Retirement Plans
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March 9, 2006
Today's sponsor: ASPPA • Working for America's Retirement™

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New from ASPPA Benefits Conference of the South

The Benefits Conference of the South provides an opportunity to discuss employee benefits issues with colleagues and local, regional and national government representatives from the Internal Revenue service, Department of Labor as well as private sector experts.

Register today at

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Overview: IRS Proposes Roth 401(k) Regulations
Excerpt: "The proposed regulations would generally be applicable for taxable years beginning on or after January 1, 2007." (Watson Wyatt Worldwide)

Boomer Bucks by Barbara Whelehan -- Don't Heed this 401(k) Advice
Excerpt: "Under current law, if plan participants do receive investment advice, they have certain assurances that the advice they are getting is impartial. That's because under the rules of the Employee Retirement Income Security Act, or ERISA, anyone who dispenses investment advice to 401(k) plan participants assumes the role of a fiduciary." (

Special Report: Implications of Participant Behavior for Plan Design (PDF)
12 pages. Excerpt: "Anyone with responsibility for a corporate defined contribution plan knows that employees need help. The responsibility for retirement funding has shifted almost entirely from the employer to the worker. For insights into how behavioral finance can play a significant role in an employee's retirement savings, AllianceBernstein turned to a leading behavioral expert, Professor Shlomo Benartzi of UCLA, to author this special report." (AllianceBernstein)

Issue in Brief: 401(k) Plans are Still Coming Up Short (PDF)
10 pages. Excerpt: "The release of the Federal Reserve's 2004 Survey of Consumer Finances (SCF) is a wonderful opportunity to re-assess the role that 401(k) plans are playing in the provision of retirement income. .... The 2001 survey showed that 401(k) accumulations were coming up short. The 2004 survey shows some progress but most of the problems persist." (Center for Retirement Research at Boston College)

Overview: Multiemployer Plans Must Give Annual Notice of Funded Status
Excerpt: "The U.S. Department of Labor (DOL) recently released a final regulation implementing the annual funding notice requirements for multiemployer defined benefit plans, which were added by the Pension Funding Equity Act of 2004. Under the act, plan administrators of multiemployer defined benefit plans must annually notify interested parties of the plan's funded status." (Watson Wyatt Worldwide)

Comparison of the Provisions of H.R. 2830, as of Dec. 15, 2005, and H.R. 2830, as of March 3, 2006 (PDF)
134 pages. Excerpt: "This document ... presents, in side-by-side format, a comparison of the provisions of H.R. 2830, the 'Pension Protection Act of 2005,' as passed by the House of Representatives on December 15, 2005, and H.R. 2830, the 'Pension Security and Transparency Act of 2005,' as passed by the Senate on March 3, 2006. This document includes a summary comparison of the provisions in the bills and does not reflect all the technical detail and differences in the provisions." (Joint Committee on Taxation)

Overview: Congress Increases PBGC Premiums
Excerpt: "Pension plan sponsors will pay higher Pension Benefit Guaranty Corporation (PBGC) premiums this year, now that the Deficit Reduction Act has been signed into law. The act increases flat-rate premiums for single-employer and multiemployer plans. It also establishes a new premium for single-employer plans that undergo involuntary terminations or distress terminations in connection with a bankrup.tcy reorganization." (Watson Wyatt Worldwide)

Participant's Estate Must Include IRA Balance for Tax Purposes
Excerpt: "A federal judge in Indiana has ruled that the executrix of a deceased participant's estate must include in the estate's value for the purpose of determining tax liability an individual retirement account (IRA) rolled over from a qualified employer plan." ( one-time registration required)

State and County Workers in Hawaii Weighing 'Hybrid' Pension Plan
Excerpt: "About 45,000 state and county workers must decide by March 31 if they want to join a new pension plan that pays higher benefits but requires workers to contribute 6 percent of future paychecks." (The Honolulu Advertiser)

San Diego City Attorney Aguirre Again Suggests Pension Credit Sellback
Excerpt: "San Diego City Attorney Michael Aguirre this week encouraged city employees to sell back pension service credits they recently purchased in transactions the lawyer has deemed to be illegal." ( one-time registration required)

Germany Urges Private Pension Insurance
Excerpt: "The German government on Wednesday urged citizens to take out private pension insurance to make up for declining payouts from state coffers." (AP via The Washington Post; one-time registration required)

New Law in Korea Encourages Employers to Fund External Pensions
Excerpt: "Tax legislation passed in the National Assembly on Jan. 31, 2006, will encourage employers to transition to externally funded corporate pension plans." (Watson Wyatt Worldwide)

Class Action on American Express Retirement Plan Filed
Excerpt: "American Express Co. ... disclosed ... that a purported class action was filed in a New York district court over its retirement plan. .... According to the company, the plaintiff alleges that when the American Express Retirement Plan was amended in July 1995 to convert to a cash balance formula from a final average pay formula for the calculation of benefits, the amended terms violated the Employee Retirement Income Security Act." (MarketWatch)

Will Pension Administrators Sink or Swim? Preparing to Face the Demographic Wave Ahead
Excerpt: "DB plan administration may be higher profile than ever before. Here [CCA Strategies reviews] a number of factors creating challenges for the future of administration." (CCA Strategies, LLC)

Issue Brief: Defined Benefit Plan Freezes -- Who's Affected, How Much, and Replacing Lost Accruals (PDF)
20 pages. Excerpt: "This new EBRI analysis quantifies how workers are likely to be affected by pension freezes, and how much they would have to save in a 401(k) -- 'whether provided by their employer and/or saved by themselves' -- to offset the loss of accrued benefits from the pension freeze." (Employee Benefit Research Institute)

Popular ETFs Still Rare in Retirement Plans
Excerpt: "Exchange-traded funds have seen tremendous growth among individual investors over the past five years, but they haven't made a dent in the retirement plan market." (Employee Benefit News)

Links to Items on Executive Comp, Benefits in General

A Second Look at the Effects of Phase 1 of FASB's Accounting Change Proposal
Excerpt: "To evaluate the effects of changes to FAS 87 and FAS 106, [Watson Wyatt] looked at the difference between a plan's funding position -- calculated as the projected benefit obligation (PBO) minus the market value of assets -- and the net amount recognized on the balance sheet." (Watson Wyatt Worldwide)

Options and the Deferred Tax Bite -- Just When You Thought It Couldn't Get Any More Complicated
Excerpt: "Implementation of FASB Statement no. 123(R) goes beyond selecting a method to value employee stock options. CPAs also must help companies make the necessary tax accounting adjustments to properly track the tax benefits from stock-based compensation." (Journal of Accountancy via The American Institute of Certified Public Accountants)

Overview: SEC Proposes New Disclosure Rules for Executive Compensation
Excerpt: "The SEC has also proposed narrative disclosure of material information regarding termination payments payable upon the resignation, severance, retirement or other termination of an NEO, a change in responsibilities, or a change in control of the company." (Watson Wyatt Worldwide)

Overview: SEC Proposed Changes to Executive Compensation and Related Party Disclosure (PDF)
11 pages. Excerpt: "While the Proposed Rules are not expected to be effective with respect to companies that file their proxy statements during the spring 2006 'proxy season,' recent events that heightened the perceived need for more disclosure related to executive compensation have caused many public companies to review their executive compensation disclosure practices in connection with the 2006 proxy season (please refer to the 'Considerations for the 2006 Proxy Season' section)." (Pillsbury Winthrop Shaw Pittman LLP)

Hewlett-Packard Shareholders Sue over CEO Severance
Excerpt: "Shareholders in four pension plans have filed suit against Hewlett-Packard Co. (HP), alleging the Board of Directors violated its own policy by approving a more than $42 million severance package to former CEO Carleton 'Carly' Fiorina." ( one-time registration required)

Additional sponsor: ASPPA • Working for America's Retirement™

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ASPPA's Exam Registration for Spring and Fall Exams Now Open

ASPPA’s exam registration is open for the 2006 spring and fall exam windows. The Spring window runs from May 15-June 30. Learn more about our exams at,
or register at
New exams include the Plan Financial Consulting (PFC-1 & PFC-2) exams that represent the advance level curriculum for the new Qualified Plan Financial Consultant (QPFC) credential. Register today!

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Newly Posted Events
(Post Yours!)

"What's Going on with ERISA these Days?" Jeffery Mandell, The ERISA Law Group, P.A., Boise, Idaho
in Idaho on March 21, 2006
presented by Western Pension & Benefits Conference -- Boise Chapter

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

401 (k) Administrator
for Compliance/Administration Company
in NJ

Health and Welfare Account Management
for Charles W. Cammack Associates, Inc.
in NY

for The Benefit Practice
in NY

Benefits Analyst
for The Angell Pension Group, Inc.
in RI

Senior Consultant, Testing & Reporting Services
for Fidelity Investments
in KY

Defined Benefits Standards and Control Administrator - PA
for Vanguard
in PA

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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.