| The BenefitsLink Newsletter - Retirement Plans Edition |  |
November 15, 2001 - 12,441 subscribers
Today's sponsor: Standard & Poor's
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For retirement plan communications that meet both your education goals and your budget demands, look to Standard & Poor's. S&P's consultants can create a program that's right for your specific needs-- from high-quality, low-cost "off-the-shelf" solutions to custom-designed print and Web materials. S&P's products include newsletters, enrollment kits, online tutorials and libraries, seminars, and more. Specialized services include on-demand print and complete fulfillment management. Coming in 2002: S&P's off-the-shelf retirement plan distribution kit. For more information, call us at 1-800-326-7697 or visit our site at: http://fc.standardandpoors.com
(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)
Expanding 2002 401(k)Savings Plan Deferral Opportunities: Catch-Up Contributions (PDF)
4 pages. Excerpt: "At the heart of [the EGTRRA] changes are revised Internal Revenue Code (IRC) Section 415 maximum annual addition limits and the new 'catch-up' contribution opportunity for workers age 50 or older. This Alert summarizes the key factors in deciding whether to make either or both of these changes to your plan." (Aon Consulting)
Defined Benefit Plans: Immediate Review Needed (PDF)
Excerpt: "Very low interest rates and weak investment markets have converged this year to create an unforeseen and unfortunate result: many defined benefit plans will be underfunded at year-end, even if they previously had been sufficiently funded.... This Client Action Bulletin describes the implications of these economic forces on defined benefit plans and suggests courses of action that sponsors may take before year-end to minimize the impact of underfunding." (Milliman USA)
PBGC Announces 2002 Maximum Guaranteed Benefits
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) ... announced that the maximum benefit it will guarantee for retirees in underfunded single-employer defined benefit plans that terminate in the year 2002 will be $3,579.55 per month, or $42,954.60 per year." (Pension Benefit Guaranty Corporation)
Former Employees Not Entitled To Challenge Qualified Status of Pension Plan: Appeals Court
Two former employees were not 'interested parties' and therefore were not entitled to challenge the Internal Revenue Service's determination that the amended retirement plan of their former employer continued to qualify for favorable tax treatment under IRC Sec. 401(a). This was the decision of the U.S. Court of Appeals for the District of Columbia Circuit in Flynn and Thomas v. Commissioner (No. 00-1457). (Spencernet)
ERISA Industry Committee Files Additional Comments on ESOP Dividend Deduction Provisions
Excerpt: "The ERISA Industry Committee ('ERIC') makes this submission to provide its preliminary responses to the questions raised by Treasury Department officials at the recent meeting regarding the ESOP dividend deduction provision in Code section 404(k)." (ERISA Industry Committee)
State of Florida Chooses Five Bundled Providers for New DC Program
Excerpt: "The state Board of Administration voted to start contract negotiations with five companies to provide a variety of investment advice, records and products to some 600,000 state and local government employees. A sixth company was added to provide limited brokerage services." (St. Petersburg Times)
Analysis: Ways and Means Committee Marks Up Boehner Investment Advice Bill
Excerpt: "The [Ways and Means] Committee acted after being referred the bill by Education and the Workforce Committee, which acted on the bill October 3, 2001. The Ways and Means Committee marked up the portion of the bill that creates a prohibited transaction exemption to the excise tax provisions of section 4975 of the Code. This provision is necessary to provide complete prohibited transaction relief for both pension plans and IRAs." (Groom Law Group)
ASPA Signals Support for Bingaman-Collins Investment Advice Bill
Excerpt: "This bill you are introducing along with Senator Collins, would provide retirement plan sponsors with a safe harbor with respect to the designation and monitoring of independent investment advisers for workers managing their retirement plan assets. In doing so, the Bingaman-Collins bill will make independent investment advice more accessible to the American workforce." (American Society of Pension Actuaries)
Comparison of Latest Version of Boehner Investment Advice Bill to Earlier Version (PDF)
'Comparative Chart Reflecting Ways & Means Changes to H.R. 2269." (American Benefits Council)
Invesmart Proposes Alternative to Retirement Security Advice Act
Excerpt: "Invesmart strongly opposed [the Boehner bill] because it believed the bill sanctions mutual fund companies and other money managers to recommend proprietary investment products to plan participants, creating a conflict of interest." (PR Newswire via Yahoo! Finance)
Full House to Take Up Boehner Investment Advice Bill; Competing Bill Offered
Excerpt: "The House will consider H.R. 2269, the Retirement Security Advice Act, authored by Education and the Workforce Committee Chairman John Boehner (R-Ohio) ... just two days after the introduction of a different version by Senators Jeff Bingaman (D-New Mexico) and Susan Collins (R-Maine)." (PLANSPONSOR.com; free registration required)
No Time to Snooze: Meeting the Needs of an Aging Workforce (PDF)
Excerpt: "The United States is 20 years behind other industrialized nations in the aging of its population. There is still time to undertake analysis and take required actions.... For business, early action increases the likelihood of: retaining older workers longer to avoid severe worker shortages, particularly among skilled workers [and] sufficient income and assets for future retirees to spend in this consumer-driven economy." (Employee Benefit Research Institute)
Most Mutual Fund Investors Watching Long-Term Goals
Excerpt: "Long identified as having this sort of buy-and-hold approach, fund shareholders have been credited with helping to prop up the market in troublesome times, most recently after the Sept. 11 terrorist attacks." (Associated Press via Excite News)
Retirees Feel Squeezed By Low Interest Rates
Excerpt: "Low interest rates, which mean cheaper mortgages and business loans and strengthen the economy, are good for everyone, right? But don't tell that to Tommie Newberry, a 72-year-old retired U.S. Army veteran." (Reuters via Yahoo! Finance)
Opinion: Value Style of Investing Vindicated
Excerpt: "The bursting of the technology bubble has taught us that fear and greed drive markets, which are ultimately inefficient. Indexes can be beaten and value outperforms in the long run." (Benefits Canada)
Developments in Decumulation: the Role of Annuity Products in Financing Retirement
Working paper. Excerpt: "A range of financial products exists currently or can be envisioned for the future that would be useful in helping to protect people against having to dramatically curtail consumption in old age. This paper reviews the usefulness of life annuities in providing protection against longevity risk." (Olivia S. Mitchell, published by the National Bureau of Economic Research)
The Benefits of Portals
Excerpt: "Web portals are the latest development in the wired world of benefits. They offer advantages to plan sponsors and members, including real-time information in a self-service environment." (Benefits Canada)
Andersen's U.S. Compensation and Benefits News Briefs, November 5, 2001 Issue
Articles include: IRS final regulations on FMLA and cafeteria plans; IRS proposed regulations on 'catch up' contributions; IRS guidance on EGTRRA qualified plan limits; IRS blesses employer leave-based charitable donation programs-- for now; IRS allows redesignation of estimated tax payments; DOL advises 9-11 victims on loss of health benefits; Court holds 'mailbox rule' controls timely receipt if no contrary plan language. (Andersen)
Compensation vs. Benefits Professionals: Who Gets Paid More?
Excerpt: "There is a discrepancy in pay between benefits and compensation professionals. These authors report on the results of a survey that measured the discrepancy and suggest possible reasons for the difference. They observe that, if benefits professionals are to reach pay equity with their compensation counterparts, they may need to play a strong role in helping organizations recognize the importance of benefits as a component of total reward strategy." (International Foundation of Employee Benefit Plans)
Demutualization of Life Insurance Companies
The Prudential Insurance Company of America and the Principal Financial Group recently joined the growing group of mutual life insurance companies electing to 'demutualize,' converting from ownership by policyholders to ownership by public shareholders. When benefit plans or employers sponsoring benefit plans receive demutualization proceeds, they face decisions with significant legal and economic implications. This article lists many issues facing those who must handle demutualization proceeds. (Sanders, Schnabel & Brandenburg, P.C.)
Developments in Decumulation: the Role of Annuity Products in Financing Retirement
Working paper. Excerpt: "A range of financial products exists currently or can be envisioned for the future that would be useful in helping to protect people against having to dramatically curtail consumption in old age. This paper reviews the usefulness of life annuities in providing protection against longevity risk." (Olivia S. Mitchell, published by the National Bureau of Economic Research)
Opinion: In Defense of Stock Option Accounting (PDF)
Excerpt: "The premise of [a recent article by Gretchen Morgenson of the New York Times] is that anyone with any intelligence and some understanding of accounting principles knows that current stock option accounting is wrong. She further infers that defenders of current accounting standards have two objectives: to protect large grants to top executives, and to insulate the companies' bottom lines from option costs. This letter both details her charges and outlines our response." (Frederic W. Cook & Co., Inc.)
Newly Posted or Renewed Job Openings (Post Yours!)
| Global Compensation Manager | for Towers Perrin in CT |
| ERISA Attorney | for Law Firm in MN |
| Pension Administrative Consultant | for PenSys, Inc. in NC |
| DC Plan Administrator | for Lincoln Benefits Group, Jenkintown, PA in PA |
Newly Posted Press Releases
| S&P's Participant Newsletters Are Penny Wise, Plan Prudent (Standard & Poor's) |
| ERIC Side-by-Side Comparison Demonstrates Expansive Nature of Domenici-Wellstone Mental Health Parity Provision (The ERISA Industry Committee) |
| California State Rate to Remain at 0.9% for 2002 (VPA, Inc.) |
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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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