Retirement Plans
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May 1, 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)

How Valuable is the New Roth 401k Option?
Excerpt: "This article will review several advantages to the Roth 401k, including the fact that a $15,000 Roth contribution can have the same tax sheltering power as a much higher contribution made through a traditional 401k!" (Herbert A. Whitehouse via

Opinion: Free Shackled 401(k) Plans from Poor Investment Offerings by Employers
Excerpt: " The best thing that could happen to 401(k)s is mandatory workplace education, automatic enrollment/contributions and standardization of the plans. If, say, the Department of Labor, published a standard template for 401(k)s that would include the most-diversified U.S. stock, bond, foreign and real-estate index funds-- and force employers to offer only the lowest-cost packages-- it would be a bold and promising start." (John Wasik on

The Chilling Effects of Pension Freezes
Excerpt: "[F]ewer years of service and a lower final calculation produce a smaller benefit. If your employer freezes your plan at 50, you're entitled to 15% of salary as an annual lifetime benefit; for example, $7,200 of a $48,000 salary. If the plan stayed in place, at 62, you would have received $8,700 on your salary (now $58,000) for life." (

Pension Funding Costs Eat Up Increase in State Funding for Higher Education in Michigan
Excerpt: "A hike in pension costs next year for seven of Michigan's public universities and all 28 community colleges will wash away much of the first state funding increases in five years, school officials say." (

Washington State Walks Quietly Into Pension Morass
Excerpt: "The debt includes $900 million in projected costs for gain-sharing. That's the much-debated benefit added in the last decade that says when Wall Street performance is above 10 percent-- 8 percent a year is the rule of thumb-- the extra money is split between the system and current and future retirees. When the gain-sharing benefit was adopted a few years back, advocates said it wouldn't cost government anything. It hasn't turned out that way." (The Olympian)

In Connecticut, Concerns Increase About Unfunded Public Pensions
Excerpt: "For at least a decade, the state has not met its full obligation to the pension fund, causing Connecticut to fall behind all but three states in its ratio of pension assets to liabilities, according to a report from the bond rating agency Standard & Poor's that was released in February." (New York Times; one-time registration required)

PBGC Assumes Pensions of Aloha Airlines
Excerpt: "Together the plans are 55 percent funded, with $190 million in assets to cover $345 million in benefit promises, according to PBGC estimates. The agency expects to be responsible for $117 million of the $155 million shortfall." (Pension Benefit Guaranty Corporation)

Reply Brief of Appellants (Plan Participants) in 3d Circuit Cash Balance Plan Discrimination Case (PDF)
43 pages; Register v. PNC Financial Services Group. Excerpt: "Nothing presented by Appellees in their brief compels affirming the dismissal of Appellants' claims of age discrimination, anti-backloading and insufficient notice brought under [ERISA].' Earlier pleadings in the case are published by ERIC at (U.S. Court of Appeals for the Third Circuit via ERISA Industry Committee)

Overview: DOL Finalizes Rules for Terminating Abandoned Plans and Distributing Benefits
Excerpt: "[T]he final regulation permits the forfeiture of small account balances that would be consumed by fees; instructions are provided on how to allocate these forfeitures and to perform other allocations that are not covered by existing plan terms.... [Also, the] regulation has been modified to allow accounts of $1,000 or less to be transferred to an interest-bearing savings account or a state unclaimed property fund instead of to an IRA." (Employee Benefits Institute of America Inc.)

Overview of Federal Income Tax Withholding Requirements for IRA Distributions
Excerpt: "This article reviews the basic federal income tax withholding requirements for IRA distributions and provides some general guidance regarding a financial organization's withholding policies and procedures and IRA file maintenance." (Compliance Headquarters)

Overview of DOL FAB 2006-1: Handling of Incoming Funds from Mutual Fund Abuse Settlements
Excerpt: "The Securities Exchange Commission (SEC) has established settlement funds that will be available for distribution to mutual fund investors, including certain 401(k) and other ERISA plans, that suffered losses as a result of late trading and market timing abuses in the mutual fund industry.... Plan fiduciaries (including intermediaries) will have flexibility in designing and implementing a methodology for allocating settlement proceeds to participant accounts ..." (Employee Benefits Institute of America Inc.)

Living a Low-Cost Retirement
Excerpt: "It's a well-known-- and some would say time-worn-- cliche about retirement: In order to keep a comfortable standard of living, you must replace 70% to 80% of your preretirement income once you stop working.... One of the surprising findings from the research world is the large number of households that experience a sharp drop in spending at retirement-- a much steeper slide than the 70%-to-80% rule would suggest ..." (OWS Magazine via On Wall Street)

Opinion: Will the Administration Claim One-Year Social Security Delay Cost $700 Billion?
Excerpt: "President Bush and other Administration officials often claim that delaying action on Social Security by '...just one year adds $600 billion [or $700 billion] to the cost of fixing Social Security.' Such claims may be repeated on May 1 when the Social Security Trustees release their annual report on the program's finances." (Center on Budget and Policy Priorities)

Links to Items on Executive Comp, Benefits in General

UnitedHealth CEO Discusses Stock Options Cache
Excerpt: "UnitedHealth Group Inc. chief William McGuire defended his billion-dollar stock option compensation on Sunday, saying his pay has not come at the expense of affordable health care." (AP via Washington Post; one-time registration required)

Social Security, Medicare Due for Checkup
Excerpt: "... the debate was certain to be revived after the trustees of Social Security and Medicare provided their annual update Monday of the financial health of the government's two biggest benefit programs.... Analysts said they expect any date changes in this year's report to be small, with the message unchanged: Both programs face massive funding shortfalls ..." (AP via Washington Post; one-time registration required)

Stock Options Odyssey: Silicon Valley Still Exists
Excerpt: "In defiance of the high-tech lobbyists, accounting regulators determined in 2004 that options, like any other form of compensation, should be reported as a cost.... [I]t turns out that companies can report options transparently and still sustain that fizzy, go-getting culture. But this makes it all the more infuriating that the transparency remains imperfect." (Washington Post; one-time registration required)

Newly Posted Events
(Post Yours!)

2006 NIPA Annual Forum & Expo
in California on May 7, 2006
presented by National Institute of Pension Administrators

FASB Exposure Draft - How It Affects You
Nationwide on May 4, 2006
presented by Buck Consultants

New! Fundamentals of 401(k) and Other Qualified Plans
in Massachusetts on June 7, 2006
presented by SunGard Corbel

Newly Posted Press Releases
(Post Yours!)

Watson Wyatt Sharply Critical of New DOE Policy Discontinuing Contractor Reimbursement for Pensions
(Watson Wyatt)

Still River Announces Monte Carlo Model for Retirement Income Planning
(Still River Retirement Planning Software, Inc.)

Skoglund & Associates Rolls Out Simplified Enrollment(TM)
(Skoglund & Associates)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Benefits Professionals
for New York University
in NY

Benefits Administrator
for Northwestern Benefit Corporation of Georgia
in GA

Client Relationship Manager
for TPA Firm in Southeastern MI
in MI

Registered Sales Director-Core Markets
for Wachovia
in NJ

Assistant General Counsel -- ERISA
for Citigroup Inc.
in NY

Director - Licensee Health and Welfare Plan
for McDonald's Corporation
in IL

Retirement Plan Processing Supervisor
for Alliance Benefit Group of New England
in NH

Actuarial Analyst
for TPA located
in OH

Implementation Project Manager
for CitiStreet
in MA

Pension Analyst
for CitiStreet
in MA

Institutional Sales Rep
for Merrill Lynch
in NJ

Institutional Sales Rep
for Merrill Lynch
in NJ

Corporate Associates
for Steiker, Fischer, Edwards & Greenapple, PC.
in RI

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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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Fax: (407) 644-2151

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