The BenefitsLink Newsletter -
Retirement Plans Edition
December 19, 2000
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The Priesthood of the Participant
Excerpt: "While it will be necessary over the next years to allow complete freedom to all that want it, it will also be incumbent upon our industry to compete on the basis of cost-effective advice and management solutions." (401kWire)
American Academy of Actuaries Says IRS Backloading Tests Produce Illogical Results
Excerpt: "In certain instances, IRS officials recently have been interpreting the anti-backloading tests of Internal Revenue Code section 411(b)(1) in ways that produce illogical results, says the Academy's Pension Committee in a recent letter to the IRS." (American Academy of Actuaries)
Navigating Professional Responsibilities: Do Actuaries Need Limits on Their Advocacy?
Excerpt: "A great variety of actuarial practices have developed around qualified domestic relations orders (QDROs). Assumptions may or may not be disclosed; the report might just as well have been issued from Mt. Actuarius." (Robert Rietz, published by the American Academy of Actuaries)
American Academy of Actuaries' Pension Committee Comments on AICPA Standard
Excerpt: "The [American Academy of Actuaries'] Pension Accounting Committee commented on proposed amendments to AICPA SOP 92-6. The committee ... agreed with AICPA that the use of net vs. gross obligations is an issue that needs to be settled, but argued that the net postretirement benefit obligation is far more important than the gross obligation." (American Academy of Actuaries)
Writing an Actuarial Valuation Report
Excerpt: "The following table contains a comprehensive list of information to be included in an actuarial valuation report. The valuation report should also include the following information and disclosure when appropriate ..." (American Academy of Actuaries)
Icahn Unit Desires To Terminate TWA Pension Plans; PBGC Would Become Trustee
Excerpt: "Pichin Corp., owned by financier Carl Icahn, [on December 14] gave formal notice to the Pension Benefit Guaranty Corporation (PBGC) that it desires to terminate two Trans World Airlines, Inc. (TWA) pension plans on Jan. 1, 2001. The plans cover about 36,500 people including more than 15,000 active TWA workers." (Pension Benefit Guaranty Corporation)
Supreme Court Denies Review Of Case Involving Treatment of Pension Benefits In Bankruptcy
Excerpt: "The U.S. Supreme Court has denied a petition to review the decision of the Eighth Circuit U.S. Court of Appeals in Taylor v. U.S. [in which the court] ruled that a debtor's pension benefits from a qualified retirement plan were includible in the calculation of the debtor's disposable income in bankruptcy." (Spencernet)
As Year Comes to a Close, Consider Rebalancing Funds
Excerpt: "As you do a year-end review of your mutual funds this winter, you might work up a surprising enthusiasm for the idea of rebalancing your holdings." (Salt Lake Tribune)
(Following also appears in Welfare Plans Edition)
Friend or Foe? The Pros and Cons of the New DOL Voluntary Fiduciary Correction Program
Excerpt: "The VFC Program might be perceived as too rigid, since it details the exact correction methodology which must be adhered to in order to participate in the program. EPCRS allows for negotiation between the IRS and the plan official and demonstrates correction principles, citing examples of possible correction methodologies, but does not provide the only acceptable methods of correction resulting in an 'all or nothing proposition' as is the case in the VFC Program." (Marcia S. Wagner, Esq. and Deanna H. Nino, Esq.)
Tax Issues In Executive Compensation
Excerpt: "The following are compensation methods reviewed in this outline: Non-qualified Deferred Compensation Plans; Stock Appreciation Rights (SARs); Phantom Stock Plans; Restricted Stock Plans; Incentive Stock Options (ISOs); Non-Qualified Stock Options (NQSOs)." (Morris, Manning & Martin LLP)
Labor Department Creates New Outreach and Communications Office
Excerpt: "The U. S. Department of Labor's Pension and Welfare Benefits Administration today announced creation of the Office of Participant Assistance and Communications to handle broad-based outreach and assistance for the millions of workers covered by private-sector pension and health benefit plans." (U.S. Department of Labor)
Congratulations to Howard Fluhr, CEO of The Segal Company, on Becoming Chairman of EBRI
(The Segal Company)
How to Handle Stock Options for Year-End Taxes
Excerpt: "So before you exercise a thing, it's imperative that you drop some numbers into tax preparation software and get a feel for what it's going to do to your tax bill. There are two types of options available-- nonqualified stock options, a.k.a. nonquals, and incentive stock options, or ISOs. The big difference between them is in the way they are taxed." (Yahoo! Finance)
Corporate Share Repurchases in the 1990s: What Role Do Stock Options Play?
Excerpt: "This paper investigates how the growth of stock option programs has affected corporate payout policy. Given that earnings per share (EPS) is widely used in equity valuation, some corporations may opt to repurchase shares to avoid the dilution of EPS that results from past stock option grants. Executives may also prefer distributing cash by repurchasing shares or retaining more earnings, as opposed to increasing dividends, to enhance the value of their own stock options." (Federal Reserve Board)
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