If this message looks garbled to you or if the headlines in this message don't connect you to Web pages when you click on , please request the "plain text" version of this newsletter ("Retirement Plans Edition") by emailing your request to publisher Dave Baker at davebaker@benefitslink.com
The BenefitsLink Newsletter -
Retirement Plans Edition

Today's sponsor is Fortress Financial Group, Inc.
(click on banner for more information)

(Would your company like to sponsor an issue?)

October 6 - 9, 2000

Proposed Regs on New Comparability ("Cross-Tested") Plans Issued By IRS
Excerpt: "This document contains proposed regulations that would prescribe conditions under which certain defined contribution retirement plans (sometimes referred to as new comparability plans) are permitted to demonstrate compliance with applicable nondiscrimination requirements based on plan benefits rather than plan contributions." (Internal Revenue Service)

Contributions Made in Last Month of February-to-January Fiscal Year Deductible When Made
Excerpt: "In this legal memorandum, the IRS addressed the deductibility of plan contributions made by an accrual basis employer for a plan year that starts (but does not end) within the fiscal year for which deductions were claimed. The plan in question had a calendar year-end, and the corporation sponsoring the plan had a January 31 year-end. The corporation made matching contributions in January 1998 attributable to January 1998 elective deferrals... " (EBIA Weekly)

Web Trading Could Dent Lots of 401(k)s
Excerpt: "A new study shows the Net has brought a surge in retirement-plan trades -- to the detriment of most of these investors." (Business Week)

Ball And Chain Borrowing From Your Company's 401(k) Plan

Another Question is Answered in the Who's the Employer Q&A Column
Father owns more than 5% of Company X but isn't employed there. His adult son is employed there, but doesn't own any of the stock, and his compensation would not make him a highly compensated employee. Is he an HCE because of his father's ownership, due to attribution? (BenefitsLink.com)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
My 47-year-old father receives a disability railroad retirement benefit. But according to the Railroad Retirement Board (RRB), he is not eligible for Medicare until he's 65 because he became disabled after he last met the work requirement for early Medicare. I don't completely understand why he can't get early Medicare. (BenefitsLink.com)

Center for Due Diligence Web Site Provides '401(k) Program Competitive Analysis'
Excerpt: "The Center for Due Diligence (CFDD) is an independent consulting/research organization specializing exclusively in full service 401(k) program competitive analysis for the trade. The CFDD ... helps providers monitor competing programs, develop product, empower wholesaler relationships with brokers and improve sales. The CFDD's analysis also helps brokers identify competitive programs, make informed trade-offs, add value, improve closing ratios and focus on production." (Center for Due Diligence)

Harkin: GAO Report Urges IRS To Stop Approval of Cash Balance Plans Until Further IRS, DOL Review
Excerpt: "'This report is a ray of light peeking in on companies converting their employees pensions to cash balance plans, exposing the potential for age discrimination. I applaud the GAO for calling on the IRS to suspend cash balance pension plans until there are more comprehensive worker protections in place,' Harkin said." (Sen. Tom Harkin of Iowa)

Loan From ERISA Section 404(c) Plan to Participant-Owned Corporation Results in Excise Tax
Excerpt: "The participant in this case directed the plan to make a loan from his individually-directed account to a corporation in which he was a 57% owner.... The participant argued that since the loan at issue was an individually-directed investment covered under ERISA Section 404(c), he was not a fiduciary under ERISA or the Code... The tax court acknowledged that ... the participant would not be a fiduciary under ERISA ... [but] the court found no similar exception [in] the Code." (EBIA Weekly)

Nabbing a Police Pension Without Joining the Force
Excerpt: "Some Philadelphia workers use a loophole to enter the academy, then immediately walk away with better benefits." (Philadelphia Inquirer)

Compliance Profile Of Section 401(K) Plans: Results Of An IRS Survey (PDF)
Excerpt: "The Compliance Profile of 401(k) Plans shows that potentially disqualifying errors occurred in plans of all sizes, from the smallest to the largest. The errors occurred in a wide range of areas, including rollover distributions, nondiscrimination provisions and loans.... [W]e hope that publication of the survey results will highlight potential problem areas and help plan sponsors and employers maintain their plans." (Internal Revenue Service)

Simple Funds Sow Confusion
Excerpt: "Anecdotal evidence has long suggested that plan participants just don't 'get' life cycle funds. Now Hewitt Associates is offering hard numbers to back up the hunch of many in the industry." (401kWire.com)

IRS Report: Wide Range of Violations Exist In 401(K) Plans
Excerpt: "Potentially disqualifying errors in 401(k) plans cover a wide range of violations, according to a report issued by examiners from the IRS Employee Plans (EP) division. The report ... was created using the data from an IRS survey conducted to identify the areas in which 401(k) plans failed to comply with the requirements of the Code and to obtain information on the size of the plans containing these violations." (CCH)

DOL Secures Court Order That Freezes Assets Of Oregon Investment Management Firm

Colorado Union Pension Funds Out $56 Million Due to Oregon Adviser's Fraud, Authorities Say
Excerpt: "Two Denver-based union pension funds are out of as much as $56 million following the collapse of a Portland, Ore., money management firm that authorities say staged one of the largest investment adviser frauds in history." (RockyMountainNews.com)

Pensions and Brokerage: The Brokerage Battlefield Revisited
Excerpt: "Pensions accept what they are told by managers, in part because they are not knowledgeable about brokerage practices. This is not the fund's fault; the brokerage business is extremely confusing and may seem only ancillary, or of secondary importance, to the investment process." (Benchmark Financial Services, Inc.)

(Following also appears in Welfare Plans Edition)

Plan Must Pay Death Benefits to Beneficiaries Designated by Employee in Violation of Divorce Order
Central States, Southeast & Southwest Areas Pension Fund v. Howell (6th Cir. 2000). Excerpt: "The Sixth Circuit is one of the few federal Courts of Appeal that will apply ERISA preemption analysis to strictly enforce the designated beneficiary provisions of life insurance and other ERISA plans even where state court orders (like divorce decrees or child support orders) require payment of benefits to different beneficiaries." (EBIA Weekly)

IRS Notice 2000-56: Contribution of Parent Corp's Stock to Rabbi Trust for Subsidiary's Employees
Excerpt: "This notice provides guidance on which entity is treated as the grantor and owner of a grantor trust when a parent corporation contributes its stock to a rabbi trust for the benefit of the employees of a subsidiary." (Internal Revenue Service)

Job Openings Newly Posted or Reposted on EmployeeBenefitsJobs.com

401(k) Plan Consultantsfor Trustar Retirement Services
in MA
Defined Benefit Specialist IIfor American Century Investments
in MO
Defined Benefit Specialist Ifor American Century Investments
in MO
401(k) Administratorfor Associated Pension Consultants
in CA
Benefits Lawyerfor Firstdoor.com
in GA
Benefits Learning Specialistfor Towers Perrin
in PA, VA
National Account Executivefor The GlobalQuest Group
in CA, DC, GA, IL, MI, MO, NY, PA, TX
DC Administrator/Consultantfor 401(k)
in OR, WA
In-House ERISA/Employee Benefits Attorneyfor Non-qualified Deferred Compensation Specialist
in CA
Regional Vice President - West Coastfor Nation's fastest-growing major life insurance group of the past decade
in AZ, CA, CO, ID, MT, OR
Pension Analystfor HEREIU Trust Funds
in IL
Pension Benefits Specialist (Actuarial)for HEREIU Trust Funds
in IL
Employee Benefits Specialistfor HEREIU Welfare/Pension Funds
in IL

Subscribe to the Welfare Plans Edition, too (click)
Copyright 2000 BenefitsLink.com, Inc.

Feel free to forward this email to friends, colleagues or clients, if no fee is paid to you and the email is forwarded in its entirety. Thanks!

BenefitsLink is a trademark of BenefitsLink.com, Inc., published by Dave Baker with much help from Mary Hall and lots of friends.

To subscribe (free): visit https://benefitslink.com/newsletter - or the person desiring to subscribe can send an email to listmanager@postmastergeneral.com, with this as the subject of the email: subscribe BLretirement

We have an online archive of prior issues at
BenefitsLink logo
Looking for a speaker for your benefits group? Want to throw your hat into the ring? Free.

Need personnel? It's like fishing in a barrel here.

Need a benefits job? Sort the openings by their distance away from you.

Exchange questions and tips with colleagues. Co-sponsored by us and several employee benefits organizations.

Promotions and new personnel in the employee benefits community.

Experts field questions online, submitted by readers via email.

View by location, by sponsoring organization, or by date.

Largest listing of benefits software on the net: descriptions, downloads.

Ads are our sole source of support. No subscription fees!


Copyright 2000 BenefitsLink.com, Inc. All rights reserved. BenefitsLink is a trademark of BenefitsLink.com, Inc.