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October 17, 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)

IRS Table of COLA Increases for Dollar Limitations on Benefits and Contributions
Excerpt: "The Internal Revenue Service announced cost-of-living adjustments applicable to dollar limitations for pension plans and other items for tax year 2006." (U.S. Internal Revenue Service)

Senate Pension Reform Bill Slated for Vote in Committee on Tuesday
Excerpt: "Unnamed US Senate aides said Friday that a pension reform bill that would sharply increase pension insurance premiums and collect larger sums from companies who shed pensions in bankrup.tcy is scheduled for a vote next week. Reuters reported that the proposal to raise premiums is due to come to a vote on Tuesday in the US Senate Health, Education, Labor and Pensions (HELP) Committee." (PLANSPONSOR.com: one-time registration required)

Editorial: Government's Disgrace -- A Bad Showing in Dealing with Pension Reform
Excerpt: "The story begins with the hole in the nation's defined-benefit pension plans, the type that -- unlike 401(k) plans -- promise a fixed proportion of salary upon retirement. The rules governing these plans are dysfunctional: They allow companies to promise workers lavish benefits while setting aside too little money to pay those benefits when the time comes. Rather than keep workers happy with wage increases, which would have to be paid for with real money, ...." (The Washington Post; one-time registration required)

Waiting on Reforms for Private Pensions May Be Beneficial
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. That's because some of the provisions being considered would do little to prevent companies from defaulting on their retirement promises, and could even prompt some pension program terminations. Should that happen, the public could get stuck with much of the bill." (AP via The Salt Lake Tribune)

Revenue Sharing Aspects of Qualified Retirement Plan Fund Management (PDF)
15 pages. Excerpt: "Today, it's imperative that executives charged with fiduciary oversight of an organization's retirement or savings plan understand the distribution systems that investment management organizations use." (Unified Trust Company, NA)

Sizing Up the Traditional 401(k) with the New Roth 401(k) Plan
Excerpt: "Contributions to a traditional 401(k) come out of employee paychecks before tax and thus reduce a worker's taxable income in the year the contributions are made. That makes it relatively cheap to contribute because each $100 contributed to the plan reduces the participant's taxable income by only $70, assuming that 30% of the participant's income goes to pay federal and state taxes. .... Roth contributions are made with after-tax dollars." (Los Angeles Times; one-time registration required)

Katrina Regs Prompt Debate Over Instant Access to 401(k) Assets
Excerpt: "Defined contribution industry experts are divided in a debate over providing instantaneous access to 401(k) loans through checks and debit cards in the aftermath of Hurricane Katrina.' (Defined Contribution & Savings Plan Alert)

Overview: 403(b) and 457(b) Plan Issues under the New Proposed 415 Regulations (PDF)
4 pages. (Benefits & Compensation Law for Nonprofits via Groom Law Group)

Promised Employee Retirement Benefits Becoming Crippling Burden for Growing Number of Firms
Excerpt: "You didn't need an oracle to know that Delphi would end up in America's bankrup.tcy courts, which is where it sought protection from its creditors on October 8. The world's biggest maker of car parts has been crushed not least by the legacy of generous pension and health-care promises made in the past to its American employees." (The Economist via CFO.com)

UK Pension Insurer to Consider Special Pension Contributions
Excerpt: "Officials at the UK Pension Protection Fund (PPF) take into account special cash contributions made by employers to make up funding deficits in their pension plans while calculating employer insurance levies." (PLANSPONSOR.com: one-time registration required)

Delta and Retired Pilots to Face Off in Bankrup.tcy Court on Pension
Excerpt: "Delta Air Lines Inc. and its pilots are about to battle in court over a key issue in the carrier's bankrup.tcy case - pensions. The pilots want the nation's third-largest carrier to continue making minimum contributions to their pension plan and certain payments to higher-paid retirees, while the Atlanta-based company vows it won't do either unless a judge forces its hand." (AP via The Kansas City Star; one-time registration required)

Letter to the Editor of the NYT from a Northwest Airlines' Executive on Wise Pension Reform
Excerpt: "Re 'Slouching Toward Pension Reform' (editorial, Oct. 9): .... Congress proposed a reasonable fix: Freeze your pension plan so that no new liabilities accrue and P.B.G.C. exposure doesn't increase. In return, airlines get an extended period of time to pay off frozen plan liabilities using the same calculations that funded plans use today." (The New York Times; one-time registration required)

Pension Agency Leads Objections to United Airlines' Bankrup.tcy Plan
Excerpt: "The government's pension agency is among dozens of creditors and others objecting to a key part of United Airlines' bankrup.tcy exit plan ahead of a court hearing on the carrier's disclosure statement. .... [T]he Pension Benefit Guaranty Corp., the government's pension insurer, also contends United's plan violates the settlement that cleared the way for United to terminate its defined-benefit pensions this year." (9News.com)

How to Protect Your Pension in the Event Your Employer Goes Bankrupt
Excerpt: "This age of corporate bankrup.tcy is enough to send shivers down the spine of anyone hoping to depend on a traditional company pension in retirement. The recent bankrup.tcy filing of Delphi Corp. serves as an unwelcome reminder of just how quickly a pension plan can be thrown into uncertainty. Here are some tips from members of the Financial Planning Association of Greater Indiana on how to protect your pension." (IndyStar.com)

Further Comments on Proposed Regs for Limitations on Benefits & Contributions under Qualified Plans
Excerpt: "The American Society of Pension Professionals & Actuaries (ASPPA) appreciates this opportunity to further comment on the proposed amendments to the regulations under Internal Revenue Code (IRC) §415 that provide guidance regarding limitations on benefits and contributions under qualified plans (Proposed Regulations)." (American Society of Pension Professionals & Actuaries)

Federal Retirees' Super-Sized COLA Is Largest in 15 Years
Excerpt: "Federal retirees covered by the Civil Service Retirement System and people who receive military and Foreign Service annuities will receive a 4.1 percent cost-of-living adjustment in their January checks.People who retired under the newer Federal Employees Retirement System and who are 62 or older will receive a 3.1 percent increase, under the rules for that program." (The Washington Post; one-time registration required)

Self-Auditing Crucial as IRS Raises Scrutiny
Excerpt: "For example, one common audit issue mentioned on the [IRS] Web site is when companies are acquired and do not credit employees from the acquired company with the proper years of service. Another example is making sure that when employees retire, they receive the proper notifications about their options. 'In the pension world, nine out of 10 audits find this mistake,' says Joe Hessenthaler, a principal at Towers Perrin." (Workforce Management; one-time registration required)

Overview: Enrolled Retirement Plan Agent Proposal by the IRS
Excerpt: "The IRS Advisory Committee on Tax Exempt and Government Entities (ACT) has proposed the creation of a new category of professionals that would be permitted to practice before the IRS. The 'enrolled retirement plan agent' category would be in addition to the existing four categories of practitioners: attorneys, accountants, enrolled actuaries, and enrolled agents." (McKay Hochman Co., Inc.)

Managing Retirement, After You Really Retire
Excerpt: "Retirees confront any number of rule changes, tax angles, longevity predictions and inheritance questions as they try to unscramble the best way to make retirement savings last. With an estimated $3.5 trillion in individual retirement accounts, according to the Investment Company Institute, a mutual fund industry group, and with baby boomers soon to retire in droves, such issues come up with increasing frequency." (The New York Times; one-time registration required)

Social Security Benefit Rising by 4 Percent, but Medicare Takes a Share
Excerpt: "The 48 million Americans who receive Social Security will get a 4.1 percent increase in their monthly checks next year, the largest increase in 15 years, the Bush administration said Friday." (The New York Times; one-time registration required)


Links to Items on Executive Comp, Benefits in General

General Motors Bets the Ailing Parts Maker Will Win Big Labor Savings -- and It Can Follow Suit
Excerpt: "Delphi Corp. had barely filed for bankrup.tcy on Oct. 8 when all eyes turned to General Motors Corp. ... It's not hard to see why. In the weeks leading up to Delphi's announcement, many analysts had figured GM would never allow its former parts unit to file for Chapter 11. Doing so meant the already troubled auto maker could inherit up to $11 billion of Delphi's pension and health-care obligations." (BusinessWeek)

Overview: IRS Announcement and New Legislation Provide Guidance for Katrina-Affected Employees (PDF)
3 pages. Excerpt: "Effective September 15, 2005, certain qualified plans may make loans and hardship distributions to employees or former employees affected by Hurricane Katrina which otherwise would not be permitted under existing plan terms. This new IRS guidance applies to 401(k) plans, profit sharing plans, 403(b) plans (for employees of tax exempt employers and public schools), 457(b) plans (for state and local government employees) and financial institutions holding IRAs ...." (Powell Goldstein LLP)

Overview: Employee Benefits Relief for Hurricane Katrina Victims
Excerpt: "In the aftermath of Hurricane Katrina, the Federal government has extended numerous deadlines relating to employee benefit plans and has provided other forms of employee benefits-related relief for affected employers, plan participants and beneficiaries. The centerpiece of the Federal government's efforts is the Katrina Emergency Tax Relief Act of 2005 (KETRA), which was signed into law by President Bush on September 23, 2005." (Ballard Spahr Andrews & Ingersoll, LLP)

Additional Extension of Time Frames for COBRA, HIPAA & ERISA Claims Procedures for Katrina Victims
The additional extension of time frames was published in the Federal Register on October 12, 2005. (Employee Benefits Institute of America Inc.)

Overview: Long-Awaited Guidance on Section 409A Has Arrived (PDF)
8 pages. Excerpt: "This Special Alert provides a summary of certain provisions of Section 409A as reflected in the newly proposed regulations." (Trucker Huss)

Overview: Employers Get IRS Guidance on Deferred Compensation Rules (PDF)
2 pages. Excerpt: "The [guidance] elaborates upon the types of deferred pay arrangements that are subject to the new restrictions, explains the operational requirements for deferral elections and sets the permissible timing of payments to plan participants. For employers and plan participants who are not based in the U.S., there are clarifications on how the rules apply to global arrangements in a number of important technical areas, such as the treatment of American depository receipts." (Towers Perrin)

Overview: Proposed Regulations on Deferred Compensation under Section 409A
Excerpt: "This is a summary of some of the more important provisions in the proposed regulations, with particular emphasis on those areas that depart from, or were not addressed by, prior guidance. While not scheduled to be effective until January 1, 2007, taxpayers may rely upon the proposed regulations until the effective date of any final regulations." (LeBoeuf, Lamb, Greene & MacRae LLP)

Bill to Revamp Law Enforcement Benefits Expected
Excerpt: "'Something needs to be done to correct the inconsistencies and inadequacies that currently exist for the men and women risking their lives to ensure our safety in today's post-9/11 environment,' Porter said in a statement. 'We simply cannot afford to lose talented, highly motivated employees because the current system governing pay and retirement benefits for federal law enforcement officers is built on an inflexible patchwork of outdated concepts.'" (GovExec.com)


Newly Posted Events

Employee Benefits Litigation Update
in New Jersey on October 18, 2005
presented by Worldwide Employee Benefits Network (WEB) - NJ

San Diego County Chapter of NIPA Is Pleased to Announce S. Derrin Watson, J.D.
in California on November 10, 2005
presented by San Diego County Chapter of NIPA


Newly Posted Press Releases

IRS Announces Pension Plan Limitations for 2006
(Internal Revenue Service (IRS))

ShareBuilder(R) Launches 401(k) Plan; Designed Exclusively For Small Business, ShareBuilder 401(k) Invests Only In ETFs And Is 100 Percent Online
(ShareBuilder)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Defined Contribution Client Account Manager
for New York Life Investment Management LLC
in NJ

Defined Benefit Client Account Manager
for New York Life Investment Management LLC
in MA

Senior Retirement Plan Specialist
for New York Life Investment Management LLC
in MA

Flex Plan Administrator
for Cornerstone Group
in RI

Account Executive- Executive Benefits
for Lockton Companies, Inc.
in MO

Enrolled Actuary
for National Retirement Services, Inc.
in CA

Conversion Specialist
for Great-West Financial Services
in CO




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