Retirement Plans
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January 31, 2006
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Overview: Determination Letter Program -- IRS Revenue Procedure 2005-66 Changes Application Process (PDF)
4 pages. Excerpt: "The Internal Revenue Service ('IRS') recently issued new revenue procedures that significantly change the determination letter application process for all types of plans submitting an application for determination. These new procedures include both individually designed plans and pre-approved (master and prototype 'M&P' and volume submitter) plans." (Brown Rudnick Berlack Israels LLP)

Americans' Savings Rate Declined in 2005
Excerpt: "The Commerce Department reported Monday that Americans' personal savings fell into negative territory at minus 0.5 percent last year. That means that people not only spent all of their after-tax income last year but had to dip into previous savings or increase their borrowing." (AP via The New York Times; one-time registration required)

DOL's Chao Says U.S. Pension Overhaul an Administration Priority
Excerpt: "Chao, speaking to editorial writers and journalists in a conference call, called on Congress to complete action swiftly on such an overhaul." (AP via The New York Times; one-time registration required)

WP Abstract: Reducing the Complexity Costs of 401(k) Participation through Quick Enrollment(TM)
Excerpt: "[The authors] study a low-cost manipulation designed to simplify the 401(k) enrollment process. Employees are given the option to make a Quick Enrollment(TM) election to enroll in their 401(k) plan at a pre-selected contribution rate and asset allocation. By decoupling the participation decision from the savings rate and asset allocation decisions, the Quick Enrollment(TM) mechanism simplifies the savings plan decision process." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full-text)

Working Paper Abstract: Lifecycle Asset Allocation & the Distribution of 401(k) Retirement Wealth
Excerpt: "This paper examines how different asset allocation strategies over the course of a worker's career affect the distribution of retirement wealth and the expected utility of wealth at retirement. It considers both rules that allocate a constant portfolio fraction to various assets at all ages, as well as 'lifecycle' rules that vary the mix of portfolio assets as the worker ages. The analysis simulates retirement wealth using asset returns that are drawn from the historical return ...." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full-text)

Opinion: Why Retirement Plan Participants 'Get It'
Excerpt: "One of the more pervasive themes about retirement plan investors is that they don't know what they're doing, and it's generally accompanied by some sort of subtextual survey that purports to prove the point. .... Well, as a retirement plan participant, I have always resented that characterization. " (Nevin Adams via OnWallStreet)

Opinion: The Coming 401(k) Disaster
Excerpt: "Personal responsibility for pension and health care saving is an important part of the solution to these most-important of issues. But without a policy framework it will fail as surely as the government and corporate benefit programs that preceded it." ( -- The Challenging Investor Journal)

The Two Kinds of Roths
Excerpt: "Employers have been slow to offer the Roth 401(k) -- a workplace savings plan that became available Jan. 1 -- and I can see why. They're hard to explain, they're not for everyone and they will no longer be available after 2010 unless Congress renews them." (San Francisco Chronicle)

Overview: IRS Issues Proposed Regulations Regarding Distributions from Roth 401(k)s
Excerpt: "Only 'qualified distributions' from Roth 401(k) accounts are eligible for tax preferred treatment. A qualified distribution is one that occurs after a five-year period of participation and that either (1) is made on or after the date the employee attains age 59-1/2, (2) is made after the employee's death, or (3) is attributable to the employee being disabled." (Deloitte's Washington Bulletin via

Working Paper: The Inattentive Participant -- Portfolio Trading Behavior in 401(k) Plans (PDF)
40 pages. Excerpt: "Most workers in defined contribution retirement plans are inattentive portfolio managers: only a few engage in any trading at all, and only a tiny minority trades actively. Using a rich new dataset on 1.2 million workers in over 1,500 plans, [the authors] find that most 401(k) plan participants are characterized by profound inertia." (Pension Research Council)

Actuaries and the Pensions Crunch (PDF)
7 pages. Excerpt: "False precision and reckless approximation have defined the actuarial profession's role in the crisis that has enveloped corporate pensions on both sides of the Atlantic. Although actuaries have not been the only cause -- companies, trustee boards, governments and accounting rules have all played their part -- they have been surprisingly hapless at their main task: forecasting funds' future liabilities and assessing how many assets will be required to meet them." (The Economist via Ryan ALM, Inc.)

Pension Fund Assets Outgrew Liabilities Worldwide in 2005
Excerpt: "Growth in institutional pension assets in the 11 major international markets was 17%, measured in local currencies, in 2005, while pension fund liabilities increased 9%, according to global research from Watson Wyatt." (; one-time registration required)

Pensions, Bankrup.tcy, and the Pension Benefit Guaranty Corporation (PDF)
31 pages. Excerpt: "With the 'baby boomers' beginning to reach retirement age and termination of large pension plans by several well-known companies undergoing restructuring in bankrup.tcy, the adequacy and security of private pension plans has become a hot topic in the press, among economists, and on Capitol Hill. Whenever the issue comes up, the financial well-being of the [PBGC] and the reliability of the pension safety net the agency provides are part of the discussion." (Annual Survey of Bankrup.tcy Law via Keightley & Ashner LLP)

Overview: DOL Issues Final Regulation on the New Multiemployer Funding Notice (PDF)
2 pages. Excerpt: "A Segal Company Bulletin that summarizes highlights of the recently released final regulation for the annual funding notice that administrators of multiemployer defined benefit pension plans are required to provide for this first time in 2006. The notice requirement ... was introduced by the Pension Funding Equity Act of 2004 ...." (The Segal Company)

New York State Senate Approves Bill Raising Earnings Cap for Government Pensioners
Excerpt: "The bill extends from $27,000 to $30,000 the amount seniors can make per year without paying penalties in their pensions. The provision would go into effect in 2007." (The Business Review (Albany) via; one-time registration required)

Public Pension Legislative Briefing Book for the 109th Congress Second Session (PDF)
8 pages. Excerpt: "This book is prepared for [the] information and review [of congressional pension legislative staff] ...." (National Conference on Public Employee Retirement Systems)

NAPF Criticizes 'Monolithic' Turner Proposals for UK Pension Reform
Excerpt: "In an outspoken attack, Christine Farnish, chief executive of the National Association of Pension Funds, has dubbed the proposals for UK pension reform put forward by Lord Turner 'Stalinist'." (Insurance Business Review Online)

IRS Plans More Pension Inspections in 2006
Excerpt: "The Internal Revenue Service is stepping up its examinations of companies' retirement plans this year, aiming to catch those that are cheating their workers or the government and to ensure the plans meet federal regulations. The offerings to be examined include traditional pensions, 401(k)s and profit-sharing plans." (The Quad-City Times)

Links to Items on Executive Comp, Benefits in General

Overview: The SEC Proposes Changes to the Executive and Director Compensation Disclosure Rules (PDF)
7 pages. Excerpt: "The proposed amendments would however, require companies to provide more detailed disclosure concerning the total compensation received by executive officers and directors (including information concerning equity awards, perquisites, and retirement benefits) in a new format intended to be more easily understood. The proposed amendments would impact the disclosure provided in proxy statements, annual reports and registration statements." (Sutherland Asbill and Brennan LLP)

MetLife Employee Benefits Benchmarking Report (PDF)
136 pages. Excerpt: "The MetLife Employee Benefits Benchmarking Report is based on findings from MetLife's 2004 Study of Employee Benefits Trends, and covers benefits-related topics from the perspectives of both employers and employees." (Metropolitan Life Insurance Company; registration may be required)

Principal Guide Offers Benefits Excellence Benchmarks
Excerpt: "A new guide published by the Principal Financial Group offers benefits managers a quick way to compare their own lineup with those offered by the 10 firms named to Principal's top 10 list for benefit programs." (; one-time registration required)

Welcome to BenefitsLink advertiser Polycomp Administrative Services, Inc.
Excerpt: "Polycomp is a California-based consulting leader in providing customized retirement plans and benefit administration with personalized service since 1974. Our services include Qualified Plans, Self-directed IRAs, Cafeteria Plans, Automatic Rollover IRAs and Association Trust Plans." (

ICI and Other Financial Industry Associations Comment on Labor Department Proposal
Excerpt: "On behalf of the Investment Company Institute, the American Council of Life Insurers, the Investment Adviser Association, and the Securities Industry Association, [the authors] are writing to comment on proposed amendments to Form LM-30 and related issues concerning Form LM-10." (Investment Company Institute)

Working Paper Abstract: The Value of Stock Options to Non-Executive Employees
Excerpt: "This study empirically investigates the value employees place on stock options using information from the option exercise behavior of individuals." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full-text)

Newly Posted Events
(Post Yours!)

Disciplining Health Care Costs by Demanding Better Value
Nationwide on February 1, 2006
presented by Kaiser Family Foundation

Recent ERISA Preemption Cases
Nationwide on February 7, 2006
presented by Paul, Hastings, Janofsky & Walker LLP

Newly Posted Press Releases
(Post Yours!)

PBGC To Meet With United Airlines Pension Participants In Chantilly, Va.
(Pension Benefit Guaranty Corporation (PBGC))

Changing The Employee Mindset From Entitlement to Engagement: It Can Be Done! New Guide Features Tips To Motivate Workers To Make Critical Benefits Decisions
(Principal Financial Group)

New Fiduciary Tools Available for Concerned Retirement Plan Sponsors' Checklist, Sample Documents Help the Principal Financial Group Clients Play by the Rules
(Principal Financial Group)

Health Coaching Propels Leade Health to Strong Growth, Lowers Employer Medical Costs
(Leade Health)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Pension Administrator
for Northwest Plan Services, Inc.
in WA

401(k) Administrator
for Robert Grathwohl Associates, Inc.
in CT

Senior Relationship Manager
for DailyAccess Corporation
in AL

Supervisor - Eligibility/COB (mid to upper $40K)
for 1199SEIU Benefit and Pension Funds
in NY

Sr. Benefits Systems Administrator (HRIS)
for Twentieth Century Fox
in CA

ERISA Paralegal/Plan Document Specialist
for Milliman, Inc.
in TX

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