August 28, 2001 - 12,749 subscribers Today's sponsor: The Institute of Management & Administration (Click on company name or banner to learn more.) Have you ever wished for a research tool that gave you access to the most current thinking in the Benefits and Compensation arena? Well, now you can have it! IOMA's HR, Benefits & Compensation e-Library, a part of its Management Library site, will help you squash the competition, impress your boss, and gain the respect of your peers. Thousands of articles on management techniques for streamlining your HR department. Graphs & Charts. Competitive analysis, and more! Load up on the tools for SUCCESS... NOW! (Help us to provide this newsletter at no charge to you -- our sponsors pay our way. Remember to visit them periodically; we try to make sure their products and services will be of interest to you. Thanks! --Editor) Congressional Budget Office: Tapping Social Security Taxes Is Called Likely Excerpt: "The CBO concludes that in the wake of the president's tax cut and the slowing economy, the government will tap about $9 billion of the Social Security surplus in the fiscal year that ends Sept. 30." (Washington Post) Analysis: IRS Issues Guidance on GUST, EGTRRA and MRD Amendments (PDF) Excerpt: "Notice 2001-42 provides guidance regarding GUST and EGTRRA plan amendments. The basic GUST amendment deadline for prior adopters of prototype plans and employers that certify their intent to adopt a prototype plan has been extended by one year to December 31, 2002. However, the GUST amendment deadline for individually designed plans remains the last day of the 2001 plan year. Also, qualified plans must have a 'good faith' EGTRRA plan amendment in effect ..." (CIGNA's Pension Analyst) Employee Ownership Update for August 27, 2001 The NCEO's executive director Corey Rosen discusses two bills introduced into Congress to provide temporary Alternative Minimum Tax (AMT) relief for holders of incentive stock options, plus two new studies on the impact of employee ownership in China and Korea. (The National Center for Employee Ownership (NCEO)) A 401(k) Tax Paradox: Higher Taxes Possible for Low- to Middle-Income Workers, Study Says Excerpt: "Participation in a 401(k) plan lowers current taxes all right, but a new study indicates that for low- to middle-income workers, it can result in higher total lifetime taxes. And the better the plan's investment return, the more likely the participant is to pay higher taxes." (Washington Post) Opinion: Finding Advice on Managing 401(k) Plans Excerpt: "Most companies run scared from providing advice, fearing that it's illegal (not true) or leaves them open to lawsuits (not necessarily). The lack of advice is a glaring weakness of the 401(k) ... The [Boehner] bill is a commendable attempt to update laws written before 401(k)s were created. Unfortunately, it is has one fundamental flaw: The bill would allow the mutual funds, insurers and bankers who manage investments to provide advice, too." (San Jose Mercury News) Opinion: Penny Pinching the Retirees at GE Excerpt: "In fact, the pension plan is doing so well that GE stopped contributing to it in 1988. The company would incur an excise tax if it made additional contributions. But GE has not shared the wealth. GE still requires employees to contribute out of their wages to the pension fund. Most upsetting to the workers, the surge in the pension plan assets has not translated into increased benefits for retirees." (Multinational Monitor) Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column If I am vested but resign from the railroad, do my credits "roll over" to Social Security? If not, are my Railroad Retirement credits of any value to me or will I just get Social Security when I retire? (BenefitsLink.com) Federal Thrift Board Issues Final Rules On Correction of Errors Under the TSP The Federal Retirement Thrift Investment Board has issued final regulations that amend the agency's existing rules on the correction of administrative errors under the Thrift Savings plan (TSP). The final regulations appeared in the August 22 Federal Register. The Federal Retirement Thrift Investment Board administers the TSP, which is a tax-deferred retirement savings plan for federal employees similar to a Sec. 401(k) cash or deferred arrangement. (Spencernet) Another Option for Risk-Averse Retirees: Immediate Annuities Excerpt: "The sale of so-called deferred variable annuities to senior citizens has been a source of controversy in recent years, sparking lawsuits and drawing the attention of regulators. But another type of annuity, known as an immediate annuity, can provide significant benefits to risk-averse retirees who want to be sure they do not outlive their savings." (The [Philadelphia] Inquirer) Catch-up Contributions Will Help Baby Boomers Build Nest Eggs Excerpt: "But, they aren't a magic bullet to boost low balances that result from years of neglecting retirement accounts.... At best, a worker will be able to add a few thousand pre-tax dollars extra a year, and those contributions won't benefit from the same long-term interest compounding that earlier contributions would have enjoyed. Also, this benefit may be available for a limited time." (mPower Cafe) Opinion: Social Security (as We Know It) Is Here to Stay Excerpt: "Buried under layers of argument, analysis and sophistry, the real issue in the Social Security fight has become invisible. That issue is the nature of the obligation. Is Social Security a firm contract with its beneficiaries, as a government bond is a contract with its holders? Or is it simply another government program that can be modified or even abandoned at any time by Congress and the president?" (New York Times; free registration required) Newly Posted or Renewed Job Openings (Post Yours!)
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Copyright 2001 BenefitsLink.com, Inc., but you may freely distribute this email newsletter in whole. This newsletter is edited by David Rhett Baker, J.D.
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