BenefitsLink Retirement Plans Newsletter January 13, 2006 Today's sponsor: InvestLink (Click on company name or banner to learn more.) InvestLink offers the "best of Breed" software for Defined Contribution recordkeeping, administration, and trading. InvestLink offers "Best in Class" Administration and Record Keeping Software on an Application Services Platform (ASP) for 401(k), Profit Sharing and All Other Defined Contribution Plans. The product was designed by administrators for administrators. This ASP platform requires no hardware investment for clients. It provides secure, disaster recovery, web-based services all at one bundled price. Additionally, InvestLink converts your old data on to our new platform at NO cost to you, with NO installation for the standard platform. Training and support included in the bundled price. Also, if you are a distributor contact us and learn more about working with us to distribute your investment products. For a free demo and pricing, contact tim@invlink.com or call Tim Slavin-CEO at 1-888-507-LINK. (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')." (PLANSPONSOR.com; 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." (PLANSPONSOR.com; 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 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 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 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: 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