Retirement Plans
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January 13, 2006
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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)

FAQs Regarding Roth 401(k) Contributions
Excerpt: "These frequently asked questions and answers are provided for general information only and should not be cited as any type of legal authority." (U.S. Internal Revenue Service)

A Word to the Wise on Roth 401(k)s
Excerpt: "The Roth 401(k) is now a reality. But that reality still comes with unanswered questions and cautionary notes -- despite the IRS issuing 'final' regulations about the new retirement plan in the closing days of 2005." (MarketWatch)

Q & A on the Roth 401(k) Plan
Excerpt: "The Roth contribution doesn't provide a tax break. The results will be the same if the tax rate at the time of distribution is the same as the participant's current tax rate. So the most important issue is a participant's current tax rate versus his tax rate at the time of distribution. This will depend on future tax rates, a participant's income now versus at retirement, and changes in the government's tax policy." (Malvern)

401k Plan Design: Match, Loan, and Investment Menu Effects (PDF)
19 pages. Excerpt: "An in -- depth analysis of more than 500 retirement savings plans indicates that matching contributions have a modest incentive effect on plan participation rates, while loans and investment menu design can also influence employee savings behavior." (Vanguard Center for Retirement Research)

The Problem with Your Pension
Excerpt: "According to Standard & Poor's, in aggregate, the companies that make up the S&P 500 would have to set aside $40 billion this year to catch up and fully fund their pension plans. That means the 300 or so companies in the S&P 500 that offer pension plans would need to contribute an average of $130 million-plus to bring their pensions into compliance with their statutory funding statuses." (The Motley Fool)

PBGC Extends Use of the PFEA 85% Corporate Rate
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) has issued Technical Update 06-1 which waives reporting by certain employers of financial and actuarial information under section 4010 of the Employee Retirement Income Security Act (ERISA). According to the update, ERISA section 4010 generally requires controlled groups to report to the PBGC if the aggregate unfunded vested benefits in plans maintained by the controlled group exceed $50 million ('the 4010 Gateway Test')." (; one-time registration required)

New Web Site: Verizon Retirement Watch
Excerpt: "This site is a joint project of the Pension Rights Center and the Communications Workers of America. Together [they] hope to help Verizon employees respond to this unprecedented decision. In past years, angry employees of IBM, Verizon, and other corporations, working together, have mobilized to change employer decisions that would have dashed their expectations for a secure retirement." (Pension Rights Center / Communications Workers of America)

Collection of Criminal Fine Does Not Violate Anti-Alienation Provision of ERISA
Excerpt: "United States District Courts across the country have found that MVRA permits courts to consider ERISA protected assets in determining appropriate fines and restitution. Nothing in the text of the ERISA anti-alienation provision suggests that it needs to be specifically cited to in MVRA to justify such interpretation." (Cypen & Cypen)

Judge Refuses to Rule on Pension Recoupment Dispute
Excerpt: "A federal judge in Ohio has thrown out worker claims that their employer should be barred from collecting past pension benefit overpayments out of future payments. US District Judge Sandra Beckwith of the US District Court for the Southern District of Ohio issued the ruling in a participant lawsuit filed against Formica Corp., BNA reported." (; one-time registration required)

Issue in Brief: Is Adverse Selection in the Annuity Market a Big Problem? (PDF)
7 pages. Excerpt: "This brief takes another look at adverse selection by examining only the group of individuals who are likely to consider buying an actuarially fair annuity. It concludes that these 'potential annuitants' tend to live considerably longer than average and thus would receive a better deal from an annuity than the average person." (Center for Retirement Research at Boston College)

San Diego Pension Board Asked to Resign
Excerpt: "Calling for drastic reforms to the city's troubled pension system, Mayor Jerry Sanders used his first State of the City address Thursday night to ask the appointed board members of the retirement system to resign." (AP via The New York Times; one-time registration required)

The Public Pension Coordinating Council Standards Award Program (PDF)
3 pages. Excerpt: "The Public Pension Standards were established in 2002 to reflect minimum expectations for public retirement system management and administration. The Standards serve as a benchmark by which to measure public defined benefit plans. All public retirement systems and the state and local governments that sponsor them are encouraged to meet the standards." (Public Pension Coordinating Council)

Middlesex Retirement System Is a Case Study on the Need for Reform of Public Pension Systems
Excerpt: "The [Massachusetts] inspector general's investigation takes aim at the kind of hidden fee arrangements that were once all too common in the investment business, but have come under fire in an era of greater disclosure. The letter comes just as the pension regulator, the Public Employee Retirement Administration Commission, or PERAC, was considering loosening its sanctions against the Middlesex system." (The Boston Globe)

NJ Benefits Advisor Says State Should Allow Choice of DB, DC Plans for Employees (PDF)
7 pages. Excerpt: "Any intelligent dialogue about the 'problem' and its solution must include a discussion about offering a choice of plans, Defined Benefit or Defined Contribution. The [governor-appointed Benefits Review Task Force's] deliberations should have been the logical place to begin such a discussion but sadly the Panel would have nothing to do with it." (Joel L. Frank)

Happy New Year Plan Administrators: What to Expect in 2006
Excerpt: "There is significant coverage of pension plan design, funding and strategy but little talk about the resulting administration impact that results from new social policy decisions. This article overviews the new complexities facing administrators." (CCA Strategies, LLC)

Opinion: Chile's Social Security System No Model for the U.S.
Excerpt: "Contrary to what we have been told by advocates of Social Security privatization, evidence continues to mount that Chile's private account system is failing badly. The Century Foundation has been making that case for years." (The Century Foundation)

The Female Factor: Why Women Face Greater Retirement Risk (PDF)
24 pages. Excerpt: "This study offers an analysis of women's economic position in retirement and the factors that determine whether they will achieve financial security in what should be their golden years." (Americans for Secure Retirement Women's Institute for a Secure Retirement)

DB and DC Plans: A History, Market Overview and Comparative Analysis (PDF)
7 pages. Excerpt: "This article describes the historical evolution of defined benefit and defined contribution plans, discusses the current utilization of employer-sponsored defined benefit and defined contribution plans, and investigates the efficacy of the two types of retirement plans. The article then highlights some potential risks in the current trends of our employer-sponsored retirement plans." (International Foundation of Employee Benefit Plans)

Links to Items on Executive Comp, Benefits in General

IRS's Employee Plans News -- January 12, 2006, Special Edition (PDF)
2 pages. This Special Edition announces the release of the Roth 401(k) Final Regulations; contains reminders that the submission deadline for defined contribution pre-approved plan letters is January 31, 2006 and the deadline for the Abusive Transaction Settlement Initiative is January 23, 2006; and, highlights the new 401(k) Resource Guide. (U.S. Internal Revenue Service)

Overview: GO Zone Act Expands KETRA Relief and Corrects Dependent Definition (PDF)
2 pages. Excerpt: "The GO Zone Act codifies certain retirement plan tax relief originally provided in the Katrina Emergency Tax Relief Act of 2005 (KETRA) and extends it to taxpayers affected by Hurricanes Rita and Wilma." (Hewitt Associates)

2005-2006 Worldwide Total Remuneration-- Selected Charts (PDF)
7 pages. (Towers Perrin)

Hewitt Federal Legislation Quick Guide Updated as of January 10, 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)

U.S. Alleges Airline Cut Reservists' Benefits
Excerpt: "The U.S. government filed a lawsuit against AMR Corp.'s American Airlines Thursday charging that the airline denied benefits to three of its pilots during their service with the Naval Reserve and Air National Guard." (Business Insurance)

Audio: Sharing the Wealth -- Bonuses for Low-Income Workers
Excerpt: "A California company is taking the unusual step of giving its low-income workers a share in its annual profits. This year, each non-management worker at Timbuk2 ... received bonuses averaging $25,000." (Day to Day via National Public Radio)

Newly Posted Events
(Post Yours!)

Distributions and Taxation Workshop
Nationwide on January 19, 2006
presented by SunGard Corbel

Health Plans, HIPAA, and COBRA Update
Nationwide on April 27, 2006
presented by ALI-ABA (American Law Institute-American Bar Association)

One day benefits seminar
in Pennsylvania on February 1, 2006
presented by Central Pennsylvania Chapter - ISCEBS

Plan Design Workshop
Nationwide on February 8, 2006
presented by SunGard Corbel

Plan Design Workshop
Nationwide on February 15, 2006
presented by SunGard Corbel

Ready for Roth?
Nationwide on January 19, 2006
presented by SunGard Corbel

Newly Posted Press Releases
(Post Yours!)

Recent Tax Law Changes Affecting Small Businesses in the Gulf Region
(Internal Revenue Service (IRS))

International Society of Certified Employee Benefit Specialists Announces 2006 Officers
(International Society of Certified Employee Benefit Specialists (ISCEBS))

www.VerizonRetirementWatch Established To Help Verizon Employees Fight Pension Freeze
(Pension Rights Center)

AIM Investments(R) Launches Roth 401(k) Contribution Option
(AIM Investments)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Annual Plan Reporting Services Manager - PA
for Vanguard
in PA

Pension Administrator DB/DC
for Block Consulting Actuaries, Inc.
in CA

Assistant to the VP of Operations
for Associated Pension Consultants
in CA

Senior Consultant, Actuarial Services
for Summit RPS
in OH

Handy Links:

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Editor and Publisher: David Rhett Baker, J.D.