The BenefitsLink Newsletter -
Retirement Plans Edition
October 31, 2000
Today's sponsor is Search401k.com (click on banner for more information)
Workers' Accounts Picking Up More 401(K) Charges
Excerpt: "Fees are taking a bigger bite out of workers' 401(k) accounts as companies shift administrative expenses onto employees. A small increase in fees can siphon tens of thousands of dollars from an account balance over an employee's career. Higher fees hurt even more now as double-digit stock market returns evaporate." (USA Today)
Surplus Assets: What You Can and Cannot Do
Outline prepared by attorney Amy Moore for the 2000 Spring Benefits Conference sponsored by the ERISA Industry Committee. (Amy N. Moore of Covington & Burling)
The Individual Advantage Plan: Balancing the Needs of Older and Younger Employees (PDF)
Excerpt: "This new design uses a cash balance plan in tandem with a defined benefit formula ... Instead of a defined benefit plan skewing benefits to older employees or a cash balance plan skewing benefits to younger employees, an individual advantage design provides a cash balance structure and a defined benefit formula under one plan. In effect, the benefits ... mimic a 'greater of' approach." (Milliman & Robertson, Inc.)
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Social Security Assistance Now a Click Away
Excerpt: "Starting Thursday, SSA will give all retirees the same head start on the road to their benefits by offering applications on the agency's Web site, www.ssa.gov. Officials say the online interview will help them cope with a massive influx of retirees expected over the next few decades as baby boomers turn into senior citizens." (Baltimore Sun)
Compensation Under The New Comparability Regulations
Excerpt: "Under the proposed new comparability regulations, effective for the 2002 plan year, a new comparability plan must use the top heavy definition of compensation (Code §415(c)(3)) in determining whether a plan satisfies the 5% minimum allocation gateway described in the regulations. This means such plans may not use any Code §414(s) compensation definition ... [This] will have the effect of increasing the required employer contribution for eligible nonhighly compensated employees ..." (Sungard Corbel)
Company Stock Bonanza: Sometimes an IRA Rollover Is Not Your Best Move
Excerpt: "[Y]ou may be better off taking an immediate tax hit-- including a 10% early withdrawal penalty-- with appreciated shares of company stock. Here's why: If you stash all your stock in an IRA rollover, you will be taxed at your income tax rate when you start pulling the money out at retirement.... If you choose to roll the stock over into a taxable account, however, you will only pay upfront taxes on the cost basis.... You won't pay any taxes on the appreciation until you sell shares." (Forbes, via Yahoo! Finance)
The Impact of Mandatory Social Security Coverage of State and Local Workers: A Multi-State Review
Excerpt: "Since mandating coverage does change the rules for a significant number of taxpayers, it might be worth considering some transition relief to state and local governments as they bring their employees into Social Security." (Alicia H. Munnell, published by American Association of Retired Persons)
Workers Share in Angst About Plunging Stock
Excerpt: "For employees at many technology companies that have gone public in the last year, stock options so far aren't living up to their flexible name." (Los Angeles Times)
(Following also appears in Welfare Plans Edition)
Graef Crystal: CEOs Court New Woes Dodging Options Charges
Excerpt: "American CEOs react to a charge to earnings for stock options the way Count Dracula did when faced with garlic. At first, they shrink back with horror. Then they try to plot an alternative way to achieve their goal. While CEOs go to great lengths to keep option costs off the books, Sprint Corp. may have gone farther than most lately." (Graef Crystal, on Bloomberg.com)
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