Retirement Plans Edition
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October 10, 2000
Update of IRS Procedures for Automatic Approvals in Funding Method Changes
Excerpt: "The IRS has published Revenue Procedure 2000-40, which updates its procedures for automatic approvals of certain changes in funding methods under defined benefit plans.... The purpose of procedures like Revenue Procedure 2000-40 is to grant approval for certain changes that eliminate the need to apply to the IRS for permission." (TRI Pension Services)
Revenue Procedure Provides Approval For Changes In Funding Method By Defined Benefit Plans
Excerpt: "In Rev. Proc. 2000-40, the Internal Revenue Service provides approval for defined benefit plans to change the funding method used to determine the minimum funding standards. The revenue procedure supersedes Rev. Proc. 95-51." (Spencernet)
Boomers Reconsider Early Retirement
Excerpt: "A new Rutgers University survey found that 76 percent of those born between 1946 and 1964 hope to retire by age 60 but don't want the same work-free retirement their parents had." (Scripps Howard News Service)
Cash Balance Plan Created Illegal Forfeiture Using Lower Interest Rate In Making Cash Distributions
Excerpt: "Esden v. Bank of Boston, No. 99-7210 (2nd Cir. September 12, 2000)... The court in this case upholds the IRS' interpretation of how IRC section 417(e) applies to cash balance plans, as set forth in Notice 96-8." (TRI Pension Services)
New Comparability Plans Survive, but New Proposed Regs Narrow Maximum Disparity Allowed
Excerpt: "[If the January 1, 2002] effective date sticks in the final regulations (which it likely will), nothing changes in the way new comparability plans show they are nondiscriminatory for the 2000 and 2001 plan years.... What do the regulations do? [First, they] establish a 'gateway' rule for defined contribution (DC) plans to prove allocations are nondiscriminatory on the basis of benefits." (TRI Pension Services)
Cash Balance Plans: Implications for Retirement Income (PDF)
Excerpt: "[C]ash balance plan participants have a particular need for clear and timely information about their plans. We found a wide variation in the quality of information that firms provided to participants in cash balance plans. However, most plans provided insufficient information to allow a participant to make informed career-and retirement-related decisions." (General Accounting Office)
7th Cir.: Partial Termination Counts Vested Participants, Over Multiple Plan Years
Excerpt: "Matz v. Household International Tax Reduction Investment Plan... This case addresses two important questions with respect to whether a partial termination has occurred under a plan. (1) Are both vested and non-vested participants taken into account to determine if a significant percentage of participants have been eliminated from the plan? (2) Can a single partial termination transaction occur over more than one plan year? The court answers yes to both questions." (TRI Pension Services)
Court Order Assigning Survivor Benefit To Former Spouse May Constitute A QDRO: PWBA
Regarding Advisory Opinion 2000-09A. Excerpt: "The advisory opinion addressed whether a court order requiring the company-paid survivor benefit to be paid to the participant's former spouse, who had been named by the participant as the designated beneficiary under the plan prior to his divorce and as of the date of his retirement, could constitute a QDRO within the meaning of ERISA Sec. 206(d)(3)." (Spencernet)
Dream of ERISA Reform on Mortgate-Related Securities Is Closer to Having Real Life Implications
Excerpt: "Many in the residential and commercial mortgage-backed securities market, as well as the home equity sector, have looked at the proposed changes with high hopes. Visions of increased buying in all of these sectors have been enticing to them. But the improvement appears unlikely to occur overnight or as dramatically as some might expect." (Thomson Financial Media)
Doing the Math on Retirement Needs
Excerpt: "This year, 53 percent of American workers said they tried to figure out how much money they will need for retirement, compared with 35 percent in 1993, according to a survey by the Employee Benefit Research Institute in Washington." (Baltimore Sun)
(Following also appears in Welfare Plans Edition)
IRS Field Service Advice 200040001 Addresses Split-Dollar Life Insurance Arrangement
Excerpt: "Issue: Whether the portion of the total purchase price allocated to the customer-based intangible/goodwill can be used to structure a split-dollar life insurance arrangement whereby avoiding taxation of the gain realized." (Internal Revenue Service, Via Tax Analysts (Temporary Link))
| Actuarial Analyst | for William M. Mercer in MA |
| Plan Consultant | for American Century Investments in MO |
| Pension Systems Supervisor - Palm Beach Gardens, Florida | for Philips Electronics - Personal Access Center for Employees (PACE) in FL |
| Senior 401(K) Operations Managers | for A Prestigious Financial Services Provider - in CO, MA |
| Defined Contribution/401(k) Administrator | for Merit Benefits Group, Inc. in IL |
| Defined Benefit Business Analyst | for Hewitt Associates in TX |
| Benefits Manager | for Growing New York City Organization in NY |
| 401(k)/ DC Plan Administrator | for The Stoller Company in CA |
| Director, International Compensation | for E*TRADE Securities, Inc. in CA, GA |
| EMPLOYEE BENEFITS PROFESSIONAL | for McKay Hochman Co., Inc. in NJ |
| Retirement Member Services Manager | for San Diego County Employees Retirement Association in CA |
| Benefits Manager | for The Owens Group, Inc. in NC |
| DBA Business Analyst - The Woodlands, TX (Near Houston) | for Hewitt Associates LLC in TX |
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