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The BenefitsLink Newsletter -
Retirement Plans Edition

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July 31, 2000

IRS Publishes Final Plan Loan Regulations
Excerpt: "These regulations affect administrators of, participants in, and beneficiaries of qualified employer plans that permit participants or beneficiaries to receive loans from the plan, including loans from section 403(b) contracts and other contracts issued under qualified employer plans." (Internal Revenue Service)

IRS Publishes New Proposed Regulations on Plan Loans: Refinancings and Multiple Loans
Excerpt: "These proposed regulations provide that if a loan is deemed distributed to a participant or beneficiary and has not been repaid, then no payment made thereafter to the participant or beneficiary will be treated as a loan for purposes of section 72(p)(2), unless certain conditions are satisfied ... [Further,] a refinancing is, in effect, treated as a new loan that is then applied to repay a prior loan if the new loan both replaces a prior loan and has a later repayment date." (Internal Revenue Service)

Mutual Funds and the Retirement Market (PDF)
Excerpt: "Mutual fund assets held in retirement accounts stood at $2.4 trillion at the end of 1999, remaining at about one-third of all mutual fund assets. Mutual fund retirement assets accounted for almost one-fifth of the assets in the $12.7 trillion U.S. retirement market. Retirement assets in mutual funds increased 29 percent in 1999, after rising 25 percent in 1998. The growth in assets was primarily the result of investment performance... " (Investment Company Institute)

Congress Remedies Federal Employees' Retirement Benefits Errors
Excerpt: "Thousands of employees who had been placed in the wrong retirement system by their agencies during the mid-1980s will now have the chance to choose the pension plan that meets their needs." (Washington Post)

Former Orange County, Calif., Company Employees Finally Get 401(k) Funds
Excerpt: "The whole mess showed how a complex labor rule about spinoffs and mergers muddied workers' control over their 401-k plans. Under the ["same desk"] rule, Rockwell could not turn over money. But this spring, the government changed the rule, allowing employers to give 401-k money back to former employees after their divisions had been divested. After the rule change, Rockwell nixed the mandated stock sale." (Knight-Ridder / Tribune Business News)

Portman-Cardin Bill: Promise or Peril?
Excerpt: "Critics say retirement legislation could endanger certain kinds of pension plans." (Dallas Morning News)

R.J. Reynolds Provides Lump-Sum Payment Option for Certain Retirees
Excerpt: "R.J. Reynolds Tobacco Holdings Inc. is offering a lump-sum payment to some workers and retirees in a move designed to assure their pension benefits. The country's second-largest cigarette maker said the offer had nothing to do with projections of its financial future following a potentially devastating verdict in lawsuit by Florida smokers." (Associated Press)

California State Employees Getting More Retirement Benefits at Younger Age
Excerpt: "For more than a year, the California Department of Corrections, the California Highway Patrol and the California Department of Forestry and Fire Protection have faced a drastic loss in experienced personnel. Local agencies, such as the Corona Fire Department, also are beginning to phase in the changes in retirement law and are seeing the resulting problems." (Knight-Ridder / Tribune Business News)

Which IRA Minimum Distribution Method Fits Best at Age 70-1/2?
Excerpt: "You must pick an IRA distribution method, but which one is best for you? ... There is the Recalculation method, the Term Certain method and the Hybrid method. And there are many variations ... The stakes are high, because picking your distribution method is a key factor in determining how long your IRA will outlive you. Once you make your choice, it is irrevocable after ... April 1 of the year following the year you turn 70 1/2 years old." (CNNfn.com)

Cheney Retirement Package Worth $2 Million
Excerpt: "Dick Cheney put in just under five years as chairman and chief executive officer of Halliburton Corp., but could be eligible for a retirement package worth at least $2.1 million, financial records show. He also has company stock options worth millions." (Associated Press)

Microsoft Stock Drop Hits New Mexico State Pension Funds
Excerpt: "Retirement funds for public employees are feeling the impact of the 40 percent plunge in Microsoft stock since a federal judge ruled in April that the company violated antitrust laws ... From a high of more than $111 a share in late March, the value of Microsoft stock dropped to the low $60s in May and closed at $67 13/16 [recently] ... Many states are feeling the shock in their public employee pension funds, including some of the original states that sued the company." (Albuquerque Journal)

Favorite Investment for Many Retirees -- Treasury Bills -- Is In Short Supply
Excerpt: "... the supply of Treasuries is shrinking and will continue to shrink. A long stretch of economic prosperity has created a large federal budget surplus, which is being used to pay down the national debt. Thus, the government is cutting back on the money it borrows from the public." (Washington Post)

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