Retirement Plans Edition
January 5, 2001
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ASPA Files Comments With IRS On New Comparability Regulations
Excerpt: "On January 5, ASPA filed ... detailed comments on proposed regulations governing new comparability plans. In these comments ASPA argues that the proposed rules applicable to combination defined contribution/defined benefit plans will likely result in excessive contribution requirements leading small businesses to abandon their defined contribution plans to the detriment of younger workers. The comments also address a number of technical issues raised by the proposed regulations." (American Society of Pension Actuaries)
Deloitte & Touche Annual 401(k) Survey: Employee Attraction and Retention Driving 401(k) Strategies
Excerpt: "Employee attraction and retention issues are driving all benefits strategies, and the 401(k) plan is no exception, according to the findings of Deloitte & Touche's annual 2000 401(k) Plan Benchmarking Survey. For example, this year more than a third of plans will admit new employees to the 401(k) plan immediately on hire." (Deloitte & Touche)
The 401(k) Turns 20 Years Old
Excerpt: "Today, your 401(k) is likely to become the largest asset you own, with the possible exception of your home. And the jobs you choose may depend in part on what kind of 401(k) is offered. That's an impressive track record for a tax-advantaged savings plan the U.S. government didn't mean to create." (CNNfn.com)
PBGC Will Guarantee Pensions for 17,000 Grand Union Workers
Excerpt: "The Grand Union Company Associates Retirement Plan had total assets of $183 million to cover total benefit liabilities of $205 million, according to PBGC estimates. The plan terminates as of January 1, 2001. The 17,000 plan participants include about 8,400 who worked for the now-defunct Colonial Stores chain that Grand Union purchased in 1980." (Pension Benefit Guaranty Corporation)
Argentina Opposition Tries To Repeal Pension Reform
Excerpt: "Argentine efforts to cut spending through a series of IMF-backed reforms to the country's pension system came under fire Thursday as legislators promised to overturn the presidential decree that put them in place." (Reuters via Excite! News)
Another Question is Answered in the Prototype Plans Q&A Column
Can a prototype plan document be used to draft a plan that covers multiple employers? The employers are not members of a controlled or affiliated service group. (BenefitsLink.com)
Another Question is Answered in the Who's the Employer Q&A Column
C is an accounting corporation; P is a partnership that does recruiting. Capital is not a material income producing factor for P. Both businesses are regularly associated in providing services to third parties. C owns 50% of P. Is P an "A-Org"? (BenefitsLink.com)
Another Question is Answered in the Fiduciary Investing Q&A Column
Our profit sharing plan lost approximately 40% in 1997 and 1998 (when the S&P 500 was averaging about 30%). The money was invested by the plan administrator in publicly traded stocks through a brokerage firm. The Department of Labor investigated and found nothing illegal. The plan is offering to repay approximately half of the amount lost, in exchange for our giving up our ERISA rights for those two years. Your thoughts? (BenefitsLink.com)
Another Question is Answered in the Fiduciary Investing Q&A Column
The trustees of a defined contribution plan (a profit sharing plan) which does not provide for participant-directed investments have invested the plan's assets primarily in fixed-income CDs for the past several years. None of the plan's assets were invested in the equity market, which provided significantly better returns during this time. Have the trustees violated their fiduciary duties under Section 404 of ERISA? Are there any possible defenses to the trustees' actions? (BenefitsLink.com)
Freeware For Use In Setting Integration Levels, Viewing Allocations: The Inte-Greater, 2001 Version
Excerpt: "Finds the best benefit formula under a profit-sharing plan for the owner of a small business, by adjusting the plan's integration level. If the plan's current formula is not the optimum formula, this peppy little DOS application shows the business owner how much would be saved each year if the optimum integration level were used instead. Also shows the dollars that would go to each participating employee's account (i.e., the allocations) at user-specified employer contribution levels." (David Rhett Baker)
Resource Site: Retirement Programs for Federal Employees
Includes links to Civil Service Retirement System (CSRS) publications and Federal Employees Retirement System (FERS) publications. (Office of Personnel and Management, U.S. Government)
IRS Voluntary Compliance Programs: Confession Can Be Good for the Pension Plan Sponsor's Bottom Line
Excerpt: "Pension plan sponsors who fail to voluntarily report plan qualification violations to the IRS for supervised correction before they are discovered under an IRS audit can expect to pay sanctions that are, on average, ten times greater than the compliance fees that otherwise would have applied." (Deloitte & Touche)
Reinventing Annuities (PDF)
Excerpt: "The annuity structure of the future will have to be capable of accommodating much greater variation in life span, asset allocation, [and] customer attitudes/requirements in retirement. [It will need] to adapt to changes in these over the period for which income is payable. The purpose of this paper is to stimulate a debate on these issues that will result in more and better choices for income in retirement." (M.J. Wadsworth of Watson Wyatt)
Most Americans Secure About Retiring
Excerpt: "Seventy-one percent are either very confident or at least somewhat confident that they will spend all of their retirement years in financial security, according to a nationwide survey of 1,005 adult residents of the United States conducted by Scripps Howard News Service and Ohio University." (Cincinnati Post)
(Following also appears in Welfare Plans Edition)
Graef Crystal: Pfizer's Steere Shows How Well Drugmakers Pay
Excerpt: "[D]rugmakers understand, if dimly, that lower prices could also mean fewer miracle pay packages for chief executives. The case of Pfizer Inc.'s William Steere, who just ended an almost decade-long tenure as CEO, shows just how much they have to lose." (Graef Crystal, on Bloomberg.com)
IRS Issues Proposed Regs on Minimum Cost Requirement Under Code Section 420
Excerpt: "[Section 420] permits the transfer of excess assets of a defined benefit pension plan to a retiree health account ... these proposed regulations provide that an employer who significantly reduces retiree health coverage during the cost maintenance period does not satisfy the minimum cost requirement of section 420(c)(3) ... [these rules] clarify the circumstances under which an employer is considered to have significantly reduced retiree health coverage ..." (Internal Revenue Service)
| Director of Operations, Deerfield, IL | for ADP, INC in IL |
| Benefits Administrator | for Broadvision Inc; in CA |
| Healthcare Consultants & Analysts | for William M. Mercer, Inc (Phoenix) in AZ |
| Client Consultant | for Invesmart, Austin, Texas in TX |
| Consultants - Benefits Administration & Communication | for Towers Perrin in CA, GA, PA |
| 401(k)/DC Plan Administrator | for Federation Pension Bureau, Inc. in NY |
| Pension Administrator | for TPA Firm in MD |
| Manager, Benefits Administration | for University Hospitals Health System in OH |
| ERISA Attorney | for ADP, Inc in NJ |
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