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December 27, 2005
Today's sponsor: DATAIR Employee Benefit Systems, Inc.

(Click on company name or banner to learn more.)
Banner ad for DATAIR Employee Benefit Systems, Inc.

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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)

Commentary: Roth 401(k) Offers Tax-Free Bonanza in Retirement
Excerpt: "The Roth 401(k) is a tax-savvy retirement plan that is being virtually ignored by employers these days. Of course, like any benefit, employers don't have to provide the Roth 401(k). Yet the long-term rewards of the Roth are reason enough to lobby your boss to offer you this new plan, a most potent nest egg builder." (Bloomberg Commentary)

Adding Automatic Enrollment to a 401(k) Plan Could Get Easier for Plan Sponsors Soon
Excerpt: "Automatically enrolling new workers is a 'significant factor' in increasing 401(k) balances, according to a study released in July by the Employee Benefit Research Institute and Investment Company Institute. Yet some employers have held off on implementing it with new hires, out of fiduciary-liability fears or wariness about its impact on nondiscrimination testing." (PLANSPONSOR.com; one-time registration required)

Opinion: A Pension System in Peril
Excerpt: "The solvency of traditional defined-benefit pension plans is just beginning to surface as an issue on our national radar screen. 'The Great Retirement Ripoff,' blares the cover of a recent issue of Time magazine. And a recent headline from The New York Times reads: 'The End of Pensions.' Should you be concerned? It depends on whom you ask. But it's clear that the American retirement system is changing, and a comprehensive retirement income plan doesn't take anything for granted." (OnWallStreet)

Pension Funds Face Troubled Future
Excerpt: "The issue of retirement benefits was key to the New York City transit workers' decision to strike. Pensions funds held for public employees across the country are in dire straits. Pensions expert Olivia Mitchell discusses the troubles looming for pension plans." (All Things Considered via National Public Radio)

Editorial: The Defined Benefit Pension Fix Is In -- But Will the Fixes Fix the Problem?
Excerpt: "Key elements of the new rules are a 100% funding target, seven-year amortization of unfunded liabilities, use of a yield curve to value liabilities, a significant reduction in the ability to smooth interest rates and asset values (and a resulting increase in contribution volatility), and restrictions on plan amendments, payment of lump sums, and ongoing accruals for certain underfunded plans.' (PLANSPONSOR.com; one-time registration required)

New York City Transit Strike Reflects Nationwide Pension Woes
Excerpt: "Fast-rising pension costs for government employees - the issue that helped set off this week's transit strike in New York City - are a problem confronting cities, counties and states nationwide, causing many budgetary experts to predict a wave of painful fights over efforts to scale back government retirement programs." (The New York Times; one-time registration required)

Workers Need to Keep Eye on Pension Plan Documents
Excerpt: "Employers sponsoring traditional pension plans are required to provide covered employees with a summary of the plan, explaining how it works. In addition, each year, employers are required to make available an individual benefit statement for each worker. That notification -- sent out automatically by many companies, but issued by some only in response to a written request -- specifies the amount a worker can expect to receive in their monthly pension checks at retirement." (The Washington Post; one-time registration required)

Retirement Plan Sponsors -- Think About Protection
Excerpt: "A recently filed lawsuit highlights the need for plan sponsors to take a close look at the fees charged and investment choices offered by their retirement plan provider." (The Kansas City Star; one-time registration required)

Opinion: Alaskan Community Will Lose with New Retirement Plan for Public Employees
Excerpt: "Changes to the state's retirement system--known as Senate Bill 141--have put in place incentives that will encourage new employees to leave. Instead of the defined-benefit system that the state used for decades, starting next July newly hired employees will get a 401(k), also referred to as a defined-contribution plan. If they stay five years, the state will match the amount the employee puts in, and the employee can leave, taking their money and the state's money with them." (Fairbanks Daily News-Miner)

No Leeway for Plan Participants in Life-Cycle Funds
Excerpt: "[A]dvisers have good reason, for their clients' sakes, to pause before putting plan participants into a life-cycle or age-based approach. The basic rigidities and lack of individuality in these funds argue against them and in favor of life-style funds." (OnWallStreet)

Chart: Leading Proposals Affecting Defined Contribution & Other Retirement Arrangements (PDF)
25 pages. Summary and Comparison of Defined Contribution and Other Retirement Arrangements in Leading Pension Reform Proposals other than pension funding and hybrid plan proposals. (Benefits Group of Davis & Harman, LLP via American Benefits Council)

Humberto Cruz: Time to Boost Your Fiscal Fitness
Excerpt: "The need for greater financial education seems all the more urgent considering the results of a new survey of American investors conducted by the Opinion Research Corporation for the Securities Investor Protection Corporation (SIPC) and the Investor Protection Trust. Sadly, surveys that show Americans lack the most basic financial knowledge are all too common. But this one is different in two important respects." (Milwaukee Journal Sentinel; one-time registration required)

Opinion: America Is Not Prepared for the Boomers' Retirement
Excerpt: "When the oldest boomers retire, the federal government, with its huge deficits, will be gushing red ink. That, in turn, will put the squeeze on social programs that aid many older Americans, especially low-income individuals. Worse yet, many boomers will go into retirement with only modest savings. According to a recent study , half of American workers over the age of 55 have saved less than $50,000." (The Washington Post; one-time registration required)


Links to Items on Executive Comp, Benefits in General

Summary: Defined Contribution and Healthcare Provisions in HR 2830
Excerpt: "Defined Contribution, Long Term Care, and Flexible Spending Account Provisions in Managers Amendment to H.R. 2830 -- In addition to its sweeping reforms to defined benefit plans, the Pension Protection Act of 2005 (H.R. 2830) passed by the House on December 15 also contained several provisions related to defined contribution plans, long term care, and flexible spending accounts." (The ERISA Industry Committee)

SEC Rejects Cisco's Proposal to Value Options, but Encourages More Work on the Issue
Excerpt: "On September 9, the US Securities and Exchange Commission (SEC) put the kibosh on a Cisco proposal intended to value options according to their market worth -- and possibly ease the financial impact of new requirements to expense them. Cisco wanted to value options by creating a financial instrument that would mimic the terms and conditions of a stock option, but the agency said its design would not lead to a reasonable 'fair value' estimate." (PLANSPONSOR.com; one-time registration required)

Overview: Final USERRA Rights Posters Issued with Slight Revisions
Excerpt: "Employers were required to provide the prior USERRA notice effective March 10, 2005, and employers should post the new version of the notice on or before January 18, 2006 (notwithstanding the minor nature of the changes made)." (Employee Benefits Institute of America Inc.)

Overview: Year-End Action under Section 409A (PDF)
2 pages. Excerpt: "As year-end approaches, employers should assess whether they need to take any last-minute action to document their use of the nonqualified deferred compensation cancellation and termination transition rules of Notice 2005-1." (Sutherland Asbill & Brennan LLP)

Tax Corrections in Gulf Opportunity Zone Act: Nonqualified Deferred Comp and 'Definition of Child'
Excerpt: "The President on December 21, 2005 signed into law the Gulf Zone Opportunity Act of 2005 (H.R.4440) ('GOZA') providing hurricane reconstruction aid and relief. The Act also provided a number of tax technical corrections including, among other things, provisions affecting nonqualified deferred compensation ('NQDC') and revisions to the uniform definition of child (cf. Working Families Tax Relief Act of 2004)." (The ERISA Industry Committee)

News Scan, December 2005 -- Summaries of News in the Benefits Industry (PDF)
10 pages. This edition includes the following items: IRS Extends Effective Date for Proposed IRC 415(b) Grandfather Rule; Sixth Circuit Court Finds Kentucky Retirement Plans Not Age Discriminatory; NCPERS Health Care Bill Included in Pension Protection Act; and, NCTR Surveys Legal Characteristics of Statewide Retirement Systems. (Gabriel, Roeder, Smith & Company)

New 'International Benefits' Type Classification on BenefitsLink
We have revised our list of document 'types' to include those about 'international benefits.' So newly added documents about Canadian, European, Japanese or other benefit systems (welfare and well as retirement plans) will be categorized as an 'International benefits' type of document on our new What's New page. If you'd prefer not to see such listings, just leave the 'International benefits' box unchecked on your bookmarked, personalized What's New page. (BenefitsLink)

Overview: Department of Labor Issues USERRA Regulations
Excerpt: "More than 11 years after the enactment of the Uniformed Services Employment and Reemployment Rights Act of 1994 ('USERRA' or the 'Act') and more than a year after issuing proposed regulations, the Department of Labor (DOL) has issued regulations to guide employers and employees in navigating the rocky terrain of rights and responsibilities under the Act -- and not a moment too soon." (Seyfarth Shaw LLP)

Overview: Final USERRA Regulations Address Health Plans and 401(K) Plans
Excerpt: "[T]he guidance regarding cancellation of health coverage was added to help employers avoid paying premiums for employees who don't want continuation coverage but fail to advise employers of that fact. Many will appreciate the green light to streamline health plan administration by using COBRA-compliant procedures wherever possible." (Employee Benefits Institute of America Inc.)

Company's Options Program Not Governed by ERISA
Excerpt: "Because the employer's stock option plan was not an Employee Retirement Income Security Act (ERISA)-governed welfare or benefit program, an employee can't sue under ERISA over the company's refusal to allow him to exercise his options." (PLANSPONSOR.com; one-time registration required)


Newly Posted Press Releases

ASPPA's New Retirement Plan Fundamentals (RPF) Exams to Replace Pension Administrator (PA) Exams in 2006
(ASPPA (American Society of Pension Professionals & Actuaries))

FirstCarolinaCare Teams with ACS to Provide Health Savings Accounts
(FirstCarolinaCare, Inc)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

401(k) Client Relationship Manager
for The Douglas Group
in CA, CO, IL, NJ, NY, PA, TX

Enrolled Actuary Manager
for RSM McGladrey Inc.
in AZ

Defined Benefit Pension Administrator
for RSM McGladrey Inc.
in AZ

Defined Benefit Calculation Analyst
for Diversified Investment Advisors, Inc.
in MA

Pension Administrator
for Premier Recruiters & Associates
in DC, MD, VA

Retirement Plan Compliance Analyst
for Leggette Actuaries, Inc.
in TX




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