| The BenefitsLink Newsletter - Retirement Plans Edition |  |
August 31, 2001 - 12,749 subscribers
Today's sponsor: Glasser LegalWorks
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This timely "how to" program will address new DOL claims procedures, the avoidance of fiduciary liability after the Harris Trust decision, identifying conduct that might trigger a DOL investigation under its Strategic Enforcement Plan, and more. Designed for ERISA fiduciaries, investment advisors, and in-house, corporate, tax, labor, and insurance counsel. September 21 in Chicago; October 24 in New York.
(Help BenefitsLink 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)
Participant Investment Decisions: Is the System Working?
Excerpt: "So how are employer doing? Is the information they provide adequate to educate the average participant about retirement saving and investing? Apparently it is not. There is mounting evidence that, while employer-provided investment education has some value, it is not enough to turn a novice into a knowledgeable investor." (Reish Luftman McDaniel & Reicher)
Boomers' Children Starting to Save for Retirement Earlier Than Their Parents Did
Press release. Excerpt: "[A]ccording to research by ING Aetna Financial Services ... two-thirds (66 percent) of respondents under age 35 started contributing to a 401(k) or similar retirement plan before age 30. That is a significantly larger share than the 39 percent of adults ages 35 and older who started contributing before age 30." (Business Wire via Yahoo! News)
At 20, the 401k Reshaped the Way Americans are Saving for Retirement
Press release. Excerpt: "Since their introduction in 1981, 401(k) retirement plans based on this section of the code have grown to hold almost $2 trillion for more than 40 million Americans. And although the past year has been a difficult one in the equity markets, during the 20-year history of the 401(k), investors have experienced 17 years of positive returns for the S&P 500® and a historical average annual return over the period of 15.68 percent." (Business Wire via Yahoo! News)
New Deferred Comp Opportunities for Key Execs & Highly Compensated Employees of Tax-Exempt Employers (PDF)
Excerpt: "[A] tax-exempt employer or governmental agency may establish an 'eligible' deferred compensation plan [under IRC 457(b)] ... EGTRRA makes two significant changes ... beginning January 1, 2002. First, amounts that an employee defers under his or her TSA or under a Code section 401(k) plan no longer reduce the limit on amounts that an employee may defer under an Eligible Plan. Second, the limit on amounts that may be deferred under an Eligible Plan is increased." (von Briesen, Purtell & Roper, s.c.)
Analysis: Final IRS Regulations on Cross-Testing of New Comparability Retirement Plans
Excerpt: "On June 29, 2001, the [IRS] issued final regulations establishing new requirements that must be met by defined contribution retirement plans in order for these plans to use 'cross-testing' methods to demonstrate compliance with the nondiscrimination requirements of section 401(a)(4) ... by converting the contributions allocated to each participant's account under the defined contribution plan for the plan year to an actuarially equivalent life annuity payable at age 65." (White & Case, L.L.P.)
Florida House of Representatives Strives to Plug Hole in Retirement Bill
Excerpt: "Florida House leaders are scrambling to undo the unintended effects of an amendment to a retirement bill passed this year that could provide a financial windfall to long-serving politicians. The amendment, which tweaks the state's deferred retirement program, was designed to help longtime government employees elected to office keep their retirement benefits from their previous jobs." ([Jacksonville] Florida Times-Union)
Analysis: IRS Updates and Expands Its Retirement Plan Compliance Correction Program
Excerpt: "[IRS] continues to improve its consolidated correction procedures for defects in various types of retirement plans. Despite the alphabet-soup proliferation of abbreviations, the changes are by and large beneficial to the pension community and ultimately for employees and participants. One drawback is that IRS-drafted closing agreements have been replaced in the voluntary correction procedure by compliance statements, which may not offer the same level of protection from future audits." (Reish Luftman McDaniel & Reicher)
The Credit Union Basic Guide to Retirement Planning
19-screen HTML educational document. Excerpt: "The good news is that more people are trying to figure out how much they need to save by retirement. According to a 1998 study by the Employee Benefit Research Institute in Washington, DC, some 45% of working Americans have made the calculation, up from 36% in 1997 and 32% in 1996. The survey found baby boomers, in particular, are increasingly running the numbers. This guide will help you plan effectively for retirement." (Credit Union National Association, Inc.)
Employees Want Investment Advice for 401k Plans According to Survey by ING Aetna Financial Services
Press release. Excerpt: "Employees are hungry for investment advice regarding their 401(k) plans, according to a survey sponsored by ING Aetna Financial Services ... More than 75 percent of the 546 full-time employees surveyed said they would take advantage of retirement planning advice if it was provided by their employer. Fifty-four percent said they would also seek advice from an additional source, such as a professional planner." (Business Wire via Yahoo! News)
Opinion: Rep. Jim DeMint (R-S.C.) is Savvy on Social Security
Excerpt: "The brilliance of the DeMint plan is that it guarantees a benefit no lower than Social Security would offer and thus removes virtually all of the 'risk' from private investment accounts. His legislation, called the Social Security Personal Ownership Plan, is modeled after the Thrift Savings Account Plan that is now offered to federal workers, including, by the way, members of Congress. It has the added attraction that it is completely voluntary for workers." (Washington Times)
Another Question is Answered in the Stock Options, Restricted Stock and Other Long-Term Employment Incentives Q&A Column
Do most defined benefit plans include stock options as part of compensation for plan purposes? If so, what definition is typically used: grant value, exercise price, Black-Scholes value, etc.? (BenefitsLink.com)
Report on the American Workforce 2001
Excerpt: "The 20th century was a remarkable period for the American worker, as wages rose, fringe benefits grew, and working conditions improved.... The American workforce was much better off at the end of the century than it was at the beginning. And the statistics used to understand the condition of working Americans also improved over the course of the century, as we discuss in this Report on the American Workforce." (U.S. Department of Labor, Bureau of Labor Statistics)
EGTRRA's Reduction in Supplemental Wage Withholding Rate May Affect Accounting for Stock Options
Excerpt: "The Economic Growth and Tax Relief Reconciliation Act of 2001 ... changes the flat income tax withholding rate for supplemental wage payments. Supplemental wages include not only bonuses, commissions, and overtime pay, but also gains realized by employees when they exercise stock options.... This change in the minimum supplemental wage withholding rate has a collateral effect on certain accounting rules that apply to employee stock option plans." (White & Case, L.L.P.)
Newly Posted or Renewed Job Openings (Post Yours!)
| 401(k)/DC Pension Consultant | for CBIZ Retirement Services Inc. in NY |
| Risk Management Specialist | for Mellon Employee Benefit Solutions in NJ |
| Benefits Administrator | for Edwards & Angell, LLP in RI |
| Account Manager Benefits Broker | for NCC in CA |
| Retirement Plan Administrator | for Charter One Bank in OH |
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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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