| The BenefitsLink Newsletter - Retirement Plans Edition |  |
March 9, 2001
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The Case For Dropping 30-Year Treasury Rates As The Benchmark For Valuing Liabilities In DB Plans
Excerpt: "Current law uses the interest rate on 30-year Treasury securities to measure the present value of benefit liabilities under defined benefit pension plans. In theory, these rates are supposed to provide a reliable and risk-neutral pricing source for long-term obligations, like pensions. But this theory may no longer be sound." (Groom Law Group)
Another Question is Answered in the Distributions: Taxation and Planning Q&A Column
If a plan allows a participant to take a hardship withdrawal of profit-sharing contributions, elective deferrals, matching contributions, qualified matching contributions (QMACs), qualified nonelective contributions (QNECs) or 401(k) safe harbor contributions (together called "employer contributions"), must the contributions remain in the plan for a minimum period of time before the participant can withdraw the contributions on account of a hardship? (BenefitsLink.com)
Another Question is Answered in the Deferred Compensation and Rabbi Trusts Q&A Column
What does the May 16, 2001 deadline in IRS Notice 2000-56 mean for employers who have rabbi trusts? (BenefitsLink.com)
Shareholder-Optimal Design of Cash Balance Pension Plans (PDF)
Working paper, by Jeremy Gold. Excerpt: "In 1980 and 1981, Fischer Black and Irwin Tepper showed that shareholders would gain if corporate defined benefit pension assets were invested in taxable fixed income securities instead of equities. This paper extends this analysis into the cash balance plan arena, concluding that additional shareholder gains arise when plan liabilities mimic equities." (Pension Research Center)
Stocking the Roth
Excerpt: "If you can choose between a traditional IRA or a Roth IRA, which is the best tax-advantaged vehicle for higher-risk growth stocks? Andre Weisbrod, Pittsburgh-based planner and manager of the STAAR portfolio, recommends the Roth." (Pittsburgh Post-Gazette)
DOL Issues Three New Demutualization Rulings
Excerpt: "On February 15, 2001, the Department of Labor issued three opinions to Theodore Groom of Groom Law Group, Chartered on behalf of the Prudential Insurance Company of America in connection with Prudential's pending demutualization.... To date, no other insurer has obtained similar guidance from DOL." (Groom Law Group)
Retirement Investing: a New Approach (PDF)
Excerpt: "This paper proposes a new approach to investing for retirement that takes advantage of recent market innovations and advances in finance theory to improve the risk/reward opportunities available to individual investors ... [It introduces] three new elements: [1] Inflation-protected bonds to hedge a minimum standard of living after retirement. [2] It takes account of a person's willingness to postpone retirement. [3] It uses option 'ladders' to lever growth in retirement income." (Pension Research Center Working Paper by Zvi Bodie)
Plan Offered to 15% of Employees Was Top Hat Plan
Excerpt: "The Second Circuit Court of Appeals found that a bank's plan for its management and highly compensated employees was a 'top hat' plan, although available to more than 15% of the bank's employees." (Taxline)
Analysis: IRS Issues Guidance on Split-Dollar Life Insurance Arrangements
Excerpt: "On Jan. 9 the IRS issued Notice 2001-10, which provides the first general guidance on split-dollar life insurance arrangements (SDAs) in over three decades. SDAs are a popular way for employers to provide permanent life insurance, supplemental retirement income and estate tax planning opportunities to their employees. Notice 2001-10 proposes to change longstanding tax practices governing the income taxation of SDAs." (Thompson Publishing Group)
IRS Actions Impact Insurance Financing For Executive Compensation
Excerpt: "Employers that use life insurance policies to finance certain deferred compensation or other benefit liabilities should consider recent IRS actions, direct and indirect, that could affect the tax-efficiency of such products. Specifically, the IRS appears to be reconsidering the proper tax treatment of both split-dollar arrangements and non-leveraged corporate owned life insurance." (PricewaterhouseCoopers)
Graef Crystal: Citigroup's Weill Tops 'Fearsome Five'
Excerpt: "Ten days ago, I lambasted five chief executives of large, publicly traded Wall Street firms for earning a total of $154 million in 2000. Little did I know that three days later, I would discover that Citigroup Inc.'s Sanford Weill earned more than $215 million by my calculation." (Graef Crystal, on Bloomberg.com)
House of Representatives Votes to Repeal OSHA Ergonomics Rules
Excerpt: "Congress voted Wednesday to repeal new workplace rules aimed at curbing repetitive motion injuries, the first legislative accomplishment for business-friendly Republicans who won control of the White House and Congress last year." (New York Times; free registration required)
Newly Posted or Renewed Job Openings (Post Yours!)
| Client Relationship Manager | for Fidelity Investments in KY, OH |
| Employee Benefits Consultant | for Fidelity Investments in KY, OH |
| Sr. Manager - 401K Client Relationships | for Fidelity Investments in KY, OH |
| Project Manager - 401K Implementation | for Fidelity Investments in KY, OH |
| HR/Benefits Administrator (Contract Position) | for Visual Networks in MD |
| Human Resources Manager | for The American Funds Group in TX |
| Skills Trainer | for CitiStreet - A State Street & Citigroup Company in MA |
| 401(k)/DC Administrator | for Benetech, Inc. in GA |
| Client Services Manager | for Transamerica in CA |
| Manager, Benefits Strategy and Development | for United Airlines in IL |
| Retirement Plan & Trust Sales and Relationship Manager | for United/ Reliance Trust in FL |
Newly Posted Conferences (Post Yours!)
| Basic Law of Pensions, Welfare Plans, and Deferred Compensation | in MA on June 2, 2001 presented by ALI-ABA (American Law Institute-American Bar Association Committee on Continuing Professional Education) |
| Benefits & Compensation Symposium--2001 | in OH on June 4, 2001 presented by Manufacturers Alliance/MAPI |
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