BenefitsLink Retirement Plans Newsletter January 9, 2006 Today's sponsor: www.ftwilliam.com (Click on company name or banner to learn more.) Register for our free on-line demo! www.ftwilliam.com offers the employee benefits professional the highest quality plan documents and forms at highly competitive prices. Plan documents on a per document basis are only $50/adoption agreement, or $100/volume submitter document (including cross testing). An annual subscription to all documents is only $1,500. The Form 5500 package and the IRS/PBGC form package are only $250 each. Prices include access for five concurrent users. (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) 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." (PLANSPONSOR.com; 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?" (401khelpcenter.com) 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." (PLANSPONSOR.com; 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 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 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 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 for ICMA-RC 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. in ANY STATE Junior Pension Administrator for Established TPA firm in Northern NJ in NJ Team Leader / Relationship Manager for Boyce & Associates, Inc in AZ Handy Links: View Today's Active Message Threads Search BenefitsLink Using the Web for Employee Benefits Research (hypertext article) Employee Benefits Library Copyright 2006 BenefitsLink.com, Inc.; except that you may reprint this newsletter in full (including this sentence) without obtaining our permission. Published by: BenefitsLink.com, Inc. https://benefitslink.com/about.html 1298 Minnesota Avenue, Suite H Winter Park FL 32789 (407) 644-4146 Fax: (407) 644-2151 Editor and Publisher: David Rhett Baker, J.D. Housekeeping: How to Sponsor an Issue Subscribe to a Daily Email Announcing Publication of Each Day's Newsletter Privacy Policy Archive of Previous Newsletters