If this message looks garbled to you or if the headlines in this message don't connect you to Web pages when you click on them, please request the "plain text" version of this newsletter ("Retirement Plans Edition") by emailing your request to publisher Dave Baker

The BenefitsLink Newsletter -
Retirement Plans Edition
BenefitsLink logo

April 25, 2001
Today's sponsor: Reish Luftman McDaniel & Reicher (click)


   Have questions about ... qualification failures, when and
   how to correct, a plan's right to participate in EPCRS?
   You'll want The Plan Correction Answer Book.  It's a
   comprehensive guide to the IRS remedial programs,
   written by attorneys Fred Reish and Bruce Ashton, of
   Reish Luftman McDaniel & Reicher.  Click on the link to
   order!


House Ways and Means Committee Approves H.R.10 for Vote by Full House
Excerpt: "The American Benefits Council today congratulates the House Ways and Means Committee on their approval of the Comprehensive Retirement Security and Pension Reform Act (H.R. 10) by a vote of 35 to 6." (American Benefits Council)

Outsourcing a 401(k) Plan
May 2001 issue. Excerpt: "Small and midsize companies may be particularly overwhelmed by myriad tasks: monitoring the performance and suitability of the investment opportunities offered to employees, keeping abreast of statutory and regulatory changes, running educational programs for participants, attending training sessions, lectures and seminars and administering plan recordkeeping and reporting." (Journal of Accountancy)

State Claims Involving Plan Loan Are Not Preempted by ERISA
Stankewich v. Vanguard Fiduciary Trust Co. (Conn. 2001). Excerpt: "[The plaintiff, a plan participant who had taken a loan from his employer's 401(k) plan,] sued the plan and Vanguard, the plan's trustee, for violations of the federal Truth-in-Lending Act and the Connecticut Unfair Trade Practices Act, and for breach of fiduciary duty under state law." (EBIA Weekly)

IRS Approves Another "Wrap" Arrangement Between Nonqualified Plan and 401(k) Plan
4/23/2001 item on Sal Tripodi's excellent web site. Excerpt: "In PLR 200116046, the IRS approves once again a 'wrap' arrangement between a nonqualified plan and 401(k) plan. Here's how it works. Before the beginning of a calendar year (e.g., by December 31, 2000, for the 2001 calendar year), an employee who is eligible for the nonqualified plan elects to defer compensation through salary reduction..." (TRI Pension Services)

Commentary: the Pension Game
Excerpt: "Now one of the lesser abuses (known as ''whipsaw'' to pension professionals) has been stopped by a decision of the US Court of Appeals for the Second Circuit in New York. A pension plan conversion by the Bank of Boston in the long ago winter of 1990 may come back to haunt the 'cash-balance' industry. Certainly it will cost cash-balance companies a good deal of money." (Boston Globe)

Portions of European Pensions Conference to Be Available Via Live Webcast
This Private Pensions Conference is the first meeting of the International Network of Pension Regulators and Supervisors, being held in Sofia, Bulgaria on April 23-26, 2001. More information is at http://www.oecdconference.org/ (Organization of Cooperation at the Development of the Economies, and the United States Agency for International Development)

Another Question is Answered in the Professional Liability Insurance Q&A Column
What is the difference between a fidelity bond and fiduciary liability insurance? (BenefitsLink.com)

CitiStreet Launches Internet-based 401(k) Service
Excerpt: "Success 401(k), www.success401k.com, is a full-featured, defined contribution plan utilizing the Internet to streamline processes for the plan sponsor and the participant. It is designed to enable independent, Internet-savvy business owners to implement their first benefits plans." (Business Wire via Excite News)

American Express Retirement Services Launches Online Retirement Tool; New Tool Guides Participants
Excerpt: "The Retirement Guidance Planner, pre-populated with each plan's unique investment option data, allows participants to view and change all of the assumptions critical to making educated decisions regarding their individual retirement income needs within the provisions of their plan. The tool automatically calculates and graphically illustrates their retirement income goals and whether or not they are on track." (PR Newswire, via Excite News)

Shareholders Uphold IBM Pension Plan
Excerpt: "An IBM shareholder proposal to reverse the company's new cash-based retirement plan was defeated for a second straight year after losing support from two consulting agencies." (Bloomberg News, via the Atlanta Journal-Constitution)

Federal Thrift Board Proposes To Amend Rules On Correction of Administrative Errors
The Federal Retirement Thrift Investment Board has issued proposed regulations that would amend its existing regulations on the correction of administrative errors to incorporate changes required by the Federal Erroneous Retirement Coverage Corrections Act. The proposed regulations appeared in the April 19 Federal Register. (SpencerNet)

Pittsburgh City Workers Ask For Bigger Pension Benefits
Excerpt: "A rowdy, standing-room-only crowd of city employees rallied at a Pittsburgh City Council hearing last night for an increase in their pension benefits, and were told by most council members they would get what they wanted.... Currently, when most municipal employees reach age 65, their pension payments are cut by an amount equal to 50 percent of their Social Security benefits. Legislation ... would erase that provision for those retiring next year and thereafter." (Pittsburgh Post-Gazette)

Differences in Senate Pension Reform Bill, Compared to Portman-Cardin Bill
Excerpt: "The legislation increases retirement savings opportunities, expands portability, and eliminates cumbersome rules. The two versions of the legislation are similar, though not identical. The Senate bill, for example, provides a tax credit for low- and middle-income savers that is not in the House version. In addition, the respective effective dates in the two versions vary." (National Council on Teacher Retirement)

JCT Description of Portman-Cardin Bill Being Marked Up in House Committee April 25, 2001 (PDF)
Entitled 'Description of the Chairman's Amendment in the Nature of a Substitute To H.R. 10, The 'Comprehensive Retirement Security And Pension Reform Act of 2001'." (Joint Committee on Taxation)

Another Side-by-Side Comparison of House, Senate Pension Reform Bills Introduced Last Year (2000) (PDF)
28 pages. Summary of retirement savings provisions included in H.R. 1102, as passed by the House of Representatives on July 19, 2000 and reported by the Senate Finance Committee on September 7, 2000. (Financial Executives International)

Commentary: Retirement Plan Changes Needed
Excerpt: "... Americans are ill-prepared for either a downturn in the economy or for future events like retirement.... Less than 20 percent of small businesses even offer any kind of plan. There is, however, a legislative solution that the New England Council has been advocating: the Comprehensive Retirement Security and Pension Reform Act." (James T. Brett and Peter Meade in the Boston Globe)

Tax Report Recommends Streamlining of Internal Revenue Code
Excerpt: "A new congressional report on the complexity of America's tax code recommends eliminating or streamlining dozens of taxes and abolishing numerous limitations on tax breaks based on income.... The recommendations for individual taxpayers include ... Ending the income limits on eligibility to make deductible contributions to IRAs, Roth IRA contributions and conversions of traditional IRAs to Roth IRAs." (Associated Press, via Yahoo! News)

Retirement Savings Bill Advancing in House
Excerpt: "A bill allowing bigger contributions to tax-favored retirement accounts will likely advance this week in the U.S. House of Representatives as two key committees take up the popular legislation. The tax-writing House Ways and Means Committee on Wednesday is expected to easily pass the legislation that will raise the limit on contributions to tax-favored Individual Retirement Accounts to $5,000 from $2,000 over three years. The limit on contributions then would be indexed to inflation." (Reuters via Yahoo! News)

IRS Official Comments on GUST Determination Letter Request Process
Excerpt: "Ann L. Hetrick, Subject Matter Expert and Resident Lead Instructor for the Learning and Education section of the IRS Tax Exempt and Government Entities Division (TE / GE) Institute in Baltimore, MD, discussed the determination letter process for continued qualification of employee benefits plans, including GUST requirements, at a meeting of the Washington, DC chapter of the Worldwide Employee Benefits Network (WEB) on April 18, 2001." (CCH)

U.S. Investors Said Uninformed On Retirement
Excerpt: "U.S. investors lack enough knowledge to manage their 401(k) retirement funds effectively and are overconfident about the prospects of their investments, according to results of a survey released Tuesday." (Reuters via Excite News)

401(k) May Lay Smaller Nest Egg Than Pension
Excerpt: "How much money could your nest egg lose because it was managed in a conventional 401(k) plan rather than managed like a traditional pension plan? Barclays Global Investors asks that rude question. In an article subtitled 'Why DC Plans Underperform DB Plans, and How to Fix Them,' three writers lay down the toughest challenge to 401(k) business-as-usual I've seen." (Scott Burns)

Parents Score Low As Financial Advisers
Excerpt: "When it comes to teaching their kids about how to manage money, it's a case of 'Do as I say, not as I do' with many parents. Personal finance and investment experts said parents are missing the mark as financial educators for their kids -- a role they can ill afford to ignore, considering the extent to which their kids rely on them for the basic foundations of personal finance education." (The Dallas Morning News)

(Following items also appear in Welfare Plans Edition)


Stop Notice and Payment Bond Statutes Are Not Preempted by ERISA
Southern California IBEW-NECA Trust Funds v. Standard Industrial Elec. Co. (9th Cir. 2001). Excerpt: "The subcontractor entered into a collective bargaining agreement that required it to make contributions to several multiemployer employee benefit plans, but then it failed to make all of the contributions. The benefit plans asserted claims in excess of $220,000 against both bonds and served a 'stop notice' on the school district." (EBIA Weekly)

United States v. Cleveland Indians Baseball Co.
Supreme Court opinion, handed down April 17, 2001. Excerpt: "Back wages are subject to FICA and FUTA taxes by reference to the year the wages are in fact paid." (FindLaw.com)

Stock Options Are Still An Option
Excerpt: "There is no let-up in the use of stock options to lure top talent, even though plunging stock prices at many technology companies have made them less appealing. A survey of 113 public technology companies found that 84 percent continue to offer employees stock options as part of their overall compensation packages, compared to 62 percent of companies in other industries." (CFO.com)

Salomon Faces Complaints Over Options at WorldCom
Excerpt: "More than a dozen current or former employees of WorldCom are accusing brokers at Salomon Smith Barney, the firm hired to oversee the company's employee stock option program, of pressing them into a risky investment strategy that left them with significant losses and onerous tax bills when WorldCom shares fell last year." (New York Times; free registration required)




Newly Posted or Renewed Job Openings (Post Yours!)
401(K) Administrator/Consultant for Pension Performance, Inc.
in IL
Pension Administrator for The Benefits Consulting Group
in IL
Client Service Manager/Consultant for Aon Consulting, Inc.
in MD
Compliance Specialist for INVESCO Retirement, Inc.
in GA
Sr. 401(k) Administrator for A Non-outsourcing Environment!
in NC
Senior Software Engineer for Lynchval Systems Worldwide Inc.
in VA
Pension Actuary Review or Consulting Business Development for Play-It-Your-Way Pension Services Firm!!!
in CA
Manager of Plan Administration for Benetech Pension Services, Inc.
in GA
Project Manager, Institutional Analysis (Finance) for Financial Engines
in CA
ERISA Attorney for EBIA
in WA



Newly Posted Conferences (Post Yours!)
Weathering the Economy in GA on August 24, 2001
presented by AH Enterprises, Inc.



Newly Posted Press Releases
American Benefits Council hails H.R. 10 passage by Ways and Means Committee (American Benefits Council)

Subscribe to the Welfare Plans Edition, too (click)
Copyright 2001 BenefitsLink.com, Inc.

You may freely distribute this email newsletter in whole.

Click here to learn how your company can sponsor a future issue!

BenefitsLink is a registered trademark of BenefitsLink.com, Inc., published by Dave Baker with much help from Mary Hall and lots of friends.

We're proud of our privacy policy.

To subscribe (free): visit https://benefitslink.com/newsletter - or the person desiring to subscribe can send an email to BLretirement@add.mb00.net

We have an online archive of prior issues at
https://benefitslink.com/newsletters/