| BenefitsLink Retirement Plans Newsletter |   |
October 12, 2005
Today's sponsor: DATAIR Employee Benefit Systems, Inc.
(Click on company name or banner to learn more.)
| 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.
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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) |
Pension Reform-- To Be or Not To Be? (PDF)
2 pages. Excerpt: "[T]he Senate pension committees were unable to bring their combined bill to the floor for consideration before the Senate recessed for the Columbus Day holiday. Now, the earliest that this bill could be considered is October 17, 2005." (Buck Consultants)
Pitfalls of Pension Reform
Excerpt: "It is looking more unlikely that Congress will pass any corporate pension reform legislation this year, but maybe that isn't a bad thing _ especially for the nation's taxpayers and many retirees, too." (AP via The Washington Post; one-time registration required)
CBO Letter Regarding S. 1783, The Pension Security and Transparency Act of 2005 (PDF)
2 pages. Excerpt: "As you requested, the Congressional Budget Office (CBO) has estimated the effect on the 10-year net costs to the Pension Benefit Guaranty Corporation (PBGC) of enacting S. 1783, the Pension Security and Transparency Act of 2005. That estimate differs significantly from our estimate of the cash-basis budgetary effect of the bill, which was provided in a letter to the Majority Leader dated October 5, 2005." (U.S. Congressional Budget Office)
Pensions Agency Says Deficit Will Grow
Excerpt: "The federal agency that insures private pension plans has concluded that its financial problems could get worse under House and Senate bills intended to strengthen the nation's traditional pension system." (The Washington Post; one-time registration required)
401(k) or Roth 401(k): Which Is Better for Your Needs?
Excerpt: "Now that the Roth 401(k) will soon be available, pension consultants, financial advisers and employers are debating its benefits: Many assume tax rates will be lower after people retire, thus lowering the negative impact of taxes on taxable withdrawals from the traditional pre-tax 401(k)." (Southern Connecticut Newspapers, Inc. via Greenwich Time)
Text: 401(k) Enhancement Act: Encouraging Retirement Savings, S. 1819 (PDF)
19 pages. Excerpt: "To amend the Internal Revenue Code of 1986 to increase participation and savings in cash or deferred plans through automatic contribution and default investment arrangements, and for other purposes." (U.S. Senate via American Benefits Council)
Employees Get New Choices in 401(k) Plans
Excerpt: "Despite a broad trend to simplify offerings in 401(k) plans, a number of large companies are giving their employees more complex options through so-called brokerage and mutual-fund windows." (The Wall Street Journal via Pittsburgh Post-Gazette)
Summary: PSCA's 48th Annual Survey of Profit Sharing and 401(k) Plans
Excerpt: "PSCA's 48th Annual Survey of Profit Sharing and 401(k) Plans reports on the 2004 plan year experience of 1,052 profit sharing and 401(k) plans. Together, these plans hold over $500 billion in plan assets and include more than 9 million participants. Of the 1,052 respondent plans, 72 are profit sharing plans, 520 are 401(k) plans, and 460 are combination profit sharing/401(k) plans." (The Profit Sharing/401(k) Council of America)
Profit Sharing/401(k) Council of America Releases Annual Survey on Profit Sharing and 401(k) Plans
Excerpt: "A PSCA news release said the survey found that auto enrollment was a feature in 10.5% of plans in 2004, up from 8.4% in 2003. The feature was more common in large plans, with 30.6% of plans with 5,000 or more participants having auto enrollment, while .9% of plans with fewer than 50 participants have it." (PLANSPONSOR.com: one-time registration required)
Overview: Hurricane Katrina Tax Relief -- Retirement Plan Distributions and Loans (PDF)
4 pages. Excerpt: "On September 23, 2005, the President signed the Hurricane Katrina Emergency Tax Relief Act of 2005 (KETRA), which provides relief to individuals affected by Hurricane Katrina. As described below, a portion of this relief package focuses on retirement savings and creates special exceptions to the existing rules governing withdrawals and loans from retirement plans in order to free up additional funds for Hurricane Katrina victims." (Hewitt Associates)
Overview: IRS Issues Katrina Relief for Hardship Distributions and Loans (PDF)
3 pages. Excerpt: "On September 15, 2005, the IRS issued Hurricane Katrina relief for hardship withdrawals and plan loans from retirement plans. Announcement 2005-70 applies to plans that meet the requirements of Code section 401(a), 403(a), or 403(b) and that could make hardship distributions and loans if enabling language were (or already is) included (such as 401(k) plans and 403(b) annuity plans). It also applies to distributions involving unforeseen emergencies from 457 governmental plans." (Hewitt Associates)
KETRA 2005: Overview of Provisions of Interest to Retirement Plan Owners (PDF)
6 pages. Excerpt: "The 'Katrina Emergency Tax Relief Act' (KETRA) allows increased charitable deductions through the end of 2005, and gives several tax breaks for 'qualified Hurricane Katrina Distributions' from retirement plans. The charitable breaks are for anybody, the retirement plan provisions only for those affected by Hurricane Katrina." (Natalie B. Choate, Esq. via Ataxplan Publications)
Most Participants in Large State & Local Government Plans Face Immediate New Tax if Pick Up Repealed (PDF)
2 pages. Excerpt: "According to a recent survey, over 80% of participants in large state and local government plans would be subjected to an immediate new tax if the pick up of employee contributions is repealed. The repeal appears as a proposal in a Joint Committee on Taxation (JCT) staff report, Options to Improve Tax Compliance and Reform Tax Expenditures (JCS-0205 (2005))." (National Council on Teacher Retirement)
Mandatory Pensions May Be Unworkable in Ireland, According to Report
Excerpt: "A new report on pensions says that the introduction of additional pensions compulsion on top of the mandatory PRSI based state pension scheme may be politically unworkable. The report - commissioned by the Irish Association of Pensions Funds ... - states that the Government's pensions policy must change from a narrow focus on increasing coverage to protecting the adequacy and coverage of existing pension scheme." (RTE Business)
Draft Dutch Pension Code Plans Revealed
Excerpt: "Details have emerged over the forthcoming pensions code to be implemented in the Netherlands. According to a report in the Dutch press, the proposed pension reforms are not as far-reaching as many observers had expected." (Insurance Business Review Online)
Pension Consultants under the Microscope in Wake of Conflict-of-Interest Findings
Excerpt: "After a string of corporate scandals, working with a pension consultant has presented employers with a minefield of potential liability issues." (Workforce Management; one-time registration required)
Evaluating Analytic Software: Tools for Retirement Specia.lists (PDF)
62 pages. (The McHenry Group)
Overview: New Determination Letter Program Raises the Stakes for Plan Sponsors
Excerpt: "Under the IRS's new determination letter program, individually designed plans have a regular, five-year remedial amendment cycle. Cycles are staggered and spread over five-year periods based on the last digit of the plan sponsor's employer identification number (EIN) (although the first cycle ends on January 31, 2007)." (Watson Wyatt Worldwide)
Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2004 (PDF)
36 pages. Excerpt: "This Issue Brief examines the level of participation by workers in public- and private-sector employment-based pension and retirement plans, based on the U.S. Census Bureau's March 2005 Current Population Survey (CPS), the most recent data currently available." (Employee Benefit Research Institute)
Links to Items on Executive Comp, Benefits in General
Q&A on GASB (PDF)
2 pages. Excerpt: "The Governmental Accounting Standards Board or GASB is an independent, private-sector, not-for-profit organization that -- through an open and thorough due process -- establishes and improves standards of financial accounting and reporting for U.S. state and local governments. Governments and the accounting industry recognize the GASB as the official source of generally accepted accounting principles (GAAP) for state and local governments." (Governmental Accounting Standards Board)
Delphi CEO Offers Warning for General Motors, Urges Remedy of Slashing Workers' Pay by 2/3s
Excerpt: "Delphi Corp.'s chief executive said a collapse of the auto supplier, which has filed for bankrup.tcy protection, would damage most of the world's automakers, and that the company can save its pension plan for U.S. hourly workers only if unions agree to work for a third of their old pay and benefits, according to two separate news reports published Tuesday." (CNN Money)
Benefits Council Comment Letter in Regard to IRS Electronic Communications Proposed Regulations (PDF)
3 pages. Excerpt: "The proposed regulations appear to indicate that if a plan relies on consumer consent (instead of the alternative method) to provide electronic notices, electronic records cannot include oral communications or recordings of oral communications (see Prop. Reg. Section 1.401(a)-21(b)(5))." (American Benefits Council)
Summary: Federal Legislative & Executive Branch Actions in Response to Hurricanes
The table covers: Charitable Contributions; Courts; Education; Employment/Labor; Energy; Food Stamps; Funding; Health; Housing; Insurance; Interoperable Communications; TANF; and, Taxes. (National Conference of State Legislatures)
Overview: Massive Changes in Deferred Compensation Rules Require Immediate Action
Excerpt: "Because of some guidance that has already come out prior to the expected regulations, we know enough about what the 200 pages of regulations will say to know that virtually every executive employment agreement in place today and any plan or program that even remotely looks like deferred compensation is going to flunk these new rules unless it is amended." (Warner Norcross & Judd LLP)
Overview: Sec. 409A Proposed Regulations-- Extension for Many Deferred Comp Compliance Requirements
Excerpt: "The IRS has issued proposed regulations that expand the guidance available for complying with the deferred compensation tax rules of Section 409A of the Internal Revenue Code. Section 409A generally provides that amounts deferred under a nonqualified deferred compensation plan are currently includible in income if not subject to a substantial risk of forfeiture, unless the plan meets specified design and operational requirements." (Perkins Coie LLP)
Deferred Compensation and Section 409A: What's Still on the 2005 To-Do List?
Excerpt: "The good news for employers is that, for most purposes, the December 31, 2005 compliance deadline that was previously in place has been pushed back a full year, to December 31, 2006. However, not all of the Section 409A deadlines were pushed back. This Client Alert focuses on the items that still must be completed in 2005 to comply with Section 409A." (O'Melveny & Myers LLP)
The Employee Benefit Plan 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." (Benefits & Compensation Digest)
Lockheed Sweetens Pension Switch with Vacation Boost
Excerpt: "Lockheed Martin Corp. is making its recent decision to switch from a traditional pension plan to a defined contribution plan more palatable to new hires by offering more vacation time. The defense contractor announced last week that it was joining the ranks of employers relinquishing defined benefit plans for salaried workers in favor of employee contributions plan, effective for new employees Jan.1, 2006." (BenefitNews Connect)
Fact Sheet: Extension of Time Frames to Help Plans and Individuals Affected by Hurricane Katrina
Excerpt: "For participants, beneficiaries, and plans in the disaster areas ..., the time frames for the [provisions noted on the target page] are tolled for the period between August 29, 2005 and February 28, 2006. The effect is to freeze the application of the time periods through February 28, 2006." (U.S. Employee Benefits Security Administration)
IRS, DOL Extend HIPAA, COBRA Deadlines to Feb. 28, 2006 to Comply with KETRA Law (PDF)
2 pages. Excerpt: "The period group health plans, disability and other welfare plans, pension plans, and health insurance issuers subject to Part 7 of ERISA must disregard is from August 29, 2005 through February 28, 2006." (Internal Revenue Service; Employee Benefits Security Administration)
Washington Legislative Wrap Up, 109th Congress, 2005-2006, As of October 4, 2005 (PDF)
6 pages. The chart of federal legislative and regulatory proposals concerning employee benefits of interest to NCTR members has been updated to be current as of October 4, 2005. (National Council on Teacher Retirement)
IRS Employee Plans FY 2006 Work Plan: Operating Priorities and Program Guidance (PDF)
38 pages. Excerpt: "EP will continue to take an aggressive stance towards all identified abusive tax avoidance transactions. Examinations are continuing and resolution strategies are being developed for S Corporation ESOPs that violate IRC 409(p), and IRC 412(i) plans that take deductions for excessive insurance. In addition, CE&O will be refining and updating the abusive transaction information on the Retirement Plans web page (www.irs.gov/ep) and the EP Intranet site." (U.S. Internal Revenue Service)
Lattice Models: Understanding the Modeling Exercise Behaviors in a Binomial Model
Excerpt: "In this article, we continue our discussion of lattice models to show how employee exercise behaviors can be modeled directly within a lattice model and incorporated into stock option valuations." (Chicago Consulting Actuaries, LLC)
Value of Stock Option Grants at the Nation's Largest Corporations Declined, According to Survey
Excerpt: "The survey also found that, using the Black-Scholes formula, the economic value of stock options granted at the typical company declined 64% from $103 million in 2001 to $37 million in 2004, according to a Watson Wyatt press release. The decline occurred in all industry sectors in spite of stock market increases." (PLANSPONSOR.com: one-time registration required)
Newly Posted Events
Compensation for Executives and Directors - 20th Annual National Institute
in New York on November 3, 2005
presented by ABA Joint Committee on Employee Benefits
DEFERRED COMPENSATION - THE LATEST GUIDANCE FROM THE IRS
in New York on October 18, 2005
presented by Ford & Harrison LLP
ERISA Litigation - 15th Annual National Institute
in Illinois on November 10, 2005
presented by ABA Joint Committee on Employee Benefits
Newly Posted Press Releases
Gilsbar, Inc. Expands New Business Development In Louisiana and Mississippi.
(Gilsbar, Inc.)
DAILYVEST PERSONAL RATE OF RETURN TECHNOLOGY SUPPORTS 401K STATEMENT DOWNLOAD USING OFX
(Metrics Partners)
EPIC Advisors, Inc. Announces New Web 401k Offering - Envisage Provides the Advantage with Enveritus
(Metrics Partners)
NBCH Supports use of Minimally Invasive Procedures for Early Diagnosis and Treatment of Breast Cancer
()
Movers and Shakers: Newly Posted Announcements of Promotions and New Personnel
(Post Yours!)
Creasia Gale, APA
(Bidwell Consulting Services, Inc.)
Newly Posted or Renewed Job Openings
ERISA Associate
for Kraw & Kraw
in CA
Employee Benefits Paralegal
for Cozen O'Connor
in PA
Plan Administration Team Manager
for Boston Financial Data Services
in MA
Sr Pension Analyst
for T Rowe Price
in MD
Senior Pension Administrator
for American Fiduciary Corporation
in MA
401(k) Enroller/Contractor-- Part-time
for Diversified Investment Advisors
in ANY STATE
Director of Account Management for Health Insurance Carrier
for Great-West Healthcare
in OH, TX
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