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December 7, 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)
Pension Bill Seen Unlikely in House this Year
Excerpt: "The full U.S. House of Representatives will not likely vote this year on legislation to shore up traditional pensions unless some Democrats back it, the acting majority leader, Rep. Roy Blunt, R-Mo., said Tuesday." (Reuters via Business Insurance)

Federal Update -- November 30, 2005 -- Comparison of House and Senate Pension Bills (PDF)
5 pages. Excerpt: "Pension legislation is moving forward in Congress. S. 1783, the Pension Security and Transparency Act of 2005, passed the Senate November 16. The House version, H.R. 2830, known as the Pension Protection Act of 2005, won approval of the Ways and Means Committee November 9. (See Federal Update 2005-36). [Cindie Moore summarizes] the differences between the two bills ...." (National Council on Teacher Retirement)

Pension Changes Move Through Congress, Slowly
Excerpt: "With the end of the legislative session not far off, bills to broadly reform the U.S. pension system began making their way through Congress, but it was not clear if they would become law." (Watson Wyatt Worldwide)

Study Examines Effects of Life-Cycle Funds on Participant Behavior
Excerpt: "The new report, Life-Cycle Funds Mature: Plan Sponsor and Participant Adoption, provides detailed information on the use of life-cycle funds and the impact they have on participants' investment behavior. [The text of the 15 page report is at https://institutional2.vanguard.com/iip/pdf/LifeCycleStudy.pdf.]" (The Vanguard Group)

New Study Examines Behavior of Defined Contribution Plan Participants
Excerpt: "The new study, How America Saves 2005: A Report on Vanguard 2004 Defined Contribution Plan Data, provides detailed information on how plan participants save, invest, and manage their defined contribution (DC) accounts. [The text of the 57 page study is at https://institutional2.vanguard.com/iip/pdf/CRR_HAS_2005.pdf.]" (Vanguard Center for Retirement Research)

Managed-Account Providers Hold at Least $9.75 Billion in Discretionary Assets, According to Survey
Excerpt: "This year, for the first time, P&I surveyed managed-account vendors as part of its special report on defined contribution service providers." (InvestmentNews.com)

Defined Contribution Plan Providers See a 9.6% Gain in Assets under Record Keeping
Excerpt: "The 10 largest record keepers accounted for $1.97 trillion, or 67% of the assets, practically unchanged from the 66.8% of the total the top 10 represented a year earlier." (InvestmentNews.com)

Focus on 401(k) - Summer 2005 Edition (PDF)
4 pages. Excerpt: "The newsletter includes articles titled: 'Cash' Options In 401(K) Plans and Monitoring The Solution: Asset Allocation Models." (The 401(k) Company)

Technical Tip: Plan Sponsor Responsibilities Regarding Erroneous Distribution from 401(k) Plan
Excerpt: "Suppose you have a 401(k) plan that fails ADP/ACP testing where the correction will be made by making distributions to the HCEs. Suppose you find this out after an HCE has already taken a complete termination distribution from the plan and it was directly rolled into an IRA or another plan. What is the plan's responsibility?" (Reish Luftman Reicher & Cohen)

Court Rejects K Plan Settlement Proposal
Excerpt: "A federal judge in New York has refused to approve a proposed $3.5 million settlement with the company that had been calculating the fair market value of a 401(k) plan's assets." (PLANSPONSOR.com; one-time registration required)

Letter to the Editor of the Financial Times Addressing the Role of Actuaries in Pension Accounting (PDF)
1 page. Excerpt: "In your editorial 'Insecure and opaque,' (November 22) you claimed that 'The actuarial and accounting professions have been highly effective in making sure that corporate pension liabilities are well disguised in U.S. company accounts.' This statement grossly misrepresents the role of actuaries in pension accounting." (American Academy of Actuaries)

Montana Lawmakers Face Public Pension Funding Bills in Special Session
Excerpt: "When state of Montana lawmakers convene for a special legislative session next week, improving state pension funding will be an issue high on their To Do lists. In fact, they will get a formal additional funding request from Governor Brian Schweitzer who said he intends to get lawmakers' OK to spend $125 million to help bail out two public retirement systems' pension funds, the Billings Gazette reported. Together, the funds deficit is more than $1.4 billion." (PLANSPONSOR.com; one-time registration required)

Using Corrective Amendments to Preserve Cross-Tested Allocations Determined Before Year End
Excerpt: "Can a -11(g) amendment be adopted to provide the terminated employee (who is already 100% vested) with the same contribution that he would have gotten had he not terminated, thus passing the non-discrimination tests?" (Reish Luftman Reicher & Cohen)

Fiduciary Lessons for ESOPs from the Enron, and Other, Debacles (PDF)
4 pages. The article was originally published in the June/July 2005 issue of the magazine. (ESOP REPORT Magazine via Groom Law Group)

Securities Rules Override ERISA Fiduciary Duties, According to Court
Excerpt: "According to a federal court in California, securities insider trading rules in effect shielded corporate officers from charges by retirement plan participants that the officers violated ERISA fiduciary duties." (Thompson Publishing Group Inc.)

There Are No Deadlines on Thrift Savings Plan Decisions
Excerpt: "[T]he TSP 'open season' requirements have been abolished by Congress, so the days of making deadline decisions are gone." (The Washington Post; one-time registration required)

ERISA for Securities Professionals (PDF)
30 pages. Excerpt: "The following is an overview of how the Employee Retirement Income Security Act of 1974, as amended ('ERISA'), applies to securities professionals such as registered investment advisers ('RIAs')and registered broker-dealers who advise, manage, or trade for investment portfolios of employee benefit plans subject to ERISA." (Institutional Investor, Inc. via Groom Law Group)

PSCA Letter to Congress Regarding EGTRRA Permanency (PDF)
3 pages. The letter was sent to Congress December 2, 2005. (Profit Sharing/401(k) Council of America)

Another Question is Answered in the Who's the Employer Q&A Column
How do the proposed 415 regulations deal with predecessor employers? (BenefitsLink.com)

Text of Tax Reconciliation Act, S. 2020, as Passed by Senate (PDF)
418 pages. (U.S. Senate via American Benefits Council)

Links to Items on Executive Comp, Benefits in General

Overview: FASB Reconsidering Accounting Standards for Pension & Other Postretirement Benefit Plans (PDF)
Excerpt: "[P]ension plan funding is the subject of increased scrutiny from Congress, investors, the media and the public. In addition, pension expense and unfunded liability reporting is now the focus of attention from FASB, which recently announced its intention to reconsider its accounting standards for pension and postretirement benefit plans. .... This Spotlight presents an overview of the implications and how employers may want to respond." (The Segal Company)

Milliman's Monthly Benefit News and Developments, December 2005 (PDF)
2 pages. The newsletter provides a summary of the previous month's legislative, regulatory, and judicial information on employee Benefits. (Milliman)

Overview: When Equity Compensation is Considered Deferred Compensation and How to Avoid it
Excerpt: "This installment of the Mintz Levin Deferred Compensation Advisory Series focuses on what equity compensation arrangements are exempt from the deferred compensation rules of § 409A of the Internal Revenue Code of 1986 .... As more fully described in our prior client advisories on deferred compensation, Code §409A was enacted under the American Jobs Creation Act of 2004, and it changed several tax rules governing deferred compensation." (Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.)

Collected Links Pertaining to Code Section 409A and Related Guidance
To date, the collection includes: Text of 409A; IRS Notice 2005-1; Proposed Regulations; Deloitte: The Effect of Section 409A: Now and in the Future; Alden Bianchi: The Effects of Internal Revenue Code §409A on the Design and Operation of Ineligible Plans of Deferred Compensation of Tax-Exempt Employers; and, from Kilpatrick Stockton: The Wait Is Over: Proposed Regulations Under Section 409A. (Attorney B. Janell Grenier via BenefitsBlog.com)

Court Finds Employer May Have Misrepresented Benefits Following Sale
Excerpt: "The US District Court for the Western District of North Carolina denied summary judgment in favor of an employer accused of a breach of fiduciary duties under the Employee Retirement Income Security Act (ERISA) for withholding details of the company's sale." (PLANSPONSOR.com; one-time registration required)

Washington Regulatory Wrap Up, As of November 30, 2005 (PDF)
3 pages. The chart of federal regulatory proposals concerning employee benefits of interest to NCTR members has been updated to be current as of November 30, 2005. The federal updates referenced in the chart are available at http://www.nctr.org/federal/index.html. (National Council on Teacher Retirement)

Working Paper Abstract: Salary or Benefits?
Excerpt: "Employer-provided benefits are a large and growing share of compensation costs. In this paper, I consider three factors that can affect the value created by employer-sponsored benefits. First, firms have a comparative advantage (for example, due to scale economies or tax treatment) in purchasing relative to employees." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full-text)

Newly Posted Events

New Retiree Health Benefits Study Captures Large Firms' Responses to Medicare Drug Law
Nationwide on December 7, 2005
presented by Kaiser Family Foundation

Newly Posted Press Releases

Workplace Options Reaffirms Commitment to Union Partners With Expansion to Downtown Detroit
(Workplace Options)

Ed Reaven Joins Eisner Retirement Solutions LLC as National Sales Manager
(Eisner Retirement Solutions LLC)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

ERISA/Benefits Attorney
for Parker, Poe, Adams & Bernstein L.L.P.
in NC

EB Account Manager (Service)
for The Protector Group Insurance Agency, Inc.
in MA

Assistant Director - Member Programs
for 1199SEIU National Benefit and Pension Funds
in NY

Consulting Associate
for McCready and Keene, Inc.
in VA

ERISA Consultant
for BISYS Retirement Services
in MN

ERISA Attorney
for BISYS Retirement Services
in MN

401(k)/Retirement Plan Administrator for Pension Consulting/Services Firm
for J.M. Singley & Associates, Inc.
in PA

Health and Welfare Account Management
for Charles W. Cammack Associates, Inc.
in NY

Client Services Analyst - H & G
for Mercer HR Services
in IL



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