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

May 29, 2001
Today's sponsor: Search401k.com (click)


   Know a company that needs a 401(k) review? Search401k
   guides you through customized product expense and return
   comparisons online and in minutes! Request proposals
   from more than 80 of the leading retirement plan
   products, and check out the Search401k Rating for more
   information about product service! See how easy the
   401(k) search and selection process can be! Visit us at:
   www.search401k.com

Just-passed Tax Bill Affects Retirement
Excerpt: "In general, $10,500 is the most you may set aside from your pay this year, on a pre-tax basis, to a 401(k) plan, a 403(b) plan or a salary-reduction type of Simplified Employee Pension (SAR-SEP). Under the new tax bill, the dollar limit will jump to $11,000 next year, $12,000 in 2003, $13,000 in 2004, $14,000 in 2005 and $15,000 in 2006. (After that, the annual limit may rise with inflation, but only in increments of $500 a year.)" (Neil Downing in the Providence Journal)

PSCA Publishes Summary of Pension and IRA Provisions in Conference Agreement on HR 1836 (PDF)
5 pages; May 27, 2001 (does not include discussion of provisions specific to section 403, 457, or government plans). Prepared by Edward Ferrigno, Vice President for Governmental Affairs. Keyed to the bill's section numbers; nice! (Profit Sharing/401(k) Council of America)

CCH Tax Briefing on the Tax Relief Reconciliation Act of 2001
Excerpt: "By a 240-154 House vote and a comfortable Senate majority of 58-33, the Economic Growth and Tax Relief Reconciliation Act of 2001 (the Tax Relief Act) -- a huge, once-in-a-decade tax cut package that contains all this, and more -- passed Congress on May 26th and now heads to President Bush who stated he will sign it after the Memorial Day congressional recess." (CCH)

Sal Tripodi's Summary of Principal Provisions of the Newly Passed Tax Bill
Excerpt: "The Economic Growth and Tax Relief Reconciliation Act of 2001 (H.R. 1836) (EGTRRA 2001) passed both houses of Congress on May 26, 2001. The vote was 240 to 154 in the House, and 58 to 33 in the Senate. President Bush is expected to sign the legislation.... Here is a brief run-down of the most significant pension provisions." (TRI Pension Services)

Pension Reform Provisions of the Economic Growth & Tax Relief Reconciliation Act of 2001
Excerpt: "The following is a quick listing of the more significant pension reform changes contained in the pension reform bill, organized by type." (PLANSPONSOR.com)

Text and Joint Explanatory Statement - H.R. 1836 - Economic Growth and Tax Relief Reconciliation Act
A summary of the legislation (which includes pension reform provisions), the text of the legislation, the Joint Explanatory Statement, is provided courtesy of the House Committee on Rules. (House Committee on Rules)

The 403(b) Market after Tax Reform (PDF)
May 26, 2001. Excerpt: "The 403(b) market will change greatly in the months following passage of the Economic Growth and Tax Relief Reconciliation Act of 2001. This new tax law opens the door to major new players, large securities firms in particular, because it increases the inducement and reduces the costs and risks involved in serving the 403(b) market. This raises important questions, both for companies entering the market and for those already established in it ..." (Still River Retirement Planning Software, Inc.)

Summary of Conference Agreement's Provisions for the Tax Bill (PDF)
JCX-50-01, May 26, 2001. Excerpt: "This document, prepared by the staff of the Joint Committee on Taxation, contains a summary of the provisions contained in the conference agreement for H.R. 1836, the Economic Growth and Tax Relief Reconciliation Act of 2001, as approved by the conference committee on May 25, 2001." (Joint Committee on Taxation)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
Our 12 year old son has a serious mental impairment. It is doubtful that he will ever be able to support himself as an adult. Will be be eligible for some type of benefit from Railroad Retirement? (BenefitsLink.com)

Another Question is Answered in the Who's the Employer Q&A Column
Leased employees are not required to be treated as regular employees for purposes of a self-insured medical expense reimbursement plan. With regard to counting service hours in a "lease to own" situation, does that mean that service as a leased employee is not counted towards eligibility in a self-insured medical expense reimbursement plan, once the leased employee becomes a common-law employee? (BenefitsLink.com)

Another Question is Answered in the Who's the Employer Q&A Column
At the beginning of plan year 2000, Corporations X and Y are 100% owned by Individual A. In June of 2000, 50% of Corporation X is transferred to Individual B. Must X and Y be treated and tested as a controlled group for plan purposes for the entire 2000 plan year, or only for the portion of the year when the common ownership interest was high enough? (BenefitsLink.com)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
I'm 45 and I have 20 years of rail credits. I plan to leave the railroad very soon so that I can become self-employed. Can I ask the local Railroad Retirement Board office for help in projecting my future retirement benefits? (BenefitsLink.com)

The New Proposed Minimum Distribution Regs: the Answer, or More Questions?
Published May 27, 2001; probably will not be archived. Excerpt: "There still exist problems and concerns, however; some that linger from the old IRS rules and directives, and some born of the new provisions. Although IRS officials have stated that the new provisions are intended to eliminate traps for the unwary, the proposed regulations arrive with their own pitfalls." (CCH)

Tri-Agency Coalition Urges Florida Governor to Oppose Investments in Tobacco Stocks
Excerpt: "The Florida Tri-Agency Coalition on Smoking OR Health is urging Governor Bush and the other trustees of the State Board of Administration (SBA) to maintain Florida's current policy of not investing in tobacco stocks. Members of the American Cancer Society, American Heart Association and American Lung Association plan to testify against reinvesting in tobacco stocks at the May 30, 2001, meeting of the State Board of Administration in Tallahassee ..." (PRNewswire via Yahoo! Finance)

Roth Holders Hurt by Slump Can Switch -- and Switch Back
Excerpt: "The stock market has been doing much better lately, but it remains a long way from its highs of last year. That's not a happy circumstance for many investors, but for those who converted their traditional individual retirement accounts to Roth IRAs last year, it may be an opportunity." (Washington Post)

Congress-Passed Tax Bill Expands Limits on Retirement Savings, Gradually
Excerpt: "The tax cut bill that Congress passed on Saturday provides several new and expanded benefits for retirement savings. People, especially those age 50 and older, will be able to save significantly more in tax-deferred retirement accounts. Some of the working poor will get a tax credit to help them save for retirement, but only for five years." (New York Times; free registration required)

Pension Reform Seen Only Helping Brokers, Wealthy
Excerpt: "Wall Street is pushing for legislation to increase the maximum amounts people can contribute to their tax-free retirement plans, saying this would benefit everyone and reverse the trend among Americans to spend more than they have. But economists are more skeptical." (Reuters via Yahoo! News)

Congress Approves Sweeping Bush Tax Cuts
Excerpt: "With the Senate casting its last vote before shifting to Democratic control, Congress on Saturday gave final approval to a sweeping $1.35 trillion tax cut package that is President Bush's top priority." (Reuters, via Yahoo! News)

Estimated Budget Effects of the Conference Agreement on H.R. 1836, the Tax Bill (PDF)
JCX-51-01, May 26, 2001. For Fiscal Years 2001 - 2011. (Joint Committee on Taxation)

Tax Cuts Will Take Time to Become Effective
Excerpt: "Americans will reap the benefits of the tax cut as early as this summer when the Treasury Department begins sending out refund checks. For many, though, the big rewards from the tax package are years in the future." (Associated Press, via Excite News)

Opinion: Tax Cut Is Swift Boost, But Long-Term Debate
Excerpt: "The tax cut will give an immediate boost to consumer spending, but longer term, it is too small to have a significant effect on the economy. However, as a policy choice--the Bush administration choosing to return surplus revenue to taxpayers in cash rather than in government programs--this tax cut marks the beginning of a decade-long debate over ways to run the U.S. economy." (Los Angeles Times)

Testimony At Recent Hearing on Protecting Privacy and Preventing Misuse of Social Security Numbers
Includes the testimony of Paula LeRoy, President, Pension Benefit Information Services, Tiburon, California. Excerpt: "Our pension plan clients would be severely impacted by the enactment of legislation that would restrict the purchase and sale of SSNs for matching, search, and retrieval purposes. Such legislative restrictions would have serious consequences for millions of Americans who have earned benefits for their years of employment." (U.S. House of Representatives, Committee on Ways and Means, Subcommittee on Social Security)

Are You Troubled By Social Insecurity?
Excerpt: "Is the system going broke? Can it be fixed? The answer to both questions is maybe. So, in the meantime, keep working on your personal nest egg." (Business Week)

Baby Steps to Retirement
Excerpt: "Previous reports on retirement generally focused on those who were already retired, while [the latest survey on retirement from AARP, entitled Beyond 50,] included those nearing retirement but still working.... Regardless of your age, it is never too early to begin thinking about retirement. Nor is it too late." (Motley Fool via Yahoo.com)

Opinion: Privatizing Social Security Would Be An Unwise Move
Excerpt: "Every American must understand that President Bush's appointees to the new Social Security reform commission are predisposed to endorse his campaign promise to create private retirement accounts funded by our Social Security taxes. Senate Minority Leader Tom Daschle compared the commission members to oil company executives advising whether or not to drill for oil in the Arctic National Wildlife Refuge." (Rep. Jim McDermott in the Seattle Post-Intelligencer)

Not Constructive Receipt: Employees Decline One-Time Chance to Swap Lower Benefits for Higher Pay
Priv. Ltr. Rul. 200120024 (May 18, 2001). Excerpt: "A recent IRS Private Letter Ruling found that a group of employees who were given a one-time election between a high-level benefits package, on the one hand, and a low-level benefits package plus an increase in compensation, on the other hand, were not found to have constructive receipt of income." (EBIA Weekly)

(Following items also appear in Welfare Plans Edition)


DOL Gathers Together Online Benefits Materials for Persons Losing Jobs
Excerpt: "The following publications provide helpful information for employees who may be facing job loss ..." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Welcome to new BenefitsLink advertiser Lynchval Systems Worldwide Inc.
'Lynchval combines new technology advantages with over 20 years of design experience earned from supporting some of the most complex plans in the world. Our leased PC systems support single-employer qualified and non-qualified plans, public plans, multi-employer/union and international pension plans. Lease includes initial training, ongoing training through user group meetings, support via telephone conference and remote/host system dial-in, documentation."

Opinion: Ameritrade's Moglia Has Incentives to Sell Out
Excerpt: "... Moglia's employment agreement tells a different story, one that suggests strongly he will concentrate less on the Omaha, Nebraska-based discount brokerage's technology and more on hawking the company to a buyer willing to pay a substantial premium." (Graef Crystal, on Bloomberg.com)

The Principal Financial Group Files Plan of Demutualization
Press release. Excerpt: "The Principal Financial Group® ... announced today it has filed its plan of demutualization with the Insurance Commissioner of the State of Iowa. The plan details the process for converting Principal Mutual Holding Company from a mutual insurance holding company to a stock company, including distribution to eligible policyholders of 100 percent of the pre-IPO value of the company." (Business Week)




Newly Posted or Renewed Job Openings (Post Yours!)
Director of Compliance for Fidelity Investments
in UT
Employee Benefit Consultant for Independent Benefit Services
in MD
Summary Plan Description Manager for Human Capital Management, Inc.
in NY
401(k) DC Plan Administrator for Printz & Associates
in CA
Contract Analyst for J Smith Lanier/Schultz Rowson
in GA



Newly Posted Press Releases
Pension Provisions in HR 1836 Will Significantly Expand Defined Contribution System (Profit Sharing/401(k) Council of America (PSCA))

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/