Retirement Plans
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February 13, 2006
Today's sponsor: InvestLink

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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)

Overview: IRS Issues Final Rules for Roth 401(k) Accounts (PDF)
4 pages. Excerpt: "This information applies to 401(k) plans, including multiemployer plans, governmental plans, and nonelecting church plans. This information does not apply to ERISA 403(b) plans or non-ERISA 403(b) arrangements." (Prudential Retirement)

Opinion: New Front -- Protecting America's Investors
Excerpt: "Now C.E.O.'s routinely take home hundreds of times what the average worker is paid, whether or not the company is doing well. The graph for the pay of C.E.O.'s is a vertical line in the last five years. The graph for workers' pay is a flat line -- in every sense." (Ben Stein via The New York Times; one-time registration required)

Pilots Demand $1 Billion if Delta Ends Pensions
Excerpt: "Pilots at Delta Air Lines, the nation's third-largest airline, are demanding a $1 billion payment should the airline scrap employee pension plans as part of its bankrup.tcy reorganization." (Bloomberg News via The New York Times; one-time registration required)

Overview: PBGC Premiums Increase for 2006 Plan Years and Indexing for Wage Inflation Begins in 2007
Excerpt: "Effective for 2006 plan years, the Pension Benefit Guaranty Corporation (PBGC) flat-rate premium is $30 per participant for single-employer plans and $8 per participant for multi-employer plans. Large plans that have already filed their estimated premiums will need to submit an amended filing by the estimated premium due date, or February 28, 2006 for calendar year plans." (Deloitte's Washington Bulletin via

Corrected Link: President Signs Bill Increasing PBGC Premiums (PDF)
2 pages. Excerpt: "The bill, now the Deficit Reduction Act of 2005, was signed by President Bush on February 8th." (Gardner Carton & Douglas)

Is a Tax-Deferred Annuity a Good Investment for You?
Excerpt: "The American Council of Life Insurers and the Insurance Marketplace Standards Assn. recently announced a push to extend 'suitability' protections to every consumer. These protections require insurance salespeople to consider an investor's time horizon, assets and goals before recommending an annuity." (Los Angeles Times; one-time registration required)

Retirement Benefits in the Event of a Divorce
Excerpt: "Here are seven key questions to ask about retirement benefits in the event of a divorce, according to the Equality in Marriage Institute: ...." (The Washington Post; one-time registration required)

Blog: Restricted Employees -- Use of Rollover to IRA for Security
Excerpt: "A segregated, reserved portion of an Individual Retirement Account will satisfy conditions relating to payment of a lump sum distribution to a restricted employee, according to a recent IRS private letter ruling. [PLR 200606051]" (BeneBlog)

Presidential Request Aims to Prevent Falloff in Pensions for Federal Part-Timers
Excerpt: "The president's budget request calls for approval of legislation that would propose several federal retirement benefit changes aimed at correcting perceived inequities." (The Washington Post; one-time registration required)

CRS Report: Federal Pay and Pension Increases Since 1969 (Updated Annually) (PDF)
11 pages. Excerpt: "Congress has linked COLAs for Social Security and federal retirement benefits to the rate of increase in the prices of goods and services in order to protect retirement income from losing purchasing power through the effects of inflation." (Congressional Research Office of the U.S. Library of Congress)

Super Trusts -- Putting Members First National Association of Pension Funds Alternative to NPSS (PDF)
61 pages. Excerpt: "The NAPF is pleased to respond to the Minister for Pension Reform's challenge to he NAPF and others in the pensions industry to develop an industry-led solution to future pension provision that would achieve similar levels of coverage and low charges to the National Pension Savings Scheme (NPSS)." (National Association of Pension Funds)

Opinion: Confusion May Be Driving People Away from IRAs
Excerpt: "Less than 20 percent of individuals contributed to IRAs in 2004, .... There may be all sorts of reasons for this sluggish behavior. One all-too-plausible explanation is that constant changes in the IRA program have rendered it so complicated that no more than a fanatical few have any idea how it's supposed to work. I dare any reader to describe out loud, right now, all of the IRA options without consulting a reference book." (The Washington Post; one-time registration required)

Investment Choices Can Be Overwhelming for Retirement Plan Participants
Excerpt: "According to Pension & Investments a widely read publication that tracks retirement plan issues, there have been huge changes in the choices that employees have with regard to their investments in their retirement plans." (The Napa Valley Register)

Arbitration Clause in Plan's Contract with Investment Advisor Not Binding on Participant
Excerpt: "This case caught our attention because of its no-nonsense application of ordinary principles of contract and agency to investment management agreements. But note the distinction between fiduciary claims under ERISA Section 502(a)(2) (addressed in this case) and claims for benefits." (Employee Benefits Institute of America Inc.)

Background Paper: Utilization of Tax Incentives for Retirement Saving: An Update, February 2006 (PDF)
22 pages. Excerpt: "Overall, the paper finds that participation in tax-favored retirement plans declined slightly over the study period. Increases in IRA and 401(k) participation were more than offset by declines in participation in noncontributory plans, such as traditional defined-benefit plans." (U.S. Congressional Budget Office)

Plan Sponsors Not Waiting for Reform to Consider Pension Options
Excerpt: "Even as the final decisions surrounding pension reform are hammered out in Washington, plan sponsors are talking about what they might do to soften the blow before hand." ( one-time registration required)

Links to Items on Executive Comp, Benefits in General

Underwater Stock Options and Repricing Strategy (PDF)
16 pages. Excerpt: "This article updates the discussion of repricing strategy in Underwater Stock Options and Repricing Strategy: Is Your Company Drowning in Confusion? and examines the impact that changes to the accounting rules under FAS 123(R)and to the tax rules under Code Section 409A have upon the repricing decision. The article also reviews the current usefulness of repricing alternatives." (National Center for Employee Ownership via Janich Law Group)

'Brain Drain' Coming with Wave of Retirements
Excerpt: "Eugene Steuerle, an Urban Institute economist who has written about phased retirement, expects more employers to offer phased retirement once the government acts. The U.S. economy can ill afford outdated rules designed to get rid of older workers who are 'our largest untapped pool of human talent,' he said." (Seattle Post-Intelligencer)

Individualized Benefit Statement Referenced in Plan SMM
Excerpt: "The practice of providing personalized benefits descriptions at open enrollment is fairly common. This decision shows some of the perils of providing inaccurate information (something that even the most careful plan administrator cannot absolutely avoid). Besides the clear lesson of being extra careful with individualized information, it might be wise to avoid incorporating benefit statements by reference into more formal documents, ...." (Employee Benefits Institute of America Inc.)

Overview: SEC Proposes Overhaul of Executive Compensation and Related Party Transaction Rules (PDF)
6 pages. Excerpt: "The proposed rules modify the group that comprises the 'named executive officers' for whom disclosure is required. Under the current rules, the 'named executive officers' are the chief executive officer and the four most highly compensated executive officers other than the chief executive officer." (Seyfarth Shaw LLP)

Text of Secretary of Labor's Amicus Curiae Brief on Beck V. Pace Int'l Union Filed December 15, 2005 (PDF)
23 pages. Excerpt: "This case involves an action under Title I of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1101-1169, for an alleged breach of fiduciary duty in violation of 29 U.S.C. § 1104. The Secretary of Labor is authorized to bring civil actions to redress breaches of fiduciary duty under 29 U.S.C. § 1132(a)(2)." (U.S. Department of Labor)

Hewitt Washington Report Special Edition -- State of the Union Address and HR Issues
Excerpt: "On January 31, 2006 President Bush delivered his fifth State of the Union Address. He presented his 2006 domestic policy agenda, which addresses health care reform, as well as other HR issues related to Social Security and immigration." (Hewitt Associates)

Ownership Society Redux -- First, Individual Social Security Accounts, Now, Health Savings Accounts
Excerpt: "A rerun of last year's debate would show that health savings accounts are harder to defend than personal retirement ones. They are shockingly regressive: Furman's study shows how a poor family might get a subsidy of $150 while a rich one might get more than $4,000." (The Washington Post; one-time registration required)

New edition of Beyond Stock Options
The NCEO presents excerpts from the new (fourth) edition of Beyond Stock Options: Phantom Stock, Restricted Stock, Stock Appreciation Rights, and Other Equity Alternatives. In the fourth edition, each chapter, and each of the plan documents for SARs, phantom stock, and performance units, has been revised to account for developments such as the new deferred compensation rules and new accounting rules. The book includes a CD with annotated model plans. (National Center for Employee Ownership)

New edition of Selected Issues in Equity Compensation
The NCEO presents excerpts from the new (third) edition of Selected Issues in Equity Compensation. In the third edition, every chapter has been revised to bring the book up to date with legal and accounting developments. The book covers stock options and ESPPs. (National Center for Employee Ownership)

New edition of The Stock Options Book
The NCEO presents excerpts from the new (7th) edition of The Stock Options Book by Alisa Baker. The new edition incorporates changes made in prior updates and supplementary materials, and covers the latest developments in the equity compensation field. There are new chapters on stock-related legislation, case law, and accounting. The book covers stock options and ESPPs. (National Center for Employee Ownership)

Newly Posted Press Releases
(Post Yours!)

The Other Important April Deadline: HIPAA Security
(Benefit Partners, Inc.)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

401(k) Plan Administrator
for Stanley Benefit Services, Inc.
in NC

HR Benefits Specialist
in VA

401k Administrator - PA
for Vanguard
in PA

Data Project Administrator - PA
for Vanguard
in PA

Employee Benefit Plan Consultant - PA
for Vanguard
in PA

Client Transition Manager (Conversion)
for Pentegra Retirement Services
in NY

401(k) Administrator
for Creative Retirement Systems
in OH

Retirement Plan Design, Document and Compliance Specialist
for Employee Fiduciary Corporation
in AL

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