Subject: BenefitsLink Newsletter 12/13/95 For your information, from BenefitsLink: ************************************************************************* U.S. DEPARTMENT OF LABOR OFFICE OF PUBLIC AFFAIRS SECRETARY OF LABOR ANNOUNCES RULE CHANGE TO PROTECT 401(k) SAVINGS Mon., Dec. 11, 1995 For more information call: 202/219-7316. Secretary of Labor Robert B. Reich today proposed sharply reducing the amount of time employers can hold workers' 401(k) savings as a part of an effort by the Clinton administration to provide new protections for the popular retirement plans. "We've discovered that some employers are holding this money for too long before they turn it over and we need to change that as soon as possible. It's not their money - it belongs to the hard-working men and women who have earned the money and who are putting it aside for retirement," Reich said. Current Labor Department rules require an employer to turn the money over to the investment plan as soon as possible, but permit it to be held up to 90 days. The new rules Reich proposed today would eliminate that 90-day window and would replace it with the same requirement employers must follow for paying Social Security taxes. Those rules require Social Security taxes to be paid quickly, with the exact amount of time based on the size of a company's payroll. The time period ranges from as little as a day to less than a month for the vast majority of employers. Reich announced the proposed rule change as part of a crackdown which began earlier this year on misuse of 401(k) money. More than 300 formal investigations are open and more than 100 have been closed. Since the crackdown was announced two weeks ago, 35 new cases have been brought to the Labor Department's attention, although formal investigations have not yet begun. In the past decade, there has been an explosion in the number of 401(k) plans, which take their name from the section of the federal tax code where they are spelled out. More than 22 million people were enrolled in 140,000 such plans in 1992, the last year for which the department has full statistics. "Certainly, the vast majority of 401(k) plans are safe and this program is still one of the best ways for people to build up their nest egg and save for retirement," Reich said. "But there are some problems with some companies and it is those companies we want to go after. "We think these new rules will help solve the problem," Reich said. "Some employers have been holding the money for 90 days and they shouldn't. In some cases, I think they were honestly confused, but in other cases, they were simply treating the money as an interest-free loan for three months. That's not right and this change should make American savers feel more secure." ********************************************************************** Dave Baker BenefitsLink - The National Employee Benefits Web Page http://www.magicnet.net/benefits