletin highlights the major aspects of the proposed regulations and how [they] will impact nonqualified deferred compensation plans this year. Specifically, [the following topics are covered]: 1) transition relief and revised deadlines ...; 2) guidance on elections to defer 2006 compensation; and 3) an overview of the insight these proposed regulations provide into good faith compliance with Code Section 409A." (Sherman & Howard L.L.C.)

FEI Letter to FASB on Proposed FSP FAS 123(R)-b (PDF)
2 pages. Excerpt: "The Committee on Corporate Reporting ... of Financial Executives International ... appreciates the opportunity to comment on the Financial Accounting Standards Board's ... Proposed FSP FAS 123(R)-b, Practical Exception to the Application of Grant Date as Defined in FASB Statement No. 123(R) ...." (Financial Executives International)

Simplifying the Delivery of Employee Benefits: OnlineBenefits Provides Communication Tools
Excerpt: "The module takes the labor away from the employer staff and guides employees through the enrollment process and helps eliminate the errors usually associated with paper enrollment, .... The program also gives employees access to decision tools to help them make appropriate choices. The employer can use the module to maintain a current database of employees and their choices, use the information from employee choices to analyze enrollments and create reports ...." (The Rough Notes Company)

Overview: Hurricane Disaster Aid Includes Urgent Compliance Relief
Excerpt: "As floodwaters recede in the areas devastated by Hurricane Katrina, it's becoming clear that payroll and human resource departments have also been hard hit. In the first weeks of September the U.S. Departments of the Treasury, Homeland Security and Labor announced significant regulatory relief for employers and workers in the affected counties. Since then, Congress has been working with great speed to approve broad-ranging tax relief and emergency healthcare aid." (Ceridian Corporation)

Overview: Legal Implications for Employers in the Wake of Hurricane Katrina (PDF)
3 pages. Excerpt: "In response to [Hurricane Katrina], the federal government has taken certain actions having legal implications for employers. There are both legislative and regulatory responses to this disaster. A summary of these actions as well as proposed actions [is outlined on the target page]: ...." (Winston & Strawn LLP)

Overview: Retirement & Welfare Plan Rules Relaxed for Hurricane-Affected Plans & Individuals (PDF)
4 pages. Excerpt: "As it relates to employee benefit plans, KETRA gives individuals affected by Hurricane Katrina easier access to retirement plan funds and provides relief with respect to certain healthcare-related coverage period issues. This LawFlash summarizes the provisions of KETRA, as well as relevant, ongoing administrative relief provided by the [IRS], the [DOL], and the [PBGC] for plans and participants affected by Hurricane Katrina and, most recently, Hurricane Rita." (Morgan, Lewis & Bockius LLP)

The Trucker Huss Benefits Report -- September 2005 (PDF)
7 pages. The newsletter includes articles titled: Benefits Relief Following Hurricane Disasters; Relative Value Information Required To Be Included In Certain QJSA Explanations As Early As November 3, 2005; and, Update: Discretionary Clauses In Disability Insurance Policies. (Trucker Huss)


Newly Posted Events

401(k) Plans
in Texas on November 29, 2005
presented by Employee Benefits Institute of America Inc. (EBIA)

AJCA: The Latest Guidance on Non-Qualified Deferred Compensation Plans
in Ohio on October 14, 2005
presented by WEB (Worldwide Employee Benefits Network) Cleveland Chapter

Cafeteria Plans
in Texas on November 30, 2005
presented by Employee Benefits Institute of America Inc. (EBIA)

COBRA Compliance for Group Health Plans
in Texas on December 2, 2005
presented by Employee Benefits Institute of America Inc. (EBIA)

Creative Safe Harbor 401(k) Plan Design
Nationwide on October 18, 2005
presented by SunGard Corbel

ERISA Compliance for Health & Welfare Plans
in Texas on December 1, 2005
presented by Employee Benefits Institute of America Inc. (EBIA)

HIPAA Portability, Privacy & Security
in Texas on December 2, 2005
presented by Employee Benefits Institute of America Inc. (EBIA)

HSAs, HRAs, and Consumer-Driven Health Care
in Texas on December 1, 2005
presented by Employee Benefits Institute of America Inc. (EBIA)

Open Enrollment 2006: Compliance Challenges and What to Do About Them
Nationwide on September 21, 2005
presented by Employee Benefits Institute of America Inc. (EBIA)


Newly Posted Press Releases

401(k) Account Balances, Asset Allocation by the Numbers
(Employee Benefit Research Institute (EBRI))

Invesmart's RightPath Program Tops A Half Billion Dollars In Assets
(Invesmart, Inc.)

New IRS Posture On Executory SEPP Plan Errors
(William J. Stecker, CPA)

Get Ready for the Empowered Healthcare Consumer: Large US Employers Are Changing Benefit Plans to Control Costs and Improve Quality
(PricewaterhouseCoopers LLP)

UPS Opens New Logistics Facility to Serve Healthcare Industry
(UPS)

John Hancock Launches Fiduciary Standards Warranty for 401(K) Plans
(John Hancock Retirement Plan Services)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Retirement Plan Sales Executive
for Ceridian
in CA, IL, OR, TX, WA, WI

Vice President of Operations
for Associated Pension Consultants
in CA

Director, Pension Administrator
for CKS
in CA

Staff Benefits Analyst
for Altera Corporation
in CA

Attorney-Counsel; Retirement Plans Division
for Transamerica-The Winning Organization
in CA

Compliance Analyst
for Transamerica-The Winning Organization
in CA

HRO Legal Consultant
for Hewitt Associates
in FL, IL, TX




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