May 2, 2003 - 13,168 subscribers

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Today's sponsor: Actuarial Systems Corporation

(Click on company name or banner to learn more.)

  ASC - QUALITY SOFTWARE FOR THE PENSION INDUSTRY FOR OVER 20 YEARS 
 
ASC provides complete automation for the pension office, including:
DC/401(k) and DB administration and valuation systems, sophisticated
Compliance Testing, DV Direct Daily Valuation, Advanced Information
Manager Database (AIM), and Single-Step Processing. All ASC Technical
Support Members were experienced Pension Administrators or Actuaries
before joining ASC -- and most have been with ASC for over 10 years.

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

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In Rev. Rul. 2003-47, IRS Describes a Valid Length-of-Service Award 457 Plan
Excerpt: "HOLDINGS: ... County C's Plan is a length of service award plan described in § 457(e)(11)(A)(ii). The Plan, therefore, is not subject to § 457(a) or § 457(f).... Awards paid under the Plan are not wages for purposes of FICA taxes." (Internal Revenue Service)

Text of Final IRS Regulations on Earnings for Returned or Recharacterized IRA Contributions
These final regulations adopt the technique provided in earlier proposed regulations, to provide a method to be used for calculating the net income attributable to IRA contributions that are distributed as a returned contribution pursuant to section 408(d)(4) of the Internal Revenue Code or recharacterized pursuant to section 408A(d)(6). (Internal Revenue Service)

IRS Provides Rules for Withholding and Reporting on 457(b) Distributions After 12/31/2001
Notice 2003-20. Excerpt: "This notice describes the withholding and reporting requirements applicable to eligible deferred compensation plans described in § 457(b) of the Internal Revenue Code ('§ 457(b) plans') for periods after December 31, 2001." (Internal Revenue Service)

IRS Releases Second White Paper: the Future of the Employee Plans Determination Letter Program (PDF)
20 pages. Excerpt: "Our evaluation of the comments [from the first white paper] leads us to eliminate all but three of the original options. The three remaining options are: maintenance of the status quo, replacement of the determination letter program with a third-party certification system, and implementation of a staggered remedial amendment period system to spread out the filing of determination letter applications over time." (Internal Revenue Service)

Why Even a Rally Won't Save Your 401(k) Savings
Excerpt: "In recent weeks, the stock market has shown signs that it finally may be starting to dig out of its three-year hole. But even a sustained upturn may not be enough to salvage the retirement savings of many Americans. A host of growing problems is deepening the effects of the bear market for the estimated 52 million people with 401(k)s." (The Wall Street Journal via NJ.com)

Why Do People Save? Why Don't They Save?
Excerpt: "Researchers from the fields of psychology and sociology, as well as economics, are increasingly gravitating to the newly emerging discipline called 'behavioral finance,' which seeks to find the human element in money matters." (The Philadelphia Inquirer)

Pick a 403(b) Vendor -- Participants Must Choose Among 140 in Los Angeles Unified School District
Los Angeles teacher and 403(b) advocate Steve Schullo has organized LAUSD's maze of more than 140 vendors into three categories: annuities and variable annuities; loaded mutual funds; and no load mutual funds and no load annuities. (403bWise.com)

Updated: Towers Perrin Retirement Legislative Tracking Chart
Excerpt: "What's New: A comprehensive pension reform bill (H.R. 1776). A bill (H.R. 1677 and S. 825) that (i) requires employers who convert to a cash balance pension plan give certain participants a choice to remain under the terms of the plan in effect immediately before its conversion and (ii) prohibits 'wearaway' in the case of any such conversions. A bill (S. 832) that would allow a bankruptcy trustee to recover certain payments made to executives prior to a corporate bankruptcy filing." (Towers Perrin)

Written Statement of AARP at Recent Hearing on Funding of DB Plans (PDF)
Excerpt: "At a a minimum, Congress should retain an interest rate for determining single-sum benefit amounts that is consistent with the historical level of the 30-year Treasury rate.... In addition, to the extent that legislation prescribes any new single-sum interest rate benchmark ... fundamental fairness to employees dictates that any such change be phased in very gradually." (AARP)

Retirement Plan Loans: the States vs. ERISA-- It's a Whole New Ball Game
4 pages. Excerpt: "Service providers now appear to have exposure to Reg Z and applicable State consumer lending regulations. Below, we examine retirement plan service provider issues surrounding participant loan administration and the current state of loan processing, from initiation to administration. We also look at the ramifications of Stankewich v. Vanguard Fiduciary Trust in practice, the challenges it has created-- and, surprisingly, the opportunities unfolding as a result." (McHenry Consulting; one-time registration required)

Written Statement of Coalition to Preserve Retirement Security at Hearing on Social Security Offset
Excerpt: "The Coalition to Preserve Retirement Security (CPRS) is a non-profit organization composed of members representing state and local governments, public employee unions, and public pension systems ... The purpose of our organization is to assure the continued financial integrity of our members' public retirement systems.... Mandatory Social Security Coverage Will Only Extend Social Security's Solvency by Two Years, But Could Destabilize Public Pension Systems Nationwide" (U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Social Security)

Written Statement of Fraternal Order of Police at Hearing on Social Security Offset
Excerpt: "Let me begin by explaining the impact of the WEP on retired police officers. Simply put, law enforcement officers who served communities which are not included in the Social Security system may lose up to sixty percent (60%) of the Social Security benefit to which they are entitled by virtue of secondary or post-retirement employment which required them to pay into the Social Security system." (U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Social Security)

Written Statement of Nat'l Assoc. of Police Officers at Hearing on Social Security
Excerpt: "Forcing state and local governments and employees to pay a combined 12.4 percent tax would have major consequences. Specifically, mandating Social Security taxes on the 70 percent of public safety officers now not covered would have a dramatic and negative impact on the recruitment and retention of well-qualified public safety officers." (U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Social Security)

Written Statement of National Education Association at Hearing on Social Security Offset
Excerpt: "NEA strongly supports complete repeal of the Government Pension Offset and the Windfall Elimination Provision, which unfairly reduce the Social Security and Social Security survivor benefits certain public employees may receive. We oppose requiring public employees to participate in Social Security. Our testimony will cover both of these issues." (U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Social Security)

Written Statement of an Affected Retiree at Hearing on Social Security Offset for Public Employees
Excerpt: "I never knew about the Government Pension Offset (GPO) until recently, when I began to explore my retirement options. I had always thought that I would be able to collect a widow's benefit when I reached the eligible age.... Clearly, that was not the case. Instead, I will be forced to offset my city pension against my Social Security widow's benefit. Two-thirds of my $1,300-a-month pension will completely eliminate my widow's benefit of $812." (U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Social Security)

Written Statement of Federal Retired Employees Assoc. at Hearing on Social Security Offset
Excerpt: "Each year, more and more individuals are finding themselves affected by these onerous offsets. And each year, more and more members of Congress have recognized the need for changing them. And now is the time to do it. I hope that today's hearings lead to enactment of change before the end of this year." (U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Social Security)

Written Statement of GAO Researcher at Hearing on Social Security Offset for Public Employees
Excerpt: "I hope I can help clarify and provide some perspective on the complex relationship between Social Security and public employees. Today, I will discuss Social Security's coverage of public employees, Social Security's provisions affecting noncovered public employees, and the potential implications of mandatory coverage of public employees. My testimony is based on a body of work we have published over the past several years." (U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Social Security)

Written Statement of Social Security Dep. Commissioner at Hearing on Offset for Public Employees
Excerpt: "Thank you for the opportunity to discuss the Government Pension Offset provision, or GPO, and the Windfall Elimination Provision, also known as WEP. These provisions are not well understood, so today, I would like to take some time to describe the purpose of these provisions, how they work, and issues that should be evaluated when considering legislative changes to them." (U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Social Security)

Social Security: Issues Relating to Noncoverage of Public Employees
14 pages; testimony by Barbara D. Bovbjerg. GAO-03-710T, May 1, 2003. Highlights at http://www.gao.gov/highlights/d03710thigh.pdf - Excerpt: "Social Security covers about 96 percent of all U.S. workers; the vast majority of the rest are state, local, and federal government employees. While these noncovered workers do not pay Social Security taxes on their government earnings, they may still be eligible for Social Security benefits. This poses difficult issues of fairness ..." (U.S. General Accounting Office)

Full Text of ASPA Comment Letter on Extension of IRS Restorative Payment Guidance to DB Plans
Excerpt: "The Service's analysis in Rev. Rul. 2002-45 did not focus on the defined contribution nature of the plan at issue ... Rather, the Service focused ... on whether the payment was being made to restore some or all of the plan's losses due to an action (or a failure to act) that created a reasonable risk of liability for breach of fiduciary duty. Thus, payments made to a defined benefit plan under the same circumstances should be eligible for treatment as restorative payments ..." (American Society of Pension Actuaries)

67% of Multiemployer Plans Were Fully Funded In 2002
The percentage of multiemployer defined benefit plans that are fully funded for vested benefits continued to decline last year, according to the Segal Company's 2002 Survey of the Funded Position of Multiemployer Plans. Segal studied 455 plans with combined assets of nearly $140 billion covering more than 3.9 million participants. According to the survey, 67% of multiemployer plans were fully funded in 2002. That percentage is down from 83% in 2001 and 79% in 2000. (SpencerNet)

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Links to Items on Executive Comp, Benefits in General

Opinion: Pension Are Sacred -- At Least for Executives
Excerpt: "[I]n a week when even Fortune, the corporate playbook, has adorned its cover with a CEO with a pig's head and the title 'Oink! CEO Pay Is Still Out Of Control,' how about starting with the guys running corporate America? They have, after all, in the course of the last year gone from American Idols to America's Most Wanted." (The Tallahassee [Fla.] Democrat)

Stealth Wealth: Companies May Struggle, But Top Execs Keep Padded Pensions
Excerpt: "When [Delta Air Lines' CEO Leo Mullin] joined Delta less than six years ago, the company gave him a sterling salary, nice bonuses and other incentives. And they did one more thing: They added 22 extra years to his pension. That's 22 years for work not performed." (ABC News)

Denver Mayor Calls for Cuts in Benefits for City Employees
Excerpt: "The changes would affect most areas of city pay and benefits, including how salaries are set, merit pay, overtime, the pension plan, health insurance and early-retirement options." (The Denver Post)

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Newly Posted or Renewed Job Openings


401(k) Client Relationship Manager
for Great West Life & Annuity
in MN, PA, TN

Senior Counsel/Associate General Counsel
for Financial Engines, Inc.
in CA

Senior Pension Administrator (Client Delivery Senior Specialist)
for Towers Perrin
in NJ, PA

Non-Qualified Project Manager
for Merrill Lynch
in NJ

Employee Benefit Trust Administrator III
for Large Southeast Bank
in FL

Employee Benefits Attorney - Part Time
for Zywave, Inc., a sister company of Frank F. Haack & Associates
in WI

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Newly Posted Conferences
( Post Yours! )

Employee Benefits Conference
in NY
August 12, 2003
Foundation for Accounting Education

2003 ICI/SIA Retirement Savings Conference
in DC
June 1, 2003
The Investment Company Institute and the Securities Industry Association

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Newly Posted Press Releases
( Post Yours! )

Milliman USA Acquires Insurance Actuarial Software Practice from IBM
(Milliman USA)

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