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The BenefitsLink Newsletter -
Retirement Plans Edition
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January 4, 2002 - 12,730 subscribers
Today's sponsor: Glasser LegalWorks

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   You are invited to attend the nation's leading seminar on
   how recent cases affect claims, plan design and operations.

   Highlights of this year's program include:
   -Health Care Plan Litigation
   -Fiduciary Litigation
   -Preemption after Egelhoff
   -Aftermath of Pegram
   -Managed Care Litigation

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(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)

Overview: Elimination of Post-Hardship Contribution Limit
Excerpt: "The elimination of the post-hardship contribution limit is effective for calendar years beginning on or after January 1, 2002. Thus, the IRC §402(g) limit for 2002 does not have to be reduced with respect to a participant who received a hardship distribution in calendar year 2001." (TRI Pension Services)

Overview: Implementation of "Severance From Employment" Rule for 401(k) Plans
Excerpt: "[T]he term 'severance from employment' does not invoke the 'same desk rule' when employees are acquired by another employer in a business transaction (e.g., merger of companies or stock or asset acquisition).... In order to permit distributions from a 401(k) plan under the new 'severance from employment' rule, the plan must be amended." (TRI Pension Services)

Overview: Model Rollover Notice Revised; Old Notice No Longer Satisfies Statutory Requirements
Excerpt: "Use of the sample notices in Notice 2002-3 will be deemed to satisfy the notice requirement under IRC §402(f). There are two sample notices: one for qualified plans and section 403(b) plans and the other for governmental 457(b) plans." (TRI Pension Services)

Pension Funds and Volatility
Excerpt: "[Over the last few years,] long-term interest rates fell, rose, then fell again, causing major shifts in pension liabilities and fixed-income asset values.... This article traces the recent ups and downs of investment markets to illustrate some important principles of pension fund management, and explains strategies that employers can use to control adverse impacts on their financial results in the future." (Aon)

ERIC: Worker Pension Reforms Threatened by 'Non-Conforming' State Laws
Press release. Excerpt: "The ERISA Industry Committee (ERIC) ... warned today that many of the pension and benefit reform provisions enacted in 2001 as part of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) may be undermined or even in jeopardy due to the disparity between the new federal law and tax codes in at least 10 states." (ERISA Industry Committee)

Overview: Guidance On EGTRRA Changes to Dividend Deduction Rules Under IRC §404(k)
Excerpt: "[Under IRC section 404(k), a] plan may permit participants to elect between payment of the dividend in cash or reinvestment of the dividend, for the benefit of the participant's account, in employer securities. The corporation is allowed a deduction even if the participant elects to reinvest the dividend in employer securities. Notice 2002-2 provides important guidance on the implementation and administration of [this IRC section]." (TRI Pension Services)

Rev. Proc. 2002-10 Provides Procedures for Approval of Updated IRA, SEP and SIMPLE IRA Prototypes
Excerpt: "[EGTRRA] made several changes to the Internal Revenue Code, affecting IRAs (traditional, Roth and SIMPLE IRAs), SEPs (including salary reduction SEPs, "SARSEPs") and SIMPLE IRA plans, that are effective beginning January 1, 2002.... Beginning April 1, 2002, prototype sponsors can apply for opinion letters on prototype documents that incorporate EGTRRA changes and the final required minimum distribution rules." (Internal Revenue Service)

Guidance Provided to Drafters of IRAs, SEPs and SIMPLE IRAs and to Users of Model IRAs and Plans
Excerpt: "The IRS has provided (1) guidance to drafters of individual retirement arrangements (IRAs), simplified employee pensions (SEPs) and SIMPLE IRA plans; (2) guidance to users of IRS model IRAs and plans; and (3) transitional relief for users of IRAs and plans that have not received IRS approval. The guidelines, which take effect on January 28, 2002, modify section 4.01 of Rev. Proc. 87-50 ..." (CCH)

Opinion: Key Reason U.S. Doesn't Save-- Too Much Hassle
Excerpt: "This is the time of year when savers can revel in Congress' annual sweetening of 401(k)s, IRAs and newer additions to the ever-growing array of tax-free savings vehicles. Or maybe the right word is wallow. Or maybe just drown." (USA Today)

Feds Helping You Catch Up on Retirement Savings
Excerpt: "This year Uncle Sam is making it easier for you to catch up on your retirement savings. As of Jan. 1, the government officially increased the amount of tax-deferred contributions you can put into your 401(k), IRA or other retirement accounts." (AARP Bulletin)

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

New Issue of Andersen's Alert: U.S. Compensation and Benefits News Briefs
December 17, 2001. Includes articles on personal vehicle use by auto dealership employees; guidance on Sec. 529 qualified tuition programs; additional September 11 relief for taxpayers with interests in passthrough entities; CEO gets jail time for pension embezzlement. (Andersen)

IRS Publishes Further Guidance on Split-Dollar Life Insurance Arrangements; Revokes Earlier Notice
Excerpt: "Treasury and the Service intend to issue proposed regulations requiring the taxation of parties to a split-dollar life insurance arrangement under one of two mutually exclusive regimes. Under one regime, the economic benefits of a split-dollar life insurance arrangement generally are treated as transfers to the benefited party. Under the other regime, payments by the sponsor ... generally are treated as a series of loans to the benefited party." (Internal Revenue Service)

Analysis: SEC Adopts New Disclosure Requirements for Equity Compensation Plans
Excerpt: "The purpose of these amendments is to allow investors to make better-informed investment and voting decisions by improving the quality of disclosure available to investors about registrants' equity compensation plans." (Faegre & Benson LLP)

Broad-Based Stock Options at the Crossroads
Excerpt: "[T]he continuing surge in option grants has brought increasing attention to the issue of dilution. [Some firms,] under fire from institutional investors to reverse their overhang levels, are increasingly inclined to consider alternatives. This article describes three alternatives, and illustrates an approach some organizations may choose to attract and retain high-performing, high-potential people." (Aon)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Account Manager for US Bank
Administrator for Summit Benefit & Actuarial Service, Inc.
Director of Executive Compensation for Heidrick & Struggles/LeadersOnline
Investment Advisor Representative for Ceridian Benefit Services
Regional Account Manager for Market Leading Provider of Life Insurance and Retirement Plans
Regional Account Manager - Bilingual for Market Leading Provider of Life Insurance and Retirement Plans
Group Benefits Account Manager for Hylant Group, Inc.

Newly Posted Conferences (Post Yours!)
COBRA Compliance for Group Health Plansin WA on March 22, 2002
presented by Employee Benefits Institute of America LLC (EBIA)
HIPAA & Other Federal Mandates for Group Health Plansin WA on March 21, 2002
presented by Employee Benefits Institute of America LLC (EBIA)
ERISA Compliance for Health & Welfare Plansin WA on March 21, 2002
presented by Employee Benefits Institute of America LLC (EBIA)
Cafeteria Plansin WA on March 19, 2002
presented by Employee Benefits Institute of America LLC (EBIA)
401(k) Plansin WA on March 20, 2002
presented by Employee Benefits Institute of America LLC (EBIA)

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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.