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Retirement Plans Edition


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June 8, 2000

IRS Notice 2000-32 Affects Tax Withholding, Rollover Rules Applicable to Certain 401(k) Payments
Excerpt: "[I]f a qualified plan's records are not reasonably available to segregate an employee's pre-'89 401(k) amounts from other amounts that, as of the '89 date, were credited to the employee's account, then, for purposes of determining what is an eligible rollover distribution, the plan must treat the other amounts as ... pre-'89 401(k) amounts ... [which are] ineligible for rollover when distributed on account of hardship." (Internal Revenue Service)

Wachovia National Bank and Former Medical Executive Agree To Restore $42 Million To ESOP
Excerpt: "Under the settlement, Wachovia will pay $30 million to the ESOP, which is now known as the Magellan Health Services, Inc. ESOP. William A. Fickling, Jr., the former president and C.E.O. of Charter Medical, also will pay another $12 million to the plan. Money restored to the plan will be allocated to past and present participants and beneficiaries on a pro-rata basis." (U.S. Department of Labor)

Cash Balance Conversions and Decline in Traditional Defined Benefit Plans Get Congress' Attention
Excerpt: "Senators on Monday expressed concern about the decline of the traditional pension plan, which has affected millions of workers. In some states, they said, the number of companies offering defined benefit plans has fallen 50 percent in the last two decades." (Knight-Ridder / Tribune Business News)

401(k) Plan Participants: Characteristics, Contributions, and Account Activity (PDF)
Excerpt: "... the survey was designed to study a wide range of decisions and the decisionmaking process of participants. It examined the decision to participate, asset allocation of account balances and plan contributions, the relationship between investment decisions made within 401(k) plans and those made outside such plans, and transaction activity within 401(k) plans. The survey also studied participant loan activity and hardship withdrawals ..." (Investment Company Institute)

IRS Clarifies Scope of New Position on 401(k) Distributions in Asset Sale Transactions
Excerpt: "First, the new interpretation is only applicable to sales of less than 85% of the assets used in a trade or business ... Second, the new interpretation applies only if the seller does not transfer affected employees' account balances from its plan to a plan of the buyer (except as a result of a direct rollover elected by the employee) ... Third, employees of the seller must actually cease performing any services for the seller in order for the new interpretation to apply." (McGuire Woods Battle & Boothe LLP)

Welcome to new BenefitsLink advertiser PensionSource Corporation
PensionSource Corporation is an independent retirement services firm specializing in providing "Daily Valuation" recordkeeping and administrative services for qualified and non-qualified plans to banks, brokers, certified public accountants, financial advisors, investment advisory firms, plan sponsors, third party administration firms, as well as state and local government entities. PensionSource will serve plans with multi-custodians, company stock, as well as multiple payroll locations. (BenefitsLink.com)

5th Cir: ERISA Preempts Texas Law That Invalidates Earlier Beneficiary Designations Upon Divorce
Excerpt: "Manning v. Hayes [is] another case dealing with whether ERISA preempts state law that would result in a beneficiary other than the beneficiary who appears on an ERISA plan's valid beneficiary designation." (EBIA Weekly)

E. D. Wash: Native American Tribal Pension Plan Is A Government Plan Exempt from ERISA
Excerpt: "ERISA is silent as to whether its provisions apply to Native American tribal governments. However, it appears that courts are willing to extend the governmental plan exemption to Native American tribal government plans under the factors analyzed in this case." (EBIA Weekly)

Private Pensions Are At Risk
Excerpt: "As presidential candidates George W. Bush and Al Gore square off over the future of Social Security, they ignore a larger problem. A majority of Americans are not saving nearly enough to maintain their living standards in retirement. This saving gap is widening, in part, because U.S. companies are radically retooling their private pension plans--covering fewer workers, making pensions less generous and in many cases cutting the benefits promised to older workers." (Michael Calabrese, on IntellectualCapital.com)

German Government, Opposition Fail To Resolve Pension Reform Dispute
Excerpt: "German labor and finance ministers failed to resolve their differences with the conservative opposition Wednesday over proposals by the centre-left government to reform the pension system to promote private retirement savings." (Agence France-Presse)

Governor Bush's Individual Account Proposal: Implications for Retirement Benefits
Excerpt: "[P]rivatization plans for Social Security, such as the one outlined by Governor George W. Bush, could lead to dramatic reductions in guaranteed Social Security benefits and leave workers vulnerable to the ups and downs of the stock market." (Century Foundation)


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