| The BenefitsLink Newsletter - Retirement Plans Edition |  |
March 27 and 28, 2001
Today's sponsor: Technical Answer Group, Inc. (click)
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Investment Advisor Says 401(k)s Are Far More Dangerous Than IRAs
Excerpt: "Like most debit card users, 401(k) investors have unwittingly exposed themselves to problems IRA investors will never encounter. These additional risks can be broken into four categories: investment risk, record-keeping risk, employer-business risk and regulatory risk." (The Benchmark Companies)
In New York, Pension Assets Drop in Value May Mean New Government Contributions Needed
Excerpt: "With the stock market deflating, the state comptroller, H. Carl McCall, warned today that the state, county and municipal governments might have to resume contributing to pension benefits for their employees. The state suspended government contributions three years ago as the boom on Wall Street pushed state pension funds to unheard-of heights. But Mr. McCall said those giddy times were over." (New York Times; free registration required)
Another Question is Answered in the Who's the Employer Q&A Column
If family members own separate restaurants, can they cover their employees under the same benefit plan? (BenefitsLink.com)
401(K) Deal Is Reached; First Union Would Pay $26 Million
Excerpt: "[T]he plaintiffs said they believed the settlement 'represents an excellent result' in that 'many of the issues in these cases are groundbreaking and challenge practices common to the 401(k) plans of many financial service companies.' Everette G. Allen Jr., one of the plaintiffs' attorneys, said the two suits are quite different, although both allege self-dealing by First Union." (Richmond Times-Dispatch)
Thrift Savings Plan Makes New Investment Options Official
Excerpt: "Federal employees will have two new Thrift Savings Plan investment options, under rule changes published in the Federal Register Monday. In addition, new federal employees will be able to begin participating in the TSP immediately and investors will be able to roll over some outside investments into their TSP accounts." (GovExec.com)
Roth IRA, or No Roth IRA? That Is the Question!
Excerpt: "Should I choose a Roth IRA or non-deductible IRA? A Roth IRA will always be a better choice than a non-deductible IRA (an IRA that is funded with after-tax dollars). Contributions in both accounts grow on a non-taxed basis, but the earnings distributed from a non-deductible IRA are taxable at regular income rates, compared to the tax-free distributions of a Roth IRA." (Investorama.com)
DOL Sues Minnesota Automobile Dealership and Executives Over $240,500 In Profit Sharing Plan Loans
Excerpt: "According to the lawsuit, the profit sharing plan made a series of [now-defaulted] unsecured loans totaling $205,000 to Johnson Motor Company from June 1986 to October 1987. The plan made the loans without executing loan agreements and failed to report the loans on the Form 5500 annual reports required to be filed with the Labor Department." (U.S. Department of Labor press release)
The Economics of Early Retirement (PDF)
From pensions-research.org - Excerpt: "The trend in most of the industrialized counties is in the direction of decreasing labor market participation of older workers. The steady withdrawal of workers from the workforce at younger age suggest that retirement income is gradually increasing and/or that older workers are increasingly being forced out of the labor force.... This paper identifies and discusses alternative theories on why people retire early." (Tryggvi Thor Herbertsson, published by Centre for Pensions and Social Insurance)
Southern California Bedding Workers on Strike for Retirement Savings Plan
Excerpt: "In a sign of shifting priorities for a maturing immigrant work force, about 400 production workers at a Vernon bedding manufacturer have held a strike line for three weeks over their demands for a retirement savings plan. The strikers at Hollander Home Fashions are primarily Spanish-speaking immigrants, and many have more than a decade's experience [at work] ... They earn about $7 to $12 per hour and have a fully paid individual health plan." (Los Angeles Times)
Golden Years Await Golfers, Thanks to PGA Retirement Plan
Excerpt: "In a series of stories published in Golfweek, the PGA Tour's pension fund was shown to be an incredible source of motivation for players to keep playing and make cuts. Some of the highlights: If a player were to average at least 130th on the money list for a 17-year career, his pension fund would total $34.1 million." (Boston Globe)
Commentator: I May Never Retire
Excerpt: "When I considered how I should invest my 401 K money, I completely bought into the advice you hear from most financial advisers that a young person should direct most of their retirement money into funds that promise good returns over the long haul. In other words, the stock market. Lately I have begun to question the wisdom of that strategy." (Knight Ridder/Tribune)
How Bad Is It? Sizing the Damage to 401k Plan Investors
Excerpt: "Pretty bad. One reason is that most people have a lot more money to lose than they had three or five years ago. Another reason: the current decline is the first significant drop in many years. Indeed, you have to go back more than 25 years to find a decline steeper than the last 12 months." (Scott Burns)
Mutual Fund Industry Has Shift in Advertising
Excerpt: "A year ago, personal finance magazines were filled with advertisements touting larger-than-life mutual fund returns with hints of even stronger profits to come. That exuberance has been toned down as the stock market has fallen." (Associated Press, via Excite News)
Sinking Stocks Scramble Nest Eggs
Excerpt: "Over the past decade, there has been a fundamental shift away from traditional pensions, which offer retirees a guaranteed lifetime stream of income. Instead, companies have turned to tax-deferred retirement savings plans, such as a 401(k) plan or 403(b) and 457 plans, which are similar to 401(k)s but designed for government workers and employees at non-profits. These plans put the burden on workers to contribute to them and select investment options." (USA Today)
UK Firms Face Upheaval In Cheap Pension Revolution
Excerpt: "'Will you still need me, will you still feed me, When I'm sixty four?' runs one of The Beatles' popular hit songs. The question posed by the British pop group is one the UK government wants people to think hard about as it pushes more of its rapidly greying population to save for old age instead of relying on the state to pay for retirement." (Reuters via Yahoo! News)
U.S. Supreme Court Holds That ERISA Preempts State Law Revoking Beneficiary Designation Upon Divorce
Egelhoff v. Egelhoff, 2001 U.S. LEXIS 2458 (2001). Excerpt: "This decision will be applauded by plan administrators and their attorneys because it allows them to rely on plan documents to determine beneficiary status without having to determine what effect state law might have." (Employee Benefits Institute of America)
Lear Execs Accept Bonuses in Restricted Stock Instead of Cash
Excerpt: "Automotive supplier Lear Corp. said its top 100 executives deferred more than $10 million in salary and bonuses in 2000. The executives accepted restricted stock awards in lieu of cash bonuses in a move to more closely link their pay to the performance of the company and its stock price ..." (The Detroit News)
Executives Win Rewards Despite Stock's Descent
Excerpt: "'When you look at the year that they had now - they lost $52 million and the stock price is down - what is the justification for paying someone a bonus?' [investment advisor Bradley] McCurtain asked. 'What's the justification for handing out stock options? What are those people doing for you?'" (BenefitsLink)
Market Place: Companies Start to Warm Up to Restricted Stock
Excerpt: "Restricted stock is finally getting some respect. Long viewed as a freebie thrown at senior executives who were already amply paid, it is now enjoying a comeback. As companies and investors grow disillusioned with the unbridled use of stock options, companies are looking for alternatives to tie the fortunes of senior management to those of shareholders. Even some large investors are rethinking their traditional opposition." (New York Times; free registration required)
Treasury Secretary Will Sell Alcoa Stock
Excerpt: "In an abrupt reversal, Treasury Secretary Paul H. O'Neill said yesterday that he would sell about $100 million worth of Alcoa Inc. stock and options that he had planned to keep." (New York Times; free registration required)
Newly Posted or Renewed Job Openings (Post Yours!)
| Retirement Sales District Manager | for ADP, Inc. in DC, MD, VA |
| Pension Compliance Specialist | for CNA TRUST in CA |
| Retirement Specialists | for KeyBank in OH |
| Asset Unitization Manager | for Reliance Trust Company in GA |
| Strategic Planning Leader | for Transamerica in CA |
| Pension Administrator | for Means & Associates, LLC in CA |
| Insurance/Employee Benefits Sales Executive | for CSI in PA |
| Client Services Consultant | for American United Life Insurance Company in MD, TX |
| Pension Plan Representative | for Lincoln Trust Company, a leader in the retirement plan industry in CO |
| Employee Benefits Attorney | for Morgan, Lewis & Bockius LLP in DC |
Newly Posted Press Releases
| Innovative Perk Increases Employee Satisfaction In More Ways Than One! (Meals by Bonni) |
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