The BenefitsLink Newsletter -
Retirement Plans Edition
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October 3, 2000
The Winning Mantra: More Choice, More Frequency, More Information
Excerpt: "For a decade now this has been the mantra of firms that have been successful in the 401(k) business. Firms that welcomed the trend and offered more investment options, more frequent fund trading and information and cutting edge services such as voice response systems won. Those that didn't lost." (401kWire.com)
How Much Is Your Employer Matching Contribution Really Worth?
Excerpt: "Your employer may be more generous than you think. Employer-matching contributions can really add zing to your 401(k) account. That is, if you are patient enough to become fully vested." (401Kafe.com)
Are Efforts To Expand Pension Surpluses Going Too Far?
Excerpt: "And thanks to the prevailing accounting methodology, a significant portion of those surpluses are boosting corporate bottom lines. According to Bear, Stearns, 25 percent of the companies in the S&P 500 reported income from their defined benefit plans in 1998.... It's no surprise, then, that more and more corporations are devising new ways to preserve and expand their pension surpluses [such as] ... Bank of America's novel idea of channeling 401(k) monies into defined benefit plans." (CFO magazine)
Call for Papers: Retirement Implications of Demographic and Family Change
Excerpt: "This Call For Papers is addressed to all professionals interested in the implications of workforce changes for social insurance and retirement plans." (Society of Actuaries)
Another Question is Answered in the Correcting Plan Defects Q&A Column
A profit sharing plan permits several ineligible employees to share in employer discretionary contributions for the plan year. Under the terms of the plan, employer discretionary contributions are allocated in proportion to compensation. Under what IRS remedial program can this problem be corrected? What is the correction? (BenefitsLink.com)
DOL Consent Judgment Requires Two Physicians To Restore $287,089 To Plan
Excerpt: "The Department of Labor has obtained a consent judgment that requires two Kansas City, Mo., orthopedic surgeons to restore $287,089 to the Orthopedic Associates of Kansas City, Inc., Money Purchase Pension Plan as restitution for losses resulting from the investment of nearly all of the plan's assets in a single speculative and volatile gold share fund." (Spencernet)
Amendment Reducing Pension Plan's Job Separation Benefits Violated ERISA's Anti-Cutback Rules
Excerpt: "ENSION plan benefits payable in the event that a qualifying participant lost his job (under specified circumstances) were retirement-type subsidies or early retirement benefits to the extent that they continued beyond normal retirement age, the Third Circuit has held.... [T]the Third Circuit refused to defer to a contrary IRS General Counsel Memorandum ... [the case is] Bellas v. CBS, Inc." (RIA Pension & Benefits Week)
Top-Heavy Rules for Owner-Dominated Plans
Excerpt: "Within the service sector, two-thirds of plans started by physicians, dentists, and legal service firms were top-heavy, a rate far higher than for other parts of the service sector.... Available research and our interviews with pension consultants suggest that incremental administrative costs associated with top-heavy rules are not likely to be significant enough to discourage plan formation or maintenance." (General Accounting Office)
Living Well in Retirement: How Much Do You Need?
Favorite Means of Financing Stock Option Grants Can Backfire
Excerpt: "As they buy shares in the open market to soak up the dilution from option grants, more and more companies have launched put-warrant and other derivatives-based programs to reduce the cost. Not surprisingly, technology firms that have granted massive amounts of employee stock options have been particularly heavy users of this tactic, with Microsoft Corp. and Dell Computer Corp. among the heaviest." (CFO magazine)
(Following also appears in Welfare Plans Edition)
Graef Crystal: Call a Doc, Ellison's Greed Glands Set to Burst
Excerpt: "'Row harder, row harder!' That's the chant echoing from Oracle Corp. headquarters as Chief Executive Larry Ellison exhorts his shareholder galley slaves to close that last gap in his race with Bill Gates for the title of world's richest humanoid." (Graef Crystal, on Bloomberg.com)
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