Retirement Plans
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March 23, 2006
Today's sponsor: ASPPA • Working for America's Retirement™

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DOL Speaks: The 2006 Employee Benefit Conference

This is the conference for Title I ERISA issues. DOL Speaks is co-sponsored by The Department of Labor/EBSA and ASPPA.
Discuss employee benefits issues with colleagues. Interact with local, regional and national government employees from the Department of Labor.

Register Today!

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

Target Date Retirement Funds: Unequivocally, the Most Important 401k Product Development
Excerpt: "Target date retirement funds are the most important 401(k) product development initiative to come along in the last ten years, and I give credit to Fidelity for pioneering this concept with the introduction of the Freedom Funds targets in October of 1996." (MJM Financial, LLC)

How to Manage the Pitfalls of Company Stock in 401(k) Plans.
Excerpt: "Companies that allow employees to invest their 401(k) accounts in company stock face a serious risk if the stock declines precipitously. Faced with large losses, employees can take legal action to recover their retirement savings." (Journal of Accountancy via The American Institute of Certified Public Accountants)

Fiduciary Focus: The Pension and 401(k) Hybrid
Excerpt: "More and more corporations in America are changing the structure of the retirement plans they offer to their employees. In many cases, this means that a company will 'freeze' its defined benefit plan and, in its place, provide plan participants with enhanced benefits in a defined contribution plan such as an existing (or a new) 401(k) plan at the company." (Morningstar)

To Roth or Not to Roth
Excerpt: "On January 1, 401(k) and 403(b) plans could allow their participants to make deferrals on a Roth basis. That means that, if the plan permitted, participants could make their deferrals on an after-tax basis, rather than before-tax." (Reish Luftman Reicher & Cohen)

Corrected Link: Where Did All the Pension Actuaries Go?
Excerpt: "I chuckled last month when an actuarial buddy sent me to an article with the headline Shortage Of Actuaries May Stall Pension Reforms, resisting the urge to take it as a cue for legislative strategy. Lately, I'm not laughing. With pension civil war looming inside the Beltway, have all the pension actuaries out there gone AWOL?" (Pension & Benefits Weblog)

Analysis of Congressional Pension Funding Reform Proposals -- Updated March 2006 (PDF)
5 pages. Excerpt: "The American Academy of Actuaries Pension Committee provides this analysis of the Pension Protection Act of 2005 (H.R. 2830) and the Pension Security and Transparency Act of 2005 (S. 1783) currently in a House-Senate conference." (American Academy of Actuaries)

The Case for Freezing Pension Plans
Excerpt: "New research from Towers Perrin looks into the challenges presented to employers by defined benefit pension plan risk, why employers are freezing plans and the unmet need for solutions to manage the risk." ( one-time registration required)

Issues in Brief: Why Are Healthy Employers Freezing Their Pensions?
Excerpt: "This brief reviews the major pension freezes during the last two years and explores the impact on employees at different stages in their careers. It then offers four possible explanations why employers are shutting down their plans. [For the full 13-page paper in PDF format, go to]" (Center for Retirement Research at Boston College)

Chief of Pension Benefit Agency to Leave
Excerpt: "The chief of the financially strapped federal agency that protects private pensions for millions of workers and retirees announced Thursday that he will step down at the end of May." (AP via The Kansas City Star; one-time registration required)

Overview: It's Time to Comply with Annuity Disclosure Requirements
Excerpt: "Proposed regulations issued in January of 2005 indicated that the enhanced disclosure requirements would become applicable for all QJSA explanations starting February 1, 2006. However, the IRS was not able to finalize the 2005 proposed regulations before February 1, 2006, and so they recently (and quietly) announced another postponement of the effective date." (Poyner & Spruill LLP)

Ford Gets Rebuff over QDRO Case Argument
Excerpt: "A federal judge in Michigan has ruled that Ford Motor Co. was out of line when it told the ex-wife of a dead participant that any rights she had to his benefits expired upon his death." ( one-time registration required)

Employee Benefit Programs — Why Should You Be Concerned? -- Originally published Nov/Dec 2003
Excerpt: "Governance of regulated employee benefit plans is as serious an issue as the corporate governance issues raised in ... recent headlines. Like corporate governance the following questions are invariably asked: Where was the Board of Directors? How could this have happened? Didn't the management team really understand what they were doing? If they didn't know, how are we supposed to know? [The 6-page PDF is at]" (West via ERISAdiagnostics, Inc.)

Individual Financial Planners May Be ERISA Fiduciaries
Excerpt: "An Advisory Opinion recently issued by the Department of Labor may come as quite a shock to many personal financial planners and investment advisors. According to the DOL, ERISA's prudence, exclusive benefit, and prohibited transaction rules apply to many of the bread-and-butter recommendations that these professionals give, if their advice relates to assets held in qualified individual account plans. The DOL guidance was issued in December (Advisory Opinion 2005-23A) ...." (Spencer Fane Britt & Browne LLP)

British Airways Plans Later Retirements for Pension Eligibility
Excerpt: "British Airways PLC, Europe's third- largest airline, proposed that employees retire later and offered to make a 500 million-pound ($871 million) payment into its pension plan to close the deficit in the fund. The retirement age for pilots will rise to 60 from 55, and for cabin crew to 65 from 55, which will help cut the fund's 1 billion- pound deficit by 450 million pounds." (Bloomberg News)

Analysis of Congressional Pension Funding Reform Proposals: Multiemployer Plan Provisions (PDF)
5 pages. Excerpt: "The American Academy of Actuaries'1 Multiemployer Plans Task Force provides this analysis to address a number of issues related to multiemployer plans present in current pension funding reform legislation, specifically the Pension Protection Act of 2005 (H.R. 2830) as passed by the House Education and the Workforce Committee2 and the Pension Security and Transparency Act of 2005 (PSTA, S.1783), which was passed by the full Senate on November 16, 2005." (American Academy of Actuaries)

Blog: Interim Regulations on FDIC Coverage Expansion for Retirement Accounts
Excerpt: "Interim regulations on expansion of deposit insurance coverage for certain retirement accounts were published by the Federal Deposit Insurance Corporation in today's Federal Register. [12 CFR 330, 71 FR 14629] The interim rules are effective April 1, 2006." (Pensions & Benefits Weblog)

Al Lurie: Numbers Game In Congress Stalls Pension Reform and Cash Balance Legislation (PDF)
6 pages. Excerpt: "As these lines are being written, the conference committee and its staffs are at work on that task that might spell life or death for the defined benefit scheme and, not so incidentally, for its cash balance variant." (Alvin D. Lurie by permission of RIA's Pension & Benefits Week)

Overview: New IRS Determination Letter Program Opens for Tax-Qualified Retirement Plans (PDF)
2 pages. Excerpt: "February 1, 2006 marked the opening of the new IRS determination letter program for tax qualified retirement plans. Under this program, each individually designed qualified retirement plan must be filed with the IRS every five years for a new determination letter." (Morgan, Lewis & Bockius LLP)

Working Paper: Uncertain Policy for an Uncertain World: The Case of Social Security (PDF)
43 pages. Excerpt: "This paper analyzes a state-dependent approach to policy in which future Social Security benefit formulas are tied to realized economic and demographic outcomes over time. The results, based on a microsimulation model with stochastic capabilities, show the extent to which it is possible to systematically address uncertainty about system finances and distributional outcomes." (U.S. Congressional Budget Office)

Ten Steps to Reforming Baby Boomer Retirement
Excerpt: "What steps can be taken to secure the retirement of baby boomers and future generations of retirees? [The 40-page PDF is at]" (National Center for Policy Analysis)

Some Retirement Accounts Get Added Protection
Excerpt: "Money you've socked away in certain retirement accounts will soon have more federal insurance protection at your bank and savings institution beginning April 1. Credit union depositors will also see an increase in the insurance limit for their retirement accounts." (The Washington Post; one-time registration required)

The Five Biggest Financial Retirement Mistakes
Excerpt: "The biggest surprise many Baby Boomers and retirees encounter is the realization that their 'bulletproof' retirement savings plan is riddled with bullet holes. Living longer, ironically, often means outliving nest-eggs intended to ensure financial comfort." (

Links to Items on Executive Comp, Benefits in General

Best Practices in EBP Audits
Excerpt: "The Department of Labor (DOL) requires all employers with more than 100 eligible benefit plan participants and certain smaller plans to conduct EBP audits." (Journal of Accountancy via The American Institute of Certified Public Accountants)

Overview: Mergers and Acquisitions and Employee Benefit Issues
Excerpt: "[S]mall and midsized employers, when contemplating the sale of their business or the purchase of another, often either ignore the employee benefits issues or regard them as something to be dealt with after the fact. For both practical and legal reasons, the issues related to retirement plans need to be resolved before the terms of the agreement are finalized." (Reish Luftman Reicher & Cohen)

GAO Report: Definitions of Insurance and Related Information (PDF)
59 pages. Excerpt: "[GAO] looked at a variety of sources to identify a definition of insurance and found that, while most definitions differed because they were developed for specific purposes or had changed over time, the definitions shared key elements of risk transfer and risk spreading. Definitions of insurance are developed for various purposes such as different fields of study, categories of insurance, and state or federal statutes." (U.S. Government Accountability Office)

What Happens When the Press Blasts Your CEO for Excess Compensation? Apparently Not Much
Excerpt: "Wharton accounting professors Wayne Guay and John Core, and Stanford accounting professor David Larcker, ... study executive compensation. What they conclude from their most recent research is that the most relevant information does not necessarily make headlines. They also find that in general, the media's focus on excessive compensation does not substantively change corporate behavior with regards to pay packages." (Wharton School of the University of Pennsylvania)

IRS Issues Guidance on Offshore Rabbi Trusts
Excerpt: "The Internal Revenue Service has released IRS Notice 2006-33 that provides transitional relief to nonqualified plans whose assets are held in certain off-shore trusts or whose provisions contain a financial trigger that would provide additional protections to participants ...." ( one-time registration required)

Hewitt Federal Legislation Quick Guide Updated as of March 21, 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)

Delphi, General Motors Offers Get Mixed Reception
Excerpt: "Buyout deals being offered to UAW members at General Motors Corp. and auto parts supplier Delphi Corp. are getting a favorable reception from some workers." (AP via The New York Times; one-time registration required)

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

(Click on company name or banner to learn more.)
Banner ad for ASPPA • Working for America's Retirement™

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!)

Who’s a Dependent and Why Does It Matter? -- What Employers Need to Know for Medical Plans, Cafeteria Plans, and DCAPs
Nationwide on March 14, 2006
presented by Employee Benefits Institute of America Inc. (EBIA)

Newly Posted Press Releases
(Post Yours!)

NIPA Members Now Eligible to Receive CFP Board-Approved CE Credit
(National Institute of Pension Administrators)

NIPA Members Receive Discount for McKay Hochman eSeminars
(National Institute of Pension Administrators)

PBGC Executive Director Bradley D. Belt Announces Departure
(Pension Benefit Guaranty Corporation (PBGC))

Automated Sales Presentation Platform Saves Financial Advisors' Time
(Metrics Partners)

White Horse Advisors Hires New Team Member
(White Horse Advisors, LLC)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Benefits Manager
for Knowledge Learning Corporation
in OR

Senior Sales Consultant
for New York Life Investment Management LLC
in NJ

Junior Pension Plan Administrator
for Robin S. Weingast & Associates, Inc.
in NY

Senior Account Manager ~ Financial Services
for CitiStreet
in NJ

Retirement Services Provider Consultant
for Deloitte Consulting LLP
in MA

Retirement Services Provider Consultant
for Deloitte Consulting LLP
in NY

Retirement Services Provider Consultant
for Deloitte Consulting LLP
in MN

Group Annuity Administration Representative
for The Standard Insurance
in OR

Handy Links:

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

Published by:, Inc.
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Fax: (407) 644-2151

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