Retirement Plans
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July 25, 2006
Today's sponsor: ASC & The ASC Institute

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ASC helps retirement plan professionals increase efficiency and profitability through its software systems, documents and education. Software includes DC 401(k) administration & valuation, Defined Benefit, Compliance Testing, DV Direct daily valuation, AIM case management and more. With ASCi plan documents you can quickly and easily create customized prototype/volume submitter plan documents, efficiently maintain historical plan information, create complete amendment packages for all your clients at one time and more. Click to learn more or email

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

Lawmakers Say They Are Nearing an Accord on Pension Reform Legislation
Excerpt: "Senate Finance Committee Chairman Charles E. Grassley (R-IA) and the panel's Ranking Member Max Baucus (D-MT) said that negotiations were nearly complete with Grassley calling the pension bill 'must-do' legislation. Baucus told CCH that he believed pension conferees would complete the conference report before Congress leaves Washington for its August recess." (CCH Pension & Benefits)

Letter of July 24 to Congress Concerning Hybrid Pension Plans and Pension Reform Legislation (PDF)
3 pages. Excerpt: "[The American Benefits Council writes] to respond to two letters you received from AARP dated June 29 and July 17, 2006, regarding the treatment of hybrid pension plans in pending pension reform legislation and to urge you to vote 'no' on the motion to instruct conferees to adopt the provisions governing hybrid pension plans in the Senate bill." (American Benefits Council)

Overview: Calculation of the Prohibited Transaction Excise Tax for Untimely Paid Employee Deferrals (PDF)
1 page. Excerpt: "Section 4975(a) of the Internal Revenue Code (Code) imposes a 15% excise tax (the first tier excise tax) on the amount involved in a prohibited transaction for each year during a taxable period. In addition, if the 15% excise tax is imposed and the transaction is not corrected within the taxable period, a second tier excise tax of 100% of the amount involved in the prohibited transaction is imposed." (Transamerica Center for Retirement Studies)

Tax Diversification -- One Selling Point for Roth 401(k)
Excerpt: "If you don't think income-tax rates could rise in the future, stop reading now. Under a stable or lower-tax scenario, new Roth 401(k) retirement accounts probably aren't for you, assuming your employer even offers them. But if you think tax rates might rise or suspect you could get pushed into a higher bracket eventually, a Roth 401(k) may make sense. That's because the new accounts offer a way to withdraw money tax-free in retirement." (; registration required)

401(k) Plans: Picking the Best Provider Survival Tips for Finding the Best Fit for Your Plan's Needs
Excerpt: "[A]s a fiduciary, you are obliged to ensure that your program is established and maintained in the best interests of the plan participants and beneficiaries. That may not require that your program employs the snazziest technologies, but it certainly requires an evaluation of features, fees, and relative value -- and on an ongoing basis, not just when the decision is thrust upon you (for more information, see" (; one-time registration required)

401(k) Plan Advice Offerings Take Different Routes to Asset Allocation Answers
Excerpt: "Because they are competing against one another in the marketplace, investment advice providers generally like to stress the distinctions that make their own methodologies unique -- and there are differences. Some are quite significant and can have a real impact on the type of advice a participant might receive." (; one-time registration required)

British Airways' Pension Deficit Reported to be Doubled
Excerpt: "The long-troubled British Airways' pension fund now suffers from a (2 billion pound) $3.7 billion shortfall-- about doubled from the last such estimate made three years ago. The latest actuarial deficit report follows a 2003 report that put the shortfall at 928 million pounds, according to a Sunday Telegraph news report." (; one-time registration required)

Equitable Cash Balance Plan Wins Discrimination Ruling
Excerpt: "The US District Court for the Southern District of New York ruled that a cash balance plan adopted for employees, managers and agents of The Equitable Life Assurance Society of America did not discriminate against older participants." (; one-time registration required)

Overview: How Much May Be Taken As a Hardship Distribution?
Excerpt: "General rule. The maximum distributable hardship amount is the employee's total elective contributions as of the date of distribution, reduced by the amount of previous distributions of elective contributions." (McKay Hochman Co., Inc.)

Community Property State Spousal Waiver Form (PDF)
1 page. Married participants who reside in Community Property law states may use this form when they want to add or change a beneficiary who is not their spouse. (ICMA Retirement Corporation)

Oregon Public Pension Board to Request Return of Pension Overpayments
Excerpt: "About 125,000 Oregon state workers and retirees will see their monthly pensions cut as a result of the ruling on a lawsuit that local governments filed, claiming the pension board poured too much money into benefits accounts in 1999." (; one-time registration required)

Policy Brief: Tax Laws Discourage Phased Retirement for Employers with Traditional Pensions (PDF)
2 pages. Excerpt: "With people living longer, healthier lives, many boomers who approach retirement do not want to retire completely. Instead, they would like to reduce their work schedules and make up the income difference by receiving a reduced share of their retirement benefits, a process known as phased retirement. For employers with defined benefit plans, current tax rules prohibit this practice prior to the plan's normal retirement age." (HR Policy Association)

Opinion: 'Unconditional love, critical to effective parenting, is fatal in investment matters.'
Excerpt: "There is a presumption of innocence in our jurisprudence that applies to criminal matters generally. Does this presumption of innocence apply in civil as well as criminal matters? Of course not." (

Opinion: Will California State Public Pension Outrages, Large and Small, Ever End?
Excerpt: "Consider this honey of a deal for some of the state's top elected officials. Last month the California Citizens Compensation Commission, which sets total compensation for statewide elected officials, legislators and Board of Equalization members, boosted the annual pay of these constitutional officials by 18 percent." (The Orange County Register)

Issues in Brief: Will We Have To Work Forever? (PDF)
8 pages. Excerpt: "This brief examines the effect of working longer on replacement rates and finds that delaying retirement by about two years can have a major impact on retirement security for those with significant 401(k) assets; households that depend solely on Social Security, however, would have to extend their work lives by more than three and a half years to achieve similar gains." (Center for Retirement Research at Boston College)

Overview: IRS Form 8905 FAQs and Other Issues
Excerpt: "[T]he IRS has issued six FAQs, addressing [the question whether the Form 8905 should be filed if the plan was not being submitted for a determination letter (DL)] along with further guidance on other issues. The FAQs are provided [in the target document] along with further insights as to how they affect you and your clients." (McKay Hochman Co., Inc.)

Rethinking Employee Benefits, Part 3: Should Pensions Be Voluntary? (PDF)
4 pages. Excerpt: "[W]hat if the government scrapped the entire Social Security and retirement program system in favor of a mandatory mini-annuity type program run by the government or outsourced to a semi-public or private entity[ies]?" (Benefits Law Journal via Kirkpatrick & Lockhart Nicholson Graham LLP)

Can an Asset-Liability Matching Strategy Spare Your Defined Benefit Plan Heartburn?
Excerpt: "To get a feel for the extent of mismatch between assets and liabilities, sponsors should become aware of their 'dollar duration,' a sort of Body Mass Index for measuring the sensitivity of liabilities to the dynamics of interest rates. When the dollar duration of the assets equals the dollar duration of the liabilities, the plan is well-guarded against swings in interest rates." (; one-time registration required)

Managing an Unwanted Risk for Defined Benefit Pension Funds
Excerpt: "This article considers the issues underlying active management of pension fund interest rate exposure and offers practical ways of adopting some of the solutions now available." (Mercer Human Resource Consulting LLC and Mercer Investment Consulting, Inc.; one-time registration required)

The Employment-Based Pension System: Evolution or Revolution? (PDF)
Pages 1-9 of 12 pages. Excerpt: "The nonpartisan Employee Benefit Research Institute (EBRI), in conjunction with AARP, co-sponsored a day-long conference on the future of the U.S. employment-based pension system. This article summarizes the main points raised at the conference: Several conference speakers predicted that the evolution currently under way in the system will lead to radical change and the ultimate demise of private-sector defined benefit pensions, the article reports." (Employee Benefit Research Institute)

Despite Decline in Number of DB Retirement Plans, a Fair Number of Employers Operate Thriving Plans
Excerpt: "A report from the Hudson Institute, a public policy research organization, reveals that, from 1988 through 2004, the number of pension plans offered by firms with one to 24 employees actually has increased by 7%, while the number offered by firms with 25 to 99 employees increased by 11%." (; one-time registration required)

Links to Items on Executive Comp, Benefits in General

The Last Samurai: The End of Executive Retirement Plans in Japan
Excerpt: "[I]ncreased scrutiny of executive pay practices in Japan . . . has prompted many companies to examine a significant component of the compensation of their executives, namely, their retirement plan. In this article, [Mercer explores] the implications of this emerging trend and describe[s] the issues companies should take into account as they set about reengineering their executive retirement programs." (Mercer Human Resource Consulting LLC and Mercer Investment Consulting, Inc.; one-time registration required)

Federal Workforce Overview: FY 1994 -- FY 2004 -- Employment Through Retirement (PDF)
18 pages. Excerpt: "Baby boomers heading toward retirement from the Federal workforce are a concern for many human capital managers and planners. Using time series modeling techniques, it is projected that nearly 61,000 non-seasonal full-time permanent Federal employees will retire in FY 2008. It is further predicted that the numbers of retirements will peak around 2008 to 2010." (U.S. Office of Personnel Management)

Options Backdating: Is Your Company at Risk? (PDF)
5 pages. Excerpt: "[T]his Alert provides information on issues relating to the timing of option grants, possible pitfalls a company may encounter and some proactive ways in which companies can address or avoid such pitfalls." (Seyfarth Shaw LLP)

Overview: Excise Taxes/Disclosure Rules with Respect to Potentially Abusive Tax Shelter Transactions (PDF)
4 pages. Excerpt: "The Internal Revenue Service ('IRS') issued Notice 2006-65 on July 11, 2006 to ensure that affected entities are aware of the new TIPRA provisions and is seeking comments on the new excise tax and disclosure requirements by August 11, 2006. Additional guidance is expected to be issued promptly." (Pillsbury Winthrop Shaw Pittman LLP)

Overview: Advance Form 5500 Released for Reporting on 2006 Plan Year
Excerpt: "[EBIA hopes] the IRS will issue additional guidance regarding the apparent elimination of Schedule P for 2006 plan year reporting. Under current IRS guidance (which continues to apply to 2005 plan year reporting), Schedule P is an optional item but, as a practical matter, must be filed for 401(k) and other retirement plan trusts to start the running of the three-year statute of limitations under Code Section 6501(a) (under which the IRS can assess taxes for plan disqualification)." (Employee Benefits Institute of America Inc.)

ERISA Benefits Litigation: Who Can Be Sued? (PDF)
12 pages. Excerpt: "There has been a surprising lack of consensus by the courts regarding whom a participant should sue under the Employee Retirement Income Security Act of 1974 (ERISA) to recover benefits due under terms of a plan. The article reviews the courts' varying treatment of the subject and proceeds to look at the structure, words, and history of the statute. The article concludes that an employee benefit plan is the only proper party defendant to an ERISA benefits lawsuit." (Benefits Law Journal via Groom Law Group)

We thank and invite your attention to our additional sponsor: The Center for Tax Law and Employee Benefits at The John Marshall Law School

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Banner ad for The Center for Tax Law and Employee Benefits at The John Marshall Law School

You Have the Potential. We Have the Programs.

Are you working in human resources? Are you dealing with health insurance plans or pension benefits? Learn how you can broaden your experience with an M.S. degree (for non-lawyers) or LL.M. degree (for attorneys) in employee benefits from The John Marshall Law School in Chicago during an information session from 5 to 7 p.m., Wednesday, August 2. Learn how these unique programs can help advance your career.

(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!)

Eligibility and Participation in Qualified Retirement Plans
Nationwide on November 30, 2006
presented by McKay Hochman Co., Inc.

In-Service Withdrawals From Qualified Plans
Nationwide on November 8, 2006
presented by McKay Hochman Co., Inc.

Introduction to Retirement Plans
Nationwide on November 6, 2006
presented by McKay Hochman Co., Inc.

Introduction to Retirement Plans
Nationwide on November 13, 2006
presented by McKay Hochman Co., Inc.

Participant Loans
Nationwide on October 18, 2006
presented by McKay Hochman Co., Inc.

Pension, Profit Sharing, Welfare, and Other Compensation Plans
in District of Columbia on October 5, 2006
presented by ALI-ABA (American Law Institute-American Bar Association)

Pension, Profit Sharing, Welfare, and Other Compensation Plans
in California on March 28, 2007
presented by ALI-ABA (American Law Institute-American Bar Association)

Pension, Profit Sharing, Welfare, and Other Compensation Plans - Webcast
Nationwide on October 5, 2006
presented by ALI-ABA (American Law Institute-American Bar Association)

Pension, Profit Sharing, Welfare, and Other Compensation Plans - Webcast
Nationwide on March 28, 2007
presented by ALI-ABA (American Law Institute-American Bar Association)

Plan Amendment Update
Nationwide on August 1, 2006
presented by McKay Hochman Co., Inc.

Representing Professional and Closely Held Businesses
in Illinois on September 28, 2006
presented by ALI-ABA (American Law Institute-American Bar Association)

Representing Professional and Closely Held Businesses - Webcast
Nationwide on September 28, 2006
presented by ALI-ABA (American Law Institute-American Bar Association)

Newly Posted Press Releases
(Post Yours!)

ASPPA Fall 2006 Proctored Examination Window
(ASPPA (American Society of Pension Professionals & Actuaries))

Richard H. Macy Named PBGC Chief Operating Officer
(Pension Benefit Guaranty Corporation (PBGC))

Article Details EBRI-AARP Conference on Pensions
(Employee Benefit Research Institute (EBRI))

Pension Rights Center Launches Revamped Web Site
(Pension Rights Center)

Transamerica Implements Online 401(k) Plan Adoption and Acceptance Agreement for Multiple Employer Plans
(Transamerica Retirement Services)

HR Policy Association Certifies Ten Pharmacy Benefit Managers Willing to Provide Full Transparency in Drug Contracting
(HR Policy Association)

Dallas-Fort Worth Business Group on Health Releases Report on the State of Diabetes in Texas
(Dallas-Fort Worth Business Group on Health)

RESOLVE National Survey Finds Employers Covering Infertility Treatment Experience No Significant Increase in Cost

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

401(k)/Defined Contribution Valuation Processor
for National Retirement Services, Inc.
in CA, NC

Defined Benefit Pension Administrator
for RSM McGladrey
in AZ

Account Manager
for Zenith Administrators
in NV

ERISA Counsel
for Windstream Communications
in AR

Director of Actuarial Consulting
for RSM McGladrey Retirement Resources
in IL

Retirement Compliance Testing Administrator
for Vanguard
in PA

Divisional Sales Director - Midwest Division
for Citigroup - Smith Barney
in IL

Compliance Analyst
for Great-West Retirement Services
in WI

Group Benefits Account Manager
for Standard Insurance Company
in PA

Employee Benefits Product Manager
for Wachovia
in NC

401(k) Defined Contribution Administrator
for DR Pension Services, LLC
in NY

Actuarial Benefit Consultant
for Fidelity Investments
in MA, NC, NY

Senior Benefits Compliance Representative
for Aerojet - Sacramento
in CA

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