Retirement Plans Edition
December 5, 2000
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Ted Benna Urges 401(k) Changes-- Says Employees Need More Investment Choices and Control
Excerpt: "While a complex bill addressing the retirement industry is working its way through Congress, a more fundamental dispute is shaping up within the industry itself over who should control the nation's $1.7 trillion in 401(k) assets.... Benna has a powerful ally in online brokerage giant Charles Schwab, which would like to see the system move to the kind of broad array of choices that Schwab is famous for." (Arizona Republic)
Early Retirement Plan Contained Warning of Possible Later Benefit Reductions, School Officials Say
Excerpt: "Notwithstanding the provision, many retirees thought the plan was a binding agreement between the School Board and the employees, said Kitty Boitnott, president of the Roanoke County Education Association." (Roanoke [Va.] Times & World News)
Text of Final Regs Defining Participant for Premium Purposes, Allowing Prorated Premiums
Excerpt: "This final rule makes three amendments ... One amendment allows plan administrators to pay a prorated premium for a short plan year rather than paying a full year's premium and requesting a refund. A second amendment simplifies and narrows the definition of "participant" for PBGC premium purposes. A third amendment simplifies the standard for claiming the variable-rate premium exemption for plans that are fully insured under section 412(i) of the Internal Revenue Code." (Pension Benefit Guaranty Corporation)
PBGC Narrows Definition of 'Participant' for Premium Calculation Purposes, Effective 1/1/2001
Press release. Excerpt: "Plans ... may exclude from their participant counts individuals who do not have accrued benefits and for whom the plan has no other benefit liabilities. For example, a new plan will not have to pay a premium for its first year unless it provides credit for service before the plan began." (Pension Benefit Guaranty Corporation)
Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
Were the seven years of credits I earned under Railroad Retirement transferred to the Social Security system after I left rail work? Are the credits under the two programs different? How are the credits under Railroad Retirement figured? Earnings? Time worked? (BenefitsLink.com)
Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
What happens to my employer's Railroad Retirement taxes for employees who are not vested? In other words, does the Railroad Retirement Fund keep both the Social Security portion and the rail industry portions of the employer's payroll taxes? (BenefitsLink.com)
Pension Plan Awarded to Surviving Spouse Not Formally Designated as Beneficiary
Excerpt: "This state court case [Gardner v. Gardner, Wash. Ct. App. 2000] involves the battle between a pension plan participant's surviving spouse and his children from a prior marriage ... The dispute arose because the participant apparently failed to change his beneficiary designation after divorcing the prior spouse, who had agreed in the divorce decree to waive her interest in the participant's property." (EBIA Weekly)
New Comparability: Alive and Well
Excerpt: "Although the new proposed regulations under IRC Section 401(a)(4) have complicated the discrimination testing process, in many cases cross-tested plans will continue to provide an optimum plan design to benefit the owners and key employees of a plan sponsor." (W. E. Stanley & Co., Inc.)
Participant is eligible for a distribution if he terminates but resumes employment within 6 months?
An interesting discussion thread on our message boards. Join in! (BenefitsBoards.net)
Deemed Distribution of Residential Loan Does Not Prevent Deduction of Loan Interest
IRS Field Service Advice 200047022 (Aug. 22, 2000)]. Excerpt: "Under the facts analyzed here, a participant obtained a residential loan from a 401(k) plan in excess of the Code's $50,000 loan limit.... it appears that only the interest deductions attributable to the excess loan amount were at issue, not the full amount of such deductions taken by the participant." (EBIA Weekly)
Feds Crack Down on 401(K) Fees That Aren't Legit; 65 Firms Forced to Reimburse Retirement Plans
Excerpt: "The Labor Department's Kansas City, Mo., regional office began focusing on fees last year. Recently, offices in New York, Atlanta and San Francisco have followed suit. But it is not a national program.... In general, federal law says that pension and retirement plan assets can be used only to pay benefits and legitimate expenses to administer the plan. But industry groups say the agency has been vague about what qualifies as a legitimate expense." (USA Today)
Sacramento County's Unions Team Up to Go For More Perks
Excerpt: "Labor unions representing most of Sacramento County's 12,000 employees are banding together to bargain for increased retirement benefits-- with an eye on a sweet deal enjoyed by many of their neighbors in state government. A coalition of a dozen unions recently asked the county to provide actuarial data on the cost of pension benefits." (Sacramento Bee)
Norfolk Southern Offers Early Retirement to 870 Non-Union Employees
Excerpt: "Norfolk Southern Corp. is offering early retirement to 870 non-union employees age 53 and over. About 18 percent of the company's non-union employees are eligible for retirement under the plan, which was announced Wednesday. The early retirement offering is the company's second this year, and the latest in a series of moves geared to improve the company's financial performance." (Knight Ridder/Tribune)
(Following also appears in Welfare Plans Edition)
Survey of CEBS Members: Top Five Benefit Priorities for 2000 (PDF)
Excerpt: "[After the cost of healthcare, the] remaining priorities in order of importance are: evaluating/implementing/ expanding the use of Internet/intranet applications, providing financial/retirement planning tools and information, providing increased investment education, and emphasizing/improving quality of employee communication materials." (Deloitte & Touche)
No Reward Without Risk -- Some Companies Rethinking Broad-Based Stock Options
Excerpt: "Volatility in the markets has forced companies to take a closer look at their basket of total compensation rather than just focusing on stock options. If stock options start replacing base pay, then employees will leave as soon as they can when the options look like they've lost their long-term value." (Employee Benefit News)
| Defined Contribution Account Administrator | for The Vanguard Group in PA |
| National Account Executive | for The GlobalQuest Group in CA, GA, IL, MA, MI, NY, PA, TX |
| DC Pension Plan Administrator | for Employee Benefits Group, Inc. in MN |
| Defined Contribution Recordkeeper | for ATR, Inc. in PA |
| Pension Compliance Specialist | for CNA TRUST in CA |
| Sales Support Manager | for Benefits Recruiting Firm in NY |
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