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The BenefitsLink Newsletter -
Retirement Plans Edition

November 10, 2000

Today's sponsor is 2e Corporation
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Cash Balance Controversy May Be Resolved
Excerpt: "[B]ecause of the attention being devoted to these plans, as well as recent court decisions, the procedures for properly establishing cash balance plans have become considerably more clear, and the cloud of uncertainty and risk has been lifted�at least as a practical matter." (Reish & Luftman)

Your 401(k): Please Don't Take the Money and Run
Excerpt: "All too often-- more than 60 percent of the time, according to Hewitt Associates, a benefits consulting firm-- employees make the wrong decision, taking the money and running with lump-sum cash payments. That means losing tax-deferred savings growth�the reason you put it there in the first place." (U.S. News)

Revised Form 5500 and ERISA AC) Compliance
Excerpt: "The new Form 5500 requires plan sponsors state whether a participant-directed plan-� usually a 401(k) plan-� intends to comply with ERISA section AC).... This new 5500 question should be answered carefully, since legal consequences can flow from the answer." (Reish & Luftman)

Converting Your Traditional IRA into a Roth
Excerpt: "... experts say a conversion from a traditional IRA, which may contain tax-deductible contributions, to a Roth, which is funded entirely by after-tax contributions, should not be entered into lightly." (IRAjunction.com)

How to Get a Copy of a Determination Letter from the IRS

Diversity Of Risk Among Age-62 Retired Worker Beneficiaries
Working paper available for downloading. (Center for Retirement Research at Boston College)

Do Spouses Coordinate Their Investment Decisions In Order To Share Risks?
Working paper available for downloading. (Center for Retirement Research at Boston College)

Recent Proposals For Individual Funded Pensions In Germany-- Repeating The UK Experience?
Excerpt: "This discussion paper introduces the foreign reader to the current state of pensions reform in Germany. marked by a draft Bill dating September 22nd 2000. Focusing on the introduction of individual funded pension accounts, it asks what lessons can be learned from the UK, especially with regard to the pensions mis-selling scandal." (Ralf Nocker, published by Centre for Pensions and Social Insurance)

Social Security Privatization: Lessons From The United Kingdom
Working paper available for downloading. (Center for Retirement Research at Boston College)

Retirement Plan Coverage Slowly Increases for Various Worker Categories
(Deloitte & Touche)

The Art of Negotiating Stock Options
Excerpt: "For several weeks this past summer, Republican vice presidential candidate Richard Cheney treated Americans to a public display of the opportunities and pitfalls surrounding stock options." (TheStandard.com)

FASB Interpretation No. 44
Originally published July 2000. Excerpt: "Traditionally, businesses have structured their option plans to avoid reporting compensation expense under APBO No. 25.... Recently, FASB issued Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation: An Interpretation of APB Opinion No. 25." (CPA Journal)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
I have over 30 years of rail service and will be 60 on November 16, 2000. If H.R. 4844 (which will eliminate the reduction for age, between ages 60 and 62) is enacted, how can I take advantage of this change? Because Railroad Retirement applications have a 6 month retroactivity, can I wait to file until April 1, 2001 and still get benefits back to December 1, 2000 under the provisions of H.R. 4844? (BenefitsLink.com)

(Following also appears in Welfare Plans Edition)

Valuing Unvested Stock Options As A Marital Asset In An Equitable Distribution Dissolution (PDF)
Excerpt: "A recent Connecticut decision, Wendt v. Wendt, 1998 WL 161165 (Conn. Super.), provides business types with grist for boardroom chat among the highly compensated elite in corporate America." (Lynn H. Karlet, MBA, JD, published by OptionWealth.com)

Supreme Court Hears Oral Arguments in ERISA Beneficiary Dispute
Excerpt: "Divorce can create sticky situations, especially if the husband dies soon afterward without removing his ex-wife as his life-insurance beneficiary. The Supreme Court wrangled Wednesday over what law governs who gets someone's employee benefits after the employee dies." (Miami Herald)

Employee Plan Disclosures: It's Cheaper to Communicate Than to Litigate-- Part II
Excerpt: "The employer's duty to disclose ERISA plan changes and the timing of that duty is becoming an ever-increasing area of contention between participants and plan sponsors.... [this article] addresses: (1) the recent Department of Labor's (DOL) request for information on plan disclosures, and (2) the types of disclosure duties imposed when plan changes are under consideration." (Deloitte & Touche)

New SEC Regulation Will Make it Easier for Insiders to Make Legal Trades
Excerpt: "SEC rule 10b5-1, which was adopted with little fanfare last month ... could have profound implications for employees, directors and shareholders of public companies. The rule, which takes effect Oct. 23, says insiders can legally buy or sell their company's shares while they are aware of material nonpublic information if the trade was specifically set forth in a written contract before the person acquired the inside information." (San Francisco Chronicle)

Graef Crystal: U.S. CEOs With the Most Underwater '99 Options
(Graef Crystal, on Bloomberg.com)

Job Openings Newly Posted or Reposted on EmployeeBenefitsJobs.com

Testing Compliance Specialistfor The 401(k) Company
in TX
401(k) DC Administratorfor Fringe Benefits Design, Inc.
in MN
Managing Director-Executive Benefits-Dallasfor Clark Bardes/ Compensation Resource Group
in TX
Client Service Consultantfor Diversified Investment Advisors
in NY
Senior Defined Benefit Analystfor Administrative Management Group
in IL
Defined Contribution Administratorfor Thomas, Beck, Zurcher & White, P.A.
in FL
401K Administratorfor Ross Stores,Inc
in CA
Employee Benefits Attorneyfor Cincinnati Law Firm
in OH

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