| BenefitsLink Retirement Plans Newsletter |   |
December 5, 2005
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Text of IRS Notice 2005-95: Clarification of Plan Amendment Deadlines and Transitional Relief (PDF)
Excerpt: "[S]ponsors, practitioners, and employers maintaining plans qualified under § 401(a) will have an extension of the otherwise applicable deadline for adopting certain plan amendments reflecting the final retroactive annuity starting date regulations, the automatic rollover requirements under § 401(a)(31)(B) of the Internal Revenue Code, and the final §§ 401(k) and 401(m) regulations." (Internal Revenue Service)
Retirement News for Employers, Fall 2005 Edition (PDF)
9 pages. This edition includes articles on IRS Retirement Plan Products; More Relief for Hurricane Victims; and the 2006 Dollar Limitations. (U.S. Internal Revenue Service)
How Would the Proposed Changes to Mortality Standards Affect Plan Sponsors?
Excerpt: "Pending pension reform would require defined benefit plan sponsors to change the mortality assumptions they use to value their plan liabilities, so Watson Wyatt analyzed the impact of the proposed changes. [They] find that the new mortality assumptions would increase liabilities somewhat for most plan sponsors, especially for plans in which men outnumber women." (Watson Wyatt Worldwide)
401(k) Consulting -- Advisors Find that Employees, and Even Employers, Are in the Dark
Excerpt: "[T]he 'self-directed' retirement model has really provided today's workers with little direction at all when it comes to managing a 401(k) account. As a result, the average employee 401(k) is sitting unmanaged -- if the employee has even taken steps to enroll in a plan. 'Participants are dazed and confused,' .... This confusion, combined with a heightened concern among sponsors about their own fiduciary responsibilities regarding their employees' retirement accounts, ..." (Financial Advisor)
Little Done to Protect Employees' 401(k) Plans Since Enron Scandal
Excerpt: "It's been four years since Enron filed for bankrup.tcy, devastating many of its employees' retirement accounts. Is your 401(k) any safer?" (Bloomberg News via The Seattle Times)
Missing the 'Safe Harbor' Deadline May Be Blessing in Disguise
Excerpt: "Is there anything an employer can do to recapture the retirement planning opportunity lost if he missed the October 1, 2005 deadline for establishing a 'Safe Harbor' 401(k) Plan? " (ERISA Expertise LLC)
Opinion: S&P 500 May Drop If Full Pension Debts Disclosed
Excerpt: "Let's assume that the U.S. Congress cuts through a political briar patch and passes a law that forces full disclosure of pension debts. The consequences might be stunning." (Bloomberg News)
Retirement Plans in 2005: A Year in the Spotlight (PDF)
6 pages. Excerpt: "Six years of poor returns and low interest rates have damaged the funding levels of defined benefit plans and lowered the value of defined contribution plans. A recent Aon Consulting study shows that the unfunded liability of Fortune 500 companies is expected to increase by 65% this year." (Aon Consulting)
Union Reluctant to Wager Maryland Teachers' Pensions on Slots
Excerpt: "First, slot machine gambling was going to raise enough money to save the horse racing industry. Next, gambling revenue was going to finance school construction. Now, architects of the campaign to legalize slots are preparing to tie their fortunes to teachers' pensions." (The Washington Post; one-time registration required)
PBGC Premium Hikes Move Ahead, Funding Reform Stumbles
Excerpt: "As Congress entered the final stretch of the 2005 legislative session, broad pension reform was moving, but slowly. The Senate approved its pension bill -- the Pension Security and Transparency Act. The House Ways and Means Committee approved the Pension Protection Act, which the Education and the Workforce Committee approved in June." (Watson Wyatt Worldwide)
Letter on Pension Reform to the Editor of the NYT from John J. Sweeney, President, A.F.L.-C.I.O.
Excerpt: "Re 'Rescuing Your Retirement,' by Elaine L. Chao, John W. Snow and Carlos M. Gutierrez (Op-Ed, Nov. 21): These three Bush administration secretaries say the president has a plan to save pensions, but the president's 'reforms' are too much about keeping the Pension Benefit Guaranty Corporation's books in order and not enough about building real retirement security for workers." (The New York Times; one-time registration required)
Overview: Non-Qualified DC Guidance: IRS Proposed Regs Provide Some Relief until 2007 (PDF)
3 pages. Excerpt: "[T]he IRS issued Proposed Regulations (the 'Regulations') providing extensive additional guidance regarding the non-qualified deferred compensation provisions contained in section 409A ('409A') of the Internal Revenue Code ('Code'). The Regulations provide critical additional transition relief from some, but not all, of the provisions of the new law, which was otherwise scheduled to go into effect fully on January 1, 2006." (Haynes and Boone, LLP)
Judge Reinstates Pension Suit Against Eight in San Diego
Excerpt: "One of the multiple lawsuits that City Attorney Michael Aguirre has filed in the city's ongoing pension crisis was reinstated yesterday by a San Diego judge who initially had dismissed the case. Superior Court Judge S. Charles Wickersham reversed his September decision yesterday. He will allow the case-- in which eight current and former city officials are accused of violations of the state's Political Reform Act-- to proceed, provided that Aguirre files a revised complaint ...." (The San Diego Union-Tribune)
Social Contract at Google Being Written with New Rules
Excerpt: "[W]hile I.B.M. is an old company that has revamped the social contract with its workers, Google is writing a new one from scratch. Some of Google's benefit and compensation practices resemble I.B.M.'s. The retirement plan is a tax-deferred 401(k) program with employee savings matched by company contributions, as it is for new employees at I.B.M. starting this year. Annual bonuses at Google range up to 25 or 30 percent, as they do at I.B.M." (The New York Times; one-time registration required)
New Jersey Pension and Employee Benefits Task Force Report Presents Challenge to Lawmakers
Excerpt: "The report urges measures to curb the abuses attributed to government officials who have inflated their pensions. But any changes to the pension system must win the approval of lawmakers, who are part of the system and who have sometimes been criticized for associating with some of those same government officials." (The New York Times; one-time registration required)
Overview: Tax Reform Panel Final Report Recommends Major Changes for Employer-Sponsored Programs
Excerpt: "In January 2005, President Bush tasked the President's Advisory Panel on Federal Tax Reform with reforming the U.S. tax code. Former U.S. Senators Connie Mack (R-Florida) and John Breaux (D-Louisiana), the panel's chair and vice-chair, recently presented the panel's final report to Treasury Secretary John Snow." (Watson Wyatt Worldwide)
U.K. 50-Year Borrowing Cost May Decline Amid Pension Shortfall
Excerpt: "The U.K. may pay less to borrow for 50 years than it does for six months when it sells 2.25 billion ($3.89 billion) of bonds in an auction this week, as pension funds snap up the longest-term debt. Pensions, facing a 57 billion-pound shortfall in annual retirement savings, need longer-term bonds because Britain's population is aging." (Bloomberg News)
The Small Business Retirement Choice
Excerpt: "Small businesses need much assistance in designing their own retirement plans. But before financial advisors recommend and help clients implement the most suitable plan or plans that cover a range of objectives, it's important to make sure that the client is comfortable with the whole concept." (Financial Advisor)
SS Actuaries Say Reform Proposal with Mandatory Personal Accounts Could Shore Up Program's Solvency
Excerpt: "The Social Security Administration's actuaries are touting a reform proposal by Harvard Professor Jeffrey Liebman and others that could make the Social Security System solvent in the long-term." (HR Policy Association)
IRS Weighted Average Interest Rate Table Updated for December 2005
Weighted average for December 2005: 4.87% (U.S. Internal Revenue Service)
IRS Composite Corporate Bond Rate Table Updated for December 2005
Corporate Bond Weighted Average Interest Rate = 5.78 for December 2005 (U.S. Internal Revenue Service)
A Balanced Look at the Case for Defined Benefit Pensions
Excerpt: "A media frenzy has surrounded the pension woes of several airlines and the resultant potential financial hit on the Pension Benefit Guaranty Corporation (PBGC). This, along with the increasing number of large defined benefit (DB) pension sponsors that have either frozen or closed their plans to new hires, has led many analysts to conclude that the traditional DB pension system is in a tailspin." (Watson Wyatt Worldwide)
Links to Items on Executive Comp, Benefits in General
Increase in Foreign Workers Puts Spotlight on Communication of Benefits
Excerpt: "The population of foreign workers in the United States is expected to grow significantly in the near future, creating new challenges for HR and benefits managers." (Employee Benefit News)
British G.ay Couples Register for Unions
Excerpt: "The law, passed last year despite some opposition from Parliament's unelected House of Lords, gives same-sex couples the same social security, tax, pension and inheritance rights as married ones." (The Conservative Voice)
G.ay Couples Face Continued Legal Battles
Excerpt: "While a few states have recognized same-sex couples, many more are strengthening bans on g.ay marriage. Conservatives in some places -- including Michigan and Ohio -- are now taking aim at existing domestic-partner benefit policies." (AP via The New York Times; one-time registration required)
Employee Benefits that Meet Moms' Needs -- Then and Now
Excerpt: "Much about a society, a corporate culture and a national economy can be transformed in 20 years. The sea change for working mothers has been the emergence of flexibility in work hours and locations, says deputy editor Della Delafuente at Working Mother magazine, which has been following workplace issues and ranking the best companies for working mothers for two decades." (Employee Benefit News)
'The People Are Just Fed Up with Their Benefits Being Cut,' One Employee Remarks.
Excerpt: "From health care to disability to pensions, across many industries, workers today are realizing with dismay that company-provided benefits are costing them more and providing them less. 'Every benefit cut that you have is a cut in your wages,' says the local president of the Communication Workers of America union Gary McClure. 'It's a cut in your ability to provide for your family.'" (CBS News)
Rewriting the Social Contract at Work
Excerpt: "I.B.M., like many other companies, has rewritten the implied social contract with its employees. Cutbacks and controversy have been part of the process. I.B.M. placed a cap on medical benefits for retirees, and eliminated the traditional pension plan for new hires. And a federal judge ruled in 2003 that changes I.B.M. made in its pension plan amounted to discrimination against older workers." (The New York Times; one-time registration required)
Mr. Ford's Wrong Turn: Why U.S. Automakers Can't Blame Japan
Excerpt: "The real problem for Ford, and the one that presents a dilemma for American society, is that an industrial-social system pioneered in Detroit in the 1930s has given way to another industrial-social system pioneered by Toyota in the post-World War II era." (The Washington Post; one-time registration required)
Newly Posted Press Releases
401khelpcenter.com Introduces New TPA Directory
(401khelpcenter.com, LLC)
IRS Announces 2006 Standard Mileage Rates
(Internal Revenue Service (IRS))
Superior Essex Chooses CitiStreet For DC Plan Administration
(CitiStreet)
BPI myCafeteriaPlan, a National Third Party Administrator (TPA) is Still Accepting New 2006 Calendar Plan Year Business for FSA and HRA Plans
(BPI - myCafeteriaPlan)
Newly Posted or Renewed Job Openings
Pension Plan Design Specialist
for American National Insurance Company
in TX
Account Executive - Client Services
for Diversified Investment Advisors
in AZ, CA, CO
Employee Benefits Administrator - Group Benefits Division
for Growing Wealth Management, Insurance and Benefits Company
in NJ
Compliance Specialist
for The Retirement Plan Company, LLC
in ANY STATE
Health & Welfare Benefits Manager
for Denver-based Fortune 500 global manufacturer
in CO
Qualified Plan Administrator/Actuary
for Experienced administrator or actuary wanting to be in the Defined Contribution Arena
in IL
Defined Contribution/401(k) Administrator
for TPA Firm in Detroit Area (Northwest Suburbs)
in MI
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