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December 2, 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)

GM Plant Closings May Face Pension Law Obstacle
Excerpt: "The U.S. Congress may be about to complicate General Motors Corp.'s efforts to close plants and cut $7 billion in costs. The House of Representatives will vote next week on legislation that would stop companies from granting workers early access to their pension benefits when their plants are closing." (Bloomberg News)

Text of PBGC's Valuation of Benefits and Mortality Assumptions -- Final Rule (PDF)
30 pages. The rules are effective January 1, 2006. (U.S. Pension Benefit Guaranty Corporation)

Pension Benefit Guaranty Corporation Releases Two Final Rules for 2006
Excerpt: "The first is a new maximum guaranteed pension benefit for 2006, .... The 2006 maximum monthly benefit guaranteed by PBGC that might be paid with respect to a plan participant in a single employer pension plan that terminates in 2006 is $3,971.59, beginning at age 65. This is an increase from $3,801.41 in 2005." (PLANSPONSOR.com; one-time registration required)

Additional Roth Q&A
Excerpt: "How does a plan measure the 5-year nonexclusion period?" (SunGard Corbel)

Changing 401k Providers (PDF)
Excerpt: "There are two key things to remember when you are responsible for a 401(k) Plan: 1. The key to a well-run plan is an excellent recordkeeping and administration package coupled with a strong investment line-up and a dedicated team of support from the provider. 2. Changing providers is a fiduciary act and should be done with care, documentation and focus on the benefit of the participants." (Business & Compensation Solutions)

More Companies Instituting Automatic 401(k) Enrollment for All Workers
Excerpt: "An increasing number of companies are starting to automatically enroll existing employees, not just new hires, into their 401(k) plans." (Workforce Management; one-time registration required)

Employee Ownership Update for December 1, 2005
NCEO Executive Director Corey Rosen discusses the Pension Security and Transparency Act and its effect on ESOPs and KSOPs; the vote by the Financial Accounting Standards Board to conduct a comprehensive review of how companies account for retirement plans; and a Treasury Department representative's comment that Code Section 409A applies to stock awards with a feature extending the date of the required recognition and/or the right to receive dividends for the award beyond its original terms. (National Center for Employee Ownership)

Opinion: We Should Stop Playing with Public Pension Plans
Excerpt: "It may be that the only thing worse than doing nothing about public pension plans is doing something about them." (Bloomberg News)

Editorial: Account Ability -- Put Plan Sponsors on the PBGC Board of Directors
Excerpt: "Just what is the PBGC? The glib answer had always been it's an 'insurer of pension benefits,' with some implication that it's there to take care of folks in need without regard to the economics of the situation.' (PLANSPONSOR.com; one-time registration required)

Overview: Restoring Pension Benefits that Should Not Have Been Suspended
Excerpt from the December 1, 2005 edition: 'The Internal Revenue Service, in Revenue Procedure 2005-7611, has extended to January 1, 2007, the date by which retirement plans must be in operational compliance with a reforming amendment in order to be eligible for the compliance relief relating to the U.S. Supreme Court decision in Central Laborers' Pension Fund v. Heinz, which the IRS granted earlier this year." (The Segal Company)

Dealing with Troubled Pension Plans during a Divorce
Excerpt: "The problems with corporate pensions in America are no longer a secret and have to be taken into consideration every time you structure a settlement agreement that includes provisions for a Qualified Domestic Relations Order on a private company pension plan ...." (www.divorcenet.com)

Interview with Martin Staubus, Co-Author of 'Equity: Why Employee Ownership is Good for Business'
Excerpt: "Staubus says the current incentive-based employee benefits design not only doesn't work well, but it also costs employers too much." (Employee Benefit News)

Switzerland Tightens Rules for Executive Pensions (PDF)
2 pages. Excerpt: "Beginning January 1, 2006, employers in Switzerland must comply with a third set of revisions to the BVG (Swiss occupational pension law). The changes provide greater flexibility in plan design while restricting some tax advantages, particularly for high earners. Pension plans have up to December 31, 2007 to amend their rules accordingly." (Towers Perrin)

Pensions Commission's Report, 'A New Pension Settlement for the Twenty-First Century,' Released
Excerpt: "On 30 November 2005, the Pensions Commission released 'A New Pension Settlement for the Twenty-First Century', its Second Report on the likely evolution of the UK pension system if policy is unchanged, and its recommendations for a new policy direction." (Watson Wyatt Worldwide)

Top Five IRA Rulings of 2005
Excerpt: "To the millions of Americans who own IRAs, 2005 may seem like most other years. But to accountants, estate attorneys and others who live, breath, eat and sleep IRAs, 2005 will go down as yet another banner year filled with new laws, court rulings, IRS Revenue Rulings and IRS Private Letter Rulings that dramatically affect America's most beloved retirement account." (MarketWatch)

The Listing of Published IRS Retirement Plan Guidance Has Been Updated through November 2005
The listings include: Treasury Regulations; Revenue Rulings; Revenue Procedures; Notices; and, Announcements relating specifically to retirement plans. (U.S. Internal Revenue Service)

Lawmakers May Soon Vote on Making Changes to 401(k) and Pension Plans
Excerpt: "Along with all the other reforms debated or legislated this year - Social Security reform, bankrup.tcy reform, tax reform - add pension reform to the mix." (CNNMoney.com)

Opinion: Current Pension Reform Only Abandons Retirees
Excerpt: "It is, perhaps, to be done in the grand tradition of burning the village in order to save it. When the House of Representatives returns from its Thanksgiving break next week, lawmakers are poised to give corporations legal sanction to cut the pensions promised to millions of older workers in the name of rescuing the fragile private pension system." (The Washington Post via timesunion.com)

Pension Coalition Letter Urges Senators to Develop 'Common Sense' Pension Reform Legislation (PDF)
3 pages. Excerpt: "Major pension reform legislation currently moving through Congress could have a significant impact on the retirement security of millions of American workers. .... As the legislation moves forward, the ... members of the Pension Coalition strongly urge you to support reforms that address problems that can and need to be fixed and that foster a legal and economic framework that encourages employers to stay in the defined benefit system." (Pension Coalition via The ERISA Industry Committee)

IRS Program Helps Correct Retirement Plan Defects So Tax Benefits Are Not Lost
Excerpt: "When CPAs review financial papers and prepare tax returns, they often discover that their clients or employers have not updated their retirement plans to meet new legal requirements or have not been operating the plans correctly. Retirement plans that don't meet the government-mandated form and operational requirements may be disqualified and, as a result, lose important tax benefits. " (Journal of Accountancy)

Pension Reform: New Mandates for Hybrid Plans
Excerpt: "Pending pension reform would attempt to clear up the legal ambiguity surrounding hybrid plans and would impose new restrictions on conversions of traditional defined benefit plans to hybrid plans. But the new rules may leave existing plans in legal limbo." (Watson Wyatt Worldwide)


Links to Items on Executive Comp, Benefits in General

Executive Summary: Accounting for Pensions and Other Postretirement Benefits 2005
Excerpt: "For fiscal year 2004, the discount rate used to calculate the present value of pension obligations ranges from 4.30 percent to 6.99 percent. The average value of the discount rate is 5.83 percent. In fiscal year 2003, the discount rate for companies represented in this report ranged from 5.00 percent to 6.75 percent, with an average value of 6.17 percent." (Watson Wyatt Worldwide)

Gray Is Good: Employers Make Efforts to Retain Older Employees
Excerpt: "For employers, the writing on the wall is hard to miss. Workers 55 and over are growing four times faster than the work force as a whole. By 2012, this age group will account for more than 19% of the labor force, up from less than 16% now, Bureau of Labor Statistics data show. In the same period, people in the prime working years, ages 25 to 44, will shrink to 43% of the work force from 46% now." (The Wall Street Journal Online via CareerJournal.com)

Overview: Proposed Regulations Require Action on Deferred Compensation (PDF)
2 pages. Excerpt: "This Law Alert highlights the action steps employers need to accomplish by December 31, 2005 and December 31, 2006." (Porter, Wright, Morris & Arthur LLP)

Overview: Year-End Employee Benefits and Executive Compensation Checklist
Excerpt: "Employers sponsoring retirement plans, welfare plans and deferred compensation arrangements should be mindful of certain actions which must take place by December 31 of this year." (Littler Mendelson)

Overview: Proposed Section 409A Regulations: Effective Dates and Transition Rules (PDF)
4 pages. Excerpt: "This is the third in a series of four Alerts providing a detailed review of the Proposed Regulations issued on September 29, 2005 by the Internal Revenue Service under Section 409A of the Internal Revenue Code. Section 409A, enacted by the American Jobs Creation Act of 2004, imposes substantial new rules on nonqualified deferred compensation arrangements. This Alert focuses on the transition rules under the Proposed Regulations." (Kirkpatrick & Lockhart Nicholson Graham LLP)

The Executive Edition, No. 3, 2005 -- A Resource on Executive Compensation (PDF)
6 pages. The articles in this issue include: Design - Stock Option Efficiency and Perceived Value; Data - Short-term Incentive Design Features; Regulatory - Living with Million Dollar Cap of Section 162(m); Emerging Issues - Ownership Guidelines for the Board. (Hay Group; one-time registration required)

Overview: IRS Proposed Change to Form 990 (PDF)
2 pages. Excerpt: "The revised Form 990 includes a new section regarding compensation paid during the year to former officers, directors, trustees and key employees (including loans and advances, in addition to cash compensation, benefit plan contributions and payments, and expense account and other allowances)." (Gardner Carton & Douglas LLP)

Overview: Stock Options and SARs under the New 409A Regime
Excerpt: "The regulations recently proposed under section 409A have broadened the definition of nonqualified deferred compensation (NQDC) to encompass virtually all equity or equity-based grants not covered by a specific exception. Fortunately, most NQDC can be crafted to either qualify for an exception or comply with section 409A. In some situations, however, seemingly innocuous designs or design changes could unwittingly run afoul of the new rules, with unfavorable tax results." (Watson Wyatt Worldwide)

Branding Your Company Benefit Plans: A Planning Guide
Excerpt: "With a tightening labor market and rapidly increasing benefit costs, the burden on companies to showcase their benefit plans to employees is greater with each passing year. As insurance premiums mount, employer-sponsored benefits are climbing the ladder of importance in the employer/employee relationship. If you can successfully turn your benefit plan into a product with its own brand identity, it will increase your employee satisfaction levels and enhance your recruiting efforts." (Employee Benefit News)

Six Steps to Better Protection of Benefits Information
Excerpt: "What are your responsibilities? What issues should you be working? In this article, we'll try to sort out these questions so that you can start preparing a realistic action plan for assessing and improving the protection of benefits information." (Employee Benefit News)

U.S. Carmakers at Crossroads
Excerpt: "Where once GM had more than four workers for every pensioned retiree, that ratio is fast reversing. The company has more than 2.5 retirees for each of its 106,000 North American workers. Last week, the company announced its goal to trim its ranks in North America by another 30,000 by 2008, including more cuts here in Flint. Now healthcare and pension costs, for current workers as well as retirees, add more than $1,500 to the cost of each GM vehicle." (Christian Science Monitor via BlueCross BlueShield Association)


Newly Posted Events

25th Anniversary Annual Conference: New Responsibilities - New Choices! A Crossroads for Employers
in Florida on March 16, 2006
presented by Employers Council on Flexible Compensation (ECFC)

Fundamentals of Employee Benefits Law
in Arizona on March 2, 2006
presented by ALI-ABA (American Law Institute-American Bar Association)

Health Law Compliance Seminar
in Georgia on December 7, 2005
presented by U.S. Department of Labor, Employee Benefits Security Administration

Introduction to HSAs and HRAs Online Training Course
Nationwide on December 1, 2005
presented by International Foundation of Employee Benefit Plans


Newly Posted Press Releases

2006 Rate Card for Job Listings and Other Advertising on BenefitsLink
(BenefitsLink.com, Inc.)

Increase in Health Insurance Premiums Slows to 8.2 Percent in California; 2005 Rise Is Still More Than Twice the Rate of Inflation; State's Employers Remain More Likely to Offer Coverage than Counterparts in Other States
(California HealthCare Foundation (CHCF))

U. S. Labor Secretary Elaine L. Chao Announces Date of 2006 Saver Summit to Help Americans Plan Secure Retirement
(U.S. Department of Labor, Employee Benefits Security Administration)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Relationship Manager
for BISYS Retirement Services
in PA

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

Compliance Administrator - AZ
for Vanguard
in AZ

Compliance Manager - AZ
for Vanguard
in AZ

Pension Analyst - PA
for Vanguard
in PA

Retirement Plan Sales Representative
for M&I Marshall & Ilsley Trust Company N.A.
in IN




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