Retirement Plans
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February 3, 2006
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Survey Findings: Hot Topics in Retirement 2006 (PDF)
25 pages. Excerpt: "In October/November 2005, Hewitt surveyed human resources professionals to learn their likely areas of focus and action over the next year regarding their defined contribution plans and defined benefit plans for their active salaried U.S. employees." (Hewitt Associates)

Overview: Comprehensive IRS Guidance on Roth 401(k) and 403(b) Plans (PDF)
9 pages. Excerpt: "The IRS recently issued proposed and final regulations that provide guidance on the requirements applicable to Roth contributions under Code section 402A. 71 Fed. Reg. 6 (Jan. 3, 2006) and 71 Fed. Reg. 4320 (Jan. 26, 2006)." (Groom Law Group)

Pension Underfunding Penalties Entitled to Administrative Expense Priority in Bankrup.tcy, IRS Says
Excerpt: "The IRS has clarified its position that pension under-funding taxes related to a bankrup.tcy estate's postpetition pension obligations are entitled to administrative expense priority." (CCH INCORPORATED)

Pension Battle May Entangle Mogul's Home in Hamptons
Excerpt: "Ira L. Rennert's colossal house in the Hamptons, built with the riches from his sprawling industrial empire, has withstood lawsuits from angry neighbors, appeals to the local zoning board, even an attempted documentary filming by Michael Moore. But now a new challenge is looming. The federal agency that insures pensions appears poised to lay claim to Mr. Rennert's 29-bedroom oceanfront estate, ..., to make sure he delivers on hundreds of millions of dollars in pensions ...." (The New York Times; one-time registration required)

The 'Funded Status' of a Multiemployer Pension Plan: What Are the Measures and How Are They Used? (PDF)
4 pages. Excerpt: "The various ways in which to measure the funded status of a pension plan can cause confusion for trustees and plan participants alike." (The Segal Company)

Increased PBGC Premiums Are In Effect (PDF)
1 page. Excerpt: "Yesterday [February 2], the House passed for the second time S.1932, the Deficit Reduction Act of 2005. Procedural rules required a second vote. The Senate had passed this broad legislation on December 19, 2005 and the measure now heads to the President who has indicated that he will sign it into law. This fiscal year 2006 budget reconciliation bill significantly increases the premiums plan sponsors must pay to the Pension Benefit Guaranty Corporation (PBGC)." (Buck Consultants)

Congress Approves PBGC Premium Increase
Excerpt: "Federal lawmakers Wednesday gave final approval to budget legislation that boosts by more than 50% the base premium rate charged by the Pension Benefit Guaranty Corp. and imposes a surcharge on employers terminating plans during bankrup.tcy." (Business Insurance)

Key Steps to Communicating Complex Retirement Plan Information Successfully (PDF)
1 page. This is a supplement to Segal's Bulletin titled: 'The 'Funded Status' of a Multiemployer Pension Plan: What Are the Measures and How Are They Used?" (The Segal Group, Inc.)

Overview: Deadline for Reforming Impermissible Suspension of Benefits Provisions Is Extended
Excerpt: "[M]any plan sponsors may be unaware that their plans' suspension of benefits provisions have become violative of federal law even without ever having been amended -- e.g., as a result of the merger of an acquired company's plan that contained more lenient (or no) suspension of benefits rules into a plan that imposes benefit suspension rules." (McDermott Will & Emery)

Comments Dated February 1, 2006, on Multiple Annuity Starting Dates
Excerpt: "This letter is a supplement to ASPPA's prior comment letters submitted on July 25, August 10 and October 12, 2005, and is a follow-up to our meeting with Treasury and IRS representatives on January 9, 2006. It provides some additional analysis on the multiple annuity issue that we raised in the August 10 and October 12 letters." (American Society of Pension Professionals & Actuaries)

Testimony on ESOP Recommendations of President's Advisory Panel on Federal Tax Reform (PDF)
11 pages. Excerpt: "The ESOP Association's Statement to the Small Business Subcommittees on Rural Enterprises, Agriculture and Technology and Tax, Finance and Exports Hearing on 'Transforming the Tax Code: An Examination of the President's Tax Reform Panel Recommendation'" (ESOP Association)

Blog: Participant Not Subject to Investment Manager's Arbitration Clause
Excerpt: "A participant is not compelled to arbitrate an ERISA fiduciary breach claim under an arbitration agreement between the plan and its investment manager, according to a 9th Circuit Court of Appeals decision affirming a district court ruling. [Comer v. Micor and Salomon Smith Barney, CA9, No. 03-16560, 2/1/06]" (BeneBlog)

Energy Firm Cleared of Company Stock Fiduciary Breach
Excerpt: "A federal judge in Texas has cleared Reliant Energy of charges that it breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by keeping company stock as a retirement plan investment option even after it was no longer prudent." (; one-time registration required)

EBSA Changes Prohibited Class Transaction Rules
Excerpt: "The US Department of Labor's Employee Benefits Security Administration (EBSA) has put out two amendments to class exemptions allowing plans to conduct transactions with a wide variety of financial institutions and insurers. An EBSA news release said that, under the amendments to Prohibited Transaction Exemption (PTE) 75-1, a plan may engage in transactions with broker-dealers, reporting dealers and banks that are plan fiduciaries." (; one-time registration required)

Correcting PTs During a DOL Investigation Can Be Costly
Excerpt: "On many occasions a retirement plan fiduciary makes an investment of plan assets with the best of intentions, only to find the investment inadvertently constitutes a prohibited transaction. When this prohibited transaction continues for many years before being discovered during either an IRS audit or an Employee Benefits Security Administration (EBSA) investigation, the cost to the fiduciary is likely to be very significant." (Reish Luftman Reicher & Cohen)

Pension Asset Pooling for Multinational Companies (PDF)
4 pages. Excerpt: "This report outlines the major benefits of and potential obstacles to asset pooling, the potential pooling vehicles, and the types of companies that should be most interested in asset pooling." (Hewitt Associates)

Appendix: Additional Data on IRA Ownership in 2005 (PDF)
13 pages. Excerpt: "The January 2006 issue of Fundamentals, 'The Role of IRAs in Americans' Retirement Preparedness,' [] covers Individual Retirement Account (IRA) ownership in 2005. .... This Appendix provides supplementary tables with additional detail for the January 2006 Fundamentals." (Investment Company Institute)

Text of Amendment to PTE 75-1 (Class Exemption) (PDF)
5 pages; retroactively effective to 1975. (Employee Benefits Security Administration, U.S. Department of Labor)

Text of Amendment to PTE 84-24 (Class Exemption for Purchases of Insurance Securities and Contracts) (PDF)
4 pages; includes restatement of PTE 84-24. (Employee Benefits Security Administration, U.S. Department of Labor)

Hedgeworld Hedge Fund Focus: ERISA Ponders Alternatives
Excerpt: "The Employee Retirement Income Security Act of 1974 (ERISA) has been a provision most hedge fund managers have sought to avoid. However, as more pension fund money has been flowing into hedge funds -- catching the eye of the Securities and Exchange Commission and perhaps pushing the move to manager registration -- legislators have acted to ease pension fund access to hedge funds." (Investment Advisor)

IRS Provides New Remedial Amendment Cycles and Transition Relief (PDF)
6 pages. Excerpt: "This information applies to qualified defined benefit and defined contribution plans, including multiemployer plans, governmental plans and non-electing church plans." (Prudential Retirement)

The DOL Expands Voluntary Compliance Program ... or Not?
Excerpt: "Since the last issue of our ERISA Audit Report, the Department of Labor (DOL) amended and restated the Voluntary Fiduciary Correction (VFC) Program. According to the DOL, the purpose of the VFC Program is to encourage voluntary compliance with the fiduciary rules of the Employee Retirement Income Security Act of 1974 (ERISA) by offering a self-correction program for employers." (Reish Luftman Reicher & Cohen)

Inside the Beltway, Movement on Pensions, Taxes, and the Roth 401(k)
Excerpt: "Officials in Washington expect Congress to pass legislation early this year that would shore up the nation's ailing pension system and provide tax breaks to encourage retirement savings." (Investment Advisor)

Links to Items on Executive Comp, Benefits in General

Overview: FASB Proposed Changes to Accounting Standards for Pensions & Postretirement Benefit Plans (PDF)
2 pages. Excerpt: "The objective of this project is to improve the reporting for pensions and other postretirement benefit plans in company financial statements by making this information more useful and transparent for investors, creditors, employees, retirees, and other users. The project will proceed in two phases." (Dechert LLP)

Mick, Cher and The Donald show no signs of slowing down, and baby boomer employees may well follow
Excerpt: "This year, baby boomers -- approximately 75 million people born between 1946 and 1964 -- began to turn 60. Don't expect most of them to retire right away, however. According to the AARP, 68 percent of workers between the ages of 50 and 70 plan to work during retirement or forgo retirement altogether." (Society for Human Resource Management)

Research Paper: Nonqualified Deferred Compensation (PDF)
61 pages. Prepared for the 'Order Out of Chaos - Analyzing the 409A Guidance' ABA Section of Taxation Midyear Meeting 2006, February 2-4, 2006 (Haynes and Boone, LLP. and T. David Cowart)

409A: Five Points that May Surprise You (PDF)
2 pages. Excerpt: "A significant portion of the payments made under a typical ad hoc separation agreement, whether voluntary or involuntary, are not deferred compensation subject to 409A." (Ivins, Phillips & Barker)

Compensation Costs in State and Local Government
Excerpt: "Compensation cost gains for State and local government workers were the same in the September to December quarter as in the prior quarter -- 1.1 percent." (U.S. Bureau of Labor Statistics)

Hewitt Federal Legislation Quick Guide Updated as of January 31, 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)

Newly Posted Events
(Post Yours!)

Health Plan Notices for 2006: COBRA, HIPAA, and More--You Might Need to Change Your Forms or Your Procedures!
Nationwide on January 26, 2006
presented by Employee Benefits Institute of America Inc. (EBIA)

Here Comes the Sun: The SEC's New Executive Pay Proposals
Nationwide on March 1, 2006
presented by ABA Joint Committee on Employee Benefits

Newly Posted Press Releases
(Post Yours!)

PBGC Moves to Protect WCI Steel Pension Plan
(Pension Benefit Guaranty Corporation (PBGC))

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Welfare Fund Administrator
for Taft-Hartley Benefit Plan - Milwaukee Wisconsin
in WI

Account Executive Director
for The Principal Financial Group
in IN

Defined Benefit Administrator
for The Senex Group
in CA

Junior Document Specialist
for Loren D. Stark Company, Inc. (LDSCO)
in TX

Regional 401(k) External Wholesaler
in DC, DE, MD, NJ, PA

Handy Links:

Copyright 2006, Inc.; except that you may reprint this newsletter in full (including this sentence) without obtaining our permission.

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