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The BenefitsLink Newsletter -
Retirement Plans Edition
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October 31, 2001 - 12,337 subscribers
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Analysis: Catch-up Guidance Provided in Form of Proposed Regulations
Excerpt: "EBIA Comment: While these rules provide three ways to characterize contributions as catch-up contributions, it seems to us that the most common use of catch-up contributions will be to permit catch-up eligible participants to make contributions exceeding the Code Section 402(g) dollar limit." (EBIA Weekly)

An Action Plan for Automatically Enrolled 401(k) Participants
Excerpt: "[A]utomatic enrollment may actually hurt some who would otherwise have enrolled on their own and chosen more aggressive investments and higher contribution levels that would have suited them better, a 2001 Hewitt Associates study of three companies concluded." (mPower Cafe)

Overview: IRS Proposes Rules for Catch-Up Contributions (PDF)
2 pages. Excerpt: "In general, the proposed rules provide guidance on eligibility for, and determination and nondiscrimination testing of, catch-up contributions, and also address various technical issues. The proposed rules may be relied on pending the issuance of final rules." (Milliman USA)

Opinion: Improper or Illegal Marketing Arrangements and Sales Practices for 403(b) Annuities
(Click on 'Section IV.') Excerpt: "[I]nsurance companies are beginning to form TPA's or are striking marketing alliances with TPA's to sell their annuities and life insurance. The TPA then uses the commissions generated from the sale of annuities and life insurance to get contracts with school districts by offering TPA services for reduced amounts or for free." (Martin, Drought & Torres Incorporated)

Opinion: What to Watch for in 403(b) Products
(Click on 'Section II.') Excerpt: "Virtually all annuities and life insurance policies have surrender penalties. You will be charged a certain percentage of your investment if you try to move your money to another company prematurely. Surrender charges usually decline over time, and eventually disappear. Surrender charges can start ... 30% for early years of annuities. The length of the surrender penalties varies greatly, from as short as five years to twenty years." (Martin, Drought & Torres Incorporated)

Overview: Tax Act Changes Retirement Rules, Makes Pension Plans Look Golden
Excerpt: "Congress recently passed the Economic Growth and Tax Relief Reconciliation Act of 2001, which will have a remarkable effect on retirement plan opportunities for small businesses. Not only has Congress simplified the administrative requirements for pension plans, but it also has increased the contributions and deductions limits for employers. As a result, many employers now will find pension plans to be more cost-effective and easier to administer." (The Business Journal of Kansas City)


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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.