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The BenefitsLink Newsletter -
Retirement Plans Edition


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September 1 - 6, 2000

Joint Committee on Taxation Describes Chairman's Mark of Retirement Security and Savings Act (PDF)
JCX-89-00 (September 5, 2000) (Joint Committee on Taxation)

Description of the Chairman's Mark of the Retirement Security and Savings Act of 2000
Scheduled for markup on September 7. (U.S. Senate, Finance Committee)

Should a 401(k) Be Part of Your Union Contract?
(401Kafe.com)

Terms of Plan Determine Whether Plan Must Comply With Tax Levy Against Account With Outstanding Loan
Excerpt: "This IRS Legal Memorandum, which just became available, addresses whether a qualified plan is required to comply with a federal tax levy when the participant whose account is being levied has an outstanding plan loan." (EBIA Weekly)

The Individual Stock Craze
Excerpt: "A new trend has emerged during the past few years among investors who have traditionally focused on mutual funds: More and more of them want to buy individual stocks." (Sue Stevens of Morningstar, on 401kWire.com)

E*Trade Venturing Into 401(k) Management
Excerpt: "Online brokerage E*Trade plans to branch into 401(k) management, becoming the first Internet-only broker to handle the popular retirement accounts, CNET News.com has learned." (CNet.com)

Pension Policy: Talking 403(b) with George W. and Al
Excerpt: "The 403(b) is the flawed retirement plan covering teachers and other non-profit workers (employees of hospitals, churches, libraries, museums, etc.). You guys talk a lot about improving education. That's great. Well how exactly do you plan to attract and retain the very people whom your reforms are so dependent on: teachers? We'll tell you how: The same way the private sector does--with a strong retirement plan." (403bWise.com)

Exposure Draft - Proposed Actuarial Standard of Practice: Projected Benefit Illustrations (PDF)
Excerpt: "[R]egulators and others have raised concerns regarding the completeness of communications provided to plan participants with respect to retirement plan changes.... [T]he role of actuaries in assisting sponsors in changing plans and in communicating such changes has been questioned.... [T]he Pension Practice Council of the American Academy of Actuaries requested that the ASB develop an actuarial standard of practice addressing communication of benefit changes to participants." (Society of Actuaries)

Another Question is Answered in Our Who's the Employer Q&A Column
I know your book's been out for a couple of years now-- are you planning to come out with a second edition? (BenefitsLink.com)

Another Question is Answered in Our Advanced Plan Design Q&A Column
My client currently sponsors a 401k profit sharing plan.... Profit sharing contributions are allocated under a cross-tested formula under which the principal receives $30,000 and each other participant receives 5% of compensation. [The client proposes to] add a defined benefit plan with different benefit levels--the full 415 maximum benefit for himself and benefits of 1% of compensation for his employees--and then aggregate the two plans for non-discrimination testing. Would it work? (BenefitsLink.com)

Another Question is Answered in Our Prototype Plans Q&A Column
If I have a controlled group of corporations, adopting a non-standardized prototype document, can I all allow each participating employer to allocate employer contributions solely to their respective employees, based upon their individual profitability? (BenefitsLink.com)

Another Question is Answered in Our Domestic Relations Orders Q&A Column
We are the administrators of a qualified retirement plan. We recently received a QDRO assigning benefits to an alternate that was made pursuant to a decree of separation. Is the QDRO valid even though the couple is still technically married? (BenefitsLink.com)

IRS Issues Final Regs on Modifications to Alternate Forms of Benefit Under Qualified Plans
Excerpt: "... a defined contribution plan does not violate the requirements of section 411(d)(6) merely because the plan is amended to eliminate or restrict the ability of a participant to receive payment of accrued benefits under a particular optional form of benefit if ... the alternative forms of payment available to the participant include payment in a single-sum distribution form that is otherwise identical to the optional form of benefit that is being eliminated or restricted." (Internal Revenue Service)

U.S. Pensions to Handle Riskier Bonds, But With Caution
Excerpt: "A plan outlined last week by the U.S. Labor Department would free private pensions to buy certain lower-rated classes of mortgage-backed securities (MBS), asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS)." (Reuters via Excite! News)

Pay Increase Could Come With Reduction in Federal Employees' Mandatory Retirement Plan Contributions
Excerpt: "... the Treasury-Postal bill would provide some extra pocket change for federal employees. The House and Senate bills would repeal the higher contributions toward retirement that employees have been paying since January 1999. The higher rates were phased in as part of a balanced budget agreement, and employees currently pay 0.4 percent more of their salary toward retirement than normal. A further increase of 0.1 percent of salary was scheduled for 2001." (Washington Post)

California Teachers, Students to Gain from New Retirement Package
Excerpt: "California's teachers and students will gain from the omnibus retirement package just passed by the legislature and approved by Governor Gray Davis, says CTA President Wayne Johnson.... The package includes the following components: Highest Year Final Compensation -- Rather than using the average of the highest three years of compensation, teachers' pensions will be calculated on their final year of compensation, if they have taught 25 years." (PR Newswire, via news.excite.com)

Cash or Deferred Arrangement Listing of Required Modifications and Information Package, 1/2000 (PDF)
This LRM language was released in January and has been available on BenefitsLink; this link is to the IRS Web site, which was just revised to include a PDF version of the original documents. For sponsors of master or prototype plans. (Internal Revenue Service)

Defined Contribution Listing of Required Modifications and Information Package, 2/2000 (PDF)
This LRM language was released in February and has been available on BenefitsLink; this link is to the IRS Web site, which was just revised to include a PDF version of the original documents. For sponsors of master or prototype plans; supercedes May, 1998 Regional Prototype LRM language. (Internal Revenue Service)

Defined Benefit Listing of Required Modifications and Information Package, 2/2000 (PDF)
This LRM language was released in February and has been available on BenefitsLink; this link is to the IRS Web site, which was just revised to include a PDF version of the original documents. For sponsors of master or prototype plans; supercedes May, 1998 Regional Prototype LRM language. (Internal Revenue Service)

SIMPLE IRA *Plan* List of Required Modifications and Information Package 1/98 (PDF)
Excerpt: "This information package contains samples of plan provisions that satisfy certain specific requirements of the Internal Revenue Code as amended through the Taxpayer Relief Act of 1997 (P.L. 105-34)." (Internal Revenue Service)

SIMPLE IRAs List of Required Modifications and Information Package 9/97 (PDF)
Excerpt: "This information package contains samples of provisions that have been found to satisfy certain specific requirements of the Internal Revenue Code as amended through the Taxpayer Relief Act of 1997, Pub. L. No. 105-34." (Internal Revenue Service)

Roth IRAs List of Required Modifications and Information Package 3/99 (PDF)
Excerpt: "This information package contains samples of provisions that have been found to satisfy certain specific requirements of the Internal Revenue Code as amended through the Taxpayer Relief Act of 1997, Pub. L. No. 105-34." (Internal Revenue Service)

Individual Retirement Arrangements List of Required Modifications and Information Package 9/97 (PDF)
Excerpt: "This information package contains samples of provisions that have been found to satisfy certain specific requirements of the Internal Revenue Code as amended through the Taxpayer Relief Act of 1997, Pub. L. No. 105-34." (Internal Revenue Service)

Salary Reduction SEP Listing of Required Modifications and Information Package, 4/2000 (PDF)
Excerpt: "A prototype sponsor applying for an opinion letter on a prototype salary reduction simplified employee pension ("SARSEP") in accordance with Revenue Procedure 91-44, 1991-2 C.B. 733, must satisfy these LRMs in addition to the LRMs for regular, non-elective SEPs." (Internal Revenue Service)

Simplified Employee Pension Listing of Required Modifications and Information Package, 4/2000 (PDF)
Excerpt: "This information package contains samples of plan provisions that satisfy certain specific requirements of the Internal Revenue Code, as amended through the Internal Revenue Service Restructuring and Reform Act of 1998 (P.L. 105-206). Such language may or may not be acceptable in specific plans, depending on the context. We have prepared this package to assist sponsors who are drafting SEPs. To expedite the review process, sponsors are encouraged to use the language in this package." (Internal Revenue Service)

Complying With ERISA: A Primer for Pension Plan Trustees
Excerpt: "Real estate investment managers and pension plan trustees... who have made real estate investments are delighted that the DOL has waited until now to begin its evaluation of real estate portfolios. Three or four years ago, most real estate portfolios were underperforming, but today the market has recovered, and many portfolios are performing as well as or better than was anticipated when they were originally underwritten. Many 'bad' investments of yesterday look much better today." (QPAMadvisor.com)

Now Online: SelectARetirementPlan.org
Excerpt: "With the helpful tools and straightforward facts you'll find in this site -- along with our interactive Select a Plan section -- choosing and implementing the right retirement plan is easier than you might think." (U.S. Department of Labor, the U.S. Small Business Administration, the U.S. Chamber of Commerce and Merrill Lynch)

Alphabet Soup of Government Plans a Recipe for Confusion, Inaction
Excerpt: "[F]or many Americans who are trying hard to save a decent nest egg for their later years, government efforts to boost such savings--and to replace traditional pensions--have resulted in a thick tangle of plans so confusing to many people that they may be having the opposite effect ... [T]oday's piecemeal, patchwork system of 401(k)s, 403(b)s, 457s, traditional IRAs, nondeductible IRAs, Roth IRAs, SIMPLEs, and SEPs--each with different rules--seems to be discouraging some Americans..." (Los Angeles Times)

One Actuary's Critique (of Social Security Reform Proposals)
Excerpt: "Do Bush's and Gore's proposals really solve Social Security's financial problems? They both want to 'save Social Security,' but both leave the details to others. That's understandable of course. Tough decisions for fixing the system don't get people elected President." (Ron Gebhardtsbauer, in Contingencies magazine)

Building the Personal Promise of Social Security
(George W. Bush, in Contingencies magazine)

A Secure Future Means a Strong Social Security
(Al Gore, in Contingencies magazine)

Pension and Benefits News Library from CCH
CCH has revised its site to include an archive of the past month or so of its pension and benefits news articles - nicely done. These seem to be excerpted from CCH's Pension Plan Guide. (CCH)

(Following also appears in Welfare Plans Edition)

Electronic Contract and Signature Law: A Prelude to the Paperless HR Department?
Excerpt: "Employers eagerly anticipating a paperless human resources department could come very close to achieving that goal under the new Electronic Signatures in Global and National Commerce Act. Despite its title, when this new law takes effect in late September, it will cover virtually every business transaction conducted in the U.S." (Deloitte & Touche)

ADEA Applies to Retirees and Employees
Excerpt: "The Third Circuit Court of Appeals has shocked employers by ruling that the Age Discrimination in Employment Act (ADEA) applies to both retirees and current workers. The ruling overturns a lower court decision and sets a major legal precedent." (hr-esource.com)

Graef Crystal: Procter & Gamble's Marketing Skills Put to Test
Excerpt: "P&G's salesman touch can be found first in its board compensation committee report. A paragraph there states Jager retired from the company, without noting he was offered the opportunity to retire by his board of directors -- an offer that, like offers made by The Godfather, he couldn't refuse." (Graef Crystal, on Bloomberg.com)



Job Openings Newly Posted or Reposted on EmployeeBenefitsJobs.com


Client Services Administratorfor Benefit National Companies
in CO, TX
Associate Attorney for Law Firmfor McGuire, Woods, Battle & Boothe LLP
in NC
Pension Supervisorfor AMETEK, Inc.
in DC, DE, MD, NJ, PA
Benefit Plan Administrationfor Compensation Resource Group, Inc
in CA
Retirement Sales Consultantfor Invesmart
in GA, IL, NY, TX
401(k) dc administratorfor karel@ assoc.ltd
in IL
401(k)/DC Administratorfor Southern California Administrator
in CA
Client Managerfor Benefit Services Corporation, a subsidiary of METLIFE, is a 401(k) plan administrator with 29 years of specialized experience in defined contribution recordkeeping.
in GA
Marketing Services Managerfor UICI Administrators, Nationally recognized healthcare TPA
in TX
Participant Representative - Pension Departmentfor Growing full-service brokerage firm
in IL
401(k) Sr. Administratorfor Top Notch Company In Sunny California
in CA
Human Resources Managerfor Ralph Appelbaum Associates
in NY
Benefits Administrator / Managerfor Summit Employer Group
in CA
Pension Analystfor Southeastern Employee Benefit Services, Inc. (SEBS)
in NC
RETIREMENT SERVICES CONSULTANTfor AmSouth Bank -- The Relationship People
in TN
Benefits Administratorfor Marsh Inc.
in NY
Pension Account Executivefor Diversified Investment Advisors
in MA
Sales Consultant - Comprehensive HR Servicesfor Administaff
in ALL STATES, CA
Pension Administratorfor Limestone Pension Associates, L.L.C.
in DE

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