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Retirement Plans Edition

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May 30, 2000

ERIC Comments on 'Optional Forms of Benefit' IRS Regulations Under Code Section 411(d)(6)
Excerpt: "We also wish to raise an important issue that the proposed regulations do not cover: the same desk rule ... First, we believe strongly that the same desk rule should be repealed. Second, we wish to express our appreciation for the relief provided from the same desk rule in Rev. Rul. 2000-27. Third, although we are pleased with publication of both Rev. Rul. 2000-27 and the proposed regulations, we do not believe that they eliminate the need to repeal the same desk rule." (ERISA Industry Committee)

IRS Issues Two More Private Letter Rulings on 401(k) "Separation from Service" Issue
Excerpt: "In two recent private letter rulings, the IRS has had to rule whether the "same desk" rule applied in determining whether certain employees had separated from service for 401(k) purposes. The rulings underscore how confusing this determination can be and how nuanced the IRS' analysis is." (TRI Pension Services)

OK to Make 'True-Up' 401(k) Matching Contributions During the Plan Year, Rather Than at Year-End?
Excerpt: "For plans that are drafted to contain a true-up matching provision (i.e., matching contributions are based on annual compensation rather than payroll period compensation), does the employer have to wait until the plan's year-end to make the true-up matching contribution?" (BenefitsBoards.net)

United Kingdom: Examining the Switch from Low Public Pensions to High-Cost Private Pensions (PDF)
Working paper published online. (David Blake, University of London)

Litigation Issues In Cash Balance Plans
Excerpt: "Section II of this article sets forth the basics on cash balance plans, including why they are being adopted and the source of the controversy regarding cash balance conversions. Section III addresses the types of issues that are being litigated--or that we believe are likely to be litigated--regarding cash balance plans ... Section IV of this article addresses general procedural defenses under ERISA and Section V concludes with a detailed discussion of the litigation to date." (Howard Shapiro and Robert Rachal of McCalla, Thompson, Pyburn, Hymowitz & Shapiro)

401(k) Participants Leaving Jobs Shun Rollovers
Excerpt: "[A] study to be released Wednesday shows the majority of 401(k) plan participants who changed jobs last year, regardless of age, chose to take lump-sum cash payments, rather than rolling over the money into other tax-deferred savings programs, such as new employers' 401(k) plans or individual retirement accounts." (Chicago Tribune)

Cashing In On Pensions Poses Danger
Excerpt: "Workers who cash in lump-sum payments from pension plans when they change jobs, or borrow from those plans may be jeopardizing their retirement security, several experts on retirement savings warn." (Salt Lake Tribune)

Interest Required on a Terminated Employee's Account Balance Since the Most Recent Valuation Date?
Several practitioners have contributed their responses to this important and common question, posted on our message boards; feel free to chime in if you have additional opinions or information! (BenefitsBoards.net)

COLI Exposed: A Discussion of Non-Qualified Deferred Compensation Plans and "Funding" with Company-Owned Life Insurance (PDF)
Originally published April 1997; excerpt: "Many companies have purchased company-owned life insurance (COLI) as a way of so-called 'funding' of their promises to pay deferred compensation to employees. These decisions have been made in the absence of a full understanding of the issues and implications of COLI ..." (Westward Pay Strategies)

IRS Memo Says OK for Plan to Exclude Independent Contractors Who Might Be Reclassified as Employees
Excerpt: "Preemptive exclusion of independent contractors who might be retroactively reclassified as employees, and exclusion of certain employees on special or limited work assignments identified by certain payroll codes, are permissible exclusion categories under IRC section 410(a) and do not violate definite written program requirement," according to an IRS Technical Advice Memorandum. (TRI Pension Services)

Mutual Fund Trade Association Submits Report on Protecting Investors in the Internet Age
Excerpt: the paper "focuses on how technology, particularly the Internet, is changing the manner in which investment advice is provided to investors and the implications of such changes for federal oversight of investment advisers." (Investment Company Institute)

'Socially Responsible' Mutual Funds Gain Popularity, Big-Time Support
Excerpt: "Investors once were laughed at for wanting to put their money into companies with a conscience. No more. Now more than $150 billion is invested in what are termed socially responsible mutual funds." (Sacramento Bee)

The No-Load Debate Has Faded Away
Excerpt: "A few weeks ago, without fanfare or news coverage, a trade group called the 100% No-Load Mutual Fund Council disbanded. While most investors never heard of the organization, its demise is the surest sign ever that the 'load versus no-load' debate is dead and that the fund business has moved on." (Salt Lake Tribune)

Suddenly Social Security
Excerpt: "It is the Republican presidential candidate, a conservative, not the Democratic candidate with labor's backing, who is embracing Social Security, the central program of the welfare state, as a vehicle for advancing an egalitarian agenda." (Opinion, from George F. Will, in the Washington Post)

Assets in 401(k)s and Other Defined Contribution Retirement Plans Top $2 Trillion in 1999
Excerpt: "Corporate defined contribution plans continued their steady growth in 1999, reaching $2.4 trillion in assets." (PR Newswire, via news.excite.com)

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