BenefitsLink Retirement Plans Newsletter October 31, 2005 Today's sponsor: www.ftwilliam.com (Click on company name or banner to learn more.) Register for our free on-line demo! www.ftwilliam.com offers the employee benefits professional the highest quality plan documents and forms at highly competitive prices. Plan documents on a per document basis are only $50/adoption agreement, or $100/volume submitter document (including cross testing). An annual subscription to all documents is only $1,500. The Form 5500 package and the IRS/PBGC form package are only $250 each. Prices include access for five concurrent users. (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) Chart: Side-by-Side Comparison of Funding & Hybrid Pension Plan Reform Proposals (PDF) 3 pages. Excerpt: "[The target page is] a brief ... side-by-side comparing the funding and hybrid plan reform proposals by (1) the Administration, (2) the House Education and Workforce Committee (H.R.2830), (3) the Senate Finance Committee, (4) the Senate Health, Education, Labor and Pensions Committee, and (5) the 'combined' bill put together by the Finance and HELP committees for Senate consideration (S.1783)." (The ERISA Industry Committee) Practitioner's Forum Discussion on Proposed Cash Balance Plan Legislation Excerpt: "The following is a transcript of an informal discussion of employee benefit practitioners held in Washington, D.C. on September 6, 2005. The topic involved the cash balance provisions included in the various pension reform proposals currently working their way through Congress." (BNA's Tax Management Inc.) Overview: Safe Harbor 401(k) Discretionary Match Excerpt: "The final regulations state that, to remain exempt from ACP testing, all matching contributions must be allocated on a nondiscriminatory basis. Placing an allocation restriction, such as a last-day rule or a 1,000 hours-of-service requirement, on any matching contribution provided by the plan is discriminatory unless all non-highly compensated participants satisfy the restrictions." (McKay Hochman Co., Inc.) Overview: New Exceptions to the Safe Harbor 401(k) Plan's 12-Month Plan Year Requirement Excerpt: "Safe-harbor 401(k) plans are generally required to be established for the entire plan year (before the plan year starts). Mid-year adoption of a safe harbor 401(k) plan is possible for a brand new 401(k) plan or for a profit-sharing plan that adds a 401(k) feature mid-year. However, there must be at least three months remaining in the plan year for a new plan or profit sharing plan to which the 401(k) feature has been added to make elective deferrals." (McKay Hochman Co., Inc.) Comment Letter to Actuarial Standards Board on the 2nd Exposure Draft of ASOP No. 4 (PDF) 3 pages. Excerpt: "On behalf of the American Academy of Actuaries' Pension Accounting Committee, I appreciate the opportunity to comment on the second Exposure Draft of ASOP No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions. Members of the committee have provided the following list (by section) of issues for the ASB to consider." (American Academy of Actuaries) With That Longer Life Expectancy Expect a Life of Working Longer Excerpt: "Make the old people work longer. That, in a nutshell, is the strategy increasingly being chosen by industrialized countries as they confront a future where people live longer - and thus collect more retirement checks - but where there are fewer young workers to help finance those checks." (The New York Times; one-time registration required) The End of Pensions Excerpt: "Unlike other contracts, which might be renegotiated as business conditions change, pension commitments are forever. And given the exigencies of the labor market, they tend to be steadily improved upon, at least when times are good." (The New York Times; one-time registration required) A Plan for Fiscal Responsibility: Higher Education and Retirement Security (PDF) 18 pages. Excerpt: "As part of the budget process, the Education & the Workforce Committee has been tasked with finding $18.1 billion in net savings ... from the direct spending programs within the Committee's jurisdiction. .... To meet its reconciliation target, the Committee has developed proposals on both higher education and pensions that will generate savings to the federal government and provide the Pension Benefit Guaranty Corporation (PBGC) with additional resources." (U.S. House Education & the Workforce Committee) IRS and PBGC Announce Time Extensions for Defined Benefit Plans in Katrina- Affected Areas Excerpt: "Federal officials on Friday announced that defined benefit plan sponsors in the areas affected by Hurricane Katrina can take more time to make minimum funding requirements and to pay pension insurance premiums. Making that announcement were the Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation (PBGC). Regulators also put off the deadlines for requesting a waiver of minimum funding requirements (due to temporary substantial business hardship), ...." (PLANSPONSOR.com: one-time registration required) Opinion: Which Would You Rather Have, Freedom or Security? Excerpt: "Social Security privatization, school vouchers, and deregulating healthcare would expand the menu of choices available to ordinary people. There is an alternative explanation of the relationship between choice and security: Rather than crowd out economic security, choice actually increases it, whether it's saving for retirement, educating one's children, or protecting one's health." (Cato Institute) United Kingdom's Conservative Party Presents Flexible Savings Plan to Boost Retirement Income Excerpt: "A plan to help restore the savings culture by establishing a new flexible and practical savings account, and boost incomes for retirement, has been unveiled by Sir Malcolm Rifkind. The Shadow Work and Pensions Secretary is promoting new legislation which is designed to encourage more people into saving for their old age through a Savings and Retirement Account and a Retirement Income Fund, ...." (Conservatives.com) IRS Settlement Offer Could Affect Small Defined Benefit Pension Plans Excerpt: "The Internal Revenue Service is trying to get some users of 412(i) defined benefit pension plans and 20 other tax-cutting vehicles to come to it before it goes after them. .... A copy of the tax settlement announcement is on the Web at http://www.irs.gov/pub/irs-drop/a-05-80.pdf." (National Underwriter Life & Health; free one-time registration or paid subscription required) Editorial: A Deal on Social Security Excerpt: "The Bush team should accept that ... it was a mistake to insist that personal accounts be part of reform. These accounts have advantages, especially for less well-off workers who do not already own stocks: They offer a good chance, though not a guarantee, of enhancing retirement by capturing healthy returns from the stock market. But Mr. Bush failed to convince Congress or the nation of this advantage, ...." (The Washington Post; one-time registration required) Nebraska State Income Tax W/H Required on Pension and Annuity Payments When Federal W/H Occurs (PDF) 2 pages. Excerpt: "Legislative Bill 216, enacted by the 2005 Legislature, changes the state income tax withholding provisions for pension and annuity payments made to Nebraska residents effective for payments made on and after January 1, 2006." (State of Nebraska Department of Revenue) Issue Brief: Social Security Reform -- Changes to the Benefit Formula and Taxation of Benefits (PDF) Excerpt: "To protect the system's solvency, Congress is considering various options for reform, .... This issue brief focuses on two other possible options for reform: changing the benefit formula while maintaining the defined benefit nature of the program; and changing the way Social Security benefits are treated for federal income tax purposes." (American Academy of Actuaries) Links to Items on Executive Comp, Benefits in General Revised Circular 230 Letter -- Requesting a Technical Advice Ruling on a Number of Issues (PDF) 5 pages. Excerpt: "Given the finalization of Circular 230 regulations on June 20, 2005, on behalf of the American Academy of Actuaries, which represents 3500 of the approximately 4000 enrolled actuaries, I would like to take this opportunity to request a technical advice ruling on a number of issues that have been raised regarding the application of Sections 10.33 and 10.35-10.37 to actuarial practice." (American Academy of Actuaries) Penalties Awarded, But Not for Failure to Provide Documents 'Relevant' to Benefit Claim This case addressed several important aspects of the rules under ERISA that allow participants to make written requests for certain plan information. (Employee Benefits Institute of America Inc.) Same-Sex Partner Benefits Ok'd in Alaska by State's Supreme Court Excerpt: "The Alaska Supreme Court yesterday ruled it is unconstitutional to bar benefits to the same-sex partners of public employees, a victory for homose.xual rights advocates in one of the first states to pass a constitutional ban on same-sex 'marriage.'" (The Washington Times) Summary: IRS Settlement Initiative for Transactions Considered Abusive Excerpt: "Internal Revenue Service officials ... announced a 'broad-based, limited-in-time' opportunity for taxpayers to come forward and settle certain transactions that the IRS considers abusive. .... Taxpayers who undertook one of the 'covered' deals will have until January 23, 2006 to submit their settlement papers to the IRS. The initiative, described in Announcement 2005-80, identifies 21 transactions eligible for the program. The ones which relate to benefits are ...." (Attorney B. Janell Grenier via BenefitsBlog.com) IRS Releases the 2006 Inflation Adjusted Indexed Numbers for Tax Benefits. Excerpt: "Included are the new Health Savings Account (HSA) limits for contributions, and deductibles and out-of-pocket numbers for H.S.A. High Deductible Health Plans (HDHP). The HSA maximum contribution for individuals increases to $2,700 from $2,650 in 2005, while the maximum contribution for families increases to $5,450 from $5,250. The catch up contribution for those aged 55 and over increases to $700 from $600 in 2005." (PLANSPONSOR.com: one-time registration required) Hewitt Federal Legislation Quick Guide Updated as of October 25, 2005 Excerpt: "Hewitt's Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding health and welfare benefit plans, retirement plans, and human resources and employment law." (Hewitt Associates) Employee Benefits Outpacing Other Compensation, According to Latest DOL Report Excerpt: "A rise in employee benefit costs outpaced overall compensation increases, including wage expenses, during the third quarter, according to a U.S. Labor Department report released Friday." (Business Insurance) Newly Posted Events 409A Forum - International Issues Nationwide on November 10, 2005 presented by Paul, Hastings, Janofsky & Walker LLP 409A Forum - Severance Issues Nationwide on November 17, 2005 presented by Paul, Hastings, Janofsky & Walker LLP 409AForum -- Equity Compensation Issues Nationwide on November 3, 2005 presented by Paul, Hastings, Janofsky & Walker LLP Career Open House in District of Columbia on November 11, 2005 presented by ICMA Retirement Corporation ERISA Litigation Forum -- Recent ADEA Retiree Health Litigation Nationwide on November 1, 2005 presented by Paul, Hastings, Janofsky & Walker LLP ERISA Litigation Forum -- Vacation Pay Preemption Litigation Nationwide on December 6, 2005 presented by Paul, Hastings, Janofsky & Walker LLP Health Plan Eligibility Audits: Getting Rid of the Ineligibles--Pros, Cons, Whys, and Hows Nationwide on October 20, 2005 presented by Employee Benefits Institute of America Inc. (EBIA) WEB 2nd Annual Wellness Fair in Massachusetts on November 17, 2005 presented by WEB Worldwide Employee Benefits Network MA Chapter Newly Posted Press Releases Indexed Amounts for Health Savings Accounts (U.S. Treasury Department and Internal Revenue Service) New Study Reveals Benefits Managers Expect "U.S. Bound Expatriate" Population to Rise; Aetna Global Benefits Provides Support for Foreign Individuals and Their Families Navigating U.S. Health Care System (Aetna) U. S. Labor Department Extends Annual Reports Deadline After Hurricane Wilma Hits Florida (U.S. Department of Labor, Employee Benefits Security Administration) New Online Total Compensation Solution (Excient Inc.) Brinker Capital Takes Retirement Plans To Attractive "Destinations" (Brinker Capital Management) Langevin Moves Health Care Agenda Forward (Office of Congressman Jim Langevin) Newly Posted or Renewed Job Openings Retirement Plan Administration Specialist for Consulting Actuaries Incorporated in NJ Pension Professionals for The Rosen Group in PA Employee Benefits Division Chief for San Bernardino County Human Resources Department in CA Senior Compensation Consultant for Stanton Group in MN, TX 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. 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