| The BenefitsLink Newsletter - Retirement Plans Edition |  |
April 3, 2001
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Market Woes Trigger Activity by 401k Participants
Excerpt: "Participants in 401(k) plans responded to recent market declines with increased investment transfer activity in March, according to the Hewitt 401(k) Index, which tracks the daily transfer activity of nearly 1.5 million U.S. employees with $80 billion collectively in assets." (Hewitt Associates press release, via Yahoo! Finance)
IRS Publishes "Frequently Asked Questions Regarding Tax Sheltered Annuities"
Excerpt: "Our school system has a TSA for full-time teachers and Administrative Personnel. It is just too much administrative paperwork to extend coverage to part-time employees and substitute teachers. They wouldn't participate anyway, since they don't have a full-time salary. Do we have to cover part-time and substitute teachers in our salary deferral TSA?" (Internal Revenue Service)
Another Question is Answered in the Correcting Plan Defects Q&A Column
This is a follow-up to Q&A-148, where we addressed the following question from one of our readers, "An employer implements a 401(k) plan effective January 1, 2000, and commences payroll deductions as of the first pay period of that year. Due to an oversight, the plan documents were not signed until January 2001, and employee deferrals were accumulated for the first 4 months of 2000 before they were remitted to the plan. What are the consequences in this case?" (BenefitsLink.com)
Supreme Court Declines Certiorari in 11th Circuit Cash Balance Plan Case
Excerpt: "The U.S. Supreme Court has declined to hear a case regarding cash balance plans, leaving in place a verdict that could mean unexpected costs for employers." (PLANSPONSOR.com; free registration required)
IRS Publications Revised to Account for Proposed Minimum Required Distribution Regulations
Excerpt: "The IRS has supplemented Publications 575, 'Pension and Annuity Income,' and 590, 'Individual Retirement Arrangements,' to account for the new MRD rules (Ann. 2001-23, 2001-10 IRB). For 2001, a taxpayer's MRD can be figured using either these new rules or the old rules explained in these two publications. The IRS notes that for most taxpayers, the new rules will result in lower distributions." (Practitioners Publishing Company)
Would Raising IRA Limits Bolster Retirement Security For Lower? and Middle-Income Families? (PDF)
Excerpt: "An analysis prepared last year by the Office of Tax Analysis at the Treasury Department found that only four percent of all taxpayers who were eligible for conventional IRAs in 1995 were at the $2,000 contribution limit. Those at the limit almost certainly are among the most affluent of the taxpayers eligible for IRAs." (Center on Budget and Policy Priorities)
Another Question is Answered in the Who's the Employer Q&A Column
Corporation X owns 100% of Corporation Y. Corporation X is owned in equal proportions by two partnerships, Partnership 1 and Partnership 2. Partnership 1 is owned by Mike (2%) and Mrs. Mike (98%). Partnership 2 is owned by Dave (2%) and Mrs. Dave (98%). Each partnership also owns 50% of Corporation Z. The question is, do Corporation Y and Corporation Z constitute a brother-sister controlled group? (BenefitsLink.com)
Online List of IRS-Sponsored Benefits Conferences
Just added to the IRS web site: "EP Benefits Conferences Calendar - 2001" (Internal Revenue Service)
Yes, the Chief Can Own Too Much Stock in the Company
Excerpt: "A recent study by John E. Core and David F. Larcker, accounting professors at the Wharton School of the University of Pennsylvania, concludes that too much pay can be counterproductive." (New York Times; free registration required)
Little to Risk, Much to Gain
Excerpt: "How could corporate executives be persuaded to own large amounts of stock in their own company, rather than mainly stock options? ... [O]ne in five large companies now uses it: reload options. They encourage managers to exercise their options by giving them a new one every time they turn one in. In effect, they let executives minimize risk and maximize gains." (New York Times; free registration required)
The Letter, if Not the Spirit, on Options Pricing
Excerpt: "In 1999, the practice of repricing stock options died. Last year, it was reborn. More than two years ago, the Financial Accounting Standards Board ruled that companies that reprice stock options -- canceling old ones and replacing them with cheaper ones, following a stock drop -- must take an earnings charge as a result. The decision all but ended a strategy that more than 300 companies had used in 1998, according to the Investor Responsibility Research Center." (New York Times; free registration required)
Why CFOs Should Get Risk Management and HR To Play Nice With Each Other
Excerpt: "Suddenly, benefit plans have had to become seriously competitive. The ability of benefits to lure workers is at least as crucial to the survival of many companies as is curbing benefit costs. In the current labor market, HR and risk managers can no longer do their jobs alone. HR people must come to the financing table and talk intelligently about matters like stock options as a retention tool. Risk managers now must factor the human appeal of benefits into their cost calculations." (CFO.com)
Options, Get Your New Options
Excerpt: "Technology companies -- which richly rewarded employees with stock options in 1999 and 2000 -- are now finding themselves in a bind. A huge portion of the options they doled out over the last few years are now underwater, meaning they're worth less than the current trading price of the stock. As a result, companies are under pressure to grant new stock options to keep the employees they're not laying off from jumping ship." (Wired.com)
Newly Posted or Renewed Job Openings (Post Yours!)
| Senior Compliance Specialist | for Putnam Investments in MA |
| Implementation Specialist | for Towers Perrin - Benefit Administration Services in NJ, PA |
| Implementation Project Manager | for INVESCO Retirement, Inc. in GA, NC |
| Compensation Analyst | for The TJX Companies, Inc. in MA |
| Retirement Plans Account Administrator | for Invesmart of Boston in MA |
Newly Posted Conferences (Post Yours!)
| Internal Revenue Service Employee Benefits Conference | in MD on May 30, 2001 presented by Employee Benefits Conference, Inc. |
Newly Posted Press Releases
| New York City Companies Embrace the Benefits of Chess League (Chess Express Ratings, Inc.) |
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