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The BenefitsLink Newsletter -
Retirement Plans Edition

November 20, 2000

Today's sponsor is Fortress Financial Group
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IRS Survey Profiles Common 401(k) Plan Qualification Violations
Excerpt: "This survey provides interesting and useful information about the types of mistakes that are commonly made in 401(k) plan administration and what agents might look for in an audit. Plan administrators should review this survey to confirm that their plans are not making these same mistakes." (EBIA Weekly)

IRS Announces 2001 COLA Figures for Pension Contributions
Excerpt: "Effective January 1, 2001, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) is increased from $135,000 to $140,000.... The limitation for defined contribution plans under section 415(c)(1)(A) is increased from $30,000 to $35,000.... The limitation under section 402(g)(1) ... remains unchanged at $10,500.... The annual compensation limit under sections 401(a)(17) and 404(l) remains unchanged at $170,000." (Internal Revenue Service)

Web Makes 401(k) Transactions Riskier
Excerpt: "An increase in portfolio turnover makes it critical for companies to educate 401(k) participants and discourage poor investment habits, such as stock market timing or investing based on attempts to predict future market direction, the study said." (Dallas Morning News)

The Effects of 401(k) Plans On Household Wealth: Differences Across Earnings Groups (PDF)
Working paper (rev. August 2000), made available for downloading by the National Bureau of Economic Research (www.nber.org). Excerpt: "[W]e find that the effects of 401(k)s on household wealth vary significantly by earnings level. Our analysis implies that 401(k)s held by groups with low earnings, who hold a small portion of 401(k) balances, are more likely to represent additions to net wealth than 401(k)s held by high-earning groups, who hold the bulk of 401(k) assets." (Eric M. Engen of the Federal Reserve Board and William G. Gale of the Brookings Institution)

New from EBRI: Executive Summary of Issue Brief no. 227, Women and Pensions: A Decade of Progress? (November 2000)
Women and Pensions: A Decade of Progress? (Employee Benefit Research Institute)

Stop And Go Investing? Vanguard Considers Imposing Waiting Limits On Participants
Excerpt: "The Vanguard Group is considering imposing a 90-day waiting period for participants who have cashed out of a fund to buy back into the fund�a move that would be among the first of its kind in the defined contribution industry, and is aimed at discouraging �return-chasing� participants." (Defined Contribution News)

Japan Might Set 5% Cap on Amount of Pension Fund's Ownership in Any One Company
Excerpt: "Japan's Ministry of Health and Welfare is considering limiting pension fund investments in a single company to five percent of total funds under management, the Nihon Keizai Shimbun newspaper reported on Saturday." (Reuters, via Yahoo! Finance)

Opinion: Election Lessons for Social Security
Excerpt: "[T]he American people came down firmly on the side of privatization. Exit polls showed that 57 percent of American voters supported individual accounts. Only 39 percent opposed them. In fact, more than a third of Gore voters favored privatization. Imagine that--on the central issue of Gore's campaign, a third of his voters deserted him." (Cato Institute)

Stock Option Overhang: Shareholder Boon or Shareholder Burden? The 2001 Study
Excerpt: "The measure of stock option usage is called 'overhang,' which is defined as stock options granted, plus those remaining to be granted, as a percentage of the total shares outstanding at a given company. Overhang has grown dramatically over the past decade because of much larger executive option grants and increased option eligibility." (Watson Wyatt)

(Following also appears in Welfare Plans Edition)

Year-End Checkup for Benefit Plans (PDF)
Excerpt: "This Alert will help identify year-end administrative issues that could lead to compliance or employee relations problems if not addressed before or fairly early in 2001. In addition, we have included reminders about recent legislative or regulatory developments affecting benefit plans or participants." (Aon Consulting)

9th Cir.: Arbitration Clause Upheld as Prerequisite to ERISA Benefits Litigation
Article describing Chappel v. Laboratory Corp. of America (9th Cir. 2000). Excerpt: "Under the proposed DOL regulations on claims procedures issued in September 1998, mandatory arbitration of ERISA benefit claims could not be required as a prerequisite to suit under ERISA.... In this decision, the Ninth Circuit noted the regulations but refused to follow them, given their still-proposed form." (EBIA Weekly)

DOL Gets $5.5 Million in Settlement with Time Warner in Indepedent Contractor Dispute
Excerpt: "'This settlement compensates misclassified independent contractors and temporary employees for their failure to be properly recognized as eligible participants under these plans,' said Secretary of Labor Alexis M. Herman." (U.S. Department of Labor)

Job Openings Newly Posted or Reposted on EmployeeBenefitsJobs.com

Consultant, Employee Benefitfor The Standard Insurance Company
401(k) Administratorfor Louis Kravitz & Associates, Inc.
in CA
Account Manager / Group Benefits Departmentfor Employee Benefits Consulting Firm
in FL
Director of Business Developmentfor ADP, Inc.
in NJ
Non-Qualified Benefit Consultantfor Clark Bardes Consulting/Compensation Resource Group, Inc
in Location Other Than U.S., ALL STATES
Benefits Consultant- Non-Qualified Plansfor Clark Bardes Consulting/Compensation Resource Group, Inc
in Location Other Than U.S., ALL STATES
Employee Benefits Tax Manager/Senior Managerfor Deloitte & Touche, Leading Professional Services Firm
in MN
Defined Benefit Conversion Specialistfor New York Life Benefit Services LLC
in MA
Administration Consulting Associatefor TPA Firm
in MA, NH
Benefits Consultantfor Clark Bardes Consulting/ Compensation Resource Group
Investment Strategist (2 openings; 1 in Denver, CO. 1 in Princeton, NJ)for Merrill Lynch
in CO, NJ

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