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The BenefitsLink Newsletter -
Retirement Plans Edition

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June 2 - 5, 2000

What's That Fishy Smell in the Teachers' Lounge?
Excerpt: "You know the routine, smartly attired "financial planner" sets up a meeting with the staff to chat about finances--food and refreshments provided. It's easy to be seduced by the aroma of "investing" and "securing your financial future," but what's really on the menu?" (403bWise.com)

5th Cir: Switch In Interest Rates Used In Calculating Lump Sums May Have Violated IRC Sec. 411(d)(6)
Excerpt: "A company may have violated the anti-cutback rule of IRC Sec. 411(d)(6) when it switched the interest rates it used in calculating lump sum pension distributions from the Pension Benefit Guaranty Corporation's rates to the interest rates required by the Retirement Protection Act of 1994 (RPA-94). This was the ruling of the Fifth Circuit U.S. Court of Appeals in Myers-Garrison v. Johnson & Johnson." (Spencernet)

Competition Forcing Insurance Company CEOs to Broaden Their Technology Horizons
Excerpt: "[M]any of a CEO's decisions today involve technology, and the insurance industry is no exception. As insurance companies turn to technology to help solve a myriad of challenges--not the least of which are reducing paper glut, automating agencies, and providing superior customer service--chief executives need to know how to spend their companies' IT dollars." (CMP Media)

The Cash Balance Conundrum: How to Promote Pensions Without Harming Participants
Press release re hearing being held today (June 5) (U.S. Senate Committee Special Committee on Aging)

IRS Letter Ruling Applies New Regs On FICA Tax Application To Multi-Account Nonqualified Plan
Excerpt: "In a recent letter ruling (PLR 200021012, Feb.16, 2000), the IRS clarified the application of FICA employment taxes under the new regulations to a multi-investment option, voluntary deferred compensation plan design. Although technical in nature, the letter ruling confirms expected FICA conclusions for such a plan under the new regulations." (Magner Financial Network)

IRS Expects To Issue Extension of GUST Remedial Amendment Period Before End of June
Excerpt: "Speaking [June 1] at an employee benefits conference sponsored by the Cincinnati Bar Association, Dick Wickersham of the IRS said that the anticipated extension of the GUST remedial amendment period will be issued by the end of June." (TRI Pension Services)

Conference Call Clarifies Upcoming Extension of Remedial Amendment Period
Excerpt: "IRS officials clarified that the extension of the remedial amendment period for 'GUST' will apply across the board to all types of qualified retirement plans, including plans drafted using prototypes or volume submitter documents. Thus, there will not be a special extension that will apply just to individually designed plans." (Corbel)

Retirement Benefits and the Marital Deduction
Excerpt: "Problem: Making sure a retirement account held for the benefit of a surviving spouse through a trust qualifies for the marital deduction. Solution: Follow the requirement of Revenue Ruling 2000-2 and the related regulations." (Reish & Luftman)

Implications of Changing Retirement Patterns and Policies in Higher Education (PDF)
Excerpt: "As the new century begins, the plate tectonics of the faculty labor market are shifting rapidly. The aftershocks of these movements are challenging colleges and universities to confront a wide range of faculty resource and compensation policies. This book focuses on retirement and retirement policies ... we are now gaining experience with what to do about a fundamental shift in the retirement rules: the end of mandatory retirement." (Pension Research Council; working paper)

A Framework for Analyzing and Managing Retirement Risks (PDF)
Excerpt: "We first examine retirement planning models and conclude that many do not yet incorporate key types of uncertainty deemed essential to economists and finance experts, including cross-asset correlations ... [W]e examine several financial products that appear to offer new opportunities to protect against old-age risk. These products include inflation-linked annuities, survivor bonds, long-term care insurance, and reverse annuity mortgages." (Pension Research Council; working paper)

Retirement Benefits of American Workers: New Findings from the 9/94 Current Population Survey
Newly posted on the DOL's Web site; originally published September 1995. (U.S. Department of Labor)

The Three Pillars of a Pension System (PDF)
Excerpt: "The author ... argues that with a universal Pillar 1 (a flat, subsistence pension) there is no need for Pillar 2 (earnings-related pensions). Pillar 3 (voluntary retirement savings) should not receive tax subsidies, which are regressive and in any case have not been shown to have any significant effect on private saving. Such a pension scheme may appear utopian, but it is in effect in New Zealand." (Economist Larry Willmore)

Riding the Bull: 2000 Compensation Survey
Excerpt: "More than half of total CFO pay is now driven by the stock market. But that doesn't mean it's linked to performance." (CFO Magazine)

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