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June 29, 2006
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Summer 2006 Edition of IRS Employee Plan News (PDF)
13 pages. Articles include HERO Act; Form 5500 Filing Tips-- Do You Really Have a Multiemployer Plan?; New Mailing Addresses for Delinquent Filer Voluntary Compliance Program; PBGC Changes Standard Termination Audit Sampling Methodology; PBGC Must Receive Copies of All Multiemployer Plan Annual Funding Notices; EP Senior Leadership; Calendar of EP Benefits Conferences. (Internal Revenue Service)

Overview: PBGC's Final Rule on Liability for Facility Shutdowns Affects Downsizing Employers (PDF)
4 pages. Excerpt: "Downsizing employers should take note of a final rule issued by the Pension Benefit Guaranty Corporation on June 16, 2006, that may make it easier for PBGC to impose liability as a result of the downsizing. 1 The final rule amends PBGC's regulations to create a new method of calculating liability when there is a cessation of operations at a facility under Section 4062(e) of [ERISA]." (Reprint of BNA Pension & Benefits Reporter article by Harold J. Ashner of Keightley & Ashner LLP)

Count on the Projected Benefit Obligation Basis from FASB in September
Excerpt: "When the Financial Accounting Standards Board issues a final statement this September for part 1 of its comprehensive project on employers' accounting for pensions and other postemployment benefits, count on the balance sheet reporting for defined benefit pension plans to be based on the projected benefit obligation." (Pensions & Benefits Weblog)

FASB and Employers Clash on Pension Metric: Corporations Don't Like to Estimate Future Salaries
Excerpt: "Financial Accounting Standards Board members and the Securities and Exchange Commission's top accountant sparred with employers and actuaries ... about whether estimated future pension obligations should be reflected on the balance sheet.' (

How Public Pension Promises Are Draining State and City Budgets
Excerpt: "As much as states are throwing into pensions, they may owe even more. Despite a 2004 stock market rise that should narrow some of the gap, pension experts at Barclays Global Investors (BCS ) say that if public plans calculated their obligations using the more conservative math that private funds do, they would not be $278 billion under, but more than $700 billion in the red." (BusinessWeek Online)

Overview: IRS Expansion of Correction Programs for Plan Loan Errors (PDF)
3 pages. Excerpt: "Because Prudential Retirement recognizes that the correction of participant loan errors is an important topic for many plan sponsors, this Compliance Bulletin is devoted to discussing the methods now available for correcting these problems. The updates and expansions to the EPCRS, in general, will be discussed in more detail in an upcoming Pension Analyst." (Prudential Retirement)

Variable Annuities: Payday or Peril?
Excerpt: "[D]espite the recent regulatory problems, an array of bells and whistles that creates endless varieties of the complicated contracts, frequently high costs, and the numerous fees VAs carry, proponents say they're still extremely valuable tools. When used properly, VAs can help grow savings tax-free, create a client's retirement income stream and help smooth out the bumps in an existing income." (On Wall Street Magazine)

Seventh Circuit Gives No Deference to Reliance on Experts in ESOP Valuation Case (PDF)
Excerpt: "In Armstrong v. LaSalle Bank National Ass'n ... the Seventh Circuit reversed a summary judgment for an ESOP trustee on whether the trustee breached its fiduciary duty in valuing a company's stock. In so doing, the Seventh Circuit seemed to give no deference to the trustee's reliance on an expert ESOP valuation firm ... and indicated that a heightened standard of prudence applies to valuing ESOP stock." (Proskauer Rose LLP)

Comments on ESOP Diversification by Directed Trustees
Excerpt: "The time may have come to rethink the concept of an ESOP, a seemingly inefficient method of wealth accumulation by employees because of the underdiversification to which it conduces (though remember that what is important is the diversification of the employee's entire asset portfolio, including his earning capacity, rather than whether an individual asset is diversified)." (Pensions & Benefits Weblog)

Federal Workers Plan to Retire, but Without Retirement Planning
Excerpt: "More than half of federal employees expect to retire before age 62, with almost four in 10 looking to retire at 59 or earlier, according to a survey conducted for the Office of Personnel Management. But less than half have calculated how much they need to save for a comfortable retirement, and only two in 10 federal employees have a professional financial adviser to help with retirement planning." (The Washington Post; one-time registration required)

Hedging on Massachusetts Public Pension Merger: Local Officials Balk at Statewide Fund
Excerpt: "Local public pension fund managers are criticizing suggestions that the state's network of 106 public retirement systems be combined to save taxpayers money and provide better oversight." (The Boston Globe)

U. Calif. Employees Challenge Pension Contribution Plan
Excerpt: "Some employees at the University of California are challenging their bosses' assertion that they need to start contributing to the system's pension plan. Union officials planned to release a report [today] saying that officials didn't do enough research before deciding to restart employee contributions to the plan." (The Mercury News; one-time registration required)

Overview: IRS QAB on Proper Exclusion of Certain Classes of Employees from Participation
Excerpt: "The IRS has issued a Quality Assurance Bulletin (QAB) describing the proper exclusion of certain classes of employees from participation. Although the QAB focuses on part timers and seasonal employees, it states that the same guidance is applicable to temporary workers or any other classification of employees." (McKay Hochman Co., Inc.)

Opinion: New Pension Analysis Reinforces Need for Congressional Action, Watson Wyatt Says
Excerpt: "With the pension reform bill at a critical point in Congress, a new analysis by Watson Wyatt Worldwide shows that a significant number of the nation's largest companies are reconsidering their commitment to providing traditional pensions to millions of U.S. workers. As a result, Watson Wyatt is calling on lawmakers to take advantage of this historic opportunity to rework the current pension laws to help companies continue to sponsor such plans." (Watson Wyatt Worldwide)

Overview: Deductions Under Code §404
Excerpt: "An employer's plan year does not match its fiscal year. The rule of thumb to remember is that an employer may only deduct contributions based on compensation that is actually paid during the employer's taxable year." (McKay Hochman Co., Inc.)

Overview: Amending a Plan for ADP/ACP Testing
Excerpt: "A plan may be amended to change its testing method from current year to prior year -- and vice versa. However, this is a discretionary amendment and must follow the discretionary amendment rules in Rev. Proc. 2005-66." (McKay Hochman Co., Inc.)

Focus on 401(k), Spring 2006 Edition (PDF)
4 pages. Articles include 'Target Maturity Funds, Models and Fiduciary Duties,' 'Challenges in Monitoring Multi-Asset Class Funds' and 'The Cost Of Risk.'" (The 401k Company)

United Kingdom Companies Make Special Pension Infusions
Excerpt: "Last year 60% of companies made special pension contributions, above normal or statutory contributions, to help plug their scheme deficits, according to a survey by Mercer Human Resource Consulting and the Association of Corporate Treasurers." (; one-time registration required)

Links to Items on Executive Comp, Benefits in General

Defined Contribution-Based Purchasing Platform Gives Opportunity to Maximize Retirement Savings (PDF)
2 pages. Excerpt: "One idea that is growing in popularity in the marketplace is a benefits purchasing platform that allows employees to allocate retirement savings among different retirement benefits, including retirement savings, retiree health care, life insurance, and long-term care." (HR Policy Association)

Recent Appeals Court Decision Instructs Plan Administrators How (Not) to Handle Benefit Claims (PDF)
Pages 1-3 of 6 pages. Excerpt: "In deciding in favor of Robinson, the Fifth Circuit sought to achieve a fair result for Robinson, who the court determined had not been given a reasonable opportunity for a full and fair review of Aetna's termination of benefits as required by ERISA and DOL regulations." (Trucker Huss)

Overview: 2006 Updates to the Voluntary Fiduciary Correction Program (PDF)
Pages 3-5 of 6 pages. Excerpt: "The Voluntary Fiduciary Correction Program ... issued by the Employee Benefits Security Administration of the Department of Labor, is designed to encourage self-correction of certain violations of the Employee Retirement Income Security Act of 1974. The VFC Program was permanently adopted in 2002 and revised in 2005. In April 2006 the DOL issued further revisions and adopted the final VFC Program effective as of May 19, 2006." (Trucker Huss)

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Benefits/Payroll Services Manager
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in WI

Associate Plan Administrator
for RSM McGladrey Retirement Resources
in IA

Senior Plan Administrator
for RSM McGladrey Retirement Resources
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Sales Consultant - Retirement Benefits
for Diversified Investment Advisors
in MA

Retirement Services District Manager
for ADP ~ Automatic Data Processing
in NY

Education/Enrollment Specialist
for ADP ~ Automatic Data Processing
in CA, NJ, NY, OH

Senior Benefits Administrator
for BKD, LLP
in MO

Self-Direct Brokerage Product Manager
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in NJ

Communications Consultant
for Merrill Lynch
in GA, NJ

Vice President/Retirement Plan Manager
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Marketing Analyst
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