Retirement Plans Edition
December 18, 2000
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401(k) Waiting Periods Getting Shorter, But Do Potential Employees Appreciate It?
Excerpt: "It's a paradox of corporate benefits. The 401(k) tax-advantaged retirement savings plan ... is one of the best ways for American workers to accumulate wealth.... And despite indications that many workers don't appreciate the 401(k), employers are bent on using it more as a selling point in the competitive market for hiring and keeping employees." (Milwaukee Journal Sentinel)
Updated Social Security and IRS Amounts for 2001 (PDF)
Excerpt: "Two of these tables list updated figures for Social Security amounts and covered compensation for 2001. The third table lists projected figures for IRS pension limits, based on the law in effect on Dec. 1." (American Academy of Actuaries)
Prefunding in a Defined Benefit Pension System-- the Finnish Case (PDF)
Excerpt: "The Finnish pension system consists of earnings-related pensions, covering almost all aid work, and a residence-based national pension. There has been considerable rivalry, even battle, between these two parts, with the former now the undisputed winner." (Jukka Lassila and Tarmo Valkonen)
Another Question is Answered in the Who's the Employer Q&A Column
Corporation Y is owned 100% by Shareholder A. Partnership/LLC X is owned 2% by Shareholder A and 98% by Shareholder A's parents. Shareholder A is 50 years old. Are X and Y under common control within the meaning of Internal Revenue Code section 414(c)? (BenefitsLink.com)
Another Question is Answered in the Who's the Employer Q&A Column
Company A is owned 50% by Employee 1 and 50% by Employee 2. They're the only employees. Company B uses Company A for manufacturing and distribution. Company B is 100% owned by Employee 1 and employs 100 employees. Company A sponsors a 401k plan; Company B sponsors a SEP arrangement, contributing the maximum amount for its two employees. Does the tax code prohibit this arrangement? (BenefitsLink.com)
Online Benefits Calculators Can Assist Retirement Planning for Federal Employees
Excerpt: "Tired of trying to figure out your retirement benefits? Can't believe the estimate provided by your agency? It's now possible to go online and double-check the numbers." (Washington Post)
Account Aggregation Close-Up
Excerpt: "Business Logic's CEO John Patterson discusses in a three part series the trend of data aggregation for the 401(k) industry. In his first column, he explains the core technology behind it." (401kWire)
Stock Market Slump May Be a Good Time for a Roth Conversion
Excerpt: "This year's stock market declines may be a blessing in disguise for long-term savers. If your traditional IRA is invested in equities, the time may be ripe to convert it to a Roth IRA before the Dec. 31 deadline." (IRAjunction.com)
ASPA Comments on Section 415(e) Guidance from IRS
Excerpt: "Additional Comments on IRS Notice 99-44, Section 415 Limitations on Benefits and Contributions Under Qualified Plans." (American Society of Pension Actuaries)
German Chancellor, Trade Union Allies Agree on Pension Reforms
Excerpt: "Under the revised plan, future pensions should not fall below 67 percent of final wages over 30 years, compared to a lavish 70 percent now. Unions had sharply criticised Riester's original proposal to pare pensions down to 64 percent of wages." (Reuters via Excite! News)
Another Question is Answered in the Correcting Plan Defects Q&A Column
If an ineligible employee is inadvertently permitted to make elective deferrals to a 401(k) plan, can the plan sponsor treat the defect as resulting from a 'mistake of fact,' so that the deferrals can be distributed to the employee without using an IRS remedial correction program? (BenefitsLink.com)
Another Question is Answered in the 401(k) Plans Q&A Column
What are the proper legal and other steps required to terminate a 401(k) Plan? (BenefitsLink.com)
(Following also appears in Welfare Plans Edition)
Another Question is Answered in the Professional Liability Insurance Q&A Column
My third-party administration firm is expected to merge with another TPA firm soon. Both firms have maintained professional liability insurance. One of the terms in the merger agreement is that my firm will combine insurance under the other firm's policy. But my firm's policy is due to expire next week! Are there any options to consider in a situation like this? (BenefitsLink.com)
Dramatic Growth In Web-Based Benefits Administration
Excerpt: "During the past year, there has been dramatic growth in the number of employers that use Web-based technology to administer their Sec. 401(k) plans, according to Buck Consultants' 11th annual survey." (Spencernet)
$97 Million for Microsoft 'Permatemp' Staffers
Excerpt: "[The] proposed $97 million settlement that, if approved, would bring to an end a case that has drawn broad attention to the use of temporary workers in the technology industry and American business in general." (Seattle Post-Intelligencer)
Graef Crystal: Emerson Electric's Knight Gets Going-Away Gift
Excerpt: "Last week's proxy statement from Emerson Electric Co. provided yet another reminder that the testimonial dinner and gold watch for retiring chief executives have gone the way of the vacuum tube. Emerson's board assured Charles Knight, who was chairman and CEO before he gave up the latter job in October, that he will have a glorious retirement." (Graef Crystal, on Bloomberg.com)
Everything You Wanted To Know About TPAs But Were Afraid To Ask
Excerpt: "About 66% of U.S. workers with health and pension employee benefits are in plans using some degree of Third Party Administration (TPA). About 5/6 of that TPA market use SPBA Member TPAs. Who are these TPAs and what do they do?" (Society of Professional Benefit Administrators)
Stock Options for Undiversified Executives
Link to a Working Paper available for downloading from the National Bureau of Economic Research. Excerpt: "We employ a certainty-equivalence framework to analyze the cost and value of, and pay/performance incentives provided by, non-tradable options held by undiversified, risk-averse executives.... We demonstrate that the divergence between the value and cost of options explains, or provides insight into, virtually every major issue regarding stock option practice ..." (Brian J. Hall, Kevin J. Murphy)
NASDAQ Requests Comments on Shareholder Approval of Broad-Based Stock Option Plans (PDF)
Excerpt: "[I]t appears that the SEC is moving quickly on this issue. It seems likely that the approach eventually approved by the SEC will limit dilution attributable to nonshareholder-approved plans and preclude companies from using such plans to make option grants to officers and directors. Related changes to proxy statement disclosure rules, if adopted by the SEC, would also result in shareholders receiving more detailed and easy to interpret data on stock option and other equity plans." (Analysis by Frederic W. Cook & Co., Inc., published online by Financial Executives Institute)
| Retirement System Specialist | for Levi, Ray & Shoup, Inc. (IT Company) in IL |
| 401(k) Client Account Manager | for New York Life Benefit Services LLC in MA |
| Client Relationship Manager | for Fidelity Investments in TX |
| 401(k) / Retirement Plan Administrator | for Sentinel Benefits Group, Inc. in MA |
| Tax Specialist 5500 | for Fidelity Investments in TX |
| Senior Benefits Analyst | for Morrison & Foerster, LLP, a large international law firm with 18 offices worldwide in CA |
| Senior Benefits Consultant | for Plante & Moran LLP in MI |
| Benefits Consultant | for Plante & Moran LLP in MI |
| PENSION ADMINISTRATOR | for SCHILLER'S PENSION CONSULTING in CA |
| Compliance - Health Specialist | for The Segal Company in CO |
| Benefits Analyst for Group Insurance/Consulting Firm | for Horne-Guest Insurance Agency in SC |
| Benefits Administrator Financial Plans | for Leading Retailer of Men's Clothing in CA |
| Benefits Administrator Financial Plans | for Leading Retailer of Men's Clothing in CA |
| Corp Employee Benefits Mgr | for Raycom Media, Inc. in AL |
| Benefits Administrator | for Georgia Pacific Corporation in GA |
| Assistant Vice President, Defined Contribution Services | for New England Financial/MetLife - Financial Services Industry. Product lines include Life Insurance, Annuities, Pension Plans and Securities. in MA |
| Pension Administrator | for Block Consulting Actuaries, Inc. in CA |
| Managing Pension Account Executive | for Diversified Investment Advisors in CA |
| Defined Contribution Specialist | for Paragon Consulting Group in DC, DE, MD, NJ, PA |
| Retirement Benefits Manager | for Freddie Mac in VA |
| Defined Benefit Project Manager | for Hewitt Associates in GA, IL, NJ, TX |
| Field Educator | for Fire & Police Pension Association in CO |
| Financial Analyst | for Towers Perrin in NJ, PA |
| Manager, Benefits Administration | for Universal Studios in CA |
| Account Manager | for SHPS in DC |
| 401(k) Sr. Administrator | for Fast growing Benefits firm in CA |
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