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=========================================================== BenefitsLink Retirement Plans Newsletter (Plain Text Format) October 15, 2004 =========================================================== We thank and invite your attention to today's sponsor: www.ftwilliam.com =========================================================== Register for our free on-line demo! (Advert.) <URL:http://benefitslink.com/cgi/a_d.cgi?a_d=2004_10_15_retirement> http://benefitslink.com/cgi/a_d.cgi?a_d=2004_10_15_retirement (Click on above address, or copy and paste it into your web browser, to learn more.) www.ftwilliam.com offers the employee benefits professional the highest quality plan documents and forms at highly competitive prices. Plan documents on a per document basis are only $50/adoption agreement, or $100/volume submitter document (including cross testing). An annual subscription to all documents is only $1,500. The Form 5500 package and the IRS/PBGC form package are only $250 each. Prices include access for five concurrent users. (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) ---------------------------------------------------------- SEC Eyes Possible Abuses in Pensions <URL:http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6506641> http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=6506641 Excerpt: "The U.S. Securities and Exchange Commission is looking into possible accounting abuses involving companies' assumptions about employee pension funds, the SEC's top enforcement official said on Thursday. 'We're looking at assumptions made in connection with pension accounting to determine whether those assumptions were reached to drive earnings results,' said SEC Enforcement Division Director Stephen Cutler in an interview." (Reuters) ---------------------------------------------------------- SEC Probing Pension Fund Assumptions and Possible Accounting Abuses at Six Companies <URL:http://www.investors.com/breakingnews.asp?journalid=23527023&brk=1> http://www.investors.com/breakingnews.asp?journalid=23527023&brk=1 Excerpt: "The U.S. Securities and Exchange Commission has requested documents from six companies to determine how they made assumptions about their pension funds and how it affected their bottom lines, according to a report published late Thursday." (MarketWatch.com, Inc.) ---------------------------------------------------------- IRS Coordinated Issue Paper Addresses Grace Period Contributions to 401(k) Plans <URL:http://hr.cch.com/news/pen-ben/stories/101504a.asp> http://hr.cch.com/news/pen-ben/stories/101504a.asp Excerpt: "Contributions to a qualified cash or deferred arrangement within the meaning of Code Sec. 401(k), or to a defined contribution plan as matching contributions within the meaning of Code Sec. 401(m), made within the Code Sec. 404(a)(6) grace period, are not deductible by the employer for a specific tax year if those contributions are attributable to compensation earned by plan participants after the end of such tax year, according to an IRS Coordinated Issue Paper." (CCH Pension & Benefits News) ---------------------------------------------------------- Analysis: FASB Focuses on Defined Benefit Plans That Pay Lump Sums (PDF) <URL:http://www.mellon.com/hris/pdf/fyi_10_14_04.pdf> http://www.mellon.com/hris/pdf/fyi_10_14_04.pdf 2 pages. Excerpt: "The Financial Accounting Standards Board tentatively decided on October 13 to broaden the focus of its cash balance measurement project to include any defined benefit plan that pays lump sums. By a 5 to 2 vote, the Board asked FASB staff to develop an amendment to the accounting standard governing pensions (FAS 87) that would set the obligation equal to the greater of the obligation otherwise determined or the value of the 'walk-away' benefit ...." (Mellon Financial Corporation) ---------------------------------------------------------- PBGC Lump Sum Interest Rate at 2.75% <URL:http://www.pbgc.gov/services/interest/interest.htm> http://www.pbgc.gov/services/interest/interest.htm Excerpt: "The immediate interest rate for valuing lump sum payments for the month of November 2004 is 2.75%." (Pension Benefit Guaranty Corporation) ---------------------------------------------------------- IRS Acquiesces in a Ninth Circuit Bankrup.tcy Decision Related to an ERISA Plan <URL:http://www.benefitscounsel.com/archives/001228.html> http://www.benefitscounsel.com/archives/001228.html Excerpt: "The IRS has announced ... that it is acquiescing in the Ninth Circuit case of U.S. v. Snyder, 343 F3d 1171 (9th Cir. 2003) (via FindLaw.com) [at http://caselaw.lp.findlaw.com/data2/circs/9th/0215618p.pdf]. Not only is the case significant as it relates to tax liens, ERISA plans, and bankrup.tcy, but the case also illustrates how the term 'flip-flopping' is not just reserved for politicians.' (Attorney B. Janell Grenier on BenefitsBlog.com) ---------------------------------------------------------- Overview: IRS Rollover Hardship Waivers <URL:http://www.complianceheadquarters.com/IRA/IRA_Articles/10_13_04b.html> http://www.complianceheadquarters.com/IRA/IRA_Articles/10_13_04b.html Excerpt: "Over the years, failure to comply with the 60-day requirement has doomed many rollover attempts. .... This changed with the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001. EGTRRA granted the IRS permission to waive the 60-day requirement ....' (Bankers Systems Retirement Plan Services) ---------------------------------------------------------- Treasury Suspends G Fund Investments in Federal Retirement Plan During Federal Debt Crisis <URL:http://govexec.com/dailyfed/1004/101404cdpm1.htm> http://govexec.com/dailyfed/1004/101404cdpm1.htm Excerpt: "Treasury Secretary John Snow Thursday indicated the government has reached the statutory federal debt ceiling, notifying Congress that he must begin to tap a federal retirement fund to avoid breaching the limit. In a letter to Senate Majority Leader Bill Frist, R-Tenn., Snow wrote that, starting Thursday, he would be unable to fully invest in the Government Securities Investment Fund, the so-called G Fund." (Congress Daily via GovExec.com) ---------------------------------------------------------- Working Paper: the Impact of Aging on Financial Markets and the Economy: a Survey (PDF) <URL:http://www.bc.edu/centers/crr/papers/wp_2004-23.pdf> http://www.bc.edu/centers/crr/papers/wp_2004-23.pdf 62 pages. Excerpt: "This paper reviews the literature on the macroeconomic and asset market effects of population aging, focusing on four related issues: (a) The impact of population age structure on aggregate household saving; (b) The effect of population aging on investment demand; (c) Evidence on the influence of population age structure on financial market asset prices and returns; and (d) Effects of globalization on our interpretation of the impact of demographic change." (Center for Retirement Research at Boston College) ---------------------------------------------------------- Evaluating Investment Managers: Are We Sending the Right Message? <URL:https://institutional4.vanguard.com/VGApp/iip/Research?Path=PUBIR&File=InvResEvalManagers.jsp&FW_Activity=ArticleDetailActivity&FW_Event=articleDetail&IIP_INF=BRInvResEvalManagers.jsp> https://institutional4.vanguard.com/VGApp/iip/Research?Path=PUBIR&File=InvResEvalManagers.jsp&FW_Activity=ArticleDetailActivity&FW_Event=articleDetail&IIP_INF=BRInvResEvalManagers.jsp Excerpt: "This report reviews the flaws in the current manager-assessment process, and provides a framework to help align the goals and objectives between managers and those in charge with evaluating their performance." (The Vanguard Group) ---------------------------------------------------------- Popular Stable-Value Mutual Funds for Retirement Plans Poised to Disappear <URL:http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2004/10/14/financial0945EDT0058.DTL> http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2004/10/14/financial0945EDT0058.DTL Excerpt: "The last stable-value mutual fund is poised to disappear. Stable-value funds invest in high-quality bonds and then purchase insurance contracts, or 'wrappers,' meant to keep the funds' net asset values stable by guarding against interest-rate swings. That promise of safety and stable returns has made stable-value options a hugely popular fixture in many retirement accounts." (Wall Street Journal via SFGate.com) ---------------------------------------------------------- Working Paper: Social Security Personal-Account Participation with Government Matching (PDF) <URL:http://www.bc.edu/centers/crr/papers/wp_2004-22.pdf> http://www.bc.edu/centers/crr/papers/wp_2004-22.pdf 48 pages. Excerpt: "This paper examines the potential impact of government matching contributions on personal-account participation in the President's Commission on Strengthening Social Security's Model 3 for Social Security reform. Given the government's choice of four plan-design parameters, the magnitude of the match is determined solely by the differential return personal-account assets receive above the notional return, ...." (Center for Retirement Research at Boston College) ---------------------------------------------------------- Another Question is Answered in the Who's the Employer Q&A Column <URL:http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer&id=266> http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer&id=266 I have an sole proprietor who owns 100% to two different companies, set up different tax IDs and operated completely separate from each other. I am being told that if he offers a 401(k) to company A, he legally has to offer it to company B, and that if he does not want to offer the benefits to company B then each and every employee of company B would have to sign a waiver form. Is that right? (BenefitsLink.com) ---------------------------------------------------------- Another Question is Answered in the Who's the Employer Q&A Column <URL:http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer&id=267> http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer&id=267 A Japanese corporation is the 100% owner of a U.S. corporation. The U.S. corporation has a 401(k) plan. One of its employees is a 15% owner of the Japanese corporation. Would the employee be considered a highly compensated employee? What code sections would apply? (BenefitsLink.com) ---------------------------------------------------------- Another Question is Answered in the Who's the Employer Q&A Column <URL:http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer&id=268> http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer&id=268 I have a plan whose corporate sponsor is 10% owned by an LLC. One of the employees of the sponsoring corporation is a 50% owner of said LLC. He does not own any of the corporation directly. What ownership in the corporation, if any, would this employee be deemed to have for plan purposes (e.g., determination of HCEs)? (BenefitsLink.com) ---------------------------------------------------------- Another Question is Answered in the Who's the Employer Q&A Column <URL:http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer&id=269> http://benefitslink.com/modperl/qa.cgi?db=qa_who_is_employer&id=269 Individual owns 100% of company A and participates in company A's retirement plan as an employee of company A. Individual is 40% owner of company B. Can company B adopt a retirement plan that is different from the retirement plan adopted by Company A? If so, can the individual participate company B's retirement plan? (BenefitsLink.com) ========================================================== Links To Items on Executive Comp, Benefits In General ---------------------------------------------------------- Text of Retroactive Corrections to August 2004 Final Regulations on Statutory Options (PDF) <URL:http://benefitslink.com/taxregs/td9144corrections.pdf> http://benefitslink.com/taxregs/td9144corrections.pdf 7 pages. Excerpt: "The document contains final regulations relating to statutory options. These final regulations affect certain taxpayers who participate in the transfer of stock pursuant to the exercise of incentive stock options and the exercise of options granted pursuant to an employee stock purchase plan (statutory options)." (Internal Revenue Service) ---------------------------------------------------------- Overview: Significant Nonqualified Deferred Compensation Legislation Headed for President's Desk (PDF) <URL:http://www.lanepowell.com/pressroom/newsletters/employeebenefitshotsheet/employeebenefits_hs_101304.pdf> http://www.lanepowell.com/pressroom/newsletters/employeebenefitshotsheet/employeebenefits_hs_101304.pdf 3 pages. Excerpt: "It is unclear how pre-2005 participant elections made under the old rules will be treated under the new rules. It is also unclear whether the AJCA applies to benefits earned but not vested prior to January 1, 2005; although, at this time it appears benefits that have not vested by January 1, 2005, will be subject to the new rules. Regulations dealing with these issues are expected to be issued within 60 days of the AJCA's enactment." (Lane Powell Spears Lubersky LLP) ---------------------------------------------------------- Overview: New Tax Law's Implications for Traditional Deferral Plans and SERPs <URL:http://wrg.wmmercer.com/showarticle.asp?ppc=&pc=ret&blurb_id=47584&ar=1> http://wrg.wmmercer.com/showarticle.asp?ppc=&pc=ret&blurb_id=47584&ar=1 Excerpt: "This article analyzes the Act's implications for traditional NQDC plans maintained by taxable employers -- including elective salary and bonus deferral plans, 'mirror' 401(k) plans, and SERPs.' (Subscription is required to read GRIST article.) Links to Full text of the American Jobs Creation Act of 2004 (HR 4520), final NQDC provisions in HR 4520, Conference report discussion of NQDC provisions in HR 4520, and Conference report on HR 4520 are provided. (Mercer Human Resource Consulting) ---------------------------------------------------------- PGA Tour Golfers Hit It on the Green in Regulation(s) -- Tax Bill Exempts Tour from New DC Rules <URL:http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2004/10/14/financial1349EDT0169.DTL> http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2004/10/14/financial1349EDT0169.DTL Excerpt: "In a hole-in-one for 300 professional golfers, including multimillionaires Tiger Woods and Vijay Singh, a few sentences at the end of the tax bill Congress sent the president this week exempts members of the PGA Tour from new rules that apply to most other high-end retirement plans. While the tax bill is named the 'American Jobs Creation Act of 2004,' it was larded by Congress with goodies for all sorts of industries, ...." (Wall Street Journal via SFGate.com) ---------------------------------------------------------- D.C. Council Bill Might Expand Domestic Partner Benefits <URL:http://www.washblade.com/2004/10-15/news/localnews/graham.cfm> http://www.washblade.com/2004/10-15/news/localnews/graham.cfm Excerpt: "D.C. Council member Jim Graham (D-Ward 1) said his staff is conducting research to determine whether a bill he introduced last week would require private employers in the city to provide benefits to their employees' domestic partners equal to those given to married spouses." (The Washington Blade) ---------------------------------------------------------- Experts Commissioned by British Gas Have Discovered How to Calculate "Murphy's Law" Impact <URL:http://www.plansponsor.com/pi_type10/?RECORD_ID=27074> http://www.plansponsor.com/pi_type10/?RECORD_ID=27074 Excerpt: "If you feel that you are constantly thwarted by 'Murphy's Law,' take heart. Researchers have figured out a formula to predict the impact of the law � before it takes hold. The so-called Murphy's Law holds that if something can go wrong, it will go wrong, and generally at the most critical time. Now, a panel of experts has provided the statistical rule for predicting the law of 'anything that can go wrong, will go wrong' - and it is ((U+C+I) x (10-S))/20 x A x 1/(1-sin(F/10))." (PLANSPONSOR.com; one-time registration required) ========================================================== Newly Posted Events Financial and Retirement Planning Education: For Plan Participants (Part Two of a two-part series) Nationwide on November 11, 2004 presented by International Foundation of Employee Benefit Plans <URL:http://benefitslink.com/events/detail.php?id=38856> http://benefitslink.com/events/detail.php?id=38856 Financial and Retirement Planning Education: For Plan Sponsors (Part one of a two-part series) Nationwide on October 28, 2004 presented by International Foundation of Employee Benefit Plans <URL:http://benefitslink.com/events/detail.php?id=38855> http://benefitslink.com/events/detail.php?id=38855 Post yours! http://benefitslink.com/events/eventmaint.php ========================================================== Newly Posted Press Releases PSCA Announces winners of the ANNUAL Signature Awards Competition (Profit Sharing/401(k) Council of America (PSCA)) http://benefitslink.com/pr/detail.php?id=38408 TRI-AD's Online Survey Shows the Majority of Flexible Spending Account Participants Oppose Health Savings Accounts (TRI-AD) http://benefitslink.com/pr/detail.php?id=38409 Post yours! http://benefitslink.com/pr/maint.php =========================================================== Subscribe to the BenefitsLink Welfare Plans Newsletter, Too Sign-up form is at: <URL:http://benefitslink.com/newsletter/> http://benefitslink.com/newsletter =========================================================== Copyright 2004 BenefitsLink.com, Inc.; except that you can forward this email in full (if you also include this boilerplate part) or otherwise reprint this email in full (if you include this boilerplate part) without obtaining our permission. 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