Retirement Plans
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April 17, 2006
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Overview: IRS Resources for the Restatement Process under Rev. Proc. 2005-66
Excerpt: "The IRS has recently created a number of resources on their website explaining many of the rules in Rev. Proc. 2005-66." (McKay Hochman Co., Inc.)

Paying for Performance Comes to Pension Investing
Excerpt: "External investment managers for defined benefit pensions are typically compensated on the basis of assets under management rather than on performance. But with plan sponsors under pressure to find ways to increase returns while keeping a lid on fees, new methods of structuring compensation for outside managers are generating interest." (Employee Benefit News)

Overview: Money Manager Compensation
Excerpt: "Why is compensation disclosure important? A lot of money is at stake. Managed funds are an integral part of the retirement planning process. According to the Investment Company Institute, retirement assets invested in mutual funds in 2004 approximated $3.07 trillion, with $1.6 trillion finding a home in defined contribution plans." (Pension Risk Matters)

Roth 401(k): Key Factors to Consider (PDF)
1 page. The page provides a comparison of Roth 401(k) contributions and pre-tax 401(k) contributions. (

Company Stock Continues to Pin Plan Sponsors Between a Rock and a Hard Place
Excerpt: "When a plan sponsor offers company stock as a 401(k) investment option to its employees, fiduciaries of the plan who also happen to be company executives can find themselves thrust into a very awkward position." ( one-time registration required)

401(k)-Type Plans Flourishing in Japan
Excerpt: "The number of Japanese companies offering 401(k)-type retirement plans to their employees is up 50% from last year, to just over 6,600, as of the end of March." (Employee Benefits Institute of America Inc.)

Opinion: Offer Relief for 'Rescuers' of Pension Plans
Excerpt: "USA TODAY's editorial on pension legislation in Congress refers to a provision that would apply to Smithfield Foods, Inc. We support language that would provide relief for many companies that 'rescue' ailing pension plans. We expect, and sincerely hope, that any final version of the bill would provide relief broadly." (Richard J.M. Poulson via USA TODAY)

Employee Ownership Update for April 14
NCEO Executive Director Corey Rosen discusses the following news items: Virginia has joined North Carolina and Minnesota in allowing certain professional corporations to form ESOPs; a Bear Stearns study finds large companies are reducing option grants; former employees at an ESOP company are suing the company for paying out sooner than required; and House-Senate conferees have made little progress in reaching a compromise on competing versions of retirement plan bills. (National Center for Employee Ownership)

Overview: Implicit Exception for Participant Direction
Excerpt: "The ERISA § 403 requirement that plan trustees exercise exclusive control over plan assets has an 'implied exception' permitting participant investment direction for an individual account plan, according to a 7th Circuit decision affirming the district court. [Jenkins v. Yager, 04-4258]" (Pensions & Benefits Weblog)

Plan Fiduciaries Found Personally Liable for Failure to Remit Contributions
Excerpt: "This case is a reminder that fiduciary liability is personal and that a fiduciary can be liable for the breach of a co-fiduciary. Although ERISA's definition of 'fiduciary' commonly is described as functional, some individuals are ERISA fiduciaries because of the positions they hold with respect to the plan, such as trustees and plan administrators." (Employee Benefits Institute of America Inc.)

West Virginia Taking Unique Path with Public Employee Pensions
Excerpt: "Less that 15 years after creating it, the Legislature voted last year to close the Teachers Defined Contribution system. Last month, more than 61 percent of system enrollees who voted in a special election approved merging into the state's longtime pension program for public schools, the Teachers' Retirement System." (

State of Ohio Public Pension Funds Are Seeking Worker and Employer Contribution Increases
Excerpt: "The Ohio Police and Fire Pension Fund became the latest to seek an increase this week. Board members voted 6-3 to ask lawmakers to approve a plan that would increase pension contribution rates for workers and employers over the next five years, raising $75 million more a year when fully implemented in 2011, the Associated Press reported." ( one-time registration required)

Dueling Fools: IRA Bear
Excerpt: "But there are a lot of misperceptions about the IRA. .... Despite the wonderful benefits of an IRA, there are drawbacks. In many, if not most, cases, the pros outweigh the cons. But not always. So when should you say 'no way' to an IRA? Let me count the ways...." (The Motley Fool)

Dueling Fools: IRA Bear Rebuttal
Excerpt: "I'll [say] loud and clear that each and every working American should have an IRA or two. But I'll also say that investors should think twice about putting each and every investment dollar in an IRA." (The Motley Fool)

Pension Reform Hurdles and Strategies for Clearing Them
Excerpt: "The two bills being considered by House-Senate conferees at press time cover a lot of ground, everything from investment advice to contribution requirements. Still experts say that there are just a few issues that have the opportunity to prove truly contentious during the conference. The bones of contention are cash balance plans, smoothing, credit balances and credit ratings, roughly in that order." (Employee Benefit News)

Mutual Fund Redemption Fees - Short Term Redemption Fee Information for Retirement Plan Participants
Excerpt: "The United States Securities and Exchange Commission (SEC) has proposed that mutual fund companies start to assess short term redemption fees on selected funds. This imposition is voluntary and varies by Fund Company although they typically apply to international funds and the holding period varies from five days to as many as 180 days." (

Market Timing and Excessive Trading
Excerpt: "In response to recent market timing and frequent trading issues in the mutual fund industry, the Securities and Exchange Commission (SEC) recently voted to adopt Rule 22c-2 under the Investment Act of 1940. The final of three phases of new regulations, Rule 22c-2, directly impacts financial intermediaries such as brokers/dealers, recordkeepers and trust companies." (

American Bankers Association Comments on Proposed Oct. 16, 2006 Compliance Date for SEC Rule 22c-2 (PDF)
8 pages. Excerpt: "Additional time is necessary for intermediaries and others to receive and to negotiate contracts with mutual funds, to revise various operational systems to allow intermediaries to interface with mutual funds ..., to obtain the necessary regulatory assurances from the banking regulators and the Department of Labor and to notify, where appropriate, clients of their contractual obligation to provide confidential information to unaffiliated third party mutual funds on request." (American Bankers Association)

Defined Benefit Plan Multimanager Approach Takes on Many Forms
Excerpt: "Pension outsourcing and multimanager and manager-of-managers programs take different names and forms, depending on the extent to which the sponsor relies on one provider for investment strategy, asset custody, and plan administration. At the center, though, they all turn over the central tasks of asset allocation, and manager selection and monitoring, to an expert outsider." ( one-time registration required)

Links to Items on Executive Comp, Benefits in General

409A Makes Its Mark on Deferred Compensation Designs
Excerpt: "'In many ways, Section 409A added flexibility for companies,' according to William L MacDonald, chairman, CEO, and president of Retirement Capital Group. 'Prior to the adoption of this law, companies had to rely upon attorney opinions, and plan design depended, to a large degree, on how aggressive the company was willing to be. Now, we have codified plan design features such as the right to re-defer a payment so long as that decision is made in compliance with the rules.'" ( one-time registration required)

The Form 5500 Database Has Been Updated
The ERISA Form 5500 Filings database is one of many searchable databases on the site. (

Trends External to the Core Payment Process Are Requiring More from Service Providers
Excerpt: "Like payroll, the ability to produce and deliver participant payments -- whether in the traditional hardcopy check, or via an electronic transmission -- has long been a foundation assumption for service providers. You do it well -- generally 100% accuracy is the baseline -- or you lose the business." ( one-time registration required)

Newly Posted Press Releases
(Post Yours!)

CIGNA HealthCare Expands Availability of Consumer-Driven Health Plans; HRA Plans Now Available to Businesses with 51-200 Employees
(CIGNA HealthCare)

Romney's Veto of Employer Contribution in MA Universal Health Care Law Will Mean Many Will Be Underinsured in 'Bare Bones' Policies
(Foundation for Taxpayer and Consumer Rights)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Health & Welfare Group Leader
for Towers Perrin
in CA

Senior Global Total Rewards Consultant
for Hewitt Associates
in IL

Benefits Specialist
for Gevity
in FL

Design Consultant
for Hewitt Associates
in IL

Senior Benefits Support Analyst
for Gevity
in FL

COBRA Specialist
for Gevity
in FL

Retirement Plan Administrator
for CMC Retirement and Employee Benefits Specialists, Inc.
in CA

Defined Benefit Technician
for SunGard Relius
in FL

ERISA Counsel
for Alltel Communications
in AR

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.