| The BenefitsLink Newsletter - Retirement Plans Edition |  |
June 21, 2001
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EGTRRA Makes Significant Changes to Retirements Plans and IRAs (PDF)
14-page summary by CIGNA Retirement & Investment Services. (CIGNA)
Summary of Retirement-Related Provisions of EGTRRA (PDF)
16 pages; nice charts of phased-in limit increases. Excerpt: "Although a number of these less well-publicized provisions of the Act offer significant opportunities to employers to enhance employee participation and retention, maximize deductions and other tax benefits of plan sponsorship and simplify plan administration, many impose potentially substantial and perhaps unexpected burdens on plan sponsors and administrators." (Kirkpatrick & Lockhart LLP)
New Rules Allow Higher 401(k) Contributions, More Portability
Excerpt: "Under the new rules, the individual annual pretax contribution limit for 401(k) plans will rise to $11,000 starting in 2002. That limit will increase $1,000 a year over the next four years and in 2006 top out at $15,000." (mPower Cafe)
Retirees Sue Washington State: Pension Fund Surplus Is Ours
Excerpt: "Retired police officers and firefighters went to court yesterday to try to stop lawmakers from spending any of a $1 billion surplus in their pension fund. The lawsuit is a pre-emptive strike because the Legislature has not yet approved taking the surplus from the Law Enforcement Officers' and Fire Fighters' Retirement System." (The Seattle Times)
Rush of Public Employee Retirements Expected in Wisconsin After High Court Ruling
Excerpt: "School districts, cities and counties throughout Wisconsin are bracing for a wave of retirements over the next year in the wake of a state Supreme Court ruling that upheld significant improvements in the public employee pension fund." (The Milwaukee Journal-Sentinel)
Third Circuit Examines Standard of Review In Cases Involving Benefits Under Top-Hat Plan
A deferential standard of judicial review did not apply to the interpretation by a top-hat plan administrator regarding the forms of compensation to be taken into account in determining the amount of a participant's retirement benefits. (SpencerNet)
Washington State Sued Over Bid to Dip Into Government Employees' Pension Fund
Excerpt: "Retired police officers and firefighters filed a lawsuit yesterday hoping to stamp out the Legislature's recent state budget deal, which would balance the budget with surplus money from a pension fund." (MSNBC.com)
Employee Ownership Update for June 21, 2001
NCEO executive director Corey Rosen reports that the International Accounting Standards Board favors a standard requiring companies to show the cost of options as a charge against current income; an unpublished PLR allows a transitory distribution to an IRA in an S corporation ESOP; a new Irish law provides incentives for broad-based stock options; and stock options qualified under requirements of French law are now eligible for improved tax treatment. (National Center for Employee Ownership)
Veterans Complain of Ability of Ex-Spouses to Attach Military Pensions
Excerpt: "Retired military members are waging a battle to save their pensions from possible attack during divorce proceedings. Some veterans say that the enemy has become their ex-spouses, the divorce courts and a law that treats their earnings as property, the Uniformed Services Former Spouses Protection Act.... Family law attorneys say that the protection act is a good one.... Veterans are currently organizing online at the Web site www.militarybetrayed.com." (WJXT via Yahoo! News)
Assessing Your Client's Risk Tolerance
Excerpt: "The successful adviser will get to know his clients so he can understand them better and can recommend appropriate investments. Learning your clients' risk tolerance is a key factor in delivering investment advice your clients will accept and benefit from." (Practitioners Publishing Company)
Mutual Funds and the Retirement Market 2000 (PDF)
Excerpt: "Retirement assets invested in mutual funds through Individual Retirement Accounts (IRAs) and defined contribution plans declined 2 percent in 2000 to $2.4 trillion, reflecting weakness in U.S. and foreign equity markets. The negative market performance offset an estimated $115 billion net inflow of new cash to mutual funds held in retirement accounts." (Investment Company Institute)
Swiss Bank Purchases Canada's Largest Privately Owned Pension Fund Management Firm
Excerpt: "UBS AG plans to buy the pension management arm of Royal Bank of Canada for up to C$350 million in a further expansion of its North American reach, Switzerland's largest bank said on Wednesday. The deal, which works out at $230 million, is small compared with UBS's $11.8 billion acquisition of U.S. broker PaineWebber ... [A]s Canada's biggest privately owned pension fund manager, [RT Capital] boasts about 700 institutional clients including top names such as Air Canada and Alcan Inc." (Reuters via Excite News)
Japan Set to Pass 401(k) Bill Friday
Excerpt: "Japan's parliament is expected to enact a long-awaited law on Friday that will introduce a pension scheme modeled after the popular U.S. 401(K) retirement savings plan. The law will for the first time allow working individuals to choose how to invest a part of their pension money. The government is hoping to overhaul the current pension system which is in danger of collapsing due to the rapidly aging population." (Reuters via Excite News)
Opinion: Treasury Secretary O'Neill Has the "Failure to Understand"
Excerpt: "Mr. Bush ... proposes to divert some of those [Social Security] funds to help set up personal investment accounts, which he envisions as a partial alternative to the Social Security guarantee. The securities industry loves the notion of such accounts, which it presumably would have a hand in managing -- for a fee, of course. The question is how large the fee would be." (Washington Post)
An Employer's Guide to Employee Benefits
Bravo! 157-page Adobe Acrobat Reader (PDF) document now online. (Third edition, November 2000.) Excerpt: "Designed as a guide for new employers and small businesses, this publication presents a nontechnical discussion of how to select an appropriate plan for the workforce, put it in place, select appropriate advisors, and communicate it to employees." (Briggs and Morgan, P.A. and the Minnesota Small Business Assistance Office)
Another Question is Answered in the ERISA Benefit Claims Q&A Column
A pension plan says it overpaid a participant over the past several years. It reduced the participant's monthly benefit to the correct amount, but now wants to recoup the overpayment by reducing the monthly benefit even more. If the overpayment was due to a mistake by the pension plan, can it recover the overpayment? (BenefitsLink.com)
Supreme Court Decision Emphasizes Need To Check Plan Records
Summary of the Egelhoff case from the U.S. Supreme Court. Excerpt: "For employers with plan participants in multiple states, this decision is good news. Plan administrators need not look beyond their plan documents and records to determine whom to pay benefits." (BenefitNews.com)
Firms Were Entitled To Jury Trial Under LMRA Regarding Unpaid Contributions To Funds
he Second Circuit U.S. Court of Appeals has ruled that a group of family-owned companies was entitled to a jury trial under the Labor Management Relations Act (LMRA) on the issue of whether the companies were liable for more than $7.5 million in unpaid contributions to union benefit funds. (SpencerNet)
Opinion: Ford CEO's Pay Is Rising as Performance Falters
Excerpt: "Ford Motor Co.'s sagging earnings -- and the public disputes over the safety of its best- selling sport-utility vehicle and F-150 line of pickup trucks -- suggest CEO Jacques Nasser may soon be taking a one-way ride." (Graef Crystal, on Bloomberg.com)
Final IRS Regs Cover Transfer of Surplus Pension Assets For Retiree Health
Final Internal Revenue Service regulations provide that an employer that significantly reduces retiree health coverage during a five-year cost maintenance period does not satisfy the minimum cost requirement of IRC Sec. 420(c)(3). The final regulations were published in the June 19, 2001, Federal Register. These regulations clarify and amend proposed rules issued in January 2001. (SpencerNet)
Newly Posted or Renewed Job Openings (Post Yours!)
| Pension Administrator | for The Benefits Consulting Group in IL |
| Client Director | for CitiStreet in FL |
Newly Posted Press Releases
| Revamped CNA Trust Website Permits Account Access for Participants, Employers and Partners (CNA Trust) |
| NextElevation Partners with RightNow Technologies to Offer Online Customer Service Tools for Health Insurance Consultant and Broker Websites (NextElevation Software Systems, Inc.) |
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