IRAs for the Kids

Congressman John P. Murtha (D-PA) and Congressman Connie Mack (R-FL) have introduced bipartisan legislation to jumpstart retirement savings by allowing Roth Individual Retirement Accounts (IRAs) to be created for children. Family members and friends who contribute to these accounts will be eligible for a tax deduction.

Under current law, an individual must earn taxable income or compensation to open any IRA, excluding children and young Americans from opening or contributing to an account.

The Kids IRA (K-IRA) Act, H.R. 2022, changes the law and allows for children to have a Roth IRA opened in their name. Under K-IRA, family members and friends will be able to contribute to a child's retirement savings account, where their money will grow tax-free. Money given to children in an envelope for birthdays or holidays could instead be put into a K-IRA to start a significant nest egg that children can continue building throughout their life.

Deception in New York City?

New York City Comptroller William C. Thompson, Jr has announced that trustees of the New York City Employees' Retirement System (NYCERS) have unanimously agreed to suspend the use of placement agents, firms, and middlemen in investments with the New York City Pension Funds.

Last week, Thompson asked the New York State Attorney General to look into whether the city retirement systems were "intentionally misled or deceived" as to the identities of any placement agents involved in an investment by the city systems in the Quadrangle Group. Thompson's request was prompted by media reports indicating that Hank Morris and Searle & Company had received a placement fee.

Delaying Retirement

According to a survey by the financial services firm Sun Life Financial:

·        54% American workers say they will delay retirement by at least a year because of the economic crisis

·        24% say they will need to work more than five years longer than planned

Another University Offers Early-Outs

Administrators at the University of Northern Iowa hope a proposed early retirement incentive plan will save the school about $1.5 million.

The incentive plan, which will go before the Board of Regents next week for approval, is available to more than 400 faculty and staff, though the university's vice president for administration and financial services, expects only about 15% to 20% to apply.

Something’s Rotten in Maricopa

The Maricopa County Community College District illegally put twenty-six nonemployees on its payroll, and a majority of them in the state retirement system, the Arizona Auditor General's Office has announced.

The district denies that the arrangements were illegal.

How $1 Million Yields $21.7 Million

In today's economy, the Spotsylvania County School Board challenges anyone to find a better investment than the early retirement program it is implementing at the end of this school year. The school division will use roughly $1 million to start payments in the fiscal 2009 budget and expects the investment to yield $21.7 million in savings over five years.

Impact of the Economic Downturn on Chief Financial Officers

The stock-price plunge has spared few individual investors and, as a group, finance executives are certainly no exception. In a recent survey of 1,400 corporate Chief Financial Officers by Robert Half Management Resources, 27% said they plan to work longer than previously expected, and an additional 25% said they cannot now predict when they will retire.

More Trouble in California

The California Public Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) have put state and local governments and school districts on notice. Public employer contributions to pension funds will rise by 2% to 5% of payroll over the next two years. That will amount to millions of dollars in increased costs from some local governments and billions more from the state annually beginning next year. The higher retirement bills come due just as local and state governments are reeling from the economic downturn. Together, CalPERS and CalSTRS have lost more than $100 billion in assets over the past eighteen months. Nonetheless, they paid out nearly $7 million in bonuses to top employees last year.

At Odds in Louisiana

Louisiana’s public and charter school associations are at odds over proposed legislation that would mandate that charter school teachers be part of a state retirement system. Currently, charter schools can individually opt into the system or go with a private retirement plan, but teacher unions say charter schools are putting the Teachers' Retirement System of Louisiana, (TRSL) and individuals' retirements on the line. A spokesperson for charter schools insists those institutions operate as small businesses and should be able to decide what is best to compete in the marketplace

Some Stats from Treasure Valley

Surveyors in the Treasure Valley of Idaho have found that 37% of the businesses in that area offer a retirement plan, in more than half the cases a 401(k). Of those that offer retirement plans, 22% have modified them in response to the fluctuations in the economy either by eliminating them or reducing employer contributions. The Treasure Valley includes the cities of Boise and Meridian.

Dillon, Montana, Police Hope to Join the State Retirement System

Voters in Dillon, Montana, will decide this summer whether to raise their property taxes to generate $1.6 million so the city can transfer its troubled police retirement fund into a statewide system. Joining the state fund would cost approximately $2.4 million.