Retirement Plans
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January 9, 2006
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Post-Death Qualified Domestic Relations Order Invalidated
Excerpt: "From the perspective of plan administration, this case illustrates the importance of reviewing purported QDROS carefully, to make sure that their terms will be clear under any possible future circumstances. Otherwise, the plan runs the risk of ending up in the middle of a court battle to interpret an ambiguous domestic relations order after the death of the participant, at which time the issue cannot be resolved simply by amending the existing QDRO." (Calhoun Law Group, P.C.)

401(k) Participant Funds Continue to Flock to Overseas Offerings
Excerpt: "[According to the Hewitt 401(k) Index, p]articipant trading volumes remained modest and relatively balanced as 2005 wound to a close, but 401(k) investors continued to demonstrate an affinity for international offerings." (; one-time registration required)

Roth 401(k) Gets Cool Reception
Excerpt: "Courtesy of the federal government, workers this month got a new option to save for retirement-- a Roth 401(k). Judging by the initial reaction from companies and workers, the whole idea has fallen flat as a pancake." (The Dallas Morning News; one-time registration required)

Overview: Roth 401(k) Requirements Clarified in Final Regulations
Excerpt: "Both the newly issued regulations and the regulations they are amending, under Code Sec. 401(k) and Code Sec. 401(m), are effective for plan years beginning on or after January 1, 2006." (CCH INCORPORATED)

Making Risk Tolerance Questionnaires Mandatory for 401(k) Plans
Excerpt: "Filling out a risk tolerance questionnaire for an investment client is the first step in the building of an investment portfolio. Without this knowledge you cannot, with good ethics, recommend any investment to a client. How does this work in the 401k world with our plan participants and their investments?" (

Defined Contribution Provisions Gain Traction as Pension Reform Moves Ahead
Excerpt: "Defined contribution provisions are included in both the Pension Security and Transparency Act (PSTA, S.1783), approved by the Senate on November 16, and the Pension Protection Act (PPA, H.R.2830), approved by the House on December 15. But the House and Senate bills differ significantly, so negotiations will continue." (Watson Wyatt Worldwide)

Lifecycle Fund Mix May Be too Conservative to Produce a Sound Retirement
Excerpt: "Some time-targeted lifecycle funds used by an increasing number of defined-contribution plans as a choice or default may have a portfolio mix that is too conservative for employees in those funds to have a sound retirement. The problem for sponsors is that by the time they know whether these relatively new options are effective for employees, it may be too late to do anything about it." (Employee Benefit News)

Time to Tune Up the 401(k) Retirement Engine
Excerpt: "I must admit that I do yearn for the good old days where you worked for a company an entire career and then could count on a pension for life, a sizable Social Security check, and perhaps even medical benefits in retirement. But the fact is that most Americans today rely on defined contribution plans to save for their 'Golden Years.' Three basic changes are needed to make defined contribution plans more viable as retirement vehicles." (Richard D. Quinn via Employee Benefit News)

The One Fund Solution for 403(b) and 457(b) Participants?
Excerpt: "Investors simply choose an estimated retirement date in the future -- say 2027 -- and select the target-date retirement fund that corresponds most closely to this date. Fund operators take it from there as they guide the fund like a missile to its ultimate destination: retirement." (bWise Guys, LLC)

Opinion: Pension Accounting Hurts Managers -- And They in Turn Hurt Us
Excerpt: "The influence of corporate America has virtually bankrupted the accounting process. FASB needs to quit hearkening to the selfish ambitions of CEOs and publish standards that accord with economic facts. Until then, those who believe FASB-based numbers will have to suffer the outcomes." (SmartPros Ltd.)

Opinion: Benefit Math: With Defined Benefits Plans, 1+1=3
Excerpt: "[C]onsider two corporate mega-trends: the drives toward greater transparency and more accountability. And as with all such 'master themes,' these two have had a huge impact on benefit plan theory and design. The subsidies inherent in benefit plans have become clearer (more 'transparent') to everyone - sponsors, participants and policymakers. And the utility and fairness of those subsidies has been challenged (called to 'account')." (Tom Terry via Employee Benefit News)

The Rush to Shut Down Pensions
Excerpt: "Employee activists are outraged. 'It's difficult to understand how they're doing this in the context of wanting to be a world-class employer. You see companies of this stature, Verizon, IBM, seemingly in concert, in a race to the bottom for the defined-benefit system,' says John Hotz, deputy director of the Pension Rights Center, a Washington consumer organization focused on retirement rights." (BusinessWeek Online)

Overview: New Bankrup.tcy Legislation Adds Protections for Retirement Plans
Excerpt: "The Bankrup.tcy Abuse Prevention and Consumer Protection Act of 2005 (effective October 17, 2005) clarifies the rights of debtors and expands the protections their retirement assets have in federal bankrup.tcy proceedings. But outside of federal bankrup.tcy things remain murky, and there still is uncertainty about whether retirement funds are subject to state attachment and garnishment proceedings." (Journal of Accountancy)

Overview: Post-Termination Pay -- Proposed 415 Regulations Suggest Changes to Come (PDF)
2 pages. Excerpt: "The proposed regulations are comprehensive and incorporate the many changes reflected in Internal Revenue Service notices, revenue rulings, and other guidance since the last time comprehensive regulations were published in 1981. This Management Alert discusses only post-termination compensation changes." (Seyfarth Shaw LLP)

Court Approves Pension Access to Pay Criminal Fines
Excerpt: "A federal appellate court has rejected efforts by a man convicted of child pornography to keep the federal government from dipping into his pension to help pay his $200,000 criminal fine." (; one-time registration required)

The Risk of Self-Directed Brokerage Accounts in 401(k)s
Excerpt: "Brokerage firms (and other vendors), of course, have been all too happy to peddle the SDBA option to fiduciaries of the 401(k) plans for these professional groups. Part of their sales pitch to fiduciaries is that they will incur less liability by offering a greater number of investment options to plan participants." (Morningstar)

Five Officials in San Diego Are Indicted Over Pensions
Excerpt: "San Diego's legal and financial troubles deepened on [January 6, 2005] as a federal grand jury handed up fraud and conspiracy indictments against five current and former officials of the city's pension system." (The New York Times; one-time registration required)

How to Prevent Investment Adviser Fraud
Excerpt: "This article seeks to explain briefly the current legal framework defining fraudulent conduct and what an investment adviser firm can do to avoid accusations of fraud. In particular, it describes how an adviser may commit fraud by failing to disclose adequately potential conflicts of interests with clients, as opposed to affirmative misrepresentations to clients." (Journal of Accountancy)

GAO's Report on Cash Balance Plans: Flawed and Misleading
Excerpt: "The Government Accountability Office (GAO) recently released a study on how participants fare in cash balance plan conversions. In a sharp departure from earlier studies, the GAO report concludes that such conversions significantly reduce most participants' retirement benefits." (Watson Wyatt Worldwide)

Links to Items on Executive Comp, Benefits in General

Milliman's Monthly Benefit News and Developments, January 2006 (PDF)
2 pages. The newsletter provides a summary of the previous month's legislative, regulatory, and judicial information on employee Benefits. (Milliman)

More Companies Ending Promises Made to Employees for Retirement
Excerpt: "The death knell for the traditional company pension has been tolling for some time now. Companies in ailing industries like steel, airlines and auto parts have thrown themselves into bankrup.tcy and turned over their ruined pension plans to the federal government." (The New York Times; one-time registration required)

Overview: DOL Issues Final USERRA Regulations and Employer Notice
Excerpt: "The final regulations provide detailed guidance in a question-and-answer format on important employer and employee obligations and rights under USERRA, .... This Legal Alert discusses some of the most significant employment and employee benefits issues addressed in the final regulations." (Kilpatrick Stockton LLP)

Securities and Exchange Commission January 17 Meeting to Address Compensation Disclosure
Excerpt: "The Commission will consider whether to propose amendments to the disclosure requirements for executive and director compensation, related party transactions, director independence and other corporate governance matters, and securities ownership of officers and directors." (U.S. Securities and Exchange Commission)

Worldwide Pay and Benefit Headlines -- December 2005 Edition (PDF)
12 pages. This edition covers international and European issues and includes items on Austria, Germany, India, Ireland, Netherlands, New Zealand, Switzerland, and the United Kingdom. (Towers Perrin)

Overview: Final USERRA Regulations Detailing the Reemployment Rights of Military Service Members
Excerpt: "While the DOL's final regulations under the USERRA clarify a number of previously uncertain areas, interpretation and application of the USERRA can still be confusing in a number of respects." (Littler Mendelson)

Newly Posted Events
(Post Yours!)

409A Regs At Last & How Employers Should React
in Georgia on January 19, 2006
presented by Worldwide Employee Benefits Network (WEB) - Atlanta Chapter

After Enron: Employer Stock in 401(k) Plans
Nationwide on January 10, 2006
presented by ABA Joint Committee on Employee Benefits

An Introduction to Health Savings Accounts
in Minnesota on January 19, 2006
presented by Wolters Kluwer Financial Services

An Introduction to Health Savings Accounts
in Minnesota on February 23, 2006
presented by Wolters Kluwer Financial Services

Benefits Boot Camp
in Georgia on February 9, 2006
presented by Worldwide Employee Benefits Network (WEB) - Atlanta Chapter

Domestic Relations Basics: QDROs and QMCSOs
Nationwide on January 24, 2006
presented by ABA Joint Committee on Employee Benefits

HCEs and Key Employees - Basics and Beyond
Nationwide on January 31, 2006
presented by SunGard Corbel

IRA Jump Start - An Introduction to IRA's
in Minnesota on January 11, 2006
presented by Wolters Kluwer Financial Services

Jump Start - An Introduction to IRA's
in Minnesota on February 8, 2006
presented by Wolters Kluwer Financial Services

Roth Final Regulations - For Now
Nationwide on January 24, 2006
presented by SunGard Corbel

Traditional and Roth IRA Contributions
in Minnesota on January 12, 2006
presented by Wolters Kluwer Financial Services

Traditional and Roth IRA Contributions
in Minnesota on February 22, 2006
presented by Wolters Kluwer Financial Services

Transfers, Rollovers, and Direct Rollovers
in Minnesota on January 18, 2006
presented by Wolters Kluwer Financial Services

Wellness Advisor-- It's More Than a Medical Plan-- Case Study - Teleweb
Nationwide on January 19, 2006
presented by International Foundation of Employee Benefit Plans

Newly Posted Press Releases
(Post Yours!)

American Bankers Association To Be Sponsor Of SPARK National Conference
(SPARK - the Society of Professional Administrators and Recordkeepers)

Assistant Secretary of Labor Addresses Ft. Wayne, Ind., Businesses on President's Retirement Security and Health Care Agenda
(U.S. Department of Labor, Employee Benefits Security Administration)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Pension Administrator
for Primark Benefits
in CA

Internal Sales Specialist
for Principal Financial
in IA, MA

Administrator, Retirement & Savings
for Ball Corporation
in CO

Client Service Manager
for Fidelity Investments
in KY

Retirement Plan Specialist II
for Raymond James Financial
in FL

Investor Services Technical Specialist
in DC

Tax Reporting Supervisor - PA
for Vanguard
in PA

Retirement Services District Manager ( Ft. Wayne/South Bend)
for ADP
in IN

Employee Benefits Administration
for Primary Consulting, Inc.

Junior Pension Administrator
for Established TPA firm in Northern NJ
in NJ

Team Leader / Relationship Manager
for Boyce & Associates, Inc
in AZ

Handy Links:

Copyright 2006, Inc.; except that you may reprint this newsletter in full (including this sentence) without obtaining our permission.

Published by:, Inc.
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Editor and Publisher: David Rhett Baker, J.D.