BenefitsLink Retirement Plans Newsletter for July 2, 2001

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The BenefitsLink Newsletter -
Retirement Plans Edition

June 29 - July 2, 2001

Today's sponsor: The Plan Sales System (click)

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IRS Issues Finalized Regs on New Comparability Plans
Excerpt: "These regulations are effective June 29, 2001.... These final regulations retain the rule in the proposed regulations that requires a defined contribution plan that does not provide broadly available allocation rates or certain age-based allocation rates (as these terms are defined in these final regulations) to satisfy a gateway in order to be eligible to use the cross-testing rules to meet the nondiscrimination requirements of section 401(a)(4)." (Internal Revenue Service)

ASPA Summarizes Final "New Comparability" Regulations from IRS (PDF)
Excerpt: "[T]he final regulations retain the 'gateways' in the proposed regulations ... In general, this means that a new comparability plan may continue to cross-test if each eligible NHCE receives an allocation rate of at least 5% of compensation, or, if less, one-third of the highest allocation rate provided under the plan.... [T]he final regulations are effective for plan years beginning on or after January 1, 2002, regardless of when the new comparability plan design was adopted." (American Society of Pension Actuaries)

IRS Announces Simplified Determination Letter Procedure
Excerpt: "[This procedure allows] employers of nonstandardized master and prototype (M&P) plans or certain volume submitter plans to rely on a favorable opinion or advisory letter with respect to most qualification requirements without requesting a determination letter." (Internal Revenue Service)

IRS Notice 2001-42 Provides GUST Amendment Guidance; No Extension of Remedial Amendment Period
Excerpt: "The GUST remedial amendment period for individually designed plans, which ends on the last day of the 2001 plan year, is not being extended. However, a separate, later remedial amendment period is being provided for EGTRRA.... Before the end of August 2001, the Service will publish sample EGTRRA plan amendments that plan sponsors and sponsors of pre-approved plans can adopt or use in drafting individualized plan amendments." (Internal Revenue Service)

Mutual Funds Trade Association Summarizes Boehner Retirement Investment Advice Bill
Excerpt: "The bill would provide a statutory exemption from ERISA's prohibited transaction rules for the provision of investment advice and related transactions. Under the exemption, 'fiduciary advisers,' who by definition would be ERISA fiduciaries, would be permitted to provide investment advice to employee benefit plans and participants and beneficiaries of such plans." (Investment Company Institute)

Prospecting for a Money Manager
Excerpt: "If you're looking for a professional to manage your money, here's what you need to know and ask." (TheStreet.com via Yahoo! Finance)

Fidelity Adds Design Features, Education Tools to its e401k Plan
Press release. Excerpt: "Fidelity Investments today announced it has added several features to Fidelity e401k, its online retirement plan for small businesses ... The new features enable a company to assess 401(k) plan options, build a plan for its business, and receive feedback prior to making a final purchasing decision ... [A survey of users] showed that key elements of participant behavior are virtually the same for online participants as those with access to a traditional plan." (Business Week)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
I'm married to a railroad worker with 32 years of pension credits. I'm 62 and retired. My husband turns 60 in 2002. My own Social Security is more than what I could get as a spouse's Tier 1 benefit. According to the Railroad Retirement Board, that means I will not receive a spouse's Tier 1. What will I get as a Tier 2 benefit as a wife and as a widow? What if we are divorced? Assume my husband will have a 'current connection' and is vested for survivor benefits. (BenefitsLink.com)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
Under current Railroad Retirement rules, a wife can receive benefits at 60 if her husband has 30 or more years of railroad service. Her husband can draw his retirement at 62. I understand that certain proposed changes will allow a rail worker with 30 years to draw a full pension at 60. Will a wife be able to start her benefit at 58? (BenefitsLink.com)

Another Question is Answered in the Who's the Employer Q&A Column
Suppose a husband and wife own separate medical practices. My understanding is that if the husband owns 100% of the stock in corporation A and his wife owns 100% of stock in corporation B, all employees have to be aggregated. Would they be better off as sole proprietors, as partners in a new partnership, or as members of a new LLC? (BenefitsLink.com)

(Following items also appear in Welfare Plans Edition)

11th Circuit Upholds Tax Court Finding that Winn-Dixie COLI-Loan Program Lacked Economic Substance
Excerpt: "Winn-Dixie Stores, Inc. appeals the tax court's judgment resting on the conclusion that Winn-Dixie was not entitled to deduct interest and fees incurred in borrowing against insurance policies that it owned on the lives of more than 36,000 Winn- Dixie employees. We affirm." (11th Circuit, U.S. Court of Appeals via FindLaw.com)

Why Employers Should Sound the Alarm on Expiring Options
Excerpt: "How interested are employers in alerting employees that their in-the-money stock options will soon expire? Listen to Tim Clancey and you might get the idea that employers simply aren't that concerned." (CFO.com)

Newly Posted or Renewed Job Openings (Post Yours!)

Plan Administrator

for Benefit Resources, Inc.
in CA

Administrator/Employee Benefit Plans

for Benefits Division of Orlando, Florida CPA Firm
in FL

Employee Communications Consultant

for CitiStreet - A State Street and Citigroup company
in MA

Manager of Compliance

for The Park Group & Associates, Inc.
in MD

Employee Benefits Division Chief

for County of San Bernardino
in CA

Benefits Paralegal

for Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
in GA

Product Administrator

for U.S. Trust Company
in OR

Underwriting Analyst

for Stone & Associates
in CA

Qualified Plan Administrator

for Hayashi & Wayland Retirement Plan Services
in CA

Newly Posted Conferences (Post Yours!)