The BenefitsLink Newsletter -
Retirement Plans Edition
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August 22, 2000
IRS May Levy a Participant's Future Right to 401(k) Plan Benefits
Excerpt: "...when the IRS served a levy upon the plan administrator that purported to require an immediate lump-sum distribution of the taxpayer's account to the IRS, the plan administrator refused to honor the levy (presumably because the participant was not entitled to any benefits at the time). The IRS's attorneys were then asked to give an opinion on whether the IRS could elect retirement benefits on behalf of the taxpayer and proceed to enforce the levy against those benefits." (EBIA Weekly)
IRS Addresses Application Of Same Desk Rule To Distributions Following Firm's Sale Of Hotels
Excerpt: "In a recent private letter ruling (PLR 200030031), the Internal Revenue Service addresses the application of the "same desk" rule to distributions from a Sec. 401(k) plan in connection with the discharge of certain employees following the sale of a number of hotels that the employer had managed. Specifically, the ruling revokes an unidentified 1997 private letter ruling in which the IRS had concluded that the distributions violated the same desk rule." (Spencernet)
Demise of the Same Desk Rule?
Excerpt: "Although [Revenue Ruling 2000-27] does not repeal the same desk rule, it substantially weakens it. There may be some problems, however." (Nixon Peabody LLP)
The Effects of 401(k) Plans on Household Wealth (PDF)
Excerpt: "Using data from 1987 to 1991 from the Survey of Income and Program Participation, we obtain three central results: the impact of 401(k)s on household wealth varies significantly by earnings level; 401(k)s held by groups with low earnings or low saving in other forms are more likely to represent net wealth than 401(k)s held by high-earning or high-saving groups; and between 0 and 30 percent of 401(k) balances represent net additions to private saving." (Eric Engen, William G. Gale; Working Paper Published By National Bureau of Economic Research)
German Industry: Raise the Retirement Age to Save Pensions
Excerpt: "While the German Government battles it out to find a compromise with the conservative-led opposition over reforming the country's lumbering pension system, German industry thinks that the retirement age should be raised by two years to 67." (Deutsche Press-Agentur)
Why Baby Boomers Plan to Keep Working
Excerpt: "Instead of retiring when they're supposed to, the Boomers might remain in the labor force well past age 65, often because their financial circumstances will require it, but perhaps even more often out of a simple desire to keep working." (Barron's)
Excerpts from new edition of Selling to an ESOP
The National Center for Employee Ownership presents excerpts from the new 6th edition of Selling to an ESOP, a comprehensive guide to employee stock ownership plans for owners, managers, and advisors of closely held businesses. (National Center for Employee Ownership)
Voluntary Correction of Plan Administration Errors: Failure to Provide Suspension of Benefits Notice
Link to an article reprinted online by Professional Practice Insurance Brokers, Inc.
Who Should Educate Us about Retirement Saving?
Excerpt: "Employers are increasingly shifting responsibility for retirement saving over to their employees by offering 401(k) and similar plans instead of, or in addition to, traditional 'defined-benefit' plans. Recent statistics indicate, however, that many people don't understand how to handle this money for their long-term benefit. Rather than keeping it off-limits until retirement, they tap it earlier for more immediate needs, in a sense robbing their own futures." (401Kafe.com)
Variable Annuities Deserve a Second Look, Some Experts Say
Excerpt: "Unlike a 401(k) plan or an IRA, there are no limits on how much can be invested in a variable annuity. On the other hand, they are not liquid investments. If someone needs to withdraw the money, he or she could find themselves paying 17 percent in tax penalties and surrender fees -- plus taxes on any gains." (Salt Lake Tribune)
(Following also appears in Welfare Plans Edition)
Statistics for Employee Benefit Actuaries
Lots of Excel tables, including Social Security Wage Index and Maximum PIA, Consumer Price Index, Railroad Retirement Earnings Base and Payroll Tax Rates, and National Health Expenditures by Type of Service and Source of Funds. (Society of Actuaries)
9th Cir. Requires Disclosure of Potential Plan Changes Under Serious Consideration, If Asked
Bins v. Exxon. Excerpt: "[An] employer-fiduciary has a duty to provide complete and truthful information about plan changes that are under serious consideration only in response to participant inquiries. Thus, when there is no inquiry, the employer has no duty to volunteer information before changes are adopted. " (EBIA Weekly)
New issue online of the Pension & Benefits Update email newsletter by Tax Analysts: August 21, 2000
(Tax Analysts, Inc.--see www.taxbase.org)
3d Circuit Finds CBS-Westinghouse Illegally Cut Back 'Job Separation Benefits' From Its Pension Plan
Excerpt: The case addresses "whether a permanent job separation benefit contained within a pension plan constitutes an early retirement benefit or retirement-type subsidy protected by the anti- cutback provisions of [section 204(g) of] the Employee Retirement Income Security Act of 1974." (FindLaw.com)
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