Retirement Plans
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April 20, 2006
Today's sponsor: ASPPA • Working for America's Retirement™

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Attend the 2006 ASPPA Mid-Atlantic Benefits Conference!

On May 8-9, the Marriott Philadelphia Downtown Hotel will be the site of this valuable conference, sponsored by the IRS and ASPPA.

Attorneys can earn Ethics Credits and ASPPA members can earn 15 CE credits. Register NOW at

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

DOL's EBSA Field Assistance Bulletin 2006-01
Excerpt: "Subject: The distribution to plans of settlement proceeds relating to late trading and market-timing Issue: What are the duties and responsibilities under ERISA of independent distribution consultants (IDCs), plan service-providers and fiduciaries with respect to the allocation and distribution of mutual fund settlement proceeds to plans and plan participants?" (U.S. Employee Benefits Security Administration)

Text of Memo by The SPARK Institute on DOL Guidance on Mutual Fund Restitution Payments (FAB 2006-1) (PDF)
3 pages. Excerpt: "The DOL expressly noted that an intermediary cannot unilaterally invest the proceeds in its own proprietary investment funds without violating ERISA. However, the FAB appears to leave open the possibility that an intermediary can hold the funds in a proprietary investment vehicle with proper direction from a plan fiduciary....An intermediary may charge plans for the direct expenses incurred in connection with allocating the proceeds, but cannot unilaterally compensate itself." (The SPARK Institute, Inc.)

EBSA Fact Sheet: Voluntary Fiduciary Correction Program
Excerpt: "On April 19, 2006, the Department of Labor published in the Federal Register a 2006 Update of the Voluntary Fiduciary Correction Program (VFCP), which simplified and expanded the original VFCP published in 2002. The VFCP is designed to encourage employers to voluntarily comply with the Employee Retirement Income Security Act (ERISA) by self-correcting certain violations of the law." (U.S. Employee Benefits Security Administration)

The hidden 'Escape Hatch' in Your 401(k)
Excerpt: "Frustrated with the limited investment choices available in your employer's retirement plan? Don't fret. You may not have to wait until retirement to unlock the investment potential of those retirement plan assets. That's right. Your employer's retirement plan may contain a little known provision that may allow you to roll over these assets into an IRA Rollover while you're still employed and without incurring any immediate tax liability." (Westwood Press on

Commentary: Reaping 401(k) Rewards
Excerpt: "Now in their 25th year, these investment plans have contributed mightily to the nation's growing investor class, especially among middle- and lower-income Americans -- broadening ownership of the economy, boosting the much-criticized savings rate, and, many now believe, making the country's electorate more conservative in its voting behavior." (The Washington Times)

Putting the New in Annuities: Insurers Pin Hopes on Improved Products and Regulatory Change
Excerpt: "Annuities are poised for a comeback as retiring baby boomers look for ways to make their defined-contribution savings last a lifetime, retirement experts say, but so far there's more talk than action by plan sponsors, who want to avoid the fiduciary risk of selecting annuity providers." (Employee Benefit News)

Corrected Excerpt: U.S. Pension Funds Still Underfunded, but Better than Last Year
Excerpt: "The pension funds of the S&P 500 companies saw an improvement last year, but are still underfunded by $145 billion, according to one analyst." (; one-time registration required)

Probe of Northwest Airlines Brings Bankrupt Companies' Retirement Funding Duties Into Sharper Focus
Excerpt: "Do some companies file for Chapter 11 protection to avoid pension payments?" (

Addressing the Insolvency of the Government's Pension Benefit Guaranty Corporation
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) is not a household name, but it should be. By protecting some individual pension beneficiaries it has become exposed to huge financial risks and has put all American taxpayers at risk." (The Washington Post; one-time registration required)

Overview: IRS Finalizes Relative Value Disclosure Regulations (PDF)
2 pages. Excerpt: "[O]ne reason the IRS deferred the relative value requirements was to give plan sponsors an opportunity to eliminate redundant benefit forms under the new protected benefit regulations that took effect January 1, 2006. Although the final regulations simplify the disclosures required for multiple forms of benefit, plan sponsors that have not already done so may still wish to review their plans and determine whether some forms of benefit are of relatively little value ...." (Seyfarth Shaw LLP)

Finding 'Best Fit' in a Retirement Plan Provider through the RFP Process (PDF)
Excerpt: "No one in their right mind would buy a house on the Internet; yet this is essentially what many plan sponsors are doing when they select a plan provider on the basis of data that has been dumped into a spreadsheet.... Rather than relying upon purely quantitative comparisons of data from competing proposals, plan sponsors should base their final decision on a more balanced set of factors that can help them achieve 'best fit' with a prospective provider." (Harry Koolen and Jim Reed)

New York State Common Retirement Fund Files Suit Accusing Qwest of Fraud
Excerpt: "Alan G. Hevesi, the New York State comptroller, filed a securities fraud lawsuit late Tuesday against Qwest Communications International, its former top executives, several former directors and its onetime auditor, Arthur Andersen, contending that they conspired to inflate the company's results artificially." (Dow Jones/AP via The New York Times; one-time registration required)

Monitoring the Monitor: Evaluating CalPERS' Shareholder Activism
Excerpt: "In 1992, CalPERS began publicly announcing annual Focus List of poor financial and corporate governance performers in an effort to apply public pressure to the targeted companies. Professor Brad Barber of the UC Davis Graduate School of Management has analyzed the gains from CalPERS' high-profile activism linked to these Focus List firms from 1992 to 2005." (Graduate School of Management, University of California, Davis)

Plan Sponsors Grapple with Performance Measurement Standards in an Evolving Market
Excerpt: "A change in foundation requirements, consolidation among vendors, and a stressful pension environment have, individually and collectively, wrought changes in the application of performance measurement. While these phenomena have not altered the evolutionary direction of the industry, their emergence has dictated that vendors continue ramping up improved measurement techniques and presentation models." ( one-time registration required)

Aon Company Stock Case Permitted to Move Forward
Excerpt: "The US District Court for the Northern District of Illinois has decided that participants in an Aon Corp. retirement plan may continue with their claim that the company breached its fiduciary duties by allowing plan investments in the company's stock while it was engaged in unlawful business practices." ( one-time registration required)

Overview: DOL Modifies Exemption for Loans Made to Plans
Excerpt: "While plan sponsors (and other parties-in-interest) will welcome this removal of the three-day limit on incidental-purpose loans, they should note another change made by this amendment. Although not a part of the proposed amendment, this final amendment to PTE 80-26 also requires that any loan for a period of more than 60 days, whether for ordinary operating expenses or incidental expenses, be in writing. A written loan agreement must contain all of the material terms of the loan." (Spencer Fane Britt & Browne LLP)

Government Oversight Efforts Turn Up the Heat on Fiduciary Compliance
Excerpt: "Consider that the Employee Benefits Security Administration (EBSA) achieved $1.7 billion in results from actions to enforce the Employee Retirement Income Security Act (ERISA) during fiscal year 2005, the second highest annual result in the agency's history. The record was set by fiscal year 2004 results ...." ( one-time registration required)

Podcast: The New Retirement Mindscape in the Workplace
Excerpt: "In this second podcast in this series, Rusty Field, Vice President of Financial Education and Planning Services - Ameriprise Retirement Services, discusses the findings of The New Retirement Mindscape study from a workplace perspective, exploring its implications for employers, employees and retirement plan benefits." (Ameriprise Financial Inc.)

Pensions Not Necessarily Key to Retirement Happiness
Excerpt: "How much a man holds in his pension plan when he retires is less important than his physical and mental health, a new study suggests. A study published this month in the American Journal of Psychiatry followed a group of 151 socially disadvantaged men since their youth to an average age of 75, and found that whether or not they had a happy retirement depended on having pleasant relationships, satisfaction with former jobs and enjoyable vacations ...." ( one-time registration required)

Memorial Day Now Current Pension Reform Deadline for Congress
Excerpt: "Congressional lawmakers have reportedly targeted their May 29 Memorial Day recess as the latest in a series of informal deadlines by which they hope to hash out a final pension reform bill." ( one-time registration required)

Links to Items on Executive Comp, Benefits in General

Overview: FASB's Exposure Draft with Proposed Changes to Postretirement Plan Accounting (PDF)
6 pages. Excerpt: "On March 31, 2006, the Financial Accounting Standards Board (FASB) released an Exposure Draft of proposed amendments to Statements 87, 88, 106, and 132(R), titled Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans. The Board expects to issue a final statement by September 30, 2006, ...." (Hewitt Associates)

New FASB Rules Could Cut Shareholder Equity by 10%, According to Study
Excerpt: "New pension and other post-employment benefits (OPEB) accounting rules proposed by the Financial Accounting Standards Board (FASB) could cut shareholders' equity of Fortune 1000 companies by 10%, according to an analysis from Watson Wyatt Worldwide." ( one-time registration required)

Nonqualified Programs Becoming Part of TRO 'Package'
Excerpt: "Increasingly, companies are looking for providers that can handle not only the full range of qualified plans, but also their nonqualified plans. The acceleration in interest seems a natural outflow of a shift in how nonqualified plans are designed today. Years ago, companies adopted nonqualified plans that offered richer benefits for key employees than those offered to the rank and file." ( one-time registration required)

Overview: GAO Examines Executive Compensation Issues at Tax-Exempt Hospitals (PDF)
2 pages. Excerpt: "As you know, the U.S. Government Accountability Office ('GAO'), an independent Congressional agency, is examining issues related to executive compensation at tax-exempt hospital systems. The GAO has reported that it initiated this project at the request of the Chairman of the House Ways and Means Committee. The project includes an ongoing GAO survey of the country's largest nonprofit hospital systems regarding: ...." (Gardner Carton & Douglas LLP)

Audio: SEC Prepares to Shine Light on Executive Perks
Excerpt: "The Securities and Exchange Commission is considering a plan that would force companies to be more explicit about how they compensate top executives. The rules, which are expected to take effect this year, would shine a light on many of the hidden perks senior managers receive." (Morning Edition via National Public Radio)

Most Employers Like HR Outsourcing, Aon Says
Excerpt: "Aon Consulting reports that for small companies with fewer than 500 employees, retirement plan administration is the most popular task to outsource, with 87% doing so. FSA administration follows with 77%, followed by COBRA/HIPAA admin (70%), payroll (66%) and, finally, health and welfare admin (39%)." (The Advisor)

Lawmakers Never Faced with Losing Benefits
Excerpt: "Members of Congress occasionally lose elections, but they never lose retirement and health benefits that most Americans can only envy. A lawmaker who retires at 60 after just 12 years in office can count on receiving an immediate pension of $25,000 a year and lifetime benefits that could total more than $800,000." (AP via The Washington Post; one-time registration required)

We thank and invite your attention to our 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™

2006 Great Lakes Benefits Conference

Co-sponsored by the Internal Revenue Service and ASPPA. The Great Lakes Benefits Conference provides an opportunity to discuss employee benefit issues with colleagues and local, regional and national government employees from the IRS and the DOL.
The program focuses on exchanging information and educating attendees about current regulatory, legislative, administrative and actuarial topics.

(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!)

Webcast: Forum on Health Care Expansion Bill in Massachusetts
Nationwide on April 19, 2006
presented by Kaiser Family Foundation

Newly Posted Press Releases
(Post Yours!)

New FASB Rules Likely to Cause 10 Percent Drop in FORTUNE 1000 Shareholders' Equity, Watson Wyatt Finds
(Watson Wyatt)

Labor Department Updates Voluntary Fiduciary Compliance Program
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))

Employee Benefits Security Administration Issues Guidance on Distributions of Mutual Fund Late Trading and Market-Timing Settlement Proceeds
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))

Gilsbar, Inc. Co-Presents with Weight Watchers(r) at the HR Executive Summit in CA
(Gilsbar, Inc.)

UNIFI Companies Retirement Plans Adopts Comprehensive Participant Education Program
(Newkirk Products, Inc.)

Harris, Rothenberg International to Provide Health & Wellness Resources to AMS Benefits
(Harris, Rothenberg International (HRI))

Alliance Benefit Group Releases Quarterly Business Report
(Target Marketing Solutions, Inc.)

Outdated Laws Cause Employee Benefit Gap; New Book Shows Inflexible Labor and Benefit Laws Present Challenge for Modern Families
(Rowman & Littlefield)

Newly Posted or Renewed Job Openings
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Key Accounts Manager - Broker/Dealer and Bank Channels
for Diversified Investment Advisors, Inc.
in MA, NC, NY

HR, Finance & Accounting Manager
for Bank of the West
in CA

Corporate Manager, Employer Benefits
for West Penn Allegheny Health System
in PA

Sr. Benefits Assistant
for Raley's
in CA

Pension Administration Professional
for PFS
in GA

Pension Administrator
for Preferred Pension Planning Corporation
in NJ

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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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(407) 644-4146
Fax: (407) 644-2151

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