Subject: Newsletter: SIMPLE transition rules; ASPA on the Web
Date: Sun, 3 Nov 1996 22:46:23 -0500

.................  BenefitsLink Newsletter  .............
{
{ Free, useful information about U.S. tax and labor laws
{ and new Internet resources, for employee benefit plan
{ sponsors, service-providers and participants.
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.............. THIS ISSUE'S SPONSOR: BEST SOFTWARE ......

Best Software, http://www.bestsoftware.com, provides the
industry's leading fixed asset, human resources and
payroll solutions. Best Software's systems are in use in
over 40,000 organizations nationwide!

.......................... IT'S SIMPLE, REALLY .........

IRS Announcement 96-112, scheduled to appear in Internal
Revenue Bulletin 1996-45 (not yet on the Internet),
assures employers of their ability to start SIMPLE IRA
plans on January 1, 1997, when the checkered flag comes
down.

The Code, as amended by the recent pension simplification
legislation, requires an employer sponsoring a SIMPLE IRA
to allow employees at least 60 days in which to decide
whether they will make pre-tax contributions for the
following year. Further, the employer must notify
employees about this option BEFORE the 60-day period
begins. Without the "transition relief" provided by the
announcement, this would mean employers wanting to get
started on January 1, 1997 would need to make up their
minds about adopting such a program and publicize it to
employees prior to November 2 ... just a few days away.

Under the transition rules, the employer still needs to
notify eligible employees begore the 60-day election
period begins, but the IRS says the election period can
begin anytime on or before January 1.  Once it begins, it
has to last at least 60 days.

BenefitsLink COMMENT: this is not a big deal.  Most
employers will want to allow participating employees to
be able to change the level of their contributions during
the year and will want to allow eligible employees to
begin participating in the plan on any of several
prescribed entry dates. The 60-day window rule generally
will be important only to those employers that want to
provide employees with the least flexibility required by
law, namely preventing newly eligible employees from
climbing aboard the plan, or participating employees from
changing the level of their contributions, any time other
than a single 60-day window period per year.

BenefitsLink COMMENT: the 60-day window rule does not
apply to a 401(k) plan that is designed to meet the
SIMPLE requirements, just to SIMPLE IRA programs.  (A
401(k) plan avoids the top-heavy minimum contribution
rules by meeting the SIMPLE requirements: full vesting,
no employer contribution other than a
100%-up-to-3%-of-comp match or 2%-to-everybody, and no
covered employees accruing contributions or benefits
under a qualified plan of the same employer.)  Note also,
by the way, that a SIMPLE 401(k) plan CAN be sponsored by
an employer having more than 100 eligible employees,
unlike a SIMPLE IRA program.

........................ SIMPLY IRRESISTABLE .........

Want to talk further about SIMPLE plans? Use the new
Message Board on BenefitsLink set up especially for
SIMPLE plan questions and answers! Set your browser to

-->   http://www.benefitslink.com

and head for the Message Boards.

....................... ASPA NOW ON THE WEB .........

BenefitsLink welcomes the American Society of
Pension Actuaries to the World Wide Web!

ASPA's new site is

-->   http://www.aspa.org

ASPA is a national professional society of actuaries,
consultants, administrators and other benefits
professionals.  Its 3,000 members provide services to
approximately 30 percent of the qualified retirement
plans in the United States.

The new Web site contains information of interest to all
benefits professionals --

  * Schedule of upcoming ASPA continuing education
    conferences and seminars

  * Schedule of upcoming examinations for the various
    professional designations conferred by ASPA, such as
    the Certified Pension Consultant and the Qualified
    Plan Administrator designations

  * Information about ASPA's government affairs
    committees, which provide important input to
    legislators on behalf of the private pension system

.................  BenefitsLink Newsletter  ...............
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