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The BenefitsLink Newsletter -
Retirement Plans Edition
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December 12, 2001 - 12,750 subscribers
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IRS Announces 2002 Limitation Amounts for Pension Plans Under EGTRRA, COLAs
Excerpt: "The Internal Revenue Service today announced the dollar limitations applicable to pension plans that become effective January 1, 2002 under the Economic Growth and Tax Relief Act of 2001 (EGTRRA), and cost-of-living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2002." (Internal Revenue Service)

Chart of 415, Etc., Limits Updated for News Release IR-2001-115
The chart of maximum limits subject to inflation indexing at Carol V. Calhoun's employee benefits site has now been amended to include the newly announced 2002 limits, as well as the 2002 limits modified by the Economic Growth and Tax Relief Reconciliation Act of 2001 ('EGTRRA'), Public Law No. 107-16. Among other things, the chart shows limits under sections 415, 403(b), 401(k), and 457, as well as the Social Security wage base and Social Security and Medicare tax rates, for 1996-2002. (Calhoun Law Group, P.C.)

Highly Compensated Compensation Test Rises To $90,000 In 2002
Excerpt: "[T]he compensation test for determining who is a highly compensated employee (HCE) was not affected by EGTRRA. The current compensation test is $85,000, which is in effect for lookback years beginning in 2001. For lookback years beginning in 2002, the compensation test rises to $90,000.... For calendar year plans, the $90,000 compensation test will apply to determining HCEs in the 2003 plan year." (TRI Pension Services)

Falling Bond Rates Inflate DB Plan Liabilities
Excerpt: "'The odds of getting [a change in the interest rate assumptions] in the economic stimulus bill are long,' James Delaplane, vice president of retirement policy at the American Benefits Council, conceded ... 'But Congress and the administration realize they have to address the issue. I would expect legislation early next year.'" (BenefitNews.com)

Collection of Online Resources on the Use of Company Stock in Retirement Plans
Excerpt: "With the media focus on Enron's demise and its effects on Enron's plan participants, company stock as an 401(k) investment alternative has become an extremely controversial issue-- particularly where a company has financial problems or goes belly up." (PLANSPONSOR.com; free registration required)

State of Florida Pension Fund to Sue Enron
Excerpt: "Florida's government employee pension fund will sue Enron Corp. to try to recoup millions of dollars in investment losses, an official said Tuesday.... The fund may lose 'a couple hundred million dollars' because of the collapse of the company's stock, said Lee Baldwin, investment communications manager for the State Board of Administration, which manages the fund." (Associated Press via Yahoo! News)

House of Representatives Gives Final Approval of Railroad Retirement Bill
Excerpt: "The U.S. House of Representatives on Tuesday gave final congressional approval to a bill that would permit $15.3 billion in railroad pension funds to be invested on Wall Street. On a vote of 369-33, the House passed the previously Senate-approved measure and sent it to President George W. Bush for his anticipated signature." (Reuters via Yahoo! Finance)

Plan for Cutting Tax Bite in Roth IRA Conversion Could Cost Retirees
Excerpt: "A Walnut Creek, Calif., insurance agency is pitching an investment product with the promise that it could provide big tax savings for senior citizens. But if they bite, consumers might lose significantly more than they save.... It is advertised as a way for retirees older than 59 to convert a traditional IRA into a Roth IRA with 'no upfront tax cost.'" (Los Angeles Times)

Who Gets Paid to Save? (PDF)
29 page working paper. Excerpt: "This study examines how new legislation affects the lifetime tax gains (or losses) of low-, middle-, and high-lifetime earners if they contribute the maximum to 401(k) accounts, traditional IRA accounts, and Roth IRA accounts. The study finds that the new legislation changes little for low- and middle-income earners." (Federal Reserve Bank of Cleveland)

Commission Recommends Delaying Social Security Reform for at Least a Year
Excerpt: "Social Security reform is dead - at least until 2003. A top priority of President Bush just months ago, a presidential commission unanimously recommended Tuesday that a rescue plan for the nation's retirement system be delayed for at least a year." (Knight Ridder/Tribune via IFEBP)

Social Security Investments Suggested
Excerpt: "President Bush's Social Security commission is recommending three plans to let younger workers invest some of their payroll taxes in the stock market.... Here, in question and answer form, is a look at the state of Social Security and the commission's recommendations:" (Associated Press via Excite News)

Analysis: Social Security Report is Finale in Three Part Harmony
Excerpt: "The most important and least surprising conclusion to the work of President Bush's Social Security commission was nowhere and everywhere in the final report the panel approved today: overhauling the retirement system is so complicated, painful and politically sensitive that it is almost impossible to get a consensus." (New York Times; free registration required)

(Following items are in both editions of the BenefitsLink Newsletter)


IRS, DOL, PBGC Issue Regulatory Agendas
The Internal Revenue Service, the Department of Labor, and the Pension Benefit Guaranty Corporation have issued their semiannual regulatory agendas. The agendas, all of which appeared in the December 3 Federal Register, set forth when proposed rules are scheduled to be issued and when final action is expected on proposed regulations. (Spencernet)

American Benefits Council Letter to Congress Suggests Priorities for Remainder of Session
Excerpt: "Today, the American Benefits Council submitted a series of recommendations to Congress regarding a range of employee benefits issues still pending before Congress. 'Members of Congress have much to accomplish within the next two weeks,' said Council President James A. Klein in the letter, 'and we urge you to keep the health of the American benefits system squarely in mind as you conclude the session.'" (American Benefits Council)




Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Manager, Benefits Administration for NYU Medical Center
in
NY



Newly Posted Press Releases
Pyramid Introduces PlanTransmit (tm): New Web-Based Tool for Efficient Data Receipt, Validation, and Conversion for Retirement Plan Providers (Pyramid Digital Solutions)
Survey Shows Employers Dedicated to Providing Viable Retirement Plan Options (BPS&M, LLC)



Newly Posted Announcements of Promotions and New Personnel (Post Yours!)
Christopher B. Valentine, CMFC (First Security Investments, 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.