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June 16, 2006
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Employee Ownership Update for June 15, 2006
NCEO Executive Director Corey Rosen discusses how the stock options backdating scandal has grown: new reports are looking at companies that grant options just before releasing favorable news, and the list of companies who may have backdated options could grow to 10% of all companies with plans. In other news, the pension reform bill (affecting ESOPs and 401(k) plans, among others) is still in conference, and FASB has issued new guidance on award modifications. (National Center for Employee Ownership)

Text of PBGC Final Reg on Employer Liability When Closing a Facility (PDF)
4 pages. Excerpt: "This rule, which is narrow in scope, provides a practicable and transparent formula for calculating employer liability when a section 4062(e) event occurs.... [W]hen there is a section 4062(e) event, there is by definition only one employer that contributes to the plan.' Text of PBGC press release about the regulation is at https://benefitslink.com/pr/detail.php?id=39830. (Pension Benefit Guaranty Corporation)

PBGC Sets Rule on Termination Liability Calculations
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) specified [yesterday] how to calculate the liability that occurs when an employer closes its operations and causes more than 20% of employees covered by a defined benefit plan to be unemployed." (PLANSPONSOR.com: one-time registration required)

CBO's Online Guide to Tax Incentives for Retirement Saving
Excerpt: "This Congressional Budget Office guide focuses on retirement plans that are treated more favorably under the current income tax regime than are other forms of saving. It addresses retirement plans offered by employers and unions, as well as those that involve personal saving. The guide's purpose is threefold: to explain the different tax incentives associated with various plans; to discuss what the government requires of such plans as a condition of their tax-favored status; and ...." (U.S. Congressional Budget Office)

Opinion: Smoothing Pension Results
Excerpt: "FASB's Robert Herz and IASB's David Tweedie give senators a lesson in how companies can report pension-related gains in years when they've actually had whopping investment losses. Never has the practice of smoothing pension results suffered the deft skewering it did on Wednesday, when the world's two most powerful accounting standards-setters testified before the Senate Banking Committee." (CFO.com)

Web Page with Links to Comment Letters Received by FASB on the Pension Accounting Proposal
Excerpt: "The comment letters concern FASB's plan for Employer's Accounting for Defined Benefit Pension and Other Postretirement Plans -- an amendment of FASB Statements No. 87, 88, 106, and 132(R)." (Financial Accounting Standards Board)

New Jersey Police Union Hits State with Pension Underfunding Suit
Excerpt: "The New Jersey Law Enforcement Supervisors Association filed the suit in state Superior Court in Trenton. .... Association President Tom Moran told the news service that the state's bill for shortchanged pension contributions could be $3 billion to $4 billion." (PLANSPONSOR.com: one-time registration required)

Testimony: A Tune-Up on Corporate Tax Issues -- What's Going on Under the Hood? (PDF)
4 pages. The ESOP Association submitted testimony June 13, 2006, to the Senate Committee on Finance. (The ESOP Association)

Ohio Bribery Investigation Turns to State Pension Funds
Excerpt: "An investigation of the Ohio Bureau of Workers' Compensation regarding bribery for investment contracts has expanded to include the state's five public pension funds and the Ohio Treasurer's office." (PLANSPONSOR.com: one-time registration required)

Retirement Planning with Target-Date Funds (PDF)
Excerpt: "Target Date funds are a service, not just an investment. Upfront evaluation of the fund family, fund risk and participant needs are among the most important steps to a successful choice." (Benefits & Compensation Solutions)

New Pension Rules Implemented for Public Employees in Taiwan
Excerpt: "In an effort to narrow the gap between retirement benefits for the civil service and the private sector, Taiwan has implemented a new rule that caps pension and retirement benefits at 85 percent of salary for all civil servants, teachers and military personnel with up to 25 years of service." (Watson Wyatt Worldwide)

Mexico -- Unconstitutionality of the Fringe Benefit Expenses Deductibility (PDF)
3 pages. Excerpt: "The Mexican Supreme Court has declared unconstitutional section XII of Article 31 of the Mexican Income Tax Law in effect as of 2003, which establishes the rules applicable to the deductibility of fringe benefits expenses made by an employer in favor of employees." (Baker & McKenzie)


Links to Items on Executive Comp, Benefits in General

Testimony on FASB's Proposed Standard on Employers' Accounting for Pension and Other Plans (PDF)
21 pages. Testimony of Robert H. Herz, Chairman, Financial Accounting Standards Board, before the Committee on Banking, Housing, and Urban Affairs, June 14, 2006, on FASB's Proposed Standard on 'Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans" (Financial Accounting Standards Board)

The Nonqualified Advisor -- Apr/June 2006 Edition (PDF)
2 pages. This edition has articles titled: Accounting Stalemate: Post-Retirement Split-Dollar; How to deduct BOLI Premiums and Gain Tax-Free Withdrawals; and IRS Offers 409A Transition Relief for Offshore Trusts. (Employee Benefit Solutions)

Deferred Compensation Programs: Cautions and Deadlines Under Section 409A
Excerpt: "Employee Benefit News has published several articles on the new Section 409A of the Internal Revenue Code, but many HR-benefit managers are still confused about its implications. .... In this article, the first in a series, Frank Palmieri, Esq., of Palmieri & Eisenberg, answers questions about the application of Section 409A to various deferred compensation programs." (Employee Benefit News)

Executive Pay Levels Driven Higher Largely on Salary and Bonus Increases
Excerpt: "A Towers Perrin analysis of 2006 proxy statements confirms that executive compensation levels moved up again last year, but the increase came mostly on higher salary and bonus payments and was the smallest in some time. .... In addition to reviewing pay trends, we were also interested in seeing whether and how companies had changed the content or format of their 2006 proxy statements in response to the SEC's January 2006 disclosure proposal." (Towers Perrin)

Stock Option Award Timing: A Hot Button Issue (PDF)
3 pages. Excerpt: "Recently, the news media have been awash in stories regarding the alleged 'backdating' of stock option grants -- primarily to high-level executives -- by publicly traded companies. Although the controversy has its roots in an SEC investigation dating back to 2005, the issue gained prominence following a March 18, 2006, Wall Street Journal (WSJ) analysis and numerous ensuing investigations by the SEC and the Department of Justice." (Winston & Strawn LLP)

Opinion: Quinn Applies Newton's Third Law to Benefits
Excerpt: "My objective is not to argue that employers should be in the business of employee benefits, but rather to note that once in it, exiting for already covered (yes, dependent) populations, is not a good thing; in fact, it is a rather dumb thing to do, financially advantageous or not. Let's count the reasons why." (Richard D. Quinn via Employee Benefit News)


Newly Posted Events
(Post Yours!)

8th Annual Corporate University Week
in Florida on November 12, 2006
presented by International Quality &#amp; Productivity Center (IQPC)

Code Section 409A Workshop
in Illinois on July 27, 2006
presented by SunGard Corbel

Cross-Tested Plan Workshop - Design and Testing
Nationwide on August 23, 2006
presented by SunGard Corbel

Estate Planning Considerations for Qualified Plans and IRAs
in Illinois on July 28, 2006
presented by SunGard Corbel

Safe Harbor 401(k) Plan Workshop - Design and Administration
Nationwide on August 24, 2006
presented by SunGard Corbel


Newly Posted Press Releases
(Post Yours!)

New Survey Finds 94% of Organizations Offer Education Assistance to Employees
(International Foundation of Employee Benefit Plans)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Employee Benefits Tax Senior or Manager
for Deloitte
in CA

Employee Benefits Associate
for Oppenheimer Wolff & Donnelly LLP
in MN

Senior Due Diligence Analyst
for Vanguard
in PA

Project Manager
for Vanguard
in PA

Annual Plan Reporting Manager
for Vanguard
in PA

Plan Specialist - Plan Sponsor Desk
for Transamerica
in IA

Associate Investment Analyst
for New York Life Investment Management LLC
in MA

Investment Analyst
for New York Life Investment Management LLC
in MA

Wachovia Retirement Solutions Relationship Manager II
for Wachovia
in NC

401(k) Compliance Specialist
for ADP (Automatic Data Processing)
in NJ

ERISA and Executive Compensation Associate
for Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
in MA




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