BenefitsLink Retirement Plans Newsletter for February 23, 2001

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The BenefitsLink Newsletter -
Retirement Plans Edition

February 22 and 23, 2001

Today's sponsor: The International Quality & Productivity Center (click)

   BENEFITS 2001 CONGRESS: How to Increase Customer
Satisfaction & Leverage Your Benefits Dollars   March 26-27, 2001   Scottsdale, AZ   For more information call 1-800-882-8684 or visit:
http://www.iqpc.com/b156benefits2001

Education IRA Limits Might Increase
Excerpt: "Employers see e-health plans as a potential salve for administrative hassles and skyrocketing medical costs, with 24% saying they would likely offer one by 2002, according to a new report by Forrester Research Inc." (Medscape; free registration required)

Court Orders ESOP Trustee To Pay $2 Million To Plan For Making Illegal Payments
Excerpt: "The U.S. District Court for the Western District of Kentucky has entered a judgment that requires the trustee of an employee stock ownership plan and a retirement plan in Louisville, Ky., to pay nearly $2 million for making illegal payments to herself from the ESOP and for retroactively amending the retirement plan documents to reduce future benefit accruals to plan participants. The judgment was entered in Herman v. Building Services Unlimited." (Spencernet)

Philadelphia Plugs Diversion of Police Pensions
Excerpt: "A law that becomes effective today stops civilian city workers from manipulating pension plans so they can collect retirement benefits intended for police and firefighters who risked their lives on the job. Mayor Street signed legislation yesterday to close a loophole in the city's pension rules that allowed civilian workers to collect retirement benefits for uniformed workers even though they never wore a badge or served a single day on the beat." (Philadelphia Inquirer)

OPM's Good Deed Gives Some Retirees a Bad Case of Heartburn
Excerpt: "The Office of Personnel Management is moving to clear up confusion over the taxable retirement income of numerous retirees. Ironically, the confusion appears to have been created by OPM's good intentions." (Washington Post)

CalPERS Says Real Estate, Alternative Investments and Bonds Offset Flat Equity Returns
Excerpt: "The California Public Employees' Retirement System (CalPERS) today reported a -1.38% annual investment return loss for the period ended December 31, 2000, but the news was greeted by System officials as 'far better than expected' considering the overall 11% decline in equity markets worldwide." (PRNewswire, via Yahoo! Finance)

CalPERS posts worst year on record as stocks drop
Excerpt: "The California Public Employee Retirement System, or CalPERS, recorded a 1.38 percent loss in the past year, the worst showing for the massive public fund since it began keeping cumulative annual records in 1984." (Reuters via Yahoo! Finance)

Attack Your Tax, Retool Your Roth
Excerpt: "[E]arly in the year many investors converted their traditional IRAs into Roth IRAs, only to see the value of their holdings shrink afterward ... [A] "Roth recharacterization" ... allows you, in effect, to undo last year's conversion-- wiping out the tax bill you otherwise would face in April. Then, if you'd still rather have a Roth, you can do the traditional-to-Roth conversion all over again when prices are low, minimizing the tax bill." (Philadelphia Inquirer)

Education IRA Limits Might Increase
Excerpt: "The Bush Administration has proposed raising education IRA annual contribution limits to $5,000 from the paltry $500 a year currently allowed, and making withdrawals from state-run tuition savings plans exempt from federal taxes." (IRAjunction.com)

Watson Wyatt Survey and Report: 'Phased Retirement' Emerging as Retention Strategy
Excerpt: "Phased retirement arrangements are evolving gradually as employers continue to tackle the challenges of a tight labor market, according to new research by Watson Wyatt. Phased retirement is any arrangement in which employees at or near normal retirement age are able to reduce their work hours and job responsibilities for the purpose of gradually easing into full retirement." (Watson Wyatt)

"House-Rich" Seniors Can Use Reverse Mortgage to Tap Funds During Retirement
Excerpt: "A growing number are turning to a product called a reverse mortgage, which allows them to borrow against the equity they've built up in their home while they continue to live there." (Associated Press, via Excite!)

Another Question is Answered in the Prototype Plans Q&A Column
Is there a published list of prototype plans that have been approved by the IRS? (BenefitsLink.com)

Another Question is Answered in the Distributions: Taxation and Planning Q&A Column
A husband and wife have divorced. The husband has a 401(k) plan at his job with company stock in it. Under a QDRO, the wife gets half of her husband's 401(k) account. If the wife takes half of the company stock, can the husband take the rest of his company stock and receive NUA (Net Unrealized Appreciation) tax treatment on his portion? (BenefitsLink.com)

Another Question is Answered in the ERISA Q&A Column
Can I purchase additional fidelity bond coverage beyond the ERISA-mandated "10% of assets handled" requirement, and why would I not want to do so? (BenefitsLink.com)

Another Question is Answered in the ERISA Q&A Column
I have a two-part question on contributions and distributions: 1. When, relative to payday (the 15th and the end of the month) are 401(k) deposits required to be in an employee's account; and 2. When an individual leaves a company voluntarily, how quickly does the law require the former employer to distribute the assets to the terminated employee (in either a rollover or a direct distribution)? (BenefitsLink.com)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
I'm retired from the railroad. Please explain what would happen to my wife's survivor benefit if I returned to work for a consulting engineering firm whose two major clients are railroads. Would her widow's benefit be reduced in the event of my death? (BenefitsLink.com)

(Following items also appear in Welfare Plans Edition)

72-Page Outline of Employee Benefits and Executive Compensation Arrangements (PDF)
This prominent law firm's publication provides a splendid overview of all of the principal kinds of deferred compensation, equity compensation, qualified retirement plans and welfare benefit plans. (Venable, Baetjer, Howard & Civiletti, LLP)

Fidelity Launches Portal to Integrate All Benefit Programs
Excerpt: "More and more employees this year will take advantage of one stop shopping, going online to a single Web site to manage everything from their 401(k) plan and payroll deductions to their healthcare and dental plans, and even their group life insurance. What's making all this possible is the debut of 'HR/benefits portals,' which are streamlining benefit programs, adding important employee self-service tools, and providing online gateways for employees." (PRNewswire, via Yahoo! Finance)

Newly Posted or Renewed Job Openings (Post Yours!)

Employee Benefits Trust Officer

for Regions Bank
in AL

ERISA Legal Assistant

for Baker Botts L.L.P.
in TX

Senior Plan Administrator

for American National Insurance Company
in TX

Benefits Communications Specialist

for Hand Benefits & Trust, Inc.
in TX

Issues Resolution Specialist

for ICMA Retirement Corporation
in DC

Benefits Administrators: Health & Welfare Plans

for Leading Insurance Provider
in NY

Benefits Administrators: Defined Contribution Plans

for Leading Insurance Provider
in NY

Compensation Manager (BL-SJCORP6922)

for Sony Electronics Inc.
in CA, NJ

Newly Posted Conferences (Post Yours!)

Form 5500 Workshop • March 21- May 30 • 51 Locations

in FL on March 21, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in CA, FL on March 28, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in CA, GA, HI, LA on March 29, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in KY, WA on April 4, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in NC, NM, OR, TN on April 5, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in UT on April 18, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in CO, MO, MS, OK, TN on April 19, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in OK, TX on April 25, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in AL, MO, TX on April 26, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in IA on May 2, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in DC, MA, NY, OH on May 3, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in CT on May 9, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in IL, OH, PA, TX on May 10, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in MI, PA on May 16, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in MD, MI, MN, NJ on May 17, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in CT, IN, NE, NY, WI on May 23, 2001
presented by SunGard Corbel

Form 5500 Workshop • March 21- May 30 • 51 Locations

in IL, KS, WI on May 30, 2001
presented by SunGard Corbel