Retirement

GASB Publishes Other Post-Employment Benefits Implementation Guide

The Governmental Accounting Standard Board (GASB) published a Guide to Implementation of GASB Statements 43 and 45 on Other Postemployment Benefits last week. The Guide assists preparers and auditors or governmental financial statements and their advisers in implementing accounting and reporting standards recently issued by the GASB regarding healthcare and other non-pension benefits for retirees.
Tax

Pass It On: Inheriting an Individual Retirement Arrangement

The first Individual Retirement Accounts (IRAs) were created by the Employee Retirement Income Security Act (ERISA) in 1974. Since then, the spotlight has been on promoting the creation, funding and use of IRAs. Recently, however, another side of IRAs has begun coming into the light: inheriting IRAs.In general, only surviving spouses can treat inherited IRAs as their own. Everyone else should rename the inherited IRA to be “for the benefit of (the beneficiary)” to reduce the income tax owed on the amount inherited.

CPAs Hold Umbrella of Protection Against Gathering ‘Legal Storm’

Like a sudden summer thunderstorm, the surprising number of ERISA-related lawsuits filed last year – more than 11,000 according to the Administrative Office of the U.S. Courts – seems to have blown in out of nowhere.In reality, the Department of Labor has been predicting this “Legal Storm” for more than a year.
Community News

AICPA’s Award-Winning Financial Literacy Campaign

The 360 Degrees of Financial Literacy program developed by the American Institute of Certified Public Accountants (AICPA) has received a 2005 Summit Award from the American Society of Association Executives (ASAE).

Federal Court Backs GM in Pension Suit

A federal court is backing General Motors Corp. in its attempts to recover up to $253 million from the federal government for one of its underfunded pension plans.The Wall Street Journal reported Wednesday that Judge Nancy Firestone of the U.S. Court of Federal Claims made a first-of-its-kind decision in saying that the federal government should pay GM the “allocable amount” of the pension underfunding, even though no specific amount was given.The government owes GM because the company in 1993 sold a division called Allison Gas Turbine, which provided services to the government.
A&A

IRS Resource Helps Small Business with Retirement Plans

A new CD-ROM from the Internal Revenue Service (IRS) outlines everything small business owners need to know to establish and maintain Individual Retirements Arrangement-based retirement plans for their employees.“IRA Resource Guide for Small Business Owners and Individuals” provides entrepreneurs with information about traditional and Roth IRAs as well as IRA-based retirement plans for employers including simplified employee pensions (SEPs), simple IRAs and payroll-deduction IRA plans.

Study Says More Large Companies End Pensions

About 11 percent of large companies that offer traditional pension plans either terminated them or froze benefits last year, a new study says.And as workers around the country are watching their retirement funds shrink, CEOs at companies with massive unfunded pension obligations continue to collect huge salaries and retirement benefits. In addition, rule changes are being considered that could force even more companies to ditch their promises to workers."The companies are operating in a world of uncertainty," said Sylvester Schieber, director of U.S.

Polls Show Americans Pessimistic About Social Security

Two recent polls show the majority of Americans are worried about having enough money in retirement and are skeptical about President Bush's plan to restructure Social Security.Bush wants to create voluntary personal retirement accounts and says older Americans would not receive less retirement income under his plan. However, 56 percent of those polled by the Washington Post June 2 to 5 don't believe that, saying their retirement income would go down.A New York Times/CBS News poll conducted a week later found a similar result.

Lawmakers Look to Overhaul Rules on Funding Pensions

Private pension plans are seriously underfunded despite a growing economy, according to new figures released by the government's pension insurance agency.The Pension Benefit Guaranty Corp. (PBGC) reported that the 1,108 weakest pension plans – ones with assets that are $50 million or more below the value of the benefits they promise – were underfunded by an aggregate $353.7 billion at the end of last year, the Washington Post reported. That figure represents a 27 percent increase in the shortfall from the year before.

GAO: Underfunded Corporate Pensions 'Severe and Widespread'

Massive failures of defined-benefit pension plans, shortfalls in pensions for state employees and the debts plaguing the federal Pension Benefit Guaranty Corp. are sparking worries about the security of retirement benefits.Troubled United Airlines recently received court approval to dump four pension plans, with a shortfall of $9.8 billion, onto the PBGC. The PBGC, a government-sponsored insurance agency of sorts, is funded by premiums paid by companies, and it is now facing a $23.3 billion deficit of its own.

Draft Guide to Medicare Benefits Called Confusing

A government guide designed to educate Medicare recipients about their benefits is getting a rewrite after many statements were determined to be incorrect, misleading or confusing.A preliminary draft of the 2006 Medicare handbook will be reworked after members of Congress, insurers, state insurance regulators and advocates for beneficiaries criticized the handbook, the New York Times reported.One major problem is the new prescription drug benefit – which will be confusing under the best of circumstances because it is new – is not fully explained.
Practice

AICPA Business Solutions Expands to Include 401(k)

Paychex 401(k) Recordkeeping services have been added to the Paychex Partner Program from the American Institute of Certified Public Accountants (AICPA) Business Solutions. “The addition of 401(k) to the CPAs’ tool chest offers another great way to professionally serve their clients,” said Tony Tortorella, vice president of Human Resource Services – Sales for Paychex.
A&A

401(k) Plan Participation Increasing, but Mistakes Abound

Despite efforts of businesses to educate Americans about the need to plan wisely for retirement, too many workers are making common mistakes - not saving enough, for example, or relying too heavily on company stock.Self-employed individuals or those who own a business that employs only their spouse are not taking advantage of Individual 401(k)s, thinking that they can't afford to set up a retirement plan, according to Fiducial, an international financial services firm."The hottest thing for self-employed individuals or a very small company's business owner and spouse is the Individual 40

It Doesn’t Take a Nobel Prize Winner

Retirement planning confuses many people, even, it turns out, Nobel Prize winners. Several past winners of the prestigious Prize in economics stumble when it comes to making the financial decisions about their retirements, ordinary Americans are increasingly being asked to make.“I think very little about my retirement savings, because I know that thinking could make me poorer or more miserable or both,” Daniel Kahneman of Princeton University and winner of the 2002 Nobel Prize told the Los Angeles Times.Clive W.J.

United Gets OK to Dump Pension Plans

In what may be the biggest pension default in U.S. history, a Chicago bankruptcy court judge approved a plan by United Airlines to sidestep more than $3 billion in pension contributions over the next five years.United's parent company, UAL Corp., was allowed on Tuesday to dump four pension plans, moving responsibility to the federal Pension Benefit Guaranty Corporation, which is itself plagued by debt.

Committee Starts Hearing on Social Security

Saying that a do-nothing approach to Social Security will mean a big cut in benefits down the road, Sen.
Community News

Outback CFO Cites Accounting "Lunacy" for Retirement

Another chief financial officer (CFO) is not big news. Then again, most CFO’s don’t give the current regulatory environment as the reason for their retirement.

Supreme Court Protects IRAs in Bankruptcy Filings

If you are facing a bankruptcy proceeding, you can rest a little easier now that the Supreme Court has ruled your individual retirement accounts (IRAs) can't be seized.The court's unanimous decision puts IRAs on the list with Social Security benefits, 401(k)s and pension as assets that may not be touched by creditors in a bankruptcy case.However, President Bush has indicated his support for a bill working its way through Congress that would make it difficult for many people to declare bankruptcy, the Wall Street Journal reported.With more than 1.6 million people filing for bankruptcy

New Roth 401(k) Adds to Workers' Investment Options

Whether it makes more sense to pay taxes now or at retirement is a question many workers will be pondering if their employers offer them a new Roth 401(k) investment option.Starting next year, the Internal Revenue Service will allow employers to offer a Roth 401(k), which has been described as a cross between the Roth IRA and a traditional 401(k).

CalPERS to Adopt PCAOB Audit Independence Proposal

The CalPERS Board adopted a three-pronged plan to advocate majority vote election procedures for corporate directors. Currently, a plurality vote system is used in most corporate elections, in which directors can be elected by the vote of a single share unless they are opposed by a dissident candidate. "Majority vote will give shareowners the power to hold directors accountable for their actions and their performance, and elect the best person for the job," said Rob Feckner, CalPERS Board President.

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