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The BenefitsLink Newsletter -
Retirement Plans Edition

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June 29 -30, 2000

401(k) Safe Harbor Plan Design Considerations (PDF)
Excerpt: "This article examines the safe harbor 401(k) plan design and explores the key issues--particularly the contribution requirement--that plan sponsors should consider in determining if it presents a good design alternative." (Milliman & Robertson, Inc.'s Benefits Perspectives, Summer 2000 Issue)

Same Desk Rule Does Not Prevent 401(k) Distribution to Employees Hired by Successor Govt Contractor
Excerpt: "[In PLR 200024056 (Mar. 21, 2000)] the federal government caused the employment transfers between Corporations B and D. Accordingly, the 401(k) plan could make distributions to the affected employees." (EBIA Weekly)

Should I Divert Unmatched 401(k) Contributions to a Roth IRA?
Excerpt: "Since the tax treatments are identical, and the limit on the 401(k) contributions is much higher, you should ... make unmatched contributions to your 401(k)... Diverting unmatched 401(k) contributions to a Roth will not give you additional tax saving, but will increase your transaction costs..." (Thanks to Rick Meigs of 401kHelpCenter.com for recommending the link!) (Leslie E. Papke, Associate Professor of Economics at Michigan State University)

Welcome to new BenefitsLink advertiser Still River Retirement Planning Software, Inc.
403(b) Contribution Planner® calculates the maximum permissible contributions to 403(b) plans, taking into account all relevant tax code sections, regulations, rulings and exceptions. For more information visit our site at www.StillRiverRetire.com (BenefitsLink.com)

Is This the Future of Social Security?
Excerpt: "While the fight rages about the merits of [Social Security reform] plans, it may be instructive to look at the federal government's experience with 401(k) plans. Luckily, there's a handy example. The Federal Retirement Thrift Investment Board ... " (401kWire.com; free registration required)

Workers Sue Over Sale of Stock to Non-ESOP Shareholders
Excerpt: "Workers at National Seating Co., a Vonore manufacturer of seats for trucks and buses, claim in a federal lawsuit they were rooked when an English firm bought controlling stock in the company after officials deliberately drove down the price, reducing the value of the employee stock ownership plan." (Knoxville News-Sentinel Co.)

DOL Sues Dallas Employer, Alleging ERISA Section 510 Retaliation Against Inquiring Employee
Excerpt: "The U.S. Department of Labor has sued a Dallas employer and plan administrator of the company’s 401(k) pension plan for allegedly firing an employee for making inquiries about the status of his own plan account." (U.S. Department of Labor)

Listing of IRS Documents Online Here (Rev Rulings, Rev Procedures, IRS Announcements, etc.)
Here's a short, current listing of all IRS documents reprinted here in HTML (hypertext) format: the principal recent benefits-related revenue rulings, revenue procedures, announcements, notices, news releases, technical advice memoranda and general counsel memoranda. (Also available elsewhere: a longer listing that includes a short description of each document.) (BenefitsLink)

Financial Executives Institute: Boehner's Efforts To Modernize ERISA Are On The Right Track (PDF)
Excerpt: "By loosening the prohibited transaction rules under ERISA, employers will be able to provide employees with the kind of investment advice and direction that will help to ensure their retirement security." (Financial Executives Institute)

Mutual Funds Association Files Additional Comments on IRS Anti-Cutback Regulations
Excerpt: "The proposed [regulation providing certain anti-cutback] relief is of great interest to Institute members, many of whom provide a full range of recordkeeping and trust services to plan sponsors. In addition, many members sponsor prototype plans or offer assistance to employers that are merging or consolidating retirement plans in the aftermath of business acquisitions." (Investment Company Institute)

State Street Corp. to Offer Funds, Pensions in China
Excerpt: "State Street Corp. will offer mutual funds and pension plans in China to customers of China's largest commercial bank. Under an agreement with Industrial and Commercial Bank of China, open-ended mutual funds will be offered in China for the first time ever." (American Banker)

Participate in Reish & Luftman's Online Survey Of Self-Correction Of Plan Defects
Excerpt: "If you have self-corrected (as a plan sponsor) or advised a client on self-correction (as an advisor to a plan) of an operational failure (a disqualifying defect) under the Administrative Policy Regarding Self-Correction (APRSC), please complete this survey." (Reish & Luftman)

Preserving Retirement Plan Account Balances (PDF)
Excerpt: "This article discusses how a defined benefit pension plan can be combined with a profit-sharing plan to provide account balance protection, substantial retirement benefits to attract mid-career employees, and increased executive benefits in tax qualified plans." (Milliman & Robertson, Inc.'s Benefits Perspectives, Summer 2000 Issue)

How Diverse Are Your Plan's Investments, Really?
Excerpt: "You've got several different fund companies, a wide selection of funds--this should be well diversified, right? Not necessarily." (401kWire.com; free registration required)

How Widespread is Illegal Pension Fund and Money Manager Conduct?
Excerpt: "We have long been of the opinion that unethical, as well as illegal activity, is widespread." (Benchmark Financial Services, Inc.)

Governor Bush's Individual Account Proposal: A Reassessment Using Realistic Stock Return Projections
Excerpt: "When the full effect of these three changes is taken into account, the accumulations in the individual accounts are likely to be only about half as large as was estimated in the Century Foundation study. This would mean that virtually everyone would end up with a lower retirement income under Governor Bush's proposal, than they would under the current social security program." (Center for Economic and Policy Research)

ERISA at 50: A New Model for the Private Pension System
Excerpt: "As a result, ERISA is no longer a sensible or practical statute. The pension system it governs is an uncoordinated jumble of plans, with a labyrinth of rules and regulations. The following are a few of its most frustrating characteristics from a legal perspective..." (Pamela Perun and C. Eugene Steuerle, published by the Urban Institute)

FASB Interpretation No. 44: Accounting for Certain Transaction Involving Stock Compensation
Excerpt: "Interpretation 44 provides some important changes and clarifications related to the application of APB 25, which generally sets forth the accounting rules for stock awards based on the intrinsic value of the award (the difference between the compensation value of the award, measured as the number of shares multiplied by the fair market value per share, and employee value, measured as the employee price per share multiplied by the number of shares)..." (Kilpatrick Stockton LLP)

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