| BenefitsLink Retirement Plans Newsletter |   |
December 19, 2005
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Pension Reform Moves Forward with House Version of Pension Protection Act of 2005 (PDF)
16 pages. Excerpt: "The House and Senate bills are now headed into a conference that will most likely be convened in February 2006. This is complex legislation that will revamp the current pension funding landscape. Undoubtedly, modifications will be made in conference. Plan sponsors should begin to review the potential impact of the provisions." (Buck Consultants)
Bill Summary: Pension Protection Act, H.R. 2830
Excerpt: "The Pension Protection Act (H.R. 2830) will fix outdated pension rules to help ensure employers properly and adequately fund their worker pension plans, provide meaningful new disclosure to workers about the status of their pension plan, protect taxpayers from a possible multi-billion dollar taxpayer bailout, and make common sense modifications to encourage greater personal savings for retirement and other needs." (U.S. Congress. House Committee on Education and the Workforce)
Key Provisions of Pensions Bill
Excerpt: "Requires employers to fund up to 100 percent of pension liabilities. Funding shortfalls must be filled within seven years. ...." (AP via The Washington Post; one-time registration required)
Prominent ERISA Attorney Questions IRS Decision to Implement Annual Plan Amendments (PDF)
15 pages. Letter of November 18, 2005 from Charles M. Lax to Joseph H. Grant, Directory of EP Rulings and Agreements for the Internal Revenue Service. Excerpt: "This letter is intended to more fully express my objection to the effective mandating of an annual amendment requirement for qualified retirement plans in Rev. Proc. 2005-66." (Charles M. Lax, Esq. of Maddin Hauser Wartell Roth & Heller PC)
Followup Letter of ERISA Attorney Regarding IRS Decision to Implement Annual Plan Amendments (PDF)
4 pages. Letter of December 6, 2005 from Charles M. Lax to Joseph H. Grant, Directory of EP Rulings and Agreements for the Internal Revenue Service. Excerpt: "It is my recommendation that the following steps be taken immediately by the Employee Plans Division: Revisit its stated policy that 'when there are statutory or regulatory changes with respect to plan qualification requirements ... the adoption of an interim amendment will generally be required by ... Rev. Proc. 2005-66....'" (Charles M. Lax, Esq. of Maddin Hauser Wartell Roth & Heller PC)
Feedback Invitation: Do You Agree with Attorney Lax's Letters to the IRS? Disagree? Elaborate Here
Practitioners and affected employers are invited to review the letters sent to the IRS by attorney Chuck Lax and post their reactions onto a special thread on the BenefitsLink message boards. There is no charge. (BenefitsLink Message Boards)
Making Maximum Use of Tax-Deferred Retirement Accounts
Excerpt: "Holding all other factors constant, [the authors] find an upward trend in the share of large contributors among high-earners, but not among low-earners. Shares of both maximum and large contributors are increasing more over time for higher than for lower earning groups." (Center for Retirement Research at Boston College)
Opinion: CalPERS Ignores Pension Crisis
Excerpt: "[Last week, CalPERS put] out a press release patting itself on the back for the fact that its assets had for the first time topped $200 billion. The release hailed CalPERS' strong return on investments -- about 30 percent -- for the two-year period ending June 30. But what the press release didn't point out is that while CalPERS may be in decent shape overall, dozens and dozens of government bodies which use CalPERS' services are in big trouble." (DailyBreeze.com)
Protect Yourself from Pension Freezes
Excerpt: "Across the country, workers are shivering, and it's not because their cost-conscious office managers have dialed down the thermostat. The chill is coming from their pension plans, which have been put on ice." (USA TODAY)
Opinion: Ducking Out on Retiree Benefits
Excerpt: "With the passage of a Senate bill shoring up private pension plans, public attention is finally turning to 'legacy costs' -- what Wall Street bankers and corporate executives call long-promised retiree benefits. And not a minute too soon. After a decade of underfunding their pension plans, flagship American corporations have now been ducking behind the closed doors of bankrup.tcy court to dispose of employee pensions." (Jennifer Klein via History News Service)
Principal Items Relating to Employee Benefits Compliance Published by the PBGC
In reverse chronological order (most recent documents first). Look what our new search engine can do! (Pension Benefit Guaranty Corporation)
Investment Guidelines Are Formal Plan Documents that Must Be Disclosed to Participants
Excerpt: "This court's determination that investment guidelines have to be disclosed appears to be a rather straightforward interpretation of previous case law. The court's ruling on the disclosure of proxy voting policies, however, may be misleading." (Employee Benefits Institute of America Inc.)
Brief Reprieve for Leaders of San Diego's Pension System Ends with Calls for Ouster
Excerpt: "Leaders of San Diego's pension system once again are under fire, ending a brief reprieve since the mayoral election. Frequent critics, including City Attorney Michael Aguirre, renewed their calls to oust top pension officials a day after two were identified as targets in the federal investigation into the city's pension crisis." (The San Diego Union-Tribune)
Portfolio of Resources on the British Pension System
Excerpt: "The AARP Global Aging Program [dedicates] this site to house the resources and research that we have produced over the years on British pension issues." (AARP)
United Kingdom Pension Insurer Releases 2006-2007 Levy Details
Excerpt: "UK authorities have announced that employers operating defined benefit plans would pay a total of £575 million ($1.01 billion) to finance the pension rescue fund in the 2006/07 year. That figure, released Friday by the United Kingdom's Pension Protection Fund (PPF) includes a risk-based element of the levy that will be charged to certain employers, according to Business Insurance." (PLANSPONSOR.com; one-time registration required)
Senate Bill Would Allow Contributions to IRAs During Short-Term Disabilities
Excerpt: "Federal law prohibits employees from contributing part of their workers' compensation or Social Security disability payments or income earned in a prior year to an Individual Retirement Account (IRA). This week, Senators Frank Lautenberg (D-NJ) and Gordon Smith (R-OR) introduced 'The IRA Equity Act' (S. 2086) to address this problem by allowing contributions of workers' compensation or disability payments or income earned in the past two years to an IRA." (HR Policy Association)
UAW Cheers Pension Reform Legislation Changes
Excerpt: "The United Auto Workers union claimed victory [December 13] on pension-reform legislation after persuading Republican lawmakers in the House to change wording on two provisions. (Originally published December 13, 2005.)" (USA TODAY)
Overview: IRS Releases 2005 Cumulative List of Changes in Plan Qualification Requirements
Excerpt: "The annual cumulative list is a helpful tool for plan sponsors and their advisors in drafting EGTRRA amendments and preparing EGTRRA determination letter submissions. Note that the IRS will not review plan language for Cycle A plans for any qualification change that becomes effective, any guidance published, or any statutes enacted after December 13, 2005, unless it is on the 2005 Cumulative List." (Employee Benefits Institute of America Inc.)
Working Paper: Financial Literacy and Planning -- Implications for Retirement Well-being (PDF)
35 pages. Excerpt: "Evidence suggests only a minority of American households feels 'confident' about retirement saving adequacy. Little is known about why people fail to plan for retirement, and whether planning and information costs might affect retirement saving patterns. To better understand these issues, we devised and fielded a purpose-built module on planning and financial literacy for the 2004 Health and Retirement Study (HRS)." (Pension Research Council, The Wharton School, University of Pennsylvania)
Links to Items on Executive Comp, Benefits in General
Speeded-Up Stock Option Vesting Is a Way Around New Accounting Rule, but Some Cry Foul
Excerpt: "At least 22 Washington area companies are among hundreds nationwide that have transformed millions of stock options, many of which would not have been available for executives to use until 2009, into fully vested shares. According to Wall Street estimates, the fast-forwarding could wipe away more than $4 billion in expenses that would otherwise have shown up on income statements starting in 2006 under a new accounting rule that goes into effect Jan. 1." (The Washington Post; one-time registration required)
Principal Items Relating to Employee Benefits Compliance Published by the DOL
In reverse chronological order (most recent documents first). Look what our new search engine can do! (U.S. Department of Labor)
Principal Items Relating to Employee Benefits Compliance Published by the IRS
In reverse chronological order (most recent documents first). Look what our new search engine can do! (Internal Revenue Service)
Overview: Reporting/Withholding Requirements for Deferred Comp Arrangements under Section 409A (PDF)
2 pages. Excerpt: "Plan sponsors and administrators have been concerned that the IRS has not issued guidance on how to determine and report 2005 deferrals for these purposes. [December 8, 2005], the IRS finally issued Notice 2005-94, which suspends the reporting and wage withholding requirements for 2005." (Groom Law Group)
Mercer Survey Examines Expatriate Benefits
Excerpt: "Most multinational companies provide their expatriate employees with employee benefit programs, according to a survey by Mercer Human Resources Consulting. The Expatriate and Third Country National Benefits Survey, conducted during the first six months of 2005, looked into how companies provide expatriate employees with retirement, medical and disability benefits." (Business Insurance)
Text of Corrections to Proposed Regs on Application of 409A to Nonqualified Deferred Comp Plans (PDF)
6 pages. (Internal Revenue Service)
How Portfolios Evolve After Retirement: The Effect of Health Shocks
Excerpt: "[The authors] investigate the influence of aging and health shocks on both a household's ownership of various assets and the dollar value and share of total assets held in each asset class." (Center for Retirement Research at Boston College)
New Guidelines on Employee Stock Options and Exit Tax Issued in Sweden (PDF)
1 page. Excerpt: "Recently, the Swedish Tax Agency issued guidelines concerning the taxation of stock options, particularly when an employee who holds options leaves Sweden." (KPMG LLP)
Job Rules Clarify Reservist Rights: Pre-Service Status Must Be Preserved
Excerpt: "The Labor Department released final regulations [December 16] clarifying a 1994 law that protects the employment and re-employment rights and benefits of members of the armed forces. The regulations are the first that explain the Uniformed Services Employment and Reemployment Act. The law promises that service members will be able to return to their jobs at the same pay and benefits as if they had never been deployed." (The Washington Post; one-time registration required)
IRS Abusive Transaction Settlement Initiative Open Until January 23, 2006
Excerpt: "The IRS recently announced a one-time opportunity for taxpayers to voluntarily disclose and resolve certain listed and potentially abusive transactions. Announcement 2005-80. Among the 21 transactions that can be settled pursuant to this initiative, four relate to retirement plans and at least three others may be of interest to the retirement plans community." (Deloitte's Washington Bulletin,)
Newly Posted Press Releases
Benefit Advisors Network Proudly Welcomes Benefit Foundations of America
(Benefit Advisors Network)
AIM Investments(R)selects ERISA Expertise Roth 401(k) Tools & Technology
(ERISA Expertise LLC)
Myron Kandel, Founding Financial Editor Of CNN, To Lead NH Initiative On Corporate Governance
(New Hampshire Bureau of Securities Regulation)
Newly Posted or Renewed Job Openings
Pension Administrator
for PENSERVCO, Inc.
in FL
401(k) Employee Communications Specialist
for 401(k) Advisors
in CA
401(k) Enroller
for 401(k) Advisors
in CA
Compliance Testing Manager
for Diversified Investment Advisors
in NY
Retirement Plan Specialist Wanted!
for SS&G Financial Services
in OH
Supervisor, Disability Programs
for Southern California Edison
in CA
Junior DC Administrator
for Hicks Pension Group - Honolulu
in HI
Qualified Plan Administrator
for Trust Company of America
in CO
Retirement Plan Consultant
for Limestone Pension Associates, LLC
in DE
ERISA Attorney
for Employee Benefits Institute of America Inc. (EBIA)
in WA
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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