July 17, 2006 Today's sponsor: Employee Benefits Institute of America Inc. (EBIA) (Click on company name or banner to learn more.)
IRS/Treasury Officials Comment: Plan Amendments, Automatic Enrollment, Highly Compensated Employees Excerpt: "The Joint Committee on Employee Benefits (JCEB) of the American Bar Association (ABA) has posted on its website a report of the May 2006 informal question and answer session between JCEB representatives and officials from the IRS and Treasury Department addressing a variety of employee benefits issues. [The target page presents] some highlights of the 401(k) plan Q/As." (Employee Benefits Institute of America Inc.) Where Offered, Roth 401(k) Accounts Can Be Valuable Retirement Savings Vehicles Excerpt: "Although most employers have been slow to adopt Roth 401(k) plans, a report by Hewitt Associates shows that the Roth 401(k) is used by a meaningful number of employees when offered -- particularly workers who are younger and newly enrolled in a retirement plan." (CCH Pension & Benefits) When 401(k) Contributions Take a Detour -- Employees Pay the Toll Excerpt: "The Labor Department levied $42.8 million in fines against nearly 1,300 employers last year for 401(k)-related violations, but most of those cases involved the more serious infraction of failing to deposit employees' money at all . . . . The agency . . . does not keep statistics on companies cited for delays." (Los Angeles Times; one-time registration required) Pension Breaks for Small Firms Face Uncertain Future Excerpt: "The House version of the bill makes permanent several provisions adopted in 2001 that encouraged small businesses to offer retirement plans. These provisions include higher contribution limits, lower administrative burdens and a tax credit for the costs of starting a 401(k) plan or an IRA-based plan. They're scheduled to expire in 2011." (The Business Journal (Phoenix) via bizjournals.com; one-time registration required) Opinion: Fred Reish Offers a Shift in Focus for the 401(k) Excerpt: "If the purpose of these plans is to provide adequate retirement benefits, then the first piece of information provided to participants should be the amount that they must defer in order to accumulate those benefits. Utilizing reasonable assumptions, we can estimate that amount, taking into account their Social Security benefits." (Plan Sponsor magazine via Reish Luftman Reicher & Cohen) The 25th Birthday of the 401(k) Is Noted Excerpt: "The rise of the 401(k) has made Americans more responsible for their own retirement security, but many have not been up to the challenge. About 25 percent of those eligible fail to sign up -- and the growth in participation rates has stalled as the stock market stagnated in recent years." (NorthJersey.com) Modern Portfolio Theory Combined with Procedural Prudence Defeats Fiduciary Breach Claim Excerpt: "This case shows that a plan sponsor can continue to offer an employer stock fund as an investment option in its 401(k) plan even while the company's financial condition is precarious." (Employee Benefits Institute of America Inc.) Court Rejects Children as Intended Beneficiaries of ESOP Participant Excerpt: "The US District Court for the District of South Carolina found no evidence to support a claim that a MeadWestvaco employee intended his children to be the beneficiary of his Employee Stock Ownership Plan (ESOP) benefits." (PLANSPONSOR.com; one-time registration required) Working Paper: Optimizing Retirement Portfolios -- Asset Allocation, Annuitization, & Risk Aversion (PDF) 30 pages. Excerpt: "Retirees must draw down their accumulated assets in an orderly fashion so as not to exhaust their funds too soon. [The authors] derive the optimal retirement portfolio from a menu that includes payout annuities as well as an investment allocation and a withdrawal strategy, assuming risk aversion, stochastic capital markets, and uncertain lifetimes." (Pension Research Council) Employee Ownership Update for July 14 NCEO Executive Director Corey Rosen discusses a Seventh Circuit decision that criticizes ESOPs; data showing that 8% of employees had options in 2005; retirement plan reform; and an opportunity to apply for the 50 Best Small and Medium-Sized Companies to Work for in America list. (National Center for Employee Ownership) U.S. Senate Bill Would Equalize Law Enforcement Officer Benefits Excerpt: "Legislation to provide more consistent treatment of federal law enforcement officers when it comes to pay and retirement benefits has been introduced by the Democratic senators from Maryland." (The Washington Post; one-time registration required) The Racial Savings Gap Excerpt: "For nearly a decade, Ariel Capital Management LLC and Charles Schwab Corp. have studied the investing habits of African Americans who earn more than $50,000 a year. The results of this year's survey concerned both companies." (The Washington Post; one-time registration required) Links to Items on Executive Comp, Benefits in General Reports of a Looming Labor Shortage May Be Premature Excerpt: "There are two reason for rethinking what many people have taken as a given, HR magazine reports in two articles this month. First, companies simply are not paying enough attention to succession planning." (The New York Times; one-time registration required) Experts Say the Impact of an Ever-Grayer Europe Will Be Felt Throughout Society Excerpt: "According to a recent EU report, the bloc's working age population is projected to fall by 48 million, or 16 percent, between 2010 and 2050, while the number of seniors is expected to rise sharply by 58 million, or 77 percent. Europe will go from having four people of working age for every senior citizen to a ratio of two to one by 2050, predicts the report by the Economic Policy Committee and the European Commission." (AP via The New York Times; one-time registration required) Commentary: Vesting of Deferred Compensation: When Words Are More Taxing than Deeds (PDF) 10 pages. Excerpt: "[The Authors] compare vesting under section 409A with that under section 83 and conclude that, paradoxically, the naked promise is often taxed before the funded one. [The article was published February 6, 2006.]" (Tax Notes via Ivins, Phillips & Barker) Study Finds Backdating of Stock Options Widespread Excerpt: "More than 2,000 companies appear to have used backdated stock options to sweeten their top executives' pay packages, according to a new study that suggests the practice is far more widespread than previously disclosed." (The New York Times; one-time registration required) We thank and invite your attention to our additional sponsor: The Center for Tax Law and Employee Benefits at The John Marshall Law School (Click on company name or banner to learn more.)
Newly Posted Events 401(k) Plan Fees: The Next Wave of Benefits Litigation? Nationwide on July 26, 2006 presented by Seyfarth Shaw LLP Communicating Your ESOP Nationwide on November 1, 2006 presented by National Center for Employee Ownership Effective Employee Involvement Nationwide on October 31, 2006 presented by National Center for Employee Ownership Effective ESOP Committees Nationwide on September 14, 2006 presented by National Center for Employee Ownership ESOPs as a Business Transition Tool Nationwide on September 12, 2006 presented by National Center for Employee Ownership Executive Compensation for ESOP Companies Nationwide on November 2, 2006 presented by National Center for Employee Ownership Fiduciary and Investment Considerations for ESOP Companies and Trustees Nationwide on November 28, 2006 presented by National Center for Employee Ownership Handling the ESOP Repurchase Obligation Nationwide on December 12, 2006 presented by National Center for Employee Ownership Is an ESOP Right for You? in California on December 5, 2006 presented by National Center for Employee Ownership Keeping Your ESOP Culture Alive Nationwide on November 15, 2006 presented by National Center for Employee Ownership Navigating the 409A Deferred Compensation Plan Rules Nationwide on November 14, 2006 presented by National Center for Employee Ownership Preferred Stock in an ESOP Nationwide on November 21, 2006 presented by National Center for Employee Ownership Preferred Stock in an ESOP Nationwide on November 21, 2006 presented by National Center for Employee Ownership S Corporation ESOPs Nationwide on October 24, 2006 presented by National Center for Employee Ownership Newly Posted Press Releases TIAA-CREF Releases Participant Survey on Socially Responsible Investing (TIAA-CREF) CalSTRS Takes a Position on Sudan Divestment Legislation (California State Teachers' Retirement System (CalSTRS)) Newly Posted or Renewed Job Openings National Account Executive for Insurance Carrier for Great-West Healthcare in CO Consultant for Louis Kravitz & Associates in CA Benefit Compliance Auditor for Hewitt Associates in IL Manager, Electronic Data Interface(EDI) Team for Sentinel Benefits Group in MA Commercial Trust Relationship Manager for Marshall & Ilsley Trust Company in NC Pension Administrator for Pension Administration firm in Eastern PA in PA Testing & Reporting Consultant for Fidelity Investments in KY, MA, TX Internal Auditor for 1199SEIU Benefit and Pension Funds in NY Director Transition Services (Implementation of Defined Contribution Plans) for Fidelity Investments in KY Benefits Administrator for Vanguard in PA Handy Links:
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