| The BenefitsLink Newsletter - Retirement Plans Edition |  |
July 11, 2001
Today's sponsor: EBIA's 401(k) Plans Manual (click)
Written by employee benefits attorneys, this manual for employers, administrators and advisors includes a clear explanation of applicable legal requirements, expert analysis of "gray" compliance issues, numerous Q&As and examples to help illustrate how the rules work, plan administration tips, charts and tables, sample plan documents and forms and the full text of relevant statutes, regulations, legislative history other official documents. Click to order!
IRS Releases Revenue Ruling 2001-30 Detailing Application of New Final Cross-Testing Regs (PDF)
3 pages. Excerpt: "This revenue ruling sets forth the specific conditions that an allocation must satisfy to be treated as a [defined benefit replacement allocation] under IRC section 1.401(a)(4)-8(b)(1)(iii)(D). These specific conditions are designed to permit employers to provide, in a nondiscriminatory manner, allocations replacing the retirement benefits that would have been provided under a defined benefit plan, without having to satisfy the minimum allocation gateway." (Internal Revenue Service)
California State Employees to Lose 401(k) Matching Contributions
Excerpt: "Amid shrinking state revenue, managers and supervisors who work for the state will receive notice within the week that the state will end its contribution to their 401(k) plans." (Contra Costa Times)
Automatic Enrollment in 401k Plans Works Against Some Employees, Helps Others
Press release. Excerpt: "New research by Hewitt Associates, in conjunction with faculty and researchers from Harvard University and the University of Chicago, shows that automatic enrollment can work against some employees' asset accumulation, affecting their ultimate retirement income security. Earlier research indicates that while automatic enrollment increases 401(k) plan participation rates, automatically enrolled participants tend to remain at the company's default elections ..." (Business Wire)
Opinion: Important Lessons in 401(k) Losses
Excerpt: "Losses in the stock market, of course, are a distinct possibility every year. But this critical fact was often downplayed by market analysts and mutual fund companies, and widely ignored by many investors as they counted their gains... [T]o avoid further unpleasant surprises, many workers need to devote more time and effort to thinking about how to invest that money. Employers and mutual fund companies can help by making sure their 401(k) programs provide the tools that people need..." (Kansas City Star)
Average Investors Warm Up to the Web
Excerpt: "Though the market downturn may have slowed it somewhat lately, activity on mutual-fund websites has been soaring. Altogether, U.S. investors had about $7 trillion in 250 million mutual-fund accounts at the end of the year 2000. They want to track that money, sometimes buy more shares or switch money from one fund to another, and at other times redeem shares. The Web gives many of these investors a convenient tool beyond mail and phone lines to conduct business." (Christian Science Monitor)
Wisconsin Supreme Court Asked to Reconsider Pension Ruling for State Employees
Excerpt: "In an unusual move, the Wisconsin Supreme Court has been asked to reconsider its own decision upholding a boost in state pension benefits. The State Engineering Association, one of the unions that challenged the constitutionality of the 1999 pension sweetener, filed a motion asking the court to reconsider a case that affects 460,000 members of the Wisconsin Retirement System." (The Milwaukee Journal-Sentinel)
Companies Should Anticipate Litigation Related to Employees' 401(k) Plans
Excerpt: "Don Trone, president of the Foundation for Fiduciary Studies, told about 50 business representatives from throughout central Illinois meeting in Peoria last week that fiduciary liability is one of the fastest growing areas of litigation in the country. 'We are facing a social crisis in this country in the next 10 to 15 years when a large component of the work force realizes they have not saved enough for retirement, and Social Security is not able to handle them,' Trone said." (The Peoria [Ill.] Journal Star)
Dollar-Cost Averaging Technique Hard to Beat
Excerpt: "Let's say you invest $120 every month in a 401(k) plan or IRA, buying the same stock each time. The first month you pay $8 a share. The second month you pay $12 and the third month, $10. The average price of the stock during this period was $10, which was what you paid, right? Wrong." (Fort Worth Star-Telegram)
Making Sense of Mutual Fund Risk
Excerpt: "Given the increasing demand for financial planning services, CPAs can help their clients with sound, clear advice about mutual fund risk and return measures explained visually through bar charts and graphs. understanding and communicating investment-related risk is challenging." (CPA Journal)
O'Neill Offers to Meet Democrats on Social Security
Excerpt: "U.S. Treasury Secretary Paul O'Neill on Tuesday repeated his assertion that the trust fund for Social Security is not backed by what he termed 'real economic assets' but offered to meet with House Democrats critical of his rhetoric on the issue." (Reuters via Yahoo! News)
Alert: U.S. Compensation and Benefits News Brief
Excerpt: "Our July 2, 2001 issue includes the following topics: Final Internal Revenue Service regulations on pension asset transfers to health accounts; IRS warns small business employers against not withholding on wages; Department of Labor opines on welfare fund's tax 'gross up' for domestic partner benefits; Brehner legislation would allow employer-provided investment advisors." (Andersen)
The Big Dogs Eat Fois Gras
Excerpt: "Don't look now but the political weather is changing, and it's moving to the left. The clearest indication is the July 2 Fortune magazine cover. It pictures Apple Computer's Steve Jobs and announces a special report: 'Inside the Great CEO Pay Heist.'" (Scott Burns of The Dallas Morning News)
Newly Posted or Renewed Job Openings (Post Yours!)
| Account Manager | for Benefit Plan Services, Inc. in GA |
| Pension Administrator | for Means & Associates, LLC in CA |
| Employee Benefits Administrator | for Kidder Benefits Consultants, Inc. in IA |
| Retirement Plan Services, VP | for Meeder Financial in OH |
| Senior Manager/Practice Leader-Compensation and Benefit Consulting | for Retained Executive search firm in NY |
| Defined Contribution Client Account Manager | for New York Life Benefit Services, LLC in MA |
| Employee Benefits Consultant | for Fidelity Investments in TX |
Newly Posted Webcasts (Post Yours!)
| Securing Executive Benefits | on July 18, 2001 presented by Clark Bardes Consulting - Compensation Resource Group |
Newly Posted Press Releases
| FIRST TRUST CORPORATION NAMES MANAGER OF QUALIFIED PLANS GROUP (FIRST TRUST CORPORATION) |
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