Retirement Plans
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January 11, 2006
Today's sponsor: ASPPA • Working for America's Retirement™

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Register for the '06 LABC Conference Today! January 26-27, 2006

The Los Angeles Benefits Conference provides an opportunity to discuss and exchange information on employee benefit issues with colleagues and local, regional and national government employees from the Internal Revenue Service and the Department of Labor. And don't miss the special pre-conference conversations with the IRS and DOL on January 25, 2006.

Contact ASPPA to register for the LABC conference and the pre-conference event at

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Overview: Final Roth 401(k) Regulations!
Excerpt: "The Roth 401(k) was created by Economic Growth and Tax Recovery Reconciliation Act of 2001 (EGTRRA), which added Section 402A to the Internal Revenue Code. The IRS is currently in the process of issuing the rules on the Roth 401(k) in three parts: first, final regulations on administrative issues, which were proposed in March 2005; second, proposed rules on distributions and taxation and; third, a 'sample' amendment to incorporate the Roth 401(k) provisions into the plan document." (McKay Hochman Co., Inc.)

For More Companies, 401(k) Enrollment Becomes Automatic, According to Survey
Excerpt: "More than one-third of large employers say they're likely to start automatically enrolling employees and increasing the employees' 401(k) contributions in 2006, according to Hewitt. That's on top of the 24% of companies that already enroll employees automatically and 17% that regularly step up employees' contributions. (Workers can always opt out of 401(k)s or cut their contributions.)" (USA TODAY)

Audio: State and Local Governments Face New Accounting Rule
Excerpt: "State and local governments often have difficulties balancing their budgets, and this year it is going be even more difficult. A new accounting rule has been approved that may complicate the way cities and states calculate employee retirement benefits." (Morning Edition via National Public Radio)

Text of Final Reg; Annual Funding Notice for Multiemployer Defined Benefit Plans (PDF)
12 pages; effective February 10,2006. (Employee Benefits Security Administration, U.S. Department of Labor)

More Employers Likely to Freeze Defined Benefit Plans, According to Hewitt Survey
Excerpt: "Nearly one-third of employers with traditional final-pay plans responding to a Hewitt Associates Inc. survey said it was either 'very likely' or 'somewhat likely' in 2006 that they would no longer allow new employees to participate in the plans." (Business Insurance)

DOL Requires Funding Notice for Multiemployer Pension Plans
Excerpt: "The Department of Labor ... has issued final rules requiring administrators of multiemployer pension plans to issue an annual notice of the funding status of the plans. According to a press release the requirement falls under the provisions of the Pension Funding Equity Act of 2004 ...." (; one-time registration required)

U.S. Pension Agency Says Bill Would Gut Oversight of Plans
Excerpt: "Part of a pension bill moving through Congress would gut the ability of pension insurers to monitor the most severely underfunded private retirement plans, the head of the Pension Benefit Guaranty Corp. (PBGC) warned [yesterday]. The provision, in the House of Representatives pension overhaul legislation, would put 'blinders' on the PBGC, the federal agency's Executive Director Bradley Belt told the Reuters Regulation Summit in Washington." (Reuters)

Oregon's PERS to Bill Some Retirees for Excess Payments
Excerpt: "The state retirement system is 'settling up' with the first batch of retired public employees whose pensions were affected by two 2005 Oregon Supreme Court rulings. The Public Employees Retirement System began mailing notices last week to 1,500 people who have retired since April. They have been getting monthly pensions set at 'estimated' levels, pending the outcome of the Strunk and city of Eugene court cases." (

Method of Offset for Prior Distributions Violates Anti-Cutback Rule
Excerpt: "The US 2nd Circuit Court of Appeals has ruled that Xerox Corp's method for offsetting the pension benefits for a group of rehired employees by their prior plan distributions violates the Employee Retirement Income Security Act anti-cutback rule." (; one-time registration required)

Issue Brief: Retirement Plan Participation and Retirees' Perception of Their Standard of Living (PDF)
44 pages. Excerpt: "This Issue Brief focuses on a critical factor in retirement security: the presence of income or assets from an employment-based retirement plan. It is the third in a series of EBRI publications based on the Retirement and Pension Plan Coverage Topical Module of the 2001 Survey of Income and Program Participation (SIPP), ...." (Employee Benefit Research Institute)

Reaching Age 50 Has Benefits for Thrift Savings Plan Participants
Excerpt: "Effective Jan. 1, over-50 federal-military investors can put in an extra $5,000 for the year 2006. That's in addition to the new, higher limit of $15,000 that TSP investors will be able to contribute via payroll deduction this year." (The Washington Times)

In Effort to Recruit, Military to Begin Offering Matching Contributions to TSP Participants
Excerpt: "Three years ago, Congress opened the Thrift Savings Plan, the 401(k)-type retirement program for civil service and postal employees, to the military. .... Congress, in an effort to provide more flexibility in this area, recently gave a green light to the military services to use matching contributions as a perk that can be offered first-time recruits who agree to serve longer than two years." (The Washington Post; one-time registration required)

Links to Items on Executive Comp, Benefits in General

Overview: Deferred Compensation and Section 409A -- Changes in Control
Excerpt: "Under Section 409A, a deferred compensation arrangement can provide for payouts only upon certain defined events. Under normal circumstances, payouts are triggered by a 'separation from service' or made pursuant to a payment schedule fixed at the time of the deferral. However, if provided in the deferred compensation arrangement, a 'change in control event,' as defined under Section 409A, can also trigger payouts." (O'Melveny & Myers LLP)

Court Considers Salt Lake City Domestic Partner Benefits
Excerpt: "A judge heard arguments Thursday on a proposal that would extend health care benefits to domestic partners of Salt Lake City employees. In September, Mayor Rocky Anderson signed an executive order to extend the benefits." (AP via

Overview: Further IRS Guidance on 409A with IRS Notice 2006-4
Excerpt: "On December 23, 2005, the Internal Revenue Service issued Notice 2006-4. Notice 2006-4 provides transition relief from the valuation rules applicable to private company stock option and stock appreciation rights ('Stock Rights'). Notice 2006-4 will be applicable until the effective date of the final regulations under Section 409A (which are expected to become effective on January 1, 2007)." (Orrick, Herrington & Sutcliffe LLP)

SEC to Vote on Executive Pay Disclosure Plan
Excerpt: "The five SEC commissioners are scheduled to vote at a public meeting next Tuesday on the plan, which makes the biggest changes in rules governing disclosure of executive compensation since 1992. The proposal would be opened to a public comment period and could be formally adopted by the SEC sometime afterward -- possibly in time for the spring company proxy season next year." (AP via

Audio: SEC Considers New Rules on Divulging Executive Pay
Excerpt: "The Securities and Exchange Commission will soon consider new rules governing the reporting of executive pay. In addition to salary information, companies would be required to divulge how much top executives earn in perks, bonuses and stock payouts." (Morning Edition via National Public Radio)

News Analysis: The Tax Opinions of Judge Alito -- Employee Benefits Cases on Pages 5-6 (PDF)
7 pages. Excerpt: "Lee A. Sheppard analyzes the tax opinions written by Third Circuit Judge Samuel Alito, whom President Bush has nominated to the Supreme Court, and concludes that the judge picks and chooses his arguments based on where he wants the law to go." (Tax Notes via TaxProf Blog)

Newly Posted Events
(Post Yours!)

Deferred Compensation for Non-Profits and Pass-Through Organizations
Nationwide on January 18, 2006
presented by Retirement Capital Group

Newly Posted Press Releases
(Post Yours!)

Tax Law Changes Related to Hurricanes Katrina, Rita and Wilma
(Internal Revenue Service (IRS))

New Health Cost Increase Figures Underscore Need To Accelerate Value Purchasing Practices
(American Benefits Council)

The New Retirement Mindscape(SM)
(Ameriprise Retirement Services)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Defined Contribution Client Account Manager
for New York Life Investment Management LLC
in NJ

Participant Services Center Supervisor
for New York Life Investment Management LLC
in NJ

Account Executive
for Transamerica
in IL

Account Service Representative
for CBIZ
in CO

Associate Attorney
for Kraw & Kraw
in CA

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.