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The BenefitsLink Newsletter -
Retirement Plans Edition
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March 5, 2001
Today's sponsor: The Retirement Plan Distribution Book (click to order now)


   The Retirement Plan Distribution Book: No other resource is
   as comprehensive, yet accessible by everyone who has to
   answer distribution questions-- from customer service
   representatives to legal counsel. Available now, from
   National Underwriter Company, publishers of other fine
   compliance books including Tax Facts.


Handling Departing Employees' 401k Accounts: Rethinking Mandatory Cashouts
Excerpt: "Employers have no legal obligation to maintain accounts with a vested balance of less than $5,000, although a few do. Most employers use this threshold, specifying in plan documents that amounts less than $5,000 will be moved out of the plan." (HR magazine)

DOL Files Suit Against Employer for Alleged Failure to Forward Employee Contributions to 401k Trust
Excerpt: "The U.S. Department of Labor has filed suit against Avcon, Inc. (Avcon), a California-based Delaware corporation, and Avcon's former chief financial officer, John N. Cowles, for violations of the Employee Retirement Income Security Act." (U.S. Department of Labor press release)

Keeping Distributions Simple: IRS New Distribution Rules and Your Plan Document
Excerpt: "Although the IRS intended to simplify the minimum distribution rules ... the proposed regulations replacing the 1987 proposed guidance may have the opposite effect on employers. By adding a multiplicity of distribution options based on the new rules, a plan administrator may end up facing a multitude of disputes with various retirees or their surviving beneficiaries.... Keeping the plan's distribution options simple ... can save a great deal of time, money and effort for all parties." (Thompson Publishing Group)

ABC Publishes Online Letter-Writing Service for Supporters of Portman-Cardin Pension Legislation
Excerpt: "The Council is asking all individuals in its member organizations to write their elected representatives and ask them to cosponsor the reintroduced House bill, sponsored by Representatives Rob Portman (R-OH) and Ben Cardin (D-MD), and the reintroduced Senate bill ... Using the Council Web site's new 'Capitol Connection Center' you can now select a pre-written e-mail and automatically send it to your elected representatives." (American Benefits Council)

John Hancock Selects UPI to Take Over Retirement Plan Recordkeeping Business
Excerpt: "Under the terms of the agreement, John Hancock will continue to manage the assets of the business, and UPI will assume the recordkeeping and support responsibilities. The transition of the business from John Hancock to UPI will begin immediately and is scheduled to be completed by June 30, 2001. Further terms of the sale were not disclosed." (PR Newswire, via Yahoo! Finance)

Opinion: Management Consultants' Pension Spinoff Schemes Mean Broken Dreams
Excerpt: "[A company has] a pension plan with a normal retirement age of 65, but workers who had accumulated 20 years of service by age 55 could retire then with an unreduced monthly pension. That early retirement subsidy feature of the plan is what's called a supplemental benefit ... that benefit is expensive to fund. So it's not surprising that some companies that have funded such a subsidized early retirement benefit would like to abolish it and capture a big chunk of the excess funds." (McGinn Actuaries Ltd.)

Social Security Reform Around The World (PDF)
Published online by pensions-research.org. Excerpt: "This article surveys the development and reform of social security around the world.... The article focuses on the issues of extending coverage in low income countries, social security privatization, and reforms to deal with the effects of population aging." (John Turner of the AARP Public Policy Institute)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
My father died in 1970. He had worked for a major railroad for 22 years up to his death. My mother was 45 at the time. Counting me, my parents had 6 children, then ages 8 to 16. Mother received Railroad Retirement benefits for about 10 years as a widow. Is my family entitled to any more benefits or a refund of my father's contributions to the Railroad Retirement fund? How do we find out if there's anything more due to us? (BenefitsLink.com)

Another Question is Answered in the Distributions: Taxation and Planning Q&A Column
In Q&A 7, your column suggests that the factor for a "designated beneficiary" would be determined first, and then would be reduced by 1 (one) for each year thereafter. Is that true for a spousal beneficiary? (BenefitsLink.com)

Another Question is Answered in the Correcting Plan Defects Q&A Column
What is the most common type of correction for an operational failure? (BenefitsLink.com)

(Following items also appear in Welfare Plans Edition)


Virtual HR Department Spells Out Benefits Online
Excerpt: "Small-business owners who've struggled with questions about insurance and 401(k) plans can take their hats off to Jerry Peter, founder of 4myBenefits Inc. He and his son, Jason, developed a virtual human resources department that can be customized to any company and each individual employee." (Cincinnati Business Courier; free registration required)

Plaintiff's Claim Under Terms of SPD Fails Without Detrimental Reliance; Estoppel Claim Fails Too
Gary B. Mauser v. Raytheon Company Pension Plan for Salaried Employees (1st Cir. 2001). Excerpt: "Because we have already established an avenue for relief for reliance on an inadequate Plan Summary, we hold there is not a more general equitable estoppel claim based solely on an inadequate Plan Summary. We leave for an appropriate case whether there may exist an equitable estoppel claim in cases where misrepresentations exist apart from the Plan Summary." (Findlaw.com)

New Claims Regulations Mean More Leeway for Workers, More Work for HR
Excerpt: "Administering your benefit plans will become more burdensome and costly under new regulations issued last fall by the U.S. Department of Labor (DOL). The new regulations require employers to modify their claims procedures for all plans subject to the Employee Retirement Income Security Act (ERISA)." (HR magazine)

IRS Information Letters Online for 2000 and Later
Excerpt: "An information letter provides general statements of well-defined law without applying them to a specific set of facts. Information letters are furnished by the IRS National Office in response to requests by taxpayers, by congresspersons on behalf of constituents, or congresspersons on their own behalf for general information." (Internal Revenue Service)

Tips That Could Save Your Lifestyle
Excerpt: "Most Americans won't be laid off. Of the unlucky few, most will find a new job fast. Still, you never know when the moving finger might tap you on the shoulder. If not a layoff, some other emergency might turn up. An auto accident. A medical problem. Slow-paying clients, if you're self-employed." (Jane Bryant Quinn, in the Washington Post)




Newly Posted or Renewed Job Openings (Post Yours!)
Global Benefits Head for Towers Perrin
in CT
Benefits Consultant for Clark Bardes Consulting/ Compensation Resource Group
in NJ
401k Compliance Testing Analyst for Automatic Data Processing- Retirement Services
in NJ
401(k) Direct Sales, Mid-market, Knoxville for Channel Synergy
in TN
Qualified Plan Team Leader for HCM International LLC
in MN
Legal Analyst, ERISA for T. Rowe Price Associates
in MD

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