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January 6, 2006
Today's sponsor: InvestLink

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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)

I.B.M. to Freeze Pension Plans to Trim Costs
Excerpt: "I.B.M., which has long operated one of the nation's largest corporate pension funds, said yesterday that it would freeze pension benefits for its American employees starting in 2008 and offer them only a 401(k) retirement plan in the future." (The New York Times; one-time registration required)

401(k) Administration Leads Benefits Outsourcing
Excerpt: "According to the 2005 Employee Benefit News/Forrester Research Benefits Strategy and Technology Study, 67% of employers outsource 401(k) administration, making it by far the most commonly outsourced benefit process." (Employee Benefit News)

Make 2006 the Year to Really Review Your Company 401(k) Plan
Excerpt: "Each year, thousands of companies go through weeks of arduous reviews of their health insurance, working diligently to stave off 15% to 20% increases in their rates. However, when it comes to reviewing their 401(k) plans, many companies simply don't do it or perform perfunctory review addressing only obvious problems." (Employee Benefit News)

403(b) Contribution Limits Rise for 2006
Excerpt: "The new elective deferral limit for 2006 is $15,000; age 50 catch-up rises to $5,000." (bWise Guys, LLC)

Dealing with the Pension Benefit Guaranty Corporation (PDF)
14 pages. Excerpt: "This article provides the practitioner with guidance on dealing with a wide variety of matters arising under the PBGC's single-employer plan termination insurance program .... However, to deal effectively with the PBGC, it is helpful to understand the issues it is grappling with, and this article therefore begins with a brief overview of the PBGC's current challenges." (BNA's Tax Management Compensation Planning Journal via Keightley & Ashner LLP)

Looming Bankruptcies Intensify Pension Debate
Excerpt: "The threat of large bankruptcies for the PBGC will intensify the debate over the agency's deficit. In November, the PBGC announced it had a small profit of $500,000 in fiscal 2005, which ended Sept. 30, compared with a $12.1 billion loss in fiscal 2004. Yet, the agency projects a $22.8 billion deficit down slightly from its 2004 deficit estimate of $23.35 billion." (Employee Benefit News)

Why Two Pension Appraisals Are Usually Better than One -- Even If You Represent the Participant
Excerpt: "Often the difference in values of ... two appraisal methodologies can exceed hundreds of thousands of dollars. When you obtain appraisals using both methods you can enter into settlement negotiations armed with the facts." (Divorce, Pensions and Retirement Benefits Newsletter)

Overview: IRS Acknowledges Delay in Finalization of Relative Value Regulations
Excerpt: "The IRS acknowledged in their Winter 2006 Employee Plans News periodical that finalization of the 'relative value' regulations would not be completed in time for the February 1, 2006 effective date. Further, they expect the final regulations will provide for a 'reasonable, good faith standard' for compliance with the 2003 regulations for the remainder of 2006." (CCA Strategies, LLC)

Court Determines that QDRO Amended After Participant Death Is Not Valid
Excerpt: "The US District Court for the District of New Jersey has determined that an amended qualified domestic relations order (QDRO) naming a participant's ex-wife as alternate payee of his monthly pension is not valid. The court said the document could not give the ex-wife a right to survivor benefits that did not exist at the time of the participant's death, and therefore was not a qualified domestic relations order (QDRO) under the Employee Retirement Income Security Act (ERISA)." (PLANSPONSOR.com; one-time registration required)

Plea Agreement Alleges Illinois Officials Involved in Pension Kickback Scheme
Excerpt: "A plea agreement made by Joseph Cari, former attorney for the Illinois Teachers' Retirement System charged with extortion, is said to accuse Illinois Governor Rod Blagojevich and two fundraisers of a scheme to offer pension deals to investment firms and consultants in return for campaign contributions." (PLANSPONSOR.com; one-time registration required)

UK Insurers Can Meet Pension Saving Goal, Says the Head of the Association of British Insurers
Excerpt: "Britain's insurance industry can deliver a low-cost pension alternative to a state-run savings scheme as proposed in a recent landmark report, the head of the Association of British Insurers (ABI) said on Friday." (Reuters.com)

Overview of New Legislation and Litigation in the Cash Balance Debate
Excerpt: "The Preservation of Defined Benefit Plans Act is unlikely to receive legislative attention this year, but its introduction highlights an important issue in the hybrid plan debate: the need to clarify the status of existing cash balance and pension equity plans. Whether the PNC decision will influence next year's legislative discussions remains to be seen ...." (Watson Wyatt Worldwide)

Simulating a Savings Plan Account Balance for Social Security
Excerpt: "Could stochastic modeling help Social Security actuaries achieve more accurate forecasts than traditional deterministic methods? It's an idea they've been looking at for a few years. Here, in a different context, is basically how stochastic modeling works." (Contingencies)

Opinion: Pension Penchant
Excerpt: "Providing additional incentives to employers and trimming expenses for short-service employees could help the ailing defined benefit system. This notion, coupled with more flexible funding rules and additional safeguards to prevent plans from failing, should top priority lists change in the defined benefit arena." (Contingencies)

Opinion: U.S. Pensions -- Capitalist Disaster
Excerpt: "Pensions have represented important hopes, expectations, and investments for millions of workers. In the endless struggles between those who produce the profits and those who receive and disperse them, corporate and political leaders 'managed' pension programs into disastrous dead ends." (ZNet)


Links to Items on Executive Comp, Benefits in General

Overview: Proposed Changes to FASB Accounting Standards for Pensions/ Postretirement Benefit Plans
Excerpt: "While it seems plausible that investors in large industrial firms with prominent postretirement obligations are well aware of the plans' current positions, they may be less aware of the complete financial picture for companies whose plans constitute a smaller share of total company obligations and market value. A preliminary strategy for responding to the potential accounting changes is to discuss with analysts and investors the likely impact on reported shareholder's equity." (Watson Wyatt Worldwide)

Enrolled Actuaries Report -- Winter 2005 (PDF)
8 pages. This edition includes articles titled: Convergence: The Future of U.S. Pension Accounting and Circular 230 Applies to You! (American Academy of Actuaries)

Taking Stock of Option Expensing
Excerpt: "Employee Stock Options (ESOs) have always had a value, but until recently the accounting cost for the most commonly issued ESOs was $0. New accounting standards requiring a non-zero expense for ESOs in the profit and loss statement (P&L) have raised the bar for ESO valuation." (Contingencies)

Working Paper Abstract: Executive Pensions
Excerpt: "Because public firms are not required to disclose the monetary value of pension plans in their executive pay disclosures, financial economists have generally analyzed executive pay using figures that do not include the value of such pension plans. This paper presents evidence that omitting the value of pension benefits significantly undermines the accuracy of existing estimates of executive pay, its variability, and its sensitivity to performance companies." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full-text)

Bankrup.tcy and Employee Benefit Plans-- ERISA and the Bankrup.tcy Code (PDF)
31 pages. Excerpt: "As you can see, the Bankrup.tcy Court is an arena in which the interests of pension plan participants vie with the interests of creditors--creditors of their own and creditors of their employers. Given the increasing numbers of bankrup.tcy case filings, the combat in this arena can only intensify." (Gardner, Carton & Douglas)

Court Says All Options Proceeds Are Community Property
Excerpt: "A state of Washington appeals court has ruled that an ex-Microsoft worker can't keep any of the sale proceeds from his exercised stock options separate from his divorce case." (PLANSPONSOR.com; one-time registration required)

ERIC's January 3, 2006, Comments on Proposed Regulations under Code Section 409A (PDF)
43 pages. Excerpt: "[T]he proposed regulations do not resolve all of ERIC's concerns, and they raise new concerns as well. In this submission, ERIC recommends specific changes in the proposed regulations to resolve ERIC's concerns. ERIC looks forward to working with the Treasury and the Service on these recommendations." (The ERISA Industry Committee)

Jobs Act Significantly Impacts Nonqualified Deferred Compensation Plans
Excerpt: "What would your employees say if they had to pay an additional 20% tax on their non-qualified deferred compensation? The American Jobs Creation Act, signed into law by President Bush on Oct. 22, 2004, has substantial rulings relating to non-qualified deferred compensation plans (IRS Code Section 409A). Noncompliance can result in immediate taxation and substantial penalties." (Employee Benefit News)

Checklist: Tune Up Your Clients' Benefit Programs
Excerpt: "Even the best-oiled machines need a little energy boost sometimes. If your clients are large companies, review the pitfalls that could jeopardize the tax-favored status of their employee benefit plans." (Qualified Pension and Profit Sharing Plans, Warren, Gorham & Lamont via Journal of Accountancy)

Hewitt Federal Legislation Quick Guide Updated as of January 3, 2006
Excerpt: "Hewitt's Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding health and welfare benefit plans, retirement plans, and human resources and employment law." (Hewitt Associates)

Prominent ERISA Attorney, Roger Siske, Dies at 61 (PDF)
Excerpt: "It with great sadness and shock that I pass on the message below ... regarding the death of our colleague and friend, Roger Siske, yesterday afternoon. I ... salute him for his tremendous contribution to the employee benefits field." (Phyllis Borzi, Esq.)


Newly Posted Events
(Post Yours!)

Intermediate IRA Seminar
in Arkansas on January 17, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in South Carolina on January 17, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in New Hampshire on January 17, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in North Carolina on January 18, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in New Hampshire on January 18, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in Oklahoma on January 18, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in California on January 19, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in Virginia on January 19, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in Illinois on January 24, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in Minnesota on January 24, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in West Virginia on January 24, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in Illinois on January 25, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in Illinois on January 25, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in Ohio on January 25, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in Ohio on January 26, 2006
presented by Wolters Kluwer Financial Services

Intermediate IRA Seminar
in Indiana on January 26, 2006
presented by Wolters Kluwer Financial Services

Non-Qualified Deferred Compensation - New Section 409A
Legislation & Regulations

in New Jersey on January 10, 2006
presented by Worldwide Employee Benefits Network (WEB) - NJ


Newly Posted Press Releases
(Post Yours!)

IBM Changes U.S. Pension Plans, Effective in 2008, as Part of Ongoing Global Retirement Plan Strategy Shift
(IBM)

Council Comments On So-Called 'Fair Share Health Care' Legislation
(American Benefits Council)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Health & Welfare Associate
for Towers Perrin
in CA

Retirement Plan Specialist
for American Funds
in VA

Omniplus Conversion Tester
for Prestige Staffing
in CO

401k Conversion Specialist
for Boston Financial Data Services
in MA

Defined Benefit Team Leader
for Mercer HR Services
in MA, RI

Director, Defined Contributions New Business Large
for MassMutual Financial Group
in MA




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